Market Feedbacks and the Limits to Growth

Critics of the Forrester-Meadows models; of population and economic growth limits have focused their attention on the excessive aggregation of the model, on its exceedingly conservative assumptions regarding technological change and, particularly, on its alleged failure to consider the extent to which the feedback relationships implicit in the price mechanism will operate to prevent catastrophic outcomes. While such criticisms are formally valid, they are insufficient to invalidate the main conclusion that limitless growth is impossible.Our model, while in the Forrester-Meadows tradition, seeks to meet these criticisms by disaggregating the world economy into two subeconomies, identified as "developed" and "underdeveloped" respectively, by disaggregating the respective natural resource sectors into "energy" and "other resources," and by providing for the consideration of alternative assumptions regarding technology. The form of disaggregation employed requires specific consideration of income generation and demand determination within the subeconomies, as well as patterns of trade and capital movements between them and the explicit determination of prices for the output of sectors of the two economies. The model is also used to investigate the possibility of steady-state solutions involving population control and pollution regulation. The implications of these are examined for absolute as well as relative per capita consumption standards of living in the two subeconomies