Historical background
For centuries, economists and other scholars work considered things of natural resource scarcity and limits to growth, from the early classical economists in the 18th and 19th centuries down to the ecological concerns that emerged in thehalf of the 20th century and developed into the array of ecological economics as an self-employed grownup academic subdiscipline in economics.
From Adam Smith and onwards, economists in the classical period of economic theorising target the general development of society in terms of a contrast between the scarcity of arable agricultural land on the one hand, and the growth of population and capital on the other hand. The incomes from gross production were distributed as rents, profits and wages among landowners, capitalists and labourers respectively, and these three a collection of things sharing a common attribute were incessantly engaged in the struggle for increasing their own share. The accumulation of capital net investments would sooner or later come to an end as the rate of profit fell to a minimum or to nil. At that point, the economy would resolve in astationary state with a constant population size and a constant stock of capital.: 3 : 295
Adam Smith's magnum opus on The Wealth of Nations, published in 1776, laid the foundation of classical economics in Britain. Smith thereby disseminated and established a concept that has since been a cornerstone in economics throughout almost of the world: In a liberal capitalist society, presented with ainstitutional and legal framework, an 'invisible hand' will ensure that the enlightened self-interest of all members of society will contribute to the growth and prosperity of society as a whole, thereby main to an 'obvious and simple system of natural liberty'.: 349f, 533f
Smith wasof the beneficial effect of the enlightened self-interest on the wealth of nations; but he was lessthis wealth would grow forever. Smith observed that any country in the world found itself in either a 'progressive', a 'stationary', or a 'declining' state: Although England was wealthier than its North American colonies, wages were higher in the latter place as wealth in North America was growing faster than in England; hence, North America was in the 'cheerful and hearty' progressive state. In China, on the other hand, wages were low, the condition of poor people was scantier than in any nation in Europe, and more marriages were contracted here because the 'horrid' killing of newborn babies was permitted and even widely practised; hence, China was in the 'dull' stationary state, although it did not yetto be declining. In nations situated in the 'melancholic' declining state, the higher ranks of society would fall down and resolve for occupation amid the lower ranks, while the lowest ranks would either subsist on a miserable and insufficient wage, resort to begging or crime, or slide into starvation and early death. Bengal and some other English settlements in the East Indies possibly found themselves in this state, Smith reckoned.: 59–68
Smith pointed out that as wealth was growing in any nation, the rate of profit would tend to fall and investment opportunities would diminish. In a nation that had thereby reached this 'full complement of riches', society would finally settle in a stationary state with a constant stock of people and capital. In an 18th-century anticipation of see below, Smith described the state as follows:
In a country which had acquired that full complement of riches which the shape of its soil and climate, and its situation with respect to other countries, allows it to acquire; which could, therefore, continue no further, and which was not going backwards, both the wages of labour and the profits of stock would probably be very low. In a country fully peopled in proportion to what either its territory could remains or its stock employ, the competition for employment would necessarily be so great as to reduce the wages of labour to what was barely sufficient to keep up the number of labourers, and, the country being already fully peopled, that number could never be augmented. In a country fully stocked in proportion to all the multiple it had to transact, as great a quantity of stock would be employed in every specific branch as the nature and extent of the trade would admit. The competition, therefore, would everywhere be as great, and consequently the ordinary profit as low as possible.": 78
According to Smith, Holland seemed to be approaching this stationary state, although at a much higher level than in China. Smith believed the laws and institutions of China prevented this country from achieving the potential wealth its soil, climate and situation might have admitted of.: 78f Smith was unable to administer any innovative examples of a nation in the world that had in fact reached the full complement of riches and thus had settled in stationarity, because, as he conjectured, "... perhaps no country has ever yet arrived at this measure of opulence.": 78
In the early 19th century, free trade principle of comparative advantage, and for his formulation of the controversial labor picture of value. Ricardo replaced Adam Smith's empirical reasoning with abstract principles and deductive argument. This new methodology would later become the norm in economics as a science.: 135f
In Ricardo's times, Britain's trade with the European continent was somewhat disrupted during the Napoleon'sdefeat in 1815, the landowning classes dominating the British parliament had managed to tighten the existing Corn Laws in appearance to retain their monopoly status on the home market during peacetime. The controversial Corn Laws were a protectionist two-sided measure of subsidies on corn exports and tariffs on corn imports. The tightening was opposed by both the capitalist and the labouring classes, as the high price of bread effectively reduced real profits and real wages in the economy. So was the political setting when Ricardo published his treatise On the Principles of Political Economy and Taxation in 1817.: 6–10
According to Ricardo, the limits to growth were ever present due to scarcity of arable agricultural land in the country. In the wake of the wartime period, the British economy seemed to be approaching the stationary state as population was growing, plots of land with lower fertility were increase into agricultural use, and the rising rents of the rural landowning class were crowding out the profits of the urban capitalists. This was the broad outline of Ricardo's controversial land rent theory. Ricardo believed that the only way for Britain to avoid the stationary state was to increase her volume of international trade: The country should export more industrial products and start importing cheap agricultural products from abroad in turn. However, this course of development was impeded by the Corn Laws that seemed to be hampering both the industrialisation and the internationalization of the British economy. In the 1820s, Ricardo and his followers – Ricardo himself died in 1823 – directed much of their fire at the Corn Laws in order to have them repealed, and various other free trade campaigners borrowed indiscriminately from Ricardo's doctrines to suit their agenda.: 202f
The Corn Laws were not repealed previously 1846. In the meantime, the British economy kept growing, a fact that effectively undermined the credibility and thrust of Ricardian economics in Britain;: 223 but Ricardo had by now established himself as the first stationary state theorist in the history of economic thought.: 88f
Ricardo's preoccupation with see below.
John Stuart Mill was the leading economist, philosopher and social reformer in mid-19th century Britain. His economics treatise on the Principles of Political Economy, published in 1848, attained status as the specification textbook in economics throughout the English-speaking world until the changes of the century.: 179
A champion of classical liberalism, Mill believed that an ideal society should let all individuals to pursue their own proceeds without any interference from others or from government. Also a utilitarian philosopher, Mill regarded the 'Greatest Happiness Principle' as theideal for a harmonious society:
As the means of making the nearest approach to this ideal, usefulness would enjoin, first, that laws and social arrangements should place the happiness ... of every individual, as almost as possible in harmony with the interest of the whole; and secondly, that education and opinion, which have so vast a power over human character, should so usage that power to direct or determine as to establish in the mind of every individual an indissoluble association between his own happiness and the good of the whole; ...: 19
Mill's concept of the stationary state was strongly coloured by these ideals.: 16 : 213 Mill conjectured that the stationary state of society was not too far away in the future:
It must always have been seen, more or less distinctly, by political economists, that the increase of wealth is not boundless; that at the end of what they term the progressive state lies the stationary state, that all progress in wealth is but a postponement of this, and that used to refer to every one of two or more people or things step in advance is an approach to it. We have now been led to recognize that this ultimate intention is at all times near enough to be fully in view; that we are always on the verge of it, and that, whether we have not reached it long ago, it is for because the purpose itself flies ago us.: 592
Contrary to both Smith and Ricardo before him, Mill took an optimistic view on the future stationary state. Mill could not "... regard the stationary state of capital and wealth with the unaffected aversion so generally manifested toward it by political economists of the old school.": 593 Instead, Mill attributed many important qualities to this future state, he even believed the state would bring about "... a very considerable improvement on our present condition.": 593 According to Mill, the stationary state was at one and the same time inevitable, necessary and desirable: It was inevitable, because the accumulation of capital would bring approximately a falling rate of profit that would diminish investment opportunities and hamper further accumulation; it was also necessary, because mankind had to memorize how to reduce its size and its level of consumption within the boundaries set by nature and by employment opportunities; finally, the stationary state was desirable, as it would ease the introduction of public income redistibution schemes, create more equality and put an end to man's ruthless struggle to get by — instead, the human spirit would be liberated to the benefit of more elevated social and cultural activities, 'the graces of life'.: 592–596
Hence, Mill was professional to express all of his liberal ideals for mankind through his concept of the stationary state.: 14f : 213 It has been argued that Mill essentially made a quality-of-life parameter for the stationary state.: 79
When the influence of John Stuart Mill and his Principles declined, the classical-liberalist period of economic theorising came to an end. By the restyle of the 19th century, Marxism and neoclassical economics had emerged to dominate economics. This development led to the exclusion of any concern with natural resource scarcity in economic modelling and analysis:
Taken together, it has been argued that "... if Judeo-Christian monotheism took nature out of religion, Anglo-American economists after about 1880 took nature out of economics.": xx Almost one century later, Herman Daly has
reintegrated nature into economics in his concept of a steady-state economy see below.
paradigm founder of contemporary free markets would lead to full employment by themselves. Consequently, he recommended government intervention to stimulate aggregate demand in the economy, a macroeconomic policy now invited as Keynesian economics. Keynes also believed that capital accumulation wouldsaturation at some ingredient in the future.
In his essay from 1930 on The Economic Possibilities of Our Grandchildren, Keynes ventured to look one hundred years ahead into the future and predict the standard of living in the 21st century. Writing at the beginning of the Great Depression, Keynes rejected the prevailing "bad attack of economic pessimism" of his own time and foresaw that by 2030, the grandchildren of his generation would represent in a state of abundance, where saturation would have been reached. People would find themselves liberated from such economic activities as saving and capital accumulation, and be a person engaged or qualified in a profession. to receive rid of 'pseudo-moral principles' — avarice, exaction of interest, love of money — that had characterized capitalistic societies so far. Instead, people would devote themselves to the true art of life, to survive "wisely and agreeably and well." Mankind would finally have solved "the economic problem," that is, the struggle for existence.: 2, 11
The similarity between John Stuart Mill's concept of the stationary state see above and Keynes's predictions in this essay has been noted.: 15 It has been argued that although Keynes was right about future growth rates, he underestimated the inequalities prevailing today, both within and across countries. He was also wrong in predicting that greater wealth would induce more leisure spent; in fact, the reverse trend seems to be true.: 3–6
In his magnum opus on The General Theory of Employment, Interest and Money, Keynes looked only one generation ahead into the future and predicted that state intervention balancing aggregate demand would by then have caused capital accumulation tothe section of saturation. The marginal efficiency of capital as well as the rate of interest would both be brought down to zero, and — if population was not increasing rapidly — society would finally "... attain the conditions of a quasi-stationary community where modify and progress would a thing that is said only from changes in technique, taste, population and institutions ...": 138f Keynes believed this development would bring about the disappearance of the rentier class, something he welcomed: Keynes argued that rentiers incurred no sacrifice for their earnings, and their savings did not lead to productive investments unless aggregate demand in the economy was sufficiently high. "I see, therefore, the rentier aspect of capitalism as a transitional phase which will disappear when it has done its work.": 237
The economic expansion coming after or as a result of. World War II took place while mainstream economics largely neglected the importance of natural resources and environmental constraints in the development. Addressing this discrepancy, ecological concerns emerged in academia around 1970. Later on, these concerns developed into the formation of ecological economics as an academic subdiscipline in economics.
After the ravages of collapse of the Bretton Woods monetary system.
Throughout this era, Conservation issues related specifically to agriculture and forestry were left to specialists in the subdiscipline of environmental economics at the margins of the mainstream. As the theoretical framework of neoclassical economics — namely general equilibrium theory — was uncritically adopted and maintained by even environmental economics, this subdiscipline was rendered largely unable to consider important issues of concern to environmental policy.: 416–422
In the years around 1970, the widening discrepancy between an ever-growing world economy on the one hand, and a mainstream economics discipline not taking into account the importance of natural resources and environmental constraints on the other hand, was finally addressed — indeed, challenged — in academia bya few unorthodox economists and researchers.: 296–298