Plate xii in print

The Ceiling

the limits to growth; whether a finite world of resources can sustain the endless compounding of ideas.

The ascent must answer for the world it uses.

— the argument of this plate, after Solow (1973) and Nordhaus (2018)

Growth consumes resources and burdens the world that yields them. The ascent therefore ends with a question about the ground beneath it: how can production keep expanding on a finite planet? The question becomes sharper once its objects are separated. An increase in measured output need not require the same proportional increase in tonnes of material, hectares of land or units of energy. A better design can deliver more service from the same inputs; a change in what people produce can change the demands placed on the world. Yet an idea must be put to work somewhere. Its availability to another mind does not supply the equipment, energy or living systems needed to use it. The distinction between a recipe and the resources that realize it makes room for ingenuity while leaving the physical conditions of its success to be established.

A finite stock imposes a precise limit when a particular input is indispensable in a fixed amount. Suppose there are one hundred units of an exhaustible resource, each unit of a specified product requires one unit of it, and neither substitution nor recycling is possible. Cumulative production of that product cannot exceed one hundred. Producing faster reaches the limit sooner; a higher price can change who receives the output without manufacturing another unit of the resource. The conclusion changes if the production relation changes. More efficient use or a substitute can enlarge what the stock supports. That possibility is the economic question inside the physical constraint. It requires identifying which resource matters, what replaces it, and what the replacement itself requires. A finite planet alone supplies none of those coefficients, while an assumed abundance of invention supplies no evidence that they can be made harmless.1

1. Robert Solow, Intergenerational Equity and Exhaustible Resources, MIT Working Paper 103 (February 1973), §6, pp. 12–13. The linked file contains that working paper despite its host filename. The hundred-unit example is hypothetical. Solow distinguishes a resource with bounded average productivity, which bounds cumulative output, from an essential resource whose productivity can rise without that bound.

Solow gave the possibility of substitution a demanding mathematical form. In a model with an exhaustible resource, produced capital and labor, he asked when a positive level of consumption could be maintained indefinitely. Under particular production conditions, with a constant population and no technical progress, building capital while resource use falls can sustain consumption. The result depends on how readily capital can replace the resource and on the relative roles assigned to them in production. It requires an expanding capital stock as extraction dwindles. This is a conditional account of how a fixed resource can support a continuing flow, rather than evidence that every natural function has an adequate manufactured replacement. Nor does maintaining a constant consumption level establish that consumption can grow without end. Technical progress changes the possibilities again, but its stipulated continuation remains an assumption whose consequences the model explores.2

2. Solow (1973), §8, pp. 15–18, and §§13–14, pp. 21–24. In his stated constant-population Cobb–Douglas case, a capital exponent greater than the resource exponent permits positive sustainable consumption. The later sections examine technical progress and state the conditional substitution conclusion. These results do not certify an actual resource technology or the feasibility of replacing every ecosystem service.
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Efficiency must also outrun the scale of the activity if it is to reduce the amount used. Suppose output rises by three percent while resource use per unit of output falls by one percent. Total use rises by 1.97 percent: the economy produces more with each unit, but the larger volume absorbs that saving and more. If resource intensity instead falls by five percent, the same expansion in output reduces total use by 2.15 percent. Both are improvements in efficiency; only the second reduces the flow taken from the environment in that period. Even that reduction leaves the longer question open. A positive extraction flow continues to draw down a finite stock, and whether it can do so indefinitely depends on the sum of future extraction. A favorable observation about one period cannot settle a claim about the whole future path.3

3. These are authored accounting examples, with output and resource intensity defined in consistent units: 1.03 × 0.99 = 1.0197 and 1.03 × 0.95 = 0.9785. With unchanged output, either intensity reduction lowers use. For an exhaustible resource without replenishment, cumulative extraction must remain within the initial available stock; declining annual extraction alone does not establish that condition.

An economy can encounter a limit through the harmful output it accumulates before it exhausts the input it burns. Climate change gives this distinction its force: the availability of fuel and the consequences of putting its carbon into the atmosphere are different constraints. In a deliberately simple stock account with no removal, a pollution stock of one hundred becomes one hundred and ten after emissions of ten, then one hundred and fifteen after emissions fall to five. Halving the flow has slowed the accumulation while the stock continues to rise. If removal in the second period were five, that period’s addition would instead be zero. An actual climate model must represent the carbon cycle and the consequences of its changing stocks. The example establishes only why a falling emissions rate and a falling atmospheric burden require different evidence.4

4. William Nordhaus, Climate Change: The Ultimate Challenge for Economics, Nobel lecture delivered December 8, 2018, pp. 440–445, on the global public good and the linked economic, emissions, carbon-cycle and climate system. The stock figures here are hypothetical; the zero-removal case is a limiting illustration, not a calibration of atmospheric carbon.

The desirability of a larger product remains a further question, even where expansion is physically possible. Growth can supply food, shelter, treatment and opportunities that people urgently need. Its gains can also accrue to people other than those who bear a polluted river, a displaced home or a damaged livelihood. The production total does not adjudicate that distribution, and a transaction price does not necessarily include a cost imposed on someone outside the transaction. As The Measure showed, the national accounts themselves distinguish production from a comprehensive measure of welfare. Assessing the ascent therefore requires both the gain it makes possible and the burdens its particular path creates. An additional unit of output has no automatic moral weight independent of what it provides, whom it reaches, and what is sacrificed to obtain it.5

5. System of National Accounts 2008 (published 2009), complete §H, §§1.75–1.84, pp. 12–13; Nordhaus (2018 lecture), pp. 440–442. The welfare and externality distinctions do not determine a single desirable growth rate. The incidence of benefits and burdens remains part of the assessment.

The ceiling is thus an inquiry into the conditions under which the ascent can continue and the ends it should serve. Some constraints can be eased by knowledge, substitution and better arrangements; others become more pressing as their effects accumulate. Each proposed escape must answer for the resource it saves, the new demands it creates, the time it takes and the people who bear its costs. The volume can hold the promise of growth together with that accounting. A larger capacity to provide for human needs is valuable, and ingenuity can enlarge it in ways a fixed picture of technology would miss. Whether a particular path delivers that promise is a question for evidence and institutions. Growth earns its purpose in the lives it enables people to lead, within a world whose conditions they must continue to inhabit.