Growth and Economics

The following sample Economics critical analysis is 1532 words long, in MLA format, and written at the undergraduate level. It has been downloaded 661 times and is available for you to use, free of charge.

When discussing matters of economic growth and sustainable development, many variables and manipulatable factors come into play. In short, predicting the sustainability of a global economy is not an exact science. However, based on aspects of economic choice, a sustainability model can be created. There have been many reputable economists that have spoken on the topic of sustainability and are still a primary focus of economic policy to this day.

The economic theories that will be analyzed are those of Thomas Malthus and David Ricardo, the more recent analyses of Keynes and Hansen. Ultimately, the world3 model of sustainability will be discussed at length, as each pertains to the concept of economic stagnation and long-run population growth.

Before going into depth about economic growth and sustainable development, let us define the terms as a basis for investigation. Economic growth is defined by David Hess as “an increase of national output per capita” and sustainable development as “the utilization of natural resources, the state of the environment and intergenerational equity. Or simply, the ability of the current generation to meet their own needs without compromising the needs of future generations (Giduz).

Thomas Malthus was a world-famous economist whose Essay on the Principle of Population garnered both hatred from the public and respect from his economic peers for its seemingly pessimistic but practical address of population growth and economic sustainability (Dorfman), which resides on the mathematic principle of exponential population growth vs. arithmetical growth of agriculture. Malthus essentially determines that economic success can only be sustained until a certain point in population growth until a significant variable in consumption or population changes the economic landscape.

One example of Ricardo’s economic theory The High Price of Bullion, a Proof of the Depreciation of Banknotes, which mainly chastised parliament for the excessive printing of banknotes that led to inflation, subsequently raising the price of Bullion, among other goods, of course (Dorfman).

The two had met, and became good friends, discussing their respective economic theories at length. The two had intersecting and contrasting views; a proverbial sharpening of each other’s ideas that led to the development of new economic theories, among which highly influenced the centerpiece of Ricardian Theory (Dorfman).

Ricardo’s economic theory as applied to population growth and sustainability is that, as population grows and capital accumulates, that the rate of profit would fall, due to farmers resorting to less productive farmland to accommodate the increase in demand, which would ultimately result in the profits in all sectors to fall since (according to Ricardo) all of the markets tended to follow the trend of agriculture.

To compare the economic theories of Ricardo and Malthus, Ricardo bases a great deal of his work on the basis of Malthusian claims of population and sustainability and vice versa. According to Dorfman, the two economists were both inseparable friends and political adversaries, often posting contradictory theories of economics in succession with one another, while also simultaneously basing many of these theories of inflation and sustainability on each other’s prior work, in some cases being so intertwined, that it would be difficult to comprehend one without first reading the other (Dorfman).

Although they influenced each other’s work, Malthus and Ricardo had very differing views on many economic principles. One such example was regarding the corn laws of the day, in which Ricardo appealed for its abolishment as essential for the sustainability of the economy, while Malthus, formerly in agreement, reversed his view and became a vehement supporter of the increased taxation as essential for the sustainable success of the English economy (Dorfman).

John Maynard Keynes is yet another British economist who is widely known for his ideas regarding macroeconomics, which is more or less directly related to the ideas of population increase and sustainability in the name of informed economic policymaking countries. Basically, Keynes was a key player in the adoption of certain monetary policies, as an opponent of the pure free market as an employment regulator (Briggs).

Alvin Hansen was an advocate of Keynesian economics and is known to be a primary introducer of Keynesian economics to the United States government in the 1930s. He also helped to explain American economic growth with respect to the country’s population growth as well as the increase of industrialization and technology, which explained the decrease of the American economic growth rate for a period in the 20th century (Brazelton).

Keynes and Hansen are obviously very similar in thought, given that Hansen based most of his theories on those of Keynes since one is not dubbed a Keynesian economist without sharing a substantial amount in regards to economic perspectives, Particularly regarding the stabilizing role of policymakers to balance aggregate demand and private sector decision making.

The World3 simulation model, developed by Donella Meadows, Dennis Meadows, and Jorgen Randers is a computer program that predicts the limits of human population growth as they pertain to industrial growth and food production. Focusing on the Malthusian limits to population, while also touching on Ricardian theses of Agricultural growth limits based on the scarcity of farmable land in relation to global demand, the world3 model constructs the relative limits to each of the three variables, and at which point each would inevitably collapse.

The world3 model is a harsh dose of reality for many optimists, systematically displaying the limits of the human population in relation to the finite nature of resources and industrial growth. But these limits are flexible. This has proven to be true over generations of population growth, where entire populations change essentially change the equations by adjusting consumption habits to support the population growth. As explained by Joel L. Cohen in Earth’s Human Carrying Capacity, the ability of Earth to sustain humans is determined by both natural constraints (i.e. disease, death, famine, etc.) and human choices concerning economics, environment, and culture (Cohen).

Upon analyzing both neoclassical, Keynesian economics, and the newer world3 computational model for population limits and sustainability, there are still some very relevant economic concerns that carry over even today.

The ever-increasing population of earth is a constant concern in terms of economic policymaking and for good reason. It is an irrefutable fact that an exponentially increasing population has a collapsing point. I believe we are already seeing the ramifications of this economic principle at play in many third world countries, where hunger and disease are swift and catastrophic killers, wiping out the population in large numbers. It is sadly the balance of a global economy that does not have the resources to support such rapid population growth. The preservation of existing humanity on earth remains a pertinent issue to any economist (or any other occupation) who values human life.

There are concerns regarding the same concept of finite resources and population growth. This is a concern that hits closer to home, figuratively, and by extension literally speaking. According to this model, there must inevitably come a time where the population growth in America will reach its maximum. I think it is important to note that due to the rapid increase of technology in the 21st century, we are currently experiencing a growth period in our nation’s economy. At hypothetical point X, America is destined to exhaust its growth resources of technology, thus putting a highly populated America to inevitably experience the realities of the balance of resources and population, as explained by the aforementioned economists. This is a real issue that must be addressed by the American government, to at least resume some semblance of sustainability.

Speaking to sustainability, another issue that has already taken global politics by storm in environmental sustainability. On the track the world is currently on, we are going to exhaust all of our resources in such a way, that the “exhausting” of these resources will operate much more like a screeching halt, and less of a gradual decrease in production. This could potentially lead to disastrous economic consequences. This is a real concern that is already being addressed by global leaders, and rightfully so.

In conclusion, I believe that each of the aforementioned theories continues to play a vital role in understanding the global economy at large. This becomes increasingly important as the world is becoming increasingly connected due to technology. The previously explained theories of population capacity and sustainability are as important as ever, in our current state of global technology increase. We should make it a prime concern on the global agenda to prepare for the inevitable back fall, as theorized and proven by Malthus, Ricardo, Keynes, and the World3 Model.

Works Cited

Brazelton, Robert. "Alvin Harvey Hansen: Economic Growth and a More Perfect Society: The Economist's Role in Defining the Stagnation Thesis and in Popularizing Keynesianism." American Journal of Economics and Sociology, vol. 48, no. 4, (1989)

Briggs, Brad. "John Maynard Keynes: The Man Who Transformed the Economic World.", 21 Jan 2010. Accessed 6 Mar 2014.

Cohen, Joel. "Population Growth and Earth's Human Carrying Capacity." Science, New Series vol. 269, no. 5222 (1995).

Dorfman, Robert. "Thomas Robert Malthus and David Ricardo." Journal of Economic Perspectives vol. 3, no. 3 (1989).

Giduz, Bill. "Davidson Economist New Book." Davidson College, 23 Jul 2013. Accessed 6 Mar 2014.