When we look at development economics that has evolved over the years since the time of Thomas Malthus, we find two of them having really diverse and often opposing viewpoints.
“Population, when unchecked, increases in a geometrical ratio. Subsistence increases only in an arithmetical ratio.” —Thomas Malthus
Robert Solow, the 96 year old MIT Emeritus Professor in Economics, '87 Nobel laureate, has this to say about how development happens in the world.
“If it is easy to substitute other factors for natural resources, then there is in principle no ‘problem.’ The world can, in effect, get along without natural resources, so exhaustion is just an event, not a catastrophe.” —Robert Solow
Robert Solow unlike his predecessor, Thomas Malthus believes in the power of technology and Innovation.
These are 2 most influential development economists of the world putting out their strategies or streams of thought on how the modern world views the environmental sustainability challenge we face today.
The Malthusian statement says that if the population of the earth, growing at a geometrical ratio, starts utilising the limited resources of planet earth which is improving only in a linear ratio, ie. incremental improvements, by way of improvements in efficiency, utilisation ratios etc., then we are in for major catastrophe. In other words, Malthusian theory believes that limits to growth are imposed by nature and cannot be overcome by man. Malthusians are looking at the development phase of humanity from a reactive position, trying to minimise usage of resources.
Solowians, people following Robert Solow's principles, believe that technology and innovation can stretch scarce resources further or help us to get more output from it. Technology and innovation can help us use less of natural resources or get more output from scarce resources. Exercise of human ingenuity appeals to natural optimism and is a great proponent for deregulation and promotion of growth.
For example, improving fuel efficiency in an engine is a Malthusian approach to improving the ride, while developing and building breakthrough innovation product like a solar powered car is a Solowian approach.
The Kyoto Protocol which insisted on forceful imposition of emission cuts and Carbon credits was a product of the Malthusian approach while the 2015 Paris treaty which insisted on voluntary actions from countries to limit CO2 emission by way of developing and using new renewable less polluting technologies like solar energy is a Solowian approach.
The interesting supporting work for the Solowian approach by 2018 Economics Nobel laureate Paul Romer on integrating climate change and technological innovation into economic analysis who argues that growth has got no natural limits and the capacity for technological innovation is unlimited. The value of spillover as propounded by Romer, mentions about the benefits in other fields due to developments in a particular field. For example, developments in space technology and exploration has helped us improve in the area of geographical locationing and mapping, search for minerals etc on earth. Similarly developments in the Internet has spawned lot of improvement in the area of electronic retailing, growth of web based commerce across the world.
The invention of the transistor led to the development of the Integrated circuit chip that paved the way for the growth of the digital world and more specifically, the mobile phone revolution. The green revolution in the late sixties paved the way for improved agricultural productivity and output that helped save many a human life and improved our general health and standard of living.
With great innovations entering the world, be it the electric car or driver less car, the potential for innovations to to serve human needs is limitless. Prof. Robert Solow still believes that human ingenuity and innovative mindset will find a solution to the environmental sustainability crisis that is gripping mankind now.
The author wishes to thank Roger Martin and Alison Kemper for their HBR article of April '12, Saving the Planet, the tale of two strategies.
George..
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