On Growth

8. Paul A. Samuelson

Professor Paul A. Samuelson was born in Gary, Indiana, in 1915. He graduated from the University of Chicago in 1935. Since 1940 he has been connected with the Massachusetts Institute of Technology, where he is at present a professor of economics.
In 1970, Professor Samuelson was awarded the Nobel Prize in economic science.

[p. 48]

There are two different viewpoints from which a study like Limits to Growth can be appraised. First, there is the viewpoint of the plain man in the street. One can ask: Does a book like World Dynamics¹ or Limits to Growth help the good cause of mankind? And since the man in the street is not a specialist in demography, engineering technology, or economics, then having the authority of a Forrester and of an MIT computer can serve the useful purpose of alerting the man in the street to a real problem, the problem that an affluent society uses up irreplaceable resources at a tremendous rate, and that the world is going faster at this moment than ever before in its history. If not in the year 2000 or in the year 2073, nonetheless, sometime ahead catastrophic problems will descend upon humanity unless we use our conscious intelligence to do something about it. From the standpoint then of the plain man in the street, I must judge the Forrester-Meadows to be a good thing.

But there is a second viewpoint from which one can appraise works like these - from the viewpoint of experts in the area. Such men have spent decades in measuring, reporting and analyzing data. I have in mind people like Simon Kuznets, Nobel laureate for 1971 in economics. One may ask: What new data does the Club of Rome group marshal, what new data do they analyze, what new methods of analysis do they bring to the data that will widen the understanding of the experts in the field? Now, a prophet is sometimes said to be dishonored in his own country; and so it may be that when more background information is available, I shall change my opinion. But up until now there has been a paucity of new data in the Forrester-Meadows studies. Indeed, they are surprisingly superficial on the factual side.

What about their methods of analysis? In the past Professor Forrester has been a pioneer in analysis of complex systems. We salute him for this. But now we have, all over the world - from Pontryagin in Russia, Bellman in California, Wold in Sweden, Phillips in New Zealand - elaborated methods for tackling stochastic-optimal-control problems. A jury of informed experts finds no seminal breakthroughs of analysis in the Club of Rome and World Dynamics studies.

A number of scholars have begun to analyze their equations to test them against the patterns of empirical experience. This is the normal method of science. Nobody rests on his laurels. No man's reputation is sacrosanct. Each nominated new hypothesis must be subjected to careful scrutiny by one's peers. This work has just begun. I would think

1 See conversation no. 34 for bibliography of Jay W. Forrester's work.

[p. 49]

it premature to render any final decision. But let me, objectively as I can, summarize what seem to be the first indications from such careful auditings.

First, are the results of the Forrester methodology robust under changes in the assumptions, or will the results be changed sensitively if certain of the assumed relationships are altered? I have before me a study from the University of California, in which the author summarizes his provisional results as follows: ‘The results of Forrester's world model are shown to be very sensitive to changes in assumptions.’ By the way, the author is Robert Boyd. He is not an economist; he is from the zoology department at the University of California at Davis, California. I have also had the privilege of seeing a provisional manuscript by Professor William Nordhaus² of Yale University, a distinguished younger economist. He happens to be a graduate Ph.D. from the MIT department of economics, so you must discount my partiality toward him.

Dr. Nordhaus finds out that our knowledge of the laws of diminishing returns, factual knowledge, has not been added to by the material that appears explicity in the Forrester and Meadows books. The fundamental omission by the Meadows and Forrester models is that they pay too little attention to the effect of scarcity on price and use. When resources begin to be short and the bottlenecks of supply begin to slow down the rates of growth, as in the Forrester simulation runs, then in the actual real world their specific prices will rise. Men in England used to be able to burn timber in order to melt iron. The forests of England as they became decimated would not permanently permit that. And so there was a substitution from timber to coal. This is where T. Robert Malthus³ made his great mistake in his 1798 prophecy of population disaster ahead. Malthus did not foresee the wonders of industrial revolution. And those wonders of industrial revolution are not over.

I have been reading the J.D. Bernal lectures, given in London by one of the world's most distinguished physicists and astrophysicists, Professor Dyson⁴ from the Institute for Advanced Studies. He takes a long look forward to a time when we shall develop through biological engineering new organisms that will process and recycle raw materials, that will do the mining and scavenging for the human race. As Dr. Kneese of Resources for the Future (Washington, D.C.) pointed out, the gloomy simulations by the computer of the Club of Rome group suggest that a great number of us will be dying in the future from cancer induced by asbestos. Indeed, it is true that asbestos is conducive to the creation of cancer. But, asks Kneese, who believes that the brakes that stop our

2 See conversation no. 19.

3 Thomas R. Malthus (1766-1834), British political economist who contended that population tended to increase faster than the means of subsistence and should, therefore, be checked by social and moral restraints.

4 See conversation no. 60.

[p. 50]

automobiles in the century to come will still be made of asbestos when the hospitals are full of its victims? There are innumerable new substances which will become cheapest and safest under new circumstances of scarcity. Processes of substitution and of taxing pollution - to put the burden where it must be - are processes which naturally occur to the economist and perhaps do not naturally occur to the engineer. All these are glossed over and largely omitted in these particular studies. The result is that a jury of experts in this area would be justified in saying that the moment of catastrophe is as likely to take place in the year 2373 as in 2273 as in 2173 or 2073.

Now, let me bring these casual thoughts to a close. These days cynics say, in order to sell sometimes you must oversell. Perhaps the jury of future experts will bring in as its final verdict: ‘The Club of Rome studies represent overselling. In that broad range between complacency and hysteria, they err on the side of hysteria.’

Nonetheless we may leave the austere court of science and move to the forum of men of affairs: statesmen, the man in the street, the vulgar public. It may be that in order to convince public opinion on the need to do something about ecology and not just talk about it, the overselling of a Forrester, of a Meadows, of the Club of Rome, of biological scientists like the distinguished Paul Ehrlich⁵ of Stanford University - all these may still be found to earn a gold star for good performance in that court of final judgment.

5 See conversation no. 13.