On Growth

55. John R. Meyer

Professor John R. Meyer is president of the National Bureau of Economic Research in New York and professor of economics at Yale University in New Haven, Connecticut.
He was born in Pasco, Washington, in 1927. He attended Pacific University, the University of Washington and received a Ph.D. at Harvard University in 1955.
In 1962 Professor Meyer participated in the Presidential conference on problems of the US economy. The same year he took part in a White House panel on civilian technology. In 1964 he was a

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member of a Presidential task force on transportation. From 1970 to 1972 he was a member of the Presidential Commission on Population Growth and the American Future. He also is a member of the Computer Science and Engineering Board of the National Academy of Sciences in Washington, D.C.

Samuel Butler¹ already stated that all progress is based upon the universal desire on the part of every organism to live beyond its income. Limits to Growth is an effort to catalogue to what extent the planet is living beyond its means and its limits.

It was certainly a very useful effort at drawing attention to certain problems that would exist if we did not modify our behavior. On the other hand, it is reasonably clear that the underlying assumptions are much too rigid. Limits to Growth assumes that human beings cannot and will not adapt to changed circumstances. By contrast the natural instinct of an economist, whenever viewing these problems, is to always assume that there are self-correcting tendencies in human behavior. But economists may be much too optimistic on this score. Many points, assumptions and warnings delivered by the physical scientists and others collaborating on Limits to Growth are well taken.

John Kenneth Galbraith once said that conventional wisdom becomes increasingly irrelevant, since economic growth renders many things obsolete, and one of these things is economic theory. Why have economists been extremely critical of the model at MIT?

Partly because the rigid assumptions that were built into the model just go contrary to basic economic training, empirical findings and theory. Economics as a science is offended by many of the underlying assumptions in the model. Nevertheless, economists may have been too quick to dismiss Limits to Growth on these grounds. Economists perhaps underestimate the importance of some of the problems to which the analyses of Limits to Growth are pointing. Economists perhaps are too prone to be optimistic about the self-equilibrating corrective character of much of human behavior. The truth perhaps lies somewhere in between. If you ask me where the balance resides, I would say it's rather more on the side of the economists' thinking - in terms of flexible parameters and

1 Samuel Butler (1835-1902), British writer.

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adaptive behavior - than on the side of the rigid parameters and noncorrective behavior that underlies the Limits to Growth analysis.

Nevertheless, you have created here at the National Bureau of Economic Research a computer study in economic research and management. In other words, you do not discount the method of the use of computers for this kind of project.

I am quite enthusiastic about the potentialities of the computer as both, an aid in modeling and general economic research. That is an additional reason why I feel in some ways Limits to Growth may be most unfortunate. For example, I worry that Limits may prematurely and improperly discredit the design, building, construction and use of large-scale behavioral models using the computer. The Limits to Growth model is based upon, in technical jargon, a closed-loop fixed-parameter system. That approach worries me. With those characteristics (fixed assumptions about technology, consumption behavior and so on), if you extrapolate out far enough, you can always derive some limiting solution which will probably be quite disturbing. The basic point is, though, that those assumptions - about fixed parameters, fixed feedbacks, nonadaptive behavior - are probably incorrect.

Would it be useful to promote close cooperation between systems engineers and economists and bring assumptions into such a model both disciplines are in agreement with?

The MIT team did not utilize enough economics. MIT has one of the most distinguished departments of economics in this country or in the world. What the communication problems are at MIT I don't know. My guess would be that some of the engineers and scientists involved in this - not all by any means - may not have been as outgoing as they might have been in seeking out the inputs of economists. I really do not think that MIT economists are much different from economists elsewhere; they're more than willing to talk about these matters, even willing to volunteer. Economic expertise certainly exists in the Cambridge, Massachusetts, area and in one way or another was available to the Club of Rome team. One therefore has to ask the question: Did they really want those other inputs? Of course, Forrester's work² is basic to the Limits, and his earlier industrial and urban dynamics are really characterized by the same weakness. Forrester appears to revel in not having

2 See conversation no. 34.

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read the basic works in the field in which he's modeling and not having consulted with those who have spent time studying the relevant phenomena. Maybe there's some case for simplification, but ignorance can be carried much too far, and when a simplification goes to the point of embodying empirical generalizations that just run contrary to all previous investigations and study, then one has to be skeptical.

Are we moving to what you would call a multipower world management, a global management of the globe?

I find it difficult to think in terms of either/ors. I do think, though, that perhaps a message that's really well taken in Limits to Growth is that compared to the past, we have to pay more attention to higher levels of planning. Whether this happens at a global level, at a national level, a state, a regional or a local level, is a matter of pragmatic adaptation and depends on the problem. For example, I hope that we will have more regional-planning districts in the US so that we look beyond, say, a central city, so as to place some of our land-use transportation and general urban planning problems in a much larger geographical context. I am certain, on the other hand, that some problems quite clearly do have important international complications. The environmental impact of the supersonic transport, for example, is a matter of concern not just to the British or the French, who've developed the plane.

Do you expect maybe a clash coming up between labor and the Limits to Growth ecologists?

I wouldn't want to characterize it as labor as such. You can have various kinds of clashes between have-not and have groups, certainly internationally. I've heard rumors that, for instance, the Brazilian government welcomes ‘dirty polluting industries’ if they would create more employment in some of their backward regions, where chronic underemployment and low incomes now exist. In the long run, of course, that might lead to a new set of problems. After incomes rise in more backward parts of the world, they might ask: Why should we have all of those contaminating industries? Then a new cycle, in a slightly different form, might ensue from these ecological and environmental problems. I think in the US, with our very heterogeneous and diverse society, with special minority-group and poverty problems, you can already see some real confrontations occurring on these environmental issues. Maybe some of these

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are false and can be modified by high-level political action and diplomacy; but some may be very difficult to reconcile because they come down to basically fundamental choices or priorities we must set about how to spend public budgets.

Herman Kahn³ has calculated that this world could carry twenty billion people at a per capita income of twenty thousand dollars per person. What would be your reaction as an economist to futurologists thinking like that?

First, I would want to check the arithmetic very carefully. Secondly, even if it were true, I would rather not live in such a world. I would rather live in a world with far fewer people, because of the many adverse externalities which could derive from such numbers. I am not sure, by the way, that Herman Kahn wouldn't also agree with that, and perhaps was motivated to do his calculations by just such considerations.

3 See conversation no. 46.