My old undergraduate economics advisor, William Nordhaus, presented a model
back in the early 1970s (when I knew him) in which the growth of the
economy encouraged high prices of the main resources used as energy
sources, which then induced the search for new supplies, for new energy
sources, and for new technology. This allowed the capitalist system (my
words, not his) to recover from the energy crisis and to begin growing
again, eventually to run into a new era of high energy costs. This theory
-- which might allow for the government to help with the process of
adaptation to high energy prices -- does not result in the destruction of
the world by capitalist growth.
I'm not an expert on this subject at all, but what's wrong with the
Nordhaus theory? My main complaint is that the recovery from an energy
crisis might easily be extremely painful and take a long time -- and that
the capitalists might deal with the problem by cutting wages instead of
following the Nordhaus path. In the US at least, the non-Nordhaus path was
an important part of the political economy of the 1970s and 1980s, helping
to explain the fall and/or stagnation of wages relative to labor
productivity. But beyond that (if people agree with this point), what's
wrong with the Nordhaus theory?
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
