Hi,I am trying to understand what happens when an economy reaches saturation. By saturation, I mean the following: 1. The population has reached to an optimum level and no longer growing or declining. 2. The demand and supply forces of production have matched- consumption trends may change but consumption levels remain unchanged. 3. All opportunities to improve output and reduce costs/input have been exhausted (no more productivity growth is possible). Is such a scenario possible, at least theoretically? What can be done to get such an economy growing, barring growth in exports? Thanks, MG

QuoteOriginally posted by: musicgold1Is such a scenario possible, at least theoretically?No. It is not the nature of time, which produces life.In general, life will occupy more and more matter. Specifically, as the population goes up, the average man is more inventive that he needs to be to feed children. So there has been geometric growth over every 50-year period since Creation.

The scenario is theoretically possible only in an economy that is bounded by the production of physical goods. Thermodynamic and material's efficiencies would hit some maximum. There's some evidence that the analog of saturation can happen in ecologies -- island ecologies have bounded populations and limited numbers of species although those species can change over time.But modern human economies are not strictly bounded by the production of physical goods. Rather, information goods play an increasing role as a valued resource, saleable product, and as a use of labor. In the case of information goods, which are nearly freely accumulable and non-dissipative, one would need to argue that the economy can reach a point where it can produce no new information. That is, every invention, scientific theory, movie, novel, poem would have been written to reach saturation. (It's possible that one could saturate on the basis of the thermodynamic limits of information, but that seems rather unlikely).Inducing growth in a saturated economy would seem to require some expansion in accessible resources such as by going into space. There's also the question of whether a saturated economy accumulates some forms of marginal resources (e.g., trash) that can serve to create a growth transient at some later date. Some might argue that that has already happened in the sense that current economic growth owes much to fossil fuels and fossil fuel represent millions of years of stored solar energy.

QuoteOriginally posted by: Traden4Alphaeconomic growth owes much to fossil fuels and fossil fuel represent millions of years of stored solar energy.The same goes for air, and the sun itself. Everything is a resource. If the universe is a coil, it will take all of time to unwind it.

QuoteOriginally posted by: farmerQuoteOriginally posted by: Traden4Alphaeconomic growth owes much to fossil fuels and fossil fuel represent millions of years of stored solar energy.The same goes for air, and the sun itself. Everything is a resource. If the universe is a coil, it will take all of time to unwind it.Indeed! I didn't want to get into the complications that the Earth is not a closed system but the universe may be. There's also nasty future details like the red giant phase of the Sun's life and the end of the carbon cycle when the Earth's core gets too cold to keep plate tectonics going.Some sci-fi authors have suggested that space-faring civilizations could persist 10^X years into the heat death era of the universe by building Dyson spheres around black holes, gathering mass to the sphere, and living off the emitted radiation generated from a regulated stream of in-falling matter. But if the universe just evaporates from accelerating expansion, then we'll all die as our atoms shred apart.But now we have strayed from theoretical economics into geophysics, astrophysics, and cosmology.

If you have time, consider reading "limits to growth" by Meadows, Randers and Meadows. The 30-year update, not the 1972 original.

QuoteOriginally posted by: willsmithIf you have time, consider reading "limits to growth" by Meadows, Randers and Meadows. The 30-year update, not the 1972 original.You will be better off reading The Ultimate Resource which will never have to be updated for being wrong every 30 years.