Optimality or Sustainability?

Abstract

Does the present concern about sustainability raise fundamentally new issues for economics, or is it dealing with problems already on our agenda? There are two points that are central to sustainability: a concern for what happens in the long-run, and a respect for the constraints that the natural world places on the dynamics of human societies and the well-being of their members. Concern for the long-run has a long and distinguished history in economics, going back to Sidgwick, Ramsey, Koopmans and others. We have not resolved these issues fully, but they are not new. Concern for the ecological limitations on society is a matter of specifying properly the constraints under which society operates. This does not raise fundamentally novel issues, although the precise specification of these constraints, which could involve non-convexities and hysteresis, could be challenging. Here I explore optimal growth paths for economies with various specifications of the objectives and constraints, and ask whether optimal paths are sustainable in a loose and intuitive sense. The answer is frequently affirmative. I argue that in fact most optimal paths are sustainable, using the terms optimal and sustainable in ways that command general assent.

Keywords: optimal growth, sustainability, sustainable development, ecological constraints, environment

JEL Classification: Q01, Q30, H00, O00