The standard theory of economic growth, which is the basis of every economic forecasting model used by governments, business or international agencies, says that economic growth is automatic and will, therefore continue at historical rates indefinitely. Both liberals and conservatives believe this, though conservatives influenced by the “Austrian School’ (von Mises, Hayek, et al) warn that growth may be adversely affected if governments interfere with the magic of the Market by excessive regulation or in other ways. The problem is that they are both chugging along the wrong track. Their mistake is so fundamental that it has become invisible. But, as I say, the problem is really simple: virtually all modern economists neglect the role of energy. Or, more accurately, they regard energy as an intermediate output of capital and labor. The idea underlying the standard theory is that capital and labor, in some combination, “produces” coal, some other combination “produces” oil, and so forth.
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