New Atlantic column: Capitalism and the end of growth

New column up at the Atlantic, on whether or not capitalism requires infinite resource exploitation:

When we bump up against our planet's resource limits, the story goes, capitalism goes bye-bye. But is it true? Maybe, but I have my doubts... 

The simple Econ 101 theories that are used to justify free markets don't even have growth in them! In Econ 101, capitalism works because people gain from trade, not because they have more and more to trade over time. Efficiency, not growth, is the gold ring. In those simple toy economies, people just keep on cheerfully making their bargains of cattle and grain until the Sun explodes... 

But who cares about economic theories, right? What does history tell us?... 

[M]odern history doesn't seem to favor the "end of growth = end of capitalism" thesis. After all, middle-class incomes have been stagnating in rich countries on and off since the early 1970s. Energy and water - certainly the most important natural resources - have become scarcer and more expensive. In other words, we really have started hitting our resource limits. And yet in many ways, rich countries like the U.S., Europe, and Japan have become more capitalist since the 70s, with lower taxes, deregulation, widespread privatization, and a bigger role for financial markets (not that this has always worked out well, obviously!). Despite the increasing prices of oil and gasoline and water, people in the developed world have not clamored for capitalism's downfall... 

Looking at history, we see that the biggest challenges to capitalism actually came during times of rapid growth... 

Although it's less glamorous than the imagined utopias of the left or the right, the boring, pragmatic, plodding old "mixed economy" has proven to be the most robust, through times of growth and times of stagnation.

Read the whole thing here!