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Dodo J. Thampapillai and Matthias Ruth

This chapter provides an alternative basis for analysing economic growth and the consequent perpetuation of climate malaise. The contention herein is that the effectiveness of approaches based on standard neoclassical frameworks of production and factor utilization, regardless of their integration with scientific and related information, is likely to be constrained. This chapter considers a simple expansion of the standard depiction of production processes to illustrate that, even within the confines of traditional methods, mainstream recommendations to address climate change perpetuate rather than get to the root causes of the problem. Specifically, we integrate insights from the laws of thermodynamics and ecological resilience in a production function for macroeconomics to explicitly include the stock of environmental capital (KN) as an argument alongside manufactured capital (KM) and labour (L). Being distinct from the production functions that underlie the work of Nobel Prize-winning economists such as William Nordhaus and Paul Romer, whose work is firmly rooted in the notion that technological change and economic growth will solve the very problems they generate, our basic model yields quite different results. For example, extending the reformulated production function to the context of the Romer model suggests clear possibilities of the need for de-growth in selected economies. Furthermore, the Nordhausian claims of “optimal pollution” and “optimal climate change” could constitute a contraindication. If the term “optimality” must be used at all, then the optimal quantity is zero pollution, which is physically impossible, and zero climate change – which for biogeophysical reasons will not happen either.