Economic Growth with Energy
M. Shahid Alam, Northeastern University, Boston
In a departure from neoclassical economics, this paper will develop an alternative conception of the economy that recognizes energy – together with workers, capital and technology – as a factor of production. The neoclassical construct of the economy is built on three factors of production: capital, labor and technology. Production in each period begins with given amounts of capital, labor and technology, and terminates in the production of goods. Capital has its origins in prior periods: it is simply a portion of the economy’s output carried forward from previous periods. The neoclassical economists are generally reticent about how labor is produced or reproduced; they assume that it grows exogenously.1 Technology is described as the stock of knowledge available to an economy. Knowledge may be embodied in machines, human skills, or it may take the form of social codes and arrangements.
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