Hartwick rule
The Hartwick Rule is a rule published by John M. Hartwick in 1977 on sustainable use of resources in an economy that is also dependent on exhaustible resources. According to this rule, a resource path is sustainable if society efficiently mines the exhaustible resource in the sense of the Hotelling rule , invests the resulting scarcity rent entirely in man-made capital and only consumes the remaining net national product . As a consequence - according to John Rawls ' theory of justice - every generation saves so much that their children can consume just as much despite the expected scarcity of raw materials .
In the strict sense, the Hartwick rule only applies under the assumption of a Cobb-Douglas production function introduced by Solow (1974) , in which the substitution between the inputs is unit-elastic and the capital input has a greater coefficient than the energy input . The Hartwick rule is seen as an example of a theory of weak sustainability .
criticism
It is difficult to meet this rule in the long term because it is unclear how many raw materials there are, what their technical extraction and recycling options will look like in the future, how the population will develop and since resources will probably run out at some point. In the last few centuries the rule has tended to be fulfilled, as the standard of living has usually increased. However, if applied consistently, i.e. with a view to the fact that the next generation must apply the rule again for the generation following it, the rule is probably unrealistic and unsatisfiable.
literature
- Hartwick, JM (1977), Intergenerational Equity and the Investing of Rents from Exhaustible Resources. American Economic Review 66, pp. 972-974.
- Solow, RM (1974), Intergenerational Equity and Exhaustible Resources. Review of Econbomic Studies (Symposium), pp. 29–45.