Abstract
The source of economic development and growth is specialization in the context of comparative advantage. Growth in capital and other inputs, energy use, and technological change are insufficient to explain the magnitude of growth. Earlier critics of economic growth failed to connect growth to specialization, and so were distracted by nostalgia and sentiment. The specialization process itself produces three significant problems. First, as economies become more specialized, they become less flexible. Second, diversity tends to make ecological systems more robust, while specialization weakens them. Third, specialization produces social isolation. Solutions to these problems may be found in participatory, indicative planning.
Acknowledgements
I would like to thank the audience at the ASE Presidential breakfast in New Orleans, two anonymous referees, as well as Wilfred Dolfsma.