290 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 28
the more important, it is « indestructible ». Whether a good pos-
sesses original powers or not is a matter of the past, which is now
dead. From the forward looking point of view, the essential dif-
ference between capital and land or natural resources is that land
does not require maintenance, but capital does, so that what
Prof. KooPMANS has been calling capital here might realiy come
closer to being a kind of land or what would be from the point
of view of future generations an increase in their supply of natural
resources that they inherit from both their forebears and from
nature itself.
Depreciation can be allowed for in this model by reinterpreting
equation (10 a), the basic feasibility equation on page II. We need
only think of Prof. KooPMANS’ À as being composed of A, +),
where À, is the rate of population growth and À, is the rate of
capital deterioration. With this amendment, would not this samo
analysis apply to an economy in which population grew and capital
deteriorated?
However this may be, the fact that capital depreciates does go
against the strong conclusions that Prof. Koopmans arrived at be-
cause it means that an increment to the capital stock cannot be
infinitely productive because it will decay, and it may carry with it
a responsibility for permanent maintenance in the face of diminishing
returns and perhaps also of diminishing marginal utility in the
U functions. In that case, an economy can reach a state of capital
saturation in the sense that, although the utility per capita resulting
from an increase in the stock of capital does not fall to zero, it
falls so low that it does not exceed the social cost of maintaining it.
This consideration may lead to some changes in your conclusions:
and help avoid some of the problems created by the infinite horizon.
KO0PMANS
I agree to the comments made by Prof. DORFMAN that this exer-
cise simplifies matters a great deal by ignoring land and deprecia--
tion of capital. Land would undoubtedly become a p-oblem if
4] Koopmans - pag. 66
