ABSTRACT
The theory of optimal economic growth, in the form given it by Frank Ramsey and developed by many others, is thoroughly utilitarian in conception. This chapter explores the consequences of a straightforward application of the max-min principle to the intergenerational problem of optimal capital accumulation. For the specific problem of intergenerational equity and savings, John Rawls proposes a deliberately vaguer principle, given by the balance between what a typical person feels it is reasonable to ask of his parents and what this same person is prepared to do for his children. The existence of indispensable exhaustible resources makes no difference to that proposition. The max-min rule says: the initial generation should invest only enough to provide capital for the increase in population at the initial capital-labour ratio. In a model with finite natural resources, it seems ridiculous to hold to the convention of exponentially growing population.
