For Georgescu-Roegen, the ultimate fixed factor is the laws of physics, due to entropy. Economic systems cannot receive an ongoing influx of both energy and matter indefinitely, and so eventually they reach limits to growth. At that margin substitutability breaks down and catastrophe ensues. To check this outcome, we must find a way to live with slower rates of economic growth, and eventually a zero or negative rate of economic growth. For him this is as much a criticism of Marxism as of capitalism, and he wrote about making do with agrarianism. Consistent with this view, his consumer theory portrayed wants as hierarchical rather than smoothly substitutable. He would have liked this Alex post on not all gdp being created equal.
For Henry George, the ultimate fixed factor is land, due to the nature of space. There is always enough energy, due to Julian Simon-like arguments that allow capital and ingenuity to be substituted for all other fixed resources, except for land. Economic systems cannot create or activate more land indefinitely, and thus the marginal benefits of growth are captured mostly by landowners, to the detriment of social welfare. At this final margin substitutability breaks down and widespread poverty ensues. To check this outcome, the returns to land must be redistributed to the rest of society, ideally through a single tax. Unlike many environmentalists, he wasn’t worried about soil erosion because land is land.
For 19th century colonial theorist Edward Gibbon Wakefield, human beings and the positive externalities from human contact are the ultimate scarcity. If you let people settle the countryside, you will have an underpopulated republic of deplorables — there is no substitute for city life! So the price of external farm land has to be kept high, so that settlers cluster in the city and as wage laborers contribute to ongoing innovation, urbanity, and economic growth. Wakefield worked in New Zealand — did they listen? If Wakefield were around today, maybe he would want to cut off broadband to large swathes of the Midwest and Appalachia. Justly or not, he cited rural French Canadians as an example of what he was worried about, whereas Georgescu-Roegen might have appreciated their agrarianism.
For Robert Solow, ultimate fixed factors do not come into play and substitutability reigns at all relevant margins. If some resources become scarce, just substitute in more capital. Growth continues forever, though it can be accelerated by investing more in the ultimate growth driver, namely new ideas. Georgescu-Roegen argued that Solow did not incorporate the idea of entropy or insights from science.
Is it proper that Solow’s model should have so dominated in the economics profession?
You cannot understand or evaluate environmentalism without revisiting these debates. One reason many environmental critiques do not seem so strong is that they are trying to measure costs in a Solow-like framework, when in fact the underlying model might involve core non-substitutabilities, a’la the other thinkers. Unless you stress how not all gdp is created equal, the costs of bad environmental outcomes won’t show up as very high, not relative to total wealth. It will appear as if you always can substitute away from bearing those costs full on, even though perhaps you cannot.
My own view is that the ultimate scarcity in today’s system comes from what the political economy of our societies and polities can bear, but that must await another day.