Category: Steady State Economy

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Review of Herman Daly’s Economics for a Full World: His Life and Ideas

Sadly, the key developer of the Steady State Economy model, Herman Daly, died on 28 October 2022.

Leading fellow ecological economist, Peter Victor, released his biography of Herman Daly earlier this year.  My review of this book appeared in the November 2022 Sustainable Population Australia newsletter (see page 5).

Alternatively, full text follows:

Book Review

Herman Daly’s Economics for a Full World: His Life and Ideas

by Peter Victor
Earthscan from Routledge, 2022. 300 pp. Soft copy RRP $73.99 (discounts available online)

ISBN: 978-0-367-55695-2

Reviewed by Jonathan Miller

 

Neoclassical economics is the dominant language of politicians and the media, and ongoing economic growth is the pre-eminent goal of nearly every nation. Yet, this is taking humanity to the brink of disaster at exactly the time we need prominent voices emphasising the dependence of our societies on a healthy environment. Peter Victor biography, Herman Daly’s Economics for a Full World: His Life and Idea, is therefore timely.  Herman Daly stands out for developing models that place economics within its environmental context. He is best known as a founder of ecological economics and for proposing principles for a steady state economy.

Victor’s early chapters describe Daly’s childhood and professional life and the major influences on his thinking. Victor is not a professional writer, however, and these sections sometimes feel pedestrian. What emerges, nonetheless, is a picture of Daly as a humble man of high integrity, strongly influenced by his Christian faith and his encounters with those less fortunate.

The majority of the book is devoted to Daly’s ideas and his intellectual engagement with critics and supporters. Victor’s writing is stronger here, reflecting his standing as another highly-respected ecological economist. Given his strong friendship with Daly, it is unsurprising that Victor provides a generally sympathetic assessment of Daly’s arguments. This book, however, is not a hagiography and also identifies shortcomings in Daly’s work.

The biography includes a chapter on population and migration. Daly apparently believes that “more people…are better than fewer, but only if they are not all alive at the same time!” In his earlier formulations of the steady-state economy, he prescribed a stable population, but he later relaxed this requirement so long as resource throughput were relatively constant. Daly’s early population concerns were informed by his work in north-eastern Brazil, where he observed that contraception was readily available to the wealthier entrepreneurial class, but not to the labouring poor. While not a Marxist, Daly saw the denial of contraception to the poor as exploitative, providing an expanding pool of underpaid workers for capital. Daly argued that slowing population growth was critical to improving living standards for the poor.

Some of Daly’s other population perspectives were controversial and decidedly politically incorrect. Borrowing from the environmental economic ‘cap and trade’ model, Daly proposed that adults be given transferable birth licences. Daly foresaw the problems with enforcement, but strangely seems not to have engaged with broader societal views and taboos on having children.

Daly also developed a stance on immigration. While he supported continuing ‘legal’ migration into the USA, he favoured controlling borders and ending illegal immigration. His motivation, however, was not nationalistic but rather a concern for American labour standards. He saw illegal immigration as again serving employers by creating a pool of cheap labour, thereby weakening unions, decreasing wages and increasing profits. Daly’s support for substantial migration levels was partly to provide a generous quota for refugees, especially for those fleeing the consequences of American military and political interventions. Daly’s views on immigration accord with his desire to roll back globalisation.

Victor also includes chapters on Daly’s positions on economic scale, distribution and allocation; measuring the economy; the steady-state economy; money and banking; and globalisation, internationalisation and free trade. These topics may sound dull to non-economists but Victor’s treatment makes clear why they are of critical importance to sustainability advocates. The chapter on economic growth provides very useful global data on the rapid expansion over the last century of the use of natural resources and the generation of wastes.

In his work across these subjects, Daly has faced criticism both from natural allies and from the economic establishment. Marxists have criticised Daly’s steady-state proposals for using free market, capitalist mechanisms. Victor gives special attention to Daly’s frustrating relationship with his brilliant but fickle teacher and mentor, Nicolas Georgescu-Roegen. Daly’s most difficult dealings were not surprisingly with leading neoclassical economists and he would pay a high professional price for challenging the academic status quo. Daly’s work highlights fundamental problems with neoclassical economics, particularly its flawed consideration of the natural environment.

Victor’s biography is relatively light on economic jargon and includes few mathematical formulae. It will, however, best suit those who have a basic understanding of economic terms and theories. This book and ‘Sustainability and the New Economics’ by SPA’s Stephen Williams and Rod Taylor are excellent primers for those wanting to understand how economics should operate in a full world.

 

 

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Interview of GDP with 2XX

I spoke to Scotty Foster and Zina Richardson from 2XX on their program, Behind the Lines, on Friday 7 October.  Our discussion was wide-ranging across limits to growth and economic issues and models, including the Steady State economy. The program runs for 90 minutes.

The link to the podcast may not be available after early November:

Behind The Lines

 

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What is a sustainable economy?

This article appeared in a number of ACM publications on Sunday 4 September 2022:

 

What is a sustainable economy?

 

Humans are like all other animals – we depend on our habitat to meet our needs. In this increasingly connected world, our habitat is the global environment, including the land, seas and atmosphere.

Scientists warn, however, that we are degrading our environment so much that it threatens our very livelihoods. Each year people, particularly in wealthy countries, use far more resources than Earth can regenerate, and polluting more than nature can remediate.

So, it is important to move to a sustainable economy, but what does that look like?

‘Sustainable’ is a word that is often used loosely to describe products that reduce environmental damage. A truly sustainable economy, however, would return our total annual resource use and wastes to within nature’s capacities. It also must be socially sustainable.

A number of sustainable economy models have been proposed.

First, there is the circular economy, which rejects the linear path from resource to product to disposal. Instead, it aims to minimise waste and maximise the re-use of resources, particularly through recycling, as well as regenerating nature.

Better use of resources is vital, but the circular economy is constrained by the properties of many resources, which allow recycling only a limited number of times. Additionally, so long as the physical economy is growing, the volumes of materials in use at any time increases, creating further demands for resource extraction and energy use.

Another proposal is ‘green growth’, which shifts production from damaging extractive and polluting industries towards cleaner production, using resources more efficiently.

It relies, however, on long-term decoupling of GDP growth from resource use, which is almost certainly impossible. The United Nations Environment Program no longer promotes ‘green growth’.

Social justice and environmental sustainability underlie a suite of other models. Kate Raworth’s ‘Doughnut Economy’ argues our economy should ensure all people have a decent standard of living, while staying within planetary boundaries.

The degrowth movement advocates radical change beyond capping or reducing the size of the economy, including reducing inequality, guaranteeing everyone an income, increasing investment in public goods and moving away from consumerism and advertising.

The steady state economy shares some degrowth elements, focusing on keeping the physical size of the economy within ecological limits, and social justice.

Its principal tenets are roughly constant economic throughput of resources, stable population size and an equitable distribution of economic benefits. Non-renewable resources should only be extracted at the rate that substitutes can be found.

What emerges from these models is the need to transition to an equitable, post-consumer economy, emphasising strong communities and a respectful relationship with nature. These societies would not be static; even in the absence of economic growth, technical innovation and cultural development would continue.

 

Jonathan Miller

Steady State ACT

 

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The need for a steady state economy

Summary

While governments worldwide strive to maintain or increase economic growth, an international movement is asking the G20 to plot a path towards a steady state economy.

Article

Across the globe, maintaining and increasing growth in gross domestic product is the pre-eminent national policy goal. Yet, there is growing scientific evidence that growth is a major cause of unsustainability, and many are questioning the benefits of economic growth.

The argument for a steady state economy starts from the understanding that exponential growth in the extraction of physical resources cannot continue indefinitely on a finite planet. The 1972 study, Limits to Growth, identified the risks of continued global growth in resource use and pollution. Frequently misunderstood, the work did not make predictions as to future resource exhaustion, but instead modelled a range of scenarios for population growth and resource use. Its main conclusion was that our current path would expand the economy beyond Earth’s capacity to support it, and that after this ‘overshoot’, production of food and other essential materials would collapse (possibly by the mid 21st century).   Dr Graham Turner from the University of Melbourne has recently re-run[i] the Limits to Growth scenarios and found that they have proved accurate over the past 40 years.

Our economic system is totally dependent on the health of natural systems to deliver physical resources and manage our wastes. Ecological Footprint[ii] analysis undertaken in 2007 found that humans were using ecological services 1.5 times more quickly as the Earth can renew them, causing an ongoing degradation of global natural capital. Twenty-seven scientists co-published a paper[iii] in 2009 identifying nine key planetary boundaries as safe limits for human impacts. Four of these boundaries are already being exceeded: climate change, biodiversity loss, phosphorus use and nitrogen use and pollution.

Growth proponents argue for continuing GDP expansion to improve lifestyles, and particularly to provide a decent standard of living to those in the developing world. The record, however, has at best been patchy. In many countries the recent decades of high global economic growth have led to significantly increased wealth disparity, a key correlate of social problems. Over the last three decades, only 10% of global wealth generated[iv] has flowed to the poorer half of the world’s population.  The gross numbers of people[v] with incomes less than $2 per day have remained similar over that period. Government policy interventions, such as land reforms, support of smallholders and social security have generally been more important in addressing hunger than free market-driven economic growth.

Proponents also claim that economic growth is essential to addressing environmental problems, but increasing extraction and pollution associated with economic growth are actually the causes of our global environmental problems. This fact is largely masked by environmental burden-shifting, with increasing production in the third world of goods consumed in the first world. The poor in developing countries are also much more vulnerable to the current and projected overshooting of global environmental boundaries, being driven by economic growth.

Economic growth is currently strongly linked to levels of resource throughput and a rising population. A key question is whether economic growth can be absolutely decoupled from resource use and consequent pollution. Not all economic activity relies directly on physical resource use and there are opportunities to improve significantly improve resource use efficiency. For example, curtailing heat losses from buildings can reduce both heating costs and greenhouse gas emissions. ‘Cradle to cradle’ strategies and adopting circular economies are also highly desirable approaches for reducing the environmental pressures of resource use.

While these strategies, in theory, could bring human environmental impacts back within safe global boundaries in the short-term, continuing exponential economic growth would likely ensure these boundaries are breached in the long-term. There are two main reasons for this. The first is described by the ‘Jevons paradox’, which identifies that when technological gains improve the efficiency of resource use, consumption of that resource actually rises due to increased demand. The second reason is that to achieve absolute decoupling of economic growth from resource use would require ongoing improvements in resource efficiency at a faster rate than economic growth, and would therefore also need to be exponential in the long-term.

Moving to a steady state economy is therefore proposed as the only viable long-term means of staying within global environmental boundaries. The key elements of a steady state economy are a constant population and a constant low-level economic throughput of material and energy.

Moving to a steady state economy provides the opportunity to return and stay within global environmental boundaries. The steady state economy model also recognises that it is not possible for all of the projected 2100 global population [vi]of 11 billion to live sustainably at current developed world levels of consumption. Global footprint analysis indicates this would require more than five ‘planet Earths’. To enable the developing world a decent standard of living, it will require significant reductions in first world levels of resource consumption and pollution, and possibly significant global redistribution of wealth.

But moving to a steady-state economy does not mean ‘returning to the Stone Age’ and could actually facilitate improved lifestyles and well-being. Health, individual happiness, secure employment, leisure time, strong communities and economic stability are key goals for a steady-state economy.

Climate change is now widely considered the single greatest threat to our global civilisation. But it is just one of a number of global environmental threats to our livelihoods, driven by exponential growth in consumption and pollution. For these reasons, CASSE is arguing the critical need to start the global transition to a steady-state economy.

This post has been adapted from an article by Jonathan Miller first published by the Australian Institute for International Affairs in 2015 in Australian Outlook.

Footnotes 

[i] http://www.theguardian.com/commentisfree/2014/sep/02/limits-to-growth-was-right-new-research-shows-were-nearing-collapse?CMP=share_btn_fb
[ii]http://www.footprintnetwork.org/en/index.php/GFN/page/footprint_basics_overview/
[iii] http://www.ecologyandsociety.org/vol14/iss2/art32/
[iv] http://www.unicef.org/socialpolicy/files/Global_Inequality.pdf
[v] http://data.worldbank.org/sites/default/files/wdi-2012-ebook.pdf
[vi]http://esa.un.org/unpd/wpp/Publications/Files/Key_Findings_WPP_2015.pdf