Steady-state economy

steady-state economy is an economy made up of a constant stock of physical wealth and a constant population size. In effect, such an economy does not grow. The term refers to the national economy of a particular country, but it is also applicable to the economic system of a city, a region, or the entire world . Adam Smith, economist and economist , in the history of economics , of the 18th century, is theorizing about the concept of a stationary state of the economy. Smith conjectured that any national economy in the world would sooner or later settle in a final state of stationarity.

Since the 1970s, the concept of a steady-state economy has-been associated with Mainly the work of leading ecological economist Herman Daly . As Daly’s concept of a steady-stateincludes the ecological analysis of natural resource flows through the economy, his concept differs from the original classical concept of a stationary state . One other difference is that Daly recommends immediate political action to establish the steady-state economy by imposing permanent government restrictions on all resources, the economists of the classical period that the final stationary state of the economy would be . [1] : 135f [2] : 55f

The world’s ecological problems have brought about a widening interest in the concept of a steady-state economy. Critics of the steady-state economy usually object to it by arguing That resource decoupling , technological development , and the unrestrained operation of Market Mechanisms are fully able Overcoming Any of resource scarcity, any creeping pollution or overpopulation Any ever to be Encountered on Earth. Proponents of the steady-state economy, on the other hand, these objections remain insubstantial and mistaken-and that the case for a steady-state economy is gaining leverage every day. [3] : 98-128 [4] [5] [6] [7]: 148-155

A steady-state economy is established with economic stagnation : Economic growth is established as the result of deliberate political action, economic stagnation is the unexpected and unwelcome failure of a growth economy.

An ideological contrast to the steady-state economy is formed by the concept of a post-scarcity economy .

Definition and vision

Herman Daly defines his concept of a constant-state economy as an economic system of a constant stock of physical wealth and a constant stock of people (population), both stocks to be maintained by a flow of natural resourcesthrough the system. The first component, the constant stocks, is similar to the concept of the stationary state , originally used in classical economics ; the second component, a new ecological feature , is presently also used in the academic discipline of ecological economics . The durabilityof the constant stocks: the more durable the stock of capital is, the smaller the flow of natural resources is needed to maintain the stock; Likewise, a ‘sustainable’ population means a population enjoying a high life expectancy-something desirable by itself-maintained by a low birth rate and an equally low death rate. Taken together, higher durability translates into better ecology in the system as a whole. [8] : 14-19

Daly’s concept of a steady-state economy is based on the view that it is an open subsystem embedded in a fragile environment. The economy is maintained by importing valuable natural resources from the input and export prices and pollution at the output end of a constant and irreversible flow. Any subsystem of a finite nongrowing system must itself become nongrowing and start maintaining itself in a steady state as far as possible. This vision is considered to be mainstream economics , where the economy is represented by an exchanging relationship between business and consumer.[3] : xiii

In the early 2010s, reviewers sympathetic towards Daly’s concept of a steady-state economy have passed the contestant’s judgment that its concept is beyond the limits of what is politically feasible . [9] : 549 [10] : 84 [7] : 83

Present background: Exceeding Global Limits to Growth

The widening interest in the concept of a steady state economy: has a background in the world’s mounting ecological problems: Since the 1990s, measurements-have Provided evidence que le volume of the world economy Far Exceeds critical global limits to economic growth already. According to the ecological footprint measure , the carrying capacity of Earth-that is, Earth’s long-term capacity to sustain human populations and consumption levels-was exceeded by some percent in 1990. [11] : 18 By 2015, this figure had increased to some sixty percent. [12] In fact, mankind is now confronted with the vicious dynamics of planetary overshoot-and-collapse. Furthermore, the concept of anthropology has been proposed by geologists as a new epoch to describe the significant impact of human activities on Earth’s ecosystems. Specifically, the following issues have long been of general concern worldwide:

population overpopulation is expected to reach 9.3 billion by 2050, and continues growing thereafter. This massive number of people is already resulting and in human overpopulation , putting excessive strain are all kinds of natural resources and wildlife habitats everywhere, Increasing pollution levels and Deteriorating human living conditions. Uncontrolled urbanization is forcing people to live in congested shanty towns , cities and wide swell To Become megacities with slum areas ripe with high crime rates . Overpopulation may even lead to social conflict and violence, when too many people (especially young men) end up competing for too few jobs in stagnating economies .

Air pollution and global warming
Air pollution emanating from motor vehicles and industrial plants is Damaging public health and Increasing mortality rates . The concentration of carbon dioxide and other greenhouse gases in the atmosphere is obviously the source of global warming and climate change . The extreme regional weather patterns and rising sea levels caused by the warming may deteriorate future living conditions in many-if not all parts of the world. The warming already poses a threat to many nations and a ‘threat multiplier’ to geo-political stability .

Depletion of non-renewable minerals
Non-renewable mineral reserves ares currently Extracted at high and unsustainable rates from the Earth’s crust . Hence, the remaining reserves are likely to become more expensive , and will reach depletion at some point. The era of (relatively) peaceful economic expansion that has prevailed globally since World War II may be interrupted by unexpected supply shocks ; or simply be succeeded by the all-too-likely peaking depletion of oil and other valuable minerals .

Net depletion of renewable resources
Uses of renewable resources in excess of Their renewable spleen are Undermining ecological stability worldwide. Between 2000 and 2012 alone, some fourteen percent of what amounts to Earth’s original forest cover was deforested . Tropical rainforests have been subject to deforestation at a rapid pace for decades- especially in West and Central Africa and Brazil -mostly due to subsistence farming, population pressure and urbanization . Population pressure is also exerting much strain on the world’s soil systems, leading to land degradation, mostly in developing countries. Global erosion rates are higher than average . Widespread overuse of groundwater results in water deficits in many countries of the world . By 2025, the living conditions of two-thirds of the world’s population could be stressed by water scarcity .

Endangered wildlife and loss of biodiversity
The destructive impact of human activity on wildlife habitats worldwide is accelerating the extinction of a rare species , thereby Substantially Reducing Earth’s biodiversity of plants and animals . The natural nitrogen cycle is largely overloaded by industrial nitrogen fixation and use , thus disrupting most known types of ecosystems . The accumulation of plastic debris in the oceans leads to entanglement, suffocation and ingestion of aquatic life. The acidification of the oceans due to the concentration of carbon dioxidein the atmosphere resulting from coral bleaching and impedance oceanic calcifying organisms . Arctic sea ice caused by global warming is endangering the polar bear .

All of These mounting Concerns Prompted year-have Increasing number of philosophers, Economists Besides, Herman Daly -and natural scientists to the point to global Obvious limits to economic growth , and to issue gold Even preclude the prevailing political orthodoxy of persistently Pursuing growth. [13] [14] [15] [16] [17] [4] [18] [19] [20] [21] [22] [23] [24] [25] [5] [6] [26 ] [27] [28] [29] [30] [31] [32] [33]

Historical background

For centuries, economists and other scholars of natural resources and growth, from the early years of economics in the 18th and 19th centuries of economics as an independent academic subdiscipline in economics .

Concept of the stationary state in classical economics

From Adam Smith and Onwards, Economists in the Classical Period of Economic Economics, The General Development of Society, and the Growth of Population. The incomes from gross production were distributed as rents, profits and wages among landowners, capitalists and laborers respectively, and these three classes were incessantly engaged in the struggle for increasing their own share. The accumulation of capital (net investments) would sooner or later come to an end of the rate of profit to a minimum or to nil. At that point, the economy would settle in a final stationary state with a constant population size and a constant stock of capital. [8] : 3 [1] : 295

Adam Smith’s concept

Adam Smith ‘s magnum opus is The Wealth of Nations , published in 1776, laid the foundation of classical economics in Britain. Smith thereby disseminated and Established a concept That HAS since beens a cornerstone in economics Throughout MOST of the world: In a liberal capitalist society , Provided with a stable, institutional and legal framework, an ‘ invisible hand ‘ will Ensure que la enlightened self-interest of all members of society will contribute to the growth and prosperity of society as a whole, leading to an obvious and simple system of natural liberty. [34] : 349f, 533f

Smith was convinced of the beneficial effect of enlightened self-interest on the wealth of nations; but he was less certain this wealth would grow forever. Smith observed that any country in the world found itself in a ‘progressive’, ‘stationary’, or ‘declining’ state: Although England was wealthier than its North American colonies, America was growing faster than in England; hence, North America was in the ‘cheerful and hearty’ progressive state. In China, the wages were low, the condition of poor people in Europe, and more marriages were contracted here because of the ‘horrid’ killing of newborn babies. hence, China was in the ‘dull’ stationary state, it did not yet seem to be declining. In the higher ranks of society, the lowest ranks of society would be lower and lower than the lowest ranks, while the lowest ranks would remain into starvation and early death. Bengal and some other English settlements in the East Indies possibly found in their state, Smith reckoned.[34] : 59-68

Smith pointed out that it was growing in any nation, the rate of profit would be declining. In a nation that had thus reached this ‘full complement of rich’, society would definitely settle in a stationary state with a constant stock of people and capital. In an 18th-century anticipation of the Limits to Growth ( see below )

In this country which has acquired that full complement of the rich which the nature of its soil and climate, and its situation with respect to other countries, allowed it to acquire; which could, therefore, advance no further, and which was not going backwards, both the wages of labor and the profits of stock would probably be very low. In a country fully effective in the form of a labor market, the competition for employment would be necessary to reduce the wages of laborers, and, the country being already fully peopled, that number could never be increased. In a country fully stocked in proportion to all the business it had to transact, as great a quantity of stock would be accepted. The competition, therefore, would be as great as possible, and would be as simple as possible. “[34] : 78

According to Smith, the United States seems to be approaching this stationary state. Smith believed the laws and institutions of China in this country, from the potential of wealth. [34] : 78f Smith was unable to provide any examples of a country in the world that had been in the hands of the rich, and that he had settled in stationarity, because, as he conjectured, “… perhaps no country has ever yet arrived at this degree of opulence. ” [34] : 78

David Ricardo’s concept

In the early 19th century, David Ricardo was the leading economist of the day and champion of British laissez-faire liberalism . Ricardo replaced Adam Smith’s empirical reasoning with abstract principles and deductive argument . This new methodology would become a norm in economics as a science. [1] : 135f

In Ricardo’s times, Britain’s trade with the European continent was somewhat disrupted during the Napoleonic Wars that had been raged since 1803. The Continental System brought into effect a large-scale embargo against British trade, whereby the nation’s food supply was heavily camouflaged. to the benefit of the landowning classes. When the wars ended with Napoleon’s final defeat in 1815, the landowning classes dominated the British parliament and managed to tighten the existing Corn Laws in order to retain their monopoly status on the home market during peacetime. The controversial Corn Laws were a two-sided measure of protectionsubsidies are corn exports and tariffs are corn imports. The tightening is opposed by the capitalist and the laboring classes, as the high price of bread is reduced and the real wages in the economy. So was the political setting when Ricardo published his treatise On the Principles of Political Economy and Taxation in 1817. [35] : 6-10

According to Ricardo, the limits to growth are ever present to scarcity of agricultural land in the country. In the wake of the wartime period, the British economy seemed to be approaching the growing state of the world, the growth of rural areas, and the rising rents of rural landowning. the urban capitalists. This was the broad outline of Ricardo’s controversial land rent theory . Ricardo believed that the only way for Britain to avoid the stationary state was to increase the volume of international trade: The country should export more industrial products and start importing cheap agricultural products from abroad in turn. However, this development has been impeded by the Corn Laws that seem to be hampering both the industrialization and the internationalization of the British economy. In the 1820s, Ricardo and His Followers – Ricardo himself died in 1823 – directed much of their fire at the Corn Laws in order to have them repealed, and various other free marketers borrowed indiscriminately from Ricardo’s doctrines to suit their agenda. [35] : 202f

The Corn Laws were not repealed before 1846. In the meantime, the British economy kept growing, a fact that effectively undermined the credibility and thrust of Ricardian economics in Britain;[35]:223 but Ricardo had by now established himself as the first stationary state theorist in the history of economic thought.[1]:88f

Ricardo’s preoccupation with class conflict anticipated the work of Karl Marx (see below).

John Stuart Mill’s concept

Main article: John Stuart Mill
See also: Liberalism § Classical and modern, and Utilitarianism § Classical utilitarianism
Further information: Principles of Political Economy, On Liberty, and Utilitarianism

John Stuart Mill was the leading economist, philosopher and social reformer in the middle of 19th century Britain. His economics treatise on the Principles of Political Economy, published in 1848, attained status as the standard textbook in economics throughout the English-speaking world until the turn of the century.[1]:179

A champion of classical liberalism, Mill believed that an ideal society should allow all individuals to pursue their own good without any interference from others or from government.[36] Also a utilitarian philosopher, Mill regarded the ‘Greatest Happiness Principle’ as the ultimate ideal for a harmonious society:

As the means of making the nearest approach to this ideal, utility would enjoin, first, that laws and social arrangements should place the happiness … of every individual, as nearly as possible in harmony with the interest of the whole; and secondly, that education and opinion, which have so vast a power over human character, should so use that power as to establish in the mind of every individual an indissoluble association between his own happiness and the good of the whole; …[37]:19

Mill’s concept of the stationary state was strongly coloured by these ideals.[8]:16 [1]:213 Mill conjectured that the stationary state of society was not too far away in the future:

It must always have been seen, more or less distinctly, by political economists, that the increase of wealth is not boundless; that at the end of what they term the progressive state lies the stationary state, that all progress in wealth is but a postponement of this, and that each step in advance is an approach to it. We have now been led to recognize that this ultimate goal is at all times near enough to be fully in view; that we are always on the verge of it, and that, if we have not reached it long ago, it is because the goal itself flies before us.[38]:592

Contrary to both Smith and Ricardo before him, Mill took an optimistic view on the future stationary state. Mill could not “… regard the stationary state of capital and wealth with the unaffected aversion so generally manifested toward it by political economists of the old school.”[38]:593 Instead, Mill attributed many important qualities to this future state, he even believed the state would bring about “… a very considerable improvement on our present condition.”[38]:593 According to Mill, the stationary state was at one and the same time inevitable, necessary and desirable: It was inevitable, because the accumulation of capital would bring about a falling rate of profit that would diminish investment opportunities and hamper further accumulation; it was also necessary, because mankind had to learn how to reduce its size and its level of consumption within the boundaries set by nature and by employment opportunities; finally, the stationary state was desirable, as it would ease the introduction of public income redistibution schemes, create more equality and put an end to man’s ruthless struggle to get by—instead, the human spirit would be liberated to the benefit of more elevated social and cultural activities, ‘the graces of life’.[38]:592–596

Hence, Mill was able to express his view of his concept of the stationary state. [8] : 14f [1] : 213 It has been argued that a Mill is made of a quality-of-life argument for the stationary state. [10] : 79

Main developments in economics since Mill

See also: Marxism and Neoclassical economics

When the influence of John Stuart Mill and his Principles declined, the classical-liberalist period of economic theorising came to an end. By the turn of the 19th century, Marxism and neoclassical economics had emerged to dominate economics. This development leads to the exclusion of natural resources in economic modeling and analysis:

  • ALTHOUGH a classical economist In His Own right, Karl Marx abandoned The Earlier concept of a stationary state and REPLACED it With His only own vision of historical materialism , selon qui human societies pass through Several ‘modes of production ” , Eventually leading to communism . In each mode of production, man’s increasing mastery over nature and the ‘ productive forces ‘ of society develop a point where the class conflict bursts into revolutionsfollowed by the establishment of a new mode of production. In contrast, Marx did not look at natural resource scarcity as a constraining factor future economic growth; The capitalist mode of production is in the process of being produced by a society based on the principles of society. that is, communism. The assumption, based on optimism , was that communism would have overcome any resource scarcity ever to be encountered. [39] : 292 For ideological reasons, then, orthodox Marxism has actually been subject to natural resource scarcity ever since Marx’s own day.[39] : 57-65 [40] : 218-225 [41] : 5f However, the German historian Reiner Grundmann was able to make the rather sweeping observation that “Orthodox Marxism has left the scene, leftism has turned green , and Marxists have become ecologists . ” [39] : 52
  • In neoclassical economics , on the other hand, the preoccupation with the society is long term; Instead, the analysis of the concept of a general equilibrium theory within an essentially static framework. Hence, neoclassical economics achieved greater generality, but only by asking easier questions; and any concern with natural resource scarcity was neglected. [1] : 295-299 [42] : 55-57 For this reason, modern ecological economists-have deplored the simplified and ecologically harmful features of neoclassical economics: It has-been argued That neoclassical economics HAS Become a pseudoscience of choice entre anything in general and nothing in particular, while neglecting the preferences of future generations; [40] : 156-160 that the very terminology of neoclassical economics is so ecologically illiterate as to rarely even refer to natural resources or ecological limits; [4] : 121-123 and that neoclassical economics has developed to become a dominant free market ideology legitimizing an ideal of society resembling a perpetual motion machine ofeconomic growth at intolerable environmental and human costs. [21] : 145-148

Taken together, it has been argued that “… if Judeo-Christian monotheism took nature out of religion, Anglo-American economists (after about 1880) took nature out of economics.” [2] : xx Almost one century later, Herman Daly has reintegrated nature into economics in his concept of a steady-state economy ( see below ).

John Maynard Keynes’s concept of reaching saturation

John Maynard Keynes was the paradigm founder of modern macroeconomics , and is widely considered today to be the most influential economist of the 20th century. Keynes rejected the basic tenet of classical economics that free markets would lead to full employment by themselves . Consequently, he recommended government action to Stimulate aggregate demand in the economy, macroeconomic policy has now Known as Keynesian economics . Keynes also believed that capital accumulation would reach saturation at some point in the future.

In his essay on 1930 on the economic possibilities of our grandchildren, Keynes ventures to look one hundred years ahead of the future and predict the standard of living in the 21st century. Writing at the beginning of the Great Depression , Keynes rejected the prevailing “bad attack of economic pessimism” of his own time and foresaw that by 2030, the grandchildren of his generation would live in a state of abundance, where saturation would have been achieved. People would find themselves in such a position of saving and accumulating wealth, and being able to get rid of ‘pseudo-moral principles’-avarice, exaction of interest, love of money-that had characterized capitalistic societiesso far. Instead, people would devote themselves to the true art of life, to live “wisely and agreeably and well.” Mankind would finally have solved “the economic problem,” that is, the struggle for existence. [43] [44] : 2, 11

The similarity between John Stuart Mill’s concept of the stationary state ( see above ) and Keynes’ predictions in this essay has been noted. [44] : 15 Keynes et al. He was also wrong in predicting that greater wealth would in fact, the reverse trend seems to be true. [44] : 3-6

In his magnum opus on the General Theory of Employment, Interest and Money , Keynes looked at one generation ahead of the future, and predicted that this would have caused capital accumulation to reach the point of saturation. The marginal efficiency of capital would have been gained, and the population would not be growing fast-society would finally “… reach the conditions of a quasi-stationary community where change and progress would results in technical, taste, population and institutions … ” [45] : 138fThis type of transaction would have the effect of making the most of the income, and it would be beneficial for them to be profitable. “I see, therefore, the rentier aspect of capitalism as a transitional phase which will have disappeared when it has done its work.” [45] : 237

Post-war economic expansion and emerging ecological Concerns

The economic expansion following World War II took place while mainstream economics largely neglected the importance of natural resources and environmental constraints in development. Addressing this discrepancy, ecological questions emerged in academia around 1970. Later on, these questions were developed in the formation of ecological economics and an academic subdiscipline in economics.

Post-war economic expansion and the neglect of mainstream economics

After the ravages of World War II , the industrialized part of the world is experiencing a prolonged and prolonged economic expansion. This expansion-known today as the Post-World War II economic expansion -was brought about by international financial stability, low oil prices and ever increasing labor productivity in manufacturing. During the period, it is expected that the economy will become more robust and more robust. In the 1970s, the expansion ended with the 1973 oil crisis , resulting in the 1973-75 recession and the collapse of the Bretton Woods monetary system .

Throughout this era, mainstream economics -dominated by Both neoclassical economics and Keynesian economics -developed theories and models Where natural resources and environmental constraints Were neglected. Conservation issues are specifically related to agriculture and forestry in the subdiscipline of environmental economics and the margins of the mainstream. As the theoretical framework of neoclassical economics-the general equilibrium theory-was uncritically adopted and maintained by this environmental economics, this subdiscipline was largely unable to consider important issues of concern for environmental policy. [46] : 416-422

In the years around 1970 the widening discrepancy entre year ever growing world economy on the one hand, and to mainstream economics discipline not Taking into account the importance of natural resources and environmental constraints on the other hand, Was finally Addressed-indeed, challenged – in academia by a few unorthodox economists and researchers. [47] : 296-298

Emerging ecological concerns

During the short period of time from 1966 to 1972, four works were published addressing the importance of natural resources and the environment to human society:

  • In his 1966 philosophical-minded essay on The Economics of the Coming Spaceship Earth, economist and systems scientist Kenneth E. Boulding argued that mankind would soon have to adapt to economic principles much different than the past ‘open Earth’ of illimitable plains and exploitative behaviour. On the basis of the thermodynamic principle of the conservation of matter and energy, Boulding developed the view that the flow of natural resources through the economy is a rough measure of the Gross national product (GNP); and, consequently, that society should start regarding the GNP as a cost to be minimized rather than a benefit to be maximized. Therefore, mankind would have to find its place in a cyclical ecological system without unlimited reservoirs of anything, either for extraction or for pollution—like a spaceman on board a spaceship. Boulding was not the first to make use of the ‘Spaceship Earth’ metaphor, but he was the one who combined this metaphor with the analysis of natural resource flows through the economy.[48] [49]:104
  • In his 1971 magnum opus on The Entropy Law and the Economic Process , Romanian American economist Nicholas Georgescu-Roegen integrated the thermodynamic concept of entropy with economic analysis, and argued that all natural resources are irreversibly degraded when put to use in economic activity. What happens in the economy is valuable and valuable for the purposes of human health (valueless waste and pollution). [50] In the history of economic thought, Georgescu-Roegen was also the first economist of some status to theorize on the premise that all of Earth’s mineral resources will eventually be exhausted at some point ( see below ). [51] : 13 [52] : 164f[40] : 160-171
  • Also in 1971, pioneering ecologist and general systems analyst Howard T. Odum published his book on Environment, Power and Society , where he describes the human society in terms of ecology . He formulates the maximum power principle , according to which all organisms, ecosystems and human societies organize themselves in order to maximize their use of energy for survival. Odum pointed out that those human societies with access to the higher quality of energy sources in the Darwinian evolutionary struggle . Odum later co-developed the concept of emergy(ie, embodied energy) and other valuable contributions to ecology and systems analysis. His work provided the biological term ‘ecology’ with its broader societal meaning used today. [53] [42] : 68-71 [54] : 14f
  • In 1972, scientist and systems analyst Dennis Meadows and his team of researchers had their study on the Limits to Growth published by the Club of Rome . The Meadows team modeled aggregate trends in the world economyand made the projection- not prediction-that by the mid to the 21st century, industrial production per capita, food supply per capita and world population would all reach a peak, and then vista overshoot-and-collapse trajectory . [55]Due to their saying pessimism, the study was scorned and dismissed by most mainstream economists at the time of its publication. [49]: 244f [56] : 60f [57] : 50-62 However, well into the 21st century, several independent researchers have confirmed that the world of the world is not the same. , indicating that a global collapse may still be far in the future. [58] : 230 [59] : 8f [29] : 152-155 [60] [61] : 8

Taken together, these four works were seminal in bringing about the formation of ecological economics later on. [47] : 301-305

Formation of ecological economics as an academic subdiscipline

Main article: Ecological economics

Although most of the theoretical and empirical work was done by the early 1970s, this has been a long-term and well-developed process. Ecological economics was formally founded in 1988 as the culmination of a series of conferences and meetings through the 1980s, where key scientists interested in ecology-economy interdependency were interacting with each other. The most important people involved in the establishment were Herman Daly and Robert Costanza from the US; AnnMari Jansson from Sweden; and Juan Martínez-Alier from Spain (Catalonia). [47] : 308-310 Since 1989, the discipline has been organized in theInternational Society for Ecological Economics that publishes the journal of Ecological Economics .

When the ecological economics is established, Herman Daly’s ‘preanalytic vision’ of the economy is widely shared among the members who joined in: The human economy is an open subsystem of a finite and non-growing ecosystem (Earth’s natural environment), and any subsystem of a fixed nongrowing system must itself at some point also become nongrowing. Indeed, it has been argued that the subdiscipline itself has been born out of frustration with the unwillingness of the established disciplines to accept this vision. [62] : 266 However, ecological economics has already been affected by the influence and domination of neoclassical economics and its everlasting free market orthodoxy. This development has been made by the ecological economists as an ‘incoherent’, ‘shallow’ and overly ‘pragmatic’ slide. [63] [64] [65]

Herman Daly’s concept of a steady-state economy

Since the 1970s, Herman Daly has been the world’s leading proponent of a steady-state economy. [10] : 81f Throughout his career, Daly has published several books and articles on the subject. [8] [3] [66] : 117-124 [67] He also founded a center for the advancement of the steady-state economy. [68]

According to two independent comparative studies of American Daly’s steady-state economics versus the later, the competing school of degrowth from continental Europe, no differences of analytical substance exists between the two schools; only, Daly’s bureaucratic -or even technocratic -top-down management of the economy fares badly with the more radical grassroots appeal of degrowth, as championed by French political scientist Serge Latouche ( see below ). [9] : 549 [7] : 146-148

The premise underlying Daly’s concept of a steady-state economy is that the economy is an open subsystem of a finite and non-growing ecosystem (Earth’s natural environment). The economy is maintained by importing low-entropy matter-energy (resources) from nature; These resources are put through the economy, being transformed into goods along the way; eventually, the throughput of matter-energy is exported to the environment as high-entropy waste and pollution. Recycling of material resources is possible, but only by using other resources; and energy resources, in turn, can not be recycled at all, are intended Dissipated as waste heat. Out of necessity, then, any subsystem of a fixed nongrowing system must itself become nongrowing. [3] : xiii

Daly argues that these two sources of wealth are largely man-made, namely a terrestrial mineral resources and a flow of solar energy . An ‘asymmetry’ between these two sources of wealth can be found in the context of a rapid evolution of the earth’s energy supply. rate beyond human control. Since the Sun will continue to shine on Earth, it is the terrestrial mineral stock-and-not-Sun-that is the crucial scarcity factor regarding man’s economic future. [3] : 21f

Unintentionally, the Industrial Revolution has thrown modern man out of equilibrium with the rest of the biosphere

Daly points out that today’s global ecological problems are rooted in man’s historical record: Until the Industrial Revolution that took place in Britain in the second half of the 18th century, man lived within the limits imposed by what Daly terms a ‘solar-income budget’ : The Palaeolithic tribes of hunter-gatherers and the later agricultural societies of the Neolithic and onwards subsisted primarily-though not exclusively-on Earth’s biosphere, powered by an ample supply of renewable energy, received from the Sun. The Industrial Revolution changed this situation completely, as a man started extracting the minerals. The original solar-income budget was thereby broken and supplemented by the new, but much scarcer source of wealth. Mankind still lives in the after-effect of this revolution.

Daly cautions that more than two hundred years of worldwide industrialization is now confronted with a range of problems.

The entire evolution of the biosphere has occurred around a fixed point-the constant solar-energy budget. Modern man is the only species to have broken the solar-income budget constraint, and this has thrown him out of equilibrium with the rest of the biosphere. Natural cycles have become overloaded, and new materials have been produced for which no natural cycles exist. Not only is geological capital depleted, but the basic life-support services of the world are impaired by their operation. [3] : 23

Following the work of Nicholas Georgescu-Roegen , Daly argues that the laws of thermodynamics restrict all human technologies and apply to all economic systems:

Entropy is the basic physical coordinate of scarcity. It could not be entropy, we could burn the same gallon of gasoline over and over, and our capital stock would never wear out. Technology is unable to rise above the basic laws of physics, so there is no question of ever ‘inventing’ a way to recycle energy. [3] : 36

This view on the role of technology in the economy was later ‘entropy pessimism’ ( see below ). [69] : 116

In Daly’s view, Mainstream Economists tend to look natural resource scarcity have only a relative phenomenon, while human needs and wants are Granted absolute status: It is Believed que le price mechanism and technological development (HOWEVER defined) is able of Overcoming Any scarcity ever to be faced on Earth; It is also believed that it should be treated as absolute, from the most basic necessities of life to the extravagant and insatiable craving for luxuries. Daly terms this belief ‘growthmania’, which he finds pervasive in modern society. In opposition to the dogma of growth, Daly submits that “… there is such a thing as absolute scarcity, and there isSuch a thing as purely relative and trivial wants. ” [3] : 41. It is recognizable that scarcity is imposed by nature in an absolute form by the laws of thermodynamics and the finitude of earth. not worthy of satisfying then, Daly concludes.

The inevitable exhaustion of mined resources could be postponed by imposing permanent quantitative restrictions on the economy

Consequently, Daly recommends that a system of permanent government restrictions on the economy is established as soon as possible, a steady-state economy. Whereas the classical economists believed that the final stationary state would settle by itself as the rate of profit fell and capital accumulation came to an end (see above), Daly wants to create the steady-state politically by establishing three institutions of the state as a superstructure on top of the present market economy:

  • The first institution is to correct inequality to some extent by putting minimum and maximum limits on incomes, maximum limits on wealth, and then redistribute accordingly.
  • The second institution is to stabilise the population by issuing transferable reproduction licenses to all fertile women at a level corresponding with the general replacement fertility in society.
  • The third institution is to stabilise the level of capital by issuing and selling depletion quotas that impose quantitative restrictions on the flow of resources through the economy. Quotas effectively minimise the throughput of resources necessary to maintain any given level of capital (as opposed to taxes, that merely alter the prevailing price structure).

The purpose of these three institutions is to stop and prevent further growth by combining what Daly calls “a nice reconciliation of efficiency and equity” and providing “the ecologically necessary macrocontrol of growth with the least sacrifice in terms of microlevel freedom and variability.”[3]:69

Among the generation of his teachers, Daly ranks Nicholas Georgescu-Roegen and Kenneth E. Boulding as the two economists he has learned the most from.[3]:xvi However, both Georgescu-Roegen and Boulding have assessed that a steady-state economy may serve only as a temporary societal arrangement for mankind when facing the long-term issue of global mineral resource exhaustion: Even with a constant stock of people and capital, and a minimised (yet constant) flow of resources put through the world economy, the Earth’s mineral stock will still be exhausted, although at a slower rate than is presently the situation (see below).[70]:366–369 [52]:165–167

Responding specifically to the criticism levelled at him by Georgescu-Roegen, Daly concedes that a steady-state economy will serve only to postpone, and not to prevent, the inevitable mineral resource exhaustion: “A steady-state economy cannot last forever, but neither can a growing economy, nor a declining economy”.[8]:369 A frank and committed Protestant, Daly further argues that…

… the steady-state economy is based on the assumption that creation will have an end—that it is finite temporally as well as spatially. … Only God can raise any part of his creation out of time and into eternity. As mere stewards of creation, all we can do is to avoid wasting the limited capacity of creation to support present and future life.[8]:370

Later, several other economists in the field have agreed that not even a steady-state economy can last forever on Earth.[71]:90f [72]:105–107 [73]:270 [9]:548 [30]:37

Conceptual and ideological disagreements

See also: Economic growth § Environmental and physical constraints

Several conceptual and ideological disagreements presently exist concerning the steady-state economy in particular and the dilemma of growth in general. The following issues are considered below: The role of technology; resource decoupling and the rebound effect; a declining-state economy; the possibility of having capitalism without growth; and the possibility of pushing some of the terrestrial limits into outer space. Herman Daly’s approach to these issues are presented throughout the text.

Role of technology

See also: Productivity improving technologies, Production function, and Pessimism § Entropy pessimism

Technology is usually defined as the application of scientific method in the production of goods or in other social achievements. Historically, technology has mostly been developed and implemented in order to improve labour productivity and increase living standards. In economics, disagreement presently exists regarding the role of technology when considering its dependency on natural resources:

  • In neoclassical economics, on the one hand, the role of ‘technology’ is usually represented as yet another factor of production contributing to economic growth, like land, labour and capital contribute. However, in neoclassical production functions, where the output of produced goods are related to the inputs provided by the factors of production, no mention is made of the contribution of natural resources to the production process. Hence, ‘technology’ is reified as a separate, self-contained device, capable of contributing to production without receiving any natural resource inputs beforehand. This representation of ‘technology’ also prevails in standard mainstream economicstextbooks on the subject.[74]:508f [75]:813-816 [76]:409f
  • In ecological economics, on the other hand, ‘technology’ is represented as the way natural resources are transformed in the production process.[7]:121f Hence, Herman Daly argues that the role of technology in the economy cannot be properly conceptualized without taking into account the flow of natural resources necessary to support the technology itself: An internal combustion engine runs on fuels; machinery and electric devices run on electricity; all capital equipment is made out of material resources to begin with. In physical terms, any technology—useful though it is—works largely as a medium for transforming valuable natural resources into material goods that eventually end up as valueless waste and pollution, thereby increasing the entropy—or disorder—of the world as a whole.[3]:18-25 This view of the role of technology in the economy has been termed ‘entropy pessimism’.[69]:116

From the ecological point of view, it has been suggested that the disagreement boils down to a matter of teaching some elementary physics to the uninitiated neoclassical economists and other technological optimists.[40]:15-19 [77]:106-109 [57]:80f [7]:116-118 From the neoclassical point of view, leading growth theorist and Nobel Prize laureate Robert Solow has defended his much criticised position by replying in 1997 that ‘elementary physics’ has not by itself prevented growth in the industrialized countries so far.[78]:134f

Resource decoupling and the rebound effect

See also: Sustainability § Decoupling environmental degradation and economic growth, Jevons paradox, and Rebound effect (conservation)

Resource decoupling occurs when economic activity becomes less intensive ecologically: A declining input of natural resources is needed to produce one unit of output on average, measured by the ratio of total natural resource consumption to Gross domestic product (GDP). Relative resource decoupling occurs when natural resource consumption declines on a ceteris paribus assumption—that is, all other things being equal. Absolute resource decoupling occurs when natural resource consumption declines, even while GDP is growing.[4]:67f

In the history of economic thought, William Stanley Jevons was the first economist of some standing to analyse the occurrence of resource decoupling, although he did not use this term. In his 1865 book on The Coal Question, Jevons argued that an increase in energy efficiency would by itself lead to more, not less, consumption of energy: Due to the income effect of the lowered energy expenditures, people would be rendered better off and demand even more energy, thereby outweighing the initial gain in efficiency. This mechanism is known today as the Jevons paradox or the rebound effect. Jevons’s analysis of this seeming paradox formed part of his general concern that Britain’s industrial supremacy in the 19th century would soon be set back by the inevitable exhaustion of the country’s coal mines, whereupon the geopolitical balance of power would tip in favour of countries abroad possessing more abundant mines.[40]:160-163 [79]:40f [57]:64f

In 2009, two separate studies were published that—among other things—addressed the issues of resource decoupling and the rebound effect: German scientist and politician Ernst Ulrich von Weizsäcker published Factor Five: Transforming the Global Economy through 80% Improvements in Resource Productivity, co-authored with a team of researchers from The Natural Edge Project.[80]British ecological economist Tim Jackson published Prosperity Without Growth, drawing extensively from an earlier report authored by him for the UK Sustainable Development Commission.[4]Consider each in turn:

  • Ernst Ulrich von Weizsäcker argues that a new economic wave of innovation and investment—based on increasing resource productivity, renewable energy, industrial ecology and other green technology—will soon kick off a ‘Green Kondratiev’ cycle, named after the Russian economist Nikolai Kondratiev.[80]:11-18 This new long-term cycle is expected to bring about as much as an 80 percent increase in resource productivity, or what amounts to a ‘Factor Five’ improvement of the gross input per output ratio in the economy, and reduce environmental impact accordingly, von Weizsäcker promises. Regarding the adverse rebound effect, von Weizsäcker notes that “… efforts to improve efficiency have been fraught with increasing overall levels of consumption.”[80]:306 As remedies, von Weizsäcker recommends three separate approaches: Recycling of and imposing restrictions on the use of materials; establishing capital funds from natural resource proceeds for reinvestments in order to compensate for the future bust caused by depletion; and finally, taxing resource consumption so as to balance it with the available supplies.[80]:309f
  • Tim Jackson points out that according to empirical evidence, the world economy has indeed experienced some relative resource decoupling: In the period from 1970 to 2009, the ‘energy intensity’—that is, the energy content embodied in world GDP—decreased by 33 percent;[4]:68f but as the world economy also kept growing, carbon dioxide emissions from fossil fuels have increased by 80 percent during the same period of time.[4]:71 Hence, no absolute energy resource decoupling materialized. Regarding key metal resources, the development was even worse in that not even relative resource decoupling have materialized in the period from 1990 to 2007: The extraction of iron ore, bauxite, copper and nickel was rising faster than world GDP to the effect that “resource efficiency is going in the wrong direction,” mostly due to emerging economies—notably China—building up their infrastructure.[4]:74f Jackson concludes his survey by noting that the ‘dilemma of growth’ is evident when any resource efficiency squeezed out of the economy will sooner or later be pushed back up again by a growing GDP.[4]:130Jackson further cautions that “simplistic assumptions that capitalism’s propensity for efficiency will stabilize the climate and solve the problem of resource scarcity are almost literally bankrupt.”[4]:188

Herman Daly has argued that the best way to increase natural resource efficiency (decouple) and to prevent the occurrence of any rebound effects is to impose quantitative restrictions on resource use by establishing a cap and trade system of quotas, managed by a government agency. Daly believes this system features a unique triple advantage:[3]:61-64

  • Absolute and permanent limits are set on the extraction rate of, use of and pollution with the resources flowing through the economy; as opposed to taxes that merely alter the prevailing price structure without stopping growth; and as opposed to pollution standards and control which are both costly and difficult to enact and enforce.
  • More efficiency and recycling efforts are induced by the higher resource prices resulting from the restrictions (quota prices plus regular extraction costs).
  • No rebound effects are able to appear, as any temporary excess demand will result only in inflation or shortages, or both—and not in increased supply, which is to remain constant and limited on a permanent basis.

For all its merits, Daly himself points to the existence of physical, [3] : 77-80 The idea of ​​absolute decoupling ridding the economy as a whole is a little ridiculed polemically by Daly as ‘angelizing GDP’: It would be work only if we ascended to become angels ourselves. [3] : 118

Declining-state economy [ edit ]

Not to be confused with recession .
See also: Nicholas Georgescu-Roegen § Criticizing Daly’s steady-state economics , and Anarcho-primitivism
Further information: Degrowth

A declining-state economy is an economy made of a declining stock of physical wealth or a declining population size, or both. A declining-state economy is established with a recession : A declining-state economy is established as the result of deliberate political action, a recession is the unexpected and unwelcome failure of a growing or a steady economy.

Proponents of a declining-state economy generally believe that a steady-state economy is not far-reaching enough for the future of mankind. Some proponents may also reject modern civilization as such, either partially or completely, that the concept of a declining-state economy begins bordering on the ideology of anarcho-primitivism , or radical ecological doomsaying or some variants of survivalism .

Romanian American economist Nicholas Georgescu-Roegen was the teacher and mentor of Herman Daly and was presently considered the leading intellectual figure in the early 2000s. In his paradigmatic magnum opus on The Entropy Law and the Economic Process , Georgescu-Roegen argues that the carrying capacity of Earth-that is, Earth’s capacity to sustain human populations and consumption levels-is bound to decrease sometime in the future as Earth’s finite stock of mineral resources is presently being extracted and put to use ; and accordingly, that the world economyas a whole is heading towards an inevitable future collapse . [50] In effect, Georgescu-Roegen points out that the arguments advanced by Herman Daly in support of his steady state-of-the-state economy in a declining-state economy as long as possible, zero economic growth is more desirable than growth is, true; but negative growth is better still! [70] : 366-369 Instead of Daly’s steady-state economics, Georgescu-Roegen proposed his own so-called ‘minimal bioeconomic program’, including restrictions even more severe than those propounded by his student Daly (see above) . [70]: 374-379 [81] : 150-153[7] : 142-146

American political advisor Jeremy Rifkin , French champion of the degrowth movement Serge Latouche and the Austrian degrowth theorist Christian Kerschner-all followers and interpreters of Georgescu-Roegen-supported in declining-state strategies. Consider each in turn:

  • In his book on Entropy: A New World View , Jeremy Rifkin argues that the impending exhaustion of earth’s mineral resources will mark the decline of the industrial age , followed by the advent of a new solar age, based on renewable solar power . Due to the diffuse, low-intensity property of solar radiation , this source of energy is uncapable of sustaining industrialism, whether capitalist or socialist. Consequently, Rifkin advocates an anarcho-primitivist future solar economy-or what he terms an ‘entropic society’-based one anti-consumerism , deindustrialization , counterurbanization , organic farming andprudential restraints on childbirths . [82] : 205-224 Rifkin cautions that the transition to the sun is likely to become a troublesome phase in the history of mankind, as the present world economy is so dependent on the non-renewable mineral resources. [82] : 253-256
  • In his manifesto on Farewell to Growth , Serge Latouche develops a strategy of so-called ‘ecomunicipalism’ to initiate a ‘virtuous cycle of quiet contraction’ or degrowth of economic activity at the level of society: Consumption patterns and addiction to work Reduced; systems of fair taxation and consumption permits to redistribute the gains from economic activities within and between countries; obsolescence and waste should be reduced, products designed so as to make recycling easier. This bottom-up strategy opposes overconsumptionin rich countries as well as emerging, poor countries to aspire this overconsumption of the rich. Instead, the goal is to establish a friendly and sustainable society. [15] : 9 Latouche further caution that “the very survival of humanity … means that it should be a central part of our social, political, cultural and spiritual concern with human life.” [15] : 103 [7] : 134-138
  • In his article on Economic de-growth vs. steady-state economy , Christian Kerschner has integrated the strategy of declining-state, or degrowth, with Herman Daly’s concept of the steady-state economy to the effect that it should be considered a path taken by the rich industrialized countries towards a globally equitable steady-state economy. This ultra- egalitarianFinally, there will be some problems in the future, and there will be some progress in the future. Kerschner admits that this goal of a steady-state world may remain unattainable in the future, but such seemingly unattainable goals could not be overlooked. [9] : 548 [83] : 229 [7] : 142-146

Herman Daly on his part is not opposed to the concept of a declining-state economy; But it does not matter that the steady-state economy should serve as a preliminary step to a declining path, the optimal levels of population and capital have been properly defined. However, this first step is an important one:

[T] he first issue remains to stop the momentum of growth and to learn to run at a stable economy at historically given initial conditions. … But we can not go back to a stop. Step one is to achieve a steady-state economy at existing or nearby levels. Step two is to decide whether the optimum level is greater or less than present levels. … My own judgment on these issues lead me to think we have overshot the optimum. “[3] : 52

Daly concedes that it is ‘difficult, probably impossible’ to define such optimum levels; [3] : 52 even more, in his final analysis Daly agrees with his teacher and mentor Georgescu-Roegen that no definite solution will be able to last forever ( see above ). [8] : 369

Capitalism without growth [ edit ]

See also: Capitalism § Criticism , Criticism of Capitalism § Sustainability , and Market Failure § Ecological

Several radical critics of capitalism have questioned the possibility of ever-imposing a steady-state or declining-state (degrowth) system as a superstructure on top of capitalism. [79] [84] [85] [24] : 97-100 [86] : 45-51 [87] [88] Taken together, these criticisms point to the following growth dynamics inherent in capitalism:

  • In capitalism, economic activity is driven by the profit motive , a competitive work ethos and the drive to accumulate capital and wealth for its own sake to gratify personal ambition, provide social prestige-or simply to get rich in a hurry . Psychologically, these drives in the work sphere repress and distort biological and social homeostasis in most people.
  • In capitalism, employments and incomes depend Directly is dirty back, That Is, people are spending money on the consumption of goods and services for sale on the market . This dependency creates a pecuniary incentive to increase sales as much as possible. To this end, much cunning advertising is devised to Manipulate human wants and prop up consumption patterns, resulting and Often in lavish and wasteful consumerism .
  • In capitalism, the financial system is one based fractional-reserve banking , commercial Enabling banks to hold reserves in water equivalent are less than That Their deposit liabilities . This establishment is credit Multiplying the monetary base Supplied by the central bank in order to assist private corporations Expanding Their activities.
  • In capitalism, the development of labor-saving technologies , creating new jobs elsewhere in the economy for workers by the introduction of new technology.
  • In capitalism, private corporations Generally resist government regulations and restrictions That Impede profits and deter investment Opportunities . Attempts to downscale the economy would quickly degenerate into economic crisis and political instability on this count alone.
  • In capitalism, they need to pay back their debt obligations , run their institutions and finance their welfare programs for the benefit of the public. Tax revenues are collected from general economic activity.
  • In the capitalist world economy , globalization intensifies competition everywhere, both within and between countries. National governments are compelled to compete and compete for employment, investment, income and wealth for their own populations.

– In short: There is no end to the systemic and ecologically harmful growth dynamics in modern capitalism, radical critics assert.

Fully aware of the massive growth dynamics of capitalism, Herman Daly on his part poses the rhetorical question whether his concept of a steady-state economy is essentially capitalistic or socialistic . He provides the following answer (written in 1980):

The growth versus steady-state debate really cuts across the old left – right rift, and we should resist any attempt to identify either growth or steady-state with either left or right, for two reasons. First, it will impose a logical distortion on the issue. Second, it will be obscure the emergence of a third way, which might be a future synthesis of socialism and capitalism into a steady-state economy and eventually into a fully just and sustainable society. [8] : 367

Daly concludes by inviting all (most) people-both liberal supporters of radical criticism of capitalism-to join him in his effort to develop a steady-state economy. [8] : 367

Pushing some of the terrestrial limits into outer space

Ever since the beginning of the modern Space Age in the 1950s, space advocates have developed plans for colonizing space in order to counter human overpopulation and mitigate ecological pressures on Earth (if not for other reasons).

In the 1970s, physicist and space activist Gerard K. O’Neill Developed a broader plan to build human settlements in outer space to solve the problems of overpopulation and limits to growth on Earth without recourse to political repression. According to O’Neill’s vision, mankind could-and-indeed should-expand on this man-made frontier to many times the current world and large amounts of new wealth in space. Herman Daly countered O’Neill’s vision by arguing that a space colony would become more of a constraint to growth-and hence, would be more secure and managed than a steady-state steady-state economy on large and resilient Earth. Although the number of individual colonies might be increased without end, living conditions in any particular colony would become very restricted. Hence, Daly concluded: “The alleged impossibility of a steady-state on Earth provides a poor intellectual launching pad for space colonies.” [8] : 369

By the 2010s, O’Neill’s old vision of space colonization has long since been turned upside down in many places: Instead of dispatching colonists from Earth to live in remote space settlements, some ecology-minded space advocates conjecture that resources could be mined from asteroids in space and transported back to Earth for use here. This new vision has the same double advantage of (partly) mitigating ecological pressures on Earth’s limited mineral reserves while also boosting exploration and colonization of space. The building up of industrial infrastructure in space would be required for the purpose, as well as the establishment of a complete supply chainup to the level of self-sufficiency and then beyond, finally developing into a permanent extraterrestrial source of wealth to provide an adequate return on investment for stakeholders. In the future, such an ‘exo-economy’ (off-planet economy) could possibly be the first step toward mankind’s cosmic ascension to a ‘Type II’ civilization on the hypothetical Kardashev scale , in case such an ascension will ever be Accomplished. [89] [90] [91]

However, it is still uncertain that the off-planet economy is likely to be fully compensated for the depletion of terrestrial reserves . Sceptics point to exorbitant Earth-to-orbit launch costs of any space mission, inaccurate identification of target asteroids suitable for mining, and remote in situThe problems of success are as follows: Investing a lot of land in the future, but not necessarily in any case, regardless of the scarcities, technologies and other mission parameters involved in the venture. In addition, even if an off-planet economy could somehow be established at some future point, a long-term predicament would then loom large regarding the continuous mining and transportation of massive volumes of materials. flowing on a steady and permanent basis in the face of the astronomicallong distances and time scales ever present in space. Taken together, all of these barriers could prevent full-scale colonization of space forever-and then limits to growth on Earth will remain the only limits of concern throughout mankind’s entire span of existence. [57] : 81-83 [92] [93] [94]