Monthly Archives: July 2014

Limits to Growth III: The Steady State

If there are limits to growth and therefore how far our economies can grow what can be done about it? Economist Herman Daly has a possible answer in the Steady State Model.

“An economy with constant stocks of people and artifacts, maintained at some desired, sufficient levels by low rates of maintenance ‘throughput’, that is, by the lowest feasible flows of matter and energy from the first stage of production to the last stage of consumption.”

Daly, Herman. 1991. Steady-State Economics, 2nd edition. Island Press, Washington, DC. p.17.

What Daly is describing is an economy that has reached a stable population level and a low-level of consumption. For most of human history our struggle has been about getting enough resources to survive but now we have surpassed that need. We have more than enough for everyone and are reaching the point where continuing to produce is a danger to us all.

The Steady State would be smaller in size, consumption and environmental impact as it would need less to sustain itself.  It’s as much a new form of economics as it is a new way of evaluating progress and value.  GDP would no longer be an adequate measurement  as production and consumption are not the pillars of progress in the Steady State.

The massive accumulation of wealth needn’t be the focus of a society and in face the Steady State requires that it not be.  Money could exist but massive accumulation tends to promote inequality which breeds an unstable society.

Achieving a steady state economy requires adherence to four basic rules or system principles:

  1. Maintain the health of ecosystems and the life-support services they provide.
  2. Extract renewable resources like fish and timber at a rate no faster than they can be regenerated.
  3. Consume non-renewable resources like fossil fuels and minerals at a rate no faster than they can be replaced by the discovery of renewable substitutes.
  4. Deposit wastes in the environment at a rate no faster than they can be safely assimilated.

The Steady State is a simple concept but politically is extremely difficult.  We’re not just discussing a policy change but instead a changing of principles and values.

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Limits to Growth II: The Myth of Infinite Growth

stateofworldMore and more people have begun to question the possibility of human economies ability to grow forever.  The overuse of Earth’s natural resources as well as the destruction regional ecosystems and global ecosystems should tell us that something is wrong.  However many mainstream economists seem to not be concerned with these facts.  They are still claiming that economic growth is not only possible, it’s necessary to improve our well-being.  This maybe true in some cases–no one would argue that Uganda or Pakistan should not work for more economic growth but this distinction should not be generalized.

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The problem is that the whole model of macro-economic growth is built on a fatal flaw–we assume that we can grow forever. The theory states that the resources are fungible and substitutable simply put: “Natural resources are not an issue as long as our technology is improving.” This is not only irresponsible, it’s insane.

What will technology use if we run if we run out of the resource which we use to build the resources? Herman Daly put it nicely  “You can not build the same wooden house with half the wood just because you have more or better saws.”

The question now is one of responsibility: do we want to proceed with “business as usual” and naively assume that technology will solve all our problems and run the risk of a catastrophe? Or shall we back pedal and think about the development and balance of Western economies versus those of the developing world?