Herman E. Daly: Steady-State Economics

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In my own outlook, I tend to be a "hopeful pessimist". I'm hopeful because I know people can change their minds ... a lot of entrenched attitudes and opinions have changed. Take an example from the history of population control: Back in the 1920's, Margaret ganger and others were thrown in jail for sending birth control information through the mails. Today—on the other hand—abortion can be had on demand and is even publicly subsidized! Whether you consider it to be for the better or not, that's an enormous change of attitude in just 50 years. So I believe people can, indeed, be convinced to move toward the steady-state economy.

Looking at the short run, though, I can't help being pessimistic . . . because I don't think our economic growth patterns are going to change quickly. The steady-state movement is going to be glacial: irresistible in the long run but very, very slow.

So the danger is that the change will be too long in coming. There's no guarantee that the amount of time necessary for such a social conversion is available to us. We may run into really grave problems in the next 20 years.

PLOWBOY: When will our situation start to deteriorate?

DALY: Right now . . . and I think it'll continue to get worse for at least the next five or ten years.

PLOWBOY: What's going to happen?

DALY: We'll have more of the type of problems you're seeing in the newspapers today: failures of advanced technology, inflation, continuing scarcity of energy, patchwork solutions that don't consider the underlying economic faults. It will take a really fundamental crisis to get people's attention on the problem . . . some 2 X 4 that clobbers them over the head. Then maybe people will start listening to all the rational arguments in favor of a steady-state system.

PLOWBOY: What will that fundamental crisis, that 2 X 4, be? Do you think it will be a depression?

DALY: A crash? That could certainly happen. There're lots of ways a depression could come about. Let's just look at one:

Suppose something—say, an enormous war in the Middle East—completely knocks out all our Arab oil supplies. A financial panic could ensue. Industries which depend heavily on energy imports would break down. Disruptions in our food distribution system would stop the interstate food shipments from California. Before long, many people—particularly urbanites—might be reduced to a precarious or subsistence livelihood.

PLOWBOY: That's a bleak scenario. Do you really think that we'll have a severe depression?

DALY: I'd say there's something like a 20% probability that a financial crash will occur in the next 10 years. That's an extremely vague estimate, of course, but I would think that anyone who discounts the possibility of a depression to zero isn't being smart. On the other hand, someone who thinks a depression's a near certainty is probably not being too smart, either . . . but, by golly, we sure ought to recognize that such an occurrence is a realistic 20% possibility.

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