Herman E. Daly: Steady-State Economics

Article Tools

Image Gallery

Print

E-mail

Comments

RSS

The economic importance of these two laws can be seen when one considers how they affect what I call "throughput" . . . the basic flow of matter-energy from the environment, through the human economy, and then back to the environment. The first law of thermodynamics tells us that you can't destroy matter-energy . . . you can only convert it. The second law tells us that the conversion is always from a useful form to a less useful form and—ultimately—to irrevocable waste. The fact that this basic matter-energy flow is entropic in nature shows us that it's basically a cost: The greater the throughput, the greater the cost we're paying.

And this cost—which can be seen as the expense of maintaining our bodies and artifacts—must, in a nongrowth economy, be minimized for whatever level of population and wealth we want to maintain.

PLOWBOY: But how do all these restricting physical laws apply to economics?

DALY: These laws of thermodynamics mean, among other things, that a society can't grow forever. If a culture does try to keep growing, it'll run smack dab into the matter-energy limits. Now this may seem obvious . . . but I've heard prominent economists express absurd statements like, "Man has probably always worried about his environment because he was once totally dependent on it," and "I can't conceive of a non-growing economy."

There is, however, one economic system that does recognize our biophysical limits: the steady-state economy. In a steady-state system the population of human bodies and artifacts is held at a constant level, and throughput is limited to the minimum flow necessary to maintain that level. Such an economic system can still "develop"—culture, knowledge, quality, and goodness can all continue to evolve—but it doesn't "grow".

Now what are the requirements of a steady state? First, in order to establish such a system, you have to have a renewable resource base. Fortunately, we possess that. We have renewable fisheries, forests, grasslands, crop lands, sun energy, etc. And, until 200 years ago when humankind started relying heavily on industrialization and depletable minerals, we pretty much were able to survive on those "constants".

Second—and this is a more difficult requirement to meet, we need the willingness to scale our activities to fit a limited budget. After all, renewable resources are only self-perpetuating at a particular level. If you push them beyond their long-term sustainable yield, they're not renewable anymore. So we have to impose a discipline on ourselves to guarantee that we live within our means.

PLOWBOY: That's a tall order. How do we convince people to limit personal consumption?

DALY: Well, one approach would be to just go around and say, "Come on everybody, let's consume less" . . . but you know in advance that's not going to work. Garrett Hardin pointed out this problem in his famous essay, "The Tragedy of the Commons": Nobody profits from making an individual sacrifice unless everybody else makes it, too. So people who would be willing to join a collective effort to sacrifice aren't going to risk being suckers when nobody else goes along. That's like the bumper sticker that you sometimes see on big Cadillacs . . . the one that says, "You folks keep on buying those small cars. I need the gas you save."

RSS | Comments | E-mail | Print