Herman Daly Festschrift: The world is in over-shoot and what to do about it
This paper is a celebration of Herman Daly’s lifework. The paper does this mainly by quoting Herman directly. He writes so pellucidly that he cannot be edited for clarity, so direct quotation is preferable. Of course, reading his works directly is far better than reading any compilation. But I have distilled a tiny fraction of his prodigious and brilliant output through the mind of an ecologist and repeated a few of Herman’s major advances that I feel are important to fellow ecologists. Other contributors to this Festschrift have emphasized Herman’s economic contributions, although it is not clear what is economic and what is ecologic as he is the most effective bridge-builder between the two disciplines. So, let me be clear. This chapter is entirely Herman’s work. I am merely a compiler. I have restricted myself to condensing four decades of Herman’s publications into 10 pages of synthesis and 7 pages towards solutions. Most generously, Herman has revised and approved the result.
One of Herman’s most influential achievements was the creation of the discipline of ecological economics, from the early 1970s with his friends Robert Costanza, Joan Martinez-Alier, AnnMarie Jansson, Roefie Hueting and others. While Herman was in the World Bank (1988-1994), they created the International Society for Ecological Economics (ISEE), then the ISEE journal, then the major textbooks on Ecological Economics.
This chapter highlights Herman’s thinking behind steady-state economics, sustainability, and the risks of seeing growth as a panacea. Ironically, development economists (e.g., World Bank, 2008) reaffirmed growth as the main solution for economic development at precisely the same time as the first international congress focused on “De-Growth”. It took Herman and others nearly four decades of persuasion until the first “De-Growth” publication appeared in 2009, further undermining faith in GDP and growth. (See: Costanza 2009 a,b, Hueting 2009, Porritt 2009, Victor 2008, Jackson 2009). As of 2009, the neoclassicals over-reliance on growth, are starkly polarized from the ecological economists goals of environmental sustainability and de-growth. Given the 2008-2009 economic meltdown, which pole looks more prudent?
What is the problem?
What problem do ecological economists have with the neoclassical panacea of more growth as the solution for all ills? The crackpot dogma of salvation by growth constitutes the abyss between mainstream and ecological-economists. The prescription of continued economic growth as a solution to problems originating in underdevelopment and misdistribution of wealth is harming the world. Mainstream (also known as neoclassical) economists consider sustainability to be a fad and are overwhelmingly committed to growth. Most economists disparage both the depletion of natural resources and the damage to sink capacities. Development economics has a misguided and unrealistic vision of development as the generalization of Northern over-consumption to the rapidly multiplying masses of the South. Mainstream economists downplay natural capital and have moved toward globalization. The critical flaw in current economics is that it fails to take into account how economic processes consume resources and generate waste, and reduce assimilative capacities of the environment to detoxify and recycle wastes. The Classical economists (Adam Smith, Ricardo, Malthus and Mill) paid much more attention to “nature” (environment) than do most contemporary economists, consequently ecological economics is more rooted in Classical than Neo-Classical economics.
Growth is widely thought to be the panacea for all the major economic ills of the modern world. Our traditional economic problems (poverty, overpopulation, unemployment, unjust distribution) have all been thought to have a common solution, namely an increase in wealth. All problems are easier if we are richer. The way to get richer has been thought to be by economic growth, usually as measured by GDP. Herman doesn’t question the first proposition that richer is better than poorer, other things being equal. But he questions whether what we persuasively label "economic growth" is any longer making us richer. Physical throughput growth is at the present margin and in the aggregate increasing illth faster than wealth, thus making us poorer rather than richer. Consequently our traditional economic problems become more difficult with further growth. The correlation between throughput growth and GDP growth is sufficiently strong historically so that in the absence of countervailing policies even GDP growth frequently increases illth faster than wealth.
|Box 1: The Irony of Growth as the Panacea|
Poverty? Just grow the economy (that is, increase the production of goods and services and spur consumer spending) and watch wealth trickle down. Don’t try to redistribute wealth from rich to poor because that slows growth.
Unemployment? Increase demand for goods and services by lowering interest rates on loans and stimulating investment, which leads to more jobs as well as growth.
Overpopulation? Just push economic growth and rely on the resulting demographic transition to reduce birth rates, as it did in the industrial nations during the twentieth century.
Environmental degradation? Trust in the so-called environmental Kuznets curve, an empirical relation purporting to show that with ongoing growth in gross domestic product (GDP), pollution at first increases, but then reaches a maximum and declines.
The facts are plain and incontestable: the biosphere is finite, non-growing and closed (except for the constant input of solar energy). Any subsystem, such as the economy, must cease growing at some point and adapt itself to a dynamic equilibrium, something like a steady state. To achieve this equilibrium, birth rates must equal death rates, and production rates of commodities must equal depreciation rates. Economists have not recognized the new pattern of scarcity, which has become natural capital, no longer artificial capital. Ecological limits are rapidly converting “economic growth” into “uneconomic growth” -- that is, throughput growth that increases costs by more than it increases benefits, thus making us poorer, not richer.
Promoting the concept of environmental sustainability to dogmatic growth-economists has failed to persuade them. Mainstream economists disparage both the depletion of natural resources and the damage to sink-capacities. They label them externalities. They are not externalities but they overlook them, or forget them and move on to more important -- to them -- topics. Neoclassical economists promote growth as the topmost priority of economic policy. Because growth means faster extraction and depletion of natural resources and ever more waste to be assimilated by over-stressed sinks, the panacea or goal of growth (Box 1) has led the human economy into a perilous trap.
Mainstream economists still adhere to the goal of yet more growth. In 2008, for example, the prestigious Commission on Growth and Development released its final 180-page report, “The Growth Report” in 2008, which “looks at how developing countries can achieve fast sustained and equitable growth.”
If “sustained growth” means that the global economy might grow at 7 Percent for 25 years (duplicating the experience of the 13 star performing non-typical and largely small countries whose economic expansion has since ceased), that means the world economy will increase by a factor of 5.4. At the end of 25 years will that be enough, or might we need a 25-year encore? We are not told, but inasmuch as the concept of “enough” is absent from the analysis, one expects a series of encores. Recent estimates of an environmentally sustainable production level for the world arrive at 50% percent of the current level. A “mere” quintupling of the scale of the economic subsystem relative to the scale of the non-growing and containing ecosystem should by itself trigger a few questions. Are the remaining environmental sources and sinks sufficient to regenerate the resources and absorb the wastes of the larger metabolic flow or throughput of resources necessary to sustain the quintupled global economy? Did the rapidly growing 13 states use more than their share of the world’s remaining sources and sinks, including the most accessible ones, effectively precluding the generalized repetition of their accomplishment? Indeed, even at the present scale, what makes this blue-ribbon Commission believe that the extra ecological and social costs of growth are not already larger than the extra production benefits?
Is growth a short-term process necessary to arrive at some desired, sufficient state, which thereafter is maintained, like the stationary state of J. S. Mill and James Meade. Or is it the process of growth itself that is permanently desirable and presumably limitless? This question gets no consideration at all. The assumption seems to be that growth will continue forever. Since the Report’s subtitle refers to both growth and development, one would expect some useful distinction, such as ecological economists have introduced – namely that growth is quantitative physical increase, while development is mainly qualitative improvement.
One could define sustainable development as development without growth beyond biophysical carrying capacity. In other words, sustainable development is qualitative improvement in lifestyles, design, technology, efficiency, ordering of priorities, and the like, without quantitative increase in the throughput from environmental sources to sinks. The Growth report, however, follows its north star of GDP and lumps together these different processes.
The report does not call growth “sustainable” (thankfully), but even more incongruously refers to it as “sustained,” meaning that for 13 countries in the past it once lasted for 25 years and therefore might do so for the whole world for the next 25 years, the Commission hopes. More growth must be good because that is what makes us richer.
No: Growth in net wealth makes us richer, but GDP, as currently estimated, does not measure additions to net wealth or income—even the units are different. Growth in GDP will make us better off and ultimately richer only if at the current margin it increases beneficial activities more than costly activities. GDP does not even distinguish between costs and benefits.
What kind of growth – in throughput, GNP or welfare? Continual growth in physical throughput in a finite, non-growing and entropic world is impossible. Beyond some point, throughput growth becomes the main reason for environmental unsustainability by overwhelming environmental source and sink capacities. At or before that point throughput growth becomes uneconomic growth, which increases social and environmental costs faster than it increases production benefits. Even Resources for the Future has agreed that some ecosystem services have been impaired by overexploitation, and some renewable resources have been exploited faster than regeneration rates.
Sustainability is not a new idea in economics [e.g., Malthus, Mill, Meade, Marshall], it is also embedded in the very concept of income. As defined by Sir John Hicks, income is the maximum that can be consumed in a given year without reducing the capacity to produce and consume the same amount next year. By definition income is sustainable consumption. Whatever part of consumption is unsustainable is by definition not income, but capital consumption. If income is by definition sustainable, then so is its growth. Then why all the fuss about sustainability? Because contrary to the theoretical definition of income, we are in fact consuming productive capacity and counting it as income in our national accounts. Natural capital lies outside the accounting domain and is being used beyond the natural capacities of the environment to regenerate raw materials and to absorb wastes. Depletion of natural capital and consequent reduction of its life-sustaining services is the meaning of unsustainability.
|Box 2: The World Bank on Sustainability|
|Curiously, in the 2003 World Development Report, “Sustainable Development in a Dynamic World,” the World Bank adopted the ecological economists’ vocabulary of “sources” and “sinks” but did not tie them together with the concept of throughput—the entropic flow from source to sink. Even less do they consider the scale of the throughput or its entropic directionality. In dismissing the idea of overconsumption they say: “But the overall level of consumption is not the source of the problem. It is the combination of the specific consumption mix and the production processes that generates the externality. And for these there are well-established policy prescriptions from public finance” (p. 196). So much for scale—it is not important—allocative efficiency via right prices is everything! Changing consumption and production in the direction of environmental sustainability would clearly lead to lower production, consequently to a lower GDP|
While intoning the term “sustainable development” at every opportunity, The WTO, the World Bank and the IMF continue to support the goal of infinite growth for the world, especially the high-consumption societies. They cannot imagine poor countries doing much more than selling their products to rich countries. How else can they earn the foreign exchange to pay back World Bank and IMF loans? Therefore they think it is vital for rich countries to become ever richer, so they can buy more from the poor. Global trickle-down remains their solution to poverty.
Of course sustainability cannot be our only goal. If it were, then we could easily attain it by returning to a hunter-gatherer economy with a low population density and low per capita consumption. The economic goal is to attain sufficient per capita resource consumption for a good life for all the world’s people for a long time. If the product of current per capita resource use and population is so large that it cannot be attained without consuming the earth’s capacity to support future life in conditions of sufficiency, then we must reduce per capita resource use, or population, or both. This will be easier to do if we can also improve resource productivity.
But improved resource productivity will be slow to happen in a regime of cheap resources. The best way to improve resource efficiency is to make it more necessary by restricting the resource throughput (lowering per capita resource use). This means higher resource prices. That is a hardship for the poor, making serious reduction in income inequality even more necessary. However, continuing a subsidized price for petroleum, and other natural resources, means a greater subsidy to the biggest user, which is itself a regressive shift in real income distribution.
Environmental sustainability (ES) refers to the world’s biophysical carrying capacity. Achieving ES demands that biophysical carrying capacity cannot be exceeded. Therefore ES means not impairing the two aspects of carrying capacity – the source capacities of the global ecosystem to supply raw materials, and the sink capacities to absorb our wastes. Pithily put, environmental sustainability is defined as “maintenance of source and sink capacities.” Some eco-economists call this “non-declining source and sink capacities.”
Sustainability is an objective concept. As a fundamental objective value, not a subjective individual preference, one would expect general agreement on it among informed people. There isn’t. The Brundtland Commission’s standard inspired utilitarian definition of sustainability cannot be operationalized. It can serve at best as a (not so useful) heuristic.
The Time Period of Sustainability
The time period of sustainability aims to maximize the cumulative number of lives over time lived at a level of per capita resource consumption sufficient for a good life. We seem to have chosen instead to maximize the present per capita resource consumption, seeking a luxurious life for a “sufficient number” of people, usually taken as the elite of the present generation and possibly the next. This is an ethical choice, a balancing of many good lives versus fewer luxurious lives. The biblical answer is “neither poverty nor riches,” but sufficiency. Neither alternative lasts forever.
Sufficiency for all should take precedence over luxury for some and insufficiency for others. No one has a right to luxuries while others lack necessities. The position can be stated in utilitarian-efficiency terms if one accepts the law of diminishing marginal utility of income, and the democratic principle that everyone’s utility counts equally. On these premises the sum of utility is a maximum when, ceteris paribus, income is equally distributed. [Assuming uniformity of needs and inter-personal comparability – two big assumptions. El Serafy 2009 pers. comm.] Thus “frugality first” gives us “efficiency second” as a consequence, but efficiency first simply makes frugality less necessary. This is the Jevons Paradox or rebound effect (Polimeni et al. 2008). Frugality and sufficiency may not be the same thing, but they are closely related.
In the past “doing the best we can” seems to have meant a larger and larger population consuming more and more stuff. Now we see that too many people alive at one time and consuming a lot per capita reduce or overburden the carrying capacity of the earth, leading to fewer people or lower consumption per capita in the future, and a lower cumulative total of people ever to live at a level sufficient for a good life. If our ethical understanding of the value of longevity (sustainability) is to maximize cumulative lives ever lived at a per capita consumption level sufficient for a good life, then we must limit the load we place on the Earth. This means fewer people, lower per capita resource consumption, and more equitable distribution. None of this is what the world wants to hear.
It is more operational to internalize sustainability by setting sustainable quantity limits, and then let the market calculate the proper rationing price. If we try to calculate the price first on the basis of willingness to pay or accept, or even replacement costs, we are saying implicitly, “You can have as much as you want as long as you pay this price.” We can always have more by growing more is the message, and limits fade away. A higher price for the good in question slows its rate of use, but the income from the higher price can be used to increase consumption. The price internalization approach is good for efficient allocation, but insufficient for limiting scale.
Why did sustainability, steady-state and ecological economics become so important?
|Box 3: Potted History of Ecological Economics|
|Most contemporary economists do not agree that the U.S. and other economies are heading into uneconomic growth. They largely ignore the issue of sustainability and trust that because we have come so far with growth, we can keep on going ad infinitum. Yet concern for sustainability has a long history, dating back to Adam Smith in 1776 and John Stuart Mill’s famous chapter: “Of the Stationary State,” in 1848, which Mill, unlike other classical economists, welcomed.|
|1776||Adam Smith described what he called the stationary state.|
|1798||The Reverend Thomas Malthus also analyzed the stationary state.|
|1848||John Stuart Mill’s classical term, a “stationary state of population and capital,” in his Principles of Political Economy, book 4, chapter 6: “Of the Stationary State.”|
|1936||John Maynard Keynes wrote about steady-state or ‘quasi stationary community’.|
|1965||James Meade’s The Stationary Economy.|
|1972||Donella Meadows et al. Limits to Growth.|
|1973||Herman Daly’s “Toward a steady-state economy.”|
|1974||Roefie Hueting’s “New Scarcity and Economic Growth: More Welfare through Less Production?” [Nieuwe schaarste en economische groei. Meer welvaart door minder produktie?]|
|1977||Herman Daly’s “Steady State Economics.”|
|1987||Herman Daly and Bob Costanza invented ‘Ecological Economics’ while they were together at Louisiana State University, Baton Rouge.|
|1989||Herman Daly & John Cobb “For the Common Good.”|
|1989||Daly & Costanza founded ISEE.|
|1989||First annual conference of ISEE (held in the World Bank, Washington, D.C.)|
|1990||International Society of Ecological Economics Journal first issued.|
|1991||Robert Costanza published “Ecological Economics,” essentially the proceedings of ISEE’s first annual congress|
|1992||Meadows et al., Beyond the Limits.|
|1997||Robert Costanza’s An Introduction to Ecological Economics.|
|2004||Daly & Farley’s textbook: Ecological Economics.|
|2008||The first international “De-Growth” conference; “Economic de-growth for ecological sustainability and social equity,” was held in Paris in March (See: Hueting 2009).|
|2008||The Commission on Growth and Development released its final report, The Growth Report: Strategies for Sustained Growth and Inclusive Development, by the World Bank and others|
The global economy is now so large that society can no longer safely pretend it operates within a limitless ecosystem. Developing an economy that can be sustained within the finite biosphere requires new ways of thinking. The world has changed from being a relatively empty world to a relatively full world, from a world of unemployed biophysical carrying capacity to a world of fully employed carrying capacity. When the world was relatively empty of people and their artifacts, throughput could be considered a flow from an infinite source to an infinite sink. The services of Nature were free, hence not regarded as a cost because they were not scarce. Environmental sink services, such as assimilation of Greenhouse gas in the atmosphere, oceans and forests have often been treated as open-access free goods, and therefore outside the purview of economics.
In an empty world it made sense to focus on human artifacts because they were in short supply and were the limiting factor for economic activity. Production of human artifacts was maximized: saws to produce timber from forest, fishing boats and nets to catch fish, buildings to house people. The sources of trees and fish, for example, were abundant, so the sources were not conserved. This situation has changed drastically. Natural resources are finite and have recently become scarce. Deforestation and overfishing are two of the biggest problems of our age. Too many boats are chasing too few fish.
The other huge change in carrying capacity is related to the new scarcity of natural resources. Sink capacity, infinite for all of human existence, suddenly became damaged. Our wastes and pollution no longer were assimilated free and fast by environmental sink capacities. In fact, the accumulation of carbon dioxide in the atmosphere now is leading to climatic disruption. The vast oceans, mildly alkaline for eternity and extraordinarily buffered, have started to acidify. Economics has great difficulty in acting on the new scarcity and limits to growth. This is the critical flaw in economic theory: it fails to take into account how economic processes consume resources and generate wastes, deplete resources and reduce assimilative capacities.
The huge change in carrying capacity from infinite sources and sinks, to finite sources and sinks, and even to depleted sources and over-burdened sinks, has not been internalized by conventional economics. Environmentalists, ecologists and ecological economists have realized that growth is not a panacea.
If one agrees that the macro-economy is a subsystem embedded in an ecosystem that is finite, non-growing, and materially closed, then wouldn’t one expect the macro-economy to have an optimal scale relative to the total ecosystem—a scale beyond which its growth is uneconomic?
The governing spirit of mainstream economic theory is to deny any important role to nature or environment. Ecological economics posits that the environment is central in its support of the human economy. Ecological economics – the science of sustainability – recognizes that the macro-economy is a subset of the global ecosystem. Neoclassical environmental and resource economics do not see the economy as a subsystem; consequently they have no concept of the scale of the economy relative to the ecosystem, nor of the metabolic throughput by which the human economy lives off the global ecosystem. The sea changes referred to above or the new scarcity and the discipline of ecological economics realize that the human economy subset has expanded in scale so much as to impair the source and sink capacities of the surrounding ecosystem.
Technical improvements in resource efficiency by themselves will simply lower demand for resources, resulting in lower prices, which will stimulate further uses. It is fine to have cars that get twice the miles per gallon, but not if this simply means that we travel twice as much and burn the same throughput of petroleum in more, albeit more fuel-efficient, cars on more crowded roads. Efficiency is more miles per gallon. Frugality is using fewer gallons. A policy of “frugality first” stimulates efficiency. A policy of “efficiency first” does not stimulate frugality—indeed, it fosters the perception that frugality has become less necessary. With lower resource prices even efficiency becomes less necessary.
The goal of sustainability, then, is not by itself sufficient. We must seek an optimal scale of the macroeconomy relative to its containing and sustaining envelope, the ecosystem. The concept of an optimal scale of the macroeconomy does not exist in current macroeconomics because, as we have seen, the macroeconomy is conceived as the whole. But in fact the macroeconomy is a part of a larger whole, the ecosystem. The physical expansion of the economic subsystem encroaches on the rest of the whole and incurs an opportunity cost. At some point, perhaps already passed, it is possible that the extra opportunity cost of disrupted environmental services resulting from encroachment will begin to exceed the extra production benefits. In other words we will have reached and passed the optimal scale of the macroeconomy relative to the ecosystem. So-called “economic growth” (growth of the economic subsystem) would then in reality have become uneconomic growth—literally growth that costs us more than it benefits us at the margin.
A policy of sustainable development first aims at an optimal scale of the economy relative to the ecosystem. One of the features of an optimal scale is that it is sustainable—that is, the source and sink demands of the resource throughput necessary to sustain that scale are within the regenerative and assimilative capacities of the ecosystem. Second, once the scale of the resource throughput is limited, the distribution of ownership of this newly scarce function must be decided. In the case of petroleum we know specifically who owns the sources in most cases, but not who owns or uses the sinks. This must be decided politically? In third place, after we have a socially defined sustainable scale and a just or at least acceptable distribution of ownership of sources and sinks, then we can allow the market to determine the efficient allocation of resources among competing uses.
Stop counting the consumption of natural capital as income.
Because income is by definition the maximum amount that a society can consume this year and still be able to consume the same amount next year, sustainability is built into the very definition of income. But the productive capacity that must be maintained intact has traditionally been thought of as manmade capital only, excluding natural capital. We have habitually counted natural capital as a free good. This might have been justified in yesterday's empty world, but in today's full world it is anti-economic. The error of implicitly counting natural capital consumption as income is customary in three areas: (1) the System of National Accounts; (2) evaluation of projects that deplete natural capital; and (3) international balance of payments accounting.
Maximize the productivity of natural capital.
Maximize the productivity of natural capital in the short run, and invest in increasing its supply in the long run. Economic logic requires that we behave in these two ways toward the limiting factor of production -- maximize its productivity and invest in its increase. Those principles are not in dispute. Disagreements exist about whether natural capital is really the limiting factor. Some argue that man-made and natural capital are such good substitutes that the very idea of a limiting factor, which requires that the factors be complementary, is irrelevant. So the question is, are man-made capital and natural capital basically complements or substitutes? It is sufficiently clear to common sense that natural and man-made capital are fundamentally complements and only marginally substitutable.
In the past, natural capital has been treated as superabundant and priced at zero, so it did not really matter whether it was a complement or a substitute for man-made capital. Now remaining natural capital appears to be both scarce and complementary, therefore limiting. For example, the fish catch is limited not by the number of fishing boats, but by the remaining populations of fish in the sea. Cut timber is limited not by the number of sawmills, but by the remaining standing forests. Pumped crude oil is limited not by man-made pumping capacity, but by remaining stocks of petroleum in the ground. The natural capital of the atmosphere's capacity to serve as a sink for CO2 is likely to be even more limiting to the rate at which fossil fuels can be burned than is the source limit of remaining fossil fuels in the ground.
In the short run, raising the price of natural capital flows by taxing throughput will give the incentive to maximize natural capital productivity. Investing in natural capital over the long run is also needed. But how do we invest in something which by definition we cannot make? If we could make it, it would be man-made capital! For renewable resources we have the possibility of fallowing investments, or more generally regeneration by "waiting" in Alfred Marshall’s sense of allowing this year's growth increment to be added to next year's growing stock, rather than consuming it. Fallowing is investment in short-term non-production in order to maintain long-term yields. Let the renewable resource grow in order to slow or reduce the exploitation. This conforms to the economic definition of investment, namely a reduction in present consumption in order to increase a future capacity to consume. As fallowing is investment without growth, current economics barely acknowledges the power of fallowing; lack of growth is tantamount to the end of progress.
For nonrenewables we do not have the fallowing option. We can only liquidate them. So the question is how fast do we liquidate, and how much of the proceeds can we count as income if we invest the rest in the best available renewable substitute? And of course, how much of the correctly counted income do we then consume, and how much do we invest?
Humanity has to shift to a steady-state economy, one in which demands on the ecosystem’s sources and sinks would remain safely in bounds. For example, logging must be kept within forest regeneration rates. Greenhouse gas emissions must be kept within the capacity of the ecosystem to absorb them. That implies shifting economic policy from a focus on boosting growth, where the scale of physical demands on ecosystems would perpetually increase, to development, meaning humanity would have to learn to make wiser use of a modest and more stable level of materials taken from the environment.
It makes no sense to tax what you want more of (income, labor?, capital gains) instead of what you want less of (depletion, pollution). Therefore, tax energy and material extraction and pollution, not income. Tax labor and income less, and resource throughput more. Such eco-taxes could be revenue neutral during a transition period so as not to increase the total tax burden. In the past it has been customary for governments to subsidize resource throughput to stimulate growth. Thus energy, water, fertilizer and even deforestation are even now frequently subsidized. Now it is necessary to go beyond removal of explicit financial subsidies to the removal of implicit environmental subsidies as well. "Implicit environmental subsidies" mean external costs to the community that are not charged to the commodities whose production generates them. Costing ecosystem services in cost-benefit analysis of extraction activities also would help.
Get the Price Right
Getting prices right helps with efficient allocation. But a different scale just results in a different set of efficient prices for that scale, just as a different distribution also results in a different efficient allocation. A sustainable scale and a just distribution both must be socially and politically determined and imposed as constraints on the market, which can only then determine proper allocative prices. Sustainable scale and fair distribution cannot be discovered by the market. They have to be politically imposed on the market. Only then will efficient allocation really be worth pursuing.
Separate allocation, distribution, and scale
These three are separate problems:
- First, neoclassical economics has dealt mainly with allocation (the apportionment of scarce resources among competing commodity uses—how many resources go to produce beans, cars, haircuts, etc.). A good allocation is efficient—in the sense that no reallocation can increase anyone’s welfare without decreasing the welfare of someone else. Properly functioning markets allocate resources efficiently in this sense (called Pareto optimality).
- Second, this concept of efficient allocation presupposes a given distribution (the apportionment of goods and resources among different people—how many resources embodied in beans, cars, etc. go to you, how many to me). A good distribution is one that is just.
- The third issue is scale, or the physical size of the economy relative to the ecosystem that sustains it. How many of us are there and how many beans, cars, etc. do we each get on average, and how large are the associated matter-energy flows relative to natural cycles.
A good scale is sustainable. A sustainable scale, like a just distribution, cannot be determined by the market—both are conditions which the market must take as given, which must be politically imposed on the market, and subject to which the market finds the efficient allocation and corresponding prices.
Economists’ legitimate concern with efficient allocation should not be allowed to obscure the critical presuppositions regarding just distribution and sustainable scale. It is fair to say that neoclassical economists accept this reasoning as far as distribution is concerned, but not for scale. If someone urges lower energy prices as a way to help the poor, economists rightly say, “no: that will distort the allocative function of prices—better to help the poor by redistribution of income to them”. Yet economists seem to think that manipulating prices will solve the scale problem—if we just get prices right then the market will move us to the optimal scale. But then why not apply the same logic of just “getting prices right” to distribution—for example? Why not internalize the cost of poverty by subsidizing wage goods and taxing luxury goods, and let the “right prices” lead us to the optimal distribution?
There are good reasons for not trying to solve the distribution question by “right prices,” but those reasons also prevent right prices from solving the scale problem. What are the “right prices,” anyway? Are they the ones that give us the optimal allocation, the optimal distribution, and the optimal scale, all at the same time? That would be lovely, but it runs afoul of logic. Nobel economist Jan Tinbergen set forth a basic principle: for every independent policy goal, we need an independent policy instrument. The logic is analogous to that of simultaneous equations. For every variable to be solved for, we need a separate equation. Is our goal optimal allocation? Fine, then supply equals demand pricing in competitive markets can be our policy equation. We also want just distribution? Fine, but we need a second policy instrument (not prices again). We also want a sustainable scale? Fine, now we need a third policy instrument (not prices yet again). Let us by all means keep prices and markets for solving the allocation problem.
Now what are our independent instruments for solving the distribution and scale problems? Following the logic of cap-and-trade, which conforms nicely to Tinbergen’s rule, scale is set by ecological criteria of sustainability by setting aggregate quotas (caps); distribution is set by ethical criteria of fairness effected by distribution of ownership of the quotas; and that leaves only allocation to be settled by efficiency criteria effected through market prices. Cap-and trade will divert emissions to those able to pay who may not be optimal users of the privilege.
How is it that economists accept the distributive precondition for efficient prices, but apparently not the analogous scale precondition? That may simply be because they have not thought much about scale. Sometimes scale is treated as infinitesimal—the economy is thought to be very small relative to the ecosystem, which consequently is considered infinite and non-scarce.
Focus on development, not growth
Trying to define sustainability in terms of constant GDP is problematic because GDP conflates qualitative improvement (development) with quantitative increase (growth). The sustainable economy must at some point stop growing, but it need not stop developing. There is no reason to limit the qualitative improvement in design of products, which can increase GDP without increasing the amount of resources used. The main idea behind sustainability is to shift the path of progress from growth, which is not sustainable, toward development, which presumably is.
What economists usually mean by growth is growth in GDP. And GDP is the difficult case. Is it physical or nonphysical; quantitative or qualitative? Actually it is the conflation of both just referred to. GDP is measured in value units. Part of value is certainly physical—goods are physical, and even services are always of something or somebody for some period, and therefore have a physical dimension. The other part of value could increase forever, but that would be inflation, and no one wants to count inflation as growth. Economists take pains to calculate real GDP in order to estimate changes in physical growth, and eliminate changes in price levels.
Certainly Keynes defined the growth of the world economy to which the World Bank would be dedicated, in physical terms: “By expansion we should mean increase of resources and production in real terms, in physical quantity, accompanied by a corresponding increase in purchasing power.” Although this is the dominant meaning of growth, it is possible to have GNP growth without growth in aggregate throughput if the mix of goods shifts from high resource-intensive to low resource-intensive commodities. But this is a self-limiting process; it is a very small part of what economists and politicians have in mind when they seek economic growth. What is the best growth policy for the North to adopt for itself to help the South overcome poverty? Should the North grow as fast as possible so it can provide markets in which the South can sell its exports, and accumulate capital to invest in the South? How fair is it for the North to suck up the South’s natural resources and count this as higher GDP of the South? Reforming National Accounts is a must so natural resource user cost is internalized in the price (El Serafy 2009, pers.comm.)
The North should continue its welfare and efficiency growth but stop its throughput growth in order to free resources and ecological space for the South to grow enough to overcome poverty and achieve sufficiency before also stopping its throughput growth. The North should accept the consequences for its GNP growth, whatever they are.
It is clear that the World Bank has effectively opted for the North as well as the South to grow as fast as possible, although without ever explicitly asking the question?. The World Bank should explicitly ask that question. The closest it has come to doing so is the question we were invited to debate in March 2004 in preparation for the World Development Report on “Sustainability”. “Can We Grow Our Way to an Environmentally Sustainable World?”
Is it the world, or the process of economic growth, that should be sustained? Development economists want to sustain growth – that is, a process, not a state of the world. Ecological Economists would like to sustain the world in a state of economic and ecological sufficiency. The attempt to sustain growth will be inimical to that end. Beyond some point growth in production and population will begin to increase social and environmental costs faster than it increases production benefits, thereby ushering in an era of uneconomic growth—growth that on balance makes us poorer rather than richer, that increases “illth” faster than it increases wealth. There is evidence that the United States and other OECD nations have already reached such a point.
What will it take for contemporary economists to adopt ecological economics? Probably a breakdown of current global capitalism, provoked by destruction of the supporting ecosystem. The crisis would destroy the legitimacy of standard growth economics. By analogy, Keynesian economics would have gotten nowhere without the Great Depression. Internal consistency is good, but correspondence with external facts is better.
Focus on Domestic Markets before International Trade
Globalization refers to global economic integration of many formerly national economies into one global economy, mainly by free trade and free capital mobility, but also by easy or uncontrolled migration. It is the effective erasure of national boundaries for economic purposes. Part of the solution is to move away from the ideology of global economic integration by free trade, free capital mobility, and export led growth, and move toward a more nationalist orientation that seeks to develop domestic production for internal markets as the first option, having recourse to international trade only when clearly much more efficient.
Global interdependence is celebrated as a self-evident good. The royal road to development, peace, and harmony is thought to be the unrelenting conquest of each nation's markets by all other nations. The word "globalist" has politically correct connotations, while the word "nationalist" has come to be pejorative. This is so much the case that it is necessary to remind ourselves that the World Bank exists to serve the interests of its members, which are nation states, national communities – not individuals, corporations, or even NGOs. It has no charter to serve the one-world-without-borders, cosmopolitan vision of global integration – of converting many relatively independent national economies, loosely dependent on international trade, into one tightly integrated world economic network upon which the weakened nations depend for even basic survival.
The model of international community on which the Bretton Woods institutions rest is that of a "community of Communities," an international federation of national communities cooperating to solve global problems under the principle of subsidiarity. The model is not the cosmopolitan one of direct global citizenship in a single integrated world community without intermediation by nation states. To globalize the economy by erasure of national economic boundaries through free trade, free capital mobility and free, or at least uncontrolled, migration is to wound fatally the major unit of community capable of carrying out any policies for the common good. That includes not only policy for purely domestic ends, but also international agreements required to deal with environmental problems that are irreducibly global (e.g., atmospheric CO2 accumulation, ozone depletion). International agreements presuppose the ability of national governments to carry out policies to support them. If nations have no control over their borders they are in a poor position to enforce national laws, including those necessary to secure compliance with international treaties.
Cosmopolitan globalism weakens national boundaries and domestic economic policy, and the power of national and subnational communities, while strengthening the relative power of transnational corporations. Since there is no world government capable of regulating global capital in the global interest, and since the desirability and possibility of a world government are both highly doubtful, it will be necessary to make capital less global and more national. That is an unthinkable thought right now, but take it as a prediction – 10 years from now the buzz words will be "renationalization of capital" and the "community rooting of capital for the development of national and local economies," not the current shibboleths of export-led growth stimulated by whatever adjustments are necessary to increase global competitiveness. "Global competitiveness" (frequently a slogan substituting for thought) usually reflects not so much a real increase in resource productivity as a standard-lowering competition to reduce wages, externalize environmental and social costs, and export natural capital at low prices, while calling it income.
Economists should reflect deeply on the words of John Maynard Keynes: "I sympathize therefore, with those who would minimize rather than those who would maximize economic entanglement between nations. Ideas, knowledge, art, hospitality, travel; these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible; and, above all, let finance be primarily national” (Keynes, 1936).
Climate disruption results mainly from the “more growth forever” that conventional economic policy seeks unquestioningly. Climate change is a massive negative side-effect of growth. Lord Stern calls it the biggest externality the world has ever known. Climate change could uproot 6 million people annually by mid-century.
The limiting factor for the throughput of petroleum is no longer the man-made capital of drilling equipment, pipelines, tankers, refineries, and combustion engines—and perhaps not even declining stocks of subterranean oil. Even more limiting is the sink capacity of the earth (atmosphere, soils, vegetation, oceans) to absorb the CO2 resulting from petroleum combustion. Sink capacity is also natural capital. Economic logic says we should economize on and invest in the limiting factor. Economic logic has not changed, but the pattern of scarcity has. More and more it is remaining natural capital that now plays the role of limiting factor. We have been very slow to change our economic policies accordingly and refocus our economizing and investing on natural capital. Instead we have treated natural capital as a free good and accounted its drawdown as income, rather than unsustainable capital consumption. To avoid a write-off on the falling value of excess man-made capital that should result from the increasing scarcity of its complementary factor (natural capital), we continue to increase the rate of drawdown of natural capital, hoping for future geological discoveries and technical advances.
Ecological economics grapples with the (recent) scarcity of environmental functions or scarcity of sources and sinks. Communities have long faced local scarcities. The difference now is that these scarcities are regional and global. There is no new frontier. How total rents are determined and divided between source scarcity and sink scarcity is a technical problem that economists have not tackled because natural resources have not been considered important, and until recently pollution has been dismissed as an externality. Economists have focused on capturing source rents through property rights, then internalizing the external sink costs of pollution through taxes. Only recently has a theoretical discussion emerged of property rights in atmospheric sink capacity—whether these should be public or private, the extent to which trade in such rights should be allowed, and so on. As an initial rule of thumb we might assume that since the sink side is now the more limiting function, it should be accorded half or more of the total throughput scarcity rents. In other words, sink rents should be at least as much as source rents.
The 2009 Economic Meltdown
This is really not a “liquidity” crisis as it is often euphemistically called. It is a crisis of overgrowth of financial assets relative to growth of real wealth—pretty much the opposite of too little liquidity. Financial assets have grown by a large multiple of the real economy. It should be no surprise that the relative value of the vastly more abundant financial assets have fallen in terms of real assets. Real wealth is concrete; financial assets are abstractions. Basically they are liens on future real assets that are based on expectations of future real growth. That is to say they are in real terms debts or liabilities. The term asset is very misleading. Liens on the future are monetary assets to the owner, but are real liabilities to the society that has to grow in real wealth to redeem those liens. Can the economy grow fast enough in real terms to redeem the massive increase in liens? In a word, no. The general realization that the answer is no, even though no one publicly admits it, is what caused the crisis.
The problem is not too little liquidity, but too many worthless or devalued liens on the future. Growth in US real wealth is restrained by increasing scarcity of natural resources, both sources like oil depletion, and sinks, like absorptive capacity for Greenhouse gas, as well as spatial displacement, and also increasing inequality of distribution of income.
Marginal costs of real (not financial or abstract) growth now are likely to exceed marginal benefits, so that real physical growth makes us poorer, not richer. To keep up the illusion that growth is making us richer we have multiplied financial assets almost without limit, conveniently forgetting that these so-called assets are nothing but liens on future growth in real wealth that is very unlikely to happen.
Peak oil also contributed to the current crisis. The spike in oil prices to >$140/barrel and the spike in gasoline prices it caused was a trigger to expose the house of cards that the housing market had become. The recession eased demand and brought oil prices down, but if the "stimulus" packages work, then demand will outstrip supply again, another oil price spike, and another recession. This may be the way we approach steady-state, with damped oscillations as we bump up against energy and climate constraints (Costanza 2009, pers.comm.).
|Box 5: What allowed financial assets to become so disconnected from real assets?|
First, our fractional reserve banking system allows pyramiding of the money supply.
Second, buying stocks and derivatives on margin allows a further pyramiding of the financial on top of the real.
Third, credit card debt expands the supply of quasi-money, as do other financial “innovations” that were designed to circumvent regulation of commercial banks.
Important in all this is our balance of trade deficit that has allowed us to consume as if we were really growing, combined with the willingness of our surplus trading partners to lend the dollars they earned back to us by buying treasury bills—more liens on future growth. Some of us have for a long time been saying that this behavior was unsustainable. Maybe we were right.
Herman Daly, Robert Costanza, Roefie Hueting, Salah El Serafy, Peter Victor............
Bibliographic note: Herman Daly’s publications are fairly complete in this listing up to c.1977 in order to establish historicity and chronology. Many of his publications have been republished, reprinted and translated; I have not included them. In such cases I have cited the earliest publication that I could find, not necessarily the best known.
- Costanza, Robert & H. E. Daly. 1987. Toward an ecological economics. Ecological Modelling 38: 1-7.
- Costanza, Robert. 1989. What is ecological economics? Ecological Economics 1:1-7.
- Costanza, Robert, B. Haskell, L. Cornwell, H. Daly, and T. Johnson. 1990. The ecological economics of sustainability: making local and short-term goals consistent with global and long-term goals. Environment Department, Working Paper No. 32. Washington, D.C.: The World Bank.
- Costanza, Robert (Ed.). 1991. Ecological Economics: The Science and Management of Sustainability. New York, N.Y., Columbia University Press, 525 p.
- Costanza, Robert & H. E. Daly. 1992. Natural capital and sustainable development. Conservation Biology 6: 37-46.
- Costanza, Robert. 1996. Ecological economics: Reintegrating the study of humans and nature. Ecological Applications: a Publication of the Ecological Society of America. 6 (4): 978.
- Costanza, Robert, Olman Segura Bonilla, and Juan Martínez-Alier. 1996. Getting down to earth: practical applications of ecological economics. International Society for Ecological Economics series. Washington, D.C.: Island Press 472 p.
- Costanza, Robert, C. Perrings & C. Cleveland (eds.) 1997. The development of ecological economics. Cheltenham, U.K, Edward Elgar 777 p.
- Costanza, Robert, J. C. Cumberland, H. E. Daly, R. Goodland & R. Norgaard. 1997. An introduction to Ecological Economics. St. Lucie Press, Boca Raton, 275 p.
- Costanza, Robert. 1997. Frontiers in ecological economics: transdisciplinary essays by Robert Costanza. Cheltenham UK., Edward Elgar 491 p.
- Costanza, Robert, Maureen Hart, Stephen Posner & John Talberth, 2009. Beyond GDP: The Need for New Measures of Progress. Boston, MA., The Pardee Center Papers, Issue 4: 40 p.
- Costanza, Robert. 2009. Toward a new sustainable economy. Real-World Economics Review 49: 20-21. http://www.paecon.net/PAEReview/issue49/Costanza49.pdf.
- Daly, Herman E. 1968. On Economics as a life science. Chicago, Journal of Political Economy 76(3): 15-29.
- Daly, Herman E. 1970. Towards a Stationary-State Economy. Yale Alumni Magazine (May).
- Daly, Herman E. 1971. A Marxian-Malthusian view of poverty and development. Population Studies 2 (1): 25-37. www.jstor.org/stable/2172745.
- Daly, Herman E. 1971. (ed.) Essays toward a steady-state economy. Cuernavaca, Centre Intercultural de Documentación, CIDOC Cuaderno No: 70: v.p.
- Daly, Herman E. 1971. The stationary-state economy: Toward a political economy of biophysical equilibrium and moral growth. University of Alabama, Distinguished Visiting Lecture Series, No. 2: September.
- Daly, Herman E. 1972. In Defense of the steady-state economy. American Journal of Agricultural Economics 54(5): 945-954.
- Daly, Herman E. 1972. Institutions Necessary for a Steady-State Economy: Three Suggestions. IDOC, September
- Daly, Herman E. 1973. A Model for a Steady-State Economy. In: Growth and Its Implications for the Future. Part 1: 435-457. Hearings before the Subcommittee on Fisheries and Wildlife Conservation and the Environment of the Committee on Merchant Marine and Fisheries, House of Representatives, 93rd Congress, First Session, (May 1). Washington DC.
- Daly, Herman E. 1973. (ed.) Toward a steady-state economy. San Fransicso, W. H. Freeman 332 p.
- Daly, Herman E. 1974. Steady-state economics vs. growthmania: A critique of the orthodox conceptions of growth, wants, scarcity, and efficiency. Policy Sciences 5(2): 149-167.
- Daly, Herman E. 1974. The economics of the steady state. American Economic Review 62(4): 15-21.
- Daly, Herman E. 1975. The developing economies and the steady state. The Developing Economies (September): 231-242.
- Daly, Herman E. & Ezra Mishan. 1975. Chapter 3 in: Economic growth in the future: the growth debate in national and global perspective. Edison Electric Institute, McGraw-Hill 423 p.
- Daly, Herman E. 1976. The Transition to a Steady-State Economy. In: The Steady State Economy, Vol. 5: pp. 13-39. Joint Economic Committee of Congress, U.S. Economic Growth from 1976 to 1986: Prospects, Problems, and Patterns. U.S. Government Printing Office, Washington, D.C.: 12 vols.
- Daly, Herman E. 1977. The Steady-State Economy: What, Why, and How? (pp. 107-130) in: The Sustainable Society: Implications for Limited Growth. Dennis Pirages (ed.) New York: Praeger Publishers 342 p.
- Daly, Herman E. 1977. Steady State Economics: The Political Economy of Biophysical Equilibrium and Moral Growth. San Fransisco CA., W.H. Freeman 185 p.
- Daly, Herman E. 1978. Toward a steady-state economy: The Economics of Biophysical Equilibrium and Moral Growth. W.H. Freeman 2nd ed ???
- Daly, Herman E. (ed.) 1980. Economics, ecology, ethics: essays toward a steady-state economy. San Francisco CA., W. H. Freeman 372 p.
- Daly, Herman E. & Álvaro Umaña (eds.) 1981. Energy, economics and the environment. Conflicting views of an essential interrelationship. Boulder CO., Westview Press [for] American Association for the Advancement of Science 200 p.
- Daly, Herman E. 1981. Lo Stato Stazionario: l'economia dell'equilibrio biofisico e della crescita morale. Firenze, Sansoni Editore 250 p.
- Daly, Herman E. 1984. A Economia do Século XXI. Porto Alegre RS., Brasil, Mercado Aberto Editora 116 p.
- Daly, Herman E. & Robert Costanza, 1987. Toward an ecological economics. //search.ebscohost.com/login.aspx?direct=true&db=eih&AN=8152416&site=ehost-live. Ecological Modelling 38 (1-2): p.1.
- Daly, Herman E. & John Cobb.1989. For the common good: redirecting the economy toward community, the environment, and a sustainable future. Boston, Beacon Press, 482 p.
- Daly, Herman E. 1990. Sustainable development: From concept and theory to operational principles. Population and Development Review (Supplement): 19 p.
- Daly, Herman E. 1991. Sustainable development: from concept and theory to operational principles (pp. 25-43) In: Resources, environment, and population: present knowledge, future options, edited by Kingsley Davis and Mikhail S. Bernstam. New York, New York, Oxford University Press,
- Daly, Herman E. 1991. Steady-state economics. (2nd. ed.) with new essays. Washington, D.C., Island Press, 302 p.
- Daly, Herman E. & R. Goodland. 1992. Ten reasons why Northern income growth is not the solution to Southern poverty. International Journal of Sustainable Development 1(2): 23-30.
- Daly, Herman E. 1992. Allocation, distribution, and scale: Towards an economics that is efficient, just, and sustainable. Ecological Economics 6(3): 185-193.
- Daly, Herman E. & K. Townsend (eds.) 1993. Valuing the Earth: Economics, Ecology, Ethics. Cambridge, MA, M.I.T. Press, 387 p.
- Daly, Herman E., R. Goodland & Salah El Serafy. 1993. The Urgent Need for Rapid Transition to Global Environmental Sustainability. Environmental Conservation 20(4): 297-310.
- Daly, Herman E. & R. Goodland. 1994. An ecological-economic assessment of deregulation of international commerce under GATT. Population & Environment, Part 1: 15(5): 394-427. Part 2: 15(6): 477-503.
- Daly, Herman E. 1994. Operationalizing sustainable development by investing in natural capital (22-37) in: Investing in Natural Capital, edited by AnnMari Jansson, Monica Hammer, Carl Folke, and Robert Costanza. Washington DC., Island Press 504 p.
- Daly, Herman E., R. Goodland & J. Kellenberg. 1994. Imperatives for environmental sustainability: Decrease overconsumption and stabilize population (87-99) in: Nicholas Polunin and Mohammad Nazim (eds.) Population and Global Security. United Nations Population Fund, Geneva 285 p.
- Daly, Herman E. 1994. Farewell speech [Upon leaving the World Bank] www.whirledbank.org/ourwords/daly.html.
- Daly, Herman E. 1996. Beyond Growth: The economics of sustainable development. Boston MA., Beacon Press, 253 p.
- Daly, Herman E. 1999. Globalization versus internationalization: some implications. Ecological Economics 31: 31–37.
- Daly, Herman E. 1999. Ecological economics and the ecology of economics. Cheltenham UK., Edward Elgar 191 p.
- Daly, Herman E. 2002. Sustainable development: Definitions, principles, policies. Invited Address: Comments on the World Bank’s [draft] “World Development Report 2003”. Washington DC., World Bank (April 30).
- Daly, Herman E. 2003. The illth of nations and the fecklessness of policy: An ecological economist’s perspective. Post-autistic Economics Review 22(1): http://www.paecon.net/PAEReview/issue22/Daly22.htm: 7 pp.
- Daly, Herman E and Joshua Farley 2003. Ecological economics: Principles and applications. Washington DC., Island Press 454 p.
- Daly, Herman E. 2004. Can we grow our way to an environmentally sustainable world? A debate. Washington DC., The World Bank (2nd. March).
- Daly, Herman E. 2005. Economics in a full world: Society can no longer safely pretend the global economy operates within a limitless ecosystem. Planners must think afresh about how to increase prosperity. Scientific American 293 (3): 100-107.
- Daly, Herman E. 2005. Economics in a full world. IEEE Engineering Management Review 33 (4): p. 21.
- Daly, Herman E. 2006. Population, migration, and globalization. Ecological Economics 59 (2): 187-190.
- Daly, Herman E. 2007. Ecological economics and sustainable development: Selected essays of Herman Daly. Cheltenham, UK: Edward Elgar, 270 p.
- Daly, Herman E. 2008. Growth and development: Critique of a credo. [Critique of the “Growth Commission” report, see: World Bank 2008]. Population and Development Review 34 (3): 511–518.
- Hueting, Rofie. 1974. New Scarcity and Economic Growth: More Welfare through Less Production? [Nieuwe schaarste en economische groei. Meer welvaart door minder produktie?] Amsterdam, Agon Elsevier 285 p. [casu quo North Holland Publishing Company, 1980, 269 p.]
- Hueting, Roefie. 2009. Why environmental sustainability can most probably not be attained with growing production. Oxford: Elsevier Science Ltd., Journal of Cleaner Production. (www.sciencedirect.com/science/journal/09596). Journal of Cleaner Production, edited by: Francois Schneider, Giorgos Kallis and Joan Martinez-Alier.
- Jackson, Tim. 2009. Prosperity without growth? The transition to a sustainable economy. www.sdcommission.org.uk/publications/downloads/prosperity_without_growth_report.pdf. London, Sustainable Development Commission, 136 p.
- Keynes, John Maynard. 1936. The general theory of employment, interest and money. London, Macmillan, 403 p.
- Malthus, Thomas Robert. 1798. An essay on the principle of population, as it affects the future improvement of Society; with remarks on the speculations of W. Godwin, M. Condorcet and other writers London: J. Johnson: 396 p. 3rd. Ed. 1806. London, Printed for J. Johnson: 2 vols or 610 p. //books.google.com.
- Martinez-Alier, Joan & Klaus Schlüpmann, 1987. Ecological economics: energy, environment, and society. Oxford UK, Basil Blackwell, 286 p.
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- Meadows, Donella H., Dennis Meadows, J. Randers & W. W. Behrens. 1972. The Limits to Growth. New York: Universe Books, 405 p.
- Meadows, Donella H. Dennis Meadows & J. Randers. 1992. Beyond the Limits. Confronting Global Collapse, Envisioning a Sustainable Future. Post Mills, VT: Chelsea Green 300 p.
- Mill, John Stuart. 1848. Principles of political economy with some of their applications to social philosophy. London, John W. Parker, 2 vols. Mill’s classical term, a “stationary state of population and capital” is in: Book 4, Chapter 6: “Of the Stationary State.” 6 pp.
- Polimeni, John M., K. Mayumi, M. Giampietro & B. Alcott. 2008. The Jevons paradox and the myth of resource efficiency. London, Earthscan 184 p.
- Porritt, Jonathan. 2009. Living within our means: avoiding the ultimate recession. London, Forum for the Future, The Sustainable Development Commission, 39 p. http://www.forumforthefuture.org/files/Living_within_our_means_sml.pdf
- Prugh, Thomas with R. Costanza, J. Cumberland, H. Daly, R, Goodland, and R. Norgaard. 1995. Natural Capital and Human Economic Survival. Solomons, MD, ISEE Press 195 p. (2nd. ed.1999.)
- Prugh, Thomas, Robert Costanza & Daly, Herman E. 2000. The local politics of global sustainability. Washington, D.C., Island Press 173 p.
- Smith, Adam. 1776. An inquiry into the nature and causes of the wealth of nations. London, Printed for W. Strahan and T. Cadell, 2 vols. //books.google.com.
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- Victor, Peter A. 2008. Managing without growth: slower by design, not disaster. Cheltenham UK, Edward Elgar, 272 p. www.managingwithoutgrowth.com.
- World Bank, 2002. World Development Report 2003: Sustainable Development in a Dynamic World. Washington DC: World Bank 276 p.
- World Bank and others, 2008. The growth report: strategies for sustained growth and inclusive development. Washington DC: World Bank on behalf of the Commission on Growth and Development 180 p.
This is a chapter from Herman Daly Festschrift (e-book).
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