A steady-state economy

Herman Daly

1st April, 2008

Economist Herman E Daly argues that our future depends on a new economic model, one that needs to be defined by the dynamic balance – the steady state – of the natural world upon which it depends.

We have lived for 200 years in a growth economy. In this time we have come to believe that all our major economic ills – from unemployment and poverty to overpopulation and even environmental degradation – can be solved by more growth. And if the global economy existed in a void perhaps that would be true. But it does not.

Instead the economy is a subsystem of the finite biosphere that supports it. When the economy’s expansion encroaches too much on the surrounding biosphere, we begin to sacrifice natural capital (animals, plants, minerals and fossil fuels) that is worth more than the manmade capital (roads, factories, appliances) added by ‘growth’.

The Earth as a whole is approximately a ‘steady state’. Neither the surface nor the mass of the earth is growing or shrinking; the inflow of energy to the Earth is equal to the outflow; and material imports from space are roughly equal to exports (both negligible).

In the last 60 years the global population has tripled and the amount of things our population has produced has increased by many times more, increasing our draw on natural capital, as well as on the earth’s capacity to deal with the waste produced by...

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