[This continues Economy Too Big for Its Biosphere]
If the world’s economy is already “full” and further growth is actually uneconomic, then we need to transform to a sustainable “steady-state” system as soon as possible. But what are the parameters, and how do we go about it?
University of Maryland Professor Herman Daly recently laid out some pointers in a lecture to his students and, with a few cuts and tucks and in somewhat plainer language, below is a summary of the reforms he has proposed as necessary.
Bear in mind that the biosphere’s resources are finite and rapidly being used up thanks to the stubborn pursuit of “growth”; whereas a “steady-state” model is one that neither grows nor shrinks, but produces only sufficient to meet reasonable needs, and does not create unreasonable ones.
In other words, the goal of a steady state is to sustain a constant, sufficient stock of real wealth and people for a long time. This is radical change from today’s thoughtless consumerism.
That said, the major economic steps Professor Daly promulgates in aiming for sustainability are as follows:
* Adopt a quota system for resource use, dependent on scarcity and resultant pollution. Auction the quotas; higher bid-prices induce more economical use of the material. Government uses revenues to lessen taxation.
* Tax resource use at source, not after things are made from it, and tax end-life disposal. An “ecological” tax system that discourages depletion and pollution but encourages added value.
* Set fair limits on the range of remuneration – minimum and maximum income. Justifying huge salary differences to promote growth is a fairy tale in a full-world economy.
* Allow greater freedom and flexibility in where and how and when people work. If you’re not trying for growth, you don’t need – indeed, cannot support – full full-time employment.
* Scrap “free” trade and re-regulate tariffs to protect efficiency (rather than subsidize inefficiency). To integrate the world’s economies we must rebalance wages, health care, and environmental standards. Trade should be “fair”, not “free”.
* Reform the WTO/IMF/World Bank to return to Keynes’ original plan for a multilateral payments clearing house. Penalize both surpluses and deficits to encourage balance.
* Establish a global reserve currency that regulates capital mobility. Uncontrolled capital transfers allow corporations to escape national public-interest regulation by playing nations against each other. This must be reversed.
* Governments, not banks, should control the money supply by requiring a 100% reserve for all lenders, so every dollar lent is one previously saved. Maintain a constant price index to govern the internal value of the dollar, regardless of interest and price fluctuations.
* Stop treating non-scarce things as if they were scarce. International development aid should take the form of actively shared knowledge. Costs of production of new knowledge should be publicly funded.
* Reform national accounts by separating GDP into costs and benefits so that throughput growth can be stopped when marginal costs are greater than marginal benefits. Introduce universal “triple-bottom-line” accounting, with a full evaluation of environmental impacts.
Yes, radical measures, but each of these is capable of gradual implementation, and is based on the conservative institutions of private property and decentralized market allocation.
They simply recognize that private property loses its legitimacy if too unequally distributed, and that markets lose their legitimacy if prices do not tell the whole truth about opportunity costs.
Remember, any notion of economy becomes absurd if it exceeds the life-sustaining limits of the Earth. That we have already entered the era of uneconomic growth remains, so far, unrecognized.
As for whether such policies are achievable, the major fly in the ointment – and the one which has attracted the most debate amongst the hundreds of comments posted online in response to Prof. Daly’s original article – is the need to control population.
And given that current global output is insufficient to meet the reasonable needs of current global population, and also that even with the best will in the world resources simply cannot be stretched far enough to meets those needs, that implies not just stopping population growing, but actually reducing it.
That is no small ask. Visions of some form of Soylent Green future (thanks, Harry Harrison!) spring readily to mind, and when you factor in religion and individual rights (just to name two) the prospect of achieving even a slow-down in people numbers is seemingly beyond reach.
That doesn’t mean we shouldn’t try. Interestingly, a large slice of readers of Prof. Daly’s lecture seem to agree, because there is very little contrary debate about the need; the arguments are all about the means.
Maybe it’s because there’s no alternative. Going steady may demand more than we would like to give, but that sure beats whimpering out as we speed off over the cliff.
More cool stuff on Celsias:
Stop Building Tanks. Start Solving Our Climate Problems.
The Oil Intensity of Foods
Follow us on Twitter: Celsiastweets
