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Mother Pelican
A Journal of Solidarity and Sustainability

Vol. 10, No. 11, November 2014
Luis T. Gutiérrez, Editor
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An Economics Fit for Purpose in a Finite World

Herman Daly

This article was originally published in
The Daly News, 2 October 2014
under a Creative Commons License


The Center for the Advancement of the Steady State Economy (CASSE) is a research group on economic sustainability located in Arlington, Virginia, USA. The mission of CASSE is "to advance the steady state economy, with stabilized population and consumption, as a policy goal with widespread public support."

Causation is both bottom-up and top-down: material cause from the bottom, and final cause from the top, as Aristotle might say. Economics, or as I prefer, “political economy,” is in between, and serves to balance desirability (the lure of right purpose) with possibility (the constraints of finitude). We need an economics fit for purpose in a finite and entropic world.

As a way to envision such an inclusive economics, consider the “ends-means pyramid” shown below. At the base of the pyramid are our ultimate means, low entropy matter-energy–that which we require to satisfy our purposes–which we cannot make, but only use up. We use these ultimate means, guided by technology, to produce intermediate means (artifacts, commodities, services, etc.) that directly satisfy our needs. These intermediate means are allocated by political economy to serve our intermediate ends (health, comfort, education, etc.), which are ranked ethically in a hierarchy by how strongly they contribute to our best perception of the Ultimate End. We can see the Ultimate End only dimly and vaguely, but in order to ethically rank our intermediate ends we must compare them to some ultimate criterion. We cannot avoid philosophical and theological inquiry into the Ultimate End just because it is difficult. To prioritize logically requires that something must go in first place.

Daly-Ultimate-Political-Economy.jpg

The ends-means pyramid or spectrum relates the basic physical precondition for usefulness (low entropy matter-energy) through technology, political economy, and ethics, to the service of the Ultimate End, dimly perceived but logically necessary. The goal is to unite the material of this world with our best vision of the good. Neoclassical economics, in neglecting the Ultimate End and ethics, has been too materialistic; in also neglecting ultimate means and technology, it has not been materialistic enough.

The middle position of economics is significant. Economics in its modern form deals with the allocation of given means to satisfy given ends. It takes the technological problem of converting ultimate means into intermediate means as solved. Likewise it takes the ethical problem of ranking intermediate ends with reference to a vision of the Ultimate End as also solved. So all economics has to do is efficiently allocate given means among a given hierarchy of ends. That is important, but not the whole problem. Scarcity dictates that not all intermediate ends can be attained, so a ranking is necessary for efficiency–to avoid wasting resources by satisfying lower ranked ends while leaving the higher ranked unsatisfied.

Ultimate political economy (stewardship) is the total problem of using ultimate means to best serve the Ultimate End, no longer taking technology and ethics as given, but as steps in the total problem to be solved. The total problem is too big to be tackled without breaking it down into its pieces. But without a vision of the total problem, the pieces do not add up or fit together.

The dark base of the pyramid is meant to represent the fact that we have relatively solid knowledge of our ultimate means, various sources of low entropy matter-energy. The light apex of the pyramid represents the fact that our knowledge of the Ultimate End is much less clear. The single apex will annoy pluralists who think that there are many “ultimate ends.” Grammatically and logically, however, “ultimate” requires the singular. Yet there is certainly room for plural perceptions of the nature of the singular Ultimate End, and much need for tolerance and patience in reasoning together about it. However, such reasoning together is short-circuited by a facile pluralism that avoids ethical ranking of ends by declaring them to be “equally ultimate.”

It is often the concrete bottom-up struggle to rank particular ends that gives us a clue or insight into what the Ultimate End must be to justify our proposed ranking.

As a starting point in that reasoning together, I suggest the proposition that the Ultimate End, whatever else it may be, cannot be growth in GDP! A better starting point for reasoning together is John Ruskin’s aphorism that “there is no wealth but life.” How might that insight be restated as an economic policy goal? For initiating discussion, I suggest: “maximizing the cumulative number of lives ever to be lived over time at a level of per capita wealth sufficient for a good life.” This leaves open the traditional ethical question of what is a good life, while conditioning its answer to the realities of economics and ecology. At a minimum, it seems a more convincing approximation to the Ultimate End than today’s impossible goal of “ever more things for ever more people forever.”

ABOUT THE AUTHOR

Herman Daly is a professor emeritus at the University of Maryland, School of Public Policy. From 1988 to 1994 he was a senior economist at the World Bank. Prior to that he was a professor of economics at Louisiana State University. He holds a B.A. from Rice University and a Ph.D. from Vanderbilt University. He co-founded the journal Ecological Economics. He has written many articles and books, including Steady-State Economics, For the Common Good (with John Cobb),Valuing the Earth, Beyond Growth, Ecological Economics (with Josh Farley), and Ecological Economics and Sustainable Development. Herman is a recipient of Sweden’s Honorary Right Livelihood Award, the Heineken Prize for Environmental Science, the Leontief Prize, the Medal of the Presidency of the Italian Republic, and the NCSE Lifetime Achievement Award.


The Kingdom of God: A Steady State Economy?

Brian Czech

This article was originally published in
The Daly News, 9 October 2014
under a Creative Commons License

I’ll never forget the privilege, maybe five years ago, of addressing a small, inter-denominational group of faith leaders in Washington, DC. They’d asked me to talk about limits to economic growth and to give a synopsis of the steady state economy as an alternative to growth. We then went around the group, perhaps eight in all, and discussed the issues. One pastor, deep in thought, summarily theologized, “The steady state economy; now that’s the Kingdom of God.” I can hear it like it was yesterday.

The rest of the conversation isn’t quite so vivid. As a long-time advocate of the steady state economy, maybe I got too excited to focus, thinking of the possibilities with God on our side! Also, it’s not like the pastor (Episcopal as I recall) had a full-fledged steady-state theology developed, at least at the time. Macroeconomics is not something he or the rest of the group had thought much about, but they’d definitely taken an interest in protecting the environment, or “caring for Creation” as some like to say.

And yet, if there is a place for common sense in theology, there is plenty to suggest the pastor was right on track. Would anyone be driving a Hummer in the Kingdom of God? Or building a McMansion? Wearing a fur coat? Presumably the trappings of conspicuous consumption would seem more befitting of…you know, that other place.

The pastor knew something was awry with the quest for ever more. Striving for more and more stuff isn’t caring for Creation. Think, for example, what it means to life on earth–all of Creation–with economic growth as the primary policy goal of so many nations. If you were to list the causes of species endangerment, it would read like a Who’s Who of the economy. A proliferation of all such activities is hardly wise husbandry.

But to really assess the relationship or relevance of economic growth to the Kingdom of God, and prior to any thorough theological assessment, we must have a solid grasp of exactly what economic growth is. It’s not enough to make vague references to Hummers or ask, “What would Jesus drive?”

In textbook terms, then, economic growth is increasing production and consumption of goods and services in the aggregate. It requires increasing human population and/or per capita consumption, and almost always entails both. The metric used to measure economic growth is GDP, or gross domestic product.

The phrase “in the aggregate” is actually quite important. Sometimes we hear confusing talk about “green jobs” and even “green growth.” It may well be that replacing oil wells with vast arrays of solar panels and wind towers provides different jobs than we had in the past and doesn’t result in as many carbon emissions. But that one development–replacing fossil fuels with renewable energy–is hardly economic growth. It’s a sectoral readjustment that may or may not accompany economic growth: increasing production and consumption of goods and services in the aggregate. If we do manage to generate enough power from renewable sources to have even more agriculture, mining, logging, ranching, milling, manufacturing, and service sectors all the way from transportation to entertainment, what happens to all the wildlife habitat?

The fact is, in the push for GDP growth, God’s creatures suffer. To put it in the technical terms of ecological economics, as the human economy grows, natural capital is reallocated out of the economy of nature and is converted into consumer goods and manufactured capital. How is that caring for Creation? The steady state economy–stabilized population and per capita consumption, in simplest terms–means a stable environment for all the other creatures.

A growing number of citizens and activists are taking note that pulling out all the stops for GDP growth isn’t making man any happier. It has even become popular in sustainability circles to discredit GDP, as if it’s a meaningless indicator. However, attacking GDP is like shooting the messenger, or shooting the metric to be more accurate. Yes, it is perfectly true and important to realize that GDP is not a measure of wellbeing, but GDP is a solid indicator of the size of an economy. Despite all the talk of “green growth,” real GDP (“real” meaning adjusted for inflation) cannot increase without more impact on the environment.

Czech-Horizontal-Integration.jpg
“All flesh is grass” in the Kingdom of God – and the human economy.
Photo Credit: horizontal.integration

Here is where a bit of theology seems to dovetail nicely with biology. The Bible says, “All flesh is grass” (Isaiah 40:6). While the direct theological implication seems more about the insignificance of man on Earth, relative to God, this verse is more than mere metaphor. The fact is that the foundation of the “economy of nature,” or Creation, is indeed plants, or “grass” in the words of Isaiah. No plants, no animals: no grass, no flesh.

This truth happens to be a central pillar of ecology. Every good ecology textbook will have a thorough discussion of “trophic levels.” Living beings in nature start with the plants at the base, literally and figuratively. Plants are called “producers” because they produce their own food in the process of photosynthesis. All other beings are “consumers” of some type. Primary consumers eat plants directly; secondary consumers eat the primary consumers. Primary consumers are often called herbivores; secondary consumers are “predators.” These are the three basic trophic levels: producers, primary consumers, and secondary consumers.

Meanwhile the book of Genesis says that God created mankind in his own image. It seems fitting, then, that the economy of man is like a microcosm of Creation, or the economy of nature. Man’s economy has producers (agricultural and extractive sectors), primary consumers (manufacturing), and secondary consumers including the purchasers of consumer goods and services in the market.

In order to have increasing production and consumption of goods and services in the aggregate, there must be more surplus produced at the base of the trophic structure. In other words, there must be more agricultural and extractive activity to free the hands for the division of labor into manufacturing, services, and “green” jobs. More and more money spent means more and more environmental impact; more erosion of the Creation.

Finally, no discussion of a steady state economy can be complete without the issue of population. Hopefully common sense suffices for understanding how we cannot have perpetual population growth on a finite planet. We humans aren’t like angels on the head of a pin. We have minimum material and energy requirements for survival.

My theology is amateurish at best, but isn’t the Kingdom of God supposed to lead to the final Kingdom of Heaven? It would seem that, at some stage, after life on Earth, the Kingdom of Heaven comes to its fruition of souls. So perhaps our good pastor was thinking ahead–way ahead–on the population front! Meanwhile, doing the best we can at caring for Creation entails serious efforts toward stabilizing our population as well as tempering our consumption.

It’s not easy advancing the steady state economy as the sustainable alternative to economic growth. If money is the root of all evil, we have a nasty force working against us: Big Money! The corporate forces in the world don’t want us talking about limits to growth or a steady state economy. They want governments pulling out all the stops for GDP growth.

On the other hand, they don’t exactly have the ultimate Commander in Chief on their side!

ABOUT THE AUTHOR

Brian Czech has a Ph.D. in renewable natural resources studies from the University of Arizona with a minor in political science. The founding President of CASSE, Brian is also a Visiting Professor at Virginia Tech, where he teaches ecological economics in the National Capitol Region. A prolific author in a variety of venues, his scientific articles have appeared in dozens of peer-reviewed journals, dealing primarily with ecological and economic sustainability issues. His books include Supply Shock: Economic Growth at the Crossroads, released in May 2013, Shoveling Fuel for a Runaway Train, which calls for an end to uneconomic growth, and The Endangered Species Act: History, Conservation Biology, and Public Policy. Brian is a regular contributor to The Huffington Post and The Daly News, a blog devoted to advancing the steady state economy as a policy goal with widespread public support. Brian is also a Interdisciplinary Biologist in the national office of the U.S. Fish and Wildlife Service, where he received a 2010 Star Award for outstanding performance. He has played a leading role in engaging the environmental sciences and natural resources professions in ecological economics and macroeconomic policy dialog.


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