Steady State Stultification

So here’s another call for a steady state economy for an environmentalist, this time a respected blogger. I really despair of this incredibly pessimistic attitude. It’s also completely barmy. The global economy is currently worth an estimated $62 trillion, or $10,500 per head at purchasing power parity. How would you fancy that as your annual salary? Didn’t think so! I think we can comfortably agree that most other people earning over the global mean would feel similarly, and hence the idea is dead at birth. Steady staters may claim that an SSE doesn’t have to equate with communism, but it does sound awfully like it in some key aspects.

I have a sneaking suspicion that what many SSE proponents envision is a national steady state economy rather than a global one. Presumably this would therefore be closed to immigration? How about that for a new left-right partnership? And apart from the insufferable sense of moral superiority that it might give them, since a large part of global economic growth is now taking place in poor countries, and that this economic growth generates lots of global externalities (did someone mention greenhouse gases?) one wonders exactly what good it would do the SSE-adopting countries.

I am firmly in favour of conservation and development, and I’m even more certain that the communities where we work are, though they’d probably be quite happy with an annual salary of $10,500. That said there are some big issues out there which often get left unmentioned for the sake of political correctness. How far off are the limits to further growth? We don’t know the full answer (so how can you set the correct level for a steady state economy?), but one or more water wars in drier parts of the world seem a likely outcome for the 21st century. If everyone in the world ate as much meat as your average Yankee we’d need multiple Earths just to grow all the animal feed. Then there’s this global warming thing that’s gotten everyone up in arms.

Almost every social and environmental problem in the world would be easier, possibly much easier to resolve if there were less people sharing our planet. It should be possible to talk sensibly about population and demography without being accused of advocating neo-eugenics or sounding like Paul Ehrlich on LSD.

Technology can certainly help, but it won’t solve every problem, and the steady staters are also right to point to the need to include things like natural capital in accounting standards (national and corporate). Simply choosing the right reference points could do a lot to avert our global headlong rush into catastrophe. Two things prevent this from happening right now: we don’t really yet know how to value stuff like biodiversity (or even how many billions of tonnes of carbon we can safely pump into the atmosphere), and heavy political resistance in favour of the status quo. Probably things are going to have to get somewhat worse, and natural resources ever scarcer, before the tipping point to change comes. Pushing SSE nonsense in the meantime, however, isn’t going to help our cause.

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6 responses to this post.

  1. Posted by Megan Evans on January 25, 2011 at 6:36 am

    I’m not entirely sure I understand what your specific criticisms of SSE really are. Firstly, a SSE does not imply everyone should have the same income – Herman Daly has said himself that “Complete equality is unfair; unlimited inequality is unfair.” http://bit.ly/eL2D5A
    It’s more about limiting the range of inequality. Daly suggests a factor of 100 (that article indicates that civil service, the military, university sectors have an inequality range of 15 or 20, whereas the corporate sector has a range of 500 or more.)
    In terms of limits to growth, I thought that was fairly clear (i.e Rockstrom 2009 http://bit.ly/32yJh and ecological overshoot http://bit.ly/3wk0Do).
    I agree there are enormous difficulties with valuing biodiversity and the current political situation seems near-impossible, but how can “pushing SSE nonsense in the meantime” be detrimental to biodiversity conservation or development (assuming it is articulated correctly)? When would be a good time to openly discuss the need for a transition to ecological sustainability?

    Reply

    • Hi Megan,

      What an SSE does imply is that the mean per capita income does not budge. Conservation is not a high paying sector, so existing salaries are probably close to the mean for age and experience. Would you be happy with a mean salary of $10,500 across the conservation sector, scaling your current and future income accordingly?

      The limits to growth and ecological overshoot are important issues, but we are not entirely sure where they are yet. More to the point, as with the climate change negotiations, we have to work within the political realities with which we are faced. Of course, ecological limits are pretty absolute, whereas politics can and do change over time. But, the SSE ideas are pretty far out there and, in the sense that someone has to determine what the steady state should be, come with a strong neo-communist overtone. If you want to move the political debate you are better off presenting ideas that are more broadly palatable. As with the carbon issue, I think there is a lot to be said for simply taxing carbon / enforcing proper accounting standards that include externalities, and let the market incorporate these new costs. Once you’ve established the principle it then becomes a lot easier to move the goalposts (numerical targets).

      Finally SSE is just such a depressing idea, especially for the majority of the world’s population who live substantially below the mean and know there’s next to no chance of some grand socialist redistribution. Technology and human ingenuity have brought us a long way; let’s not give up hope yet!

      MJ

      Reply

      • Posted by Alan McDonald on January 26, 2011 at 4:55 pm

        Actually I don’t think steady state economics is a depressing idea. After the 20th century myths of both Marxism and equilibrium economics, it makes sense to me that sooner or later outputs and inputs have to be in balance. Early economists from Smith to J S Mill saw this clearly, that eventually economic growth will have a limit.

        Many of your observations, MJ, suggest to me that you see these limits to growth quite clearly, but for the present you feel the need for ‘more palatable’ ideas.

        To my mind economic growth has been oversold for the 60-odd years I’ve been on this earth, often on the basis that only through growth will the poor escape poverty. It hasn’t happened. Within and between nations the rich are using up more and more resources. The idea that the poor must help pursue growth because that’s their only way out is the one that tastes more and more unpleasant on my tongue. Steady state is a way of trying to rethink this. It’s a model that needs work but it’s not barmy. Give it another chance, MJ. But really, don’t let it depress you 🙂

  2. I agree with you that population should be openly and rationally discussed. That is one of the first barriers that needs to be crossed if we’re ever going to work out what Bill Hicks called the “food/air deal”.

    As for the idea that a steady state economy would somehow lock everyone in to an unchanging median income, I think that is both disingenuous and missing the point.

    The idea behind a steady state economy is a simple one – on a finite planet, “sustainable growth” is an oxymoron. It is all too easy to get caught up in dismissing the small parts of a thesis with which you disagree rather than addressing the central narrative which is the heart of the matter. It was exactly this habit that made Paul Ehrlich such a contentious figure – the fact that his predictions didn’t come true was touted as a de facto debunking of his work, whereas the heart of his work was that no biological organism can exceed ecological carrying capacity for very long without catastrophic consequences.

    If we can agree that there is a causal relationship between increased economic activity as measured by GDP growth and ecological drawdown, which I believe that we do agree on, then there are effectively three possible outcomes to that process:

    1. We continue to pursue economic growth, and when the environment can no longer be drawn down, we face a catastrophic end to the current direction of the human enterprise.

    2. We try to shrink the current economy/population/enterprise to a small enough size that future growth will be possible because of the released pressure on the environment.

    3. We attempt to transition from a global system that demands growth to one that pursues relative stability and equilibrium, without killing off loads of people or destroying human capital in favour of environmental capital or vice versa.

    Option 1 sounds like what we’re doing right now, and it doesn’t sound like something either of us wants. Option 2 sounds horrific and would require more than the genocide by proxy currently practiced by the OECD puppeteering of international trade. Option 3 sounds tricky, but also kind of nice, right?

    Steady state doesn’t mean that the poor stay where they are and so do the rich. A steady state means challenging the central drivers of the growth economy:

    1. Money creation based on debt, which demands/causes economic growth and inflation year after year.
    2. Population growth.
    3. The absence of environmental concerns or natural capital from the calculations of industry and economists.

    Debt-based money can be turned around within eighteen months if the effort and political will are directed properly. Without the year-on-year increase in sovereign debt, increases in prices, taxes and wages will fluctuate based on the real world elements of supply and demand rather than all manner of theoretical derivatives.

    Population growth can be addressed simply by supplying family planning services, maternal healthcare and contraception where they are desired. The idea is not that humans are bad or undesirable, but that the rights of women to assert sovereignty over their own fertility are part and parcel of the broader human rights openly campaigned for by almost every NGO in existence. Is it more cruel to provide free or affordable healthcare to people who desire it or to effectively subsidise by inaction the condemnation of millions of unwanted children to grinding poverty and deprivation? If women have education and contraception, they without exception choose to have smaller families of around replacement level.

    By accounting for natural capital, we will obviously see that we are currently losing at the very game we invented. We are in a period of what Herman Daly calls “uneconomic growth”. This is true of almost every OECD nation. In the developing world, their growth is necessary for their well-being. In the developed nations, growth is simply a habit, an addiction to which we are unwilling to propose a viable alternative. The developing world will not remain in stasis where it is now if we begin to construct a steady state economy. Our impact, through consumption, predatory free trade and blind ignorance of the exponential function of population, will diminish as we align ourselves with an ecologically-minded economic model. This will release future pressures on scarce commodities whose availability will allow developing countries to afford them.

    The idea is not that development and growth are bad. The idea is that we in the OECD have now developed and grown and it is the turn of the rest of the world to do the same. This means reducing our demand on the world’s resources. Nobody likes doing the dishes and hoovering after a party, but it has to happen sooner or later.

    As for your question about when the limits to growth will be, I can only suggest that you read some of the news from around the world. Oil is once more approaching $100 a barrel. Commodities are all at record highs. Rare earth metals are exactly that, rare. Minerals like copper and tin are in ever-shortening supply. It is interesting how most economists and critics of the steady state idea argue that price warnings are the market’s way of signalling scarcity, and yet when those price warnings occur they are put down to speculation or some other kind of malfeasance. Biodiversity is suffering at a greater rate than ever in the planet’s history, apart from the other five great extinctions.

    The only reason so few people (“only” 2 billion, half of them children) live below the poverty line worldwide is because the World Bank consider the poverty line to be $1.25 a day. I’ve been to 48 countries, many of them considered developing, and I haven’t been to a single one where even $2 a day is enough to survive anymore, let alone thrive.

    The steady state ideal is not a static, rigid, Soviet-style economy with no self-actualisation available to citizens and no progress available to industry. The steady state aims for a healthy fluctuating economy within the limits set by our planet. Nature is not rigid, and neither is a steady state economy. What is rigid is insisting that what we’ve done so far will work into the future despite all evidence to the contrary.

    Your heart is clearly in the right place. I can only guess that you’ve been mis-informed about the steady state movement and the current extent of humanity’s plight.

    I applaud your conscience and sincerity. Come join us. We need every voice we can get.

    Reply

    • Dear Mike,

      I would query each of your points in favour of SSE:

      Firstly, debt-based financing is essential to the functioning of the modern economy, and responsible for many of the extremely tangible benefits of it. (You almost certainly wouldn’t have high-speed internet cable without debt finance.) Of course debt has to be carefully managed: when money is too cheap we get a boom followed by a bust (take a bow the sub-prime property market), but cutting off debt finance would be economic suicide. Barmy!

      Secondly, yes there is unmet need for family planning worldwide, but equally in many parts of the world there are still strong cultural factors in favour of large family sizes. Population growth is therefore not going to go away any time soon unless drastic measures like China’s one child per couple policy are introduced more widely. That said, anyone with their eye on the long term conservation view should certainly consider investing in support of family planning, since reducing future population pressure will certainly play its part.

      Thirdly, I don’t think that current growth in OECD countries is without benefit. New ways to treat and even cure cancer are a good example. And far from allowing developing countries to afford scarce resources, an SSE may impoverish them as they are deprived of markets for their own goods. Developing countries may also have other priorities for their money rather than these scarce resources, but now cannot benefit from them by exporting them to the OECD.

      Regardless, I don’t think I’ll be joining with you any time soon, and the reasons are encapsulated in your remark “the genocide by proxy currently practiced (sic) by the OECD puppeteering of international trade”. I like a good turn of phrase as much as anyone, but accusing the OECD of genocide is a bit ridiculous. For a start, though I’m no lawyer, I’m pretty sure genocide requires intent to kill, which all but the most deeply disturbed can surely agree that the OECD lacks. The suggestion that if you’re dying it doesn’t matter much whether there was intent is also a straw man; just ask any relative of someone who died as a result of violent crime – it matters a great deal whether or not someone had intent to kill or injure. Finally, by that yardstick so would many governments of developing countries be guilty of genocide, since, whilst the scandalous trade policies of the OECD do cause a great many problems, so do all sorts of appalling policies and practices instigated by poor peoples’ own governments.

      This and shrill warnings about the imminent exhaustion of the world’s resources do the good ideas that you have a huge discredit. Even the name “Steady State Economy” is a big put off. It sounds like something that would be stultifying! We laugh a bit when Sarah Palin makes reference to the “lame-stream media” (good sound bite even if you completely disagree with her), but mainstream is mainstream for a good reason. Start engaging on terms that the general public will agree with and you might get somewhere. Otherwise you might as well just retreat to your chosen wilderness paradise, and live the life of a hermit: your own little steady state economy.

      MJ

      Reply

  3. Posted by Sharon Ede on January 27, 2011 at 3:04 pm

    MJ –

    Growth has served much of humanity (although not all) for a very long time. But once people’s material standards of living are fulfilled to a comfortable level (however one defines that, but at a minimum, food security, shelter, sanitation, education & health services), more and more growth makes less sense (and becomes uneconomic in terms of the costs it brings), especially on a planet that is now 6 billion fuller than 100 years ago, and where – as you are all too well aware – many people need to raise their material standard of living.

    Debt – it depends on what kind of debt you are talking about. The concern is not debt financing as such, but rather that governments have handed over the right of money creation to private bankers to issue money out of thin air and LOAN it to society at interest; this is the basis of a destructive growth machine. This very scandal is currently being challenged in the UK, including at high levels of governance. Check out what these guys are doing: http://www.positivemoney.org.uk

    I think one could safely bet the national debt of all modern economies that more people have suffered and died from the indirect, but deliberate (intended), constructs of the global political economy than by direct genocide.

    If you are not already aware and would like to participate, Global Population Speak Out is next month: http://www.populationspeakout.org

    Cheers
    Sharon

    Reply

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