Tag Archives: steady-state economics

Laissez-faire: the environmental version

I tend to write a lot about messaging and sound bites [here and here, for two], sometimes with the simple sounding proposal that the environmental movement needs better and catchier phrases. (For instance, something less dull and abstract than “the environmental movement.”) So a sentence in a current post in one of my most favorite and least catchily-named blogs, The Center for the Advancement of the Steady State Economy, caught my eye: “Laissez-faire takes on a new meaning — it is the ecosystem, not the economy that must be “left alone” to manage itself and evolve by its own rules.”

What a neat twist on the religious-like belief in conventional laissez-faire, the doctrine that the so-called free market, if “left alone” – which is a near literal translation of the term — will provide the best outcomes.

A reasonable response to that orthodoxy is: the best outcomes for whom? Herman Daly, the renowned economist and author of that post, similarly turns the laissez-faire idea on its head by suggesting that it’s the environment, not the market, which should be left alone.

A closer translation of laissez-faire is “let do.” And that interpretation, I think, is even more suitable as an approach to the environment because, from our human point of view, it is what the environment does that is critical to our existence. Interfering in the environment’s ability, honed over millennia, to do things like purify water and air, and maintain the exquisitely balanced temperature of the troposphere, is in the interest of neither us humans nor that free market that supposedly makes our lives better.

So how can we co-opt the phrase or come up with our own (preferably in the authoritative tones of a foreign language)? Any of you French-speakers out there have suggestions? At the risk of trivializing another powerful slogan, and since I’m bound by my fluency only in English, my dangerously off-the-cuff first thought is “let my environment do.”

OK, I withdraw that suggestion. Contain your sighs of relief. But I stand by the idea, or rather Herman Daly’s idea.

Redefining Growth

I thought maybe I coined a new word recently: physophilia, meaning love of growth. It describes the — at times irrational – preoccupation with and addiction to economic growth that possesses politicians and many economists.

This misplaced attachment has already been the focus of several EcoOptimism posts, especially here and here. (While we’re not physophiles, I guess you’d have to say we have a love of the topic itself.) The essence of the problem is that economic growth, at least as it is usually defined, is not the great objective most of us think it is. It is neither advisable nor desirable.  Yet it remains an assumed good.

In a post at one of my favorite blogs (you know you’re an eco geek when you regularly read posts from a site called the Center for the Advancement of a Steady State Economy), Brian Czech dives into this, noting that President Obama, as well as almost-President Gore, try to sell the idea that we can simultaneously address environmental issues and grow the economy. In his recent State of the Union address, the president said: “Now, the good news is, we can make meaningful progress on this issue [climate change] while driving strong economic growth.”

At first blush, this sounds like a strong and positive pronouncement, a “Yes, We Can” for environmentalism. But there’s that intractable little problem (as we’ve previously discussed – see the links at the top) of living on a finite planet, a place where infinite economic growth – especially one based on materialism – is a physical, mathematical impossibility. That’s the reason Czech calls the president’s declaration a “slippery slope” in which he “capitulate[s] to paltry cynicism” in not acknowledging the linkage between economic growth and pollution.

So growth is bad, right? That depends on what we mean by the word “growth.” And this isn’t a Bill Clinton “it depends on what the meaning of is is” hairsplitting moment. Economic growth is usually taken to mean an increase in the popular indicator, Gross Domestic Product. The problem, as so many have noted, is that GDP is a crappy measure of well-being. It’s entirely possible to have strong GDP “growth” while people are becoming worse off, which in fact is what’s happened in much of the developed world (and parts of the developing world as well) over the past few decades.

In short, economic growth – at least in its GDP definition – is neither sustainable nor desirable, even if we didn’t have environmental issues to deal with. Fortunately, economic growth is not really what we want. Economic growth is not the same as improved quality of life, and sometimes it’s the opposite, for instance if it means longer work hours or harsher conditions, or if it feeds off the “hedonic treadmill” in which we constantly have to work more to buy more.

Czech asks if we have to get the president off this slippery slope of promoting economic growth alongside environmentalism, and concludes that, no, “he’s too far into it.” That conclusion, though, makes the assumption that Obama can’t use his bully pulpit to educate and inform. Yeah, I know he hasn’t been great at that to date, but here’s my proposal:  instead of sending the misleading and incorrect message that “there is no conflict between growing the economy and protecting the environment,” change the emphasis to address what we really want by saying “there is no conflict between improving the quality of our lives and protecting the environment.”

‘Growing the economy’ is an abstract goal that’s mostly irrelevant to living better lives. Many economists and environmentalists know this; the U.S. data have indicated as much since the middle of the last century. But the public, by and large, doesn’t realize this because of the fixation that politicians and the news media have on reporting GDP and other markers like the stock market. (A secondary proposal: can we please get the news media to stop putting GDP front and center?)

That word I thought I had coined – physophilia – well, it turns out that Juliet Schor and others were there first. There goes my shot at a wordsmith credit. Merely getting rid of physophilia, though a necessary prerequisite, will not solve everything. Much of our current economy is based on a presumption of growth; how else can investment be encouraged and debt be retired? There are, in fact, other economic models – truly sustainable ones, unlike what we have – such as the world described in Enough Is Enough. (See my review here.) But as I’ve mentioned (ad nauseum, or so it seems at times to me), it’s a communication issue. How do we eschew something as seemingly positive sounding as growth? It will take a convincing group of voices, with resounding sound bites, to change the goal from wins for the economy to wins for people. Czech sounds as if he’s given up on Obama taking the lead in this. “He’s uttered the win-win rhetoric one too many times; now he’d have to admit his mistake in addition to explaining the trade-off between economic growth and environmental protection.”

The EcoOptimist in me isn’t ready to do write Obama off just yet. In one sense, Czech is right: no politician wants to admit a mistake. But Obama doesn’t have to. He can instead redefine – in populist terms – what the goal really should be. It’s not the economy that we want to win; it’s us. It’s human growth, not economic growth.

Economic Insurrection, or Nature’s Economy vs Wall Street’s

If you’re into economics (and, after all, who isn’t?), you probably see economic theory as divided into two camps, supply-side and Keynesian, that roughly coincide with Conservatives/Republicans and Democrats. Supply-side economics became better known as trickle-down economics while Keynesian economics is grouped with neoclassical economics.

But never mind all that. If you were reading closely (and not already bored by this slew of terminology), you may have noticed that Liberals or Progressives were not represented above. That’s because, in the eyes of many lefties, neither of those economic camps has it right. In short, both schools ignore nature and therefore are fundamentally wrong about how the world – and the economy that is a subset of it – works. They deal instead in an artificial idea of economics in which humanity essentially lives in a vacuum.

No, that’s not quite right either. If we somehow actually did live in a vacuum, we’d have to provide everything on our own. There’d be no oxygen or water or coal or, well, anything. But we don’t and can’t exist in a vacuum. Instead, we draw upon nature for everything we make or consume.

What if bees charged for pollinating?

What if bees charged for pollinating?

The problem is that conventional economics pretty much ignores that fact. It regards nature as free. We can take anything we want from it and we can dump anything left over into it. It’s the ultimate free lunch. And as fans of Robert Heinlein, Barry Commoner or Milton Friedman know, There Ain’t No Such Thing As A Free Lunch.

Conventional economics also regards nature as unlimited, at least in a theoretical sort of way. The thinking is that we’ll never run out of something because its price will increase as its availability diminishes and, as that price goes up, we’ll either use less or switch to alternatives.

But there are a lot of problems with this approach. An obvious one is that some things in nature, like oxygen or water, are irreplaceable. If we run out of those, or if they become exorbitantly expensive, it’s game over.

Yet we don’t really put prices on those things either. They’re “free as air.”  Which means we don’t know the true cost of things. (Riffing on Oscar Wilde, the authors of Natural Capitalism wrote “People now know the price of everything but the true cost of nothing.”)

We do put prices on everything we do. (Well, more or less. A lot of the most important things we do, like raising children or taking care of elderly parents, are considered to be outside the economy.) When nature does it though – when nature, for instance, grows a tree or makes oil – that doesn’t appear anywhere in our ledgers. Yet the benefits are ours for the taking.

The alternative goes by a few names. Perhaps the most widely used is ecological economics. I alluded to it in my facetiously titled post Planets Are People My Friends. The acknowledgement that conventional economics has this fundamental flaw goes back quite some time, but has only started to gain wider recognition more recently. Sometimes on the fringes: the True Cost Economics Manifesto, with strident, almost revolutionary language, seems to have appeared around 2005. (The original website is gone, but the manifesto is reposted at Adbusters, among other places.)

But more recently, perhaps as some of the signers of that manifesto graduated into the “real” world, the fringe has moved inward, with a widespread understanding that the Earth’s “commons” (its air and water and other resources) are not a fee-free dumping ground.

It’s not just a matter of calculating and finding a way to charge the “true costs” of the things we make and do. It becomes part of a larger understanding, in some ways a philosophy, of both the economy’s and humanity’s purposes. In the blog Common Dreams: Building Progressive Community, economist David Korten asks “What Would a Down-to-Earth Economy Look Like? How did we end up with Wall Street when models for a healthy economy are all around us?” He comes up with this comparison of nature’s economy vs Wall Street’s:

Korten writes: “With proper care and respect, Earth can provide a high quality of life for all people in perpetuity. Yet we devastate productive lands and waters for a quick profit, a few temporary jobs, or a one-time resource fix.”

Over at the Center for Steady State Economics, Rob Dietz (co-author of Enough Is Enough, which I reviewed here) has a two-part post “The Rise of Fantasy as the Basis for Economic Policy” and “Restoring Science as the Basis for Economic Policy.” There are, he says, two camps of economic thinking, Fantasy Camp and Science Camp, and you can easily guess which one he falls into.

At Fantasy Camp, the counselors educate campers to believe that humanity can circumvent natural limits. Campers are taught that our unstoppable ingenuity can overcome any resource shortages or manage any amount of waste generation. There’s a strong undercurrent of consumption — a desire to accumulate ever more power and stuff in an attempt to gain complete control over life (and even death).


(My take on this was probably decided many years ago when my parents sent me to – literally – a science camp. Unfortunately, it was long before geeks were cool. But I digress.)

In EcoOptimism parlance, Wall Street’s economy is based on “win” only and the hell with everything else, while Nature’s is win-win-win. In other words, the one per cent vs 100%.

Less is More, More or Less

Thanksgiving, the celebration of bounty, seemed a completely appropriate time to contemplate the corollary concept of enough. Hence one of my tasks for the weekend (why do I always think a day or two off, or even a long plane flight, will give me the time to catch up on everything?) was to read the advance copy of Enough Is Enough sent me by co-author Rob Dietz. A bit overoptimistic I was. I’ll blame the lingering L-tryptophan effect. But I’ve only missed the goal by a bit.

Dietz is the executive director of an organization called CASSE or the Center for the Advancement of the Steady State Economy, a mouthful as large as the (first) slice of leftover pumpkin pie I had for breakfast on several of the days following the feast. “Enough Is Enough” rolls off the tongue much more easily (than CASSE, not pumpkin pie), and the strong, memorable title makes me almost wish CASSE would change its name to accompany the book.

The basic tenet of the steady state economy (or SSE) is an observation that makes complete sense: you can’t have infinite growth in a finite system. Unfortunately, conventional economics – perhaps in an attempt to defy its characterization as the dismal science – says otherwise. Its faith in unending growth portrays it as both possible and desirable.

EcoOptimism, though based (obviously) in optimism, doesn’t subscribe to this delusional belief in the virtues of growth. In another post, I’ll discuss how that self-serving faith is actually more akin – as faith-based ideas tend to be – to a religion than it is to a science. So much so that, in attempting to escape the “dismal science” moniker by being less dismal, conventional economics may have instead lost its reasoned science aspect.

What’s in a name?

Part of the politically untouchable faith in growth derives from the positive nature of the word growth. How could growth possibly be bad or undesirable? And, even after proving that it is, finding an appealing word or phrase to convey that idea is a difficult task, yielding less than positive terms. Ungrowth? Uh uh. Degrowth? No better. Is the opposite of growth diminishment? Nothing appealing in that. Another suggested term, post-growth, gets warmer, but still doesn’t quite make the cut for me.

And so we get to steady state economics. Though it ain’t exactly catchy ( as noted above) SSE at least doesn’t succumb to easy connotations of negativism and survives the first round of sound bite tests. Steadiness, especially when compared to the booms and busts of recent history, has much to be said for itself.

Going Steady

But the goal of SSE is not so much to steady the rough ride of economic cycles as it is the creation of a path for continuing human growth within the constraints of an amazing yet finite planet. And it’s also more than (merely) achieving sustainability. It is the decoupling of economic growth from human flourishing. It is the enabling not just of a future, but of a positive future.

We already know that happiness (yes, I know that’s a mushy subjective quality, but there actually are ways to define and measure it) does not correlate with economic growth, at least not in the long run. In the richer nations (the “developed” world), where essential needs have largely been met, the acquisition of more material things does not lead to happier or more fulfilled lives. And acquiring things is, after all, an integral part of material growth and its measure, the appropriately named Gross Domestic Product. But even with this knowledge (which is not nearly widely enough known), how is the iconoclastic case against growth made? And accepted?

I have nearly the same image in my book, Sustainable Design: A Critical Guide, but this is from Enough Is Enough












There’s been a plethora of books on this topic of late. I’ve written about some of them before: Prosperity Without Growth, The End of Growth, Plenitude, eearth, et. al. But in virtually every case, what’s been missing from the iron-clad arguments has been an accompanying roadmap. We have a general idea of where we want to go, but no idea – especially not a convincing one – how to get there.

Indeed, this shortcoming is a major part of the purpose behind EcoOptimism. Along with the lack of concrete steps, I’ve been positing that we need verbal descriptions and perhaps graphic illustrations (I must still be in a Thanksgiving state of mind because that made me think of the “twenty seven eight-by-ten color glossy pictures with the circles and arrows and the paragraph on the back of each one” from Arlo Guthrie’s Alice’s Restaurant — but I digress) depicting what our un/re/de/post-growth future will look like.

Happily, Dietz and co-author Dan O’Neill have brought us much closer to answering the how-the-hell-do-we-get-there question. Each chapter in the section “Strategies of Enough” as well as most of the chapters in the third section “Advancing the Economy of Enough” begin by asking “What Are We Doing?” and proceed to “What Could We Do Instead?” Then they move to the part I devoured each time: “Where Do We Go From Here?”

Dietz and O’Neill are, of course, thoroughly familiar with the concepts of a Steady State Economy. But, they write, “we had been asking ourselves for some time how a steady-state economy would work in practice.” What are “the policies and transition strategies that would turn [a SSE] vision into a reality?” Those questions, as it happens, are the same ones I’ve been asking since I started focusing on the “New Economy.”

They’ve done a terrific job on the second question. First they demolish the conventional argument that growth is the solution to poverty, poor education and unrepresentative rule as well as pollution (the argument proffered by groups like the WTO and mainstreamed by Bjorn Lomberg’s The Skeptical Environmentalist). Toss out the convenient and misleading metaphor “a rising tide lifts all boats.” Our economic history strongly declares otherwise.

Responding to the Econ 101 tenet “Market prices give no reason to believe that natural resources are a limit to economic growth,” they almost literally scream “This statement may be true, but it reveals more about the failure of markets than the absence of limits!” This is the core of an argument many of us have been making in various forms for years: a “free” market can work only if everything is priced accurately. And our current markets, which consider almost every resource and service provided by nature to be free, are far from that point. “Prices often fail to capture the effect of resource depletion, waste generation, and loss of ecosystem services. As a result, the market sends improper signals—if it sends any signal at all—regarding the sustainability of throughput levels. We need to eliminate this market failure….”

What’s Enough?

Making economic growth the measure and the goal does humanity a huge disservice. Growth, in the gross unqualified version that we currently reflexively strive for, is a false god asking us to sacrifice everything (our lives, our planet) in search of a future nirvana that cannot possibly be the result. The problem, putting aside such relevant constraints as physics and, yes, economics, is that we’ve set our goal on the wrong sight. “More” is not only unachievable; it is undesirable. And the opposite of more is not less; it’s enough – provided that what we achieve enough of is what we in fact need to grow qualitatively. This becomes a two-part question: first, what is “enough,” meaning what sates us and leaves us better off than we started and, second, how do we get to that state?

We can continue the overly obvious Thanksgiving analogy here. For most of us, the quantity of the food leaves us with that content but overstuffed lagginess and perhaps the feeling that we overdid it. We certainly could live without it, though most of us would choose not to. Why? Because we enjoy the ritual, the company … and the food. What, more precisely, is it that makes the holiday so valued to so many? It’s not the amounts of food that we often wish we had exercised a bit more willpower to resist. It’s the circumstance, the associations and the experience (both social and sensorial), not the amount of food. In a crude way, this sums up the difference between the economy of growth and the economy of enough. Economic growth, after a point, does not translate to improved well-being. And after that point – the point at which basic life needs have been met — our economic and social goals should change course.

This does not by any means signify stagnation, which is perhaps the main problem with the term steady state – it’s vulnerable to being misinterpreted as a call to sacrifice. In reality, it’s the opposite of sacrifice; it’s finding the true value and measure of progress. As Dietz and O’Neil more succinctly put it: “the economy can develop qualitatively without growing quantitatively.”

It’s People!

Environmentalists all know that our problems stem from the combination of too much consumption (or rather, unnecessary and inefficient consumption primarily by people in the rich nations) and too many people (who, increasingly, are in the poorer nations). And therefore any real solution has to address both problems.  While the first part is certainly key, the second part – population growth – is the elephant in the room. It’s an incredibly delicate and laden topic. To its credit, Enough Is Enough doesn’t skip over it, as most such discussions do. “We need smaller footprints but,” they emphasize, “we also need fewer feet.”

The authors underscore the point that the number of unintentional pregnancies in the world each year (80 million) is equivalent to the annual growth of the human population. This means we don’t need to dive into heavy-handed intrusive programs like the Chinese one-child-per-family rule. We can achieve steady population through education and voluntary birth control.

The Role of Wall Street

When I discuss ecodesign in my classes, I emphasize that there are two ways to approach changing the environmental impact of a product. One is the “tweak,” which involves one or more relatively small and incremental changes to the design. The other is the “innovation,” which demands rethinking the problem (often by rephrasing the question) to find alternative ways of achieving the result the product provides. Often this leads to what has come to be called disruptive technology, a fancy phrase for a new way to do something that reduces the old to history. Think Internet versus encyclopedias. Or 3D printing replacing mass production.

I found myself categorizing the suggestions within Enough Is Enough the same way. Many of their proposals required minor alterations to our current ways of doing things. Others, though, are more like the “square one” approach. For instance, in the chapter “Enough Debt,” they propose some fundamental changes to how the financial world operates, ranging from the technical (requiring reserves on loans to be 100%) to the structural (decreasing the size and power of financial institution below the “too big to fail” level and – here comes the part that will elicit protests of socialism – democratizing the means of production).

Instead of hailing and idolizing the financial arena as the source of investment and growth as we currently do, the authors say we should be viewing it as a cost. “The fewer resources needed to accomplish this service [helping money to flow where it’s needed in the economy], the better off society is. So we should aim to minimize the cost represented by the financial sector—it should account for as small a percentage of total economic activity as possible.” We’ve come to see the financial world as an end in itself (how’s the market doing today?), forgetting in the process that its purpose is to be a means to the improvement of our lives. “Instead of focusing on using money to make more money, financiers should be focusing on serving a stable economy, an equitable society, and a healthy biosphere.”

Enough is (Almost) Enough

Enough Is Enough does an admirable job of making the off-putting topic of SSE much more approachable and enticing, but (ironically) leaves me still wanting more. The authors fully understand that “for people to embrace the concept of a steady-state economy, they need to understand how it would work and why it would be preferable to what they’ve become accustomed to.” They’ve brought us much closer to this point, but I came away still wanting to know what it will feel like and look like and how we will experience it.

This shortcoming – and I’m nitpicking through an exceptional book – strengthens the underlying need for what I see as a primary mission of the EcoOptimism blog: providing that visceral taste of a positive future. Enough Is Enough lays the policy groundwork. Now we need to make it concrete and present it in a form people can relate to in order to convince an understandably skeptical populace.  This requires the merging of policy wonk-dom with the visioning and communicating designers can provide (with perhaps some added oomph from the PR and advertising worlds).

Dietz and O’Neill write “An enlightened transformation to a steady-state economy is a profoundly hopeful prospect.” Not one of doom and gloom or involving sacrificing the “American way of life.” The overriding need is to develop and successfully present this thoroughly desirable future so that we will pursue it, not because we have to but because we want to. Enough Is Enough is a major step on that path.

Enough Is Enough will be released by Berrett-Koehler Publishers on January 7, 2013