August 20, 2017

The steady state economy

Published in The Ecologist Vol 9 No 3, June 1979.


A few of our more enlightened scientists and economists have rightly accepted that economic growth is now neither feasible (except in the very short-term) nor desirable. Rather than allow growth to come to a halt by itself, we should seek instead purposefully to achieve a “Steady State Economy” (Daley) or an “Equilibrium Society” (Meadows). In such a society births would equal deaths and investment would equal depreciation – which means that there would be neither demographic nor economic growth.

This is indeed a very necessary first step, but is it sufficient? Can our social and physical environment support, except in the very short-term, our present population, living at its present level of consumption? I am quite convinced that it cannot.

If some, indeed most people, continue to think that it can, and that it would thereby suffice to freeze population and economic activity at the present level to achieve a “steady-state” or sustainable society, it is largely, I think, that they have overlooked two very important factors.

The first is that problems that have, up till recently, been local in character are rapidly becoming global. This means that they can no longer be exported, because there is nowhere left to export them to. When pollution was a local problem we could put up high chimneys and send it all off to Scandinavia. When population was a local problem, we could colonise the empty lands across the oceans and consign to them all our surplus people. All this we cannot do for very much longer and this means that our own environment, not that of other people, will soon have to sustain the full impact of our destructive activities.

The second is that the impact of these activities is cumulative over and above the rate of natural biospheric recovery. If the impact of these activities over a given period is greater than the environment can sustain, the latter will deteriorate and its ability to support the impact of our activities over the succeeding period will be correspondingly reduced even if the extent of these activities does not increase.

In other words the gap between the impact of our activities and the environment’s ability to support it must systematically increase, even in a stationary economy. Hence the biospheric cost of our activities
must go on increasing.

As a result the material compensations, technological expedients and institutional services that a stationary GNP can provide must meet with diminishing returns.

People in general will want more material benefits as a compensation for the cumulative deterioration of their physical environment.

Farmers will require more fertilisers to compensate for the diminishing fertility of their land resulting from the cumulative effects of overcropping and over-grazing and for its diminished capacity to generate its own nitrogen as a result of the cumulative over-use of fertilisers. They will require ever more pesticides to compensate for the growing pest problems resulting from cumulative ecological disruption and growing resistance among insects and other pests to the pesticides used for their “control”.

We shall require more hospitals to cater for the growing number of cancer cases and the growing incidence of congenital disease caused by the cumulative exposure of our population to the carcinogens and mutagens in the food they eat, the water they drink and the air they breathe. We shall require more institutions to cater for the growing hordes of criminals, delinquents, vandals, baby-bashers, wife-batterers, alcoholics and drug-addicts, generated by the cumulative disintegration of our social structures under the cumulative impact of industrial activities. We shall also require ever more material resources which can only be obtained by further cumulatively depleting the world’s dwindling stocks.

Such trends, needless to say, can only lead to price increases and, in a stationary economy, to reduce levels of consumption that, on the basis of current values and expectations, are unlikely to be accepted. This will render it correspondingly more difficult to maintain the stationary economy in the face of international competition. Thus, if a foreign competitor introduces a new labour saving device, the microprocessor for instance, economic survival only seems possible if everyone follows suit. But this, among other things, can only lead to increased unemployment unless once more the economy is allowed to expand. It might be argued that unemployment benefits can be increased. But then, in the long run, these can only be financed by increasing economic growth.

What then can we do? There is no solution other than to reduce per capita GNP to that level which the environment can support over a long period. It is only once this has been a-chieved that the deterioration of our social and physical environment will cease; that the strategies employed for dealing with our problems will no longer meet with diminishing returns and that the need for further increasing the scale on which they are applied will be less apparent. This of course will mean achieving both negative demographic growth and negative economic growth or, to put it less inelegantly, demographic and economic contraction.

It is not suggested a contracting economy is likely to be easier to manage than a stationary one, only that the problems involved in the latter case can only increase, whereas in the former case, they must eventually solve themselves. Indeed once the level of economic activity is reduced to that which the social environment can absorb, the manufacture and distribution of goods and services rather than occurring within a separate and self-contained sphere of human activity – the economy- can occur instead as an integral part of social activities, subjected thereby to the control of the social system as a whole. Polanyi (see Our Obsolete Market Mentality, The Ecologist July 1974) has shown that this was the case in all traditional societies, a separate economic sphere only appearing with the disintegration of society, largely under the impact of an overdeveloped market economy.

Once economic activities are brought once again under social control, attitudes are likely to change very dramatically. Economic motivations are likely to be replaced by social ones as is also the case in traditional societies, where goods are produced and distributed, not to maximise the return on any factor of production but to feed oneself and one’s family, satisfy social obligations and achieve social prestige. Once peoples’ pre-occupations become social rather than economic, the main motive-force for further economic expansion thereby disappears.

The objection normally raised to the idea of economic contraction is that it would reduce our ability to feed our massive population. People seem to think that industry feeds people. The opposite of course is true. The more economic growth we have, the more key resources such as labour, land and water must be diverted from agriculture to industrial use, the more, in the long run, must production fall. In many arid parts of the world where water availability is a limiting factor on food production (Southern California, and many parts of India), further industrial growth can even today only be achieved at the cost of reducing current food production.

What is more, industrial growth only provides more food for the population of industrial countries because manufactured goods can be sold to non-industrial countries in exchange for their food. Industry is thereby not a means of producing food but of exporting food shortages from industrial to non-industrial countries. If we take these two considerations into account it becomes clear that taking the world as a whole, the number of people we can feed is, if anything, inversely rather than directly proportionate to per capita GNP.

It must be noted that no government or international agency has to my knowledge, yet commissioned a study of economic contraction. It probably has not occurred to them that this might even occur – let alone that it might provide the only solution to the worsening problems that face us today.

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