Economics, Equity and the Ecological Predicament
Advances in Ecological Economics series
Edited by Joshua Farley and Deepak Malghan
Chapter 4: Population, resources and energy in the global economy: a vindication of Herman Daly’s vision
Herman Daly pioneered the concept of environmental macroeconomics (Daly, 1973, 1991a, 1991b, 1996). He famously argued that we have moved from an ‘empty world’ of resource abundance to a ‘full world’ of energy and resource limits (Daly and Farley, 2011, chapter 7). His insights, however, have generally been rejected or ignored by most mainstream economic analysts. From the point of view of neoclassical economic analysis, resource shortages are remediable through market flexibility and substitution, posing no threat to long-term exponential economic growth. In the absence of immediate crisis, standard economics has been able to maintain this ‘optimistic’ stance, dismissing population, resource and energy limits. But developments during the first decades of the twenty-first century indicate that it will be Daly’s view, rather than that of the mainstream, that will be most important in shaping economic development in the coming century. A review of global trends in the areas of population, food supply, non-renewable and renewable resources, and environmental impacts including global climate change indicate that the situation has changed significantly during the first decade and a half of the twenty-first century. Evidence of resource shortages and environmental impacts that was contentious prior to the year 2000 has become unarguable. From the point of view of the debate among economists, this is most significantly reflected in price trends.
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