From Uneconomic Growth to a Steady-State Economy

From Uneconomic Growth to a Steady-State Economy

Advances in Ecological Economics series

Herman E. Daly

In this important book, Herman E. Daly lays bare the weaknesses of growth economics and explains why, in contrast, a steady-state economy is both necessary and desirable. Through the course of the book, Daly develops the basic concept and theory of a steady-state economy from the 1970s limits to growth debates. In doing so, he draws on work from the classical economists, through both conflicts and agreements with neo-classical and Keynesian economists, as well as recent debates on uneconomic growth.

Chapter D.: Real-world economics

Herman E. Daly

Subjects: development studies, agricultural economics, development economics, economics and finance, development economics, environmental economics, environment, ecological economics

Extract

Well-established words can be misleading. In economics ‘production and consumption’ are such common terms that it is easy to forget that they do not really mean what they literally say. Physically we do not produce anything; we just use energy to rearrange matter into a more useful form. Production really means transformation of what is already here. Likewise, consumption merely reflects the disarrangement of carefully structured materials by the wear and tear of use into a less useful form – another transformation, this time from useful product into worn out product and waste. Of course one might say that we are producing and consuming ‘value’ or ‘utility’, not really physical things. However, value is always added to something physical, namely resources, by labor and capital, which are also physical things ultimately made from the same low-entropy energy and materials that go into products. Nor does the service sector escape physical dimensions. Services are always rendered by something or somebody. To abstract from physical dimensions and focus only on utility is to throw out the baby and keep the bathwater. If we were to speak of a ‘transformation function’ rather than a production function then we would naturally have to specify what is being transformed, into what, by the agency of what? Natural resource flows are transformed into flows of goods (and wastes) by the fund agents of labor and capital.

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