Chapter 2: The economics of the steady state
A steady-state economy is defined by constant stocks of physical wealth (artifacts) and a constant population, each maintained at some chosen, desirable level by a low rate of throughput, in other words, by low birth rates equal to low death rates and by low physical production rates equal to low physical depreciation rates, so that longevity of people and durability of physical stocks are high. The throughput flow, viewed as the cost of maintaining the stocks, begins with the extraction (depletion) of low-entropy resources at the input end, and terminates with an equal quantity of high-entropy waste (pollution) at the output end. The throughput is the inevitable cost of maintaining the stocks of people and artifacts and should be minimized subject to the maintenance of a chosen level of stocks (Boulding, 1970). The services (want-satisfaction) yielded by the stocks of artifacts (and people) are the ultimate benefit of economic activity, and the throughput is the ultimate cost. The stock of physical wealth is an accumulated flow of throughput, and thus in the final analysis is a cost. Ultimate efficiency is the ratio of service to throughput. But to yield a service, the throughput flow must be first accumulated into stocks even if of short duration. It is the existence of a table or a doctor at a point in time that yields services, not their gradual depreciation nor the productive process by which they are replaced.
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