Chapter 8: Using a Fisherian Measure of Income to Guide a Nation’s Transition to a Steady-State Economy
INTRODUCTION In a relatively recent News and Review article in the journal, Ecological Economics, William Mates (2004) outlined two basic accounting identities for Hicksian and Fisherian national income. The identities were devised following a paper I wrote highlighting the theoretical foundation underlying the Index of Sustainable Economic Welfare (ISEW) and the Genuine Progress Indicator (GPI). In a response to Mates’ paper (Lawn, 2004b), I extended Mates’ accounting identities to include the cost of lost natural capital services. I also introduced a means by which the physical scale of a nation’s macroeconomy could be measured and tracked. This, I argued, would enable one to calculate the economic welfare associated with a nation’s prevailing growth strategy and aid its inevitable transition to a steady-state economy. In this chapter, I go one step further and measure the Hicksian and Fisherian national income of Australia for the period 1967–97. In view of the superiority of the latter indicator, I also contrast Australia’s per capita Fisherian income with the growth trend of the Australian economy to reveal whether Australia should have already initiated a transition to a steady-state economy and, if so, when the transition might best have begun. Before revealing the results of the study, I will brieﬂy say something about the steady-state economy and reiterate the diﬀerence between Hicksian and Fisherian national income. Second, I will introduce the basic equations for Hicksian and Fisherian national income revealed in my response to Mates’ paper (Lawn, 2004b). Third, since both equations are...
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