Sunday, November 13, 2022

What I learned from steady-state economist Herman Daly

Herman Daly, the dean of the steady-state economists, died recently at age 84. His view that the Earth could only support a steady-state economy in the long run—rather than the perpetual growth economy imagined by most of those alive today—was based on an understanding he came to early in his career. As a doctoral student Daly became convinced that the economy was a system like any other in the universe and therefore governed by physical laws.

So here are three important things I learned from reading Herman Daly and hearing him once at a conference long ago:

  1. The economy is a subset of the natural world and as such is governed by the laws of the natural world. Daly was particularly focused on the Second Law of Thermodynamics, also known as the Entropy Law, which establishes that we live a universe in which the distribution of energy and matter are becoming more and more disordered. That is the meaning of entropy, and this disorder will ultimately lead to the heat death of the universe. (Don't worry; this scary-sounding heat death is theorized to be 10100 years away.)

    The practical significance of this realization is that human society is "using up" Earth's nonrenewable resources in the sense that resources:

    • Are being made into objects or products which erode and deteriorate over time thus scattering nonrenewable resources unintentionally.

    • Are scattered intentionally (think: phosphate rock fertilizers).

    • Are burned (think: fossil fuels).

    Once scattered or burned, they cannot be economically retrieved for reuse. That is, these processes cannot be reversed (except locally by creating more entropy).

    To build a civilization that could remain functioning indefinitely, we humans would have to 1) live in a way that does not exploit renewable resources faster than they can be replenished (think: trees and fish), 2) use nonrenewable resources at a rate that does not surpass our ability to find renewable substitutes before these nonrenewable resources become prohibitively expensive or inaccessible altogether, and therefore 3) limit consumption (and thus ultimately population) to a level that will allow this balance. This would be the steady-state economy.

  2. Some things can grow in the steady-state economy and others cannot. While the throughput of material and energy resources could not grow beyond a point that achieves balance with natural replenishment, other areas of human civilization could continue to "grow." We could grow and deepen our relationships with others. We could do the same with our spiritual lives (if we are inclined to pursue such a thing). We could continue to grow in aesthetic understanding and artistic expression. In short, we would focus on our social and intellectual development and our well-being would not be equated merely with per-capita consumption.

    Some say that such a society would be stagnant. This is not the case as over time businesses would die and other businesses would replace them. Innovation would continue but would be focused on technology and practices that would allow humans to do more with less throughput of resources and energy. Intellectual achievements would continue in the arts and sciences. Style in the design of buildings, clothing and manufactured goods would shift over time with the changing vision of designers and the needs of consumers. Ideally, physical products would be fully recyclable.

  3. Growth has become uneconomic. Daly was clever in using the arguments of establishment economists (so-called neoclassical economists) against them. Growth itself creates "disutilities," that is, costs or negative outcomes. When the costs of growth exceed its benefits, we should cease growing. The costs are all around us in the environment and in our highly unequal distribution of wealth and prosperity. But establishment economists refuse to recognize the downsides of perpetual growth. They thereby violate their own precepts by endorsing perpetual growth while never acknowledging that the costs of growth must eventually exceed the benefits (and have almost certainly done so already).

    This could be because most economists are dependent on the wealthy for the salaries they make in the financial industry or for the endowments and research funds that support their professorships. And the wealthy generally become wealthy because of the dynamics of growth and wealth inequality inherent in our system of perpetual growth.

Perhaps Daly's most famous piece of writing is "Economics in a Full World," which appeared in Scientific American in September 2005. Seventeen years on Daly's message is even more relevant in that nothing has been done to rein in the growth juggernaut.

By developing a clear blueprint for a sustainable society, Daly has shown that rigor in economic thinking is possible. Unfortunately, the policy-making institutions of our society remain largely in thrall to establishment economists who have a natural incentive to please their paymasters in the financial, political and academic worlds.

The result is policy that speeds us toward an inevitable cliff of disruption as natural systems ultimately fail to keep up with the needs of our growing population and consumption. The cascading dangers that we are seeing in climate are only one manifestation of many breakdowns occurring in the natural systems we rely on for survival.

Humans will one day live in steady-state economies. Physical laws assure this. For now, it's looking more and more like human societies will arrive at such a steady state involuntarily as a result catastrophic disruptions rather than intelligent planning.

Kurt Cobb is a freelance writer and communications consultant who writes frequently about energy and environment. His work has appeared in The Christian Science Monitor, Resilience, Common Dreams, Naked Capitalism, Le Monde Diplomatique,, OilVoice, TalkMarkets,, Business Insider and many other places. He is the author of an oil-themed novel entitled Prelude and has a widely followed blog called Resource Insights. He can be contacted at


Anonymous said...

Thank you Kurt. Always interested in your outlook!

Anonymous said...

Коли дивишся на всі ці експоненційні графіки споживання, росту населення та перевищення, одразу згадується пан Дейлі.
Але, не буде ніякого 'переходу'.
Населення планети росте на 220 тисяч щоденно. Глобалізована культурна система каже нам, купи, використай, скористайся, спробуй, я, я, я. А також, я хочу, я можу, я досягну, я кращий і т.д.
В світі глобально не вміють ділитися, заощаджувати, скорочувати, цінувати, не марнувати, ремонтувати.
Цілі покоління не вміють і не хочуть цього робити.
А коли вони дізнаються що це потрібно. Це викликає гнів і ненависть.
Люди здатні вбити за шматок хліба і склянку води. І скоро це буде.
Світ не створений для людей, він не створений для технологій і інновацій, для акцій і капіталу, для грошей і 'роботи'.
Світ це інше.
Пропоную до читання -

Joe Clarkson said...

Daley's perspective makes perfect sense, but it's even simpler than that. Even a child can accept that the surface of a planet like ours doesn't grow in area. Since the surface can't grow, anything that grows on the surface will eventually have to stop growing if only because it will eventually use up all the available space. Since growth must stop at some point, the trick is to decide the optimum point for stopping and how to keep it that way.

Kurt Cobb said...

Here is a translation from Google Translate for the comment above from the Ukrainian commenter:


When you look at all these exponential graphs of consumption, population growth, and excess, Mr. Daly immediately comes to mind.

But, there will be no "transition".

The population of the planet grows by 220 thousand every day. The globalized cultural system tells us, buy, use, use, try, me, me, me. And also, I want, I can, I will achieve, I am better, etc.
In the world globally, they do not know how to share, save, reduce, value, not waste, repair.
Entire generations do not know how and do not want to do this.

And when they find out that it is necessary. It causes anger and hatred.

People are capable of killing for a piece of bread and a glass of water. And soon it will be.
The world is not created for people, it is not created for technology and innovation, for shares and capital, for money and "work".

The world is different.

I suggest reading:

ChemEng said...

Thanks for the information about Mr. Daly. His passing is a loss to all of us.

His point about the Second Law is important. For example, carbon capture projects seem to be an attempt to defeat that Law. After all, it takes energy to run those facilities. If we use fossil fuels for this purpose then we are in a downward spiral. Even if we use solar or wind we still need hydrocarbon fuels to build and maintain those facilities.

The idea of focusing on non-material areas such as the arts and spirituality is something to wish for. But, given that an ever increasing number of people will be struggling to maintain just a basic standard of living, it seems unlikely.

SomeoneInAsia said...

I really think steady-state economies have been the norm throughout most of human history and in most civilizations. Once we adopt a steady-state economy -- which I agree we will -- it will merely amount to a return to an old way of running our economies.

Have to say, by the way, that I find somewhat problematic Daly's appeal to the Entropy Law to argue against the ideology of growth. Like so many of the claims about life and Nature made by modern science, the Entropy Law seems to preclude any affirmative views about human life and its ultimate destiny. If everything is destined to run down, it becomes difficult to see our lives, our achievements, human civilization etc etc as anything but futile. Why, then, should we bother about anything or exert ourselves in any direction, such as work towards a juster and more sustainable economic system? What is the point? (Bertrand Russell, if I remember correctly, was precisely one who came very reluctantly to this conclusion.)

One may say that, well, a physical law is a physical law, and it's not going to change according to whether you like it. My response is that, at least as far as the Entropy Law is concerned, there's a big bogey under the bed. Isaac Asimov was once asked the question: if the Universe is running down, how the heck did it wind up to begin with? How indeed? Asimov admitted he had no idea (and neither did anyone else).

Science itself could be a great contributor to the plight of the modern world, not just by providing us with the means to exploit our planet's resources to our own eventual detriment, but also by making serious claims about the nature of reality that simply leave no basis for any human values (and therefore no reason to work for anything positive, such as a safer and juster world). We're all just the product of blind collocations of hydrogen atoms; human thought is nothing more than the operation of cold computer algorithms; everything eventually runs down etc etc. (In his book Small is Beautiful E F Schumacher expressed deep concern about the implications of some of these claims as well.) I think in this respect science will need to change. People like Rupert Sheldrake and David Ray Griffin have been grappling with this issue, but that's too long a story to go into here.

Radu Diaconu said...

Although I do not have the time to read it, far more interesting than Mr Daly writings, in my opinion, is the opera of NICOLAE GEORGESCU-ROENGEN, a romanian born and romanian and european educated american economist and professor of economics at Vanderbilt University, the creator of the so called BIOECONOMICS THEORY.
His Magnus Opera is entitled...The Entropy Law and the Economic Process, 1971.
In the history of economic thought, Georgescu-Roegen was the first economist of some standing to theorise on the premise that all of earth's mineral resources will eventually be exhausted at some point. In his paradigmatic magnum opus, Georgescu-Roegen argues that economic scarcity is rooted in physical reality; that all natural resources are irreversibly degraded when put to use in economic activity; that the carrying capacity of earth – that is, earth's capacity to sustain human populations and consumption levels – is bound to decrease some time in the future as earth's finite stock of mineral resources is being extracted and put to use; and consequently, that the world economy as a whole is heading towards an inevitable future collapse, ultimately bringing about human extinction.[14] Due to the radical pessimism inherent in his work, based on the physical concept of entropy, the theoretical position of Georgescu-Roegen and his followers was later termed 'entropy pessimism'.