"The Steady-State Economy"
Excerpt from Herman Daly, "The Sustainable Society: Implications for Limited Growth"
(New York and London: Praeger, 1977) pp. 107-114

"What is a steady-state economy?

The steady-state economy is a physical concept. It is characterized by constant stocks of people and physical wealth maintained at some chosen, desirable level by a low rate of throughput. Throughput flow begins with depletion (followed by production and consumption) and ends with an equal amount of waste effluent or pollution. Benefits come from the services rendered by the stock of wealth (and people). This service or psychic income is unmeasurable, but it is clearly a function of the stock, not of the throughput flow. One cannot ride to town on the maintenance flow of the stock of automobiles, but only in an existing automobile that is a current member of the stock. Stocks yield services and require maintenance and replacement. The throughput flow is the maintenance cost of the stock. As such it should be minimized for any given stock size. . . .

Once a steady state is attained at some level of population and wealth, it would not be forever frozen at that level. As values and technology evolve, different levels might become both possible and desirable. But the growth (or decline) required to get to the new level would be seen as a temporary adjustment process, not a norm. The momentum of growth in population and capital currently creates our technological and moral development. In the steady state, technological and moral evolution would be autonomous rather than growth-induced. They would precede and pull growth in the most desirable direction, rather than being pushed down the path of least resistance by the pressure of autonomous growth. Growth (positive or negative) would always be seen as a temporary passage from one steady state to another.

Why? Assumption and values underlying the steady-state view

The steady-state view is based on physical, biological, and moral first principles and is immediately deductible from them without the aid of computer simulations.

The physical first principles are the laws of thermodynamics. . . .

From the first law (conservation of matter-energy) it is obvious that we do not produce or consume anything, we merely rearrange it. From the second law (increasing entropy) it is clear that our rearrangement implies a continual reduction in potential for further use within the system as a whole. In mining concentrated ores we convert usable energy to unusable energy. We concentrate and refine the material ores in 'production', but then by way of 'consumption' or depreciation we eventually, through friction, rust, accident, loss, decay, and so on, disperse the once-concentrated minerals all over the face of the earth so that they become forever useless.

Entropy applies to materials as well as energy. For materials it means that order turns to disorder, the concentrated tends to be dispersed, the structured becomes unstructured. It is true that materials can be recycled and energy cannot, but materials recycling can never be 100 per cent complete. Some fraction of useful materials will be irrevocably lost during each cycle of use. For energy, entropy means that usable energy is always diminishing, and useless (equilibrium temperature) energy is always increasing. The distinction between useful and useless is an anthropomorphic one - in fact an economic distinction. Thus the relevance of entropy to economics is built into the very concept of entropy and requires no further demonstration.

The concept itself originated with an economic problem: the maximum efficiency of heat engines. Entropic constraints are not abstractions far off in the future. We are not talking about the ultimate heat death of the universe. The effect of the entropy law is as immediate and concrete as the facts that you can't burn the same tank of gasoline twice, that organisms cannot live in a medium of their own waste products, and that efficiencies cannot reach, much less exceed, l00 per cent. The low entropy of highly organized stocks of wealth and human bodies must be maintained by the continual importation of low-entropy inputs from the environment and the continual exportation of high-entropy outputs back to the environment, where through the agency of solar-powered biogeochemical cycles they are transformed into low-entropy forms on varying time scales.

The entropic flow, beginning with depletion and ending with population (the throughput), is the necessary cost of maintaining the stocks of commodities and people. Too large a throughput can disrupt the biosphere and impair its capacity to assimilate wastes. The world's sources of useful (low-entropy) matter and energy become depleted, while the sinks for waste high-entropy matter and energy become polluted.

We live off of the depletion-pollution throughput and cannot exist or enjoy life without it. It is a necessary cost of existence and plenitude. But the entropic degradation is a cost and must be reckoned as a cost and minimized for any chosen level of population and per capita wealth. Unfortunately, it seems that our present economic institutions and theories are more attuned to maximizing throughput than to minimizing it. This results from the close association of throughput with GNP, which is taken as an index of welfare, and from our failure to recognize any concept of a mature or sufficient level of stocks.

It is true that we have a continual input of new low entropy in the form of sunlight (our earth system is open with respect to solar energy), so that it is possible to maintain and increase the order and complexity of the earth, via photosynthesis and life processes, at the expense of increasing the entropy of the sun. Solar energy only arrives at a fixed rate independent of man's will, and the entire biosphere has, over millions of years of evolution, adapted itself to living off this fixed income of solar energy. But in the last two centuries (a mere instant in the history of the biosphere) man has ceased to live within the annual solar budget and has become addicted to living off his capital of terrestrial stocks of low entropy (fossil fuels, minerals). Terrestrial stocks of fossil fuels represent a minute fraction of the energy available from the sun, but unlike the sun these stocks can be used at a rate of a man's own choosing that is, we cannot mine the sun, but we can mine, and rapidly deplete, terrestrial stocks. As population grew, man needed more food and undertook the work necessary to produce it, employing draft animals to help. As population continued to grow man became more reluctant to share his food-producing land to grow fodder for draft animals. Instead he began to feed tractors with fossil fuels and increased the ability of the land to support a larger population. Also, new products were produced and standards of individual consumption increased along with population, further increasing man's addiction to living off his terrestrial capital.

Some big problems emerge from this addiction.

Our terrestrial capital will clearly become more and more scarce, and then for all practical purposes available nonrenewable resources will be used up. Our national income accounts treat consumption of geological capital as current income, thus sanctifying the addiction. Substitution will extend the life of all resources, but will not 'create new resources' as metaphorically stated by many people. Whenever the net energy yield becomes zero (that is, it costs as much energy to mine a ton of coal as can be got from a ton of coal) then it becomes nonsensical to continue mining that energy source. This consideration is unaffected by prices and clearly shows that we will never be able to use all the resources in the earth's crust.

Second, since man is the only species living beyond the solar budget, it is clear that such behavior will throw the human species out of balance with the rest of the biosphere which, because of evolution over eons, has become ever more elaborately adapted to the fixed solar flow. Man is the only member of the biosphere who has broken this evolutionary budget constraint. It is only natural that this unique expansionary behavior should cause repercussions and feedbacks from the rest of the system in the unhappy form of pollution and breakdown of local life-support systems. These systems are unable to accommodate man-made energy and material flows that constitute significant additions either to the local solar flux, or to that part of the solar flux trapped by photosynthesis, or to the natural volumes of solar-powered material cycles. The surprising thing is not that these breakdowns occur, but that they have not occurred to a greater degree. The ecosystem evidently has considerable slack, redundancy, and resilience. But the slack is being used up in one dimension after another - no one doubts that man has the capacity to destroy the biosphere, whether directly by war or indirectly through the growing commercialization of chemical and radioactive poisons (DDT and plutonium), with which the biosphere has had no evolutionary experience and to which it is consequently unadapted...

The physical and biological first principles just discussed (that is, the first and second laws of thermodynamics, and the evolutionary adaption of the biosphere to solar energy) point toward the eventual necessity of a stabilized economy (that is, ignoring the first and second laws results in excessive depletion and pollution, which in turn provoke ecological disruption).

Independently, there are also some ethical first principles indicating the desirability of a steady state. Nearly all traditional religions teach man to conform his soul to reality by knowledge, self-discipline, and restraint on the multiplication of desires, as well as on the lengths to which one will go to satisfy a desire. The modern religions of technological scientism, magic, and economic growth seek to subjugate reality and bend it to the uninstructed will and whim of some men, usually to the uncounted detriment of other men. C. S. Lewis has reminded us that what we call the increasing dominance of 'man' over nature is really the increasing dominance of some men over other men with knowledge of nature serving as the instrument of domination. This may not be intentional or always a bad thing, but it should be recognized for what it is. There is a limit beyond which the extra costs of surrendering control over one's environs and activities to the experts becomes greater than the extra benefits. This is not anti-science - it is merely a warning against the idolatry of science by some of its zealous fanatics who are consecrated to redoubling their efforts while forgetting their purposes...

For scientism and growth-mania there is no such thing as ''enough' even on the material plane. Indeed the whole idea seems to be to try to fill a spiritual void with material commodities. The usual objection to limiting growth, made in the name of the poor, only illustrates the extent of the void because it defends growth as an alternative to sharing, which is considered 'unrealistic', if not inconceivable. For the traditional attitude there is such a thing as material sufficiency, and beyond that admittedly vague and historically changing amount the goal of life becomes wisdom, enjoyment, cultivation of the mind and soul, and of community. It may be that community requires a certain degree of scarcity, without which cooperation, sharing, and friendship would have no organic reason to be, and hence community would atrophy. Witness the self-sufficiency and lack of community of middle-class suburbs.

Another ethical first principle is a sense of stewardship for all of creation, and an extension of some degree of brotherhood to future generations and to subhuman life. Clearly the first demands on brotherhood are those of presently existing human beings who do not enjoy material sufficiency. The answer to this failure of brotherhood is not simply more growth, but is mainly to be found in more sharing and more population control, both of which are necessary. Without population control, sharing will simply make everyone equally poor. Without sharing, population control will at best reduce the number of the poor, but will not eliminate poverty. If, as often happens, the rich limit their numbers and the poor do not, then birth control worsens the distribution of income. Both sharing and population control are basically moral problems whose solutions require sound values far more than clever techniques.

The virtue of humility is also high on the list of moral first principles. Much of the drive to convert the ecosphere into one big technosphere comes from the technological hubris of ordinary men who think that the scientific method has somehow transfigured them into little godlings who can collectively accomplish anything - if only society will give them more and more research funds. At a more basic level the drive comes from the need for doing and controlling as a verification of knowledge. There is no reason why we must do everything we know how to do, but there is a sense in which we cannot be sure we know how to do something unless we have done it. If we are going to avoid doing certain things we will have to sacrifice the forbidden knowledge that would have been gained.

Another important virtue is 'holism', the attitude that recognizes that the whole is greater than the sum of its parts, that reductionist analysis never tells the whole story, and that the abstractions necessary to make mechanistic models always do violence to reality. Those who habitually think in terms of abstract, reductionist models are especially prone to the 'fallacy of misplaced concreteness' - that is, applying to one level of abstraction conclusions arrived at from thinking on a different (higher) level of abstraction.

In sum the moral first principles are some concept of 'enoughness', stewardship, humility, and holism.

In social science today one hears little of moral values or ethics (even though historically economics began as a branch of moral philosophy). Appeals to moral solutions, to a change in values, are considered as an admission of intellectual defeat, as a retreat from the rules of the game - as cheating. The quest is for clever mechanistic technical solutions, not straightforward moral solutions. Power-yielding techniques have been assiduously sought for, while the cultivation of right purposes has been neglected - some even consider the latter 'a meaningless question'. We now have growing power in search of shrinking purpose.

If one accepts these biophysical and moral first principles, then it will be hard for him to reject the ideal of a steady-state economy. If one rejects the moral first principles, he may still be convinced by arguments of necessity arising from the biophysical first principles If one rejects the biophysical premises, he may still be led to accept the steady state for reasons of desirability arising from the moral premises. If one accepts both sets of first principles then he should be doubly convinced."

Resource Link: The Steady State Revoultion Homepage.