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A conversation with Herman Daly

We are grateful to Herman Daly for chatting with us on a range of topics from ecology to economics, policy to politics, relocalization to religion. He is Emeritus Professor at the University of Maryland School of Public Policy, pioneered work on Steady-State and Ecological Economics, and has received more accolades and written more books than we can mention. Find more about Steady-State Economics at steadystate.org, and reach out to your elected officials about the need to transition to a steady-state economy.


You have been making a persuasive case for a steady-state economy (SSE) for several decades now. In that time, we’ve gone well into ecological overshoot. The Limits to Growth scenarios indicate it may no longer be possible to avoid decline/collapse as delayed negative effects begin to kick in. What gives you hope that a transition to a steady-state economy is still possible?

The steady state to which we might now transition will be a smaller and more impoverished one than our existing level, or one that we could have attained if we had started sooner. A small amount of optimism comes from the fact that growth has become uneconomic and our self-interest may help us recognize that, once we properly measure costs and benefits. But beyond such limited rational optimism is faith-based hope. If one believes the world is in some sense a creation rather than a random accident, and that purpose can be independently causative in the physical world, albeit within limits, then there is a basis for hope. If one believes that purpose (final causation) is an illusion, a trick evolution played on us, as many materialists affirm, then we might as well forget it all anyway and try to "have fun" while it lasts.

In control systems, two properties that are important, among others, are convergence and stability---that is, how well, if at all, does the system move towards the desired operating point, and how well does it stay there once it arrives at that point.

Regarding convergence, do you think there’s a way to arrest the harmful, delayed feedbacks that are already underway using the levers of SSE? It seems one of the fundamental issues in an economic or industrial system is the feedback delay between changes in the system and their effects; it’s this dynamic that Meadows et al. observed as causing overshoot and decline/collapse. How might you avoid this in a steady-state system, especially when the delayed feedback can be in the form of a problem that develops for years before scientists even become aware of it (e.g. the ozone hole), let alone form a consensus (e.g. climate change)?

I don't think of a SSE as automatically converging to a stable operating point, but more as a system whose inherent tendency is to outgrow its parent system, and which must therefore be externally constrained. Thus the equilibrium will be at a limit, and the important thing is to set that limit within the larger carrying capacity and carefully enforce it. (This is an important difference with neoclassical environmental economists who think they can make the economy internally convergent and stable by just "getting prices right" and putting a price on everything). The uncertainty about where the limits are, and the delayed feedback from exceeding them are very real problems, and the only "answer" I have is to slow down and leave a bigger margin for ignorance—the so-called precautionary principle---as I am told the engineers do---design a bridge you think will last, and then double its strength for good measure.

Might there be an analogous stability problem to The Energy Trap that arises out of political myopia, in which there is an incentive to rig the system once it has arrived at the steady-state target to squeeze a little bit of short-term gain out of it? What might be done to keep politicians (and those that support and elect them) from changing the rules of the game in this way for temporary benefit? (Might there be broader, more permanent rules, akin to Alaska’s constitutional mandate on sustainable fishing, that would prevent such action?)

The more one specifies permanent rules the less able one is to make adjustments to meet changing conditions. Any system can be subverted by the people running it—witness the repeal of the Glass-Steagall Act. The quest for a "system so perfect that no one needs to be good" (T.S. Eliot) is likely to fail.

Suppose you could make every layperson familiar with one economic concept. What would it be, and why? Given the kind of reportage we get on matters economic, what should people be paying attention to, and what should just be ignored?

I suppose it would be "opportunity cost", the worth of the next best alternative to the one chosen, the best set of opportunities sacrificed in making a choice. Don’t worry about monetizing it at first, just make a list (without double counting) of the most important things you can’t do because of what you chose to do, and calmly think about whether your chosen alternative would really be worth it. Then try to monetize the cost. We should ignore incessant reportage on the Dow-Jones, and GDP growth, and demand better reporting and measurement of unemployment, income distribution, and rates of depletion and pollution.

How can the concept of opportunity cost help laypersons? Does it help them make choices in daily life? If so, what might be an example? Or is it better for evaluating candidate policies?

Suppose I want to become a great singer, but have limited talent. Maybe I just need to devote all my time and energy to singing and practicing. But what else could I be doing with my time and energy—what opportunities am I sacrificing in my quest to become a great singer? Is it worth it?---A very commonsense idea.

You have argued that GDP conflates utility and throughput; might there be some simple definition or definitions of utility that could be computed using statistics collected by governments today? (Are the Human Development Index, Genuine Progress Indicator, and others like them good proxies for utility?)

GPI is an objective index of utility, and self-evaluated happiness is a subjective index---both show a positive correlation with GDP up to a point beyond which GDP continues to rise and the utility index becomes flat. So although there is no direct measure of utility, there is good evidence that, beyond a sufficiency, GDP growth does not increase it.

How would you sell SSE to someone whose understanding of economics comes from the nightly news---one dominated by growth, the stock market, and unemployment data? How would you sell steady-state economic policy to progressives / liberals vs. conservatives?

I would point out that all the growth has gone to the rich, and that the poor have actually lost ground in the last few decades, so the claim that growth will cure poverty has proven false. As for the stock market---the Dow-Jones is mostly meaningless day-to-day noise, but the recent crash brought on by over leverage and fraudulent financial manipulation should make one very wary of the stock market---and indeed of our fractional reserve banking system. It should convince us of the need to move toward 100% reserve requirements and to break-up large banks. Unemployment statistics are an important feedback that reflects large loss of welfare, and the figures are usually underestimated. It used to be that full employment was the goal and growth in GDP the means to it. Now growth is the goal, and off-shoring jobs, merger, and automation, which increase unemployment, are the means. Since liberals are as afraid of a steady state as conservatives, I would make the same points to them.

The highest-profile source—or vehicle, really—of information about the massive gains for the rich since 1970 is Occupy Wall Street. And thinking about OWS brings many questions to mind. Although there was some misleading coverage of OWS, especially at first, for a few weeks the mainstream media were showing people with economic grievances, and taking them seriously. And OWS also took issue explicitly with the engineers of the 2008 financial crisis.

Nonetheless, Occupy Wall Street has been effectively disappeared from media coverage, the camps displaced, and the issues dismissed by ad hominem—e.g. it’s only lazy hippies who complain. Is this a sign that the information people need is inherently unwelcome? Was OWS the wrong spokesmovement for economic justice?

No, I think they had as much impact as possible, given that Wall Street owns the media.

Do you still believe that "it will probably take a Great Ecological Spasm to convince people that something is wrong with an economic theory that denies the very possibility of an economy exceeding its optimal scale" (as you wrote in 1987)? (Or for a real paradigm shift to happen will it require, to put Kuhn’s observation nicely, that today’s conventional economists retire?) Have we foreclosed some outcomes having waited over twenty years from that writing?

Yes. The financial crisis of 2008 and continuing recession have not been enough---indeed they have placed growth even more front and center because it is the only "solution" economists and politicians can imagine. I used to expect a Kuhnian paradigm shift as old economists died off, but they seem to be cloning themselves in university economics departments faster than they are dying. As noted above we have certainly foreclosed some options by delay, and the Millennial generation of economists do not seem to be an improvement, with the exception of ecological economists who are still very rare in academic economics departments. I hope the new generation will not be bluffed by their economists, but will insist on better answers to critical questions.

In For the Common Good, you made a compelling case for the revitalization of communities, and for bottom-up rethinking of social arrangements. It seems however that there are structural economic and political barriers that communities face if they try to relocalize: everything from outsourced manufacturing to the Commerce Clause. What might be some ways around this? Might it require informal / gray-market local economies or policies (and might local currencies, timebanks, and other similar mechanisms play a role)?

Of course one way is global crash followed by reconstruction at more local and national levels. Increasing energy and transportation costs could bring about re-localization more gradually. Off-shoring production and global economic integration is a sell-out of the working class in the interest of transnational corporations, and at some point has to be politically resisted. The disintegration of the Eurozone may be the first step in re-localization. Local currencies as a supplement to national currencies are a good idea especially for depressed areas that have to export to the national economy just to earn cash with which to transact even local exchanges. The fallacies of free trade and globalization are discussed in For the Common Good, chapter 11. I think the first step in re-localization is to de-globalize or re-nationalize. Relatively independent nations can trade for mutual benefit, but extreme specialization means you must trade. If trade is no longer voluntary there is no reason to expect it to be mutually beneficial.

Have we in the United States (and, to a lesser extent, Europe and the rest of the industrialized world) reached a point of diminishing returns not just in terms of EROEI but in something related: the return we get from tapping the resources of nations around the globe via economic (and military) means? Is there a means by which we in the United States can extricate ourselves from our involvement in and wealth-siphoning from countless nations around the globe in a way that isn’t severely damaging both for us and the nations in question?

Already wars are caused by competition for remaining oil, and increasingly for agricultural land and water. Growth economies will be driven to resource wars, and avoiding that is a major reason for steady state economies. R & D should go into improving resource productivity, not into military weapons for gaining access to remaining resources. Move away from globalization (integrated world economy dominated by transnational corporations) toward trade among interdependent but relatively self-sufficient national economies, as was envisioned at Bretton Woods, and then abandoned with the later formation of the WTO and its promotion of free capital mobility and global economic integration.

We've been wondering for a while how to be sneaky and achieve the end goals of a steady-state economy through different means. That is, suppose we come to terms with the fact that the economic and political systems are what they are, and are going to resist open change to a SSE. What stealth approaches might political leaders or activists use to make the needed changes piecemeal but without letting on about the overall end goal? Might there be a way to achieve the goals of steady-state economics during a transition period without letting on that we’ve abandoned growth? That is, might there be some policy (likely monetary, though perhaps fiscal and otherwise) that could create the appearance of growth given the statistics and metrics we use today while at the same time in fact behaving like an SSE? Similarly, are there systems today (either in the private or public sector) that could be co-opted to function as SSE mechanisms?

I think there are policies that foster a steady state indirectly, and have other reasons in their favor that might be emphasized (100% reserve requirements for banking system). But their negative consequences for growth are soon realized and are raised as an argument against them. I have argued for a set of ten policies, each of which would contribute towards a steady state, and all of which together might be sufficient. Although the ten policies supplement and balance each other to some degree, most could be enacted piecemeal for reasons short of attaining a steady state economy.

Might it be the case that implementing any specific preferred system for society would be counterproductive or less effective than we’d like if it didn’t evolve organically? (That is, if rulemaking itself wasn’t relocalized.) Is there some minimal framework of concepts from SSE that could be extracted (meta-rules)---that is, the paradigm, not the system---within which local and national societies could establish their own rules to operate at a steady state, and if so what might that be?

Meta-rules for SSE: limit population; limit throughput; limit the range of income inequality permitted. Within those limits let markets allocate resources, with exception made for non rival goods.

While we strongly believe in the need to let science guide the ways in which an SSE is boxed in and kept within ecological limits, might there be a blindspot in this approach? Specifically, might it fall into a sort of neutral technocrat fallacy, in which the biases of those who manage this crucial aspect of the system go unexamined? (Consider for example the natural resource extraction limits that are set, or the maximum and minimum wages incomes that are set.) Are there ways of instituting real checks and balances here? Would the constitution need to be amended to enshrine the principles of steady-state economics, and if so, how?

There is always a danger of the “neutral technocrat” fallacy as we have certainly experienced in connection with the overwhelming technocratic support of the growth economy. My major worry about “scientific blindness”, as I have experienced it in ecological economics, comes from the biologist/ecologist commitment to neodarwinist fundamentalism. By that I do not mean descent from a common ancestor, for which there is abundant evidence, but rather the metaphysics of materialism and random randomness as sufficient causes for explaining everything. This view is often connected with neodarwinist evolutionary theory, as a key part of their animus against any idea of creation or a creator or purpose in any meaningful sense. This scientific materialist methodology is understandable as a working hypothesis, but when elevated to a metaphysical worldview, quickly and logically leads to nihilism.

This undercuts policy of any kind, including environmental policy. I hasten to add that biologists and ecologists have been at the forefront of environmental protection, but there is a deep lurking inconsistency between their actions and their professed philosophy that does not support their actions. In a way this is the opposite inconsistency from the Christians whose belief in Creation gives them every reason to responsibly care for it, yet have in practice failed to do so. Neodarwinist ecologists have no reason to care for creation yet in practice do so, perhaps unconsciously drawing on the early history of their discipline in natural theology. Over time I fear this practical commitment will wither from lack of religious foundation.

It’s true that theists have a reason to care about the natural world that atheists lack. But don’t theists and atheists alike have many other reasons to preserve the environment and enact good policy? For example, anyone could act out of concern for other humans, future generations, the beauty of nature, the welfare of nonhuman creatures, or even simple self-interest. If a scientist or politician genuinely cares to preserve ecological systems, does it really matter whether they’re acting out of religious concern rather than for one of these other reasons?

Isn’t it quite common, in general, to hold contradictory beliefs but act consistently on one of them? Everyone has some inconsistencies in their belief set, but this doesn’t usually prevent people from acting. I might consistently act on the belief that P even though I hold beliefs inconsistent with P, especially if I’m not aware of that inconsistency. So, supposing that a materialist metaphysics really does entail nihilism (for the record, I don’t believe it does), why should we expect scientist policymakers to act like nihilists, rather than simply continue to act as though there are genuine values?

If one refuses to act on a set of beliefs that contradict another set of beliefs that one does act on, then I would say that one doesn’t really believe the first (inoperative) set of “beliefs”. The world is full of people who profess materialist determinism, yet they make decisions and blame themselves and others for mistakes and immoral choices. If one is unaware of the inconsistency then we have an obligation to raise his awareness. Perhaps it is not atheism per se that entails nihilism, but rather the beliefs, the worldview, that lead many to atheism in the modern world, namely materialist determinism plus randomness over immense time periods. Most atheists of this usual type grew up in a culture saturated with the Judeo-Christian tradition (in the West, or another religion elsewhere) and absorbed the associated moral values with their mothers milk. They will not ” simply continue to act as though there are genuine values” as the basis for belief in genuine values atrophies in light of their ”knowledge” that values are mere survival mechanisms governed by materialist forces guided by randomness. Continued appeal to the beauty of nature, future generations, etc. becomes free-floating sentimentality with no objective foundation.

What do you think of James Hansen’s conclusion that climate scientists (and in general those working to raise awareness on overshoot), given that decades of warnings have had no impact, need to take direct action (as Hansen has, going to jail for protesting against coal)?

I agree with his serious concern about climate change, and very much admire him for his courage and willingness to engage in peaceful civil disobedience. I do not, however, understand his antipathy to cap-auction-trade as a policy for limiting greenhouse gasses. I think he overstates the differences with tax policy, and underestimates the advantage of fixing quantity from the beginning and thereby ruling out the Jevons or rebound effect of efficiency increase.

One of the strongest cultural forces in the U.S. is Christianity, and the Biblical heritage has sometimes been blamed (notably by Lynn White) for exploitation of the nonhuman world. Whether or not that historical thesis is true, U.S. Christianity currently seems to be aligned with the drill-baby-drill crowd, and the occasional politician will even claim that God won’t let us run out of resources. But there is also a Christian environmentalism on the move, which sees passages like Genesis 1:26–28 as a demand for stewardship of the planet and its life. Do you think there is a way to make stewardship part of mainstream Christianity? Would doing so change the kind of environmental politics we see in the U.S.?

To my fellow Christians, and others, I recommend Richard Baukham’s book, Bible and Ecology (Rediscovering the Community of Creation) as a much-needed correction to the “drill-baby-drill” exercise of dominion. Christians have a lot to repent of regarding care of creation, and many, in addition to Bauckham, are certainly doing so. But at the same time Christians have a theology of creation that supports environmental policy much better than does a metaphysics of purposeless random materialism. Without strong support from a reawakened Christian faith I doubt that environmental destruction and economic collapse can be avoided, at least in the US. Will other faiths in other cultures be able to arrest the collapse? I don’t know. The dominant belief that modern science and technology (which also have a lot to repent of but unfortunately lack the concept) are sufficient, is in my view a replay of the Gnostic heresy.

Have you or others tried to understand prior sustainable societies of the world in the context of your economic theories? Are there practices that you thought were necessary for sustainability that were absent, or vice-versa?

I am afraid that I have not really dealt with this important question, although others have.

What do you think those of us in the Millennial Generation understand better or worse than those of generations past about these challenges? What generational strengths should we leverage and weaknesses should we avoid?

As I mentioned earlier I have been disappointed that there has not been a Kuhnian revolution in economics in which the new paradigm (ecological economics, steady-state economics) replaces the old, because the old growth economists have been cloning themselves in university economics departments faster than they are dying. So I hope that in the new generation other scholars will invade the discipline of economics and do the job that my generation of economists has failed to do. Ecological economists are trying, but still are very much marginalized. Some physicists have made an important contribution here; others have just become rich Wall Street “quants”. Again I am hopeful, but not very optimistic.

Thank you for taking the time to chat with us. Is there anything important we’ve missed or anything else you’d like to share with us?

Was a pleasure to have such a stimulating discussion with you. I hope you continue your invasion of the discipline of economics!

What do you think? Leave a comment below.

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