Beyond Growth: The Economics of Sustainable Development

by Herman E. Daly

"Daly is turning economics inside out by putting the earth and its diminishing natural resources at the center of the field . . . a kind of reverse Copernican revolution in economics." 
--Utne Reader

"Considered by most to be the dean of ecological economics, Herman E. Daly elegantly topples many shibboleths in  Beyond Growth.  Daly challenges the conventional notion that growth is always good, and he bucks environmentalist orthodoxy, arguing that the current focus on 'sustainable development' is misguided and that the phrase itself has become meaningless."
--Mother Jones

"In  Beyond Growth,  . . . [Daly] derides the concept of 'sustainable growth' as an oxymoron. . . . Calling Mr. Daly 'an unsung hero,' Robert Goodland, the World Bank's top environmental adviser, says, 'He has been a voice crying in the wilderness.'" 
--G. Pascal Zachary,  The Wall Street Journal

"A new book by that most far-seeing and heretical of economists, Herman Daly. For 25 years now, Daly has been thinking through a new economics that accounts for the wealth of nature, the value of community and the necessity for morality."
--Donella H. Meadows,  Los Angeles Times

"For clarity of vision and ecological wisdom Herman Daly has no peer among contemporary economists. . . .  Beyond Growth  is essential reading."
--David W. Orr, Oberlin College

"There is no more basic ethical question than the one Herman Daly is asking." 
--Hal Kahn,  The San Jose Mercury News

"Daly's critiques of economic orthodoxy . . . deliver a powerful and much-needed jolt to conventional thinking." --Karen Pennar,  Business Week

Named one of a hundred "visionaries who could change your life" by the Utne Reader, Herman Daly  is the recipient of many awards, including a Grawemeyer Award, the Heineken Prize for environmental science, and the "Alternative Nobel Prize," the Right Livelihood Award. He is professor at the University of Maryland's School of Public Affairs, and coauthor with John Cobb, Jr., of  For the Common Good.

Genres: Economics, Environment, Sustainability, Nonfiction, Politics, Ecology, Climate Change

254 pages, Paperback

First published January 1, 1996

About the author

Dr. Herman Edward Daly is an American ecological economist and professor at the School of Public Policy of University of Maryland, College Park in the United States. He was Senior Economist in the Environment Department of the World Bank, where he helped to develop policy guidelines related to sustainable development. While there, he was engaged in environmental operations work in Latin America. He is closely associated with theories of a Steady state economy.

Before joining the World Bank, Daly was Alumni Professor of Economics at Louisiana State University. He was a co-founder and associate editor of the journal, Ecological Economics.

He is also a recipient of an Honorary Right Livelihood Award, the Heineken Prize for Environmental Science from the Royal Netherlands Academy of Arts and Sciences, the Sophie Prize (Norway), the Leontief Prize from the Global Development and Environment Institute and was chosen as Man of the Year 2008 by Adbusters magazine.

He is widely credited with having originated the idea of uneconomic growth, though some credit this to Marilyn Waring who developed it more completely in her study of the UN System of National Accounts.

Reviews

[Terence · Rating 3 out of 5]

I finished this last week and have been dithering since then with notes and possible angles for addressing the arguments in the book.

Well, no more delay - I will post the review. Eventually. Just not today :-)
_____________________

Anyone who has followed my recent nonfiction reading may have seen a theme – a focus on the deteriorating conditions for life on this planet. While the subject has been of interest for a long time, my latest venture into it began with Derrick Jensen’s Endgame (both volumes). Jensen is angry and radical. Not only does he predict the imminent end of industrial civilization but he wants people to actively bring it about since the longer we maintain it, the worse the aftermath. My reading continued with Spencer Wells’ Pandora’s Seed, where the author traced many of the problems we’re dealing with today to the Agricultural Revolution, which fundamentally transformed how humans lived and interacted with their environment. Unlike Jensen, Wells finds cause for hope in technology that could ameliorate or reverse the damage we’re inflicting on the ecosystem. Herman Daly’s Beyond Growth deals with the same problems from an economist’s POV. He’s not angry and he’s radical only to the extent that he believes the current, neoliberal, growth-oriented economic consensus makes no sense and has reached a point of rapidly diminishing returns. I don’t think he would advocate blowing up dams or toppling cell-phone towers á la Jensen. Rather, like Wells, Daly sees hope that we can contrive a way of life that preserves a decent standard of living for everyone.

Introduction
The assumption of most economists from all schools is that the economy is an open-ended system capable of eternal growth. There may be disputes about how best to distribute wealth and to allocate resources efficiently but that wealth would always increase and that there would be sufficient resources to fuel it were givens. In a pre-industrial and early industrial world this was a defensible position. The scale of human activity was such that the ecosystem it was a part of could renew itself or absorb the waste and there were plenty of niches yet to be exploited. The “golden age” of industrial civilization is coming to an end. Scale – the heretofore ignored third leg of the economy – is making considerations of allocation and distribution irrelevant. It’s simply not possible to grow into greater prosperity for the near 7 billion people who are living on the planet at the time of this review (2011). It wasn’t possible for the 5 billion living at the time of the book’s writing (1996). And it won’t be possible for the 9 billion who’ll be here by 2050. As Daly might phrase it: There is not enough low-entropy input and too much high-entropy output to support an American-style quality of life for the entire planet, and even within developed nations, many are slipping below even that level.

Daly wants to convince readers that we have to contemplate (and implement) a fundamental shift away from a growth economy to a development economy, one that focuses on qualitative improvements instead of quantitative ones, and balances exploitation of resources with the need of future generations. In this book, Daly doesn’t discuss the details of such an economy. Here he wants to prove that the current model is unsustainable, and describe an overall framework for sustainable development (SD) which “meets the needs of the present without sacrificing the ability of the future to meet its needs.” (p. 1)

The introduction distills Daly’s conception of SD into 15 principles, which he elaborates upon subsequently:

1. Preserve and restore natural ecosystems (reduce humanity’s footprint on the planet).
2. Economic development, environmental protection and social equity must be balanced against each other.
3. Private markets can efficiently solve the problem of allocation but they must operate within boundaries of scale and equitable distribution that can only be resolved by communities in their political and social institutions.
4. Population growth must be controlled
5. Consumption must be reduced. Limit (halt) growth to force the development of greater efficiencies.
6. Reducing poverty is impossible without a more equitable distribution of wealth and a significant reduction in the number of consumers.
7. All segments of society must share environmental costs and benefits.
8. All economic and environmental decision making must consider future generations and preserve for them the same (or greater) range of choices as the present.
9. Where there is damage to public health or the environment, the costs should be borne by the consumer of the commodity, not the public at large.
10. SD acknowledges that depreciation of natural capital is just as much a cost as the classical idea of depreciating human-made capital.
11. Countries pursuing SD policies are less likely to go to war. Countries operating under the classical paradigm will inevitably come into conflict with others as they compete for dwindling natural capital.
12. SD is easiest to achieve in a free society.
13. SD policies must be debated by an informed public.
14. Technologies that reduce consumption and/or increase efficiencies are beneficial and should be encouraged. Not all technologies are beneficial.
15. SD must be tied to national policy and resists “globalization”: Unrestricted free trade promotes a race to the bottom in terms of wages and environmental abuse, and it weakens a nation’s ability to govern itself. Multinationals, with no interest in local concerns and focused on short-term maximization of profit, take over.

The final chapters of the book are a departure from the relatively soul-less analysis of the preceding pages. In these final pages, Daly suggests that the only way to convince enough people of the need for SD is to appeal to their spirituality – their sense of purpose. Science is excellent at accumulating data and explaining process but it can’t make any claims toward an ultimate purpose. On the contrary, most scientists actively eschew such a role. It’s only by making the preservation of life – and not just human life – a sacred obligation that we can hope to bring civilization within sustainable boundaries and hope to ensure a reasonably good quality of life for everyone and their descendants.

Economic Theory and Sustainable Development
Part one discusses the outlines of what Daly calls the “steady-state economy” (SSE). SSEs grow to the sustainable limits of their ecosystem, at which point any enhancements to productivity are qualitative rather than quantitative. Dale shies away from the details of a SSE except to say that it would maximize a “good life” for everyone that is indefinitely sustainable. There are two arguments for preferring a SSE to a growth economy (GE). The first is based on physical law, especially the second law of thermodynamics. A GE extracts resources and produces waste. Technological innovation has, so far, managed to keep ahead of resource depletion but only by substituting one resource for another and/or at the expense of the ecosystem (e.g., the Green Revolution expanded crop yield but at the cost of chemical pollution, limiting seed choice, erosion, destruction of vital ecosystems and population growth that is now outstripping carrying capacity). There is also an ethical argument against GEs. The desirability for growth in the present is based on the theft of resources for the future. Growth crowds out other species whose existence is vital for environmental health (e.g., mounting evidence that marine phytoplankton upon which the entire oceanic food chain depends is failing). A third consideration is that while absolute wants (food, shelter, health, etc.) are limited (i.e., a consensus of what is sufficient is possible), relative wants (access to more of what everyone else has) are not, and the driving demand for aggregate growth corrodes moral standards by encouraging the baser instincts in the human soul.

A final consideration arguing against a GE is the “cult of money” – which manifests as in increasing distance between money, the symbol of production, and the commodities it’s meant to represent. Daly traces four stages in the development of an economy. The first is the barter stage, a simple exchange of commodities (C > C’). At some point, as economies grow, money becomes a medium for exchange but it still represents something real (C > M > C’). The third stage is capital circulation. Theoretically, the money changing hands represents real or future wealth but the transaction focuses on the exchange of money (M > C > M’). As long as the cash economy doesn’t overwhelm its ecosystem, stage 2 and 3 look a lot alike. But the former inevitably reaches a physical limit; a limit that doesn’t restrain money. The final stage – the paper economy – cuts the ties between reality and exchange, and profit is measured by the manipulation of figures (M > M’). The system can stumble along fairly well as long as the participants have confidence in the future productivity of the economy. When that’s lost, however, you have “hiccups” (the Great Depression, the ‘70s oil shock, the financial collapses of the Asian Tigers and Mexico in the ‘90s, the dotcom implosion at the turn of the century and the ongoing meltdown that began in 2008). The hiccups are coming more frequently, are of greater scope and the recoveries benefit fewer and fewer people as the human economy continues to crowd out the overarching ecosystem.

There are a few more points Daly makes that he’ll elaborate on in future chapters. The first is that gross national product (GNP) – the chief metric of economic health (at least in the media and in political debate) – is hokum. It’s a measure of capital consumption and a poor reflection of reality. So poor, in fact, that Daly advocates abandoning it entirely. The second point is that by ignoring scale in their economic fantasies, free-market enthusiasts and classical economists make the command/centralized economies they abhor inevitable as resources (natural capital) become scarcer and the actors scramble to secure them (e.g., the mounting tensions among the nations bordering the Arctic Sea as melting ice makes its resources more accessible). The final point is that in a SSE the ultimate goal of policy should be to minimize production and consumption in order to maintain the capital stock.

Operational Policy and Sustainable Development
In this section, Daly shows that natural capital has become the limiting factor in the production of wealth, and argues that pro-growth policies that refuse to recognize this are becoming increasingly uneconomical and destructive. In their place, he presents four new policies:

1. Stop counting the consumption of natural capital as income. It should, rather, be treated as a cost in so far as they are nonrenewable and/or over-exploited.
2. Tax labor and income less and resource throughput more; thus, shifting the cost of manmade exploitation closer to the source.
3. Maximize productivity of natural capital (qualitative development).
4. Abandon free-trade ideology in favor of local/regional development.

This last point is Daly’s most radical as it flies in the face of 30 years of global economic policy but it’s necessary to restore some measure of control to communities that have lost it to multinationals, and it strengthens institutions capable of (and interested in) carrying out policies for the common good. He quotes Keynes:

“I sympathize therefore, with those who would minimize, rather than those who would maximize, economic entanglement between nations. Ideas, knowledge, art, hospitality, travel – these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible; and, above all, let finance be primarily national.” (p. 93)

National Accounts and Sustainable Development
One of the Daly’s least attractive features as a writer is that he too often writes like the World Bank bureaucrat he once was. Thus a reader must endure acronyms and formulae – lots of acronyms, lots of formulae. In this section we are introduced to yet another one – ISEW – the index of sustainable economic welfare, which is meant to replace GNP as a measure of economic health. It would incorporate measures of consumption, income distribution, depletion of natural resources and debt levels, among other measures. While not a perfect reflection, ISEW still more accurately reflects the quality of life vs. GNP. Measuring economic health by the ISEW, Daly charts a parallel rise with GNP through the mid-‘70s. In the ‘70s, the GNP continued to grow but ISEW flattened out, and from the ‘80s, it has declined relative to GNP.

ISEW’s decline illustrates the overgrowth of the developed world – it can only sustain itself by exploiting natural capital from abroad (not only denying them to the future but denying them to many in the present). The outcome (quoted from Global 2000 Report to the President from 1980) is that “if present trends continue the world in 2000 will be more crowded, more polluted, less stable ecologically, and more vulnerable to disruption than the world we live in now…. Despite greater material output the worlds’ people will be poorer in many ways than they are today.” Daly notes that in order to provide an American lifestyle to the 5 billion living at the time of writing (1995) would involve a seven-fold increase in the exploitation of natural resources.

Population and Sustainable Development
Daly looks at carrying capacity in section 4 – the optimum number of people in a SSE. Beyond the moral quandaries of population control, human carrying capacity is difficult to determine because four relatively constant controlling factors among other animals become variables with us. Among nonhumans:

1. Standards of living are relatively stable over time.
2. Relatively uniform per capital resource consumption.
3. Technologies are endosomatic and adapted to the environment (by and large, chimpanzees, for example, are known to use tools).
4. The level of exchange between species is constant.

The import of humans being able to control or strong influence these factors has been a population explosion that long ago passed the point of sustainability, and now impoverishes the majority, consuming natural capital like a cancer.

As with his position on global trade (of which more below), Daly’s on population is 180 degrees from the current “wisdom” (at least in America): Any rational population policy would promote zero, if not negative, growth – a diminution of the human presence. Such a policy would also preserve or increase carrying capacity by more appropriate uses of land, redistribution of resources to satisfy basic needs and investment in moving to renewable resources. A first step in limiting population, is the democratization of birth control – from education, to contraception, to abortion. The best options have to be available to everyone.

International Trade and Sustainable Development
In this section Daly returns to the baleful impact of free trade and expands on the case against. To begin, there is the cost of transportation, which consumes nonrenewables to move commodities over enormous distances. Where communities come to depend upon distant markets, they become more vulnerable to developments outside their control. Globalizing economies reduces the range of livelihoods within a community and entail a social cost hard to quantify (and thus ignored in economic analyses). And finally there is a standards-lowering competition to externalize costs. The proverbial “race to the bottom” in environmental standards, workings conditions and wages. The two objections to this analysis that Daly considers the most serious are that growth will compensate and Ricardo’s law of comparative advantage. To the first, he recaps all that has come before to show that “growth” will not compensate as there’s no place to growth into. To the second, which suggests that countries should specialize, Daly points out that Ricardo assumed that capital was immobile. In a free-trade world, capital if free moving and follows the law of absolute advantage.

And just as free capital weakens community control and social cohesion, so too does free labor. Both free labor and capital might make sense in a global economy with global standards on wages, environmental protection, etc., but there are no such things and no acceptable enforcement mechanism is there were.

Free trade conflicts with getting prices “right” as more responsible nations that internalize costs lose business to those less responsible. Open trade equalizes profit and labor – the former upward, the latter downward. Free trade removes ownership control from regional concerns. A true international community – as opposed to the current, footloose class of money managers who make up short-term coalitions of economic interest – would be a federation of regionally focused economies. Free trade results in huge trade imbalances and unsustainable debt (Europe 2011; America 2012?). Free trade violates scale. Participating GEs preserve consumption by importing/exporting among themselves but inevitably run up against environmental limits. By globalizing the scale of economic activity, every country hits the limits at the same moment, causing unmanageable, catastrophic problems worldwide as opposed to (hopefully) manageable local ones.

Daly concludes with the observation that SD demands an economic sophistication we’re not capable of at the moment, and we may have reached a point where we have little luxury for experimentation.

Two Pioneers in the Economics of Sustainable Development
Part six comprises two essays about Daly’s intellectual mentors – Frederick Soddy (1877-1956, major work: Wealth, Virtual Wealth, and Debt) and Nicholas Georgescu-Roegen (1906-1994, major work: The Entropy Law and the Economic Process).

Soddy was originally a chemist but became interested in economics when he contemplated how atomic energy would be used – primarily for war – and wondered why the economic system made that inevitable and how that could be changed. He argued that economists ignored the physical basis of the economy – that all life depends upon using energy. Up to the Industrial Revolution, humans relied upon energy “revenue,” immediately available and difficult to store. The industrial age allowed massive exploitation of energy “capital.” Economists also confuse “wealth” with “debt.” Wealth is a positive, physical quantity. Debt is a mathematical abstraction. Wealth is limited by the ecosystem. Debt is unlimited (as long as people trust each other to continue paying it). At some point wealth reaches its physical limit but debt continues to grow. The result is debt repudiation: inflation, bankruptcy and confiscatory taxation.

Soddy concluded that allowing wealth and debt to get a divorce (my analogy, not Soddy’s) has led to an ultimately unsustainable situation that promotes violence, instability and inequitable social/economic hierarchies. (Concluded in the Comments section)

[Keith Akers · Rating 5 out of 5]

Haven't you ever wondered what is the relationship of the economy to the environment, whether our civilization is unsustainable, or whether we are approaching limits to growth? Mainstream economics is not only irrelevant but actually dangerous, pushing us ever closer to ecological catastrophe. Herman Daly explains why and how we can correct these dangerous economic delusions in this old but classic explanation of the subject. This is a terrific book but it is also totally academic. You have to love the subject or you'll never get through it.

I wouldn't actually recommend starting with this book if you're trying to get into ecological economics. When are these guys going to recruit some decent writers? For that, I'd suggest Kate Raworth's book Doughnut Economics even though she doesn't really discuss ecological economics as a discipline. Or try An Introduction to Ecological Economics which has Herman Daly as a co-author, along with four others, including Robert Costanza and Robert Goodland. Though it is somewhat longer (and a textbook), Herman Daly's Ecological Economics (co-authored with Joshua Farley) is, while equally boring, also clearer and more logical in its presentation. So we have a paradox: a book which is difficult to get through, but is also essential reading for anyone interested in economics.

Here's another suggestion: if you do read this book, don't start with the introduction. Start with Part I. The Introduction is polemical and assumes you've at least heard of the Brundtland Commission Report, John Stuart Mill, and John Maynard Keynes. (Maybe you have, so charge forward.) Come back and read it once you're done and it makes much more sense. A third suggestion: this book makes a lot more sense on re-reading or after you're somewhat familiar with the terrain of ecological economics (by reading e. g. Raworth's book or the other books I mentioned above).

However, if you are somewhat familiar with ecological economics, this book will really sharpen your focus. A lot of ideas which I'd read about in the textbook Ecological Economics and were a bit fuzzy in my head became much clearer after Beyond Growth. One of these was the idea that we should not tax value added (through labor) but that to which value is added (natural resources!).

This book is nearly 25 years old, but still relevant, because economists are still clueless about the environment! Absolutely and totally clueless! We are staring the collapse of industrial civilization in the face. Like, do you know where your nose is? Well, go out directly in front of your nose about 5 inches, and that's where it is! And still economists are just spinning their equations. Let's get to work and build a revolution!

[Jonathan · Rating 4 out of 5]

Herman Daly's "preanalytic vision" is that the economy is a open, growing sub-system of a finite, closed ecological system. This may sound like jargon but the implication of accepting such a concept is portentous for the economic and political consensus. Put simply, further economic growth is increasingly unsustainable as we approach a "full world" and an alternative economic model is needed. The answer, according to Daly, is to move towards a "steady state" economy.

A steady state economy, Daly explains, is one where capital stocks remain constant and population growth is kept at a sustainable level. Such a model allows for "development" (qualitiative improvement) but not growth (quantitative increase). The means of achieving development but not growth, according to Daly, include ecological tax reform, a cap and trade system which sets a limit to overall pollution, minimum and maximum income levels, measures to constrain population growth and more besides. Such measures are inevitably contentious - the idea of limiting population growth is far from politically correct (on the right or the left), neither is the idea of an increased emphasis on redistribution including maximum income levels (currently increased growth is predominantly seen as the means of mitigating class conflict thus dodging the issue).

However, Daly argues that optimal scale of the economic sub-system has already been reached meaning an alternative is imperative. Yet such ideas are not new, Daly has been championing them in one form or another for many years whilst the mainstream of economics continues to stick its fingers in its ears. The question is - as crises start to bite in coming years will the politically inconceivable (limitations on economic growth) be forced onto the agenda?

[Bill O'driscoll · Rating 4 out of 5]

Daley is a pioneering economist here exposing the absurdity our pursuit of infinite "economic growth" on a finite planet. The reading is a bit theoretical at times, but Daly is a decent writer, and his main point is well-made: Most standard macroeconomics models (and hence most standard texts) assume that "natural resources" are a subset of the human economy, when in fact it is the other way around. His suggestions for a way forward put more faith in the market economy than I think is warranted, but he does have some interesting ideas, like pricing nonrenewable resources at the price of the next-cheapest renewable equivalent.

[Sam Dotson · Rating 4 out of 5]

TL;DR A thought provoking book that I would recommend for anyone interested in economic solutions to climate change, wealth inequality, and sustainability. Stars: 3.8

Daly is, without a doubt, the father of "ecological economics." He presents a scathing criticism of modern economic thought and practice. Now twenty-five years on, Beyond Growth is still remarkably relevant and worth reading. Daly introduces a strong definition for "sustainability" which is: natural capital and man-made capital are complements rather than substitutes. The latter means that we can always invent a suitable replacement for whatever natural resource we exhaust. This is obviously untrue, because even man-made substitutes for cloth (consider polyester) is derived from natural capital! Man-made capital are the "tools of transformation" that allow us to convert natural capital into something more suitable for human use.
We are then reminded of another unassailable truth -- the Earth is finite. Disagreement enters when considering how close we are to the limit of Earth's resources. This is where I begin to part ways with Daly. I fully agree that the Earth is finite and I also agree that we are running up on the limit of Earth's carrying capacity. The argument, however, that we must pursue a steady-state economy because we're close to the limit falls flat -- we should minimize throughput regardless of how close we are to the limit.
Daly makes some other comments, predictions and comparisons that are questionable, wrong, or inaccurate. To name some examples, he has some strange comments on immigration that aren't expanded upon and could be dangerously misconstrued. Next, he made some predictions about the Amazon and some countries in South America that simply did not pan out, which is an indication that his theory about how the world functions is incomplete. Finally, he compares GNP to the Heisenberg Uncertainty Principle, which is flatly incorrect. I indicate this inaccuracy because he makes a big deal about the serious role of physics (should) play in economic thinking.

The thing that Daly did brilliantly was delineate specific policy actions. Right or wrong, it doesn't matter, but he had the courage to say something real rather than swim in, what he termed, "pious generalities." For example, he disparaged the concept of GNP and suggested a true alternative and how to calculate it. For another, he is critical about how prices are set and that they fail to capture the nonrenewability of some natural capital and proposes specific methods to integrate the cost of nonrenewability . In particular, that a nonrenewable asset should be priced the same as its nearest renewable substitute (e.g. gasoline vs. ethanol). His solutions aren't fool proof, but they give readers something to bite into rather than just nod along passively.

Daly isn't perfect. I fundamentally disagree with his idea that religiosity is necessary for morality and required to motivate society to slow down growth. But his ideas about the importance of community and his gesturing towards an economy driven by values rather than profits is important and worth reading.

[Elinor Hurst · Rating 4 out of 5]

This is a book that I will keep and re-read and dip into from time to time, as a first-principles "bible" of sustainable economics.

Others have complained that this book was a dry read, and it is true that it is dense, but for me it was a pleasure to read as the concepts explained within it were so logically and methodically laid out with the meticulousnous of a trained economist.

The basic aims of economics need to be to address allocation (efficiency), distribution (equity), and scale (sustainability). Yet mainstream economics concerns itself almost solely with the first, only peripherally and reluctantly with the second, and not at all with the last. This is Daly's crucial message of the book, and he unpicks the flaws in conventional economic thinking along the way, along with proposed solutions to the problem.

It is a disgrace that his message and proposals have been so roundly ignored by a largely moribund discipline, and we find ourselves worse off than ever 20 years after this seminal book was published.

[Sreena · Rating 3 out of 5]

The book delves into the interconnectedness of economic, social, and environmental factors, highlighting how they must be considered holistically for true sustainability. It challenges the conventional notion that perpetual economic growth is both feasible and desirable, arguing that it often comes at the expense of environmental degradation and social inequality.

[Abhinav · Rating 5 out of 5]

This might be the most important book I've read all year. That doesn't mean it's the best written book, nor that it was the most readable. On the contrary, I found it exceedingly difficult going. Over the two years or so that I've read this book on-and-off, I must have re-read every section at least three times, grasping for perfect understanding. Why did I even bother? Because this book is mind-opening in a way that I feel strongly, even amidst my cloudy comprehension, is going to alter how I see everything around me.

Part of the reason why I found it difficult was simply that I lack formal training in economics, and this is a book on economics after all. (I can imagine Herman Daly's voice in my ear now though - assuring me that I'm best-placed to understand this book precisely because I'm not entrenched in economic orthodoxy. I tried, Herman, I tried.)

OK, while the details are complex, some of Daly's fundamental claims are easy to lay out. First, that the neoclassical economics orthodoxy deliberately ignores the role of natural resources, and the environment in general. This matters, because economics is not really a science. It doesn't merely observe without altering; the simplified mathematical model of neoclassical economics that treats the environment as infinite has directly played a part in the climate crisis we find ourselves in today.

A veneer of mathematics lends apparent neutrality to a model that imposes a particular set of values on the world. GNP is an example. It never was meant to be a measure of welfare, but it has become so. Daly shows that its correlation with welfare, if there ever was one, has weakened, even turned negative over time. Yet, given its quantitative and apparent neutral nature, it has led nations to attempt to grow it. But the GNP is not neutral - it is bookkeeping at a global scale, and a bookkeeping that makes particular choices. For example, the choice to not consider the degradation of the environment. In that arbitrariness, Daly also sees opportunity: a new system of accounts could be constructed that does account for the environment.

To me, the notion that a bookkeeping choice could be responsible for vast environmental damage was initially hard to swallow. But Daly won me over. The way I think of this is using the systems metaphor - these choices become institutionalised, and institutions are large systems that are inflexible, with planet-changing inertia. There are also forces exerted by larger economic powers, and so on.

Neoclassical economics is value-laden in other ways. It has a deeply entrenched individualism, that Daly snappily calls an oversimplified - plain false even - model of the human being called homo economicus. It does not believe in community, and encourages selfish-mindedness systematically. Again, I wondered how a model's faulty assumption could cause such affects on human behaviour. Again, I'm naive. These value assumptions are baked into policy; into how institutions like the IMF give loans, how governments are considered successful or failures, and via subtler ways such as the already-rich nations' WEIRD philosophy becoming desirable to developing nations just by their glitter.

The complete blindness of economics towards the environment could not have lasted surely? Daly recognises some efforts to account for resource consumption without giving up on orthodox dogma. He methodically knocks all these efforts down. One of them is the idea that natural capital lost - oil, forests and so on - can be replaced by man-made capital. While true marginally, this cannot hold true in general, Daly argues. ("What good is a saw-mill without a forest?")

Daly is sceptical of the power of technology to recreate natural capital, such as via artificial biospheres. We simply do not understand the incredibly complex systems that ecosystems are well enough to do such a thing, and we don't have the time to learn. Here, Daly suggests that the traditional economics ideas of scarcity and income can be used to manage the problem, only if we do one small thing: stop treating the environment is infinite, and instead treat the services provided by the environment as capital. There are costs associated with the maintenance of 'capital' that are well-understood when it comes to manmade capital, and "waiting" is investment.

Herman Daly also takes on two controversial themes. One: population control, and two: restricting free trade. A third of the resource consumption of the whole world - a third! - is needed to support the wants of just 6% of the world's population in the United States. Given that an implicit goal of development is to have the whole world reach the US's level of resource consumption, that'd need us to drive up environmental resource consumption seven times at least. A lot more, given the unequal distribution of capital in the world today. While the population question is uncomfortable, the facts of resource consumption make it an important one to ask. Daly raises this in the context of a concept he calls 'carrying capacity'; this is the maximum scale of the economic system that the environment can support.

With trademark sarcastic wit, he likens the application of this 'limit' to "child-proofing a day-care centre rather than piloting space-ship Earth." Such a limit may be hard to calculate, but is no more complex a bookkeeping exercise than say the GNP. In the context of the scale of the econornmic subsystem, Daly even makes room for asking how much intrinsic value animals have. (I love you, Herman Daly!) The answer is difficult, but surely the answer is not zero, for most people in the world. Any non-zero answer restricts the scale further. Within this scale, Daly thinks free-market economics ought to be let loose to do its magic: efficient allocation.

Herman Daly's criticisms of free trade were harder for me to follow. Some more than others. How transnational companies escape the obligations of their parent nations by 'externalising costs' is brutally familiar to us. These costs are not just things like pollution and waste, but social gains that people have fought for - labour rights, healthcare, working hours, vacations, hazard pay and so on.

I love that Herman Daly always has one eye on morality. He refuses to let economics wriggle free of its obligations to morality, and everything we've seen so far in terms of its hidden value-ladenness suggests it ought not to be able to. He worries that community, a notion so important to humans, is being weakened beyond repair by neoclassical economics.

I don't share Herman Daly's morality, exactly. He has a whole chapter using the Bible to analyse the flaws of economics, and I can't relate to that at all. Yet, I share Herman Daly's focus on the importance of morality. I admire this deeply intelligent man's efforts to challenge generations of orthodoxy. The facts were in his favour in the seventies, but today, are critically, unquestionably so. I'm also left wondering (again) if the combination of highly arcane specialisation and the appearance of scientism that has infected every field of study has left us knowing less, and making poorer choices. More whole-system synthesis - like with Daly combining concepts of econology, economics and physics - and less hyper-analysis would be what I'd like to see more of.

Because to the question of why environmentalists and economics don't just work together, the answer is - they don't even speak the same languages. Visionary translators like Herman Daly, and Frederick Soddy, are needed to forcibly spark Kuhnian paradigm shifts. It's been slow going, by Daly's own admission, but I'm hopeful.

I don't know if his particular prescriptions are the way to go, but I know that the questions he's posed cannot simply be wished away. Faced with the reality of climate change, habitat loss, the unimaginable cruelty of factory farming, loss of culture and more, the 'pencil and paper' abstract reality of GNP and neoclassical economic models must adapt.

Meanwhile, now that I'm on this path, I guess I'll have to continue. Which work of ecological economics to read next? :)

[Chris · Rating 5 out of 5]

Visionary economics that probably aren't taken seriously. Ex-World Bank economist Herman Daly makes newer arguments for Sustainable (Steady-State) economics, that he has been making since the early 70's. The tragic flaw in current economic theory is in assuming that resource availability and waste removal is not finite - that the economy is not properly considered as a subsystem of the overall ecosystem - which leads invariably to economic growth policies as solutions to problems of development and distribution. His concept of economic development rests not on increases in raw material "throughput" but rather increases in efficiency of production and more sensitive mechanisms to shift production emphasis(es)

What I find really interesting are his Marxist (I think) underpinnings and explicit spirituality. He chastises the late and late biologists E. O. Wilson and Stephen Jay Gould for their antagonistic relationship with religion. Daly seems to have a real problem with scientific materialism (frequently citing J.S. Mill and Alfred North Whitehead), the kind that seems to be the bedrock of most modern environmentalism. I think his ideas are ultimately justified spiritually rather than by mutual self-interest schemes, a course which, even at the most cynical, is far-sighted. Very interesting book.

[Kenneth · Rating 5 out of 5]

Incredible book challenging many of the underlying assumptions of modern economic thought, including the idea that all growth is good, or that an economy can grow indefinitely.

Daly, a former Chief Economist for the World Bank (who left in disgust), seems likely to be more fully appreciated in the years to come. Read him now, and see what the future holds.

[Pat · Rating 5 out of 5]

Great book. A very interesting attack on the "growth is best" mentality that now permeates all spheres of economics. It's a not a hippie waxing poetic about how the world should be, its a very well-reasoned argument that the rules of economics we live by were brilliant 150 years ago (when we thought them up) but entirely out-dated now and in need of revision.

[Eric · Rating 5 out of 5]

This is an economics text written for sober non-economists. Daly critiques the growth-oriented world view shared by mainstream economists and policymakers. He proposes that economists begin to consider that the world economy is physically bounded by and dependant on the Earth and its natural systems; and offers a few policy prescriptions. This is a sane, thoughtful, well written book.

[Beth Barnett · Rating 4 out of 5]

Discussion of "growth" and alternatives to the "GNP" index to measure economic well-being. Daly talks about environmental capital, unhealthy economic growth/spending, and challenges the sacred cow of "growth" itself, as it is currently seen by mainstream economists.

[Chad · Rating 5 out of 5]

Landmark essay from one of the world's smartest individuals.

[Menser · Rating 5 out of 5]

close to a 5, brilliant. still , sadly, way ahead of its time.

[Rex · Rating 3 out of 5]

Beyond Growth is a short book that is not quite sure who its audience is; for me, it was sometimes enlightening, sometimes went over my head, and sometimes engaged in exercises that have been better done elsewhere (e.g., the religious ethics of the last two chapters). Daly is a bit Malthusian and utilitarian for my taste. Nevertheless, there was a large handful of useful concepts for me in here, such as Georgescu-Roegen's hourglass, the importance of scale and the market's inability to self-moderate, the distinction between "cowboy" and "spaceman" economies, the possibility of "investing" in natural capital, the observation that growth in many industries today is limited by natural rather than man-made capital, the proposition that comparative advantage is fundamentally undermined by the current mobility of capital, the insistence that intellectual property rights which by their nature artificially inflate the exchange value of knowledge should give way to less socially costly incentives, and the insight of Frederick Soddy that real wealth is subject to physical laws of generation and decay whereas debt is not. I'd like a more extensive and rounded treatment of many of its points, but I believe this was a worthwhile read.

[Tony Smyth · Rating 3 out of 5]

Can't agree with the high star reviews. I'd heard about Daly over the years so I finally bought this book. It does have good points but its hard going if you are not an economist. Its a bit like forcing yourself to eat dry toast, and nothing but, for a week. I got through it but its tough going. We really do need to move away from the disastrous growth at all costs paradigm. For this Daly, and his mentor Georgesu-Roegen, and to be admired for showing the sheer 'disastrousness' of this path.
My objection to this book is more the presentation than the message. Sorry Herman but you're not going to persuade many with this book. Is it too much to ask that he give the essence of the message but make it more attractive to the lay reader?

[Alan Eyre · Rating 5 out of 5]

Finished. Fantastic, grounding neoclassical economics into the larger biophysical system in which we live, (i.e. the world). We use 'natural capital' (materials) which emits waste. This throughput of natural capital both extracts low-entropy matter (raw materials) and deposits high-entropy matter (waste) back into it. Classical economics ignores this, treating itself as a closed system and not an open system under the larger, closed, biophysical system. Basically, we are treating finite capital (natural resources) as income. The fact that this outlook isn't common among policymakers, over 25 years after this book was written, is indicative.

[Laura · Rating 5 out of 5]

I'm rereading this book, which I already read (parts of it) during my PhD. I really admire his writing. I think his 'preanalytical vision' of economics (and the same idea of 'preanalytical vision') is fundamental for any kind of sustainability analysis today. We can see it clearly in many people writing today (but barely citing him).

[James Erskine · Rating 4 out of 5]

Very interesting book, unfortunately I don't have the knowledge to understand all the economic concepts without an economics background, would be great is there was a introductory version of this for non-economists

[David · Rating 5 out of 5]

An amazing book, full of ideas that currently are top topics for discussion

[Carl Wade · Rating 4 out of 5]

Pg 247: He has some principles of economics from the Bible but also 2 chapters.
Pg 1: a bit of a shibboleth sustainable development is meeting the needs of the present with out sacrificing the ability of the future to do the same. very good so far.
Pg 12: Presidents Council on sustainable development 15 principals calls for reduced population and per capital consumption. That won't go over very well. What we must do is find new ways to use trash. That's right trash.
Pg 45: Growth economy to sustainable economy.
Pg 58: Cowboy economy - move on - no recycle. Spaceman economy limit input maximum recycle.
Pg 70: Neoclassical economic needs to look to "that to which value is added" That being the dowry of natural resources.
Pg 75: Old: having the same capacity to produce the same next year New: include natural capital as well as man-made capital.
Pg 87: The Bible does say that a human is more valuable than a sparrow.
Pg 89: Through put is such things as energy, water fertilizer and deforestation. He says tax these rather than labor and income. That was my old idea for the family tax. That's "within the family" family tax.
Pg 106: Overdeveloped countries those that use beyond their natural resources. Underdeveloped those that don't use up to sustainable world levels.
Pg 114: Here is something about services. 1. Stock and funds satisfied. 2. Service then maximized. 3. Throughput be minimized. Applied to a Barber Shop would be as my idea of a stand alone Barber Shop. Power from the Sun, water from rain.
Pg 149: All countries cannot be net importers of natural capital.
Pg 167: Sustainable development rather than growth is better not bigger which is unamerican and unbaptist.
Pg 185: Says use of scarce terrestrial stock is destined to be short-lived but flamboyant. Sunshine is the constant natural resource.
Pg 202: Secular ethics can not claim originality or priority. Bible principles came first. He go in trouble by prepossessing minimum and maximum income for employees. He says no more than 10 times the lowest employee.
Pg 206: He takes it upon himself to state a new commandment. Inequality in private property.
Pg 207: Levitical law allowed ownership for 50 years then it went back to the owner or family.
Pg 212: What was Huckabee's plan about inequality. A check for everyone and a % tax on purchases. The throughput? Tax nonrenewable use and renewable less.
Pg 214: Dominion is caring and maintaining God's creation according to his plan rather than ours.
Pg 224: He is sure that growth is done. That limits to growth, resource use, population growth, and inequality must be set. But one possibility of the future is a big breakthrough in the use of resources allowing growth in population. Call me an optimist.

[The Capital Institute · Rating 5 out of 5]

Daly has been called one of the most prominent advocates for a change in economic thinking. In Beyond Growth, Daly writes that in terms of sustainability, it is crucial that we begin to see the economy as part of the entire ecosystem, and therefore revoke the ideal of economic growth. Daly writes that our most basic assumptions about economic theory, trade, welfare and population need to be rethought. Beyond Growth presents the idea that there is a larger struggle among conventional economists and development thinkers over the meaning of “sustainable development,” with each group trying to adapt that meaning to its own ends.
Reviewers have commented that Daly’s ideas are fresh and overturn conventional ways of thinking about sustainable development – important in a situation where the definition of these ideas is constantly shifting and expanding. The Wall Street Journal referenced World Bank environmental advisor Robert Goodland in calling Daly an ‘unsung hero’ in pushing forward the field of sustainable development.

[Andrew · Rating 3 out of 5]

a good intro to alternative econ theory. many of the points regarding sustainable development have since publication entered mainstream discourse, so it's interesting to see where they've gained traction. the book's strong points are its brevity and clarity - requiring only a basic understanding of economics to follow. case studies and biographical info are well chosen, and most policy recommendations are thoughtfully put forth. my main disappointment was in Daly's discussion of religious roles in sustainable economic development. while that section perhaps warrants an entire volume, i expected a bit more depth.

[for-much-deliberation ...]

"the need for a change in economic thinking in response to environmental crisis"... these words grabbed my attention in this books general goodreads review, that change in 'economic thinking' is imperative to sustainable development...

[Eleonore]

This is a simple introduction to Daly's revision of neoclassical economics. A good starting point for anyone with basic knowledge of macroeconomics, with an interest in how economic theory can be more complete, taking the environment into account.

[Desira · Rating 3 out of 5]

Conceptually fascinating, but very rough and slow reading in places. Some of the examples are very out of date. I can't say I agree with everything, but it is a great eye opener.

[Wilma · Rating 5 out of 5]

Pioneer and prophet for environmenists, manna for real Christians. Not cor those seeking thought-saving.

[JimZ · Rating 5 out of 5]

A good place to start in understanding ecological economics.