Did someone say, “steady state economy”?

EcoEconTo some extent, I’d like the early posts here to be sequential in laying out a case for the site’s basic arguments. But timely items from around the Web and elsewhere are part of the plan as well. With that in mind, I bumped into a piece on Alternet by Stephan Harding. It’s about the idea of implementing “Tradable Energy Quotas” (TEQs) as a way of promoting a “steady state economy.”

Previously, I’ve mentioned the importance of the idea of the steady state economy. Any thoughtful examination of the current pervasive growth imperative, leads to the conclusion that endless economic growth — with its growth in physical throughput — is unsustainable. Our ecosytem has limits. And such growth is leading quickly to its collapse. A move to a steady state economy would be a key step toward putting on the brakes and taking the ecosystem fully into account in our economic policies.

Pssst… need some cheap TEQs?

As Harding explains, TEQs would help. Every adult would be given an equal annual quota of energy units (initially carbon-linked, but eventually, once clean energies are relatively pervasive, just energy-linked ), with the option to buy more or sell their surplus. Industries and energy providers would be involved as well. Over some period of years, the total energy budget would be stepped down, bit by bit, until it reached some necessary minimum. As Harding puts it: “The final amount of energy available to the nation — the lowest rung of the energy step — is set at a level low enough to ensure that the economy does as little harm to the natural world as possible while ensuring that citizens enjoy a simple but comfortable standard of living.”

In setting a cap on energy available for consumption, this process would be consistent with a steady state economy. I’m not sure I agree with everything in Harding’s article. (For instance, I’d much rather he not refer to TEQs as “intelligent growth.” A steady state economy is all about superior alternatives to unending growth.) But the idea of TEQs, or something similar, is well worth study. We need some sort of organized effort toward a steady state economy or other sustainable economic model — if there is such a thing — and studying the effects and feasibility of TEQs could be a part of that.

Nothing special needed?

It’s exciting to see discussion of the idea of the steady state economy at a site as popular as Alternet. And the notion of TEQs could have enough novelty to get the ball rolling toward implementation. But moving toward a steady state economy may not even take particularly novel ideas. Brian Czech of the Center for the Advancement of the Steady State Economy explains (see the last paragraph):

The steady state economy may be pursued in the policy arena with the same policy tools that have historically been used to facilitate economic growth. These include fiscal policy tools such as government spending and taxation, and monetary policy tools such as money supplies and interest rates. Certain institutional adjustments are also entailed. For example, some have posited that a fractional reserve banking system may not be reconciled with a steady state economy and that fee-service banking is the most feasible alternative.

If that’s true, it may be a matter mainly of drumming up the interest and the will to make the change. Talk it up!
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Image source: PLoS Biology Vol. 4/8/2006, e278, posted on Wikimedia Commons

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8 responses to “Did someone say, “steady state economy”?

  1. Nice piece.

    I haven’t fully read the articles you posted but novelty may be what TEQ is and nothing more – another way to make the picture a little more fuzzy.

    And interest rates hikes don’t work. The money ultimately comes back into the economy as government spending, probably the worst way to try to stop (over)consumption. The only way is to slow consumption directly without looking at it through financial numbers.

  2. (Just back online after a day long outage of my ISP…)

    signature — Well, you may be right. I’m a bit skeptical too that these sorts of schemes really effect any fundamental change. On the plus side, though, (I think) is that as a rationing scheme TEQs seem to necessitate setting a cap on total energy made available. I would assume it’s a cap based on some estimate of what’s sustainable.

    But, having written that, when it comes to nonrenewable resources, no level of consumption is truly sustainable. :-/ Maybe that’s the problem right there. But it would at lease be an estimate of what the ecosystem can successfully reabsorb with regard to waste. That would be a step in the right direction, no?

    I guess the question is whether it would be an effective step toward something like a steady state economy. What do you think?

  3. I haven’t gone in depth regarding the steady state economy, but on the surface it seems unlikely to be accepted.

    Portions of the Kyoto accord seem similar to the basic steady state economy model. My understanding, is under Kyoto, Annex I countries, like Canada for instance, would buy “pollution credits” from developing countries in order to be allowed to exceed certain pollution limits.

    I don’t really have a strong knowledge of either Kyoto or the steady state economy concept, but what little I have read I don’t really think will work nor be realistically implemented.

    Ross

  4. Ross — I’ve only read a modest amount on the steady state economy idea. (am trying to beef up my knowledge of it as we speak) You could be right that it won’t realistically be implemented. At this point, I don’t *necessarily* advocate it; my main concern is just that the current economic model on which the world operates has an “endless physical growth” component which is unsustainable. Daly (whose book, Beyond Growth, has been one of my main sources of info on this, suggests the problem is that mainstream economics simply doesn’t include a “scale” component regarding the physical throughput of “stuff,” taking into account the limits of the ecosystem.

    This is closely related to something I posted about previously — the problem of mainstream economics failing to acknowledge that the economy is a *part* of the ecosystem.

    So we need, in some way, to shift to an economic approach which puts the ecosystem on an equal (or better!) footing with the economy. Whether the steady state economy is the way to do that, I’m not sure. Maybe something else will turn out to be a superior approach. But I will say it seems to be the most developed alternative I’ve seen out there. It definitely meets a lot of resistance from mainstream economists, but there are some pretty prominent folks like Daly backing it.

    I heard just the other day that there is some work being done toward a citizens’ group which will lobby government bodies to establish local steady state economies in the U.S. I’ll report more when I hear something. But it’s an interesting sign.

    As far as the carbon trading kinds of things, yeah, I’m not sure they really represent any true solution. Heck, maybe signature103 is right that we just have to reduce consumption directly. But it seems to me we need some changes in economic policy as well.

  5. John, on the whole it is better effort. But only time can tell. Let’s just say I am a sceptic when it comes to any solution that still takes the economy into account.

    Right now I am really interested in Gross National Happiness (GNH). It’s a corny name but I think the idea is good. It “needs” to be measureable in order to be accepted, but once that happens the numbers (like any Western economic system) take over to become all meaningful when in fact it is completely meaningless. This obsession with measureably and substantiability is simply wrong. Some things can not be measureable, and should not be measured (love for your partner or spouse is one that comes to mind).

  6. signature103, I’m intrigued by the GNH concept. I’ve only read a tiny bit about it. e.g., this Wiki entry.

    I’ve come across the Genuine Progress Indicator (GPI) too.

    Both GNH and GPI definitely seem like improvements on the usual GDP or GNP.

    If I’m interpreting GNH correctly, I think there’s merit, when looking at goals a country should shoot for, to taking economics out of the picture entirely and just looking at the final product — how happy people are. This is something I’ll have to investigate further.

    BTW, I saw your post related to this on your blog. Good food for thought. I look forward to hearing more from you on these issues.

  7. Yes, I like the GPI and Ecological Footprint (EF) which are by the same people – Redefining Progress.

    Take a look at this article:
    http://www.alternet.org/module/printversion/21083/

    It gives a good overview of GNH and also the country profile from the BBC:
    http://news.bbc.co.uk/1/hi/world/south_asia/country_profiles/1166513.stm

    This gives a great picture of how a nation can subsist without following the captialist paradigm.

    And thanks for the compliment. I am looking forward to keeping a fruitful dialogue going here too.

  8. Pingback: Gross National Happiness is, well… gross « sustainability theory dharma