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Herman Daly’s ideas might help us claw our way out of the economic and environmental mess we’re in.


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Big Idea: A Steady-State Economy
by Herman Daly.

Herman Daly isn’t your average neoclassical economist, though he may well have been were it not for certain key events in his life. Like most graduate students of economics, Daly once believed that growth was the key to solving humanity’s problems. But while earning his doctoral degree under one of the most respected economists of the day, Nicholas Georgescu-Roegen, Daly’s confidence in growth was shaken.

Despite having made significant contributions in the field of neoclassical economics, Georgescu-Roegen, at the time of becoming Daly’s mentor, had started to uncover a critical flaw in neoclassical theory: it failed to take into account how economic processes consume resources and generate wastes. Further growth meant a quicker rate of resource extraction and ever more waste. That seed of doubt that Geoegrescu-Roegen managed to plant in Daly’s young mind began to grow when Daly read Silent Spring, a groundbreaking book that warned of the dangers of industrial chemicals in the food chain. After accepting a teaching position in Brazil in 1968, Daly observed firsthand how population growth was negatively impacting the local environment. His faith in growth had eroded. In its place sprung a grave concern over the apparent indifference his fellow economists displayed to the relationship between the economy and the environment.

In the 1960s and 70s, it was practically unfathomable that an economist would question the growth model. Yet once Daly realized that the economy is a growing subset of a non-growing planet, he had no choice but to sound the alarm. Humanity, he argued, had to shift to a steady-state economy, one in which demands placed on the ecosystem would remain safely in bounds. This would imply shifting economic policy from a focus on stoking growth, where the scale of physical demands on ecosystems perpetually increased, to a focus on development, meaning humanity would have to learn to make wiser use of a modest and more stable level of materials taken from the environment. Daly was able to make little headway among fellow economists, but his views were recognized as key insights by natural scientists and the emerging environmental movement.

For four decades, Daly has worked tirelessly to challenge the growth dogma that modern society has so enthusiastically imbibed. Publishing several books and more than 100 articles, Daly has even tried to effect change from within, spending six frustrating years at the World Bank, where he observed how misguided policies emerged from “an unrealistic vision of development as the generalization of Northern over-consumption.” In 1994, Daly left the World Bank for the University of Maryland. To date, he has received the Right Livelihood Award as well as the Heineken Prize for Environmental Science awarded by the Royal Netherlands Academy of Arts and Sciences.

Thanks to the overwhelming evidence natural scientists have amassed demonstrating that if we want to avoid catastrophic climate change, humanity must stop pumping CO2 into the atmosphere, mainstream economists are grudgingly coming to accept the fact that there are ecological limits to our growth after all. While the majority have yet to admit that growth is a false idol, once one limit is accepted, the likelihood that there are others quickly follows. Once these limits are accepted, the whole plausibility of continued growth crumbles. Herman Daly has long been working to move the goalposts, and his brilliant economic insights are changing how the game is played. He has shown ways to tame the global economy’s insane appetite for resources. In a world where we must make more modest demands on nature, he has focused on ensuring that we use those limited resources to produce real wealth that addresses real human needs. Herman Daly is a game changer and a paradigm shifter. He is illuminating the path that will lead us away from ecological and economic crises. Thus, at this critical juncture in our history, Adbusters has chosen him as Person of the Year.

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Big Idea: A Steady-State Economy
by Herman Daly.

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