Herman Daly has been cast from the graces of neoclassical economics for refusing to kneel at the altar of infinite growth. He believes that the flaw plaguing his devout colleagues is that they think that “the only way to solve environmental problems is to get richer and they don’t consider for a minute that growth may cost more than it’s worth.” Daly began to question neoclassical orthodoxy while studying under Nicholas Georgescu-Roegen (an economist famous for asserting that growth is limited by the economy’s biological foundations). Daly’s conversion was complete after he read the works of environmentalist Rachel Carson and spent time teaching economics in northeastern Brazil, where he observed the extent to which runaway population growth swallows up natural resources and realized that economic growth – like population growth – comes at the expense of the environment.
He returned to the us and turned to the ideas of John Stuart Mill to develop the concept of a steady-state economy, one in which human population and consumption are tied directly to the ecosystem’s capacity to support inhabitants without detrimental effects.
Steady-State Economics became one of the most influential environmental books of the 20th century, but Daly’s arguments were too revolutionary to find a foothold in mainstream economics. So in 1988 he cofounded the International Society for Ecological Economics to provide a forum for other radical thinkers who sought to blend the studies of economics and ecology. That same year the World Bank hired Daly as part of an effort to green its image. While working to eliminate poverty in the South, Daly wondered why the Bank professed to favor sustainable development models for Third World countries but not for the First World. After six years as a member of the Bank’s “loyal opposition of environmentalists,” he left his post in frustration and returned to academia. In his parting address Daly left his colleagues with a formula for sustainability: stop counting the consumption of natural capital as income; tax labor and income less and resource extraction more; maximize the productivity of natural capital in the short term, and invest in increasing its supply in the long term; and most contentiously, abandon the ideology of global economic integration through free trade, free capital mobility and export-led growth. He also prescribed “new eyeglasses and a hearing aid” to make the Bank more responsive to outside input. Still, Daly is quick to qualify his critique of his former employer. He maintains that the Bank is staffed with good people who are merely abiding by the narrow economic “theology” forced on them in university.
According to Daly, part of this theology includes a devotion to scientific materialism that helps explain economists’ disregard for the environment. If, after all, the Earth was formed by accident, then “the natural world is just a pile of instrumental accidental stuff to be used up in the arbitrary projects of one purposeless species.”