Herman Daly — The Dualist Economics of Fredrick Soddy

Herman Daly gives a brief account of the philosophical basis of Fredrick Soddy's Cartesian (dualistic) approach to economics. 

Soddy, a (real) Nobel prize winner in chemistry, held that entropy is a chief limitation and that credit is not capable of creating perpetual motion, given finite real resources and the mathematics of compound interest. He was an opponent of economists' unlimited growth model and an advocate of 100% reserve banking under the gold standard of his day. Today he is better known as the founder of steady state economics, the forerunner of the economics of sustainability.

Center for the Advancement of the Steady State Economy
Dualist Economics
Herman Daly

Marx and Engels and “Small Is Beautiful”

For those interested in Marxian economics and E. F. Schumacher.

Read it at Energy Bulletin
Marx and Engels and “Small Is Beautiful”
by Samar Bagchi, John Bellamy Foster, and Fred Magdoff

Herman Daly — Uneconomic growth deepens depression

The US and Western Europe are in a recession threatening to become a depression as bad as that of the 1930s. Therefore we look to Keynesian policies as the cure, namely stimulate consumption and investment—that is, stimulate growth of the economy. It seemed to work in the past, so why not now? Should not ecological economics and steady-state ideas give way to Keynesian growth economics in view of the present crisis?

Certainly not! Why? Because we no longer live in the empty world of the 1930s — we live in a full world. Furthermore, in the 1930s the goal was full employment and growth was the means to it. Nowadays growth itself has become the goal and the means to it are off-shoring of jobs, automation, mergers, union busting, importing cheap labor, and other employment-cutting policies. The former goal of full employment has been sacrificed to the modern ideology of “growth in share holder value.”

Read it at Energy Bulletin

Uneconomic growth deepens depression

by Herman Daly

Herman Daly's Steady-State Economics

I finally sat down and read Daly’s classic book Steady-State Economics, which I think is worth discussing in light of today’s situation. In this post I’d like to begin to review Daly’s ideas (which were ahead of their time—the first edition was written in 1977). His ideas are deep and simple at the same time, and should be a foundation for any future economic system.

Daly makes a point at the beginning of the second edition that is both “obvious” and true. (I use quotes because I’ve found that sometimes things that are obvious are either not so, or not true, for a variety of reasons.) Using Schumpeter’s term “preanalytic vision”—the premise upon which a theory is built—he describes the basis for both standard and steady-state economics:

What is the preanalytic vision of standard economics? Of stead-state economics?

For standard economics, it is that the economy is an isolated system in which exchange value circulates between firms and households. Nothing enters from the environment, nothing exits to the environment. It does not matter how big the economy is relative to its environment. For all practical purposes an isolated system has no environment.

Contrast this with steady-state economics:

For steady-state economics, the preanalytic vision is that the economy is an open subsystem of a finite and nongrowing ecosystem (the environment). The economy lives by importing low-entropy matter-energy (raw materials) and exporting high-entropy matter-energy (waste). Any subsystem of a finite nongrowing system must itself at some point also become nongrowing.

The logic is so simple, yet somehow it isn’t the basis for today’s dominant economic thinking. Daly comments that the discipline of economics is not so keen on creative destruction when applied to the discipline of economics itself....

Read the rest at Contraposition, Daly’s Steady-State Economics by barath