Corruption of Economics vs' the Steady State Revolution

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Earth Day 2003

• Corruption of Economics vs. the Steady State
  Revolution

2

• Outline
• History of economic thought
• Corruption of economics
• Modern economic growth theory
• Ecological economics
• Steady State Revolution

3

• History of Thought

Corruption of Economics
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• Georgist
• Henry George, Progress and Poverty
• Single-tax movement
• George vs. land barons

5

• Neoclassical
• Alfred Marshall, Principles of Economics
• Political economy breaks up
• Political science
• Economics
• American apologists

Corruption of Economics
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Corruption of Economics

• George vs. land barons

• Incipient tax code at stake

• Establishment of American economics

7

• Major Implications
• Y (K, L)

8

• Major Implications
• Y (K, L)
• Land subsumed under
• capital

9

• Keynesian
• John Maynard Keynes, The General Theory of
  Employment, Interest, and Money
• Keynesian Revolution,
• end of laissez faire
• Inauspicious birth of
• economic growth theory

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• Economic Growth
• Increase in the production and consumption of
  goods and services
• Typically expressed in terms of GDP
• Facilitated by increasing
• population
• per capita consumption

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• Modern Economic Growth Theory
• Solow model
• Lucas model
• Romer model

Y (K, L)
12

• Romer Model
• 1990, Endogenous Technological Change
• Y (K, L)
• Technological progress
• Research and development
• Production of ideas

13

• Neoclassical State of Art
• Land gone from production function
• No limits to growth
• And what is required for increasing per capita
  GDP in the long run?

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Population Growth!
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• Heterodox
• Anything not orthodox that is, not adhering to
  the neoclassical synthesis
• Post-Keynesian
• Various Marxist
• Georgist
• Ecological
• Many others

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• Ecological Economics
• Ecological economics movement
• Scale
• Allocation
• Distribution
• Laws of thermodynamics
• Principles of ecology

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Neoclassical Economy
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Slightly More Sophisticated
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(No Transcript)
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Real Economy
Land
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Plus Labor
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Plus Capital
23

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I.e.,
Economy
Embedded in the Land
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With Economic Growth
Economy
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Slightly More Sophisticated
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With Economic Growth
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Why do wildlife biologists venture into
economic growth theory?
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Endangerment Causes

• Urbanization
• Agriculture
• Water diversions (e.g., reservoirs)
• Recreation, tourism development
• Pollution
• Domestic livestock, ranching

• 247
• 205
• 160
• 148
• 143
• 136

Czech et al. 2000. Bioscience 50(7)593-601.
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Causes (cont.)

• Mineral, gas, oil extraction
• Non-native species
• Harvest
• Modified fire regimes
• Road construction/maintenance
• Industrial development

• 134
• 115
• 101
• 83
• 83
• 81

Czech et al. 2000. Bioscience 50(7)593-601.
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K
Natural capital allocated to wildlife
GDP
Natural capital allocated to human economy
Time
32
Economy of Nature
Super- Carnivores
Service
Providers
Consumers
Producers (i.e., plants)
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Human Economy
Light manufacturing
Heavy manufacturing
Service
Sectors
Producers (i.e., agriculture, extraction)
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Human-inclusive Economy of Nature
Humans
Service
Providers
Animals
Plants
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With Economic Growth
Human Economy
Service
Providers
Animals
Plants
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PDF files for these articles available at The
Wildlife Society website www.wildlife.org
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ESA Listings and GDP
10 9 8 7 6 5 4 3
R2 98.4
1973 1980 1990 2001
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Wildlife Conservation and Steady State Economy
K
To conserve wildlife...
GDP
...maintain steady state economy below K.
Time
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But what about technological progress?
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KU
X natural capital allocable
KT
Natural capital allocated to non-human economy
GDP
Natural capital allocated to human economy
Time
 
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KU
X natural capital allocable
K2
 
X/2 conserved  
K1
Economic growth with technology level 2
GDP
Economic growth with technology level 1
Time
 
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The Great Debate Is There a Limit?

• Yes
• Physiocrats
• Classical economists
• Ecological economists
• Ecologists

• No
• Neoclassical economists
• Corporations
• Politicians

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Why would there not be a limit?

• Technological progress
• Substitutability of resources

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White Pine, Big Wheel
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Sitka Spruce, Timbco 435 Feller Buncher
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Why would there be a limit?

• Carrying capacity
• Thermodynamics
• Trophic levels

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• Carrying Capacity
• Consumers
• Artifacts
• Waste

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• Thermodynamics
• Matter, energy not created or destroyed
• Entropy

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Economy of Nature
Biomass/100
Service
Providers
Biomass/10
Biomass
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Human Economy
Light manufacturing
Heavy manufacturing
Service
Sectors
Producers (i.e., agriculture, extraction)
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• Clear to All
• Without technological progress, GDP is limited.

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• Unclear to Many
• Does technological progress occur without
  increased consumption?

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• Consider the Sources
• Research and development
• Corporate profit
• Economies of scale

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KU
X natural capital allocable
K
Natural capital allocated to non-human economy
GNP
Natural capital allocated to human economy
Time
 
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KU
X natural capital allocable
K2
 
X/2 conserved  
K1
Economic growth with technology level 2
GDP
Economic growth with technology level 1
Time
 
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KU
X/2 natural capital allocable
K2
X/2 converted  
K1
GDP
Economic growth with technology level 2
Economic growth with technology level 1
Time
 
 
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But what about the Environmental Kuznets Curve?
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Environmental Kuznets Curve
Environmental Threat
GDP or Per Capita GDP
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• Kuznets Curve
• Has supposedly applied to SO2
• Hasnt applied much otherwise
• Sharply criticized for disregard of international
  economics

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More Realistic Scenario
K
TP3
TP2
Environmental Threat
TP1
GDP or Per Capita GDP
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Kuznets Curve vs. Maximum Power Principle
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Maximum Power Principle (H.T. Odum)
Power
Power work performed i.e., production.
0 Efficiency 100
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Political Economy
Capitalism
Production ()
Socialism
Laissez Faire
Anarchy
Utopia
0 Efficiency 100
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Alternatively
Capitalism
Production ()
Socialism
Laissez Faire
Anarchy
Utopia
0 Efficiency 100
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• In Any Event
• Capitalism selected for
• Production, not efficiency, selected for in the
  aggregate
• Limits to efficiency also imposed by political
  economy

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Red Herring Alert!!!

• The Information Economy

• What is the information used for?
• How does one come to afford the information?

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And yet we hear

• Some people just dont get it. There is no
  conflict between economic growth and
  environmental protection!

Why do they persist?
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Iron Triangle
Political Faction
Professional Society
Policy Table
Special Interest
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Iron Triangle
Politicians
Neoclassical Economists
Economic Policy Table
Corporations
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What can we do?
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Steady State Revolution!
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• Goals
• Replace national goal of economic growth with
  national goal of steady state economy.
• Replace bloating economy with steady state
  economy.

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Revolutions

•  
• Magnitude of change
• Pace of change
• When evolution wont cut it
• Evolution combined with revolt

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Steady State Revolution

• Academic, social
• Peaceable, not pacifistic
• Models
• abolition of child labor
• reduction of smoking

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Academic Phase

• Replacement of neoclassical economic growth
  theory
• Refocusing of curricula
• More public outreach

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Social Phase

• Economic growth reconstructed as economic
  bloating
• Dollar spent is dollar burned
• Castigation of the liquidating class

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Class Structure of the Steady State Revolution

•  Liquidating class
• Steady state class
• Amorphic class

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Consumption Classes
Expenditures
Percentile 80 99 100

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Consumption Classes
Liquidating Class
Expenditures
Percentile 80 99 100

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Consumption Classes
Liquidating Class
Expenditures
Steady State Class
Percentile 80 99 100

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Consumption Classes
Liquidating Class
Expenditures
Amorphic Class
Steady State Class
Percentile 80 99 100

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Liquidators
Amorphs
Steady Staters
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Population
Liquidating Class
Amorphic Class
Steady State Class
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Consumption
Liquidating Class
Amorphic Class
Steady State Class
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Economic Rationale

• Trickle-down consumption
• Redistribution of wealth compensates for reduced
  per capita consumption
• Reduction of waste
• Leads toward steady state economy

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Consumption
Liquidators
Ecological Capacity
Amorphs
Most Steady Staters
PovertyLine
Some Steady Staters
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Trickle-down Consumption
Liquidators
Ecological Capacity
Amorphs
Liquidators Amorphs Steady Staters
Most Steady Staters
PovertyLine
Some Steady Staters
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Political Rationale

• No everyone revolt against everybody
• Taps into predisposition
• Readily identifiable classes

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Psychological Rationale

• Darwin, Veblen, Maslow
• Cure for liquidator syndrome
• Ratcheting effect toward sustainable ideology

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Maslows Hierarchy

• Food
• Security
• Love, affection, reproduction
• Self-esteem
• Self-actualization

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Sociopolitical Rationale

• Ideological horse before the public policy cart
• Supplementary to policy prescriptions
• Replaces politicians, not system

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Ethics

• Equity (current, intergenerational)
• Consistent with religions
• Devil in the details of castigation
• Tolerance overrated

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Nothing could be more salutary than a little
healthy contempt for a plethora of material
blessings.

• Aldo Leopold, 1948

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Remember

• A dollar spent
• is a dollar burned!

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K
The End
GDP
Time
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(But for more...) www.steadystate.org