Environment, poverty and the steady state economy

Theodore Lianos

doi:10.3197/jps.2019.3.2.55

Abstract

Environmental degradation and inequality of income and wealth are two major global problems at the present time. This paper suggests that a steady state economy offers solutions for both problems. It argues that if the world population is drastically reduced and remains constant at a low level ecological balance can be achieved and, at the same time, income distribution will be greatly improved. The basis of this argument is that a smaller population will reduce the use of natural resources for production and consumption and at the same time reduce the supply of labor and thus increase wages. Also, a brief review of the idea of the steady state economy from the ancient philosophers to modern writers is provided.

Highlights

After the Second World War one of the main concerns of economists, governments and international organizations was the economic development of all nations leading to increasing gross domestic product (GDP) and per capita consumption
This paper suggests that a steady state economy offers solutions for both problems
At the theoretical level the fundamental elements that define the steady state economy are three: (i) Stable population at a size compatible with ecological balance and with an acceptable average standard of living, (ii) Flexibility of prices of products and factors of production, and (iii) Internalization of external diseconomies so that prices reflect the real costs of production in terms of resource use8

Summary

Introduction

After the Second World War one of the main concerns of economists, governments and international organizations was the economic development of all nations leading to increasing gross domestic product (GDP) and per capita consumption. Bartlett (2000) uses the number of persons per Representatives as a proxy for the quality of democracy and estimates that in the last two hundred years in the USA this number has increased at least twenty times, making contact between people and those who represent them in the parliament extremely difficult4 Another disturbing fact about the present economic situation worldwide is the extremely unequal distribution of income and wealth. The increasing divergence between the supply of resources, i.e. biocapacity, and the demand, i.e. ecological footprint, shows a major contradiction that has developed between humans and nature as a result of growth in production. These are the motivating ideas for examining the desirability of the steady state economy as an alternative to the present economy whose functioning is based on growth

The steady state economy: review

Findings

11. Conclusions