New Models for Managing a ‘Steady State Economy’

Abstract

Today's application of economics as the basic tool in managing national resources is being challenged by environmentalists, by scientists from other disciplines and even by an increasingly skeptical public. Nowhere is this debate hotter than in the United States where the environmental movement began. In the past year, the advocates of zero population growth were joined by a vanguard of environmentalists calling for a re-examination of the nature and direction of economic growth as defined by the Gross National Product, and development of more sensitive indicators of human welfare which might subtract some of the disamenities, dis-economies and dis-services associated with growth, such as costs of pollution related illnesses, crowding, traffic jams, decaying cities and the depletion of energy supplies and other natural resources. These new realities pose serious challenges to prevailing economic policies which, inthe next few years, may result in vast changes in the formulation of our national economic accounts and, in turn, our methods of assessing corporate performance. Indeed, at the United Nations Conference on the Human Environment in June 1972, many Third World delegates questioned the advisability of trying to imitate the capital-intensive developmental models provided by the West. Rather, they hope to leapfrog many wasteful processes, bypassing, for example, the automobilization stage in favor of a more diverse mix of public transportation for intermediate and long hauls, and arranging for the growth of human settlements so that walking and bicycling can serve most individual needs. Many less-developed nations are now looking to China as a more viable model to emulate, because its labor-intensive system uses the human resources that are abundant in all countries, and does not require the surrender of national autonomy which often becomes the hidden cost of importing foreign capital. Obviously, this kind of economy that substitutes exhortation for incentive and utilizes human rather than mechanical energy is a pragmatic response to lack of capital to seed economic development any other way; however, it might also result in a resource-conserving and therefore more environmentally-benign economy than a capitalintensive one. Much of the new questioning of the goals of economic development is slipping into a sterile re-hashing of the communism versus capitalism dialectics of the last century. The Chinese, for example, have denounced capitalism as the root of environmental problems, and yet China is one of the first nations to order the environmentally-disruptive supersonic Concorde plane. The U.S.S.R., after initially taking a similar position, has now acknowledged its own pollution problems and will collaborate with the U.S.A. on a new bi-lateral committee of scientific experts to search for solutions to these mutual problems. Many economists reject such arguments against capitalism and point to government-directed investments in many centrally-controlled economies, such as power generation, steel and auto production and many extractive industries, which produce environmental results as horrendous as similar operations in market economies. And recently, many less developed nations without noticeably capitalistic leanings have proclaimed their willingness to capitalize Hazel Henderson frequently writes and speaks on the subject of corporate responsibility in society.