steady state economics
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Steady State Economics Steve PurdeyTRANSCRIPT
Growth Model vs Steady-State Economy (SSE) Model
The Key Difference
The Growth Model: The environment is a sub-set of the economy
The SSE Model: The economy is a sub-set of the environment
What is the Growth Model?
A politically sanctioned template that defines a desirable objective and specifies the means to achieve it
The Objective: Prosperity for allThe Means: Economic growth
The pursuit of growth is the primary organizing principle of the world economy
Major international institutions and organizations such as the WTO, IMF, World Bank, the OECD, G8 and G20, and the UN
National governments (North/South, East/West)Regional trading blocs in Europe, Asia and the
AmericasAll multinational corporationsCivil societies around the world
How well does the Growth Model perform?
New jobsCorporate profits for reinvestmentStrong tax base for public spendingRewards for individual successThe promise of a better future for all
Two Problems with the Growth Model
1. Growth drives climate change
The bulk of the world’s economic activity is driven by fossil fuels
GHG emissions are increasing by 3% per year, in lockstep with growth
Energy demand is expected to increase by 36% by 2035
Two Problems with the Growth Model
2. The Growth Model is open-ended
No limits to growth are built into the model
The world economy is already bumping up against planetary biophysical constraints
De-coupling is not an option
An Alternative Model
Acknowledges Earth’s finitude
Functions in dynamic equilibrium with Earth’s biosphere
Requires much less energy to maintain
Basic features of the SSE
A stable population
A constant stock of constructed and natural capital
Population and capital stocks maintained by a minimum matter/energy throughput
Structure of the SSE Model:three nested circles
Functions of the SSE components (inner circle)
The Economy
Market capitalismEfficient resource allocationEmployment and optimal productivityInnovation
Functions of the SSE components (middle circle)
The socio-political context
Prevents runaway growthProvides meaning and direction to the forward
motion of human developmentProvides stability and predictabilityMitigates extremes of wealth and poverty
Functions of the SSE components (outer circle)
Earth’s biosphere
Provides natural support for human society and all economic activity
Determines the ultimate size of the world economy, and the ultimate size of the human population
Economic Obstacles to the Transition
Drivers of economic growth:
Population increase
North-South economic disparity
Sovereign indebtedness
Political Obstacles to the Transition
The paradigmatic commitment to growth
Political expedienceShort-term electoral successMedium-term political stability
Moral convenience: Growth offers an economic surrogate for distributive justice
Other Obstacles to the Transition
Institutional inertia
Long lead time for implementation
Peak oil
Initiating the Transition: Political Objectives
Fill the leadership vacuum
Shift the burden of proof
Put the SSE on the international agenda
Mobilize relevant constituencies
The World Polity in 2050
Micro-variability within a context of macro-stability
A world economy transformed from one that is consumptive, fast-moving and unpredictable to ...
An economy that is environmentally sustainable, stable and more profoundly creative
In Sum
The organizing principle of the Growth Model is the pursuit of (quantitative) economic growth
The organizing principle of the SSE Model is the quest for (qualitative) development
We cannot manage Earth’s biosphere, but we can learn to manage ourselves.