by MAYWA MONTENEGRO
Herman Daly is an ecological economist and co-founder and associate editor of the journal Ecological Economics. As the World Bank’s senior environmental economist from 1988 to 1994, Daly focused on Latin American poverty and development and helped to establish the discipline of ecological economics. Today, based at the School of Public Policy at the University of Maryland, Daly spoke with Seed editor Maywa Montenegro about growth, technology, happiness, and the steady-state economy.
Seed: When did you first start thinking about a steady-state economy?
As an undergraduate, taking a course in the history of economic thought and reading Malthus. Then in graduate school I studied under Nicholas Georgescu-Roegen, a pioneer in relating the entropy law to economic theory. Elementary economic theory describes something called a circular flow diagram: Firms supply goods and services to households, which in turn supply labor and capital factors of production back to the firms. This flow goes around and around, and money flows in the opposite direction to pay for it. The way it’s usually depicted is as a closed circulatory system. What’s ignored is the economy’s digestive system: the input of low-entropy raw materials from the environment and the expulsion of high-entropy waste products back into the environment. A fundamental assumption of those who treat the economy like a totally circular exchange is that the environment is infinite relative to us, that natural resources and space to absorb our waste are not scarce. The assumption is no longer valid.
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