Some Requirements of a Steady-State Economy

941 total words    

4 minutes of reading

A steady-state economy will require numerous policy, technical, and technological changes—many of which are discussed in other responses in this series. None, however, are likely to be successfully implemented (or implemented sufficiently) unless critical underlying distributional, institutional, political, economical and cultural questions are attended to. This brief response discusses three.

First, the Matter of Distribution

Quite apart from questions of equity, the current distribution of income in many countries creates sociological and cultural forces that are a potent driver of growth. Consider at the outset a situation in which growth occurs, but the relative distribution of income does not change at all. When growth occurs, despite the improved situation for those at the bottom of the income scale, the absolute distance between the lived reality of one family and another must increase over time. Thus, if one family has $10,000 and another has $100,000 per year in the initial period, but $20,000 and $200,000 in the second period, there is no change in the relative distribution of income. However, the absolute gap between the two families has grown from $90,000 to $180,000. This dynamic constitutes what might be called an “envy machine,” driving culture, politics, and economics inexorably through one channel or another toward more growth—and, indeed, a form of growth that will continue to fail to satisfy the expectations of those at the bottom so long as the “machine” continues to generate its challenging logic.

Note that the “envy machine” logic inherent in such distributional issues also operates in times of both growth and little or no growth (as is now occurring in the United States), since it is exacerbated when inequality worsens. For example, between 1979 and 2007, the income of the top 1 percent in the United States grew by 275 percent, while the income of the bottom 20 percent increased only 18 percent. This has created a growing absolute distance between different groups and new demands for more growth from both “left” and “right.” Again, any serious strategy aimed at halting or radically reducing growth must address underlying distributional issues and the powerful resulting dynamic, or it is likely to fall prey to cultural and political forces that work to undermine the larger economic strategy.

Second, Corporate Growth and Corporate Power

So long as large private corporations must meet stock market demands for ever-greater (often quarterly) profit increases, they must “grow or die.” This dynamic is diametrically opposed to the need to slow or halt overall growth and resource use in general. And it also runs directly contrary to the need to control carbon emissions in particular. Additionally, corporate political power commonly acts as a powerful obstacle to progress on other vital ecological issues—as we have seen in the United States with the failed climate change legislation and continued efforts to discredit climate change science.

A row of smoke stacks billowing smogAlthough it may be possible in some countries to assemble sufficient political power to regulate corporate behavior sufficiently to curb pollution and reduce emissions of CO2 and other gases that contribute to global warming, in many countries—including the United States—effective regulatory strategies no longer appear to be politically feasible. Or when regulation is achieved, it is commonly very porous given corporate influence over the political and regulatory system.

Ultimately, in such circumstances, direct public ownership of certain large corporations may be the only realistic answer—a general judgment reached by conservative American Chicago school economists decades ago. Many held that “regulatory capture” was a routine result of attempting to curb corporate power politically. And Henry C. Simons (one of the Chicago school founding leaders and Milton Friedman’s revered teacher) held that the corporation’s power to thwart regulation was so great that even from a conservative free-market point of view, public ownership was necessary in certain cases.

Such ownership also is often more transparent—with decisions open to public input and scrutiny—than decisions made by private managers behind closed doors. A related perspective was offered by the late E.F. Schumacher, who held that decentralization, small-scale participation, and a mix of small and cooperative firms were essential wherever and whenever possible, but that public ownership needed to be considered with regard to many large-scale enterprises.

Again, in certain cultures and political situations, it may be possible to curb the underlying force of this reality; in many others, that it can be done without much more far-reaching change is increasingly questionable.

Third, the Matter of Community

Ultimately, unless a culture of community—and an understanding that “we are all in it together”—becomes a significant factor in politics and political economy, it is likely to be difficult to undercut the psychological as well as institutional pressures that counter pose individual (and corporate) gain to common needs. Achieving an ecologically sustainable economy, accordingly, ultimately requires what can only be deemed the literal reconstruction and nourishing of community as a political and cultural experience. A pre-condition of this, in turn, is sufficient local job stability to maintain livelihoods and families in communities. Two additional conditions follow from the above considerations—namely, a reduction in economic disparities that undermine community cohesion, and the subordination of corporate and other institutional priorities to community values. A fourth long-term requirement is a thoroughgoing cultural shift—building on these institutional conditions—to steadily reconstruct the experience, understanding, and, eventually, the norms of community in sufficient strength so that it can provide a long-term foundation for a new ethical and politically effective approach to the challenges of a steady-state system. In many countries, steadily developing experience with new forms of cooperative worker- and community-owned economic enterprises has begun to suggest new institutional strategies that can contribute to such economic and cultural change.


Image Credit

“Smog” by Isengardt. (CC BY 2.0)

Scroll to Top