You actually worked with Herman Daly. Could you tell us what that was like? And what might he say today – seeing the state of the world now, in 2023?
My connection with Herman Daly began several years before I met him. I first read his "On Economics as a Life Science" (Daly 1968) and "Toward a Steady State Economy" during my PhD studies in systems ecology at the University of Florida. I marveled that there was at least one economist in the world who recognized that planet Earth was finite, that the economy was an interdependent sub-system of the global ecosystem, that the material economy could not grow forever, and that our goal should be true sustainable development not mindless growth at all costs.
Imagine my delight when one of the panel members for my first job interview at Louisiana State University was Herman Daly, then on the economics faculty there. Herman liked my work on expanded input-output analysis, which mirrored his ideas in "Economics as a life science", helped me get the job, and invited me to participate in a session at the upcoming AAAS conference in San Francisco on "Energy, Economics, and the Environment" (Daly and Umaña 1981). He also helped me get the paper I presented at the conference on "Embodied Energy and Economic Valuation" published in Science
(Costanza 1980), quite a coupe for a new PhD.
Herman did not totally agree with my conclusions in this paper, and we had a lively and friendly debate on this topic over the years. The thing I remember most about it was Herman's way of conducting the exchange. In this, and in all his scholarly discussions, Herman assumed good will on everyone's part – that we should be investigating questions from all sides and searching for mutual enlightenment, not defending intellectual turf or jockeying for personal status or position. He was not always right in this assumption about other people, but I learned much from his insistence on (and personal adherence to) civil discourse, even with those who do not themselves play by the same rules. There is no better exemplar of how scientific discourse should be engaged than how Herman Daly conducted his life and work.
Since then, I had the honor and pleasure of working with Herman on a large number of projects, including co-founding the International Society for Ecological Economics (ISEE) and the journal Ecological Economics
, both aimed at furthering the ideas outlined in Herman's writings and building a global network of researchers and practioners.
Herman moved from LSU to the World Bank in 1988. This was a very unexpected appointment for Herman, facilitated by Robert Goodland, one of the few ecologists employed by the bank, who wanted Herman to help reform the Bank's environmental agenda. During this time, he argued with the Bank's contention that GDP growth was the path to solving all problems and that environmental concerns were minor. He also published one of his most influential books "For the Common Good" (Daly and Cobb 1989). In addition to a comprehensive assessment of the problems with the mainstream economic paradigm and its misplaced reliance on GDP growth, the book introduced the Index of Sustainable Economic Welfare (ISEW). Later renamed the Genuine Progress Indicator (GPI) it accounted for the effects of income inequality, the positive but non-marketed benefits of volunteer and household work, and the costs of a range of "bads" like crime and environmental destruction that GDP counted as positives. It showed that the costs of GDP growth had begun to outweigh the benefits. We had surpassed the optimal scale of the economy and were in a period of "uneconomic growth" – a situation we still find ourselves in.
This was followed in 1992 with an influential paper describing the three goals necessary for an ecological economy: sustainable scale, fair distribution, and efficient allocation (Daly 1992). The first has recently been popularized as "staying within planetary boundaries" (Rockstrom et al 2009). The second has received growing recognition and concern with the massive inequality in many countries and its negative effects on wellbeing (Wilkinson and Pickett 2010). The third has been the traditional domain of mainstream economics, but Daly was quick to point out that the market was not efficient in allocating resources because of its failure to take into account the impacts on and the benefits from natural and social capital.
In 1994 Herman left the World Bank after 6 years of battling to have environmental concerns and sustainability taken more seriously there. Herman's farewell speech on leaving the Bank
is now a classic. In it, he articulated four policy recommendations that have become central to ecological economics, are more relevant today than ever, and are finally beginning to be implemented, even by the World Bank to some extent:
- Stop counting the consumption of natural capital as income.
- Tax labor and income less and tax resource throughput more.
- Maximize the productivity of natural capital in the short run, and invest in increasing its supply in the long run.
- Move away from the ideology of global economic integration by "free" trade.
Herman was steadily swimming against the mainstream in economics over his entire life. The real value, magnitude, and brilliance of his contributions have only recently begun to be widely realized and appreciated. His steady state, ecological economics can honestly be pointed to as the blueprint for a sustainable and desirable future. There are hopeful signs, including the Wellbeing Economy Alliance (WEAll
), the Wellbeing Economy Governments (WEGo
) Initiative, and the Club of Rome's Earth4All
initiative that Herman's ideas are finally being put into practice.
Our collective future
depends on it. What is your take on GDP – and why are economists so slow to drop it as a measure of economic strength? Is growth over? Is decoupling possible? What should we be doing instead?
The problem is that we have known about the looming environmental crises for decades and this is not the first set of ambitious goals that have been elaborated to address it. Why, then, have we still not made sufficient progress?
One way to understand this lack of progress is as a societal addiction to the current system. Like a drug addiction, the positive short-term reinforcements to current behaviours prevent acknowledgement of the addiction and thwart efforts to escape it. In addition, like a drug addiction, simply pointing out the dire long-term consequences is often counterproductive toward changing behaviour
What we need is societal therapy to overcome our addiction to the growth
at all costs paradigm.
The transformation we need requires a major change in societal goals away from growth. We need to transform to broader wellbeing goals within which the GBF goals are obvious, uncontroversial, and seen as contributing to the larger wellbeing goals.
By analogy with Motivational Interviewing
, used by psychiatrists at the individual level to overcome addictions, the therapy starts with building a shared vision of the kind of world we really want – a sustainable wellbeing future. We need to envision and communicate the economic and political context within which the GBF goals can be achieved. We need to demonstrate to the broader human population that within that world humanity and the rest of nature can flourish together.
Within the current economic paradigm, there is little chance that the our goals can be achieved. It is like an addict setting goals to cut back or stop using, but not changing the context of interactions in the world that led to the addiction in the first place. No change in behaviour, or temporary change with a relapse, is likely. So we're out of hope?
There is hope.
Transformational change is happening at many levels. For example, a few vanguard Wellbeing Economy Governments
(including Scotland, New Zealand, Iceland, Finland, Wales, and Canada) recognize the need to shift from GDP growth to inclusive and sustainable wellbeing. There is also a growing Wellbeing Economy Alliance (WEAll
) working to build the broad movement that will be needed to shift societal goals and overcome our addiction to growth.
The current system is locked in and it has been (and will continue to be) hard to change. What about the Common Good? Air pollution for example – why can't governments act and do their jobs?
The atmosphere is a community asset that belongs to all of us.
The problem is that it is currently an open access resource—anyone can emit carbon dioxide into the atmosphere with no consequences to themselves—but with huge cumulative consequences to the climate and the global community. Many agree that charging companies and individuals for the damages their emissions cause, for example, a comprehensive carbon tax or cap/auction/dividend/ trade system, would drastically cut emissions. However, despite some interesting regional experiments, implementing this kind of system via international negotiations at the global level has proven close to impossible.
A few critical governments, influenced too much by fossil fuel interests, have been blocking binding commitments and effective economic instruments.
Global civil society can change this if it claims property rights over the atmosphere
This is what you term "claim the sky"…
Yes. By asserting that all of us collectively own the sky, we can begin to use the legal institutions surrounding property to protect our collective rights, charge for damages to the asset, and provide rewards for improving the asset. This idea has been proposed by Peter Barnes and others.
The Public Trust Doctrine is a powerful legal principle that supports this idea. In her book, Nature's Trust: Environmental Law for a New Ecological Age,
legal scholar Mary Wood describes how the Public Trust Doctrine has its roots in ancient Roman law and occurs in the many legal systems derived from it. The doctrine holds that certain natural resources are to be held in trust as assets to serve the public good. It is the government's responsibility, as trustee, to protect these assets from harm and maintain them for the public's use. Under this doctrine, the government cannot give away or sell off these public assets to private parties. The public trust doctrine has been used in many countries in the past to protect water bodies, shorelines, fresh water, wildlife, and other resources. What gives you hope?
People. And events like the Beyond Growth conference
held at the European Parliament on 15-17 May 2023. I believe it marks a tipping point in thinking and governance in response to the convergence of crises facing humanity today.
Sponsored by the European Commission and the Club of Rome, it attracted more than 2,500 participants (with another 2,000 online).
We are in a race of tipping points. We are exceeding biophysical planetary boundaries and the climate is fast approaching irreversible tipping points that could give us a world human civilization has never experienced. Social capital is eroding due to runaway inequality and political polarization. People around the world recognize that life is not getting better. Levels of anxiety, depression and burnout are skyrocketing across the Western world. Full-time employees unable to pay rent, people turning to precarious gig work with little protection to make ends meet, and employers cutting staff and increasing workload have become normal in this system that extracts natural resources, energy, and time.
The root cause of these crises is our societal addiction to an outdated economic paradigm based on the single-minded pursuit of GDP growth at all costs.
Which brings us back to the shift from a GDP driven economy to a regenerative economy – based on well being and protection for the Common Good…
Our current paradigm claims that all people want is more income and consumption with no limit, the market economy can grow forever, massive inequality is justified to provide incentives++ to promote growth, and efforts to address climate and other environmental problems must not interfere with growth.
The EU conference, in contrast, emphasized what had long been recognized in parts of the academic and policy communities: that GDP was never designed to measure societal wellbeing since it only measures marketed production and consumption, conflating positive and negative outcomes. It also says nothing about the distribution of income, unpaid work, or damages to the environment. Continuing to misuse GDP as a policy goal is driving our societies toward an unsustainable future that benefits an increasingly small fraction of the population while impoverishing the vast majority.
All of these things must be considered in any attempt to measure true societal wellbeing. The conference had several sessions on alternative indicators that attempt to do just that. In fact, it showed that the number of experiments with societal wellbeing indicators is in the hundreds. These experiments provide the basis to move toward a broad consensus on what needs to be included to form a more complete and useful picture of societal wellbeing that can replace GDP as a societal goal. It also emphasized the need for models that incorporate the complex dynamics of the economic system embedded in society and the rest of nature to allow projections into the future to assess the sustainability of societal wellbeing. These models building on many recent efforts including the LowGrow
model of the Canadian economy and the global Earth4All
model of the Club of Rome.
The Club of Rome model explores two basic scenarios for the future out to 2050. The "Too little too late" scenario looks at business as usual, continuing trends of increasing inequality, climate disruption, and decreasing wellbeing even though GDP continues to rise. However, we can achieve a "Giant Leap" scenario by investing in five turnarounds forcuse on energy, food, inequality, poverty, and empowerment (fig 1). These turnarounds could ensure a sustainable, prosperous, and equitable wellbeing for humans and the rest of nature.
People often fear that making these transformations will require sacrifice and lower wellbeing. The reverse is actually the case. It is a sacrifice of our global wellbeing to continue down the too little too late path, while the giant leap can substantially improve the lives of everyone on earth and the biodiversity and ecosystems on which we all depend.
The conference also recognized the pioneering efforts of several governments, including the EU, and the Wellbeing Economy Governments (WEGo)
group including Scotland, New Zealand, Wales, Finland and Iceland, to begin to implement measures of sustainable wellbeing and policies needed to achieve them.
What are these policies? An open letter
signed by over 400 leading economists, scientists, policy makers, and activists provided this list of some of the basic principles:
Biocapacity: fossil fuel phase-outs, limits to raw material extraction and nature protection and restoration measures for healthy and resilient soils, forests, marine and other ecosystems. E.g., a Fossil Fuel Non-Proliferation Treaty, a Resource Justice and Resilience Act including a binding material footprint reduction target and real, area-based nature restoration.
Fairness: fiscal instruments to foster a more equal society by eradicating income and wealth extremes, as well as super-profits. E.g., a carbon wealth tax, both minimum and maximum incomes.
Wellbeing for all: secured access to essential infrastructures via an improved, ecologically sensitive welfare state. E.g., Universal Basic Services (including the human rights to health, transport, care, housing, education and social protection etc.), job guarantees, price controls for essential goods and services.
Active democracy: citizen assemblies with mandates to formulate socially acceptable sufficiency strategies and strengthen policies based on ecological limits, fairness and wellbeing for all and a stronger role for trade unions. E.g., local needs forum, climate conventions, participatory budgeting.
Finally, the conference recognized that the vested interests in maintaining the current system, including billionaires, the fossil fuel sector, big pharma, defense, and industrial agriculture will continue to fight to prevent the transformative changes needed. To overcome our societal addiction
to the current system will require a broad consensus and movement of movements around the shared goal of sustainable wellbeing for humans and the rest of nature. This conference will perhaps be remembered as one of the early sparks of the movement to create the world we all want.
Thanks so much. Robert Costanza will be teaching at the Oxford Summer School in Ecological Economics 2023 – the "one-week" Green MBA for executives. Topics include: Green Business Transformation, ESG, Sustainable and Impact Investment, and New Sustainable Business Models.