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Brian Czech,
Center for the Advancement of the
Steady State Economy
A Critical Role for Physicists In Steady State Economics
www.steadystate.org
• Increase in the production and
consumption of goods and services in
the aggregate
• Typically expressed in terms of GDP
• Entails increasing population and/or
per capita consumption
Economic Growth
• Increase in the production and
consumption of goods and services in
the aggregate.
Economic Growth
Economy as 800-Pound Gorilla
Coming out of the Corner and Growing
Not Economic Growth
Economic Growth
Speaking of Wildlife…
Urbanization
Agriculture
Water diversions (e.g., reservoirs)
Recreation, tourism development
Pollution
Domestic livestock, ranching
247
205
160
148
143
136
Czech et al. 2000. Bioscience 50(7):593-601.
Causes of Endangerment
Mineral, gas, oil extraction
Non-native species
Harvest
Modified fire regimes
Road construction/maintenance
Industrial development
134
115
101
83
83
81
Causes of Endangerment (cont.)
Czech et al. 2000. Bioscience 50(7):593-601.
Quick Note About Energy Abundance
Economy of Nature
Producers (i.e., plants)
Consumers
Super-Carnivores
Serv
iceProviders
Human Economy
Producers (i.e., ag/ext.)
HeavyManufacturing
Light Manufacturing
Serv
iceProviders
Human-Inclusive Economy of Nature
Plants
Animals
Humans
Serv
iceProviders
With Economic Growth
Plants
Animals
Human EconomySe
rvic
eProviders
Time
GD
PK
Natural capital allocated to human economy
Natural capital allocated to economy of nature
Macro-Allocation
Czech 2000. Wildlife Society Bulletin 28(1):4-14.
K
GD
P
...maintain steady state economy sufficiently below K.
To conserve biodiversity...
Therefore
Czech 2000. Wildlife Society Bulletin 28(1):4-14.
Time
What might you say in response to this?
“But what about technological progress?”
Czech, B. 2008. Prospects for reconciling the conflict
between economic growth and biodiversity
conservation. Conservation Biology 22(6):1389-
1398.
Also see…
Supply Shock: Economic Growth at the Crossroads
(Chapter 7)
• Solow model
• Lucas model
• Romer model
Y = (K, L)
Economic Growth Theory
• 1956, “A Contribution to the Theory of
Economic Growth”
• Technological progress
• “Manna from heaven”
Robert Solow
Solow Model
• 1990, “Endogenous Technological Change”
• Research and development
• Patenting
Paul Romer
Romer Model
KT
GDP
Natural capital allocated to human economy
Natural capital allocated to economy of nature
X natural capital allocable
Time
KU
Macro-Allocation Revisited
Capital-free growth zone KT1
KT2
GDP
Time
KU
Natural capital allocated to human economy
Natural capital allocated to economy of nature
X natural capital (still) allocable
Reconciliation Hypothesis
1. Fixed amount of energy, matter (E = mc2)
2. Entropy; i.e. limits to efficiency in the
economic production process
Thermodynamics
• Help dispel myth of perpetual growth with
implications from thermodynamics.
• Expand academic niche.
– Economics
– Ecology
– “Sustainability Science”
• Popularize findings and “don’t be such a
scientist.”
Critical Role for Physicists
• R&D
Source of Technological Progress
R&D
_______
Sources of Technological Progress
R&D
Profits
Sources of Technological Progress
Profits
R&D
Competitive Advantage
R&D
Profits
Sources of Technological Progress
R&D
????????????????
Profits
Sources of Technological Progress
R&D
Profits
Economies of scale
Sources of Technological Progress
________________????????????????
• Increased efficiency but necessarily with increased production using existing technology
• Applicable at all levels in the economy (micro to macro and local to global)
Economies of Scale
Economies of Scale
• Economic growth requires technological progress.
• Technological progress requires economic growth.
• No reconciling the trade-off between economic growth and biodiversity.
So, “What about technological progress?”
Capital-free growth zone KT1
KT2
GDP
Time
KU
Natural capital allocated to human economy
Natural capital allocated to economy of nature
X natural capital (still) allocable
Reconciliation Hypothesis
X/2 re-allocated KT2
GDP
Time
KU
Natural capital allocated to human economy
Natural capital allocated to economy of nature
X/2 natural capital allocable
Hypothesis Refuted
KT1
Why Must We Have Physics – and Physicists –
for Steady State Economics?
Neoclassical vs.Ecological Economics
Business Household
Neoclassical Economy
Business Household
With Economic Growth
“Natural resources originate from the mind, not the ground, and therefore are not depletable.”
Robert L. Bradley, Jr., 2002 Julian Simon Award Acceptance Speech
How did this happen?
History and political economy…
• Henry George
• Progress and Poverty, 1879• George vs. land barons
• Incipient tax code at stake
• Establishment of American economics
• Y = (K, L)
(Mason Gaffney, 1994)
The Corruption of Economics
“relic of anti-George”
Czech, B. 2009. Ecological Economics 68:2193-2197.
Or see chapter 4 of Supply Shock.
For more on this, google:
• Ecological economics movement
• Laws of thermodynamics
• Principles of ecology
Herman Daly
Ecological Economics
Daly CostanzaMartinez-Alier
Scale Distribution
Allocation(Sustainability) (Justice) (Efficiency)
Themes and Leaders
Heat
NaturalCapital
PollutantsNatural
Capital
Heat
NaturalCapital
PollutantsNatural
Capital
• What is the optimum scale, all things considered?• Is GDP a reliable measure of scale?• Could ecological microeconomics lead to optimal
scale?
A Few Words About Optimum Scale
GD
PK
Unsustainable
Unsustainable
Sustainable
GD
PK
Unsustainable
Unsustainable
Optimal?
GD
PK
Unsustainable
Unsustainable
Anthropocentric Optimum
Biocentric Optimum
GD
PK
Unsustainable
Unsustainable
Optimum
Democratic
Anthropocentric Optimum
Biocentric Optimum
Hum
an W
elfa
re
GDP
Optimum
All Things Considered
Optimum
UneconomicGrowth
All Things ConsideredH
uman
Wel
fare
GDP
MU
GDP
MD
UOptimal Scale
GDPOpt
Modified from Daly and Farley 2010, Figure 2.2.
0
MU = MDU
MDU = ∞
MU = 0
MU
GDP
MD
UEconomic Growth
0Uneconomic
Growth
GDPOpt
Some Useful Metrics• GDP (as indicator of scale, not welfare)• “Greened” (less-gray) GDPs • Ecological Footprint • Genuine Savings• Living Planet Index• Millennium Assessment Accounts• Measure of Economic Welfare • Human Development Index • Index of Sustainable Economic Welfare • Genuine Progress Indicator• Gross National Happiness
Spheres of Sustainability
Ecological
SocialEconomic
Bigger Picture = Integration
Ecological
Economic Social
Ecological Economics
Ecosystem
Economy
Society
Emphases of Indices
LPI
MEA
MEW HDI
ISEW
GPIGSGGDP
GDP
EF
GNH
Emphases of Indices
LPI
MEA
MEW HDI
ISEW
GPIGSGGDP
GDP
EF
GNH
US
40
90
140
1940 1960 1980 2000
UK
40
90
140
1940 1960 1980 2000
Germany
40
90
140
1940 1960 1980 2000
Austria
40
90
140
1940 1960 1980 2000
Netherlands
40
90
140
1940 1960 1980 2000
Sweden
40
90
140
1940 1960 1980 2000
Chile
40
90
140
190
240
1940 1960 1980 2000
Indices of ISEW (Index of SustainableEconomic Welfare) and GDP (1970 = 100)
Compliments of R. Costanza, Gund Institute for Ecological Economics
Psychic Welfare
GDP/capita
Hap
pine
ss/S
atis
fact
ion
Inglehart and Klingemann (2000)
What About Valuing Ecosystem Services?
• Carbon sequestration
• Water purification
• Hurricane buffering
• Pollination
• Etc.
Ecological Microeconomics
“One of the most rapidly growing markets related to ecosystem services is the carbon market… It is speculated that this market may grow to some $44 billion by 2010.”
2005 Millennium Ecosystem Assessment
Ecosystem Services
S
P
Supply
Ecosystem Services
D
S
P
Supply and Demand
Ecosystem Services
S
P
Supply
Trophic Theory of Money
Producers (i.e., ag/ext.)
HeavyManufacturing
Light Manufacturing
Serv
ice
Providers
Czech 2000. Shoveling Fuel for a Runaway Train.
Limits to Real Money
Plants
Animals
Human EconomySe
rvic
eProviders
Natural capital
D
S1S2
P1
Trophic Conundrum
P2
More is needed, less is had.
So how do we pay increasing amounts for ecosystem services?
• By liquidating increasing amounts of natural capital to generate the money.
• That is, by liquidating the funds of ecosystem services we are “investing” in.
Ecological Micro and Macro
• Micro alone leads to the trophic conundrum.
• Macro alone is tough political sledding.
• Micro and macro: two tracks for the sustainable train.
Implications for International Diplomacy
Steady Statesmanshipv. “Lebensraum”
United Nations: A Starting Point for Steady Statesmanship?
UNEP World Conservation Monitoring Centre; Global Footprint Network. 2004.
Use Steady State Economics and the Ecological Footprint
“Rich Nations Gobbling Resources at an Unsustainable Rate”
OAKLAND, California, March 30, 2004 (ENS) – Excessive consumption by the world’s richest nations is making life even more difficult for the world’s least fortunate, according to a new report by Redefining Progress… the wealthiest nations are depleting global resources at an unprecedented rate…
“Backtracking”
What else can a physicist do?
• Sign the position on economic growth.
• Write a piece for the Daly News.
• Draft a briefing statement.
– Physical limits to growth
– Implications of thermodynamics
– ???
• Join the Speakers Network.
• Start a Princeton chapter.
• Be CASSE’s Physics Liaison.
• Please join CASSE as regular or student member.
Collaboration with CASSE
•Wendell Berry•Herman Daly•Jane Goodall•Buzz Holling•Richard Lamm•Chris Matthews
•David Orr•Jonathon Porritt•Vandana Shiva•Gus Speth•David Suzuki•E.O. Wilson
Some CASSE Signatories
(Needed: Physics Dignatory)
• Establish or engage steady state economics sections or
working groups in the xyxy.
• Organize conferences and symposia.
• Write articles and books.
• Get xyxy to adopt a position on economic growth.
• Give academic and public talks and interviews; lectures,
seminars, Rotary functions, brown-bags, radio
interviews, etc…
• Support efforts occurring in other professional societies.
Within the Physics Profession
Scientific Societies
NGOs, Agencies
Publics
Polities
“Small-Money Model” of Political Economy
In conclusion…
www.steadystate.org
Thank…You!
Acknowledgments: Lockheed Martin
GDP and Energy