Ecological Economics and Herman Daly

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Ever wonder why economic growth is necessary? It’s not, according to Christian economist Herman Daly. Daly was born in 1938 and served as a World Bank economist for six years. Among other titles, he’s the author of For the Common Good: Redirecting the Economy Toward Community, the Environment, and a Sustainable Future (this 1990 book concludes with a chapter entitled “The Religious Vision”) and the 2003 textbook Ecological Economics. Quoting Aleksandr Solzhenitsyn, Daly claims that “economic growth is not only unnecessary but ruinous.”

His notion that economic growth is idolatrous resonates with Bob Goudzwaard’s “Reformed economics” view that the “idols of our time” reveal themselves in distorted emphases on limited aspects of reality, like the gods of “capitalism and progress.” Though “economics is the study of the allocation of scarce means among competing ends” writes Daly in Steady-State Economics (1977), “the entire ends-means spectrum is not considered. Economists do not speak of the Ultimate End, nor of the ultimate means.”

On the means end of the spectrum, the basic laws of physics (mass-energy-entropy) reveal that continued growth is impossible in a limited world. On the other end, intermediate ends (consumers’ aggregate demand) have replaced the ultimate end for which humans were created: to give glory to God.

Daly argues that whereas neoclassical economics focuses on the goal of efficient allocation(implicitly assuming a given distribution of wealth), ecological economics also addresses the goals of the optimal scale of the economy and of the fair/equitable distribution of goods, services, and wealth.

Scale is not an issue for those who assume that we have not reached the limits of what God’s creation can sustain, nor for those who believe that human innovation—and thus economic growth—is limitless. For Daly, seeking salvation in the growth of human knowledge is a techno-gnostic heresy. He believes the ecological limit of our world’s economy has already been breached.

Because addressing distribution tends to be politically suicidal, neoclassical economics prefers to counsel the poor to be patient and believe that poverty will eventually be eradicated by more growth. Daly insists that both wealth and income must be more equitably distributed and provides convincing policy suggestions for achieving these goals.

Daly provides Christians with plenty to ponder as they seek to identify a biblical and Reformed perspective on both ecology and economy.

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But economic growth is necessary.  If my family grows in number, there had better be "economic growth" to at least match.  If a particular society's population grows in number, there had better be "economic growth" to at least match.

Beyond that, "economic growth" is sometimes, perhaps usually, the best way to broaden "economic distribution."  After all, if government dictates that economic distribution must be broadened, but requires nothing of the new distributees, then it accomplishes little beyond creating a dependency mentality.  On the other hand, if individuals within a society create new goods and services that others will want to buy (small business innovation), then economic growth has had the side effect of broadening economic distribution. People are made to work (see The Bible, Genesis). I'll take the latter method of increasing economic distribution over the former any day.

Except for specific goods (e.g., natural resources), there really isn't a limit to goods and services, the laws of physics and this author's suggestions notwithstanding.  Art, music, cooking, sports, technology, etc, etc, all represent creatives ways to increase good and services that don't consume inherently scarce resources.

I'm not all all sure some insist on equating economic growth with idolotry from which we should repent. OK, one can idolize anything, including very good things, but that doesn't make good things bad. Banner articles like these try too much to tell us all what to tell the government about how to "save the world."  Bob Goudzwaard had his good points, but was way too much of a "state-ist" for me, somewhat assuming Christian should be concerned only with economic matters involving government -- fighting to control the power of the sword.

I don't know why we (in terms of Banner articles) don't focus more on being individually faithful, understanding the that the billions of decisions of others who don't read the Banner may or may not be idolotrous, and that allowing iodolotry, to a large extent at least, is political freedom (that we should never give up). Thus, just as I don't want government to jail my neighbor who takes the Lord's name in vain, neither do I want government to demand all its citizens to repent from (or engage in) "economic idolotry."  Provide for contract law, tort law, property law, etc? Fine. But require (by threat of death, which is how government requires) biblical attitudes in all economic decision making (and perspective)? No.

Again, the Banner would do well to focus on the Banner readers -- how they might be biblically faithful, not how we might control government with a view to mandating the right economic perspective from all citizens.