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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