‘Grow or die’ is a commonly accepted axiom in business but just how true is it and Is growth inexorably tied to capitalism? These questions grow in importance as the environmental crisis escalates. The role humans play in climate change is clear and as industry around the world grows so do worries over long term consequences. With an ever expanding need for fossil fuels the damage done to the environment becomes a foregone conclusion. But it doesn’t have to be. Steady state economics is a concept meant to examine the necessity of growth in an economy. Simply put, a steady state economy would limit growth and resource use to what's necessary and as a by product reduce the strain on the environment. 

The Origins

Steady state economics has existed as a concept since Adam Smith and has appeared in the works of Karl Marx, John Maynard Keynes, and most importantly Herman Daly as he expanded on previous ideas and connected the subject to the environment. Early on it was considered as an organic end state that an economy could fall into. It was an idea of  what might happen when growth stops and what that might look like. What causes this state changes depending on the economist. However, In the 1970s Herman Daly radically shifted the paradigm by looking at solid-state economies as something to be intentionally created rather than a natural result of the market.

He viewed the earth's ecosystem as a system with absolute limits and human economies as a subsystem that does not acknowledge these limits. He challenged the notion that we have limitless resources to match limitless economic growth. This is the central thrust of modern steady state economics. 

Environmental limitations must be translated to the economies that are dependent on the natural world. In practice, what this would look like is debated but this idea of removing the absolute imperative of growth is a uniting principle in steady state economics and related philosophies such as de-growth movements or survivalist environmentalism.

In Practice

One way to envision a system like this lies in the natural world. To see a vibrant functional system with no growth look towards the earth itself. It has a fixed budget of solar radiation as energy. Over the years this energy has been transformed into the natural world as we know it. Vibrant and teeming with change and excitement. While actively changing at all levels the system as a whole remains static. This idea of dynamic equilibrium is the key here to imagining how a steady state economy could function.

Of course, it's hard to talk about the functionality of a steady state economy without getting real about just how likely implementation is. It’s hard to see a way that steady state economics could come about considering its opposition to core tenets of modern liberal capitalism. It would require a large amount of government intervention to say the least. The jury is still out on whether a steady state economy is even capable of being capitalist at all. Realistically the only real pressure to move towards a more sustainable steady state economy comes from the environment. As climate change escalates the conflict between absolute growth and inherent limits becomes more and more apparent. Just how much more oil can we really burn at this rate? While steady state economics might not be an answer to this crisis it’s undeniable that action must be taken.

What It All Means

I was introduced to steady state economics through the lens of environmental politics as a solution to an existential threat. It is a radical change to a problem at the root of modern life. However this lens is also limiting. It dissociates these ideas from the real world. Steady state economics inhabits this space where it exists in theory with little application in the real world. It resides in the same category as any number of other radical concepts and philosophies that exist outside the realm of fathomable possibility.

However there are lenses to look at steady state economics other than beyond its environmental benefits. Critically another main component of steady state economics is its critique of the traditional model of capitalism in which social benefits are a by-product of economic growth. The idea that the better the economy does the better people lives are is one of the core assumptions we operate under in the modern world. However like the need for growth it can and should be challenged too. It is not the only way the world can operate. 

In a steady state economy meeting the needs of the people would be the primary goal rather than a side effect. This to say that the goal of a steady state economy would be providing for people as efficiently as possible. Progress would be defined by finding newer more efficient ways to benefit one another rather than finding larger profits. An example of this would be working employees fewer hours rather than trying to squeeze as much value out of them as possible.

This brings steady state economics into the real world. Rather than a far off solution to an impending problem this frames steady state economics as a paradigm through which we as individuals and economic actors can examine our actions.  It shrinks the scale from massive policy changes down to the individual and allows us to look at how we actually help people and how we harm people in the pursuit of profit. Thinking about steady state economics this way lets us look at the actions we can take to create a more sustainable world at a more manageable scale.

This brings us to the Peace Innovation Institute(PII). The connection between steady state economics and the PII is illustrated well by the institute's research question ‘How good can we be to each other’? The idea of innovating new ways to produce good in the world is inherent to both peace innovation and modern steady state economics. In this way one could view the philosophy of the PII as a sort of middle ground between steady state economics and modern capitalism. A more reformist approach perhaps. Rather than entirely abolishing the idea of growth and pursuing the absolute benefit of people it suggests that perhaps a higher share of economic production can go towards doing good. This unique position allows the PII to find ways to approach a steady state economy from the ground up in small actionable chunks.

The institute is actively working to innovate new ways of doing business that benefit all parties. Beyond that it challenges traditional economic assumptions and works to create more efficient ways to generate value ethically. This work is important for its own sake but it is also important in that it provides a basis for future work in peace innovation as well as related fields such as steady state economics.

If you’d like to learn more about innovation for social good, sign up for our newsletter here