Ecological Economics and the Ecology of Economics: Essays in Criticism

Summary

Ecological Economics and the Ecology of Economics: Essays in Criticism is a collection of previously published essays by Herman E. Daly (1938–), Professor at the University of Maryland School of Public Affairs. Daly was Senior Economist in the Environment Department of the World Bank from 1988 to 1994, and previously Alumni Professor of Economics at Louisiana State University (Daly 1999, p. 13). The book was published by Edward Elgar in 1999.

Daly's thesis is that ecological economics "sees the economy as a subsystem of a larger ecosystem that is finite, non-growing, and materially closed, while open to a flow-through (throughput) of solar energy that is also finite and non-growing" (Daly 1999, p. 14). The book's two-part title reflects its dual concern: ecological economics as a discipline, and the competitive/symbiotic relations between different "species" of economists — the "ecology of economics" (Daly 1999, p. 14). Daly argues that standard neoclassical economics has become "a brittle, desiccated and ossified discipline" (Daly 1999, p. 14).

Core Findings

Structure

The book is organized in seven parts (Daly 1999, pp. 7–11): - Part I: On the Roots of Error in Growth Economics (Ch. 1–6) - Part II: On Some Specific Errors in Growth Economics (Ch. 5–7) - Part III: On Economists' Misunderstanding of Thermodynamics (Ch. 9–12) - Part IV: On Economic Development and Population (Ch. 13–15) - Part V: On Globalization as Growth Economics' Last Gasp (Ch. 16) - Part VI: On Money (Ch. 17) - Part VII: On Purpose (Ch. 18–20)

(A-claim; factual)

Uneconomic Growth

Daly's central concept is "uneconomic growth" — growth that costs more in sacrificed ecosystem services than it contributes in value of production (Ch. 2). He traces this concept "in theory, in fact, in history, and in relation to globalization" (Daly 1999, p. 7). (C-claim; theoretical)

The Throughput Concept

Daly distinguishes the economy's "throughput" — the flow of matter-energy from nature, through the economy, and back to nature — from the stock of capital and labor. The economy as subsystem is constrained by the larger ecosystem's finite, non-growing, materially closed nature (Daly 1999, p. 14). (F-claim; definition)

The Entropy Law and Economics

Daly argues the entropy law (Second Law of Thermodynamics) is "relevant to the economics of natural resource scarcity" (Ch. 12, originally in Journal of Environmental Economics and Management 23, 1992). He critiques the Solow/Stiglitz production function for treating matter and energy as infinitely substitutable, calling it "alchemy" (Ch. 10). (C-claim; theoretical)

The Farewell Lecture to the World Bank

Daly's farewell lecture (Ch. 6), delivered at the World Bank on January 14, 1994, and published in Beyond Bretton Woods (1994), summarizes his critique of growth economics as practiced in development institutions (Daly 1999, p. 7). (D-claim; interpretive)

Critique of Julian Simon

Ch. 3, "Ultimate confusion: the economics of Julian Simon" (originally in Futures 17(5), 1985), critiques Simon's cornucopian economics and the claim that resources are effectively infinite through substitution and technological progress (Daly 1999, p. 7). (E-claim; objection)

Population and Development

Ch. 13 reviews Population Growth and Economic Development: Policy Questions (Population and Development Review 12(3), 1986). Ch. 14 critiques Becker and Tomes's Chicago School individualism as applied to reproductive decisions (Journal of Economic Issues, 1982) (Daly 1999, pp. 8–9). (E-claim; objection)

Globalization as "Last Gasp"

Daly frames globalization as "growth economics' last gasp" — the attempt to overcome national limits to growth by expanding the scale of economic activity globally (Part V, Ch. 16, reviewing Dani Rodrik's Has Globalization Gone Too Far?) (Daly 1999, p. 10). (D-claim; interpretive)

Free Trade Critique

Ch. 15, "Free trade, sustainable development and growth: some serious contradictions" (Population and Environment 14(4), 1993), argues that free trade conflicts with sustainable development goals (Daly 1999, p. 9). (C-claim; theoretical)

Policy Recommendations

Daly advocates (throughout, especially Ch. 6 and Ch. 17): 1. Steady-state economy: maintaining throughput within ecosystem absorptive and regenerative capacity 2. Capital controls and limits on international trade to keep production aligned with consumption 3. Shift from growth to development (qualitative improvement without quantitative throughput growth) 4. Population stabilization 5. Redefinition of money, debt, and wealth to distinguish financial from real assets (Ch. 17, from For the Common Good with John B. Cobb Jr.)

Nuances and Limits

Essay Collection Format

As a collection of previously published essays spanning 1979–1997, the book lacks a single unified argument structure. Some essays are reviews of other books (Beckerman, Lewis, Rodrik, Wilson, Ehrenfeld) rather than original research. This limits the book's coherence as a standalone text.

Polemical Tone

Daly acknowledges his essays are "critical, sometimes polemical" and that "if you think the house is on fire then it is inappropriate not to shout" (Daly 1999, p. 14). This overt advocacy stance means the book does not adopt NPOV.

Limited Empirical Content

Most essays are theoretical or review-based. The empirical case for steady-state economics relies on arguments made elsewhere (especially Steady-State Economics 1977/1991 and Beyond Growth 1996).

Georgist Connection

Daly's framework of throughput limits and the economy as subsystem connects to Georgist concerns about land and natural resources as non-produced inputs. However, the book does not directly engage with Henry George or land value taxation. The connection is indirect through the concept of economic rent from natural resources. [VERIFY: whether Daly discusses LVT in other works]

Key Quotes

"That which seems to be wealth may in verity be only the gilded index of far-reaching ruin." — John Ruskin, Unto This Last (1862), quoted by Herman E. Daly, Ch. 2

"The economy is not at the expense of anything else—there is no opportunity cost to growth. On the contrary, growth enlarges the total to be shared by the different sectors or subsystems. Growth does not increase the scarcity of anything; rather it diminishes the scarcity of everything! How can one possibly oppose growth? Growth for ever, or a steady state at optimal scale? Each is logical within its own pre-analytic vision, and absurd from the viewpoint of the other." — Herman E. Daly, Ch. 2, Uneconomic Growth in Two Paradigms

"The paradigm or pre-analytic vision of standard neoclassical economics is that the economy is the total system, and that nature, to the extent that it is considered at all, is a sector of the economy. Nature is not seen as an envelope containing, provisioning and sustaining the economy, but as one sector of the economy similar to other sectors." — Herman E. Daly, Ch. 3, Uneconomic Growth in Two Paradigms

"The law of increasing marginal costs tells us that we first make use of the most productive and accessible factors of production—the most fertile land, the most concentrated and available mineral deposits, the best workers—and only use the less productive factors as growth makes it necessary." — Herman E. Daly, Ch. 1, Uneconomic Growth in Theory

"There are costs of depletion, pollution, disruption of ecological life-support services, sacrifice of leisure time, disutility of some kinds of labour, destruction of community in the interests of capital mobility, takeover of habitat of other species, and running down a critical part of the inheritance of future generations. We not only fail to measure these costs, but frequently we implicitly count them as benefits." — Herman E. Daly, Ch. 1, Uneconomic Growth in Theory

"Nature is really nothing but a supplier of indestructible building blocks which are substitutable and superabundant. The only limit to growth is technology, and there is, supposedly, no limit to technology, ergo no limit to economic growth. Therefore the very notion of 'uneconomic growth' makes no sense in that paradigm." — Herman E. Daly, Ch. 3, Uneconomic Growth in Two Paradigms

"The 'great benefit', for which we are urged to sacrifice the environment, community standards and industrial peace, appears, on closer inspection, likely not even to exist." — Herman E. Daly, Ch. 2, Uneconomic Growth in Fact

Bears On

• Steady-State Economy — Daly's central concept
• Uneconomic Growth — coined/popularized by Daly
• Throughput — the flow concept central to ecological economics
• Entropy and Economics — the thermodynamic constraint
• Resource Rent — natural resource scarcity and rent
• Limits to Growth — the broader sustainability framework

See Also

• Steady-State Economy
• Uneconomic Growth
• Throughput
• Herman Daly
• Limits to Growth

Sources

1. Herman E. Daly, Ecological Economics and the Ecology of Economics: Essays in Criticism (Cheltenham: Edward Elgar, 1999). — primary text
2. Herman E. Daly and John B. Cobb Jr., For the Common Good (Beacon Press, 1989/1994) — source for Ch. 17 "Money, debt, and wealth" (C-claim; theoretical).
3. Nicholas Georgescu-Roegen, The Entropy Law and the Economic Process (1971) — the thermodynamic foundation Daly extends (C-claim; theoretical).
4. Julian Simon, The Ultimate Resource (1981) — the cornucopian position Daly critiques in Ch. 3 (E-claim; objection).