RWER issue 55: Richard Smith
If Herman Daly has a better plan, let’s hear it
Richard Smith [Institute for Policy Research and Development, London]
The great strength of Herman Daly’s work has always been his passionate, eloquent, and insistent argument against both mainstream economics and green growth proponents that economic growth cannot continue forever on a finite planet and that humanity will not survive unless we construct a sustainable “steady-state” economy. I could not agree more with this thesis. Where we differ is that Professor Daly believes that our present capitalist economic system can be reformed in such a way as to make it function as a steady-state economy whereas I contend that it cannot, that such an economy would be undesirable in any case because the “market allocation of resources” Daly wishes to keep is neither efficient nor rational in environmental or social terms, and that the only way we can actually get a non-growing sustainable economy is a democratically planned socialist economy.
Now it is quite true, as Professor Daly says, that he never uses the term “steady state capitalism” but instead always talks about a “steady state economy.” This he says is “something different from both capitalism and socialism.” But one of the most frustrating aspects of reading Daly’s books is this maddening imprecision. If it’s not capitalism and it’s not socialism, what exactly is it? For a start, who owns it? If we’re talking about a modern industrial economy, who owns the factories, the mines, the auto plants, the oil companies, the airlines, etc.? And if this economy is mostly comprised of corporations, owned by investors, what are the implications of such corporate ownership for the problem of growth? And what are the implications of the threat of unemployment if one or another factory has to shut down in order to stop pollution or out-of-control growth, in order, say, to get a “steady-state” economy? Daly says almost nothing about such questions.
All he tells us is that in his imagined SSE, private property will be the rule and the market will determine the allocation of resources. Further, Daly has never to my knowledge suggested that there is anything even slightly socialist about his SSE – no common property, no economic planning, no workers’ self-management, no popular economic democracy. Indeed, like Milton Friedman, Daly even rejects capitalist social welfare states (like Sweden). So if there is nothing particularly “socialist” about Daly’s SSE model and he insists that the means of production must be privately owned and that markets “determine the allocation of resources,” then what else can he talking about but capitalism?
In his response to my article, Daly says that even if capitalism can be “socially and ecologically constrained” such that “the market can no longer determine the scale of the economy relative to the biosphere” and also “not any longer generate huge inequalities of power and wealth,” this is just not enough to satisfy me.
You may download the whole of this paper at: http://www.paecon.net/PAEReview/issue55/Smith55.pdf