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
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—— Ugarteche, Puyana and Madi ——
Gerson Lima / Maria Alejandra Madi
Edward Fullbrook and Jamie Morgan
————— Michael Hudson ————–
Maria Alejandra Madi / Jack Reardon
————- Edward Fullbrook ————-
—————— Steve Keen —————–
————— Richard Smith —————
————– Gustavo Marques————
– Victor Beker and Beniamino Moro –
————– Lars Pålsson Syll ————-
—————– Stuart Birks —————-
Edward Fullbrook and Jamie Morgan
———— Armando Ochangco ———-
Shimshon Bichler / Jonathan Nitzan
————— Mauro Gallegati ————–
————— Herman Daly —————-
————— Asad Zaman —————
—————– C. T. Kurien —————
————— Robert Locke —————-
Real-World Economics Review Blog 
i imagine daly won’t satisfy you, til you are the next larry summers.
daly is generic, and even wrong at times (egh georgesc rogescu–‘4th law’).
hooked up with the (no)meritocracy at u md.
but ecosocialism is just another brand of potato chips—‘all new!!!’. (and conveniantly forget the incas who bred potatoes—hey, they aint even no they be in the americas).
heterodox potato chips. boss in nova.
I’m not Herman Daly, but I do have a plan. Whether or not it is “better” depends on engaging people in a dialogue about ideas that may be uncommon and thus will repay some effort to understand. I’ve outlined my plan in a paper that was posted on MRzine last week and given an extensive historical grounding for it in a book manuscript I have completed over the last couple of years.
Last Monday, MRzine posted my short, provocatively-titled polemic, “Socialism is Dead! Long Live the Commons and Social Accounting!” challenging John Bellamy Foster’s downplaying of work time reduction policies advocated by degrowth advocates. My proposal is well positioned to bridge the gap between “eco-socialist” and “degrowth”/steady-state proponents. It addresses many of the issues that arise in the Richard Smith’s debate with Herman Daly.
http://mrzine.monthlyreview.org/2010/walker131210.html
Central to the debate between eco-socialists and ecological economists is contention over private ownership of property, especially the means of production. While I won’t claim that private ownership isn’t a problem at all, I will contend that public ownership isn’t the solution to that problem. Instead, what we need to do is pay more attention to the origin of property and thereby find a way of “defusing” accumulation rather than merely replacing one kind of property with another (“meet the new boss, same as the old boss…”).
The key to defusing accumulation may lie buried in the “Chapter on Capital” in Marx’s Grundrisse, where Marx appreciatively sums up the views of a pair of English radical social critics from the 1820s, Percy Ravenstone and Charles Wentworth Dilke: “Just as capital on one side creates surplus labour, surplus labour is at the same time equally the presupposition of the existence of capital. The whole development of wealth rests on the creation of disposable time.”
read that on mrzine and econospek. i dont think you got anythung new to day, any more than… the g- o g-o. indicators. cover charge no weapons
“ISHI”, have you got yourself banned from this site as “media” or something?
kindah like the half a gas can indians (as they called they self): athabascan in the yukon(chilly– -45).
half a nice day. read a book. destroy the redwoods. kill the injuns 7 hour day. sandwich. man.
All I can say is Id rather be an eco socialist than an eco fascist. The latter embraces both the mainstram tragic Murdoch media and the eco denialists he manages to enlist (who probably wouldnt otherwise subscribe).
I dont know about private property, but the level of (rising) environmental damage is way too big for private property rights to solve on its own.
One polluted property isnt a polluted atmosphere and it isnt an entire polluted river system. Thats a massive class action and where are the teams of lawyers. Maybe they prefer a smaller job.
Property rights and Coase – too little too late. Even with a market trading system, we likely are already are familiar with the winners and it wont be household Mums and Dads.
Richard Smith poses good questions, but his answers — that we need a centrally planned eco-socialist system in which government owns the major means of production — exceed what is necessary to achieve the goals he and Daly agree upon. It is sufficient for the public to own the resources which the means of production depend on; it is not necessary for the public to own the means of production themselves. Nor is it necessary to plan the entire economy; it is sufficient to ration a handful of key resources.
Imagine a market economy with a dozen or so ‘valves’ regulating inputs of carbon, nitrogen and advertising, extractions of fish, trees and fresh water, and outputs of wastes of various sorts. If it were established that the people collectively, not private corporations or even the government, own the commons, then those valves could be controlled by trusts legally accountable to nature, future generations, and/or all citizens equally. Private corporations could still own the means of production and still strive to maximize profit, but they’d have to operate within limits set by these commons trusts. They’d also have to pay scarcity rent to the trusts, which would force them to internalize many currently externalized costs, and also generate revenue streams that could mitigate many of the harms the corporations cause.
Creating an economic system as described above will not be easy — Smith is right that cap and trade is a cautionary tale of what can go wrong. But it will be easier to build such a hybrid commons/private ownership system (whatever you want to call it) than to replace capitalism with eco-socialism. The devil, of course, is in the details.
For more discussion of the details, see my book “Capitalism 3.0,” available free at http://www.capitalism3.com.
This debate is very important. Recently the group of ecological economists asssociated with Robert Costanza, et al., weighed in (again), but now attacking Smith’s article. Philip Lawn writes in “Is steady-state capitalism viable? A review of the issues and an answer in the affirmative” (Annals of the New York Academy of Sciences, no 1219): “Richard Smith has gone much further by suggesting that if capitalism and ecological sustainability are incompatible, it follows that a steady-state economy—which many believe is necessary to achieve ecological sustainability—is also incompatible with a capitalist system.” Without going into more details, I simply wish to bring to bear a quote from Nicolar Georgescu-Roegen, who in his later years became a militant critic of Herman Daly: “There cannot be much doubt, sustainable development is one of the most toxic recipes.”
… [Sustainable development is] “ a more beguiling snake oil than the steady state” (Georgescu-Roegen, Correspondence, 1991). He wet further one year later in a letter to Kozo Mayumi: “From your letter I see that you associated yourself firmly with the International Ecological Economics Society, which serves two unfortunate interests. One represents the idea that the salvation of our entropic predicament is the steady state, which for Bangladesh would mean a lasting condemnation to its present misery. […] Actually the capital sin of that International Association is that with an overabundant funding they market the most dangerous /snake oil/ of all time, /sustainable development/! (G.R. Corr. to K. Mayumi, 1992). Twenty years later, the blindness of many self-styled adherents to EE continue to ignore the weight of the Third World in the formulation of strategies for the coming period.