Brian Czech, Center for the Advancement of the Steady State Economy A Critical Role for Physicists In Steady State Economics

Increase in the production and consumption of goods and services in the aggregate Typically expressed in terms of GDP Entails increasing population and/or per capita consumption Economic Growth

Increase in the production and consumption of goods and services in the aggregate. Economic Growth

Economy as 800- Pound Gorilla

Coming out of the Corner and Growing

Not Economic Growth

Economic Growth

Speaking of Wildlife…

Urbanization Agriculture Water diversions (e.g., reservoirs) Recreation, tourism development Pollution Domestic livestock, ranching Czech et al Bioscience 50(7): Causes of Endangerment

Mineral, gas, oil extraction Non-native species Harvest Modified fire regimes Road construction/maintenance Industrial development Causes of Endangerment (cont.) Czech et al Bioscience 50(7):

Quick Note About Energy Abundance

Economy of Nature Producers (i.e., plants) Consumers Super- Carnivores Service Providers

Human Economy Producers (i.e., ag/ext.) Heavy Manufacturing Light Manufacturing Service Providers

Human-Inclusive Economy of Nature Plants Animals Humans Service Providers

With Economic Growth Plants Animals Human Economy Service Providers

Time GDP K Natural capital allocated to human economy Natural capital allocated to economy of nature Macro-Allocation Czech Wildlife Society Bulletin 28(1):4-14.

K GDP...maintain steady state economy sufficiently below K. To conserve biodiversity... Therefore Czech Wildlife Society Bulletin 28(1):4-14. Time

What might you say in response to this?

“But what about technological progress?”

Czech, B Prospects for reconciling the conflict between economic growth and biodiversity conservation. Conservation Biology 22(6): Also see… Supply Shock: Economic Growth at the Crossroads (Chapter 7)

Solow model Lucas model Romer model Y =  (K, L) Economic Growth Theory

1956, “A Contribution to the Theory of Economic Growth” Technological progress “Manna from heaven” Robert Solow Solow Model

1990, “Endogenous Technological Change” Research and development Patenting Paul Romer Romer Model

KTKT GDP Natural capital allocated to human economy Natural capital allocated to economy of nature X natural capital allocable Time KUKU Macro-Allocation Revisited

Capital-free growth zone KT1KT1 KT2KT2 GDP Time KUKU Natural capital allocated to human economy Natural capital allocated to economy of nature X natural capital (still) allocable Reconciliation Hypothesis

1.Fixed amount of energy, matter (E = mc 2 ) 2.Entropy; i.e. limits to efficiency in the economic production process Thermodynamics

Help dispel myth of perpetual growth with implications from thermodynamics. Expand academic niche. –Economics –Ecology –“Sustainability Science” Popularize findings and “don’t be such a scientist.” Critical Role for Physicists

R&D Source of Technological Progress

R&D _______ Sources of Technological Progress

R&D Profits Sources of Technological Progress

Profits

R&D Competitive Advantage

R&D Profits Sources of Technological Progress

R&D ???????????????? Profits Sources of Technological Progress

R&D Profits Economies of scale Sources of Technological Progress ________________ ????????????????

Increased efficiency but necessarily with increased production using existing technology Applicable at all levels in the economy (micro to macro and local to global) Economies of Scale

Economic growth requires technological progress. Technological progress requires economic growth. No reconciling the trade-off between economic growth and biodiversity. So, “What about technological progress?”

Capital-free growth zone KT1KT1 KT2KT2 GDP Time KUKU Natural capital allocated to human economy Natural capital allocated to economy of nature X natural capital (still) allocable Reconciliation Hypothesis

X/2 re-allocated KT2KT2 GDP Time KUKU Natural capital allocated to human economy Natural capital allocated to economy of nature X/2 natural capital allocable Hypothesis Refuted KT1KT1

Why Must We Have Physics – and Physicists – for Steady State Economics? Neoclassical vs. Ecological Economics

Business Household Neoclassical Economy

Business Household With Economic Growth

“Natural resources originate from the mind, not the ground, and therefore are not depletable.” Robert L. Bradley, Jr., 2002 Julian Simon Award Acceptance Speech

How did this happen? History and political economy…

Henry George Progress and Poverty, 1879 George vs. land barons Incipient tax code at stake Establishment of American economics Y =  (K, L) (Mason Gaffney, 1994) The Corruption of Economics

“relic of anti-George” Czech, B Ecological Economics 68: Or see chapter 4 of Supply Shock. For more on this, google:

Ecological economics movement Laws of thermodynamics Principles of ecology Herman Daly Ecological Economics

DalyCostanzaMartinez-Alier Scale Distribution Allocation (Sustainability) (Justice) (Efficiency) Themes and Leaders

Heat Natural Capital Pollutants Natural Capital

Heat Natural Capital Pollutants Natural Capital

What is the optimum scale, all things considered? Is GDP a reliable measure of scale? Could ecological microeconomics lead to optimal scale? A Few Words About Optimum Scale

GDP K Unsustainable Sustainable

GDP K Unsustainable Optimal?

GDP K Unsustainable Anthropocentric Optimum Biocentric Optimum

GDP K Unsustainable Optimum Democratic Anthropocentric Optimum Biocentric Optimum

Human Welfare GDP Optimum All Things Considered

Optimum Uneconomic Growth All Things Considered Human Welfare GDP

MU GDP MDU Optimal Scale GDP Opt Modified from Daly and Farley 2010, Figure MU = MDU MDU = ∞ MU = 0

MU GDP MDU Economic Growth 0 Uneconomic Growth GDP Opt

Some Useful Metrics GDP (as indicator of scale, not welfare) “Greened” (less-gray) GDPs Ecological Footprint Genuine Savings Living Planet Index Millennium Assessment Accounts Measure of Economic Welfare Human Development Index Index of Sustainable Economic Welfare Genuine Progress Indicator Gross National Happiness

Spheres of Sustainability Ecological Social Economic

Bigger Picture = Integration Ecological EconomicSocial

Ecological Economics Ecosystem Economy Society

Emphases of Indices LPI MEA MEW HDI ISEW GPI GS GGDP GDP EF GNH

Emphases of Indices LPI MEA MEW HDI ISEW GPI GS GGDP GDP EF GNH

Compliments of R. Costanza, Gund Institute for Ecological Economics

Psychic Welfare GDP/capita Happiness/Satisfaction Inglehart and Klingemann (2000)

What About Valuing Ecosystem Services? Carbon sequestration Water purification Hurricane buffering Pollination Etc.

Ecological Microeconomics “One of the most rapidly growing markets related to ecosystem services is the carbon market… It is speculated that this market may grow to some $44 billion by 2010.” 2005 Millennium Ecosystem Assessment

Ecosystem Services S P Supply

Ecosystem Services D S P Supply and Demand

Ecosystem Services S P Supply

Trophic Theory of Money Producers (i.e., ag/ext.) Heavy Manufacturing Light Manufacturing Service Providers Czech Shoveling Fuel for a Runaway Train.

Limits to Real Money Plants Animals Human Economy Service Providers

Natural capital D S1S1 S2S2 P1P1 Trophic Conundrum P2P2 More is needed, less is had.

So how do we pay increasing amounts for ecosystem services? By liquidating increasing amounts of natural capital to generate the money. That is, by liquidating the funds of ecosystem services we are “investing” in.

Ecological Micro and Macro Micro alone leads to the trophic conundrum. Macro alone is tough political sledding. Micro and macro: two tracks for the sustainable train.

Implications for International Diplomacy Steady Statesmanship v. “Lebensraum”

United Nations: A Starting Point for Steady Statesmanship?

UNEP World Conservation Monitoring Centre; Global Footprint Network Use Steady State Economics and the Ecological Footprint

“Rich Nations Gobbling Resources at an Unsustainable Rate” OAKLAND, California, March 30, 2004 (ENS) – Excessive consumption by the world’s richest nations is making life even more difficult for the world’s least fortunate, according to a new report by Redefining Progress… the wealthiest nations are depleting global resources at an unprecedented rate…

“Backtracking”

What else can a physicist do?

Sign the position on economic growth. Write a piece for the Daly News. Draft a briefing statement. –Physical limits to growth –Implications of thermodynamics –??? Join the Speakers Network. Start a Princeton chapter. Be CASSE’s Physics Liaison. Please join CASSE as regular or student member. Collaboration with CASSE

Wendell Berry Herman Daly Jane Goodall Buzz Holling Richard Lamm Chris Matthews David Orr Jonathon Porritt Vandana Shiva Gus Speth David Suzuki E.O. Wilson Some CASSE Signatories (Needed: Physics Dignatory)

Establish or engage steady state economics sections or working groups in the xyxy. Organize conferences and symposia. Write articles and books. Get xyxy to adopt a position on economic growth. Give academic and public talks and interviews; lectures, seminars, Rotary functions, brown-bags, radio interviews, etc… Support efforts occurring in other professional societies. Within the Physics Profession

Scientific Societies NGOs, Agencies Publics Polities “Small-Money Model” of Political Economy

In conclusion…

Thank… You!

Acknowledgments: Lockheed Martin GDP and Energy