Sozialalmanach - Caritas Luxembourg

Ecological Macroeconomics
There is something odd about the modern refusal to countenance anything but growth
at all costs. Early economists such as John Stuart Mill (and indeed Keynes himself) foresaw
a time in which growth would have to stop 6 .
Herman Daly’s pioneering work 7 defined the ecological conditions of a steady-state
economy in terms of a constant stock of physical capital, capable of being maintained
by a low rate of material throughput that lies within the regenerative and assimilative
capacities of the ecosystem.
What we still miss from this is a viable macro-economic model in which these conditions
can be combined with conditions of economic stability. This call – for a robust ecological
macro-economics – is perhaps the single biggest message to emerge from the analysis in
this study.
There are only a limited number of attempts to develop a macro-economics of sustainability.
One of these suggests that it is possible, under certain assumptions, to stabilise
economic output. Another discusses the macro-economic implications of a successful
transition to a non-fossil economy.
Though limited in certain important ways, these exercises reveal that a new macroeconomics
for sustainability is not only essential, but possible. The starting point must be
to relax our presumption that perpetual consumption growth as the only possible basis for
stability and to identify clearly the conditions that define a sustainable economy.
These conditions will still include a strong requirement for economic stability as the basis
for protecting people’s jobs and livelihoods. But this condition will need to be supplemented
by conditions that address distributional equity, sustainable levels of resource throughput,
and the protection of critical natural capital.
In operational terms, this new macro-economy will need enhanced investment in public
infrastructures, sustainable technologies and ecosystem maintenance. It is likely to demand
a different balance between public and private goods. It will also require us to reframe our
concepts of productivity and profitability.
Above all, a new macro-economics for sustainability will have to be ecologically and
socially literate, ending the folly of separating economy from society and environment.
6 Mill (1848); Keynes (1930).
7 Daly (1972).
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