[Graeme]

Steady state economy

$this->bbcode_second_pass_quote('', 'T')heoretically and temporarily, a steady state economy may have a growing population with declining per capita consumption, or vice versa, but neither of these scenarios are sustainable in the long run. Therefore, “steady state economy” connotes constant populations of people (and, therefore, “stocks” of labor) and constant stocks of capital. It also has a constant rate of throughput; i.e., energy and materials used to produce goods and services.

Within a given technological framework these constant stocks will yield constant flows of goods and services. Technological progress may yield a more efficient “digestion” of throughput, resulting in the production of more (or more highly valued) goods and services. However, as emphasized in biophysical economics (which may arguably be classified as a subset of ecological economics), there are limits to productive efficiency imposed by the laws of thermodynamics and therefore limits to the amount and value of goods and services that may be produced in a given ecosystem. In other words, there is a maximum size at which a steady state economy may exist. Conflicts with ecological integrity and environmental protection occur long before a steady state economy is maximized.

“Constancy” of population and capital stocks does not imply absolutely unchanging population and capital stocks at the finest level of measurement. Rather, “constant” implies mildly fluctuating in the short run but exhibiting a stable equilibrium in the long run. Long-run changes reflect evolutionary, geological, or astronomical processes that alter the carrying capacity of the Earth for the human economy. Dramatic examples include atmosphere-altering volcanoes and massive meteorite collisions.