The Steady Stater

Giving Thanks: A Conversation with Herman Daly

November 23, 2020 Brian Czech
The Steady Stater
Giving Thanks: A Conversation with Herman Daly
The Steady Stater
Giving Thanks: A Conversation with Herman Daly
Nov 23, 2020
Brian Czech

It’s Thanksgiving week, and in this episode of the Steady Stater Brian talks with Herman Daly, the father of steady-state economics. It’s no coincidence: Steady staters have Daly to thank—more than anyone else—for the vision of a steady state economy. After listening to this episode, you too will have an additional reason to be thankful, even amidst the daunting trends of the 21st century. To our weekly listeners, CASSE also sends a big thank-you for your support!

Show Notes Transcript

It’s Thanksgiving week, and in this episode of the Steady Stater Brian talks with Herman Daly, the father of steady-state economics. It’s no coincidence: Steady staters have Daly to thank—more than anyone else—for the vision of a steady state economy. After listening to this episode, you too will have an additional reason to be thankful, even amidst the daunting trends of the 21st century. To our weekly listeners, CASSE also sends a big thank-you for your support!

Richard Tibbetts  00:01

From the Center for the Advancement of the Steady State Economy, this is The Steady Stater, a podcast dedicated to discussing limits to growth and the steady state economy.

Brian Czech  00:10

Welcome to the show. I'm your host, Brian Czech, and our guest today is Herman Daly. The best way to describe Herman Daly for our purposes at The Steady Stater is like this: Herman is the grandfather of all things steady-state in the world of economics. While there may have been precedents for steady-state thinking, going back at least to John Stuart Mill in the mid-19th century, it wasn't until Herman developed the cogent philosophical and scientific foundation that a field steady state economics could really be identified. And, of course, at the Center for the Advancement of the Steady State Economy, we're extremely grateful for that. That explains why our guest for this episode, our 2020 Thanksgiving episode, is indeed Herman Daly. Herman Daly, thank you and welcome to The Steady Stater.

Herman Daly  01:17

Thank you, Brian, and CASSE is one of the things that I give thanks for this Thanksgiving.

Brian Czech  01:28

Well, thank you so much for that as well. And, you know, Herman, it's common practice in an interview like this to mention the credentials of the guest, right? During the introduction. But in your case, you have so many credentials, and you've received so many awards and accolades that we'll have to meet them out during the course of our interview. I guess we could start with your academic bona fides. You have a BA from Rice University and a PhD from Vanderbilt, both in economics. So, what was the topic of your PhD research and is that what led you directly into the development of steady-state economics?

Herman Daly  02:09

Well, you know, the topic of my PhD was the trade control authority of Uruguay as a development policy. So I started out in economics as a very standard economic growth advocate, or development. In the 1950s, when I was an undergraduate, the field of development was just really coming into its own and it was mainly focused on improving the GDP, welfare of underdeveloped countries, as they were then called. And so I started out, you know, thinking that my little contribution to the world, if I could do it, would be to improve, to make the poor countries richer. And since I grew up in Texas, I was kind of oriented towards Latin America. And Vanderbilt had a program in Latin American economic development. And so that's what attracted me there. Well, once I got there, of course, you can't just choose all your own courses. You have to take some required courses. And one of the required courses was economic theory with Professor Georgescu Rogan. And that really opened my eyes to a whole lot of things I had not thought about before, and particularly the biophysical basis of economics and the laws of thermodynamics. And that kind of changed my my direction, although not totally. It was a gradual process from then on to go to the notion of steady state.

Brian Czech  04:11

Okay, well, immediately following your PhD, you landed a tenure track position at Louisiana State and I guess you started there in 1968, and by 1973, you were a full professor of economics. And if I understand correctly, it was primarily during this track at LSU when you also served as a Ford Foundation visiting professor at the University of Sierra in Brazil, as a research associate at Yale University, as a visiting fellow at Australian National University, and as a senior Fulbright lecturer in Brazil. And in 1976, from LSU you received, let's see, it was the Distinguished Research Master Award. Now by that time, was that pertaining to your discovery, you might say, and development of steady-state economic theory?

Herman Daly  05:15

Yes, I was, for about 20 years, at LSU, and over that period, I began to think more and more and develop more and more and write or more on the subject of steady state economics. Now, he was fortunate for me, that I started out and in the beginning, I was focused on development economics, which was an acceptable topic at that time. And so, that made it relatively easy for me to get tenure. But as time went on, I moved more and more into ecological economics, steady state economics, and the Department of Economics moved more and more to neoclassical growth economics. So over that 20 years, the gap between me and the rest of the department became so wide that it was really unbridgeable, and not really possible for a student to write a dissertation under under me, because he had to have four other members of the committee that would approve it. And so a few bad experiences along that line led me to look for another job and that's when I went to the World Bank.

Brian Czech  06:49

Right, right. Well, let's talk about that a little bit. But first, you know, we mentioned this award, let's rattle off a few of the other ones that you've garnered over the years. And there's a long list of them, but a few would be the Honorary Right Livelihood Award, which is given by the government of Sweden, the Heineken Prize for Environmental Science, the Leontief Prize in Economics, the Medal of the Presidency of the Italian Republic, the Sophie Prize from Norway, the 2008 Man of the Year by Adbusters Magazine, the Blue Planet Prize from the Asahi Glass Foundation, and the Lifetime Achievement Award from the National Council for Science and the Environment. There's a bunch of other ones as well, but these are some of the biggies. Now, Herman, you're a modest fellow, and I hate to put you on the spot. But which of these prizes would you say you're most proud of?

Herman Daly  07:56

Oh, goodness. I'm grateful for all of them. And I suppose the the Blue Planet Prize from the Asahi Glass Foundation was the most recent and that was...One of the early ones, also, the Heineken Prize, which is awarded by I mean, it's the Heineken Brewing Company, the good old Heineken's beer. And that's awarded by the Royal Dutch Academy of Arts and Sciences. So, anyway, well, that was good. And while I'm on the subject of Heinekens, I guess I should say that I'm twice the beneficiary of Heineken's Brewing Company, because the building at University of Maryland in which my office was housed was called Van Munching Hall, which was endowed by the distributor Heineken's in the Eastern United States. So, folks, drink Heineken's.

Brian Czech  09:06

You get four more awards, there'll be a six pack of those I guess. So after your time at LSU, you signed on as senior economist at the World Bank, and you held that post from 1988 to 1994. First of all, what's your fondest memory from that stint?

Herman Daly  09:29

Well, I think, working with Robert Goodland. Robert Goodland was an ecologist. I had met him through his work in Brazil when I was working there. And he had been made the way the Bank went through a reorganization and they set up environmental review departments for each of the major geographic areas, and he was the chief of the environmental review department for Latin America. So when I was looking for a job, you know, fortunately, he needed somebody who was sort of an environmentalist and an economist and had experience in Latin America. So I checked those three boxes. But mainly, by that time, I had sort of gotten a reputation as being opposed to a critic of economic growth, and that did not help me with World Bank, but Robert was a very persuasive fellow, and he managed to get me hired. So working with him, and a number of other people at the bank. What was was excellent, many of the people at the Bank were wonderful first-rate people trying hard to do good in an institution which made it very difficult for them to do it. And so I persevered for six years there and I think, maybe I helped Robert achieve a few things. But I think by now, they've all disappeared. Of course, I've been away from the Bank for 20 years now. And so maybe some of those things may have reappeared. And it kind of dulled my appetite for large international organizations.

Brian Czech  11:42

Well, I could see why fond memories there would be of Robert Goodland. He was an early CASSE supporter too, an early signatory of the CASSE position, and just always a really encouraging fellow. And I guess we should mention, I think he passed away, what was it like, five years ago now? Somewhere in there. Well, Herman, have you ever had any regrets about leaving the World Bank? Or would it just have clearly been an exercise in futility to stay on there?

Herman Daly  12:21

Well, I thought it was an exercise in futility. Of course, one never knows the future. I suppose many people thought going from academia to the World Bank, was out of the frying pan into the fire for me. And in some ways, I suppose it was. But as I say, academia had its problems and it was a good experience to work at the World Bank because they were actually trying to do things. And although they were failing, in many respects, they had some successes as well. And there's something about having to deal with the real world, which is absent in academia. And I appreciated that.

Brian Czech  13:18

Yeah, you know, it brings to mind, World Bank efforts would be co-opted or corrupted, you know, and geared toward, well, of course, enriching those few doing the corrupting, but also becoming extremely pro-growth. Did you get a sense of some of that from the program that you were operating in?

Herman Daly  13:50

Yeah, I did. The I think the the best understanding that I developed with the World Bank is that it's basically a money pump. It wants to push money into developing countries in the form of loans. And so anything that will increase the flow of money loaned is selected for, and anything that slows that down is selected against. Well, including environmental costs and project evaluation. That makes it more difficult to move money and so it was intended to be selected against. So growth in all forms was what was selected for in order to push the maximum amount of money. So, we sometimes said that the the World Bank's definition of efficiency is to move as much money as possible with the least amount of thought and preparation. And I suppose, well, I could go on and on about that, but I'll stop there.

Brian Czech  15:12

Well, Herman, we're really on a roll here and I can't wait to hear more. But right at the moment, we need to take a short non-commercial break with Rick Tibbetts.

Richard Tibbetts  15:28

Hi there, we hope you're enjoying the show. Without the support of listeners, like you, CASSE would be unable to deliver high quality steady-state content every week or sustain its fight to advance the steady state economy. That's why we are humbly asking you to make a donation to CASSE, whatever you can afford, on Tuesday, December 1st, also known as Giving Tuesday. As a thank you for your contribution, we'll send a free copy of Peter Seidel's captivating new book, Uncommon Sense: Shortcomings of the Human Mind for Handling Big-Picture Long-Term Challenges, to those who donate $50 or more. By donating, you'll be taking an active role in helping CASSE achieve a smarter, fully sustainable economy that finally puts the well being of our planet and species first. Now, back to the show.

Brian Czech  16:15

First of all, Herman, what's the relationship between ecological economics and steady state economics?

Herman Daly  16:23

Well, yes, I think it's a very close relationship. You might say that ecological economics is the broader umbrella concept and steady state economics is a particular specific model of how an ecological economy could work. That might be the best way to put it. Another way, I guess to recognize, is that the concept of steady state goes back to classical economics, as you pointed out, in your introduction, back to John Stuart Mill and even prior to that. So in a way, this is a movement from neoclassical economics, which looked upon the source of value as a psychic magnitude utility. Going back to the classical economists who emphasize more the physical labor and resources as a source of value. And so getting back into physical things, that sort of brings with it limits, since the physical world is limited. Whereas the psychic world of imagination and enjoyment may or may not be limited, I really don't know. But it's assumed to be unlimited. So I suppose that's a difference. So ecological economics then would would be, I suppose, the broader concept. Steady state, more specific.

Brian Czech  18:13

That's a great lay of the land in ecological economics, and I encourage everybody to read the textbook by Herman Daly and Joshua Farley called Ecological Economics: Principles and Applications. And Herman, from that textbook and from other of your work, one thing that distinguishes your presentation of steady state economics is a moral philosophy, like some of the classical economists. And one of my favorite lessons from that textbook with Josh Farley, is the ends-mean spectrum. It's an outstanding way, I thought, to introduce the topic of ecological economics. Because I could imagine otherwise, an economics student sitting there kind of thinking, 'well, what the heck am I doing here?' And that ends-mean spectrum really does help to lay out the context where that question is answered. And so it's wonderful stuff. But now, what would you say are the two or three biggest questions today that remain to be answered in steady-state economics?

Herman Daly  19:39

I guess to my mind, some way of figuring out what is the optimal scale of the physical economy relative to the ecosystem. I mean, I think, in a way, it's fairly obvious that we've exceeded the optimal scale, we're tearing up the ecosystem. So we don't really need to answer that question in a policy sense, because we already know that we have to cut back in order to get to the optimal level, but just taking that as a real problem. I mean, it's a problem in the sense that we have not convinced other economists and the public at large that we have, in fact, exceeded the optimal scale. And even though there's abundant evidence, I'd say, that's one thing. And I suppose what keeps us practically stymied in political [unintelligible] is the issue of distribution. Because growth has been justified for so long as an alternative to redistribution. Economists consider redistribution, well, that's an ethical question, so that's really not science, so it's ruled out of economics. So they don't want to talk about it. So they finesse the whole question of justice of distribution by saying, 'well, we'll just grow and everybody will have more, and therefore everybody will be happy,' the good old bigger pie theory. And we have to break away from that. We have to get get out of that. So I think that's probably the biggest political unanswered question.

Brian Czech  21:42

I see. You know, that resonates with me, because, and you may recall this too, when we were trying to get the International Society for Ecological Economics to adopt a position on economic growth, as the US society had adopted, you know, explicating, the fundamental conflict between economic growth and environmental protection and long-term economic sustainability and so on. The ISDE, the International Society, there were elements that saw that kind of in the way you just described, as some sort of an effort to halt the growth and put things like a snapshot in time with the current mal-distribution of wealth, and keeping the poverty-stricken countries down. And that was the last thing we had in mind. But, you know, it's, I guess it's something we can empathize with them about because until there's some semblance of what we like to call at CASSE, you know, as steady statesmanship, the application of steady state economics in international diplomacy, then I suppose they would be kind of suspicious of these efforts.

Herman Daly  23:08

Sure. And I suppose at the national level, internally, there's this similar sort of thing between rich and poor classes. I mean, there's a great deal, even within the leftist, in the labor-oriented movement, there's enormous suspicion of anything having to do with limit. And so I think that what I think we just have to face that immediately, right from the beginning, say, "No, we're, we're talking about a system in which inequality is limited. There are limits to the degree of inequality. Now, here are the limits that we suggest. What do you suggest? What's your counter proposal?"

Brian Czech  23:57

Well, you know what, Herman, I suspect what this is leading up toward is another episode with you sometime in 2021, maybe about the degrowth movement in Europe and steady-state economics as we're trying to advance it here and elsewhere, but I think we were going to have to tidy this up and head toward the ending for today. One more thing, though, about, you mentioned the question of optimum scale, and I think it was around the late 1980's, you and John Cobb, John B. Cobb, developed the index of sustainable economic welfare (ISEW). And I think that helped to to spawn other attempts to get at, you know, optimum scale, like the Genuine Progress Indicator and things that help us to ferret that out, like the Living Planet Index, the Human Development Index. Which one of these do you think we should be, if we could only take one and invest more time and effort in improving and advancing, which one do you suppose it should be?

Herman Daly  25:19

Well, that's a good question. You know, we've gotten a lot of criticism of the index of sustainable economic welfare simply because it's a monetary index and it's based on market prices and estimates of shadow prices, and so on. And that is a problem. Originally, if you look at the book, John Cobb and I, in the text, part of the book, the chapters dealing with measurement, we've pretty well dealt with conceptual criticisms of GDP and sort of conceptual dialectical improvements of, of how to define what is the cost and what is the benefit and so on. We did not attempt a monetary measure in those chapters, because we were aware of the treachery of monetary measures, I mean, prices measure marginal utility, not totally utility. Yeah, there's all sorts of difficulties. However, you know, John's son, he was sort of a useful, a very helpful critic. And he told us, 'Look, you ought to develop a monetary case, even though that's not your basic argument. Your basic argument is person and community and things like that. But economists look at money. And so, it wouldn't be that hard to develop another index, you could just take all the GDP sub accounts, and rearrange them, because some really measure benefits and some measure costs. And then you could correct a little bit for the mal-distribution of income change. And it would be easy to come up with a better monetary measure welfare then GDP, even though far from perfect, because after all, GDP was never intended as a way to measure welfare. So it wouldn't be that hard to come up with a better measure of welfare then GDP since they weren't even trying to measure welfare.' Well, that made sense to us. And so we tried it. And so I have to give credit to Clifford Cobb, for pushing us in that direction. And I think the index of sustainable welfare, it did stimulate other people to try to improve it, which is what we had hoped for.

Brian Czech  28:09

Exactly. Well, you know, and we haven't even mentioned all your books. But here's a short list, at least. There was Steady-State Economics, which kind of got the ball rolling, I think in 1967. There was Beyond Growth. There was For the Common Good, the one with John Cobb. And, of course, the textbook in ecological economics, published by Island Press. That's the one called ecological economics, principles and applications, which you authored with Josh Farley as your co-author.

Herman Daly  28:50

Yeah, that was very fortunate to have Joshua as a co-author, and Josh is doing great work at University of Maryland, I mean University of Vermont. And they have a good program there.

Brian Czech  29:05

Well, Herman, I don't want to stop this at all, but I think for now, I'm going to have to thank you so much for joining us this morning on the Steady Stater podcast. Again, this is our episode for Thanksgiving weekend. We simply could not have chosen a more apropos guest. Thank you, Herman and we hope to persuade you to come back onto the show in 2021, at least for another Thanksgiving episode.

Herman Daly  29:32

Okay. Thank you, Brian, and thanks to CASSE this Thanksgiving.

Brian Czech  29:43

Well, folks, that about wraps her up. We've been talking with Herman Daly, the grandfather of all things steady-state in the field of economics. I urge listeners to read as many of Herman's books and articles as they possibly can get their hands on. Herman's writing is crystal clear, and he's the master of metaphor. And no subject is more important for the 21st century. This has been our Thanksgiving week episode, and in addition to our heartfelt thanks to Herman, I also want to thank our listeners for tuning in every Monday morning. I'm Brian Czech and you've been listening to the Steady Stater podcast. See you next time.