The Steady-State Economy is one way of interpreting the meaning of long-term sustainability, particularly in terms of our current concepts of growth and its relationship to quality of life.
Daly's Steady-State Economy
Within the Sustainability framework, the Steady-State Economy concept addresses the issue of the classical economics presumption that economic growth is necessarily equivalent to increasing material wealth.
Measurements of GDP (GNP) are not correct as an indicator of 'progress', in the sense that they hide costs which are real but intangible, or unequatable to monetary value. Since neo-classical economics sets value of a good to zero if it cannot be incorporated on the account books, whose currency is literally currency, environmental economics is obliged to attempt to value environmental resources, services, and intrinsic values in terms of human economic value. This contradiction leads to undervaluing of common goods, and exaggeration of the importance of private ownership.
The falsity of the GDP as a measure of progress is evident when one considers that the loss of a free (zero monetary value) natural resource (drinkable tap water) by pollution, and its replacement by a monetarised substitute (bottled water), although clearly not a move towards a sustainable economy, is registered as a positive on the GDP account. Similarly, car accidents generate employment and economic stimuli (car repair and replacement, employment for police and traffic control, medical personnel, invalid care, legal system, funeral services, insurance....), which all appear as positives in the GDP calculation, but can hardly be considered to be beneficial to the state as a whole.
Although it is generally unchallenged that quality of life increases with income, H.E. Daly (1990) proposes that this is only for a certain range - there is a point at which quality of life stops increasing with increasing wealth. There is a debate about at what point over-development is detrimental to overall well-being. Over-population, traffic congestion, environmental deterioration, loss of cultural and social goods and values, high crime rates, inequality and alienation of minorities, all result from excessive wealth feeding social competition in an overtly material society.
The Steady-State Economy would keep within the limits: population size, wealth distribution, opportunity, and crucially the dependence on material flow. Material flow rates in the post-industrial west (or north) have been extremely high. Economic theories have supported the concept that stability (let alone growth) can be regulated directly by material flow. This fits well the industrial output/consumer model of determining economic strength, but fails to address the question of whether this measures quality of life, and whether this dependence is a weakness in the long-term since the availability of raw materials and market dynamics may not be sustainable. In this sense, automating production and eliminating labour costs appears 'efficient', but is ultimately self-defeating because it erodes the necessary condition that there be a consumer market able to purchase the goods being produced.
The Steady-State Economy principle states that physical growth is economic only if marginal benefits of growth exceed the marginal costs. Once the basics of life have been provided (sufficient food, shelter and essential medical care and social infrastructure), each additional unit of material provision becomes less advantageous compared to the environmental and social costs it entails. Increasing the range of personal mobility with constantly proportional air pollution and noise, beyond a certain point is merely providing for the whims of the wealthy at the cost of the health of those forced into unhealthy areas. Increasing car ownership and subsised fuel prices leads to increased inquality, not only in access to these goods, but in the burden of environmental degradation reaulting from the increase. SSE would ensure that increasing mobility would not lead to inequality in burden.
Bibiography: Prof. M. Thring Income and Quality of Life bell curve, 'societal over-engineering'. [Carley and Christie, Managing Sustainable Development, p. 31, personal communication).
H.E. Daly (1990), Herman Daly: Steady-State Economics Island Press, 1977.
John Stuart Mill: chapter in Principles of Political Economy, 'On the Stationary State'.
A phase in which industrial production is interlinked with modern information and communication technology.
1st: Mechanization, water power, steam power. In the West, this occurred between c. 1750 and c. 1880s.
2nd: Mass production, assembly line, electricity. 1880 - 1960s.
3rd: Computers and automation. 1960s - 2000s.
4th: Cyber physical systems. Since c. 2005 - present.
Elements of Industry 4.0 are sometimes referred to as 'Cyber-Physical Systems', 'Internet of things', 'Big Data' and 'Cloud computing'.
The next 'Revolution' could be the Singularity - AI (Artificial Intelligence) makes humans extraneous entirely.