Growth Model vs Steady-State Economy (SSE) Model The Key Difference The Growth Model: The environment is a sub-set of the
economy
The SSE Model: The economy is a sub-set of the
environment
What is the Growth Model? A politically sanctioned template that defines a desirable
objective and specifies the means to achieve it The Objective: Prosperity for all The Means: Economic growth
The pursuit of growth is the primary organizing principle
of the world economy
Major international institutions and organizations such as
the WTO, IMF, World Bank, the OECD, G8 and G20, and the UN National governments (North/South, East/West) Regional trading blocs in Europe, Asia and the Americas All multinational corporations Civil societies around the world
How well does the Growth Model perform? New jobs Corporate profits for reinvestment Strong tax base for public spending Rewards for individual success The promise of a better future for all
Two Problems with the Growth Model 1. Growth drives climate change The bulk of the world’s economic activity is driven by fossil fuels GHG emissions are increasing by 3% per year, in lockstep with growth Energy demand is expected to increase by 36% by 2035
Two Problems with the Growth Model 2. The Growth Model is open-ended No limits to growth are built into the model The world economy is already bumping up against
planetary biophysical constraints
De-coupling is not an option
An Alternative Model Acknowledges Earth’s finitude Functions in dynamic equilibrium with Earth’s biosphere Requires much less energy to maintain
Basic features of the SSE A stable population A constant stock of constructed and natural capital Population and capital stocks maintained by a minimum
matter/energy throughput
Structure of the SSE Model: three nested circles
Functions of the SSE components (inner circle) The Economy Market capitalism Efficient resource allocation Employment and optimal productivity Innovation
Functions of the SSE components (middle circle) The socio-political context Prevents runaway growth Provides meaning and direction to the forward motion
of human development Provides stability and predictability Mitigates extremes of wealth and poverty
Functions of the SSE components (outer circle) Earth’s biosphere Provides natural support for human society and all
economic activity Determines the ultimate size of the world economy, and the ultimate size of the human population
Economic Obstacles to the Transition Drivers of economic growth: Population increase North-South economic disparity Sovereign indebtedness
Political Obstacles to the Transition The paradigmatic commitment to growth Political expedience Short-term electoral success Medium-term political stability
Moral convenience: Growth offers an economic surrogate
for distributive justice
Other Obstacles to the Transition Institutional inertia Long lead time for implementation Peak oil
Initiating the Transition: Political Objectives Fill the leadership vacuum Shift the burden of proof Put the SSE on the international agenda Mobilize relevant constituencies
The World Polity in 2050 Micro-variability within a context of macro-stability A world economy transformed from one that is
consumptive, fast-moving and unpredictable to ...
An economy that is environmentally sustainable, stable
and more profoundly creative
In Sum The organizing principle of the Growth Model is the
pursuit of (quantitative) economic growth
The organizing principle of the SSE Model is the quest for
(qualitative) development
We cannot manage Earth’s biosphere, but we can learn to
manage ourselves.