Economy Remembrance Sam Pizzigati

Herman Daly: An Economist Who Future Economists—and Societies—Will Dare Not Ignore

Without greater equality, Herman Daly helped us understand, our environment has no real shot at renewal.
Ecological economist Herman Daly, Emeritus Professor at the University of Maryland, School of Public Policy, speaks during the Growth and the Future of the Chesapeake Bay conference at Hood College in Frederick, Md., on January 13-14, 2015. The conference was hosted by the Bay Journal and featured experts on both economic and population growth and the issues they raise. (Photo by Will Parson/Chesapeake Bay Program)

By Sam Pizzigati / Inequality.org

Great thinkers, down through the ages, have regularly had to watch the movers and shakers of their epochs shrug off their core insights. One of our contemporary great thinkers who suffered that fate — the 84-year-old economist Herman Daly — died just last week.

Daly did not, to be sure, go totally unrecognized during his lifetime. In 1996, he won the “alternate Nobel Prize,” Sweden’s annual Right Livelihood Award.

“Herman Daly redefined economics, forging a way forward that does not include the destruction of our environment for economic gain,” Ole von Uexkull, Right Livelihood’s executive director, noted after Daly’s passing.

But that passing has, by and large, gone unnoticed, at least in the major media, with no obit appearing until well after his death.

Despite this media disinterest, Daly most certainly does figure to get much more attention in the years ahead. Why? The life’s work of this University of Maryland emeritus professor just happens to directly link the two supreme  challenges of our time: environmental collapse and economic inequality.

Herman Daly pioneered the discipline of ecological economics. He gave us a vision — in works always “crystal clear, conceptually compelling” — of a “steady state economy” that featured “redistribution and qualitative improvement instead of perpetual growth” sure to overload and overwhelm our environment.

We need, Daly believed, to reject “having ever more” and revolve our lives instead around having enough, and that means sharing, a virtue today, he observed, often derided as “class warfare.” But real “class warfare,” Daly noted a decade ago, “will not result from sharing, but from the greed of elites who promote growth because they capture nearly all of the benefits from it, while ‘sharing’ only the costs.”

And how could we arrive at a “steady state,” at an economy that develops qualitatively, not quantitatively? At one point, Daly spelled out a “top 10” list of policies to move us forward in that direction. High on that list: a call to limit the range of inequality by setting both a minimum and a maximum income.

Daly first advocated for this coupling in his 1991 book Steady-State Economics. He contrasted his “min-max” to the conventional economics notion that the poor don’t get hurt when the rich get richer and may actually end up benefiting from the expenditures wealthy people make.

“I argue to the contrary,” Daly wrote in his 1996 book Beyond Growth, “that there is a limit to the total material production that the ecosystem can support, and that it would be clearly unjust for 99 percent of the limited total product to go to only one person. I conclude, therefore, that there must implicitly be some maximum personal income.”

What maximum would be most appropriate?

“A range of inequality permitting a factor-of-ten range difference between the richest and poorest would serve the need for legitimate differences in rewards and incentives,” Daly explained, “while respecting the fact that we are persons-in-community, not isolated, atomistic individuals.”

“No one is arguing for an invidious, forced equality,” he added. “A factor of ten in inequality would be justified by real differences in effort and diligence and would provide sufficient incentive to call forth these qualities.”

But Daly didn’t see anything “sacred about a factor of ten” and felt a factor of twenty could serve just fine. And he saw the Income Equity Act proposed by then Minnesota congressman Martin Sabo — legislation that would limit the tax deduction a corporation could take for executive compensation to no more than 25 times the income of the corporation’s lowest-paid worker — as a step in the right direction.

A point of reference: Last year, the Economic Policy Institute reports, American corporate CEOs averaged 399 times the pay of our nation’s typical workers.

In Daly’s work as a whole, declare Hubert Buch-Hansen of the Copenhagen Business School and Max Koch of Sweden’s Lund University, we find “the most systematic consideration of maximum caps on wealth and income.” In that consideration, Daly didn’t limit his rationale for maximums to economics. The “sense of community” central to successful democracies, he argued, will always be “hard to maintain across the vast income differences current in the United States.”

“Rich and poor separated by a factor of 500 have few experiences or interests in common,” he continued, presciently adding, “and are increasingly likely to engage in violent conflict.”

Daly spent a half-dozen years of his career as a senior economist at the World Bank, and he would regularly place his advocacy for equity within a framework that might resonate within the economic mainstream.

“Private property,” he recurringly reflected, “loses its legitimacy if too unequally distributed.”

Daly also had a gift for explaining his economic precepts with vivid metaphors. Would our economy simply collapse if we no longer had grand rewards to incentivize ever more economic growth?

“The failure of a growth economy to grow is a disaster,” Daly explained in an interview this past July. “The success of a steady-state economy not to grow is not a disaster. It’s like the difference between an airplane and a helicopter. An airplane is designed for forward motion. If an airplane has to stand still, it’ll crash. A helicopter is designed to stand still, like a hummingbird.”

Daly spelled out concepts like these in a series of remarkable works that started nearly a half-century ago with a 1973 essay collection entitled Toward a Steady-State Economy. This body of work, unfortunately, would gain “little attention in the economic mainstream,” and governments today, as analyst Paul Abela quips, “are hardly forming an orderly queue seeking to embrace” Daly’s egalitarian steady-state approaches.

But Daly’s work has nurtured a new generation of economists who understand that success in a steady-state economy, as Abela reminds us, “would not be based on maximising profits and increasing GDP but rather on maximising human well-being.”

“In the coming decades, weather extremes will start to wreak havoc on our ability to provide the goods and services needed to provide for people’s needs,” he sums up. “In the midst of it all, Daly may well gain the widespread acclaim and reverence his ideas deserve.”

That acclaim, sadly, didn’t come in Daly’s lifetime. But that lack of recognition never punctured his good cheer and hopeful optimism that his economics profession would one day understand why we need to see the world through a different economic lens. That optimism comes through loud and clear in one of Daly’s last published works, a foreword to a widely acclaimed new Daly biography by the Canadian economist Peter Victor.

“I used to be a neoclassical growth economist,” Daly wrote. “I hoped that my contribution to the world would be to help increase the growth rate of GDP, especially in the poor regions of Latin America, but in wealthy countries too. But experience, arguments, and evidence changed my mind, and I became an ecological economist who advocates a steady-state economy with redistribution and qualitative improvement instead of perpetual growth.”

“Might not the same happen to other economists?” Daly went on. “Indeed, is it not now happening, although slowly? Why won’t the same evidence and logic that has convinced me (and a number of others) eventually convince many more?”

Let’s hope that evidence and logic turn out to have just the impact that Daly so indefatigably envisioned.


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Sam Pizzigati
Sam Pizzigati

Sam Pizzigati writes on inequality for the Institute for Policy Studies. His latest book: The Case for a Maximum Wage (Polity). Among his other books on maldistributed income and wealth: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970  (Seven Stories Press). 

5 comments

  1. PURPOSE, MEANING, AND THE ECON OF HERMAN DALY

    I love Herman Daly; have several of his books. Two autographed at alt. econ panels held in answer to the 1999 WTO meeting I’m proud to say became known as *the Battle of Seattle*. I also corresponded with him–he was kindly enough to reply, answering questions about econ theory.

    His rejection of econ dogma meant he was considered a heretic in his profession and condemned as irrelevant. All the more so since he overtly considered decidedly non-standard accounting factors like ecological functions and the importance of meaning for human life.

    In capitalist theory, the natural world, if noticed at all, is as simply a source and sink. Natural resources only become added value after processing. So then ecological destruction and devastation to human communities are considered externalities and therefore they don’t count–which is insane.

    Here’s a paragraph from the intro to his 1996 book Beyond Growth:
    “All traditional religions are the enemy of the same modern idolatry–that accidental man, through economic growth based on science and technology, is the true creator, and that the natural world is just a pile of instrumental, accidental stuff to be used up in the arbitrary projects of one purposeless species. If we cannot assert a more coherent cosmology than that, then we might as well close the store and go fishing–at least while the fish last.”

    Herman Daly was a prophet.

  2. Wynona La Duke pointed out this very thing years ago, when she talked about basing our LIVES on the Native American concept of Enough. She was ignored even harder than Mr. Daly was, but I liked it and started implementing it anyway. I am quite happy about it. Second hand stores, yard sales, a second hand Honda, vegetarianism and community gardening, sidewalk shopping (only here in Portland. Man those dumb Yuppies toss out some great stuff!) Barter ( I’ll be your astrologer if you’ll help me cut up this tree for firewood). Hit up lawn laying guys for pieces of grass to fill in my yard with. Share garbage collection costs with my neighbor—helps me cut down on garbage! Buy bulk. Cut the cable. I could go on. It’s fun. I’m old (78) and it’s fun to participate in my life. I certainly don’t think young women with 2 jobs and 3 kids have time to do this, but there are still plenty of people who could. We really don’t need to live so high on the hog that we make ourselves sick with surfeit. And it helps throw a wrench in the corporate economy that doesn’t serve anyone anyway, except the oligarchs. Cheers.

  3. No, the leading form of class war for the past quarter-century has been middle class vs. the poor, workers vs. those left jobless. It was a profound change in US culture when we decided to strip the jobless poor of their most basic human rights (UN’s UDHR) to food and shelter. Countless poor American families torn apart, and the life expectancy of the US poor fell below that of every developed nation. It doesn’t even matter that the middle class considers this fact inconsequential.

  4. We, average students, knuckleheads, knew these things back in the ’70s, without the help of learned PhD economists. If we knew it, the ruling class knew it, too. It’s easier to ignore the structural changes needed to avoid resource depletion and ecocide with their snouts in the trough. Eight billion of us cover the planet destroying habitat, filling the oceans with plastic, driving species to extinction, literally baking the ecosphere is the result of fossil fuels and a laissez-faire, competition-based economic system based on externalities.

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