Physical Features
The steady state economy is an entirely physical concept. Any non-physical components of an economy (e.g., knowledge) can grow indefinitely. But the physical components (e.g. supplies of natural resources, human populations, and stocks of human-built capital) are constrained by the laws of physics and beholden to ecological relationships. An economy could reach a steady state after a period of growth or after a period of downsizing or degrowth. The objective is to establish it at a sustainable scale that does not exceed ecological limits.
Economists use gross domestic product or GDP to measure the size of an economy in dollars or some other monetary unit. Real GDP – that is, GDP adjusted for inflation – in a steady state economy remains reasonably stable, neither growing nor contracting from year to year. Herman Daly, one of the founders of the field of ecological economics and a critic of neoclassical economics, defines a steady state economy as
...an economy with constant stocks of people and artifacts, maintained at some desired, sufficient levels by low rates of maintenance "throughput", that is, by the lowest feasible flows of matter and energy from the first stage of production to the last stage of consumption."
A steady state economy, therefore, aims for stable or mildly fluctuating levels in population and consumption of energy and materials. Birth rates equal death rates, and saving/investment equals depreciation.
Read more about this topic: Steady State Economy
Famous quotes containing the words physical and/or features:
“To survive there, you need the ambition of a Latin-American revolutionary, the ego of a grand opera tenor, and the physical stamina of a cow pony.”
—Billie Burke (1885–1970)
““It looks as if
Some pallid thing had squashed its features flat
And its eyes shut with overeagerness
To see what people found so interesting
In one another, and had gone to sleep
Of its own stupid lack of understanding,
Or broken its white neck of mushroom stuff
Short off, and died against the windowpane.””
—Robert Frost (1874–1963)