Reply to Troy Vettese’s “Against Steady-State Economics” 1

by Herman Daly

Steady staters are used to being attacked by right-wing neoliberals. Attacks from left-wing neo-Marxists are new and require a reply. To put the matter simply, Marxists hate capitalism, and they mistakenly assume that steady-state economics is inherently capitalist. Vettese is a Marxist; ergo, Vettese hates steady-state economics.

Karl Marx

Marx noted injustices of capitalism and predicted political crises, yet failed to foresee limits to growth. (Image Source, Credit: John Jabez Edwin Mayal)

To spell this out, let’s begin by giving Marx due credit for emphasizing the reality of class exploitation under all heretofore existing economic systems, including especially capitalism, although excluding future idealized communism. Communism arrives after the Revolution in which the dictatorship of the proletariat seizes control of the enormous powers of capitalist production. With overwhelming abundance, bourgeois man is freed from scarcity-induced greed and acquisitiveness, giving birth to the “new socialist man” and the Marxist eschatology of heaven on earth.

History has not been kind to this Marxist fairy tale, except for the part about inequality under capitalist growthism (the part which doesn’t take a Marxist to recognize). Socialist growthism also had serious problems but let’s leave that aside. There is, however, a new problem with growthist economies that Marxists did not foresee in their eagerness to appropriate the abundance that capitalism historically created. Growth in a finite and entropic world now produces “illth” (depletion and pollution) faster than wealth, thus becoming uneconomic growth and threatening the overwhelming abundance required for the advent of the new socialist man.

This unexpected emergence of uneconomic growth, plus the economic failures and enormous political repressions of 20th-century communist states (not to mention the intellectual discrediting of dialectical materialism and historical determinism) has left the poor orphaned Marxists without an ideological home. As their red house collapsed, the green house down the street began to look attractive. After all, the greens do recognize major problems with capitalism, the big enemy, even if they are problems that Marxists have failed to recognize. So, these Marxists paint themselves green and hyphenate their name, calling themselves not eco-Marxists but, less specifically, “eco-socialists,” hoping to appeal to reasonable leftists in addition to fellow neo-Marxists. They aim to revive moribund Marxism by usurping the place of ecological economics.

Many greens, eager for allies, welcome the eco-Marxists and accept the red cuckoo eggs deposited in the green nest in the hope that the hatchlings will be more green than red. Steady-state economists certainly need friends and allies, but reading Vettese has reminded me of an aphorism my mother taught me: “Better alone than in bad company.”

Specifically, Vettese has deposited three Marxist cuckoo eggs in the steady-state nest: (1) Markets are bad; (2) Central planning is good;2 and (3) “Malthusianism” is wrong as demonstrated by Julian Simon. This is an odd collection of eggs that demonstrate the confusion of Vettese. If one accepts Simon’s view that there is no need to stop the drive for endless economic growth, then whence the necessity to abolish markets and establish central planning? The confusion hardly stops there. Let’s consider each egg in turn.

Markets are All Bad

The Market with a capital “M” is indeed a poor master and should be demoted to “markets” with a small “m” which can be good servants. Marxists tried to completely abolish all markets, along with money, in the early days following the Russian Revolution, and they attempted instead the direct physical requisitioning of resources and goods by central planners. This was the period of War Communism. It was a failure and was soon replaced by Lenin’s New Economic Policy, which restored significant reliance on markets, although not The Market. Today all countries, including the remaining communist ones, rely on markets to a significant degree, usually constrained by elements of collective action. Indeed, socialist-economic theorists, such as Oskar Lange in his On the Economic Theory of Socialism, have long shown how markets can serve collective goals as well as individualistic ones.

So much for the 20th-century economic history ignored by Vettese. What about 21st-century economic policy? Ecological economists recognize that we live in a capitalist market economy, like it or not. It is our historically given starting point. Trying to wipe the slate clean with the bloody shirt of Revolution is a very bad idea. Instead, it’s better to restrict the individualistic-capitalist market by two collective limits. First, given that the market does not count the cost of economic growth displacing the very ecosphere on which the economy (and life itself) depends, we must impose macro constraints on the size of the economy. Second, because a capitalist market economy generates extreme inequality in the distribution of income and wealth, a direct solution is to constrain the inequalities between minimum and maximum incomes, supplemented by wealth and inheritance taxes. Do eco-Marxists advocate limiting the range of income inequality by a maximum as well as a minimum income?

Graph of distribution of wealth within the market

How do we change these statistics? Through a bloody revolution? Or with policies conducive to a steady state economy? (Image: CC BY-SA 3.0, Credit: Guest2625)

A specific policy for achieving both limits (before they are self-limited, that is) is the cap-auction-trade approach to conserving and allocating basic resources. Vettese totally opposes cap-and-trade auctions because they make use of markets. He can almost be heard complaining, “How unfair of the auctioneer to sell to the highest bidder instead of my more deserving nephew! Putting a price on the free gifts of nature is crude and immoral too!”

While Vettese appears to be advocating for a more ethical use of basic resources, he fails to recognize that free gifts can also be scarce and require rationing. These preciously purist sensitivities lead Vettese to oppose any use of markets. No markets mean no exchange, no prices, no need for money, no specialization, and no division of labor. Well, who is going to abolish markets and centrally plan the production, allocation, and distribution of everything? Not Troy Vettese and his fellow pretenders who don’t have a clue, but “the new socialist man” who is still being materialized in the Marxist dialectical womb of history!

Markets are necessary for allocating goods but not sufficient. In addition to offering macro policies to correct the market’s scale and distribution failures, steady-state economics also emphasizes that many goods can be physically non-rival and legally non-excludable. Yet market allocation works only for rival and excludable goods. In other words, non-rival and non-excludable goods cannot be efficiently or fairly allocated by markets and require planning and collective action at a more micro than macro level.

Central Planning is Good

Macro limits on scale and distribution require considerable planning. Micro intervention in the allocation of non-market goods takes even more planning. Given all the economic planning needs, why bother to defend any role at all for markets? Why not centrally plan production and distribution of everything “for the good of society” as advocated by Vettese? First, remember the failed Soviet experiment with War Communism and collectivization of agriculture. Second, consider the following thought experiment.

Imagine the consequences of rival market goods (food, clothing, and shelter, plus a whole lot more) being freely distributed, according to the will of the citizens, as eco-Marxists envision. The democratic will of the citizens is to be expressed by voting. One decision concerns the amount of steel to produce. Citizens place their votes, but their collective decision leads to another question: How much of that steel will go to the production of, say, wood screws as opposed to a million other uses? The citizens vote again, and more subsequent questions arise: Of the wood screws, how many will be round-head, flat-head, slot-head, or Phillips-head? How many cadmium-plated; how many chrome-plated? Also, some screws are made of brass or aluminum, not steel. And for each type of screw, how many of each length and diameter? And who shall receive how many of each type? The citizens robustly and democratically vote again and again as conditions change, although most are unaware of the myriad special uses of different types of screws and may not even know which end of a screwdriver to hold.

Meanwhile those people who actually use screws and know their uses are unable to “vote” with their money in markets, and are thereby prohibited from conveying reliable information to producers about the mix of the infinitely many types of screw that would be most needed and most profitable to produce. Instead we have citizens spending absurd amounts of time “democratically” voting, mostly about things they don’t understand, while those with the most information about actual use-values of screws are “disenfranchised” by the absence of markets.

Ironically, eco-Marxists claim that in a planned economy, use-value, not exchange value, would be the only criterion for the production of goods and services. Use-value as judged mostly by non-users—what could possibly go wrong?

Carbon emissions

Vettese may oppose cap-and-trade auctions, but what is his solution for addressing resource scarcity? (Image: CC BY-SA 2.0, Credit: Bernard Bradley)

With so much effort wasted on attempting to plan the allocation of market goods, there will be little capacity left to plan the use of true public goods or to avoid the tragedy of the commons resulting from open-access exploitation of rival but non-excludable goods (such as oceanic fisheries). The larcenous market enclosure of non-rival goods, such as knowledge and information, will be difficult to avoid as well. Eco-Marxists expect that as the transition moves forward, more goods and services critical for meeting fundamental human needs would be freely distributed according to the democratic will of the citizens effected by the central planners.

Without markets (that is to say without supply and demand, prices, and yes, profit), there could be no self-employment. No one could identify a needed good or service and make a living by taking the initiative to provide it. Everyone would be a salaried employee of the state, giving the state monopsony power in the labor market and stifling initiative.

Most objections to market allocation would disappear if the underlying inequality of wealth and income distribution were limited by cap-and-trade auctions or ecological tax reform. Opposition would also dwindle if the throughput of energy and materials was restricted to an ecologically sustainable level. Instead of correcting excessive throughput and distributional inequality—which of course get reflected in distorted market prices and allocation—eco-Marxists attack market allocation itself, as if underlying sustainability and equality problems could be solved by breaking the mirror that reflects them.

What are the eco-Marxist policies for directly limiting throughput and distributional inequality? If they don’t like cap-and-trade auctions, distribution limits, or ecological tax reform, then let them suggest something better. However, preferably not the Revolution, the Singularity, the Rapture, or the advent of the New Socialist Man.

Malthusianism is an Evil Fiction

Marx’s hatred for Malthus is well known and prevalent among Marx’s disciples as well. For all his faults, it is hard to find a historically more influential figure than Thomas Robert Malthus. In addition to his enormous impact on Marx, Malthus was a key influence on Alfred Russell Wallace and Charles Darwin as they independently developed their theories of natural selection. Malthus’ theory of under-consumption also greatly influenced John Maynard Keynes’ theory of unemployment. Not to mention the whole neo-Malthusian birth control and planned parenthood movement. For Vettese, however, Malthusianism is merely the “false” idea that resource scarcity and overpopulation are real. For Marx poverty was caused only by class exploitation, and he rejected any cause stemming from nature as undermining the call for Revolution. Marx’s anti-Malthusian denial of natural resource limits and demographic pressure continue in Vettese and the faithful band of eco-neo-Marxists.

Curiously Vettese’s modern anti-Malthusian champion is the late Julian Simon, a staunch neoclassical economist of the most cornucopian variety, who vigorously opposed environmentalism. This third cuckoo egg (which is contradictory to the first two, as noted earlier) seems to have hatched prematurely and will likely get kicked out of the green nest, exposing Vettese as more red than green. Vettese accuses steady-state economists, specifically me, of having ignored Julian Simon’s critique: “Moreover, the neo-liberal Julian Simon developed a powerful critique of environmentalism in the 1980s, which Daly has not responded to” (p. 35). Actually, I published critical reviews of two of Simon’s books, and I do not have space here to repeat my response, so refer Vettese back to what he overlooked.3

An Issue of Representation

I’ll conclude with one last point, quite distinctive from the preceding. Vettese has taken me as representative of the entire field of steady-state economics. That is not fair to the many scholars whose steady-state findings have been quite independent of mine. Indeed, some of these scholars may sometimes call themselves “eco-socialists.”

Furthermore, given the central role of the steady state economy in ecological economics, Vettese’s attack on steady-state economics (were it successful) would also stain the broader field of ecological economics.

However, I am afraid that I have also treated Vettese as representative of eco-Marxists in general. That is not really fair to other Marxists or eco-socialists of various stripes, some of whom (John Bellamy Foster and Paul Burkett, for example) I have benefitted from reading, regardless of differences.

1 Vettese, T. 2020. Against steady-state economics. The Ecological Citizen 3:35–46.

2 On these two points Vettese is clear and emphatic: “…the only way to stop the drive for endless economic growth is to undo the necessity to participate in markets. That is, the conscious political control over production and distribution through central planning is the only way to stop and reverse capitalism’s ceaseless incorporation of the natural world” (pp. 37-8).

3 Daly, H. 1982. Review of The Ultimate Resource. Bulletin of the Atomic Scientists 38(1):39-42.
Daly, H. 1984. The resourceful earth. Environment 26:25, 27-28.

Herman Daly

Herman Daly is CASSE’s Chief Economist, Professor Emeritus (University of Maryland), and past World Bank senior economist.
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1 reply
  1. Chris Kuykendall
    Chris Kuykendall says:

    Keep Professor Daly away from the coronavirus!! Supplied with nitrile gloves!! Etc.

    I cannot think of anybody in any field who is so continually lucid in a non-obtuse way.

    The eggs part especially is great, clever writing (or should I say rejoinder).

    I just counted my (Austin, Texas, home retiree) bookshelf: Twelve authored or co-authored Daly books, plus the revised (1991) version of (1977) Steady-State Economics which was one of the twelve. So sort of twelve and a half. This does not count two Brian Czech books and a few Robert Costanza, etc., books.


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