In the 1960s, when economic growth became the most important goal of government economic policy, economist Herman Daly, who died at the age of 84, saw a different future. He called for a shift in mindset to make our economies more compatible with finite energy and the limits of Earth’s resources.
Sixty years ago, questioning economic growth was considered heresy, and Herman faced much opposition, but his ideas became the foundation for many new approaches, such as donut economics and economics. of well-being, placing the economy in earth systems and in society.
In his first book, Toward a Steady-State Economy (1973), Herman envisioned an economy based on the understanding that it was rooted in the biosphere and totally dependent on it for all materials and energy and for the deposition of its waste. He called this flow of materials and energy through an economy “flow”.
Herman was not the first economist to advocate a steady-state economy, but he was the first to define it. He recognized that policies would be needed to limit the physical scale of economies – their use of energy and materials – within planetary boundaries; ensuring a fair distribution of income and wealth; and to make economies more efficient in the way resources are allocated to the production of different goods and services.
In such an economy, the “flow” of materials and energy is kept constant within the limit of the capacity of the biosphere to regenerate resources and assimilate waste. The size of the human population and the stock of capital are then free to adjust to whatever size the constant flow can maintain. Basically, this flow is governed by the laws of physics and the life sciences, constituting the fundamental principle of what is now called ecological economics, Herman being its most influential contributor.
Having spent several years working in Brazil and the Environment Department of the World Bank, where he developed his “three rules for sustainable development” and worked unsuccessfully with others to try to change the system of the bank’s GDP measure to reflect environmental costs, Herman was well aware of the extreme inequalities between and within countries.
He was convinced that in rich countries economic growth had become “uneconomic” in the sense that its costs exceeded its benefits, and he used the Index of Sustainable Economic Well-Being, which he developed with John Cobb Jr and Clifford Cobb in his book For the Common Good: Reorienting the Economy towards Community, the Environment and a Sustainable Future (1989) to show this. Economic growth could continue for some time in the poorest countries, but if all countries followed this path, the consequences would be catastrophic.
It is the fate of most economists that their ideas become obsolete, however relevant they may be to the times in which they live. This is not the case with Herman. The pressure of the human economy on the natural world has exceeded what can be sustained.
Born in Houston, Texas to Mildred (née Herrmann), an accountant, and Edward Daly, who ran a hardware store, Herman was taught at an early age to treat people of all kinds fairly. From his Methodist mother, he developed a strong commitment to Christianity that informed his ethics and worldview throughout his life. Even those who disagreed with Herman were impressed by his kindness and courteous demeanor.
At seven, he contracted poliomyelitis and lost the use of his left arm. After unsuccessful efforts over the years to fix it, his arm was amputated shortly before he entered Lamar High School, Houston. From this experience, Herman learned that some things are truly impossible, including, as he concluded later in life, unlimited economic growth.
He earned a BA in economics from the city’s Rice Institute (now Rice University) in 1960. He chose economics because he believed it was rooted in science and the humanities and it didn’t want to choose between them. He discovered, on the contrary, that it was based on neither. Nonetheless, Herman stuck with the subject, earning his doctorate from Vanderbilt University, Nashville, Tennessee, in 1967. It was there that he was taught by renowned economist Nicholas Georgescu-Roegen, who introduced Herman to the second law of thermodynamics and its relevance. to the economy, i.e. all natural resources are degraded when used in economic activity.
While at Vanderbilt, Herman met Marcia Damasceno, a Brazilian student, a week before she returned home. Six months later, while traveling to Uruguay for his doctoral research, he arrived unexpectedly in Rio de Janeiro to visit her. Five weeks later, they got engaged and married in 1963.
The following year, Herman was appointed assistant professor of economics at Louisiana State University. He became a full professor in 1973 and remained there until 1988 when, finding his critical approach to standard economics increasingly at odds with that of the department, he left for the World Bank.
At the bank, he tries to have his vision of the economy adopted as a subsystem of the biosphere, but without success. However, in close collaboration with its director, the environmentalist Robert Goodland, Herman has done much to improve the bank’s consideration of the environmental consequences of major projects.
Upon his departure in 1994, Herman gave a widely read speech recommending what the bank should do to improve its internal and external operations. Such actions did not make him popular but, as Herman wrote in a preface to my 2022 book Herman Daly’s Economics for a Full World: His Life and Ideas, arguing against economic growth was like stinging “a big hornet’s nest with a short stick… This grossly upsets a very broad and comfortable consensus.
In his later years, Herman believed that at least some of his recommendations had been accepted, but he also believed that the World Bank, IMF and World Trade Organization had gone too far in promoting capital mobility under under the guise of free trade, and should all be downgraded.
He ended his career at the University of Maryland, retiring in 2010.
Throughout his life, Herman worked to alert humanity to the impact of unrestricted growth and to get people to think about economics in a different way. That a new generation of scholars, ecological economists and ecosocialists had taken up the slack gratified him immensely, and he remained optimistic to the end.
He is survived by Marcia, their two daughters, Karen and Terri, three grandchildren, and his sister, Denis.