Steady State Economy

Submitted By Vincent-Bouchard
Words: 1580
Pages: 7

Vincent Bouchard
Reflection 4

We could say of our ecosystem that it is in steady state. One could say that the only factor of change is men. We are the cause of changes; we are the root of growth and evolution in the recent times. Our ecology and society is jeopardized by our extreme production and consumption of natural resources. We need to be in harmony with nature for our society to be sustainable. We need our economy to be in a steady state. For so long we have lived in this fast growth economy, it is now hard to imagine what a steady state economy would be like.

Steady state economy

A steady state economy has a constant population, a constant level of production and consumption, and a constant level of capital (Daly, 2008). This is needed to match our ecosystem capacity. Without this steady state economy, the depletion of resources leads to multiple social consequences such as problem in the equal redistribution of resources.

Could we keep our infrastructure in a steady state economy?

If we would choose today to switch from a growth economy to a steady state economy, one of the most important consequences observed would be money shrinkage. Contrary to what M. Daly believe, which is that this shrinkage would happen gradually, I believe that such shrinkage would happen catastrophically quickly due to fear. This fear would be the fear of not having enough money after the shrinkage, the fear to become economy insolvable. This would lead to terrible momentous inequality on the short-term. People would become much more conservative and avaricious. They would limit their investment to the minimum.

This state of society would be good for our ecosystem and for society on the long run. We would not produce or consume more than necessary stopping the depletion of resources. Lending and borrowing would be severely limited removing the risk of important speculation and then reducing economical risk.

In reality however, such state of economy would be unachievable with the current population’s mentality. This idea of pure money market is impossible for now. People want to be rewarded for their efforts. People working in more specialized field ask for bigger monetary reward. Quickly they would hold the majority of the wealth in a steady state economy. Action to redistribute income intensively would not be sustainable as communism showed us: Production, motivation, development, and happiness would decrease in the long run.

A solution: Social Businesses
While today’s people mentality is not ready for such important change, other possibilities are proposed by theorists. One of them, M. Yunus suggests the creation of social businesses. The underlying objective of these businesses would be to create social benefit for those whose life it touches. M. Yunus says, “The company itself may earn a profit, but the investors who support it do not take any profits out of the company except recouping an amount equivalent to their original investment over a period of time”. These companies would not act as charity; they would aim to recover their full costs while achieving their social objectives. When the company produces more than its objectives, the surplus is reinvested in the company for its development. Theoretically, investor who invested in the company would get their money back 5 to 10 years later without any surplus (Yunus, 2007). These investors would be looking for satisfaction from the philanthropic act instead of the money reward.
Typically, M. Yunus predict that social businesses will compete in their ability to give back to the society. For this to happen, a new stock market, called “social stock market”, would be created to allow for better comparison. Also, Muhammad Yunus divide social businesses into two groups: companies providing a social benefit and companies owned by poor or disadvantaged people. In the latter case, the goal of the business would be to redistribute earnings as dividend to poor. Such model of business