What is Steady State Economics?
Steady state economics is an economy with “a constant flow of throughput at a sustainable (low) level, with population and capital stock free to adjust to whatever size can be maintained by the constant throughput.” Rather than pursuing perpetual GDP growth, it recognizes the economy as a subsystem of the finite biosphere, bounded by thermodynamic laws and ecological carrying capacity. The steady-state economy is defined in terms of constant stocks (a quantity measured at a point in time, like an inventory), not flows (a quantity measured over an interval of time, like annual sales), and seeks to maintain a desired level of stocks with a minimum throughput.
Steady-state economics considers cycles of production and consumption that take the surrounding ecosystem into account and try to achieve a state of equilibrium with it. The framework explicitly rejects the assumption that environmental problems can be solved through perpetual economic expansion, instead advocating for qualitative development—improvements in well-being, technology, and social arrangements—without quantitative physical growth.
Origins & Lineage
Herman Daly based his concept of a steady state economy on what classical economists described as the ‘stationary state,’ a term already mentioned by Adam Smith in ‘The Wealth of Nations.’ John Stuart Mill introduced the concept in Principles of Political Economy (1871), predicting a novel economic situation he called “the stationary state.”
The modern incarnation emerged in the early 1970s through convergent intellectual streams. In his 1971 magnum opus on The Entropy Law and the Economic Process, Romanian American economist Nicholas Georgescu-Roegen integrated the thermodynamic concept of entropy with economic analysis, and argued that all natural resources are irreversibly degraded when put to use in economic activity. Kenneth Boulding’s 1966 essay The Economics of the Coming Spaceship Earth argued that the standard model of an open economy failed to reflect the reality of limits to growth.
Herman Daly, building on the work of predecessors including John Stuart Mill, Frederic Soddy and Nicholas Georgescu-Roegen, began writing about the steady-state in the 1960s and his 1977 book Steady-State Economics still stands as the single most comprehensive treatment of the subject. Georgescu-Roegen was the teacher and mentor of Herman Daly, who went on to develop the concept of a steady-state economy to impose permanent government restrictions on the flow of natural resources through the economy.
First published in 1977, Daly’s volume caused a sensation because of his radical view that “enough is best,” and today his ideas are recognized as the key to sustainable development. Daly combined limits-to-growth arguments, theories of welfare economics, ecological principles, and the philosophy of sustainable development into a model he called steady state economics, later joining forces with Robert Costanza, AnnMari Jansson, Joan Martinez-Alier, and others to develop the field of ecological economics and establish the International Society of Ecological Economics in 1990.
How It’s Practiced
Steady state economics manifests primarily as an analytical framework and policy paradigm rather than a tangible spiritual or contemplative practice. Its application occurs through academic research, policy development, and institutional advocacy. Daly’s concept includes the ecological analysis of natural resource flows through the economy and recommends immediate political action to establish the steady-state economy by imposing permanent government restrictions on all resource use.
In his work on the steady-state economy, Daly advocates birth and resource depletion quotas alongside a “distributist institution” consisting of minimum and maximum limits on income and maximum limits on wealth, framing this as a question of distribution. The framework requires measuring both the benefits of physical growth and the costs—a dual accounting absent from conventional GDP metrics.
Practitioners engage through ecological economics curricula, participation in organizations like the Center for the Advancement of the Steady State Economy (CASSE), and advocacy for macroeconomic policy reform. Herman Daly served as senior economist in the environment department of the World Bank from 1988 to 1994, and prior to that taught economics for twenty years at Louisiana State University.
Steady State Economics Today
The Center for the Advancement of the Steady State Economy (CASSE) advances the steady state economy, with stabilized population and consumption, as a policy goal by educating citizens, organizations, and policy makers on the conflict between economic growth and environmental protection, ecological and economic sustainability, and national security. CASSE describes itself as the only think tank in the world dedicated to advancing the steady state economy.
The framework increasingly intersects with related movements. Degrowth, steady state and circular economics appear as distinctly different discourses but are highly compatible and comparable, sharing similar, often nearly identical principles and policy proposals. The predominantly European “degrowthers” and the predominantly American “steady staters” have been called to unite under the slogan “Degrowth Toward a Steady State Economy.”
Herman Daly’s textbook, Ecological Economics: Principles and Applications, remains the gold standard for steady-state economics. Herman Daly, 1938-2022, is posthumously regarded as the unquestioned champion of steady-state economics.
Common Misconceptions
Steady state economics is not a “zero-growth” stagnation in human progress. A failed growth economy and a steady-state economy are not the same thing; they are the very different alternatives we face. The framework distinguishes between quantitative growth (physical expansion) and qualitative development (improved well-being, knowledge, and efficiency).
It is not synonymous with degrowth, though the terms are often conflated. According to comparative studies, no differences of analytical substance exist between Daly’s steady-state economics and the later competing school of degrowth from continental Europe; only Daly’s bureaucratic top-down management of the economy fares badly with the more radical grassroots appeal of degrowth. Degrowth represents a period of controlled decline until a sustainable level is reached, which must then be maintained as a steady-state; degrowth ends in steady-state, and steady-state allows development by means of resource efficiency.
Nor is it strictly a conservative return to pre-industrial conditions. Critics usually object by arguing that resource decoupling, technological development, and market mechanisms are capable of overcoming resource scarcity, pollution, or population overshoot. Proponents counter that thermodynamic constraints place absolute limits on material throughput regardless of technological advances.
Finally, it is explicitly not religious or metaphysical doctrine, despite its inclusion in consciousness-oriented directories. It is grounded in biophysical science, thermodynamics, and ecological economics.
How to Begin
Start with Herman Daly’s Steady-State Economics (1977, revised 1991), which remains the foundational text. For a more accessible introduction, Beyond Growth (1996) and For the Common Good (with John Cobb, 1989) present the core arguments to general audiences. The textbook Ecological Economics: Principles and Applications provides the academic standard.
Engage with the Center for the Advancement of the Steady State Economy (steadystate.org), which publishes the Steady State Herald and maintains educational resources. Explore the journal Ecological Economics, co-founded by Daly, for peer-reviewed scholarship.
For historical context, read Nicholas Georgescu-Roegen’s The Entropy Law and the Economic Process (1971) and Kenneth Boulding’s 1966 essay The Economics of the Coming Spaceship Earth. Academic programs in ecological economics at the University of Maryland, University of Vermont, and other institutions offer formal study pathways.
Understand that steady state economics requires grappling with thermodynamics, ecology, and welfare economics—it is an intellectually demanding framework that challenges foundational assumptions of modern capitalism.