Measuring Progress Towards a Socially Sustainable Steady State Economy Daniel W. O’Neill Submitted in accordance with the requirements for the degree of Doctor of Philosophy University of Leeds School of Earth and Environment July 2012 The candidate confirms that the work submitted is his own, except where work which has formed part of jointly-authored publications has been included. The contribution of the candidate and the other authors to this work has been explic- itly indicated below: Section 1.2 of this thesis includes background material that was published in Chapter 2 of O’Neill et al. (2010). This chapter was written by the can- didate and Rob Dietz, and draws on a presentation given by Peter Victor at the Steady State Economy Conference in Leeds. The candidate confirms that appropriate credit has been given within the thesis where reference has been made to the work of others. This copy has been supplied on the understanding that it is copyright material and that no quotation from the thesis may be published without proper acknowl- edgement. The right of Daniel W. O’Neill to be identified as Author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. © 2012 The University of Leeds and Daniel W. O’Neill – ii – Acknowledgements Writing a Ph.D. thesis is in many ways a solitary pursuit. Nevertheless, many wonderful people have helped me along the way, and without their advice and support this work would not have been possible. First and foremost, I would like to thank my supervisors—Tim Foxon, Julia Steinberger, and Peter Victor—for their advice, encouragement, and detailed comments. Their thoughtful reflec- tions have greatly improved the quality of my work and challenged me to look beyond my own preconceptions. Second, I would like to thank everyone involved in the organisation of the Steady State Economy Conference and the report and book that have followed it. The full list of those involved is too long to provide here, but a very special thank you goes to David Adshead, Lorna Arblaster, Claire Bastin, Nigel Jones, and Rob Dietz. I am particularly grateful to Rob for our many long and enjoyable conver- sations, and for the humour which he has always been able to find in our work. Third, I would like to thank the organisations and individuals who have funded my research. These include the University of Leeds (by way of an Inter- national Research Scholarship), the Center for the Advancement of the Steady State Economy, and two kind philanthropists who took a special interest in my work. For additional help and feedback I would also like to thank Dave Abson, Brian Czech, the two anonymous reviewers of my “measuring progress” paper, and the participants in the Indicators for Degrowth workshop at the second in- ternational degrowth conference in Barcelona. Finally, I would like to thank my friends in Leeds for five truly interna- tional years, my housemates (past and present) for their fantastic cooking and lively dinnertime conversation, and my parents (Michael and Nancy) for their never-ending love and support. Without all of you, this journey would not have been possible. – iii – Abstract Within this thesis, I investigate how progress towards a socially sustainable steady state economy could be measured at the national scale. Following a re- view of four possible approaches, I suggest that separate biophysical and social indicators represent the best approach, but that a unifying conceptual framework is required to choose appropriate indicators and interpret the relationships be- tween them. I propose a framework based on ends and means, and a set of bio- physical and social indicators within this framework. The biophysical indicators are derived from Herman Daly’s definition of a steady state economy, and meas- ure the major stocks and flows in the economy–environment system. The social indicators are based on the stated goals of the degrowth moment, and measure the functioning of the socio-economic system, and how effectively it delivers human well-being. I use these indicators to measure how close ~180 countries are to the idea of a steady state economy over a ten-year time period (1997–2007), and explore whether there is any relationship between a country’s proximity to such an econ- omy and its overall social performance. I find that the majority of countries in the world are biophysical growth economies, although a small number of coun- tries achieve biophysical stability over the analysis period (e.g. Denmark, France, Japan, Poland, Romania, and the United States). In general, I find that countries with stable stocks and flows perform better on social indicators than countries with either growing or degrowing stocks and flows. However, I also find that social performance is higher in countries with greater per capita resource use. Taken together, these findings suggest that while a biophysically stable economy may be socially sustainable, the level of resource use required for a “good life” may be too high to extend to all people on the planet without surpassing ecologi- cal limits. – iv – Table of Contents 1. Introduction ............................................................................................................. 1 1.1. Economic Growth........................................................................................... 1 1.2. The Critique of Economic Growth .............................................................. 4 1.2.1. Economic Growth is Not Sustainable ................................................. 5 1.2.2. Economic Growth is No Longer Desirable......................................... 8 1.3. The Call for a Steady State Economy......................................................... 11 1.4. Research Questions ...................................................................................... 12 1.5. Organisation.................................................................................................. 14 2. What is a Steady State Economy? ....................................................................... 15 2.1. Defining a Steady State Economy .............................................................. 15 2.2. Defining Degrowth....................................................................................... 18 2.3. The Complementary Nature of Degrowth and a SSE ............................. 20 2.4. Achieving a Steady State Economy............................................................ 25 2.4.1. Limiting Resource Use and Waste Production................................ 27 2.4.2. Stabilising Population ......................................................................... 29 2.4.3. Limiting Inequality.............................................................................. 30 2.4.4. Securing Full Employment................................................................. 32 2.4.5. Reforming the Monetary System....................................................... 33 2.4.6. Rethinking Business and Investment................................................ 35 2.4.7. Addressing Global Relationships ...................................................... 37 2.4.8. Dismantling the Culture of Consumerism....................................... 39 2.4.9. Changing the Way We Measure Progress........................................ 41 2.5. Summary........................................................................................................ 42 3. How Should Progress Towards a Steady State Economy Be Measured? ..... 44 3.1. What Are Indicators? ................................................................................... 44 3.2. To Measure or Not to Measure? ................................................................. 46 3.3. Four Possible Approaches........................................................................... 48 3.3.1. Gross Domestic Product...................................................................... 49 3.3.2. The Index of Sustainable Economic Welfare.................................... 51 3.3.3. Biophysical and Social Indicators...................................................... 54 3.3.4. A Composite Indicator........................................................................ 57 3.4. Recommended Approach............................................................................ 59 3.5. Methodological Steps................................................................................... 61 3.6. Summary........................................................................................................ 62 4. Interpreting the Definition of a Steady State Economy ................................... 64 4.1. Stocks, Flows, and Scale .............................................................................. 64 4.2. The Issue of Aggregation............................................................................. 69 4.3. Renewable and Non-renewable Resources............................................... 73 4.4. The Issue of Trade ........................................................................................ 76 4.4.1. Stable Domestic Extraction and Domestic Outflows ...................... 78 – v – 4.4.2. Stable Direct Inputs and Direct Outputs...........................................79 4.4.3. Stable Consumption.............................................................................80 4.4.4. Stable Throughput ...............................................................................82 4.4.5. Which Approach to Choose?..............................................................85