In the 1960s, when economic growth became the single most important objective of government economic policy, the economist Herman Daly, who has died aged 84, saw a different future. He called for a change in thinking to make our economies more consistent with the finite energy and resource limits of the Earth.
Sixty years ago it was considered heresy to question economic growth, and Herman faced much opposition, but his ideas have become a foundation for many new approaches, such as doughnut economics and wellbeing economics, by placing the economy within the Earth’s systems and in society.
In his first book, Toward a Steady-State Economy (1973), Herman envisaged an economy based on an understanding that it was embedded in the biosphere and totally dependent on it for all materials and energy and for depositing its wastes. He called this flow of materials and energy through an economy “throughput”.
Herman was not the first economist to argue for a steady-state economy, but he was the first to define it. He recognised that it would require policies to limit the physical scale of economies – their use of energy and materials – to within planetary boundaries; to ensure a just distribution of incomes and wealth; and for making economies more efficient in how resources are allocated to the production of different goods and services.
In such an economy, “throughput” of materials and energy is held constant within the capacity of the biosphere to regenerate resources and assimilate waste. The size of the human population and the stock of capital is then free to adjust to whatever size the constant throughput can maintain. Crucially, this throughput is governed by the laws of physics and the life sciences, constituting the core principle of what is now known as ecological economics, with Herman its most influential contributor.
Having spent several years working in Brazil and in the environment department at the World Bank, where he developed his “three rules for sustainable development” and worked with others, unsuccessfully, to try to change the bank’s system for measuring GDP to reflect environmental costs, Herman was well aware of the extreme inequalities among and within countries.
He was convinced that in rich countries, economic growth had become “uneconomic” in the sense that its costs were exceeding its benefits, and he used the Index of Sustainable Economic Welfare, which he developed with John Cobb Jr and Clifford Cobb in his book For the Common Good: Redirecting the Economy Toward Community, the Environment and a Sustainable Future (1989) to show it. Economic growth could continue for a while in poorer countries, but if all countries followed this path, the consequences would be catastrophic.
It is the fate of most economists that their ideas become dated, however relevant they were to the times in which they lived. Not so with Herman. The pressure of the human economy on the natural world has surpassed what can be sustained.
Born in Houston, Texas, to Mildred (nee Herrmann), a bookkeeper, and Edward Daly, who ran a hardware store, Herman was taught from 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 gentlemanly demeanour.
Aged seven, he contracted polio, and lost the use of his left arm. After unsuccessful efforts over the years to repair it, his arm was amputated shortly before he entered Lamar high school, Houston. From this experience Herman learned that some things really are impossible, including, as he concluded in later life, unlimited economic growth.
He obtained a BA in economics from the Rice Institute (now Rice University) in the city in 1960. He chose economics because he thought it was grounded in the sciences and the humanities and he did not want to choose between them. He found, instead, that it was grounded in neither. Nonetheless, Herman stayed with the subject, receiving his PhD from Vanderbilt University, Nashville, Tennessee, in 1967. It was there that he was taught by the renowned economist Nicholas Georgescu-Roegen, who introduced Herman to the second law of thermodynamics and its relevance to economics, that is, all natural resources are degraded when used in economic activity.
While at Vanderbilt, Herman met Marcia Damasceno, a Brazilian student, a week before she was due to return home. Six months later, on his way to Uruguay for his doctoral research, he arrived unannounced in Rio de Janeiro to visit her. Within five weeks they were engaged, and they married in 1963.
The following year Herman was appointed assistant professor in economics at Louisiana State University. He rose to full professor in 1973 and remained there until 1988, when, finding his critical approach to standard economics increasingly at odds with the department’s, he left for the World Bank.
At the bank, he tried to have his view of the economy as a sub-system of the biosphere adopted, but without success. However, working closely with his director, the ecologist Robert Goodland, Herman did much to improve the bank’s consideration of the environmental consequences of large projects.
On leaving 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 foreword to my 2022 book Herman Daly’s Economics for a Full World: His Life and Ideas, arguing against economic growth was like poking “a big hornets’ nest with a short stick … It rudely upsets a very large and comfortable consensus.”
In his later years Herman thought that at least some of his recommendations had been accepted, but he also thought that the World Bank, the IMF and the World Trade Organization had gone too far in promoting the mobility of capital 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 tried hard to alert humanity to the impact of unrestricted growth, and to have people think about the economy in a different way. That a new generation of scholars, ecological economists and ecosocialists have picked up the baton gratified him enormously, and he remained hopeful to the end.
He is survived by Marcia, their two daughters, Karen and Terri, three grandchildren, and his sister, Denis.
• Herman Edward Daly, ecological economist, born 21 July 1938; died 28 October 2022