Abstract
There are at least three basic definitions of the steady state:
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1.
The steady state as a situation in which both production measured through Gross Domestic Product (GDP) and population are constant over time. I call this situation the stationary state.2
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The steady state defined as a physical concept. For renewable resources the term indicates a situation in which human use of nature (expressed in physical terms) equals natural production.3 For non-renewable resources, this situation is one in which the stock-depletion ratio is constant.4 I use the term physical steady state to refer to a situation in which both the stock of renewable resources and the stock-depletion ratio for non-renewable resources are constant.5
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3.
The steady state as a situation in which production, consumption and investment grow by a constant percentage, resulting in a constant capital-output ratio. In this definition, which is the one economists are most familiar with, production is measured in terms of GDP. I refer to this situation as a state of steady growth. In this chapter I will look at the stationary state and the physical steady state respectively.
This chapter is a revised version of Chapter 3 from Heijman W.J.M., 1991. Depletable resources and the economy. Wageningen Economic Studies (WES) 21. Pudoc, Wageningen.
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J.S. Mill, 1973 (1848). Principles of political economy. Kelley, Clifton.
In terms of Chapter 13, this means that, after infinite time of depletion, rest R of the renewable natural resource stock equals the initial stock.
Regardless of a rest R of the resource after an ‘infinite time’ of depletion. See Chapter 13.
K.E. Boulding, 1966. The economics of the coming spaceship earth. In: W.A. Johnson and J. Hardesty (eds), 1971. Economic growth vs. the environment. Wadsworth, Belmont (Cal.). N. Georgescu-Roegen, 1971. The entropy law and the economic process. Harvard University Press, Cambridge (Mass.). H.E. Daly, 1977. Steady-state economics: the economics of biophysical equilibrium and moral growth. Freeman, San Francisco.
In fact the tendency of the rate of profit to fall is the Marxist counterpart of the tendency of the marginal product of capital to decrease in usual neoclassical theory. One might even consider the latter the cause of the former.
J. Tinbergen, 1987. Kunnen wij de aarde beheren? Kok Agora, Kampen. J. Tinbergen, De verdeling van hulpbronnen over toekomstige generaties. Economisch Statistische Berichten, 74 (1989), nr 3715, p. 677.
See, for example, Perman R., Y. Ma and J. McGilvray, 1996. Natural resource & environmental economics. Longman, London.
K. Zoeteman, 1989. Gaiasofie: anders kijken naarevolutie, ruimtelijke ordening en milieubeheer. Ankh-Hermes, Deventer.
The ‘net natural production’ of an ecosystem during a certain period is the difference between gross natural production, i.e. the production by photosynthesis and the respiration by plants and animals, excluding respiration by man. The ‘growth of nature’ is the difference between net natural production and man’s respiration, i.e. the human process of production and consumption.
The solution of this differential equation is: Further dn t/dt is at the maximum for: and.
As long as the optimum steady state has not been reached, human use of nature should be less than natural production. In that case there will be a positive growth of nature if: Suppose, for example: g t = Ya(n c — n t)n t with 0<Y<1 for n t<n t and y= 1 for n t=n c. From this it follows: Further it is assumed that the optimum steady state will have been reached within T years. So, by using
If the elasticity of substitution between capital and a non-renewable resource is greater than or equal to unity, it is possible to sustain a positive level of consumption. This is known in the literature as the Hartwick rule.
This is based on the assumption that the stock of renewable resources can not be substituted by the stock of man-made capital or the stock of non-renewable resources.
Meadows D.L., D. Meadows, J. Randers and W. Behrens, 1972. The limits to growth: a report for the Club of Rome Project on the predicament of mankind. Dutch version, Het Spectrum, Utrecht.
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Heijman, W.J.M. (1998). Steady-State Economics. In: The Economic Metabolism. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-5038-5_17
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