Steady-State Economy: Political Philosophy



In a prior post (here), I commented that the Political Philosophy of a Steady-State Economy "remained to be worked out". What I mean by the comment is that when we work through all the popular political philosophies (see table in the Notes below) and end up at Steady-State Economy and General Systems Philosophy, we start to run into some contradictions. The graphic above summarizes the problem (there are actually six growth modes that contain the three above--see below).

We know the history of Societal Collapse, it has happened before and is obviously not sustainable. We also hypothesize that unstable exponential growth will eventually reach limits on a Finite Planet (the Limits to Growth) and create living conditions that are not sustainable. Growth Limits, however, are a hypothesis that can't be proven until it is too late.

From General Systems Theory we know that the only way to create a Steady-State Economy is by reducing growth rates and stabilizing the system (the squiggly line in the graphic above). The problem is that (1) we do not know how, from a policy perspective, to limit growth rates and (2) politicians cannot run on a no-growth (or De-growth) platform.  

Some societies are currently approaching what is predicted to be a steady state, but the slowing of growth is typically misinterpreted as Economic Stagnation.

I believe that the best thing we can do is to use stabilized versions of Systems Models to create Policy Wedges for political action. Identify the system states that are not on the attractor path for a Steady State Economy and find ways to bring them into line (bending the curve).

Notes

Comparison of Political Philosophies

The AI System ChatGPT, when asked to compare various political philosophies, produced the table above.


System Growth Modes


There are six growth modes (graphic above) that can be generated with the Leibenstein Equation:



Where Q is Aggregate Output (GDP), N is Population, c are constants to be estimated by Principal Components Analysis (PCA) and S is the system state.


The Leibenstein Equation is a realization of the Malthusian Model. In Systems Theory, the Leibenstein Malthusian Equation is an historical controller, in this case for population growth.  The Leibenstein Malthusian Equation can be generalized in the table above to include many other possible controllers that can be emphasized within an Economic system over a particular time period. For example, (Q-P) is the Liberal Market Controller and (Q-L) is the Marxian Labor Controller. Which controller dominates over a specific historical period is a matter for statistical estimation, an important strength of the Generalized Leibenstein Equation.

This blog presents various growth modes in particular countries over specific historical periods (where data is available--for early historical periods and for complete coverage of the period 0-2000, data is only available for Leibenstein Malthusian Equation--see the Boiler Plate).

You can run the basic Leibenstein model here, the Expanded Leibenstein model here and the Leibenstein DCM Controller Model here.

References


  1.  Harvey Leibenstein (1960). Economic Backwardness and Economic Growth: Studies in the Theory of Economic Development John Wiley & Sons.

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