This paper addresses the question of whether a capitalist economy with interest-bearing money can... more This paper addresses the question of whether a capitalist economy with interest-bearing money can ever sustain a ‘stationary’ (or non-growing) state, or whether, as often claimed, capitalism has an inherent ‘growth imperative’ which arises from the creation of money as interest-bearing debt. We outline the development of a dedicated system dynamics model for describing Financial Assets and Liabilities in a Stock-Flow consistent Framework (FALSTAFF) and use this model to explore the potential for stationary state outcomes in an economy with balanced trade, debt-based money, and private equity. Contrary to claims in the literature, we find that neither credit creation nor the charging of interest on debt create a ‘growth imperative’ in and of themselves. We show further that it is possible to move from a growth path towards a stationary state without either crashing the economy or dismantling the system. Our model supports critiques of austerity and underlines the value of countercycl...
Understanding sustainable prosperity is an essential but complex task. It implies an ongoing mult... more Understanding sustainable prosperity is an essential but complex task. It implies an ongoing multidisciplinary and transdisciplinary research agenda. This working paper sets out the dimensions of this task. In doing so it also establishes the foundations for the research of the ESRC-funded Centre for the Understanding of Sustainable Prosperity (CUSP). Our guiding vision for sustainable prosperity is one in which people everywhere have the capability to flourish as human beings – within the ecological and resource constraints of a finite planet. CUSP’s work will explore not just the economic aspects of this challenge, but also its social, political and philosophical dimensions. It will address the implications of sustainable prosperity at the level of households and firms; and it will explore sector-level and macro-economic implications of different pathways to prosperity. It will pay particular attention to the pragmatic steps that need to be taken by enterprise, government and civi...
Among Herman Daly’s many contributions to ecological economics none is likely to have a greater a... more Among Herman Daly’s many contributions to ecological economics none is likely to have a greater and more lasting significance than his analysis of and advocacy for a steady-state economy. As is typical of so much of his work, Professor Daly has been inspired by and has built on the work of predecessors including most notably John Stuart Mill, Frederic Soddy and Nicholas Georgescu-Roegen. But he has also brought his own imagination and insights as well as his remarkable capacity for expressing complex ideas in simple terms. It is fair to say that he has virtually single-handedly ensured that the steady-state economy remains an alternative to be considered in discussions of the future of the economy and society.
This milestone provides a broad overview of model development under Work Package 205 of the WWWfo... more This milestone provides a broad overview of model development under Work Package 205 of the WWWforEurope project. It describes briefly the challenge of modelling combined economic, ecological and financial systems and sets out a series of objectives for modelling the socio-economic transition towards sustainability. It highlights modelling needs in relation to full employment, financial stability, and social equity under conditions of constrained resource consumption and ecological limits. The paper also provides a broad overview of the literatures relevant to the task in hand. It then describes two separate modelling approaches, developed by two different teams within WWWforEurope. One of these approaches, led by WIFO, uses a Dynamic New Keynesian (DYNK) model to explore the implications of different long-run equilibrium paths for energy consumption. The other approach, led by Surrey in collaboration with York University, is motivated primarily by the desire to integrate a comprehe...
The “product” travel cost model (PTC) improves supply and substitution specification in travel co... more The “product” travel cost model (PTC) improves supply and substitution specification in travel cost models (TCM), eliminating common biases in estimating welfare effects of qualitative changes at specific sites. Angling sites and participation are modeled as a system of product supplies and demands; changes in angling quality at specific sites are evaluated as changes in the supplies of relevant products. PTC assumes that each angler chooses from a selection of angling opportunities (i.e., products) based on access cost (i.e., travel cost) and the nature of each angling product. Key factors defining angling products (e.g., success rate, fish size) are derived from angler travel patterns: Anglers are assumed indifferent between sites providing identical angling products, so choose the lowest cost site. Therefore, the benefits of any management action not only differ from average welfare-change values, but are also site-specific. Changing angling attributes at a site changes its angli...
Report to the United Nations for the 2012 Rio+ 20 Conference, 2011
Executive Summary The world has changed dramatically. We no longer live in a world relatively emp... more Executive Summary The world has changed dramatically. We no longer live in a world relatively empty of humans and their artifacts. We now live in the “Anthropocene”[3], a full world where humans are dramatically altering our ecological life-support system [4]. Our traditional economic concepts and models were developed in an empty world. If we are to create sustainable prosperity, if we seek “improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities”[5], we are going ...
This paper addresses the question of whether a capitalist economy with interest-bearing money can... more This paper addresses the question of whether a capitalist economy with interest-bearing money can ever sustain a ‘stationary’ (or non-growing) state, or whether, as often claimed, capitalism has an inherent ‘growth imperative’ which arises from the creation of money as interest-bearing debt. We outline the development of a dedicated system dynamics model for describing Financial Assets and Liabilities in a Stock-Flow consistent Framework (FALSTAFF) and use this model to explore the potential for stationary state outcomes in an economy with balanced trade, debt-based money, and private equity. Contrary to claims in the literature, we find that neither credit creation nor the charging of interest on debt create a ‘growth imperative’ in and of themselves. We show further that it is possible to move from a growth path towards a stationary state without either crashing the economy or dismantling the system. Our model supports critiques of austerity and underlines the value of countercycl...
Understanding sustainable prosperity is an essential but complex task. It implies an ongoing mult... more Understanding sustainable prosperity is an essential but complex task. It implies an ongoing multidisciplinary and transdisciplinary research agenda. This working paper sets out the dimensions of this task. In doing so it also establishes the foundations for the research of the ESRC-funded Centre for the Understanding of Sustainable Prosperity (CUSP). Our guiding vision for sustainable prosperity is one in which people everywhere have the capability to flourish as human beings – within the ecological and resource constraints of a finite planet. CUSP’s work will explore not just the economic aspects of this challenge, but also its social, political and philosophical dimensions. It will address the implications of sustainable prosperity at the level of households and firms; and it will explore sector-level and macro-economic implications of different pathways to prosperity. It will pay particular attention to the pragmatic steps that need to be taken by enterprise, government and civi...
Among Herman Daly’s many contributions to ecological economics none is likely to have a greater a... more Among Herman Daly’s many contributions to ecological economics none is likely to have a greater and more lasting significance than his analysis of and advocacy for a steady-state economy. As is typical of so much of his work, Professor Daly has been inspired by and has built on the work of predecessors including most notably John Stuart Mill, Frederic Soddy and Nicholas Georgescu-Roegen. But he has also brought his own imagination and insights as well as his remarkable capacity for expressing complex ideas in simple terms. It is fair to say that he has virtually single-handedly ensured that the steady-state economy remains an alternative to be considered in discussions of the future of the economy and society.
This milestone provides a broad overview of model development under Work Package 205 of the WWWfo... more This milestone provides a broad overview of model development under Work Package 205 of the WWWforEurope project. It describes briefly the challenge of modelling combined economic, ecological and financial systems and sets out a series of objectives for modelling the socio-economic transition towards sustainability. It highlights modelling needs in relation to full employment, financial stability, and social equity under conditions of constrained resource consumption and ecological limits. The paper also provides a broad overview of the literatures relevant to the task in hand. It then describes two separate modelling approaches, developed by two different teams within WWWforEurope. One of these approaches, led by WIFO, uses a Dynamic New Keynesian (DYNK) model to explore the implications of different long-run equilibrium paths for energy consumption. The other approach, led by Surrey in collaboration with York University, is motivated primarily by the desire to integrate a comprehe...
The “product” travel cost model (PTC) improves supply and substitution specification in travel co... more The “product” travel cost model (PTC) improves supply and substitution specification in travel cost models (TCM), eliminating common biases in estimating welfare effects of qualitative changes at specific sites. Angling sites and participation are modeled as a system of product supplies and demands; changes in angling quality at specific sites are evaluated as changes in the supplies of relevant products. PTC assumes that each angler chooses from a selection of angling opportunities (i.e., products) based on access cost (i.e., travel cost) and the nature of each angling product. Key factors defining angling products (e.g., success rate, fish size) are derived from angler travel patterns: Anglers are assumed indifferent between sites providing identical angling products, so choose the lowest cost site. Therefore, the benefits of any management action not only differ from average welfare-change values, but are also site-specific. Changing angling attributes at a site changes its angli...
Report to the United Nations for the 2012 Rio+ 20 Conference, 2011
Executive Summary The world has changed dramatically. We no longer live in a world relatively emp... more Executive Summary The world has changed dramatically. We no longer live in a world relatively empty of humans and their artifacts. We now live in the “Anthropocene”[3], a full world where humans are dramatically altering our ecological life-support system [4]. Our traditional economic concepts and models were developed in an empty world. If we are to create sustainable prosperity, if we seek “improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities”[5], we are going ...
This working paper presents a stock-flow consistent (SFC) simulation model of a national economy,... more This working paper presents a stock-flow consistent (SFC) simulation model of a national economy, calibrated on the basis of Canadian data. LowGrow SFC describes the evolution of the Canadian economy in terms of six financial sectors whose behaviour is based on ‘stylised facts’ in the Post-Keynesian tradition. Contrary to the accepted wisdom, the results indicate the feasibility of improved environmental and social outcomes, even as the growth rate declines to zero.
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Papers by Peter Victor