Prof. Herman Daly is, in the minds of some, a maverick economist. His controversial views on economic growth and environmental protection for sustainable development are seen as unorthodox by most economists. Having spent a number of years as a lecturer in the Louisiana State University, he moved to the World Bank in 1988. After six years of trying, and failing, to get his views accepted by the World Bank he left in 1994 to join the University of Maryland where he now holds the position of Professor in the School of Public Affairs.

On the 26^th of April 1999, the committee of the Student Economic Review 1999 in conjunction with FEASTA (Group for Sustainable Development in Ireland), welcomed Prof. Daly to Trinity College where he was to give a lecture on the topic of:

The lecture held in the Edmund Burke Theatre attracted a crowd of about 400 people – of whom some were students, others were professional economists and others were interested parties from various backgrounds.

Following the usual thanks and introductions, Prof. Daly began his lecture. His first topic was the theory of uneconomic growth. He explained how he felt that the idea was consistent with microeconomic theory and yet was not acceptable in macroeconomic theory. He described his pre-analytical vision of the economy as a subsystem of the ecological system and through his Jevonian view of the limits of growth tried to convince all in attendance of the need to shift the focus of economics from growth to sustainable development arguing that the economy had reached, if not passed, its full potential in terms of growth.

He followed this up by presenting some empirical evidence supporting his view that growth is now uneconomic. Focusing on the USA, he laid out the work of Nordhaus and Tobin which seemed to suggest that as long ago as the late 1960’s the welfare costs of growth had exceeded the marginal benefit. He also proposed that the use GDP as a measure of welfare was not efficient and so suggested the use of the Index of Sustainable Economic Welfare (ISEW), a concept designed by Cobb, Cobb and Daly. Although he accepted that this was by far a less than perfect measure of welfare, he argued its superiority over GDP.

So what in his opinion is the cause of the current emphasis on growth? Historically, the growth push came from the practical answers given by modern economists to three major problems, each associated with the name of a great economist:

• Malthus on overpopulation;
• Marx on unjust distribution;
• Keynes on involuntary unemployment.

Growth is the common answer to all three problems given by modern economists. He suggested that these problems should be addressed directly and not through economic growth. Therefore policies of population control, redistribution of income and policies to reduce unemployment should ideally be pursued. He then criticised the World Bank's 1992 World Development Report which he said argued that continued growth was also the automatic solution to the environmental problem. A so-called "environmental Kuznets curve" was discovered, which was taken to reveal an inverted U-shaped relation between GNP and emissions of a number of environmental pollutants. Consequently, one must persevere in growth because even though it initially is bad for the environment, it will later be good for the environment once the hump of the inverted U is passed.

He concluded that we (economists) avoid the issue of uneconomic growth in order to prevent the need to come up with new solutions. He sees globalisation as a major obstacle to recognising and addressing the problem. This is because:

"Global economic integration by free trade and free capital mobility effectively erases the policy significance of national boundaries, turning the federated community of nations into a cosmopolitan non community of globalised individuals. Some of these "individuals" are giant transnational corporations, but legally are treated as fictitious individuals. Nations can no longer internalise environmental and social costs in the interests of resource efficiency and social justice, because capital is free to produce elsewhere and still sell its product in the market whose social controls it just escaped. In like manner, capital escapes higher wages and taxes of any kind." (Prof. Daly)

He saw the answer as a return to the Nation State in order to avoid the oligopoly of trading blocs that is emerging in the world today.

The discussion was then opened to the floor and, unfortunately, no one really challenged Prof. Daly from on the issues he had just addressed. Questions ranged from the issue of the Tobin tax and ethical economics to how the process of credit creation worked (Economics for Dummies Session!). One question, asked toward the end of the session, related to how Prof. Daly would see the problem of 'free-riding' being dealt with in a global economy of smaller nation states. However, the question was never adequately answered and time duly ran out. The attendees then adjourned to the Atrium were people could further discuss the issues and opposing groups either made love or war.

On behalf of the SER Committee I would like to thank Prof. Daly for his time. Even though as an economist he may not have convinced me of his ideas, it was an honour and an achievement for us to be able to have him speak in Trinity College.