Steady-state economy

From CEOpedia | Management online

A steady-state economy is an economic system in which resources are maintained at a certain level and the population remains stable. It is an economy which is not focused on growth, but instead on the system's efficient use and replenishment of resources. This type of economy is based on four main principles:

  • Resource utilization: The economy must use resources efficiently and only take what is necessary.
  • Renewable resources: Resources must be renewable and replaced as they are used.
  • Population control: The population must be kept at a sustainable level.
  • Distribution of wealth: Wealth must be distributed equitably.

These principles are designed to create an economy that is self-sustaining and does not depend on growth or debt. This type of economy is beneficial in that it reduces environmental impact, allows for more equitable distribution of resources, and creates a more stable economic system.

Example of Steady-state economy

A common example of a steady-state economy is the hunting and gathering lifestyle of many of the world's indigenous peoples. These groups have lived sustainably for many generations, maintaining a stable population and resources. They use resources efficiently by taking only what is necessary for their current needs and replacing them in a timely manner. They keep their population levels low and distribute wealth evenly within the group.

When to use Steady-state economy

A steady-state economy is beneficial in certain situations, such as when a population is already large and the resources available are limited. In this situation, growth is not possible, and a steady-state economy can be used to ensure that the population remains at a sustainable level and that resources are used efficiently. It is also beneficial in cases where the social and economic status quo is desirable and growth is not necessary.

Types of Steady-state economy

  • Subsistence Economy: This type of economy is based on subsistence production, meaning that most of the goods and services produced are consumed by the same people who produce them.
  • Recycling Economy: This type of economy is based on a closed-loop system of production and consumption, in which resources are reused and recycled, and nothing is wasted.
  • Barter Economy: This type of economy relies on bartering and trading goods and services instead of relying on money.
  • Gift Economy: This type of economy is based on sharing resources and the giving of gifts rather than relying on money.

Steps of Steady-state economy

  • First step: Establish a resource budget. This involves calculating the total amount of resources available, the amount of resources that can be responsibly used, and the amount of resources that need to be replenished.
  • Second step: Establish a population limit. This is done by setting an upper limit on the population size and then adjusting it based on the resource budget.
  • Third step: Establish an equitable distribution of wealth. This means that resources should be distributed to those who need them most, such as the poor and disadvantaged.
  • Fourth step: Implement policies to ensure that resources are used efficiently and responsibly. This includes encouraging the use of renewable energy sources, reducing waste, and encouraging sustainable practices.

Advantages of Steady-state economy

  • Long-term stability: Unlike economies focused on growth, a steady-state economy is designed to maintain a certain level of stability over the long-term. This allows for more consistent economic outcomes and less risk of volatility.
  • Sustainable resources: Steady-state economies rely on the efficient and sustainable use of resources. This reduces environmental impact and ensures that resources are not over-used.
  • Equitable distribution of wealth: By focusing on the equitable distribution of wealth, rather than growth, a steady-state economy ensures that no one is left out and that resources are shared fairly.

Limitations of Steady-state economy

Despite the benefits of a steady-state economy, there are some drawbacks that must be considered.

  • Lack of incentives: Without economic growth, there are fewer incentives for people to invest in new businesses or technologies.
  • Limited resources: With a steady population, resources are limited and could lead to shortages.
  • Difficulty maintaining balance: Maintaining the balance of resources and population growth can be difficult.
  • Lack of economic activity: Without economic growth, there is a lack of economic activity which can lead to stagnation.

Other approaches related to Steady-state economy

A number of other approaches to creating a more sustainable economy have emerged in recent years. These include the Circular Economy, Biomimicry, and the Degrowth movement.

  • Circular Economy: The Circular Economy is a model that focuses on closing the loop of resource use, where materials are reused and waste is minimized.
  • Biomimicry: Biomimicry is a practice that looks to nature for solutions to environmental and economic problems. It seeks to create a more sustainable economy through the use of natural systems.
  • Degrowth: The Degrowth movement seeks to reduce economic growth and focus on the equitable distribution of resources. It advocates for a more sustainable economy that does not rely on continued growth.


Steady-state economyrecommended articles
Principles of circular economyEtatismPrice controlsConservation of resourcesEcological sustainabilityEcologically sustainable developmentEnvironmental policyAlternative technologyWaste of resources

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