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Steady-state economy
A steady-state economy is an economy of relatively stable size. A zero growth economy features stable population and stable consumption that remain at or below carrying capacity. The term typically refers to a national economy, but it can also be applied to the economic system of a city, a region, or the entire planet. Note that Robert Solow and Trevor Swan applied the term steady state a bit differently in their economic growth model. Their steady state occurs when investment equals depreciation, and the economy reaches equilibrium, which may occur during a period of growth.
== Physical features ==
The steady-state economy is an entirely physical concept. Any non-physical components of an economy (e.g. knowledge) can grow indefinitely. But the physical components (e.g. supplies of natural resources, human populations, and stocks of human-built capital) are constrained and endogenously given. An economy could reach a steady state after a period of growth or after a period of downsizing or degrowth. The objective is to establish it at a sustainable scale that does not exceed ecological limits.
Economists use gross domestic product or GDP to measure the size of an economy in dollars or some other monetary unit. Real GDP—that is, GDP adjusted for inflation—in a steady-state economy remains reasonably stable, neither growing nor contracting from year to year. Herman Daly, one of the founders of the field of ecological economics and a critic of neoclassical economics,〔Daly, Herman (Lead Author); Robert Costanza (Topic Editor). 2009. "(From a Failed Growth Economy to a Steady-State Economy. )" in ''Encyclopedia of Earth''. Eds. Cutler J. Cleveland (Washington, D.C.: Environmental Information Coalition, National Council for Science and the Environment). (in the Encyclopedia of Earth 5 June 2009; Retrieved 17 August 2009 ).〕 defines a steady-state economy as...
A steady-state economy, therefore, aims for stable or mildly fluctuating levels in population and consumption of energy and materials. Birth rates equal death rates, and saving/investment equals depreciation.
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