Valuing the Earth: Economics, Ecology, Ethics.

In 1973, a renegade economist named Herman Daly compiled an anthology of essays that questioned the wisdom - and possibility - of a perpetually expanding economy.

Arguing that "at some point ... an extra unit of Gross National Product costs more than it is worth," Toward a Steady-State Economy was ridiculed by the economic orthodoxy, but became a classic of the fledgling school of ecological economics. The book contained seminal works from the likes of theorists Paul Ehrlich, Garrett Hardin, and E.F. Schumacher, and it passed from hand to hand in little-known study ccnters like Washington's newly created Worldwatch Institute.

This year, Daly - now a senior economist at the economic profession's most prestigious club, the World Bank - has joined forces with Kenneth Townsend of Virginia's Hampden-Sydney College to revise that anthology and make it available to today's much larger audience. They have added new essays, deleted some that were no longer salient, and introduced the older texts with updated explanations.

The effort was well worth making. Valuing the Earth: Economics, Ecology, Ethics, as the new volume is called, is as relevant as ever. And though some of the commentary it contains is dated, its central theses only stand out more clearly with age.

The crux of their argument is the concept of scale, defined as the physical "size of the human presence in the ecosystem." Scale can be thought of as human population times per capita resource use, or, more simply, as "how many people consume how much stuff."

Conventional economics envisions the human economy as a circular affair. An immaterial stuff called "utility" - consisting of the satisfaction of people's desires - is made concrete in the form of money and moved from producers to workers and consumers back to producers back to consumers and so on forever. Because utility is immaterial, the economy is seen as unhindered by any theoretical limits to growth.

Ecological economics recognizes the importance of the money circuit but sees it as a subset of a larger system - a system in many ways analogous to a water wheel. As falling water drives a water wheel, so do energy and material resources drawn from the natural environment fuel the economic wheel. Just as water at a lower level of potential energy flows away from the water wheel, pollution and waste flow out of the economy.

In the terminology of ecological economics, these inputs and outputs together - the coal, timber, coffee cups, discarded shrink wrap, and every other material thing that the economy absorbs and spits out - constitute "throughput." The size of the throughput is "scale."

In the authors' eyes, conventional economics' blindness to the throughput river that drives the economic wheel condemns the field's efforts to irrelevance or worse. Conventional economics focuses on the question of allocation - whether workers, money, and resources are being combined in ways that generate the most additional money. Occasionally it examines the question of distribution - whether the fruits of production are shared widely. But it ignores the question of scale.

And ignoring scale can lead to disaster, says Daly. The extraction of resources can exhaust ecosystems' regenerative capacities. The generation of wastes can overwhelm ecosystems' absorptive capacities. Either of these rapidly expanding activities can push ecosystems across the thresholds of their tolerance.

What ecological economists call for is controls on the economy to keep its scale within the carrying capacity of the earth. In Daly's metaphor, a ship, even if its load is optimally allocated on board, can still be overburdened. "Optimally loaded boats will still sink under too much weight - even though they may sink optimally!" Ship builders paint Plimsoll lines on ship hulls to show when the load is too great. The economy, at present, lacks a Plimsoll line.

The argument for ecological limits on the economy's scale takes up the first third of Valuing the Earth. It is followed by a more difficult discussion examining the proposition that limiting the economy's scale is morally desirable. Here Daly argues forcefully that beyond a certain point, additional consumption means the accumulation of trivial and distracting luxuries. "Growth in GNP in a poor country means more food, clothing, shelter, basic education, and security," he writes, "whereas for a rich country it means more electric toothbrushes, yet another brand of cigarettes, more tension and insecurity, and more force-feeding through more advertising."

For the affluent, furthermore, the proliferation of stuff has deprived us of time. Daly writes that in the past, economic development has increased the physical output of a day's work while the number of hours in a day has remained constant, with the result that time is worth more goods, and a good is worth less time. "As we become goods-rich and time-poor ... time-intensive activities (friendships, care of the aged and children, meditation, and reflection) arc sacrificed in favor of commodity-intensive activities (consumption)." In a sustainable economy, by contrast, we would have less stuff and more time.

The book's final section investigates ways of using economics - or, more precisely, market-oriented economic policies - to keep the economy's scale in check. Here, the volume is weaker than in the earlier sections.

Among the proposals, for example, is the dubious idea of tradeable permits for giving birth to children. Such a system might logically give rise to world markets in baby rights, to nightly reports on balances of trade in baby rights, to fortunes made trading baby rights futures, and to mafia-control of the baby rights black market. Conventional economics may be blind to natural values, but tradeable birthing permits, if seriously pursued by ecological economists, would demonstrate an alarming commodification of human life.

Still, Valuing the Earth remains a watershed book. Its essays are vintage, and their release in a new bottle is recycling of the best kind.