DEFINITION of 'Steady-State Economy'

A steady-state economy is an economy structured to balance growth with environmental integrity. A steady-state economy seeks to find an equilibrium between production growth and population growth. The economy aims for the efficient use of natural resources but also seeks fair distribution of the wealth generated from the development of those resources.

BREAKING DOWN 'Steady-State Economy'

The possibility of a steady-state economy comes down to balance: economies may grow or contract, but ultimately fight back to an equilibrium. Ecological economists – major supporters of the idea of a steady-state economy – posit that the environment cannot support an unlimited growth of production and wealth, since a growing population will eventually push down wages and use up an increasingly scarce base of natural resources.

How Differing Perspectives View the Concept of a Steady-State Economy

Interpretations of how a steady-state economy would function can be a point of conflict. From one perspective, such an economy would see industrial and ecological growth in tandem with each other, or at least see their growth push and pull each other until there was balance. However, there have been some interpretations that posit that the constraints put in place to enforce stability in such an economy would not allow for any growth. Also, from this perspective, it is believed the economy would be less susceptible to cyclical patterns of boom and bust.

Under a steady-state economy, a society would be less likely to see sprawling real estate development because of the various pressures and directives put in place for balance. That would mean construction activities would likely be focused on redevelopment and repurposing of space rather than clearing out a new property for building.

There would also be a focus to only make use of resources that can be replenished, such as water and sustainable energy sources but only at a pace that the resource would be able to safely regenerate. This would stifle the vigorous development that heavily industrialized societies are used to. Fossil fuels would only be consumed at a pace at which they could be replaced with renewable energy.

Furthermore, practices such as creating landfills and other sites where waste is stockpiled would be curbed. Such an approach also means overall production would have to be balanced with the capacity to accommodate the waste that would be generated, thereby alleviating the piling up of refuse. It would also encourage production wherein the end results are goods that can more readily degrade quickly rather than remain static and not decompose, such as the case with various plastics.

RELATED TERMS
  1. Economy

    An economy is the large set of interrelated economic production ...
  2. Closed Economy

    A closed economy considers itself self-sufficient and has no ...
  3. Economic Efficiency

    Economic efficiency implies an economic state in which every ...
  4. War Economy

    War economy is the organization of a country's production capacity ...
  5. Mixed Economic System

    A mixed economic system is one that features characteristics ...
  6. Command Economy

    A command economy is a system where the government determines ...
Related Articles
  1. Financial Advisor

    These Will Be the World's Top Economies in 2020

    Discover the current economic forces that are anticipated to significantly shift the landscape of the world's most powerful economies over the next decade.
  2. Insights

    What's the Economy?

    The economy is the production and consumption activities that determine how scarce resources are allocated in an area.
  3. Investing

    What's a Centrally Planned Economy?

    A centrally planned economy is one where the government controls the country’s supply and demand of goods and services.
  4. Investing

    3 Waste Management Stocks That Outperformed Since 2010

    A look at three stocks in the environmental and waste management industry that have outperformed the market for the last five years.
  5. Investing

    What's a Command Economy?

    A command economy is one where the government controls the economy, acting as the central planner, dictating production quotas and distribution levels, and setting prices. Such economies exist ...
  6. Insights

    Exploring the Current Account in the Balance of Payments

    Learn how a country's current account balance reflects the country's economic health.
  7. Insights

    What is jobless growth?

    What are the effects that a jobless growth economy has on workers and investors alike. Learn about these effects here.
  8. Insights

    How Demographics Drive The Economy

    Demographics can have a profound effect on the economy. An aging population coupled with a declining birthrate points to a decline in economic growth.
  9. Insights

    4 Global Economic Issues of an Aging Population

    Discover why dramatic increases in life expectancy is creating significant socioeconomic challenges for many advanced industrialized nations.
  10. Investing

    Problems Loom For The Chinese Economy

    In 2010 China became the world's second largest economy, yet some analysts see problems ahead. Find out why.
RELATED FAQS
  1. Why are there no profits in a perfectly competitive market?

    See why economic profits are theoretically impossible in a perfectly competitive market and why some economists use perfect ... Read Answer >>
  2. How is an economy formed and why does it grow?

    Find out how an economy forms and why it grows, including the role that financial markets play and how productivity increases ... Read Answer >>
  3. What are some advantages of a market economy over other types of economies?

    Learn what a market economy is, the main assumption behind a market economy and some important advantages it has over other ... Read Answer >>
  4. What are some examples of economies of scale?

    Take a look at different examples of economies of scale, including how marginal costs can be reduced through external and ... Read Answer >>
  5. What are some examples of free market economies?

    In a free market economy, the law of supply and demand, rather than a central government, regulates production and labor. ... Read Answer >>
  6. How does a bull market affect the economy?

    Find out why it can be difficult to prove any real causal link between rising stock market prices and a healthy, growing ... Read Answer >>
Trading Center