Using the Fisherian concept of income to guide a nation's transition to a steady-state economy

Abstract

Many ecological economists have long been advocating that industrialised nations should abandon their growth predilection and initiate the transition to a steady-state economy. To demonstrate how a nation's transition to a steady-state economy might be usefully guided, Fisherian national income - one of the best known indicators of sustainable economic welfare - is calculated for Australia for the period 1967-1997. Also calculated for the study period is the changing physical scale of the Australian economy. By juxtaposing per capita Fisherian income and the growth of the Australian economy, it is shown that Australia surpassed its optimal macroeconomic scale in the mid-1970s. While, around this time, Australia began a transition to a lower rate of growth that arrested the steep decline in per capita Fisherian income, Australia had reverted back to a high-growth policy by the end of the study period. It chose not to continue the deceleration towards a steady-state economy, a policy stance that is likely to be detrimental to the sustainable economic welfare enjoyed by the average Australian. © 2005 Elsevier B.V. All rights reserved.