This may be disjointed- perhaps I'll tweak it in time, but here are my notes on reading Herman Daly.
Economics goes through four stages of evolution- barter, currency for goods or service, investment or speculation- money for goods for money, and finally financial investment- money invested in money to beget money. As this last stage, in which we are living, creates value without creating goods or services, it increases the share of wealth controlled by the elite. The ability to get money just for having money- control of the means of production- means inequality will continue to grow worse. Daly also
There is an optimum scale for everything in economics, but economists don't acknowledge the finite nature of the resources we put through our system and turn into waste before depositing into what remains of the ecosystem. The entire system of our environment also has an optimum scale for the economy that forms part of it.
Most economists refer to economics and the market as a closed loop- value is created, transformed, moved around, remade, etc., but this only reflects value, not the finite resources that are consumed in the process. We can manipulate value- not the cold hard facts.
Growth (an increase in scale, where scale is population x per capita consumption) is touted as the solution to problems of the rich and poor alike, when we need to control our population and get more out of the resources we already consume, not consume more.
Our ecosystem regenerates the raw material inputs and absorbs the high entropy, unusable waste outputs of our economy, which is a subset of the ecosystem, not an independent entity.
Daly endorses the tradeable permit form of regulation, which forces businessmen to consider at least some of the value cost of polluting in making their decisions, but he is concerned about how these permits are to be distributed, as this system is more prone to speculation than is a carbon tax. If they are given ahead of time to existing polluters, the impact will be minimized and actually protect preexisting offenders, and if they are sold off to enrich the public coffers a la privatization, that opens the door to speculation. That said, we can set the maximum scale, and decide at least the original distribution, while the market allocates the remaining decisions. Personally I prefer carbon and methane taxes, but Daly makes a good case for this, and it could conceivably be less regressive.
But how does scale matter if the price is right, you ask? (And in the free market the price is always right). Well, in 1986 we were already using some 40% of the planet's surplus energy just to sustain ourselves. Our population has increased by half since that time. That's all available energy after plants sustain their own lives- we have extremely limited potential for growth left, yet that's all we want to do!
Most conventional economic models assume we are consuming value- which is more or less infinite, being created by human labor- but is only really meaningful if it is attached to material goods or services, which are more dependent on existing commodities.
Basic proposals: stop counting growth/consumption of natural capital as a positive- the GNP and GDP need to be seriously revised if not done away with
Tax resource throughput more than capital or income- how do we redistribute this?
The free flow of labor and goods, in addition to consuming more transportation actually limits our ability to solve the environmental crises we have created. In the absence of a binding international government, the only tools we have remotely equal to the task at hand are nationstates. We need to stop externalizing environmental costs through cheaper products, and actually pay the full cost of what is being consumed, i.e. an environmental tariff