18. Based on the passage, a steady-state economist is most likely to claim that a successful economy is one that satisfies which one of the following principles?
Recently, a new school of economics called steady
state economics has seriously challenged neoclassical
economics, the reigning school in Western economic
decision making. According to the neoclassical model,
(5) an economy is a closed system involving only the
circular flow of exchange value between producers and
consumers. Therefore, no noneconomic constraints
impinge upon the economy and growth has no limits.
Indeed, some neoclassical economists argue that
(10) growth itself is crucial, because, they claim, the
solutions to problems often associated with growth
(income inequities, for example) can be found only in
the capital that further growth creates.
Steady-state economists believe the neoclassical
(15) model to be unrealistic and hold that the economy is
dependent on nature. Resources, they argue, enter the
economy as raw material and exit as consumed
products or waste; the greater the resources, the greater
the size of the economy. According to these
(20) economists, nature’s limited capacity to regenerate raw
material and absorb waste suggests that there is an
optimal size for the economy, and that growth beyond
this ideal point would increase the cost to the
environment at a faster rate than the benefit to
(25) producers and consumers, generating cycles that
impoverish rather than enrich. Steady-state economists
thus believe that the concept of an ever growing
economy is dangerous, and that the only alternative is
to maintain a state in which the economy remains in
(30) equilibrium with nature. Neoclassical economists, on
the other hand, consider nature to be just one element
of the economy rather than an outside constraint,
believing that natural resources, if depleted, can be
replaced with other elements—i.e., human-made
(35) resources—that will allow the economy to continue
with its process of unlimited growth.
Some steady-state economists, pointing to the
widening disparity between indices of actual growth
(which simply count the total monetary value of goods
(40) and services) and the index of environmentally
sustainable growth (which is based on personal
consumption, factoring in depletion of raw materials
and production costs), believe that Western economies
have already exceeded their optimal size. In response
(45) to the warnings from neoclassical economists that
checking economic growth only leads to economic
stagnation, they argue that there are alternatives to
growth that still accomplish what is required of any
economy: the satisfaction of human wants. One of
(50) the alternatives is conservation. Conservation—for
example, increasing the efficiency of resource use
through means such as recycling—differs from growth
in that it is qualitative, not quantitative, requiring
improvement in resource management rather than an
(55) increase in the amount of resources. One measure of
the success of a steady-state economy would be the
degree to which it could implement alternatives to
growth, such as conservation, without sacrificing the
ability to satisfy the wants of producers and consumers.