Steady-State Economics:Limits to Growth is not a new idea. I recall the Club of Rome and D.H. Meadows, making the concept of "limits" public knowledge 40 years ago. Of course economists were the first to decry any notion of ecomonic limits.
Today, faced with the prospect of peak oil production and global warming caused by human activity, the imposition of some sort of "limits" does not seem so silly. Herman E Daly, is the most noted economist to take "limits" seriously. To adopt his steady-state ideas is to think of economics in an entirely new way. Dr Albert A Bartlett explains the basic facts for us on video here.
If we take seriously that pollution is a crime, and that the use of non-renewable resources should be controlled, and the use of renewable resources must also be restricted, then the whole nature of the economy changes. But, given the tools of economics and free markets, Daly and other economists have devised market systems to make all these new restrictions as painless as possible.
The best known example is the creation of catch limits for fisheries, and the sale of licenses to take that catch. The idea of carbon credits, is another market mechanism that eventually will pay people not to cut down forest, and for planting new forest. Water use licenses have been virtually free in the past, but in future they are likely to have substantial value. The whole objective is a principle economists call "full cost pricing".
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