What a Stable Economy Looks Like, and How It Works

Most economies today are growth economies, meaning they require continuous growth or there is a recession, companies go bankrupt, jobs are lost, and so forth. This is unnecessary, unsustainable, and very unstable, as we are increasingly discovering. Any sector of the economy that requires continuous growth is a bubble. When the entire economy requires continuous growth, then the whole economy is a bubble.

A far better and more traditional economy is the steady-state economy, or Stable Economy, which is sustainable indefinitely if done properly. By sustainable, I mean that employment, environment, and wealth – People, Planet, and Prosperity – are preserved. A stable economy is far more secure for the middle class, though not as ripe for plucking by the greedy.

The stable economy is easily visualized: Let’s start with a neighbourhood, called James Bay for convenience. Imagine several thousand people living in James Bay, some in apartments and condominiums, some in townhouses, and some in detached houses. James Bay is served by a grocery store. Now, if the population of James Bay remains stable, that grocery store will be profitable forever without growing or shrinking in size, sales, or employment.

Now expand: any neighbourhood will also have cafés and restaurants, various professionals such as doctors, dentists, accountants, plumbing firms, flooring and book stores, a library, and so on. There are also farms and factories producing the goods sold in the stores. None of these need to grow continuously to be successful; they don’t need to grow at all.

This is the single most important point to understand about the stable economy. Any stable business can products or services and employment forever; there is no need for it to grow, ever.

In fact, growth puts great pressures on the neighbourhood. More people move in, so lots and homes must get smaller while their prices increase, privacy diminishes, noise and traffic increase, taxes go up to pay for upgrades to sewage lines, and so on.

The Stable Economy still has plenty of room for change and innovation. The population of James Bay may grow younger or older as people move in or out, have children, or age. They will still need groceries and plumbers. And they will still want iPods and the latest gadgets. There is also a place for investment in the companies that make up the Stable Economy.

That’s it; the essentials of the Stable Economy explained in less than 500 words, because it is simple, straightforward, and honest. It is only when instability is added in the form of continuous growth that things get complicated, because, essentially, greed requires complex justifications to hide the trickery that goes on.

Further reading

Combining the Stable Economy with Waste Not, Want Not for the Sustainable Economy.

Developing Countries need a Growth Economy; Developed Countries need a Stable and Sustainable Economy.

Why We Abandoned the Stable Economy for the Continuous Growth Bubble Economy.