Addendum: Further Commentary on the Work of Economist Herman Daly

Whitehead’s thought has played no role in mainstream economic thinking. Indeed, the one major economist who has adopted it, Herman E. Daly, has been virtually ostracized from the guild of economists, at least in the United States. However, he has had a following in other circles, particularly ecologists and religious communities. He is in great demand all over the world among those critical of the dominant direction in which the global economy is going. He is called on for teach-ins at meetings of the anti-globalization movement.

Furthermore, government officials who have responsibilities both toward the environment and toward the economy are often interested in what he has to say. And even some professional economists working on issues involving natural resources, for example, in schools of forestry, have turned to him for guidance. These officials, economists and others, who recognize the importance of taking the environment into account in economic theory and practice, now have their own organization, the International Society for Ecological Economics. Although the members of the society have diverse views, its organization was stimulated by Daly’s work, and he has continued to be a major influence within it. He is co-founder and associate editor of its journal, Ecological Economics. There are also national societies in which Daly is held in high esteem; this is certainly true of the Canadian society. Accordingly, one can say that, through him, a Whiteheadian economics is playing a role in the global drama.

Daly studied economics at Vanderbilt University and then taught at Louisiana State University. At Vanderbilt he was influenced by economist Nicholas Georgescu-Roegen who emphasized the biophysical foundations of economics, especially the entropy law. It was through this polymath professor that Daly was first introduced to Whitehead, a connection later much strengthened by collaboration with John B. Cobb, Jr. When the World Bank succumbed to pressure to institute environmental impact studies of its proposed projects, Daly was its most visible choice. Daly’s prior experience in Latin America made him acceptable to that division of the Bank in spite of his unorthodox economic views. Since leaving the World Bank, Daly has taught at the School of Public Policy at the University of Maryland. Among his books are Steady-State Economics (1977, 1991), Valuing the Earth (1993), Beyond Growth (1996), and Ecological Economics and the Ecology of Economics (1999).

Daly has received considerable recognition for his work, especially in Europe. He was honored with a Right Livelihood Award by Sweden. The Royal Netherlands Academy of Arts and Sciences gave him its Heineken Prize for Environmental Science. He received the Sophie Prize from Norway. Subsequently he received the Leontief Prize for Contributions to Economic Thought (Tufts University), and the Medal of the Presidency of the Italian Republic. Thus, Daly has not been ignored at all, except by the professional mainstream of economists. Perhaps this disjunction is an implicit expression of diminishing confidence in mainstream economics.

Daly was clear from an early stage that the human economy should be understood to operate within the natural economy. Since the natural economy is relatively fixed, this means that the human economy cannot continue to grow indefinitely in its use of natural resources. Unfortunately, the now dominant economic thinking is based on the assumption that economic growth can go on indefinitely; the natural world figures trivially, at best, in its calculations. Accordingly, the managers of the actual economy aim at maximizing this growth. The goal of growth justifies policies that work against equity in human relations; these policies have also proved disastrous for the natural environment.

That the human economy is part of a larger natural system that sets limits to human consumption is a fact difficult for most economists to recognize. They are schooled to believe that natural resources are infinitely substitutable, and that technology can, therefore, solve all problems of shortages. They understand nature simply as resource for human use, with no value in itself. Although most of them do not articulate their assumptions philosophically, they may clearly be classified as dualistic and anthropocentric. Daly joined Whitehead in rejecting these philosophical assumptions. He taught, following the philosopher and classical economist John Stuart Mill, that the goal is a steady-state, or stationary-state, economy, operating within the limits of nature and allowing for much of nature to function for the sake of other creatures.

Daly has also been concerned about dominant economic assumptions concerning the human being. Most economists assert that desire is constitutive of value: that is, if a person desires X, then X is valuable. Indeed, value is generally equated with monetary value: X is valuable to the extent that people are willing to pay for it. In accord with this individualistic view is the assertion that no group of people should impose its values on others; it is not for economists or political leaders to say that some objects of desire are better than others. The market should be left to make the decisions as to which goods are available for consumption.

Daly formulates matters differently. People desire many things that are not good for them. Society has some collective wisdom that can be employed to persuade and educate and otherwise influence the use of economic resources. In this, too, his views correspond to those of Whitehead and his followers, who find varying degrees of intrinsic value in all experiences, human and nonhuman alike. They, accordingly, do not identify value with price. They judge that it is important to evaluate actions as to whether they increase or decrease real value in the world. Economics should serve the long-term good of the earth with its human and nonhuman inhabitants, not simply provide ephemeral pleasures for those who can afford them.

Daly quickly recognized his affinities with Whitehead. He made explicit use especially of Whitehead’s fallacy of misplaced concreteness. Whitehead saw that the human ability to abstract is a great gift; we cannot think without abstractions. But he saw also that when the abstractness of concepts is ignored, the conclusions drawn from them are limited in validity. If these conclusions are applied to the real world without consideration of what they have omitted, in other words, if they are treated as it they were accurate representations of concrete reality, the consequences can be destructive.

Daly saw that Whitehead described well what takes place in much economic theory and in its application to society. He and John B. Cobb, Jr. organized much of their joint 1989 book, For the Common Good: Redirecting the Economy toward Community, the Environment, and a Sustainable Future, around four of these abstractions: the market, economic success, Homo economicus, and land. In the 1994 expanded version, Daly added an appendix on money.

The book proposes alternative concepts to those that are criticized. These concepts are based on different abstractions that take more of the actual reality into account and are more sensitive to what they neglect. To indicate the ways in which different assumptions lead to different policies, additional chapters propose many such policies. The first of these chapters points out that the ideal of free trade is based on the fallacy of misplaced concreteness, that a more concrete analysis supports a decentralized economy.

For the Common Good won the Grawemeyer award for ideas improving world order. It remains the most fully developed discussion of economic theory from a communitarian and ecological perspective. It is also the most explicitly and intentionally Whiteheadian treatise on this subject. In addition, both authors believe with Whitehead that religious faith has a role to play in history. They think that it is crucial to change the destructive direction of events and that a Whiteheadian theology is relevant to the task of reframing economic thinking and practice.

This difference follows from the replacement of the classical /Homo economicus/ with “person in community.” the classical /Homo economicus/ is understood in a fully individualistic way. He is related to other individuals through exchange and contract. Each of these individuals aims to attain as many goods and services as cheaply as possible while getting as much as possible for the least labor. Relations among people are, in philosophical terms, purely external and they become, therefore, purely competitive. The population as a whole is made up of such individuals. Obviously, much economic behavior conforms to this model, so that theories based on it have predictive use. Nevertheless, it involves a radical abstraction, which is acknowledged and then forgotten. People do not exist, could not exist, in this self-enclosed way. Recognizing that families cannot be understood as simply a collection of individuals, economists sometimes speak of households rather than persons as the units of the economy. It is then households that are related to one another in this purely external way.

Whitehead teaches us that we consist largely of /internal/ relations, which he calls “prehensions.” These relate us to one another not only in the family but also in the wider society in such a way that our own well being is bound up with the well being of others. The good life is life in community,. Actually, we can develop a healthy individuality only in a healthy community. Hence we understand human beings better as “persons in community.” Many human actions, even economic ones, express our concern for the communities in which we live. A Whiteheadian economics will be “economics for community.”

Since the idea of “community” plays no role whatever in standard economic theory, the contrast is sharp. When national policies are shaped by standard economic thinking the goal is to increase overall production and consumption. It is believed that this is best done when the size of markets is increased and each region within the market specializes in what it can produce most efficiently. Also government involvement should be kept to a minimum. A global market in which the role of national governments is minimized and corporations are free to act as they please is the ideal toward which the world has moved. This is the meaning of the “free trade” to which so many people have given their allegiance. In the process of realizing the ideal of free trade, tens of thousands of villages and small towns are being wiped out to be replaced by vast urban slums. In evaluating the results, the loss of community life is not even mentioned.

Clearly the Whiteheadian view of people as persons in community leads to quite different policies, usually called “community development.” This expresses the Gandhian ideal. Gandhi wanted to improve the lot of the people of India, most of whom lived in peasant villages, by improving the quality of village life. That meant introducing tools and technologies that could be used by the villagers to increase their production. Of course, not all production would be at the village level and there would be trade among villages. But the emphasis would be on an economy that allowed persons in community to shape their community life and decide how to relate to others. Having experienced the human devastation caused by the global economy, more and more people today are recognizing the value of local economies.

The co-author of the book, John B. Cobb, Jr., is a Whiteheadian theologian who sees the dominant economic theory as the ideology or “theology” that is most widely determinative of the course of events. Accordingly, he brings his Whiteheadian theology to bear on the assumptions of economic theory. He believes, with Daly, that current economic practice is destructive of both human society and its natural environment, and that its justification by economic theory should be challenged. From this point of view, Cobb has published several books dealing with the course of world events as they are informed by the dominant ideology as well as with more general questions of how Christianity does and should understand human society and the natural world.

Author Information

John B. Cobb, Jr.
Emeritus, Claremont School of Theology
1325 N. College Ave., Claremont, CA 91711 & Center for Process Studies

How to Cite this Article

Cobb, Jr., John B., “Addendum: Further Commentary on the Work of Economist Herman Daly”, last modified 2008, The Whitehead Encyclopedia, Brian G. Henning and Joseph Petek (eds.), originally edited by Michel Weber and Will Desmond, URL = <>.