Going Steady with Herman Daly: ‘¡No pasarán’/ É Proibido Proibir’

We follow Herman Daly into one of the last places you’d expect to find a rebel economist: the World Bank. We will hear how the academic work of Herman’s sister, Denis Daly Heyck, impacted on his worldview. We’ll also see how this fused with Herman’s own experiences teaching in Brazil, and the building of pan-American ecological and human rights movements to fuel him to advocate for policy and philosophical changes at the Bank - culminating in his famous farewell speech. 

Featured in this episode:

Karen Daly Junker & Terri Daly Stewart, Herman and Marcia’s daughters

Jon Sward, Environment Project Manager at the Bretton Woods Project

Denis Daly Heyck (Deni), Professor Emeritus of Spanish language & literature

David Batker, Ecological economist

John Redwood, Former World Bank employee

Robert Costanza, Ecological economist

Clóvis Cavalcanti, Ecological economist

Peter May, Ecological economist

Kate Raworth, DEAL co-founder

Joshua Farley, Ecological economist

Xiye Bastida, Climate justice activist

Thank you to the Daly family for their generous support in sharing Herman’s story. 

Thanks also to: C40's Barbara Barros for voicing Marcia Daly’s email in this episode; Denis Daly Heyck for providing the images for our episode art; and to Nate Hagens and the team behind The Great Simplification podcast for granting us permission to use a clip from their show.

Thank you also to our series consultants and fact checkers, Peter Harnik, Rob Dietz, and Peter Victor, who also graciously supplied the interview tape with Herman Daly, recorded in 2022.

Media citations by order of appearance:

(That'll Work) (Live), Chuck Brown

The Heritage Foundation - “Mr. Gorbachev, tear down this wall!”

The Great Simplification: “Toward an Ecological Economics”

If you want to learn more about the Journal of City Climate Policy and Economy, please visit our website: https://jccpe.utpjournals.press/

Cities 1.5 is produced by the University of Toronto Press and Cities 1.5 is supported by C40 Cities and the C40 Centre for City Climate Policy and Economy. You can sign up to the Centre newsletter here. https://thecentre.substack.com/

Cities 1.5 is hosted by David Miller, Managing Director of the C40 Centre and author of the book Solved. It's written and produced by Peggy Whitfield and Jess Schmidt: https://jessdoespodcasting.com/

Our executive producer is Chiara Morfeo.

Edited by Morgane Chambrin: https://www.morganechambrin.com/

Cities 1.5 music is by Lorna Gilfedder: https://origamipodcastservices.com/

Transcript

[Going Steady with Herman Daly theme music]

Herman Daly 00:04

Well, I changed my mind about the World Bank. You know, I thought that would be a good possibility of making a contribution. I thought that that would be a worthwhile effort.

Karen Daly Junker 00:17

Oh, the World Bank. Imagine going from a college professor where his daily attire was shorts and a guayabera shirt and tennis shoes.

Terri Daly Stewart 00:29

Or jeans. Yeah.

Karen Daly Junker 00:29

Yeah, jeans, and then going to the World Bank. He loved to be comfortable, and then to have to wear a suit to the World Bank, that was painful for him. [music ends]

David 00:43

[samba music] Washington, District of Columbia, 1988. The capital of the United States of America was a city of sharp contrast. By day, its federal buildings and historical marble monuments projected power, stability, and global dominance. By night, entire neighborhoods wrestled with the crack epidemic that had earned D.C. the grim title of ‘America’s murder capital’. The Smithsonian Museums and the Kennedy Center offered free admission to world class culture. The population was majority Black, and while the capital was rich in community, the city’s neighborhoods were scarred by inequality and disinvestment, mainly along racial lines. [music ends]

[fast rhythmic music] On the political front, George Bush Senior was just about to step into the White House on the heels of the Reagan years. Globally, the Cold War was in its death throes and the Iron Curtain was collapsing. The Berlin Wall would fall by November the following year. [music ends]

Ronald Reagan 02:09

Mr. Gorbachev, tear down this wall. [crowd cheering]

David 02:17

[slow rhythmic music] The Washington D.C. of the late 80s was the stage where the future of entire nations was argued over and then decided largely by American and European elites in rooms at the IMF and the World Bank. The old order was giving way and new global alignments emerging, leading to shifts that would profoundly reshape the world’s economy.

Herman and Marcia arrived into this atmosphere of turmoil and transition as he took up a post at the World Bank, determined to bring the idea of an economy bounded by ecological limits into the heart of global policy. But other members of Herman’s family were also entering new stages of their life, with both of his now adult daughters having flown the coop to university. At LSU, Terry would study music and vocal performance and Karen pursued an undergraduate degree in religious studies. Post-graduation, Karen made the decision to join her parents in Washington while Terry continued to graduate school where she was studying occupational therapy. [music ends]

Karen Daly Junker 03:31

After I graduated, I decided I wanted to see if I could move up there. And, you know, we got along so well so I lived with them. And I worked at a law firm in Washington, D.C. because I thought I was interested in law, and I quickly became disinterested in law. [laughs]

David 03:51

And what about Marcia? Now that the children were young adults, Marcia embraced big city life. Here’s an excerpt from an email, voiced by Barbara Barrows, that Marcia sent to Herman’s biographer Peter Victor.

Barbara Barros 04:08

Washington D.C. area was very nice for me. I decided I would use the I-495 Interstate beltway to learn about the area, so we could go to meetings and museums. We joined the downtown Washington Methodist Church. Our church also served a lunch in downtown where we could also meet and talk with very nice persons who were having a hard time financially and looking for jobs. We both participated in a few marches and demonstrations to support peace and justice.

Karen Daly Junker 04:40

She really liked when we moved to Washington. She loved how international it was. And I think my mother was spending that time just engaging with Washington and, you know, she wanted to go to every symphony. And my dad always said that she’s strong. Like, she is so strong. Like, she adapted to Washington very well. He always said that. He said it much better than I did. I think he was so impressed at his wife because she just embraced it.

Terri Daly Stewart 05:11

She would be the one driving a lot of times because she knew where she was going. If not, they would fight probably in the car, you know.

David 05:17

[slow rhythmic music] While Marcia was making waves in Washington, Herman was on the verge of making his own splash in the city; bringing his economic theories to the World Bank. But before we join him there, let’s remind ourselves of the geopolitical and organizational context that we find both Herman and the bank itself in. [music ends]

[rousing music] From its beginning, the World Bank was not a level playing field. Voting power was tied to financial contributions. This meant the richest nations, especially the United States of America, held the most sway. To this day, the USA remains the largest shareholder with effective veto power over major decisions. The World Bank’s original mission was reconstruction and development. In its earliest years, it helped rebuild Europe’s infrastructure: its bridges, power, plants, and roads. Over time, the World Bank grew into one of the most powerful financial institutions on the planet, shaping the trajectories of dozens of countries, but often with conditions attached to its loans. After rebuilding Europe, the bank turned its attention toward what was then called ‘the developing world’.

Jon Sward 06:45

I am Jon Sward. I’m the Environment project manager at the Bretton Woods Projects. [music ends]

David 06:50

The Bretton Woods Project is a UK-based watchdog of the World Bank and the International Monetary Fund, making Jon a present day expert on the global implications of these institutions.

Jon Sward 07:04

We were set up in the 1990s. There was an awful lot going on during the late 80s and early 90s. And the standard critique, I think, of the bank advanced by many of us, and starting certainly from that period in the 80s to the present day, is that the bank hasn’t done enough in its projects and investments to avoid environmental and social harms from projects.

David 07:27

[rousing music] You’ll remember Denis Daly Heyck from earlier episodes. She’s Herman’s sister and Professor Emeritus from Loyola University. She’s also an influential academic in her own right and spent a lot of her academic career working with indigenous and grassroots projects across Nicaragua, Bolivia, and Brazil. In her 2002 book, Surviving Globalization in Three Latin American Communities, Denis argues that the dominant concept of development assumes that so-called ‘First World Nations’ should help ‘Third World Nations’ become more advanced. But this vision was at best naive and at worst arrogant. Institutions like the World Bank built their policies around this model. Tying loans and aid to economic growth targets, large scale infrastructure and modernization projects designed to replicate Western style prosperity across the globe. [music ends]

Denis Lynn Daly Heyck 08:35

Development was seen as increasing wealth for a few. And if certain geographical areas and environments or certain groups of people had to be sacrificed in pursuit of development, then that was a shame but that was just the price to be paid.

David 08:58

[rousing music] Historically, the World Bank’s guiding philosophy was rooted in economic growth as the path to prosperity. By financing big projects, the bank aimed to jumpstart productivity, expand trade, and integrate poorer countries into the global economy. [music ends]

Jon Sward 09:21

What we’ve seen is that since the 1980s, in particular, inequalities have deepened, and part of that is the story of structural adjustment. In the early 1980s, there was the Volcker shock when Paul Volcker, the chairman of the Federal Reserve, raised U.S. interest rates and catalyzed a debt crisis, essentially, across much of the Global South. That was really the catalyst for structural adjustments, and at that point the development model of the bank changed quite a bit.

David 09:54

[melodic music] Countries like Mexico, Brazil, and Argentina were weighed down by soaring interest rates, collapsing commodity prices and defaults on their massive debts. The bank and the IMF stepped in with emergency financing, but only in exchange for these sweeping structural adjustment programs. [music ends]

Jon Sward 10:18

And the energy sector up to that point, the World Bank had sort of supported a developmentalist approach with public utilities, for example, providing energy. And in structural adjustment we saw this real shift where the solution now is to privatize those utilities, liberalize energy markets, introduce a kind of wholesale energy system. And so part of the rationale for that initially was the bank’s approach to debt sustainability, right? That selling off these assets was a way to try to shore up the short-term debt outlook.

David 10:53

Denis saw firsthand the impacts these policies had on impoverished women in Nicaragua, who faced a huge shift from revolutionary leftist policies to neoliberalism and free markets.

Denis Lynn Daly Heyck 11:08

They lost control over their economic livelihood. Things got destroyed. They were put off their land. What the neoliberal policies do is they create dependency. It is not a strategy for development, but for continuing dependency.

David 11:30

[slow rhythmic music] These policies reflected the dominance of the United States of America and its G7 allies who had by and large become rich through colonialism. They were backed by extractive economics which plundered and exploited the natural resources of conquered lands. This led to the marginalization, enslavement, and destruction of indigenous communities who had previously lived in balance with their environment. Brazil is one such example of this. [music ends]

Jon Sward 12:05

There were a number of iconic kind of high profile cases that brought this to the forefront of the public’s attention, really, and to the attention of lawmakers. And one of those was certainly the Polonoroeste Project, the road development project in the Brazilian Amazon in the 1980s. And this was the first example of the bank stopping the disbursement of project financing because of environmental and social concerns.

David 12:34

This Northwest development program promised integration. In practice, it became a state subsidized land rush. Migrants poured in, forests were burned and indigenous communities and rubber tapper families were forced from their land by chainsaws and gunman.

Jon Sward 12:55

So this created quite a lot of negative social and environmental impacts and was a kind of a lightning rod moment for a number of U.S. NGOs, Congress, obviously social movements in Brazil. The American media, and even the public at large, wrote a number of letters to the bank at the time. This was a very controversial project, and I should add that it was quite a controversial project within the bank. It was sort of bank insiders who were feeding information to U.S. civil society at the time.

David 13:28

[rousing music] By the mid-1980s, the violence and growing inequality was drawing global attention. Among those speaking out was Chico Mendes, who organized empates, nonviolent blockades to stop the destruction. He would be joined by another hugely influential player in Brazil’s political and environmental future, Marina Silva, Brazil’s current minister of the environment and climate change. [music continues then ends]

Denis Lynn Daly Heyck 13:58

She had been a rubber tapper from a very young age, about 10 or 11 years old, and she was very involved in the empates, those were—standoffs were between groups, unarmed, of forest people, grandparents, children, workers, forest residents who were being threatened or evicted or whatever from their forest home, and the owners, and their own workers, of these large rubber estates and logging areas. So, these were often very violent on the part of the landowners, because they would come with chainsaws and arms and they would be very intimidating because they were going to cut down the trees. The forest people who were in the empate, the community members, they would lie down in front of the tractors. They were very courageous and they were ultimately successful in a number of empate standoffs. That was quite a remarkable thing that Marina Silva was involved in.

David 15:08

[melodic music] The message of Chico Mendes, Marina Silva and all those who stood with them was simple; the survival of local people depended on the survival of the forest. But as is so often the story, Chico Mendes paid a high price for his activism. In 1988, he was honored with the prestigious Goldman Environmental Prize, but later that same year Chico Mendes was shot dead outside his home by a rancher. [music continues then ends]

Denis Lynn Daly Heyck 15:43

Oh, it was shock in horror. It was terrible. People couldn’t believe it. And it really actually devastated the rubber tappers movement for a while. They fell into disarray because their incredible leader was no longer there. But thankfully they had structures and individuals established that could ultimately—not initially, but ultimately take the reins of leadership and continue the movement and the union.

David 16:16

Denis’ work with communities on the sharp end of neoliberal economic policies undoubtedly influenced Herman’s perspective on what damage could be done to populations across Latin America.

Denis Lynn Daly Heyck 16:30

I know he was very moved by the courage and tenacity and the agency of all those who were involved in the base community work and leadership development and strategizing for the community and the environment in the Amazon, even in the face of personal danger to all of them.

David 16:52

International outrage and growing social movements in the USA and Latin America forced the World Bank to confront its own role in the chaos and violence.

Jon Sward 17:03

This was one of those early examples of public embarrassment. You know, reputational damage to the bank catalyzing a degree of internal change. So as a result of the sort of controversy that surrounded the project, it wasn’t only that the funding to the project itself ceased, but the bank brought in kind of range of processes to try to mitigate some of the issues that emerged.

David Batker 17:32

The World Bank decided that they needed an environment department. They didn’t have one before. If it was a major dam or a huge coal-fired power plant or anything else, there was no environmental assessment. Nothing.

David 17:45

That’s the voice of one of Herman’s former students from Louisiana State University, David Batker. Like Herman, David also ended up working at the World Bank and the former student and teacher struck up a strong working relationship.

David Batker 18:01

We worked on many, many issues over the years while he was at the World Bank, and I was with a group of about 300 NGOs wanting to change policy at the World Bank.

John Redwood 18:12

Back then, it was mainly male in terms of staff. Rather gray. Largely Brits and Indians and Americans, then a scattering of women, a scattering of other nationalities and so on.

David 18:27

That’s John Redwood, who also worked at the World Bank in the late 1980s. John’s been involved with the World Bank in one way or another for half a century.

John Redwood 18:38

My title is ‘retired from the World Bank and Consultant to a number of different international agencies, including the World Bank’.

David 18:47

Herman and John Redwood were another example of colleagues turned friends from this time period. All thanks to their wives, it might have been a case of friends turned colleagues.

John Redwood 18:59

I actually met Herman before I went to the environment department among a group of friends. We were all married to Brazilians, so I’m pretty sure that was how I first met Herman and his wonderful wife, Marcia. We were good friends even before we were colleagues as department mates.

David 19:17

Herman’s daughter Karen says her mother looked back on these times with fondness.

Karen Daly Junker 19:22

They had a World Bank book club with a lot of the spouses and she loved that. She loved that.

Barbara Barros 19:31

I also enjoyed working at the Word Bank as a volunteer to help spouses who had arrived in D.C. from other countries and had problems in finding a house and a doctor, school for kids, et cetera. The husbands usually had to travel pretty soon, so many spouses were alone with the children in a large city and some did not speak English.

David 19:52

[rousing music] John, Herman and David were on the front lines of a period of immense change at the World Bank. They saw firsthand the internal struggles which hampered the new environment department’s ambition to integrate mainstream policies which would protect people and planet. [music ends]

John Redwood 20:16

The environment was often seen as a cost rather than a benefit. We tried to show that good environmental management and good practice was good development practice. It was also key to sustainable development, which became a concept around that time. These were early days and there was a lot of resistance by sort of the mainstream part of the bank, the operational complex.

David 20:40

Herman was driven by what his sister Denis had shared with him as well as his research and experiences with marginalized Latin American communities.

John Redwood 20:51

He was really trying to change, you know, the overall approach. We didn’t really discuss his specific frustrations. I think among other things, he was very discreet and very diplomatic with some of his publications, even internal publications at the time. We were just really trying to focus on his view of development, and sustainable development more specifically, which was a new concept in the bank.

David 21:15

During this time of great change, there were many successes in pushing the World Bank to change its policies.

David Batker 21:23

The World Bank got a new policy for information. People had to be informed a year in advance if there was a proposed World Bank policy, then the environment policy was adopted, an energy policy, a forest policy banning the logging of primary forests.

David 21:40

But Herman also got increasingly frustrated with the slow pace of change.

David Batker 21:46

Herman shifted to the Brazil department for a while. He was given veto power because at that time the World Bank realized that a lot of very bad projects and disasters happened because there wasn’t environmental and social assessment. He immediately said, “Brazil’s biggest problem is not producing too little stuff, it’s the wealth distribution that is so horrifically skewed,” and then he was booted out of the Brazil department.

David 22:15

Herman began to realize that he had a profound philosophical clash with the prevailing World Bank culture. Here’s John Redwood again.

John Redwood 22:25

I think the main problem was the bank’s core macroeconomic paradigm was very different from Herman’s. And I think most of us shared Herman’s views and I think we were all equally frustrated by the resistance and the inability for the bank to change more rapidly. It’s a lending organization so the incentives are to get the money out. Environmental safeguards were seen as something that slowed the process down, that complicated relations with the borrowers—countries because many of them were resisting as well, maybe even more so than the bank. So, it was hard to get the environmental risk approach into projects. Over time, that has greatly improved. It really has been incorporated over the last several decades into the bank’s culture, so it’s kind of standard practice. But initially it wasn’t.

David 23:16

[rousing music] One of the most enduring legacies that would come from Herman’s time at the World Bank was yet another field defining diagram. Here’s a clip of Herman explaining the said diagram on the podcast The Great Simplification hosted by Nate Hagens. You can see the diagram in the background of the image for this episode. [music continues then ends]

Herman Daly 23:42

The World Bank comes out with a World Development Report every year or sometimes two years. Back in 1992, a couple years after I had just gone to the World Bank, they were going to do one on sustainable development, which at that time was the big new concept that had just come down from the UN and they had to deal with it. I was not on the team which was going to write the report because I was too low in the hierarchy, but because I was an environmentalist in the environment department I was on the review panel to comment on successive drafts of the report. First draft comes, I eagerly start reading it. In the first chapter, there’s a diagram, which is titled ‘The Relation of the Economy to the Environment’, and it consisted of a rectangle labeled ‘economy’ and an arrow coming in from the left labeled ‘inputs’, and an arrow exiting to the right labeled ‘outputs’. Nothing else. So I wrote a comment. I said, “This is a really good beginning here, but the caption says ‘relation of economy to the environment’, where’s the environment? So let’s draw a big circle around the rectangle and label that ‘environment’.” So I sent that back in as my comment. Here comes the second draft. It’s the same diagram, but this time with a great big rectangle drawn around the original rectangle as basically a picture frame. They just took the same picture and put it in a frame. No labeling, no change in the text, and I said, “This is really the same thing.” I repeated the things I’d said before, tried to be more diplomatic, sent it back in. Here comes the third draft. No more diagram. Completely abandoned any attempt to draw a diagram of the relation of the economy to the environment. You know, that’s something, isn’t it? That’s not hard to do. This is kindergarten. Why won’t they look at it that way? Why do they not want to do it? Well, I realized slowly the reason is that picture threatens you with questions to which you cannot give a good answer within the context of the World Bank, because it immediately says, “If the economy is the subsystem of a larger system, the larger system is finite, non-growing, and materially closed. How big can the subsystem be relative to the total system before it disrupts it?” It’s going to limit growth. We understand that much and we can’t do that because the World Bank is in the business to grow, so better to abandon it.

David 26:33

[rousing music] Nate Hagens is the director of the Institute for the Study of Energy & Our Future, an organization focused on educating and preparing society for the coming cultural transition. He’s also another ecological economist whose work has been greatly informed by Herman, and we highly recommend The Great Simplification if you want to hear more from Nate and many other experts on the human predicament we find ourselves in. [music ends]

[slow rhythmic music] Much like LSU, Herman had allies and trusted colleagues who understood and supported the work he was trying to accomplish. And also like LSU, he had to face detractors, naysayers and roadblocks. Here is David Batker. [music ends]

David Batker 27:23

I would say conflict was apparent every day. Herman was a very strong personality. He was very frank and true about what he thought. He didn’t mince words. He’s actually blunt in many ways. He was determined and he did not cow in front of anybody. When the executive directors of the World Bank got mad at him, he’s like, “Okay, you’re mad, but I’m right still. [chuckles] “You know, you being mad is not solving the problem of injustice.”

David 27:53

Here’s Herman’s daughters.

Terri Daly Stewart 27:55

I think he just realized it was a very different role. I mean, he knew what he was getting into, but he also—once you’re there and you’re dealing with it every day I’m sure it was like, “Oh, gosh!” You know, he made the best of that and I think he tried to do positive work while he was there. And I think when he would have disagreements, I think he tried to work at them from the heart.

Karen Daly Junker 28:20

I think he was very much a—and I’ve heard this from other people too. He was very much a gentleman—

Terri Daly Stewart 28:25

Yes. [chuckles]

Karen Daly Junker 28:25

—in his disagreements. Which, you know, we would see him behind the scenes where he’d be ranting a little bit—

Terri Daly Stewart 

[imitating wordless grumbling]

Karen Daly Junker 28:30

—but I think face-to-face with people, he was incredibly respectful in a way that you don’t see today, which is sad.

David 28:38

[melodic music] Herman’s time at the World Bank was a mixed bag. He made some good friends and created influential intellectual partnerships as well as supporting profound policy shifts in the face of internal opposition. But the constant battles to achieve anything became tiring, as Marcia recalls. [music ends]

Barbara Barros 29:06

It was not enjoyable for Herman to work at the World Bank, though he enjoyed meeting persons who were of the same mind as he.

David 29:16

Despite this, Marcia had her own misgivings about life in the capital.

Barbara Barros 29:22

We did not attend many parties.

David 29:25

So in 1994, after six years at the World Bank, Herman decided to move on.

John Redwood 29:32

I don’t think he was pushed out. I think he decided to go. I think he felt frustrated with the bank and more comfortable in an academic environment, which is more open and which he was professionally much more accustomed to.

David 29:44

Herman relocated a stone’s throw away to the University of Maryland, but before he left he gave what was to become a very famous speech.

David Batker 29:54

Herman’s farewell speech at the World Bank was one of the most touching moments of his life, as he said. It was held in a very large auditorium. It was absolutely packed to the gills. People were sitting on the stairs. So many people admired him. So many people looked up to Herman and the struggles and fights that he conducted at the World Bank.

John Redwood 30:21

The farewell lecture itself, I think, was well attended at least by his colleagues in the environmental department. And by the way, there was a lot of regional environmental staff as well who were also our mates, if you like. I think Herman was very widely respected and very widely known among that group.

David Batker 30:37

Two of his bosses left town. [chuckles] They didn’t want to be seen by the administration of the World Bank as having anything to do with him or thanking him for anything. It was kind of hilarious. Nobody wanted to introduce him. [chuckles]

John Redwood 30:52

His critiques of the World Bank were basically it should be more open. It should listen to advice from people like himself and it should follow that advice.

David Batker 31:01

He was given an absolutely resounding standing ovation for minutes. [audience clapping and cheering] And it was so sweet because Herman had been so criticized by the management many times, sort of marginalized, and here it was all these people who had been sort of hidden in the World Bank came out and showed vast appreciation for all he’d done and for what he had to say.

David 31:29

Here’s Jess, our producer, reading a transcript of Herman’s speech.

Jess Schmidt 31:35

Who can refuse an invitation to give a farewell lecture to (take a parting shot at) such a powerful institution—an institution whose role in the world is, for better or worse, becoming ever more important, and whose imminent fiftieth birthday invites the reassessment characteristic of mid-life? I willingly succumb to the temptation both to pontificate and to prescribe a few remedies for the Bank’s middle-aged infirmities.

My prescriptions will be of two kinds, internal and external. First, a few antacids and laxatives to cure the combination of managerial flatulence and organizational constipation giving rise to such a high-pressure internal environment. Second, to improve interactions with the external world, I will prescribe some new eyeglasses and a hearing aid. After age fifty these aids to the body become more necessary and should be accepted, or at least listened to, with as much grace as possible.

David 32:47

[slow rhythmic music] Herman also prescribed the World Bank some medicine to fix its ailments. His old friend and co-author of Limits to Growth, Dana Meadows, wrote a contemporaneous blog post about his speech titled ‘A Farewell Address by the World Bank’s Most Outrageous Economist’. Have a listen as our producers read excerpts from both, with Jess voicing Herman and Peggy voicing Dana. [music ends]

Jess Schmidt 33:18

[melodic music] One, stop counting the consumption of natural capital as income.

Peggy Whitfield 33:26

When the Philippines permits its forests to be carried off as logs to Japan, its balance of payments looks good, for a few years. When Indonesia sells off its oil, when the U.S. fishes its great cod populations down to remnants, the economy booms, until the resource is gone. That kind of behavior breaks the most time-honored economic law, which is to take this year only what will leave intact the capacity to produce the same amount next year. Don’t spend down your capital. Every economist knows that. The problem is that economists have never counted soils, forests, clean water, clean air, mines, oil wells, or other species as capital. These resources are income-producing; indeed without them there would be no income. But we have no accounting systems to keep track of natural capital. The Bank is playing a pioneering role in “greening the GNP”—adding natural resources to national accounting systems. “The Bank should also,” said Daly, “Count the loss of natural capital when calculating whether to fund a dam or a road. Not to do so means biasing Bank projects toward unsustainable development.” [music ends]

Jess Schmidt 34:40

[rousing music] Two, tax, labor and income less; tax throughput more.

Peggy Whitfield 34:49

Throughput means flows of energy and materials from the earth, through the economy, and back in the form of waste to the earth. “It makes no sense,” said Daly, “To tax what you want more of (income, capital gains) instead of what you want less of (depletion, pollution).” Given that we have to tax something, we should tax energy and material extraction and pollution emission, not income.

Jess Schmidt 35:14

Indeed, sustainable development must be achieved in the North first. The major weakness of the World Bank’s ability to foster environmentally sustainable development is that it only has leverage on the South. Some way must be found to push the North.

Peggy Whitfield 35:32

The North should take the step first. [music ends]

Jess Schmidt 35:36

[slow rhythmic music] Three, maximize the productivity of natural capital and invest in increasing it.

Peggy Whitfield 35:45

Economists don’t have to be told that the smartest way to invest is to find the most limiting factor in an economy or economic process—the factor that is most strained, the one that is holding back production—and find a way to use that factor more efficiently or to get more of it. What economists do have to be told is that in many places the limiting factor is no longer labor or manmade capital. It is natural capital.

Jess Schmidt 36:12

The fish catch is limited not by the number of fishing boats, but by the remaining fish in the sea. Cut timber is limited not by the number of sawmills, but by the standing forests.

Peggy Whitfield 36:25

That realization is slow to come partly because of inadequate accounting, and partly because so many economists were trained in a half-empty world where nature was abundant. They haven’t yet adjusted to a world where nature is suddenly very limiting. [music ends]

Jess Schmidt 36:43

[fast rhythmic music] Four, move away from the ideology of free trade and free capital mobility and toward national production for internal markets. At present global interdependence is celebrated as a self-evident good. The royal road to development is thought to be the unrelenting conquest of each nation’s market by all other nations. It is necessary to remind ourselves that the World Bank exists to serve the interests of its members, which are nation states. It has no charter to serve the cosmopolitan vision of converting many relatively independent national economies into one tightly integrated world economic network, upon which the weakened nations depend for even basic survival.

Peggy Whitfield 37:31

Globalizing the economy means erasing much of the power of national governments to carry out policies for the common good. Any protection of local businesses, of workers, of communities, or of the environment can be struck down as a restraint of trade—as if trade were the highest value, to which all other values must be sacrificed. [music ends]

David 37:52

[samba music] After the final lecture, Dana asked Herman a question.

Peggy Whitfield 37:58

How did the bank audience react to all this heresy?

Jess Schmidt 38:01

Much better than I had hoped. Maybe its wishful thinking, but I think the first two suggestions, with time, will certainly be followed. The third is more debatable, but I’m confident of it in the longer run. It’s going to be a real battle for the fourth. [music ends]

David 38:17

[jazz music] Herman had been busy during his time at the World Bank, but not so busy that he didn’t have time for side projects. These would become the basis of the new interdisciplinary economic field he was unknowingly creating. [music ends]

[fast rhythmic music] You will remember Bob Costanza from last episode. He was another heterodox thinker who had bonded with Herman over their shared ideas about the world while they were both working at LSU. Bob and Herman figured that if they were eventually going to overthrow mainstream economic thinking, they should probably figure out what to call the new replacement. [music ends]

Robert Costanza 39:01

I think calling it ecological economics was something that we sort of agreed on together. We were trying to figure out what—you know, how to represent this sort of transdisciplinary thing that we were talking about. So we didn’t want it to just be seen as a sub-discipline of economics like environmental economics is kind of in that mode. We recognize that both ecology and economics, you know, come from the same Greek word oikos, which means the house, and so literally ecology is the study of the house and economics is the management of the house. So, you want to manage the house, you know, in a way that represents how you understand it and how you study it, and I think that’s what was not going on and what we wanted to represent.

David 39:45

[melodic music] So Herman and Bob had a name. But with academia rejecting the doctrine of their new discipline, they also needed a way to share their knowledge and ideas and hopefully to recruit some new disciples. [music end]

Robert Costanza 40:00

We were having trouble publishing our papers in the normal journals. [chuckles] There were no journals that really covered this kind of intersection between ecology, economics and the sort of natural and social sciences. We published a special issue on this idea of, you know, having an ecological economics and invited some of our colleagues who we thought were of the same mindset. And that was quite successful. That special issue came out in 1987 and we eventually, you know, had the idea to start a journal.

David 40:32

The journal Ecological Economics.

Robert Costanza 40:35

The first issue of that was in 1989. Once we had a journal going [chuckles] you know, the publisher, Elsevier, said, “Well, if you want to get, you know, reasonable prices for individual subscriptions to the journal you’ve got to have a society,” so we decided to start a society for ecological economics.

David 40:52

Here’s Clóvis Cavalcanti.

Clóvis Cavalcanti 40:55

We had been discussing about how to move forward with the concepts, with the interpretation of reality that ecological economics offer. And then after much discussions we decided something concrete had to be made. I was invited by Herman to participation in the creation of the International Society for Ecological Economics.

Robert Costanza 41:27

And then once we had a society then, okay, you have to have meetings of the society, right? [laughs] So we decided to have a meeting and the first meeting—because Herman was now at the World Bank and Robert Goodland was also there, one of the few ecologists that was working at the World Bank, and they somehow got the World Bank to agree to let us hold the meeting at the World Bank in D.C..

David 41:50

One of those people who joined the inaugural meeting was Peter May. Now he’s a writer, author, and renowned ecological economist living in Rio and a professor at several Brazilian universities. But back then, he was a relative unknown who had just finished his PhD.

Peter May 42:10

1990, we went to the first meeting of what became, actually, at that meeting, the International Society for Ecological Economics. And Herman was one of the two movers and shakers behind the creation of this organization, which was kind of reflecting on the need for a different kind of perspective. A lot of it based on Herman’s work, but also on the work of Bob Costanza, who was his partner, really, in that endeavor, and a number of other people. Obviously there were quite a coven of people working together creating this. And, you know, I don’t even know how, but I heard about this meeting and I thought, “I’ve got to go to this meeting because they’re doing what I want to do.”

David 42:54

Choosing the World Bank as the venue was a master stroke. It showed the bank just how many people were infused by Herman’s vision of economics.

Robert Costanza 43:04

I think that stimulated maybe more interest than we would’ve otherwise gotten in this meeting. And, you know, we had like twice as many people show up as we anticipated, so that was a big success. It was mainly people from outside the bank, but we did have some people from the bank there. We talked about all of the issues that are still important, I think, to ecological economics: the issues of sustainability and the limits to growth and, you know, how to measure wellbeing more comprehensively, and all of our assets, really, but including our natural capital and our social capital. It was quite exciting and it did get covered by Science magazine and a few other outlets. I think the idea that, “Hey, we need a whole new approach to economics and here’s one that’s coming up.” So, it was an exciting time for sure.

David 43:57

[slow rhythmic music] Academics from all over the world were brought together with the goal of creating a version of economics that actually made sense. When Peter May met Herman and Bob at the inaugural meeting of ISEE, they capitalized on the opportunity to ensure that ISEE wouldn’t become an exclusively North American society. [music ends]

Peter May 44:21

That’s where I know I met Bob and then we had a partnership of sorts to try to build this ecological economic society in Brazil. So that’s how it all started.

David 44:31

[jazz music] They called this new branch the Brazilian Society for Ecological Economics, or ECOECO, and Peter became its first president. Since its founding ECOECO has been key to ensuring the spread of ecological economics in Latin America and keeping the Brazilian lens that was so important to Bob, Clóvis, Peter May and Herman. [music continues then ends]

Clóvis Cavalcanti 45:01

ECOECO was founded parallel to the discussion of the international society. We had a meeting in Brazil and our first conference was a small group meeting in São Paulo in 1993. In 1994, I organized a small group to discuss the things here in my state here. We had a very interesting discussion, including people from outside the economics. For instance an anthropologist called Daropozi. Daropozi was from Oxford. Why we invited Daropozi is because in my view we needed to include traditional people, the vision of traditional people.

David 45:54

Clóvis had grown up in loving but humble circumstances, teaching himself to read. He was surrounded by the legacy of colonialism and the displacement and dilution of indigenous cultures and communities.

Clóvis Cavalcanti 46:09

I studied the behavior of indigenous peoples in Brazil. First meeting for the ecological society—the ISEE, I wrote about mentioning the importance of traditional people.

David 46:28

We heard last episode about Clóvis and Herman’s University course, one of the graduates of which went on to shape the future of ECOECO.

Clóvis Cavalcanti 46:37

One of the students taking the course became an ecological economist, and she became president of the Brazilian Society of Ecological Economics, Maria Amélia Enriquez.

David 46:52

[jazz music] These blends of influences from the very different members of ISEE were integrated in the culture and work both the North American and Brazilian branch carried out, but perhaps more importantly, they created a place where heretical thinkers could work together. The journal was also a powerful medium to communicate their work. [music continues then ends]

Robert Costanza 47:19

We had a group of colleagues around the world that we were talking with. And in order to move this idea forward, you know, we needed to have a venue for publishing those kinds of ideas and having a permanent record and, you know, having this ongoing discussion.

David 47:34

[fast rhythmic music] Now, more than three and a half decades later, the journal has become the field’s central voice. It has carried forward Herman’s groundbreaking ideas, the steady-state economy, uneconomic growth, the critique of GDP as a measure of progress and set them alongside the work of thinkers like Nicholas Georgescu-Roegen, Joan Martinez-Alier, Jason Hickel, and Julia Steinberger. Over the years, it has nurtured debate, fostered innovation, and given ecological economics a legitimacy it never had before. In short, the journal, with the support of the ISEE and its Brazilian offshoot, institutionalized the field. It gave Herman and his peers a platform to challenge the myth of endless growth and to show the world what an economy grounded in ecological reality might look like. [music ends]

[melodic music] His career at the World Bank, though frustrating at times, had helped to give Herman mainstream credibility; the academic world, while still imperfect, was the place he was meant to be. Herman’s return to academia for the second time was less fraught than his time at LSU. It also led to the blossoming of his career in later years, as David Batker recalls. [music continues then ends]

David Batker 49:13

It took time for his ideas, I’d say, to flourish. You saw this movement of younger economists coming up through the entire profession who regarded him as important. And so suddenly he was being accepted as a real economist and a very important economic thinker, and this group of ecological economists as well grew and then many, many offshoots from that as well. His ideas became better accepted. He was better accepted. But he was always popular. He was always invited to give many speeches. He was recognized even at—when he was at LSU, but he became better recognized and more accepted in the economics profession as time went on.

David 49:59

[slow rhythmic music] This grounding of ecological economics gave Herman the scope he’d been missing for most of his career; mainstream economics had dismissed him because his work was too ecologically focused. Conversely, he couldn’t get published alongside straight ecological work because he was an economist by training. This new field gave him purchase to fully explore this intersection, and he did so through a number of publications throughout the next couple of decades at the University of Maryland. His career at the World Bank, though frustrating at times, had helped to give Herman credibility; academia, whilst still imperfect, was the place he was meant to be. Herman’s return to academia for the second time was less fraught than his time at LSU. Even while he was at the World Bank, Herman had continued to pursue both his research and the development of his like-minded community. By the time he moved to the University of Maryland, Herman’s work was no longer relegated to the fringes of economics. It was starting to become accepted into the mainstream, but under its own new umbrella. One of Herman’s books which would end up inciting epiphanies in a number of other economists, including Kate Raworth, the inventor of doughnut economics, is Beyond Growth: The Economics of Sustainable Development published in 1996. [music ends]

Kate Raworth 51:37

I went to university to study economics in 1990. I wanted to learn the mother tongue of public policy. And I was really interested in environmental issues, but it was barely on the syllabus. You couldn’t really study it back in those days. And by the end of my degree, I was just really frustrated because the issues I cared most about, like looking after the environment, just hadn’t come into what we’d been taught. And so I never wanted to introduce myself as an economist. I never wanted to stick my hand out and say, “Hello. I’m an economist.” People tended to recoil for many good reasons, actually, and I walked away from economics and threw myself into the real world economy. And it was only many years later, in fact, during the global financial crisis, when economists were saying, “Oh, we must rewrite economics to reflect financial realities.” I just thought, “We’ll be darned if we’re only going to do that. Surely we’re going to now rewrite economics to reflect ecological crises that we already face, social crises that we face,” and this led me back towards economics. I wanted to be part of the big team that took it on, challenged it, flipped it on its head and started with the goal of the economy, which is what led me to draw the doughnut. Can we meet the needs of all people within the means of the living planet? But also what kind of economic mindset would give us even half a chance of getting there? And it was in order to answer that question that I started reading a lot of the economics that I had never been taught, and one of the first books on my list was Beyond Growth by Herman Daly. And I remember I was reading it while I was doing jury service, actually, and I kept reading it every time the jury was sent out of the courtroom and we had to sit for an hour or two. And in those times in between the court case, my mind was turning somersaults, because the concepts that Herman Daly set out in his book just blew me away. They were so antithetical to everything I’d been taught and immediately made sense. So, that was how I encountered his work and I never looked back.

David 53:39

[melodic music] Another work which was to become a cornerstone of his theories was Ecological Economics: Principles and Applications published in 2003. Herman co-wrote this textbook with Joshua Farley from the University of Vermont. We met Josh back in episode one. [music ends]

Joshua Farley 54:02

I had written to Herman in grad school and told him that I wanted to be an ecological economist and I didn’t know how to become one. He said, “Finish your degree and call yourself one.” That’s exactly what I did. I’ve never taken a class in ecological economics. I met Herman some years later and he invited me to write this textbook with him. And, you know, I really was a huge fan of Herman. I’d read almost all of his work and, you know, really knew his ideas, but apparently he thought I had a few things to add he hadn’t thought about. We were hoping to provide a textbook that would allow people just to teach easily. Right now, if you wanted to teach a course in microeconomics, you could get a textbook that will have all your lecture notes, all the assignments, everything you need to do the whole course. At the time when we did this, there wasn’t even a textbook in ecological economics. You had to piece it together yourself. We wanted to just make it easier, hoping that would be enough for people to adopt it. But it still has certainly not taken off in Econ departments. Outside of economics, I’d say the field is very influential, but within Econ departments, not very much.

David 55:06

[slow rhythmic music] This period of Herman’s life was when ecological economics truly took off as a global discipline, with the community’s societies and academic journals being crucial and influential tools to fight, sadly, many of the same battles today. The Amazon is still being destroyed. Indigenous communities are still being displaced. Global financial institutions still need reform if they’re to truly create a more equitable world, one which puts the needs of people and planet at its heart. In the U.S., Brazil, and across the world, dramatic policy change is required, but the movement that Herman created is still going from strength to strength. [music ends]

Peter May 55:57

It started off as being more of an academic group of people sort of with common ideas and trying to develop the field so that you have some kind of scientific basis to work from. We try to, you know, kind of rope in people from government, from research institutions where you can have some kind of mass of people who can actually bring some of their ideas to bear. In the process of development of policy we will have to continue working with the NGOs and with people in the academy, people with—in governments where there are some more positive perspectives on what can be done, and that’s the lesson that we have.

David 56:47

Non-profits such as the Bretton Woods Project and ActionAid are also continuing to advocate for World Bank reform, to pressure the institution to center human rights and climate protection in all its policies, but it’s a challenging task.

Jon Sward 57:05

At the end of the day, the World Bank is owned by governments, right? And so to the extent that it can be changed, it’s down to governments, the owners, to change them which is both the kind of like opportunity and the limitation we’ve seen historically at the institutions, right? But yeah, I think there’s an opportunity there in terms of increasing certainly like the diversity of perspectives within the institutions. And ultimately we all have a role to play in terms of convincing governments that that’s the right approach. I think within our space there’s an overwhelming consensus that these institutions which were created in the post-war period are struggling to adapt to the global challenges of our times. If you ask anyone from any corner of our space, they would agree with some version of that kind of diagnosis. And the question is what to do now to address that.

David 58:03

[melodic music] The movements that arose out of the structural readjustment policy era of the World Bank and the activism of brave environmental defenders like Chico Mendes continue to this day. They’re now voiced by a new generation, overwhelmingly from Global South nations, who put economic, social, and climate justice at the heart of all that they do.

In season three of Cities 1.5 we spoke to youth climate activist Xiye Bastida. Born in Mexico and a member of the Otomi-Toltec indigenous community, she has been continuing the fight that activists such as Chico Mendes began; bringing the voice and messages from her region to global fora such as COP. [music ends]

Xiye Bastida 58:57

For me, climate justice means recognizing the way in which communities have been disenfranchised from access to nature, resources and kind of autonomous decision making. Communities have just been sidelined and it’s systemic. I think that’s the essence of climate injustice. That most communities that are breathing polluted air and where all the refineries are in or where all the waste facilities are in or the pipelines are going through are communities of color; indigenous communities. And the Global South has been a place of extraction for the past hundreds of years. So, climate justice means recognizing that these relationships have been broken and then doing what we can to remediate that. We need to make sure that communities are getting back their dignity. So for me, climate justice is that. Making sure that everybody gets their dignity back and is able to enjoy what nature has to offer, what community has to offer, and that they’re not scared of the future.

David 01:00:00

[rousing music] We all have a part to play and the struggle of communities in the Amazon are also our struggles. Or in the words of Chico Mendes, “At first I thought I was fighting to save rubber trees, then I thought I was fighting to save the Amazon rainforest, now I realize I’m fighting for humanity.” [music continues then ends]

[fast rhythmic music] Next week’s episode is our finale and we’ll be focusing on Herman’s legacy, which continues to live on beyond his career. We’ll also be exploring why cities are the perfect laboratories to provide proof of concept for the theories and ideas of ecological economics, inspired by the work of Herman Daly. And we’ll be looking at what the future holds with fossil fuel riches financing authoritarians and political offices around the world and COP30 in Brazil just on the horizon. [music ends]

[jazz music] This has been Going Steady with Herman Daly: How to Unbreak the Economy (and the Planet).

I’m David Miller. I was the mayor of Toronto, Canada, and I know firsthand the role cities can play in solving the climate crisis. Currently, I’m the editor in chief of the Journal of City Climate Policy and Economy, published by the University of Toronto Press in collaboration with the C40 Center, the think tank for cities and climate, where I’m also the managing director. C40’s mission is to use the voices and the actions of the mayors of the world’s greatest cites to help the world avoid climate breakdown.

Special thanks must go to the Daly family for their support and generosity in telling Herman’s story. Thank you to Denis Daly Heyck for providing the photos of the community she worked with across Latin America, which we use in the show art for this episode. Thanks also to our consultants and fact checkers for the series, Peter Harnik, Rob Dietz and Peter Victor, the latter who also graciously shared his interview recordings with Herman from 2022 to use on the show.

This podcast is written and produced by Jessica Schmidt and Peggy Whitfield and edited by Morgane Chambrin. Our executive producer is Chiara Morfeo.

The fight that Herman Daly started is still alive and thriving today. To learn more, visit the show’s website linked in the episode notes. See you next time. [music continues then stops]