Introduction

     Stable consumer prices, full employment, and increasing per capita wealth are economic and political goals in nearly every nation. Aggregate economic growth has been the principal means for realizing these goals. Yet comprehensive and independent scientific investigations provide compelling evidence that the growth of the global economy is not sustainable because it consumes many of the environmental services that underpin the production of goods and services (e.g., Houghton et al., 1996; Heywood, 1995; Postel et al., 1996; Vitousek et al., 1997). There also is a growing realization that economic growth does not necessarily go hand-in-hand with growth in the well-being of people. Standard measures of economic output such as Gross National Product do not reflect the growing disparity between rich and poor in most nations (UNDP, 1996), or the environmental degradation which diminishes the health of people, communities, ecosystems, and the economy (Daly and Cobb, 1989).

     Underlying the universal prescription for economic growth are theoretical models that describe the process of growth itself. These models (and their derivatives) reflect the conventional wisdom about the driving forces behind the historic growth in living standards, the role of the environment in the economic process, and the ability of substitution and technical change to overcome resource scarcity and environmental degradation.

     These models fundamentally misrepresent these important relations, and therefore contribute to the expectation that the type of economic growth we have experienced in this half-century is sustainable. There has been much discussion over the last quarter century about the role of resources in economic development and the compatibility of growth with environmental conservation. As indicated by a recent exchange between mainstream and ecological economists (Daly, 1997a, b; Stiglitz, 1997; Solow, 1997) this debate has not been settled.