Introduction to Steady-State Economy, Throughput and GDP
Whereas mainstream economics either ignores the economy's relation to the environment or assumes that the environment is a subset of the economy, i.e., the extractive industry (mining, energy, etc.),Herman Daly maintains that the economy is a subset of the ecosystem, which is finite, non-growing, and materially closed--no matter enters or leaves it. The ecosystem is a source of the economy's resources, and a sink for its wastes. Energy and matter enter the economy as inputs, are transformed into goods and services, and leave as wastes, this flow of energy and matter being known as "throughput."
Economists have focused too much on the economy’s circulatory system and have neglected to study its digestive tract. Throughput growth means pushing more of the same food through an ever larger digestive tract; development means eating better food and digesting it more thoroughly. Clearly the economy must conform to the rules of a steady state—seek qualitative development, but stop aggregate quantitative growth. GDP increase conflates these two very different things.