by From Peter Söderbaum, “Do we need a new economics for sustainable development?”, real-world economics review, issue no. 80, 26 June 2017, pp. 32-44. A proposed new theoretical perspective starts with a partly different definition of economics: “Economics is multidimensional management of (limited) resources in a democratic society” Why “multidimensional” management? Multidimensional goes against the one-dimensional analysis of neoclassical theory and method. “Monetary reductionism” is no longer accepted. The idea that we should put a monetary price on all impacts, ecosystem services included, to make them commensurable and tradeable, is abandoned. Instead impacts of different kinds are kept separate throughout analysis. And non-monetary impacts are viewed as being as “economic” as
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from Peter Söderbaum, “Do we need a new economics for sustainable development?”, real-world economics review, issue no. 80, 26 June 2017, pp. 32-44.
A proposed new theoretical perspective starts with a partly different definition of economics:
“Economics is multidimensional management of (limited) resources in a democratic society”Why “multidimensional” management? Multidimensional goes against the one-dimensional analysis of neoclassical theory and method. “Monetary reductionism” is no longer accepted. The idea that we should put a monetary price on all impacts, ecosystem services included, to make them commensurable and tradeable, is abandoned. Instead impacts of different kinds are kept separate throughout analysis. And non-monetary impacts are viewed as being as “economic” as monetary ones. This may make analysis more complex but also more relevant. In relation to environmental issues, Sweden has proposed 16 environmental objectives to monitor the quality and state of the environment as well as possible (Swedish Environmental Agency, 2016). At the UN level, world leaders agreed about 8 Millennium Development Goals in the year 2000. This process of broadening the agenda has continued with 17 Sustainable Development Goals (SDGs) sanctioned at the UN-level in November 2015. They are:
- No poverty
- Zero hunger
- Good health and well-being
- Quality education
- Gender equality
- Clean water and sanitation
- Affordable and clean energy
- Decent work and economic growth
- Industry, innovation and infrastructure
- Reduced inequalities
- Sustainable cities and communities
- Responsible consumption and production
- Climate action
- Life below water
- Life on land
- Peace, justice and strong institutions
- Partnerships for the goals
Each set of goals is further elaborated including a number of sub-goals and targets to be achieved in the next 15 years. “For the goals to be reached, everyone needs to do their part: government, the private sector, civil society and people like you”, it is argued (United Nations, Sustainable Development Knowledge Platform, 2016).
It is clear that the above list of objectives points to a disaggregated and multidimensional view of sustainable development. One dimensional aggregation in monetary or other terms does not appear meaningful. It can furthermore be observed that economic growth in traditional terms is part of the list but only one of the 17 SDGs. Performance in relation to the goals is finally made an issue for all individuals in all potentially relevant roles. This suggests that we need to abandon the neoclassical mechanistic idea of individuals and organizations in favor of a view where actors are responsible and accountable. To this we will return.
Why reference to a democratic society? When reading neoclassical introductory textbooks in economics it becomes clear that “democracy” is not a theme taken seriously. These texts rather reflect an emphasis on economists as experts, i.e. a kind of technocracy. In the mentioned textbook by Mankiw and Taylor “democracy” is not even part of the index or glossary. As I see it, democracy should play a crucial role at two levels:
- Regarding the discipline of economics itself. We should not accept neoclassical monopoly and dictatorship
- Regarding our understanding of individuals as actors in the economy. We should respect that individuals differ with respect to value or ideological orientation.
Economics as a discipline is in need of being democratized (Söderbaum and Brown, 2010). As scholars we should admit that a specific paradigm (theoretical perspective) in economics is not only theory; it is also specific in value or ideological terms. Gunnar Myrdal, a well-known institutional economist, argues that “values are always with us” (Myrdal, 1973; 1978) in the different stages of the research process from formulation of problems to presentation of results. Neoclassical theory is specific in ideological terms with its focus on markets and the monetary dimension. Applying Economic Man assumptions and looking upon organizations in profit-maximizing terms are other examples. The reasons for some of us economists to look for other theoretical perspectives are not only scientific (in some narrow sense) but also ideological. Those of us who claim to take environmental issues seriously and advocate institutional environmental (or ecological) economics as alternative perspective do so for scientific as well as ideological reasons.
If there are options at the level of ideology then democracy becomes important also when understanding individuals in the economy and respecting differences in their ideological orientations. Neoclassical economists with their CBA claim expertise in “correct values” in market terms for purposes of assessing impacts of investments in infrastructure. They claim ability to identify the best or optimal solution for society as a whole among competing investment projects. Applying Positional Analysis (PA) as an alternative method means that we in many situations have to refer to conditional conclusions rather than one single optimal solution. Alternative investment projects will be ranked differently depending upon the ideological orientation considered. And in many decision situations it is not realistic to assume that all stakeholders and concerned actors share the same idea about what is progress in society. Such ideas may differ between political parties in a democratic society for example.