Saturday , April 20 2024
Home / Real-World Economics Review / Internalizing “externalities”

Internalizing “externalities”

Summary:
From Victor Beker and RWER issue 106 There was a time when it was thought that the main task of economics was to assure economic growth. For example, John M. Keynes predicted that “the day is not far off when the Economic Problem will take the back seat where it belongs” (Keynes 1931: 6). Then, once scarcity has been overcome, mankind would devote most of its efforts to real problems, the problems of life and human relations (ibid,). The impact of economic growth on the Earth environment was not an issue. This is no longer so. The ecological impact of economic activities can no longer be ignored. Ecological sustainability is an imperative if we want to preserve the planet for future generations. Ecological economics is a new subfield which addresses the challenge of introducing the

Topics:
Editor considers the following as important:

This could be interesting, too:

Lars Pålsson Syll writes Cutting-edge macroeconomics …

Peter Radford writes The eclipse part wo

Editor writes Chang’s “Edible Economics”

Stavros Mavroudeas writes Workgroup for ‘Political Economy of Inequality and Social Policy’ – WAPE 2024, 2-4 August 2024, Panteion University

from Victor Beker and RWER issue 106

There was a time when it was thought that the main task of economics was to assure economic growth. For example, John M. Keynes predicted that “the day is not far off when the Economic Problem will take the back seat where it belongs” (Keynes 1931: 6). Then, once scarcity has been overcome, mankind would devote most of its efforts to real problems, the problems of life and human relations (ibid,).

The impact of economic growth on the Earth environment was not an issue. This is no longer so. The ecological impact of economic activities can no longer be ignored. Ecological sustainability is an imperative if we want to preserve the planet for future generations. Ecological economics is a new subfield which addresses the challenge of introducing the ecological restrictions into economic analysis, trying to provide an integral response to the pressing environmental problems, many of them caused by economic activities.

This collides with the traditional economic point of view of a continuing and unlimited economic growth.

Ecological economics introduced an opposing line of thought assuming that technology will not be able to circumvent fundamental energy and resource constraints; this, together with the collateral damage caused by economic activities, will impose that eventually economic growth would stop. Therefore, resource constraints as well as ecological damage have to be taken into consideration in any economic analysis.

The idea of immiserizing growth—an increase in aggregate national output that results in a net decline in national welfare—was first developed in the context of the theory of international trade (Bhagwati et al. 1998: 369). It can be extended to the situation where an increase in aggregate output results in environmental degradation. Given the fact that social costs differ from private costs the main issue in ecological economics.

Leave a Reply

Your email address will not be published. Required fields are marked *