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The need for a new economic paradigm

Summary:
From Giandomenico Scarpelli and current issue of RWER As documented in the previous paragraph, in recent years it finally seems that most orthodox economists have become more aware of the catastrophic outcomes of climatic disturbances; but at this point the traditional policy they recommend could be insufficient to meet the goals set at international level. In fact, that policy consists mainly of pollution permits and carbon taxes, but if the permits are offered with great generosity and if carbon taxes are low, these policies are ineffective. In order to counter climate change effectively economists should abandon the “… irrational commitment to exponential growth forever on a finite planet subject to the laws of thermodynamics”. This commitment is based on the assumption that GDP

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from Giandomenico Scarpelli and current issue of RWER

As documented in the previous paragraph, in recent years it finally seems that most orthodox economists have become more aware of the catastrophic outcomes of climatic disturbances; but at this point the traditional policy they recommend could be insufficient to meet the goals set at international level. In fact, that policy consists mainly of pollution permits and carbon taxes, but if the permits are offered with great generosity and if carbon taxes are low, these policies are ineffective. In order to counter climate change effectively economists should abandon the “… irrational commitment to exponential growth forever on a finite planet subject to the laws of thermodynamics”. This commitment is based on the assumption that GDP growth is always a good thing, and for this idea many distinguished economists for decades did not take into account the warnings of climate scientists, arguing that it was not worth giving up some points of GDP growth to implement an immediate and strong action to stabilize or reduce total output of greenhouse gases.

Also for this reason Herman Daly for a long time advocated a “paradigm shift” in economic theory, suggesting a new paradigm not focused on growth. We need such a paradigm to counter climate change, or a “climate revolution”. Otherwise, as professor Steve Keen wrote, “if climate change does lead to the catastrophic outcomes that some scientists now openly contemplate (…), then these Neoclassical economists will be complicit in causing the greatest crisis, not merely in the history of capitalism, but potentially in the history of life on Earth”.  read more

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