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Three principal strategies for theorizing a “new economics of ecological limits”

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From Richard Parker and RWER issue 106 Back in the late 1960s, a tiny band of unconventional economists encountered an environmentalism in the midst of radical rethinking. Prompted by Carson’s Silent Spring, capitalism and its science were being accused of major crimes—against nature, our fellow species and humankind itself.  Hiroshima had shattered confidence in the benignity of Progress, especially Progress through Markets and Corporate Science.  Now that skepticism looked around through a wider lens and would soon birth “ecology” with its excoriating indictment of our fundamental relations with Earth.[1]  Herman Daly and John Cobb’s pioneering works, Ken Boulding’s “spaceship earth” argument, and The Club of Rome’s Limits to Growth warnings led the way.  Much has since

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from Richard Parker and RWER issue 106

Back in the late 1960s, a tiny band of unconventional economists encountered an environmentalism in the midst of radical rethinking. Prompted by Carson’s Silent Spring, capitalism and its science were being accused of major crimes—against nature, our fellow species and humankind itself.  Hiroshima had shattered confidence in the benignity of Progress, especially Progress through Markets and Corporate Science.  Now that skepticism looked around through a wider lens and would soon birth “ecology” with its excoriating indictment of our fundamental relations with Earth.[1]  Herman Daly and John Cobb’s pioneering works, Ken Boulding’s “spaceship earth” argument, and The Club of Rome’s Limits to Growth warnings led the way.  Much has since transpired—nowhere more apparent than in “economics” and the crises today it seeks to address.

Sixty years on, let me name three principal strategies for theorizing a “new economics of ecological limits” that have evolved from that 1960s moment:

  • Neoclassical Environmentalism: The Neoclassical assumptions about rationality, markets, price-based efficiency, and growth as desiderata are retained but reweighed and recalibrated, with “externalities” made a catch-all for costs related to addressing environmental limits and administered price adjustments, mainly through taxes the key. Of the many in this tradition, Nobel Laureate William Nordhaus[2] idea to use a Global Carbon Tax to manipulate the discount rate applied to carbon’s “externalities” may be the best known. [3]
  • Ecological Keynesianism: government’s micromanagement role here adds science-defined goals for “harm reduction” to nature and humankind–and typically also stresses “public-private partnerships” to this end. Nicholas Stern’s famous review[4] illustrates the model in its mainstream form, emphasizing public subsidies and constraints (taxes and regulation) –plus extensive intergovernmental cooperation as well as public-private partnerships– to move toward a “global green economy” in which, most importantly, fossil fuel use is radically curtailed.  The much-discussed “Green New Deal” as taken up by the Biden administration, though in some ways more “progressive”, also fits in here.
  • Post-Marginalist “Biophysical Economics”: A form of “deep ecology” that’s fairly easy to envision intuitively, challenging to explain systemically, so far very hard to theorize, let alone operationalize. Seeks, but has not yet found exactly how to reframes neoclassical (and Keynesian) “economics” by adopting some analog to Newton’s laws (especially the Second Law and entropy).  Often cited as forefathers are Georgiescu-Roegen, Herman Daly, and Kenneth Boulding. Robert Constanza, a prominent professor of ecological economics at Univ. of Vermont, a) describes the field as trans-disciplinary (he includes “psychology, anthropology, archeology, and history” ; b) says its goals are “sustainable scale, fair distribution, and efficient allocation”.[5]

Among the three, I find myself torn, because I think each has points to recommend it.  I say that though because of something fundamental here: I don’t think any economic paradigm has a leading role to play.  Why do I say that? First because to me the looming planetary disaster is a “political disaster”, not a “natural disaster” –albeit on a scale without precedent.  Second, I find I can’t imagine a “science-based solution” –let alone a new “economic theory” (if we mean an orderly macro-systemic set of interrelated axioms or principles that can be operationalized mathematically)– that can forestall this disaster.  Once again, to be clear, that’s because I see “political decisions”—actions taken by governments, particularly the large governments, that measurably alter patterns of behavior by individuals and firms, and in a democratic society are actions fairly consistently affirmed (or at least reasonably accepted) by the electorate.

[1]  For pre-1960s attempts to construct an “environmental economics”—from Condorcet to Musgrave—see Agnar Sandmo, “The Early History of Environmental Economics”, Review of Environmental Economics and Policy, Winter 2015.

[2] See Jason Hickel, ‘The Nobel Prize for Climate Catastrophe”, Foreign Policy, 12/6/18 at https://foreignpolicy.com/2018/12/06/the-nobel-prize-for-climate-catastrophe/

[3] Although Nordhaus, like others in this camp, defend Neoclassical assumptions about Market Efficiency, prominent conservatives zealously attack him: see the Hoover Institution’s David Henderson’s “The Problem with Nordhaus”, Defining Ideas, 8/27/21 https://www.hoover.org/research/problem-nordhaus

[4] See Nicholas Stern, Blueprint for a Safer Planet; for critique of Stern, see Bumpus and Liverman, “Accumulation by decarbonization and the governance of carbon offsets”, Economic Geography, Spring 2008.

[5] Robert Constanza, “What Is Ecological Economics?”, Yale Insights, 5/11/10 https://insights.som.yale.edu/insights/what-is-ecological-economics

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