35 Ecological Economics
Its challenge would not be to blend the different domains of study under the same mindset – combining plants and profits in a single analysis – but to train students to see in complementary, but conflicting, ways.
While ‘environmental economists’ argue that we can easily correct markets by pricing carbon emissions and other pollutants – no matter that we barely have, in practice – the larger issue is that many of our ecological challenges are not amenable to a commodification ‘fix’, which relies on treating the environment as parts.
The issue comes to a head in the question of whether we should impute dollar values for ‘ecosystem services’ – to put a price on the Amazon rainforest, say. The question is not whether we can impute such values, but rather whether it is intelligent to do so. In this critical matter, which has divided ecologists, is the issue of whether ecology should yield to a dominant economic way of thinking or make a stand for its different way of seeing – a different way of appreciating and valuing – that challenges economics’ monetary default.
The pragmatic view has been to impute monetary values because we cannot afford for ecosystems to be valued at zero. [DH: rather - at infinite! nature is Holy!!]
Indeed, when such estimates are made, they reveal that the ‘value’ of global ecosystem services dwarfs global GDP! Market measures of value miss more than they grasp.
Sustainable business is confronting the fact it does not constitute ‘ecological’ thinking but rather the appropriation of some ecological concerns into a framework that remains steadfastly economic.
The scale and stubbornness of major problems simply may not yield to a more-of-the-same technological fixing mentality, but instead require deeper cultural rebalancing, through a ground-up awakening.
The broader vision of the ecologist has room to understand the role the economist plays, but the economist – and the businessman and the investor – do not seem to know that they need the ecologist.
Austin (2021) The Matrix of the Emissary - Market Primacy and The Sustainability Crisis
Parrique
Let me introduce Romanian-American mathematician and economist Nicholas Georgescu-Roegen (1906–1994) who, at the beginning of the 1970s, laid out one theory so disruptive that it led to the creation of a new school of economic thought: ecological economics. His main idea, exposed in The Entropy Law and the Economic Process (1971), was that economic organization is a continuation of biological organization. Why? Because all machines are necessarily made of materials and use energy, and because all labour involves our biological bodies, which are also made of materials and use energy. The economy is — unavoidably — a bioeconomy, which means it is a subsystem of the larger finite and non-growing ecosystem that is the Earth. The logical conclusion becomes inevitable: nature holds non-negotiable market power and humans can only use whatever nature supplies. This also means that the prosperity of the economy is fundamentally linked to that of ecology. In the same way that a healthy organ cannot thrive for long in a dying body, an economy will not prosper within a collapsing biosphere (or at least not for long). In terms of manufacturing, this means that certain factors of production are non-substitutable. Any human-made artefact is necessarily made out of natural resources such as materials and energy and so therefore cannot be a true substitute to it. “One cannot build the same wooden house with half the timber no matter how many saws and carpenters one tries to substitute,” wrote Herman Daly (another economist who has laid out a deep theory to explain why infinite growth is an ecological impossibility). Regardless of how ingenious you are and the budget of your R&D department, you will not be able to build a wooden house without wood. If all economic activities require energy and materials, it means economic practices are unavoidably entropic (the second law of thermodynamics), which means they neither create nor destroy matter or energy but only transform it from a higher to a lowerquality. Consider this an inescapable law of diminishing returns applied to the economy as a whole. You can produce more for a time, and produce more efficiently to be able to keep producing for a longer period of time, but you cannot keep increasing production forever. This is because all of the materials and energy we use come from a nature that is fundamentally finite in its ability to provide resources and assimilate waste.
What kind of theory do green growth advocates offer in opposition to that? Well, not much, in my opinion. The core assumption of modern mainstream economics comes from a 1974 paper from American economist Robert Solow where he integrated natural resources as an input into the neoclassical production function while assuming its perfect substitutability with human-made capital. “If it is very easy to substitute other factors for natural resources,” Solow writes, “the world can, in effect, get along without natural resources.” Now, economists who think this makes sense should spend a bit more time in their garden, realising that it is not “very easy” (or even possible at all) to substitute other factors for natural resources (good luck growing food with a high-tech, smart shovel but without soil, bees, and water). So now, which theory should we choose? Should we trust experts who have developed their entire school of economics since the 1980s on the very question of how economy interacts with ecology, or should we rather ask a random neoclassical economist what they think on a matter they have only studied peripherally? I love both Nicholas Georgescu-Roegen and Robert Solow for different reasons, but picking Solow to understand the relation between growth and the environment would be like picking Zlatan Ibrahimović to play tennis — not the wisest pick.
The current hype for green growth is scientifically ungrounded, both empirically and theoretically.
Parrique (2022) Degrwoth is Good Economics Parrique Home (pdf)
35.1 Natural Resources and Energy
Garzon
The economist Georgescu-Rogen (2007) was one of the first to warn of the serious deficiencies in traditional ways of thinking about the economy. In particular, he highlighted the gap in economic models regarding the consumption of energy and materials. Both components restrict the possibilities of economic growth in ways that economics had ignored until just a few years ago[1]. In fact, planet Earth is a closed system of materials so that, aside from the very exceptional arrival of a meteorite or the removal of a human artefact, neither of which are significant in quantitative terms, the mass of materials is always the same. In the case of energy, planet Earth is an open system inasmuch as we receive energy flows from solar radiation, but even then, the laws of physics impose limits on energy use.
Every human process involves use of a series of energy sources governed by the laws of physics, particularly the laws of thermodynamics. The second principle of thermodynamics establishes that the quality of energy usable by human beings is decreasing and that, in converting energy (for example, converting the energy deriving from solar radiation to photosynthesis or generating electricity through photovoltaic panels), it is not possible to maintain 100% of the available energy. Much of the energy is dissipated as heat, so that conversion presupposes the transformation of high-quality, low-entropy energy, such as carbon, into low-quality, high-entropy energy such as heat. The history of technological development is the history of a constant struggle to improve the energy efficiency of such conversions.
Flows of materials and flows of energy can be understood as two distinct aspects of the same process. In fact, a continuous flow of materials is only possible if there is a continuous flow of energy at the same time. In addition, these two restrictions on economic growth interact in very diverse ways and the ecological pressure and impact of productive activity also show up in the alteration of geochemical cycles.
There is no doubt that human beings have lived on Earth for at least two hundred thousand years, although most of the time they did so in hunter-gatherer social groups. The end of the last ice age, which occurred some twenty thousand years ago, gave way to an extraordinarily warm climate which, in its turn, enabled human beings to develop new economic and social practices, such as agriculture (developed some 12,000 years ago). Scientists have agreed to call this warm era the Holocene, in which current civilizations developed.
Planetary Boundaries and Eco-Social Crisis
One of the main problems with the planetary boundaries’ framework, however, is that it looks at social metabolism in an essentially technical way. If the analysis is not broadened, the framework seems to place responsibility on abstract notions such as «humanity» or «the human being», when it is obvious that neither the causes nor the consequences of the ecological impact are symmetrically distributed either across the class structure or between the different geographical regions. There is in fact no global ecological crisis which means the same for all human beings (Brand et al., 2021). Therefore it is much more appropriate to talk of an eco-social crisis, because this helps to highlight the importance of socio-political relationships when assessing environmental degradation processes and seeking solutions.
Garzon (2022) The limits to growth: eco-socialism or barbarism
35.2 Against Steady-State Economics
Vettese
Underlying Herman Daly’s ecological economics is a faith in markets, neo-liberal regulatory tools and theory, and Malthusianism. While Daly criticizes economic growth, he overestimates the ability of regulation to contain a capitalist economy within a ‘steady-state’. Cap-and-trade is his main tool to regulate a steady-state economy, even though that tool emerged from neo-liberal thought and has been instrumental in stymying the environmental movement’s progress. Moreover, the neo-liberal Julian Simon developed a powerful critique of environmentalism in the 1980s, which Daly has not responded to. Over the last half-century, neo-liberal environmental thought has cast a shadow over ecological economics, even though Daly seems unable to perceive its influence on his life’s work. If the environmental movement wants to win the fight, then it needs an entirely new ecological economics.