Celia Brauer: Putting the “home” back in economics
When David Suzuki addressed a large crowd at Occupy Vancouver on October 22 he made a point of mentioning that the prefix eco in both ecology and economics comes from the Greek word oikos which means home. To sum up, Suzuki said: “Ecology is the study of home. Economics is its management.”
I have heard this reminder about the roots of the word economics many times. Perhaps it is because I choose to listen to people who speak about the importance of the Earth in our lives. But I sense I am out of step with many of my fellow humans and nowhere is this more obvious than when I read discussions about the “economy” in the media. As the fear of more recessions loom, columnists are trying to make sense of the daily ups and downs of the world’s economies and its impact on our world’s governments and their people. I suppose we can take comfort in the fact that so many are contributing but this is dangerous territory. Economics is a subject few people know anything about, which means that “experts” might well steer us right back into the swamp we just emerged from.
Surveying many of these discussions—there is a very obvious omission. Insights from the important trans-discipline of ecological economics (EE) may offer a potential path to salvation. Okay—let’s see a show of hands of the number of readers who have heard of EE. Yeah, just as I thought—most have no idea. Well, we might expect this from the layperson, but not from those who pretend to understand economic principles and how these interpretations can help in these turbulent times. The limited awareness of EE—indeed the “mental block” so many seem to have—is perhaps the key to understanding why our current problems are not responding to traditional prescriptions.
To give a short summary, ecological economics is very much a discussion of economics as if the Earth’s physical structure and biological processes mattered. Because as any grade school student will tell you, of course the Earth matters! The beginning pioneers of classical economics were Adam Smith and David Ricardo with further important contributions from T.R. Malthus, J.S. Mill, and J.C.L. de Sismondi. They were all addressing a society with a dominant agricultural base. This is why they logically factored the Earth into their abstract models. But in the 19th century as industrialization became more widespread the influence of modern day mainstream economics (ME) gradually took over. And the recognition of the value of Earth systems no longer seemed as important.
If this sounds outrageous it is worth remembering that at that time the world had far fewer people who were consuming far fewer resources and producing far less waste than now. Back then it was hard to imagine running out of fish and wood or not using the soil or water as a perpetual dumping ground. In fact humankind had just recently discovered the theory of evolution and the structure of the atom, the reality of viruses, and the fact that dinosaurs roamed the Earth in prehistoric times. To highlight the Earth’s finite limits when they had just opened up a Pandora’s Box on its vastness seemed counterintuitive. Restrictions of any kind were viewed as an unnecessary thorn in the side of endless possibilities.
We still use many of these latter models of economic theory today. This is evident in how GDP (gross domestic product) has always been measured. GDP is an abstract index of flows of private consumption, gross investment, government investment, imports, and exports. The variability of stocks of “natural capital” assets such as forests, water, soil, fossil fuels, animals, et cetera—the ingredients necessary for any commerce cycle to happen—continue to be largely ignored. Also not properly considered—if they are considered at all—are “ecosystem values and service”. These are provided by air and water systems, flora and fauna, and the cycles that maintain life on Earth. Their presence means that humans can live and eat and create and consume all those imports and exports.
So you might ask—now that we know better—why is it that mainstream economics has not adapted to fit a truer model of reality? Well, this is where we discover that modern day ME has a personality all its own. Leading mainstream economists have, historically, preferred to be neutral on the question of what is desirable for human societies. They also hesitated to admit to influencing public policy. That, they argued, was best left to politicians and voters. Yet on the other side, many mainstream economists certainly had their ideological agendas—like preference for free markets—or they thought that steady “economic growth” was so obviously good for everyone that it could be offered as a kind of “free lunch”. As you can imagine this was an attractive idea for most politicians.
An emphasis on economic growth perhaps made sense after the Great Depression, when millions were unemployed, or after the 20th century’s World Wars, when countries had to rebuild. But even if it did get people back to work and made them feel good, it couldn’t be expected to last forever. Any intelligent human being can—with a little thought—realize that a finite planet cannot continually be asked to become infinite to benefit the supposed good of humans. Not only does this also encourage excess population growth—which the world does not need—but as EE pioneer Herman Daly says in the preface to his second edition of Steady State Economics (1990):
For standard economics, it is that economy in an isolated system in which exchange value circulates between firms and households. Nothing enters from the environment, nothing exits to the environment. It does not matter how big that economy is relative to its environment. For all practical purposes an isolated system has no environment. For steady-state economics, the pre-analytic vision is that the economy is an open subsystem of a finite and non-growing ecosystem (the environment). The economy lives by importing low-entropy matter-energy (raw materials) and exporting high-entropy matter-energy (waste). Any subsystem of a finite non-growing system must itself at some point also become non-growing. At some optimal, or at least sustainable, scale the economic subsystem should be maintained in a steady state as far as possible.
Ecological economics—a movement which had been developing for some four decades now—holds the principles of steady state economics at its centre. Building on its roots in the original classical economy, EE came into clearer view in the ’60s and ’70s through books and articles by Kenneth E. Boulding, Nicholas Georgescu-Roegen, and E.F. Schumacher. By 1977, the EE approach had been elegantly synthesized and summarized by Daly’s Steady State Economics. Daly’s work attracted collaborators and followers such as Robert Costanza, Paul Hawken, and Amory Lovins among many others. Hawken with Amory and Hunter Lovins cowrote Natural Capitalism in 1999—a book which is very accessible to general readers. The EE movement is today stronger than ever. There are numerous institutes and publications, and an academic journal Ecological Economics of increasing reputation and influence. There is an international scholarly society with 10 regional affiliates spread around the world.
You would think, then, that by the 21st century EE would be on everyone’s lips, especially in times of economic turmoil. Yet its acceptance in academia, government, business, and society is far from our present day reality. To understand why EE is still not yet mainstream we have to sense the powerful influence of certain underlying myths of our society that are steering us clearly in the wrong direction. For example in the cloistered academic world of “advanced” ME at most universities, a self-policing and self-replicating culture refuses to accept EE ideas as “good economics” and continues to isolate itself from the important arena of critical thought and discussion. Ecological Economics as the inconvenient second cousin rarely gets a foot in the door of university curriculums. For most academic economists and those who consult to the financiers and politicians, it’s still “all about people”. They have either brainwashed each another—or themselves—to think nature still doesn’t matter, or more cynically they “know who butters their bread”. Why should they be concerned with the continued integrity of ecosystems?
As for the rest of the population, most have either not heard of EE or they have no interest to get involved in economics at all. After all, it seems to be a subject—like medicine— where you consult “the experts”. There are all kinds of common justifications. Some might say “Ecology has nothing to do with economics”. Other think ecological concerns are a luxury so let’s ignore them a little longer while we “focus on the economy” and “build up more wealth”. Then when we are wealthy enough we will go back to “worrying about the environment”.
People may instinctively feel that economics deals with human needs and desires and so a “poor economy” will affect them negatively. But many also think the natural environment is “out there” and they don’t remotely comprehend the connections between the two. In their eyes ecology and economics are clearly separate and should not be mentioned together. Of course the exact converse is true. We will never wholly succeed as a species if we are influenced by ecologically ignorant economists. Nor can we be saved by ecologists who deny the significance and power of very entrenched patterns of human economic behaviour.
No matter what happens to humans on the planet and whether or not we decide to discuss ecology and economics in the same sentence—ecology matters. It has always mattered and it always will matter because it exists as a reality in its own right far beyond our human musings—one way or the other. It is what created us as real live beings on this planet and the sooner we include this rather important and unavoidable reality in the discussions of our human affairs the sooner we can imagine how to right what is so clearly wrong in our world.
It is worth meditating on the fact that air, water, trees, birds, and fish and myriad of other flora and fauna are not consumers, they do not have a dollar vote in markets or a political vote in our elections. Nor do they control what media content gets delivered to humans. So it is not surprising these other stakeholders have not been able to state their demands at the boardroom tables of business, government, and politics. Instead they sit quietly for the time being and provide the vital ingredients that keep life on Earth ticking forward daily as best they can. When you add future generations to the list and realize they also have little input—then you have a scenario that becomes all the more potentially tragic.
In a world of seven billion people with frightening ongoing declines in stocks of natural capital assets, exponential increases in human population and waste, and serious risks of large-scale hard-to-reverse global climate change, the time has come to give ecological economics a great deal more attention. Information about EE is no longer hard to find for anyone curious enough to find out what was historically and might presently be wrong with our world. It certainly was easy for me without formal training in either ME or ecology. The challenge is to educate more people in this discipline so that some real natural light can penetrate our thought processes. We have been shaded under the veil which separates humans from the natural world so long it seems our brains have been altered into thinking we are indeed a species apart. It’s time to open up some space in those brain cells to let new thoughts grow so we can get to the serious work of securing the long term health of our society.
We can take our cue from our own former prime minister and finance minister Paul Martin. He originally commissioned the National Roundtable on the Environment and the Economy in 2000. Corporate Knights magazine—which recently gave Martin an award for the vision of a “green GDP”—said in its citation: “In his presentation to Parliament at the time he noted that ‘as we move to more fully integrate economic and environmental policy, we must come to grips with the fact that the current means of measuring progress are inadequate.’ Martin continued on to say that ‘in the years ahead the environmental indicators could well have a greater impact on public policy than any other single measure we might introduce.’”
How many Antarctic ice sheets the size of New York City need to fall into the ocean (due any day now) before we wake up? It is a sorry state of affairs that some humans have become so focused on themselves that they cannot see that they are eating us all out of house and home. We can turn the tide by putting the home back into Economics.
Celia Brauer works with various local nonprofits such as the False Creek Watershed Society, Livable Region Coalition, and Village Vancouver. This article was written with the help of Michael Barkusky, an ecological economist and professional accountant.