The New Environmental Economics

Sustainability and Justice

Eloi Laurent

• Publisher: Polity
• Year: 2020
• ISBN:
  9781509533831
• Edition: 1
• Topic: Economics
• Subtopic: Economic Policy
• Index: Economics

Too often, economics disassociates humans from nature, the economy from the biosphere that contains it, and sustainability from fairness. When economists do engage with environmental issues, they typically reduce their analysis to a science of efficiency that leaves aside issues of distributional analysis and justice.

The aim of this lucid textbook is to provide a framework that prioritizes human well-being within the limits of the biosphere, and to rethink economic analysis and policy in the light of not just efficiency but equity. Leading economist Éloi Laurent systematically ties together sustainability and justice issues in covering a wide range of topics, from biodiversity and ecosystems, energy and climate change, environmental health and environmental justice, to new indicators of well-being and sustainability beyond GDP and growth, social-ecological transition, and sustainable urban systems.

This book equips readers with ideas and tools from various disciplines alongside economics, such as history, political science, and philosophy, and invites them to apply those insights in order to understand and eventually tackle pressing twenty-first-century challenges. It will be an invaluable resource for students of environmental economics and policy, and sustainable development.

Part I
Ideas and tools

1
What the classics know about our world; what twentieth-century economics forgot

History of thoughts, too often forgotten in existing conventional economics textbooks, is not just about remembering past insights and forgotten intuitions. It is mostly about confronting older thinking to current challenges to understand how problems, and more importantly solutions, can look alike or differ from one era to the next. In this respect, contrary to a common belief, the twin concern for sustainability and justice has been around for quite some time in economic analysis.

The physiocrats: Natural resources as political power

The physiocrats, a group of philosophers and policy-makers in eighteenth-century France,¹ can claim two important firsts regarding economics: They were the first to build a consistent model of the economy where natural resources played the central role; they were also the first to pretend, falsely, that economics was a science, the physics of the social world, based on universal and robust laws. François Quesnay and Anne-Robert-Jacques Turgot were towering figures of the movement, with Pierre de Samuel Du Pont de Nemours and Marquis de Mirabeau as important secondary characters.

François Quesnay (1694–1774), the founder of physiocracy from an intellectual standpoint, was a physician by training and saw the economy as a human body, where blood circulation amounted to trade and social classes mirrored vital organs. Quesnay’s Tableau économique (Economic Table), first published in 1758, embodies the underpinnings of physiocracy. For the physiocrats (physis is Greek for Nature and kratein means governing), the economy should be understood as a “government of Nature” based on two principles, corresponding to their two-sided approach: The first holds that the economy is governed by natural laws; the second that wealth and, in the end, political power belongs to those who control natural resources.

In the Tableau, farmers produced wealth, transformed by landowners into capital, while workers and artisans are just “sterile” groups. “The productive class” according to Quesnay is the one responsible for bringing to life the annual wealth of the nation through the “culture of the territory.” “The class of proprietors” (that includes the landowners) subsists, thanks to the income or net product of the crop, which is paid to them annually by the productive class. The “sterile class” is made up of all citizens engaged in other services and work other than those of agriculture, and whose expenses are paid by the productive class and the class of proprietors, who themselves derive their income from the productive class.² The distribution of natural resources benefits and organizes society and determines its hierarchy.

Physiocrats were fierce liberals,³ who thought that government’s intervention was unwarranted in an economy efficiently governed by natural laws. The root of their anti-interventionist creed was their belief in the universal laws of economics, close to the laws prevailing in physics. In that, they strongly opposed the “Colbertist doctrine,” named after Louis XIV’s influential Minister Jean-Baptiste Colbert.⁴ They also resented the then dominant mercantilist doctrine, which viewed international trade as a zero-sum game and recommended protectionism and imperial conquest to increase national wealth.⁵

Physiocrats believed that a “natural order” founded economics as a “science”: In De l’origine et des progrès d’une science nouvelle (1768), Dupont de Nemours affirms: “Economic science being nothing other than the application of the natural order to the government of societies, is as constant in its principles and as demonstrable as the most certain physical sciences.”

Among the most brilliant minds of their time, physiocrats also exerted influence on economic policy. Quesnay became known in policy circles as the leader of les économistes (the economists), a group of advisers omnipresent in economic debates at the royal court dedicated to early industrial modernization of France and agricultural reforms. This is probably the start of the influence of economists on public discourse and ultimately public policy, that extends until now, of which Turgot was the embodiment and the founding figure.

Jacques Turgot (1727–1781) was appointed Controller General of France by the new King Louis XVI. True to its liberal principles, Turgot introduced freedom of circulation and pricing of grains. But poor harvests lead to higher prices for bread and violent riots erupted in the provinces and the Paris region. In 1776, the minister doubled down by decreeing freedom of enterprise and competition in the agricultural sector. The unpopularity of his economic remedies among the people suffering from the price increase as well as the opposition from privileged classes controlling powerful corporations weakened his position and doomed him politically. Under the impetus of the Queen and Minister Maurepas, he resigned on May 12, 1776.

His most famous measure, the promulgation of the Edict of July 19, 1764, is true to physiocratic principles and policy recommendations: It officially liberalized grain and flour trade entirely in all the kingdom of France except for Paris and its surroundings (the Edict states that “the culture of land” is “the surest source of wealth for a State”).

The physiocrats fought for their ideas and briefly governed by them in a country where agriculture accounted for the vast majority of national wealth. But their insights and prescriptions can be adapted to today’s context of geopolitical struggles over rare earths, minerals, and fossil fuels. Even more fundamentally, natural resources command civil conflicts, with environmental wars fought from Palestine to Lake Chad (both over water access). As a matter of fact, the French Revolution can be seen as the first social-ecological revolt of moden history: Scholars⁶ have shown that the climatic context that preceded 1789 (a hot spring and summer followed by bad autumnal weather turning into a harsh winter) played a key role in fostering social unrest due to the impact of climate on crops and bread production.

Physiocrats therefore help us to understand the essential link between natural resources and political power. Malthus held an extreme view of this link when he assessed that, given the scarcity of subsistence, only some humans should have the privilege to survive.

Malthus and sustainability analysis

In 1798, in his brief and lugubrious essay on the principle of population, where cynicism quarrels with fatalism, Reverend Thomas Robert Malthus states what he believes to be the iron law of human tragedy. We are, says Malthus, caught between production and reproduction: Our incontinent desire to procreate violently comes up against the limits of our ability to feed our offspring. The tragic is mathematical: If the food subsistence grows at an arithmetical rhythm (1, 2, 3, 4 ...), the population grows in turn at a geometric rhythm (1, 2, 4, 8 ...). So, while only resources only add up, humans are multiplying. Humanity is running to ruin, and of its own doing. The reasoning seems irresistible: “At the end of two centuries, population and means of subsistence will be in the ratio of 256 to 9, after three centuries, 4096 to 13.” If they want to prosper, humans must learn to control their own growth.

Nearly two and a half centuries later, Malthus’ mistake is glaring: “Human population and well-being have grown together, exponentially. The great desynchronization promised by the pessimist pastor has turned into an abundance of prosperity absolutely new in the long history of human history. To put it simply, there are seven times more people on the planet than in Malthus’ days and their life expectancy is twice as high as when he made his gloomy prediction. The irony is that Malthus was pretty good at describing the situation that prevailed over the seven million years of human presence on the planet before he took the pen. But, at the precise moment when he states his theory, it became empirically false. The first industrial revolution (of which Malthus did not see the premises around him), the successive agricultural revolutions, the progress of medicine, the emergence and development of the welfare state (which he could not imagine and would most certainly have resented), will prove him more and more wrong over the decades, until today.

But, if Malthus was wrong on substance, he was not mistaken about the form: A great desynchronization, potentially more destructive than the one he had imagined, did indeed start on his watch. Consider, to measure it as precisely as possible, five fundamental indicators of human development for about a century: population, human development (income, health, educat...