Ecological Economics

Political Economics for Social and Environmental Development

Peter Soderbaum

• Publisher: Routledge
• Year: 2013
• eBook ISBN: 9781134198337
• Edition: 1
• Topic: Business
• Subtopic: Economic Theory
• Index: Business

Ecological economics seeks to socially construct a political economics which will deal successfully with environmental problems and make the individual more visible in economic analysis. The author describes the principles, strategies and instruments of social change for key players - governmental agencies, business corporations, environmental and religious organizations and universities - and underlines their responsibilities in the market economy. Peter Soderbaum emphasizes the need to articulate ideologies, worldviews, ethics and related scientific perspectives as part of economics, and the importance of pluralism and democratic decision making. His account of the theories and means that will brings us closer to a sustainable society consider tools such as environmental impact assessment (EIA) and describes success indicators such as environmental labelling and environmental management systems (EMS). It highlights strategies and policies that facilitate social change and sets out future agendas for the individual actors in political economics.

Chapter 1

Environmental and Other Problems

Before discussing the nature of environmental problems, it may be rewarding to consider just what we mean when we talk of a ‘problem’. I suggest that perception of a problem refers to a perceived difference between an existing state of affairs and a desired one, relative to the particular actor, and taking into account his or her knowledge, experience, values and position in a social, institutional and physical context. In an alternative, more dynamic version of the definition of a problem, an actor negatively values the ‘development path’ and future outcomes of some ongoing activity, compared with the outcomes of an alternative development path.

This definition of ‘problem’ draws attention to the importance of values and ideology. Two different actors, A and B, may have different ideas about the present state of affairs and also what is desirable for the future. For example, A may argue that a lake that is undergoing a reduction in size due to eutrophication is a ‘problem’. B on the other hand regards this change not as a problem but as a potential advantage. B might be a farmer who stands to gain by extending his acreage, albeit slowly, as a result of the eutrophication process.

The storage of nuclear waste can also illustrate the different ways of perceiving a phenomenon either as a problem – or not. A third actor, C, may trust and rely completely on the ability of scientists and engineers, the nuclear power companies and state civil servants to solve this problem. C may not even accept that nuclear waste is or poses a problem at all. A fourth actor, D, on the other hand, is of the opinion that it is highly likely that the problem of disposing of nuclear waste can never be satisfactorily solved. D may lay great weight on a precautionary principle – that nuclear waste should never have been produced in the first place; but, in view of its existence, that nuclear reactors should be closed down as soon as possible to prevent the production of even more waste.

Clearly actors C and D differ in their views about the importance or seriousness of problems in society. C may perceive business expansion and profitability at the micro-level and ‘economic growth’ measured in terms of GDP at the national level as lying at the heart of her or his value orientation, whereas impacts on ecosystems and depletion of natural resources are secondary or even minor matters. C may regard any deterioration of the competitiveness of his or her country’s industrial base as a serious problem. Implicit in such an ideological orientation is the belief that by constantly increasing GDP one can solve virtually all the problems that the country may face – environmental problems included.

Actor D, characterized here as ‘green’ in valuational or ideological orientation, questions the idea of GDP growth as the all-important measure of progress in society. D believes that in the present circumstances, continuing GDP growth can lead to more rather than fewer problems and he or she emphasizes that new visions and ideologies for societal development are important. Ideas about ecological sustainability need to be formulated and a choice of ways to move in that direction need to be identified.

When we now contrast the outlook of C with that of D, it is clear that the two actors have different ideas concerning the problems or issues confronting society. C gives economic growth and international competitiveness top priority on his or her ‘personal agenda’. D on the other hand favours ecological sustainability and wise husbandry of natural resources. A whole plethora of problems are of importance both for society as a whole and for the individual. In a sense, all these issues compete for our attention. Each individual actor may, in principle, have his or her own agenda or list of priorities for such problems. Within society there will also be predominant agendas of particular collectives such as firms or other organizations, local communities, nations, or a group of nations such as the European Union. It is even possible to speak of an agenda on a global level, as reflected for instance in international agreements or in the policies and activities of institutions such as the UN or the World Bank.

THE IMPORTANCE OF IDEOLOGY

When acting in a specific role, each individual uses her or his own world view or ideology as a basis for their own agenda or list of priorities. As we have seen, the agenda of any organization similarly reflects its own dominant values. Ideology is used here in a broad sense and refers to ‘ideas about means–ends relationships’ in any sphere of human activity. In textbooks on political ideologies (Eccleshall et al, 1994), only established ideas about means–ends relationships, such as liberalism, socialism, conservatism and various newer -isms like ‘ecologism’ and ‘feminism’ qualify as ‘ideologies’. Ideas about means and ends lying closer to operational activities in organizations, or nearer to private life, will be included here among ideologies. For example, one may contrast various ‘health care ideologies’; for instance those emphasizing centralized systems, versus others suggesting that decentralization offers many advantages. Similarly, there are different ‘environmental ideologies’, some founded on technological optimism, others on the aforementioned ‘principle of cautiousness’. Even in the context of a school classroom or private household, our actions are formed by our beliefs concerning fruitful means–ends relationships. We need ideas, images or models to guide us through the complexities of the real world.

Most economists have been reluctant to refer to ideologies and world views, but Douglas North is an exception. In a footnote in his book Institutions, Institutional Change and Economic Performance, he makes the following statement:

By ideology, I mean the subjective perceptions (models, theories) all people possess to explain the world around them. Whether at the microlevel of individual relationships or at the macrolevel of organized ideologies providing integrated explanations of the past and the present, such as communism or religions, the theories individuals construct are colored by normative views of how the world should be organized (North, 1990, p23, original emphasis).

Ideologies in the present sense are based on beliefs. Such beliefs consist not only of factual elements, but also of expectations about the possible outcomes of acting according to one particular ideology rather than another. An ideology may be more or less established on the societal level and similarly more or less adopted by an individual. It may be more or less well formulated or logically coherent. Even if it is perceived by the individual as shaky or fragmentary an ideology may nevertheless serve as a guide to action. The term I shall use for the fragmentary and uncertain nature of the images and ideas that guide us is ‘ideological orientation’.

SCIENCE AND IDEOLOGY

We assume here that each individual is guided by an ‘ideological orientation’ and that ideas and images are important elements of any such orientation. But where do these ideas and images come from? One answer is that many of the ideas that play a role in our daily life have their origin in, or are legitimized by, science. According to John Maynard Keynes, economists and political philosophers in particular have contributed greatly in this regard:

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist (from Fusfeld, 1994, p1).

Interpreting the ‘market’ mechanistically in terms of ‘supply’ and ‘demand’ with associated beliefs in ‘the invisible hand’ – a concept used by Adam Smith but older in origin – is an example of the sort of idea that features in current public debate and in the decision-making and daily activities of politicians, civil servants and businessmen. Other ideas that have become common are the views of organizations as ‘profit maximizing firms’ and of human beings as ‘consumers’ who maximize utility.

Keynes’ statement is worth considering, but should be qualified in certain respects. There is today quite a choice in terms of ‘defunct economists’. Even a particular economist, take Adam Smith for instance, can be interpreted in more than one way. I share Keynes’ judgement that ‘practical men’ are dependent on the ideas of economists, but would like to emphasize that not only dead economists but also living ones are responsible for this state of affairs. If there is a slavery relationship, as suggested by Keynes, the masters are not necessarily far away in terms of time and space. In terms of the supply of economic ideas, present-day neo-classicists have established a near-monopoly position at departments of economics and this is, in my opinion, a major danger confronting modern society. Dictatorship in the sphere of economic ideas is as bad as in any other field of public life.

One reason why such a form of monopoly is problematical has to do with our interpretation of the role of science in society. Keynes himself, in the above quotation, speaks of ideas as if they are either true or false or, to use his words, ‘right’ or ‘wrong’. Accordingly, economists – and perhaps also the ‘political philosophers’ referred to by Keynes – seek truth, and when they believe themselves to have succeeded in this endeavour, disseminate their knowledge to various actors in society and to the general public.

Personally, I do not believe that the interaction between scientists and other actors in society (or ‘practical men’) is well described as one of a uni-directional distribution of knowledge. Ideas flow in both directions and the power of ‘practical men’ in influencing social science should not be underestimated. The latter may, for instance, choose to ‘accept’ certain ideas coming from science while disregarding other contributions. By generating their own ideas and selectively supporting parts of the scientific community, they can be active participants in a dialogue about specific issues and the future of society more generally.

I will therefore emphasize here a second model, referred to as an actor-network model or, alternatively, an interaction model. As part of this view, models, theories and conceptual frameworks – especially in the social sciences – should not be regarded as exclusively scientific matters, but also as ideological concerns. Concepts and theories are, at least in part, socially constructed to serve specific scientific and ideological purposes. Acceptance of specific conceptual simplifications (and even more complex conceptual frameworks) such as the aforementioned ‘invisible hand’, is as much a matter of ideology as of science. In other words, there is no pure or value-free science.

When we work with the interaction model, we begin to recognize that university scholars as well as ‘practical men’, such as business leaders, are guided by their ‘ideological orientations’ and may well have ideas that they want to implant in other actors. Economists and political philosophers have power, but conversely those engaged in practical affairs can also exercise influence on actors in the universities. One may ask, for example, why a particular view of organizations (such as profit maximizing firms) becomes accepted and popular among practical men while other competing ideas find fewer supporters. An initial answer, and more in line with Keynes’ argument above, is that the actors at the universities teach economics in a monistic fashion and in this way promote certain ideas. But in addition, there is a ‘demand’ side (in the ‘market’ of ideas) with actors, both individually and as organizations, exercising a preference and accepting only specific views of organizations (as ‘firms’ in the neo-classical sense). In this way the actors’ often entrenched thought patterns and value orientations are legitimized by ‘science’. A focus on the financial and monetary aspects of organizational practice may facilitate life for business actors, at least in the short run, when compared with an alternative view of the organization where non-monetary (eg social, environmental) impacts are systematically made visible in accounting systems, publicity, etc. With a focus on profit maximizing, that is a kind of ‘monetary reductionism’, issues such as the social responsibility of business can effectively be played down.

While there are actors who are happy with the current state of affairs in departments of economics, other actors may hold ideologies that depart significantly from those built into neo-classical economics. They may ‘demand’ ideas which are not ‘supplied’ as part of mainstream economics. They may believe in and rely on their own mental faculties or have listened to sources other than neo-classical economists. They may be concerned about ecosystems, about natural resources, and feel that they bear a degree of social responsibility in relation to various affected sections of society. Rather than neglecting such ‘demands’ for an alternative conceptual framework and theory, university scholars should be sensitive to criticism of mainstream approaches and be ready to reconsider their conceptual framework and theory.

Interaction and dialogue within the scientific community with all its different disciplines, within the community of ‘practical men’ as well as between scholars and practical men, will mean that new ideas – wherever they come from – will be tested. Competition in the world of ideas will replace monopoly. I believe that regarding interaction in society as a process of mutual learning, where science as well as ideology is involved, gives a better representation of reality than does the traditional ‘truth dissemination model’. But according to the very logic of our second model, which sees science and ideology as interconnected, it also serves my own ideological purpose in the search for an economics that will help us to deal with environmental problems in a fruitful manner.

While not excluding the possibility of neo-classical economists changing their position, I see the best hope of change coming mainly from two other sources. As hinted at by Keynes in the quotation above, other humanistic and social sciences exist in addition to economics. These disciplines also supply ideas that various actors consider relevant. Philosophers such as Mark Sagoff may criticize ideas put forward by economists (Sagoff, 1988); Amitai Etzioni and other sociologists may take an interest in economics and suggest alternatives to ‘economic man’ assumptions (Etzioni, 1988, 1992); political scientists may take part in the dialogue on the basis of an interdisciplinary approach referred to as ‘policy science’ (Fischer, 1990), to mention just a few examples.

In addition to the humanistic and social sciences, there are actors within business, environmental, religious and other organizations who have a lot to offer the dialogue on the environment and development. As a scholar, I may learn just as much from my interaction with politicians, business leaders, environmentalists and ordinary citizens as from my colleagues. If non-neo-classical schools of thought are to be strengthened or there is to be a ‘new’ economics, the initiative and driving force will not come exclusively from scholars at departments of economics. Also those who ‘demand’ conceptual frameworks, or paradigms with specific characteristics, will play an important role.

NEO-CLASSICAL ECONOMICS

How do neo-classical economists approach environmental problems? To respond to this question, it would seem appropriate to say a few words on the history of economic ideas. As the term suggests, neoclassical economics is regarded as a new version of economics when compared with the classical version. Of the classical economists, Adam Smith is perhaps the best known with his celebrated book An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776. David Ricardo and Thomas Malthus are two other influential and well-known classical economists.

Adam Smith’s ideas about ‘division of labour’ and the self-adjusting market or the ‘invisible hand’, that produces the best possible outcome for society as a whole, are still influential in public debate and the same can be said of David Ricardo’s principles of international trade. At the time when Smith wrote his book and until the advent of neo-classical economics a century later, the discipline was referred to as ‘political economy’ or ‘political economics’. Ricardo’s book Principles of Political Economy and Taxation from 1817 is a good example.

The era of neo-classical economics started around the 1870s and is associated with the writings of Karl Menger, William Stanley Jevons and Leon Walras among others. While building on many of the classical economists’ ideas about markets and international trade, they tried to refine the theory and to express it in mathematical terms. Value was connected with an individual’s utility of a commodity in use and not exclusively, as in classical theory, with the labour input necessary to produce that commodity. As part of the new approach to economics, a principle of diminishing marginal utility was formulated, which stated that a consumer who, for instance, considers how many slices of bread she or he will consume per day, is expected to enjoy the first slices of bread more than the ones that follow. At some stage the utility added by cons...

Table of contents

• Cover
• Half Title Page
• Title Page
• Copyright Page
• Table of Contents
• List of Figures and Tables
• List of Acronyms and Abbreviations
• Preface
• Acknowledgements
• 1. Environmental and Other Problems
• 2. Ecological Economics
• 3. The Political Economic Person and the Political Economic Organization
• 4. Economics, Efficiency and Ideological Orientation
• 5. Political Ideologies, Democracy and Decision-Making
• 6. Environmental Management and Decision-making: A Political Economics Approach
• 7. A Policy for Ecological Sustainability
• 8. Epilogue
• References
• Index