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More by Jack Beatty in Atlantic Unbound
A heretical new approach to economics may change the way we think about growth
by Jack Beatty
January 14, 1998
The cant phrase "paradigm shift" has been so promiscuously applied to everything from fashion to public policy that you may not have noticed signs of the real thing at work in the realm of its provenance: intellectual history. Heresy drives the history of ideas, toppling paradigms, disturbing the settled geography of knowledges. With the recent publication of a first-of-its-kind college textbook, An Introduction to Ecological Economics, heresy has made a fissure in the thick crust of economics.
One of the textbook's five authors, Herman Daly, a professor of ecological economics at the University of Maryland, says that the standard pedagogy might find a dose of heresy useful in the classroom to rouse students of economics from the somnolence inherent in the study of the "dismal science." He is, nevertheless, under no illusion that his textbook will supplant his mainstream rival -- Paul Samuelson's classic Economics -- anytime soon. This is because of a profound clash between the fundamental paradigms of conventional and ecological economics.
Draw a circle. That is the vision of the economy presented by neoclassical economics -- an isolated system entire of itself. Now draw another circle outside the first circle. That is the vision of ecological economics. The economy is a sub-system of the ecological system containing it and -- for that matter, everything else.
"It is interesting that such a huge issue should be at stake in a simple picture," Daly wrote in his 1996 book, Beyond Growth. "Once you draw the boundary of the environment around the economy, you have said that the economy cannot expand forever ... that at some point quantitative growth must give way to qualitative development as the path of progress."
That theory has empirical support: Daly and his coauthors cite studies claiming that "the human economy uses -- directly or indirectly -- about forty percent of the net primary product of terrestrial photosynthesis today." A doubling of the world's population, something likely in fewer than fifty years, the authors say, means that the human economy will be using eighty percent, and shortly thereafter one hundred percent, of the breath of life. In this scenario, the inner circle of the economy bulges against the outer circle of the ecosystem, which cannot grow to accommodate it. Such total dominion over nature may disrupt the infinitesimal web of life. It may take an environmental disaster to shake our faith in a paradigm on which we have staked everything and to persuade the poor countries to get serious about population control.
What is the alternative? Growth must yield to "sustainability," the grail of ecological economics. The economics of sustainability with development -- meaning constant technological innovation aimed at qualitative not quantitative improvement -- are not manifestly implausible. But the social and political implications of shifting paradigms from growth to sustainability are frightening. Growth is the world's only current answer to global mass poverty. Absent growth, redistribution of the goods of progress from the North to the South would have to become the answer to endemic poverty. But any such redistribution, in the wake of the modest but controversial environmental standards agreed to at the environmental summit at Kyoto, is unrealistic.
An Introduction to Ecological Economics ends with a section on green policy initiatives. They include:
Americans hold no brief for specific policies, but a Roper Report survey reveals that overwhelming majorities envision the "expected problems 25-50 years from now" to be environmental. The top concern of those surveyed was severe air and water pollution, with the next four problems on the list also having to do with the environment.
Some critics, for example Herman Daly's colleague at the University of Maryland, Julian Simon, reject the premise of scarcity that is at the bottom of this ecological anxiety. "The appropriate measures of scarcity (the costs of natural resources in human labor, and their prices relative to wages and to other goods) all suggest that natural resources have been becoming less scarce over the long run, right up to the present," Simon writes in the introduction to The Ultimate Resource 2, a reassuringly massive volume of evidence and argument supporting that claim.
So much for overconsumption, at least in Simon's maximalist version of conventional economics. As for overpopulation: "From the economic point of view an additional child is like a laying chicken, a cacao tree, a computer factory, or a new house.... Additional persons produce more than they consume in the long run, and natural resources are not an exception." Pointing to the gap between these views and the public attitudes noted above (61 percent see overpopulation as one of tomorrow's most "serious problems"), Simon, of course, could argue that his cornucopian views are the real heresy and that the paradigm needing shifting is the grip of green propaganda on the public mind.
Still, no amount of econometric persuasion is likely to shake the inchoate majority sentiment that growth has become a worrying good. The green majority may want a cleaner environment, fear the catastrophic effects of global warming, and boycott fur. But it may not be ready, yet, to pay for what it wants through a less energy-intensive way of life. We need lessons in ecological economics, but we need candid political leadership on the choices ahead even more.
Jack Beatty is a senior editor at The Atlantic Monthly and the author of The World According to Peter Drucker.
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