Home > Uncategorized > Economics 101: Dog barking, overgrazing and ecological collapse

Economics 101: Dog barking, overgrazing and ecological collapse

from Edward Fullbrook and RWER Special Issue: Economics and the Ecosystem

“the collapse of our civilisations and the extinction of much of the natural world is on the horizon”
(David Attenborough)

Today’s economics, especially Economics 101, is a major source of humankind’s denial of the possibility of the calamity of all calamities which our economy is engineering. Annually millions of students around the world are forced to study textbooks that indoctrinate them in to thinking that there is no significant causal connection running from our economy to the ecosphere. Once upon a time there wasn’t. Although from the first forest-clearing onwards, the economy has caused environmental damage and at an increasing rate, it was only when in the 19th century the economy began the big switch away from muscle energy that it began to acquire the means to cause lethal damage to the ecosphere.

It has now been over half a century since the natural sciences began to discover that the economy was causing fundamental and irreversible changes to the ecosphere by which we and the economy exist. Given that economics is the study of the economy, a more radical change in a science’s empirical realm is unimaginable.

In 50 years, what has economics done about it? Virtually nothing. There have been brilliant and intellectually brave economists, some of whom are contributors to this Real-World Economics Review special issue, who have created “ecological economics”. But that work remains ignored by over 90 per cent of the profession and in nearly 100 per cent of its classrooms. In today’s teaching of economics, 19th century theory continues to hold sway. Students are given a picture of the economy that blocks from view the fundamental facts about the economy that natural science has discovered. Let’s take a look at how this censorship is achieved.

Gregory Mankiw’s Principles of Economics is said to be the world’s most used economics textbook and is the prototype of nearly all the others. It is a huge book. Its fourth edition index is 18 pages long with over 2,500 entries. This index illustrates how comprehensive the censorship is. Here are 11 key and now common terms pertaining to the economy’s effect and dependency on our life-support system: biosphere, climate change, climate science, climatology, ecosphere, ecosystem, emissions, global warming, greenhouse gas, threshold, tipping-point.

How many of these terms appear in Mankiw’s 2,500 entries? None. Nor do any of them appear in the book’s 13 section titles, 36 chapter titles and over 700 sub-chapter titles. Why?

Because the basic theoretical structure of the economics that is taught to millions of university students every year will not accommodate the bidirectional causal link between the economy and the ecosphere. In the 19th century, when today’s mainstream economics was invented, the global economy was too small to have observable effects on the ecosphere and none were anticipated. Of course even then economies had negative effects on their immediate environment, but they were small enough to make it seem reasonable to ignore them when considering how an economy works.  So economists conceptually dumped an economy’s negative effects into a broad category they called “externalities”, and today in Economics 101 that is where they remain under the name “negative externalities”

Chapter 10 of Mankiw’s textbook is titled “Externalities”. It defines “negative externalities” as all those not so nice things that happen when market “equilibrium fails to maximize the total benefit to society as a whole”; (204) and Mankiw gives two examples:

  • “The exhaust from automobiles… because it creates smog that other people have to breath”,
  • “Barking dogs… because neighbors are disturbed by the noise” (p. 204).

Further on, Mankiw explains to students that today’s “environmental degradation” is analogous to the problem of overgrazing in the Middle Ages (pp. 231-234).

Climatologists see the problem of “externalities” as more serious than barking dogs and overgrazing. Here, for example, are quotes from a 2015 paper in the journal Science (http://science.sciencemag.org/content/347/6223/1259855)

“There is an urgent need for a new paradigm that integrates the continued development of human societies and the maintenance of the Earth system (ES) in a resilient and accommodating state.”

and

“The relatively stable, 11,700-year-long Holocene epoch is the only state of the ES that we know for certain can support contemporary human societies. There is increasing evidence that human activities are affecting ES functioning to a degree that threatens the resilience of the ES – its ability to persist in a Holocene-like state in the face of increasing human pressures and shocks” [emphasis added].

In an interview the eminent climatologist Will Steffen sums up the economy versus the ecosphere problem informally:

“It’s clear the economic system is driving us towards an unsustainable future and people of my daughter’s generation will find it increasingly hard to survive,”

and

“History has shown that civilisations have risen, stuck to their core values and then collapsed because they didn’t change. That’s where we are today.”

It is because humanity has engaged with today’s Economics 101 fantasy – that the connection between the ecosphere and the economy is unidirectional – that we are now in this dire threshold situation. As John Maynard Keynes noted, “The ideas of economists…, both when they are right and when they are wrong, are more powerful than is com­monly understood.” And the ideas of economists have never been more wrong nor nearly so powerful at doing wrong as those force-fed to the students of today’s Economics 101. We now know thanks to natural scientists, that the longer this mass indoctrination into this fantasy world continues, the more likely that the ultimate disaster will happen. It is not only with bombs and gas that crimes against humanity can be committed. Everyone connected with economics, perhaps most of all its students, need to ask themselves what they can do. It is hoped that this special issue of the Real-World Economics Review will help this questioning to take place.

Economics and the Ecosystem

  1. A.J. Sutter
    April 3, 2019 at 2:04 am

    You’re terribly unfair to Mankiw’s book, which is now in its 8th edition (2017). I haven’t been able to check that edition’s index, but already in the 7th edition (2014) there is a reference to ‘climate change,’ in an “In the News” box about a carbon tax (pp 208-209). Sure, that’s just one item out of the 10 you mention, but if we assume 1 term added in each edition, and one new edition every 3 years, then he’ll have the whole list by 2041, which should be at least a few years before we’ve been flooded out of our cities or desiccated by drought (YMMV).

    • Rob Reno
      April 3, 2019 at 9:05 am

      Brilliant, but how do your pronounce Mankiw’s name?

    • April 3, 2019 at 12:44 pm

      The first quantitative article on greenhouse gases, which also coined the term was published by Prof. Svante Arrhenius in 1896. By 1912 (at the latest) this was directly linked to the burning of coal – in this year a brief article appears in Popular Mechanics and was reproduced all over the world, including a provincial newspaper in New Zealand later than year (which is how I discovered the fact).

  2. Patrick Newman
    April 3, 2019 at 11:04 am

    I dont know the book but I suspect it is also stuffed with neo-liberal claims about the free market and how its invisible hand always satisfies human needs. Most of us try to make sense of the threatening world in which we and our fellow beings have to exist in. I am confident that an increasing number of new economists will come to challenge the continuation of the supreme cognitive dissonance conventional economics attempts to maintain!

  3. April 3, 2019 at 12:36 pm

    In Britain the building of the navy to fight Napoleon resulted in the large scale destruction of England’s oak forests before the 19th Century.

    One might also argue that the enclosure of common land from 1760 onwards, with the imposition of “modern” farming methods is also an early link between economics and ecology.

  4. Dominique
    April 3, 2019 at 4:01 pm

    Mankiw can write whatever he wants, but tell me, why would teachers of economics 101 adopt such a text?

  5. EDWARD K ROSS
    April 4, 2019 at 4:56 am

    hellow all

  6. EDWARD K ROSS
    April 4, 2019 at 8:29 am

    my previous post was just a test to see if I could post my post.
    Here I reiterate firstly that apart from a mature age B.A. i had very little formal education, with some working experience in agriculture. Now in my later years i have observed the stupidity and ignorance of mainstream neoliberal mainstream economics. I make this statement not from academic indoctrination (eg university indoctrination from real experience in the real world ) where I seriously questioned economic political double speak that was designed to cajole the masses into accepting the political economic BS that was designed by the extremely wealthy and the other mongrels hanging onto their coattails.

    While their is much that I could say in response to this blog, I whish to make a few comments relating to economics and the ecology. Firstly having lived much of my life in a rural setting, I developed a love of the land and the importance of sustainable production of all that it is capable of producing. On this basis I am very critical of those who concentrate on production solely on an economic basis. My point here is that the first step here is that before entering into the conversation at a economic level one needs to have developed a large amount of knowledge of the land and an infinity with the ecology of it For example economists may argument that dairy herds in there hundreds are more efficient economically than smaller herds. My argument is that smaller farms have the potential to provide better quality food and do less damage to the environment provided they are given the knowledge and support to achieve those goals. Ted

  7. Rob Reno
    April 4, 2019 at 1:39 pm

    Jamie Dimon defends capitalism in annual letter: ‘Socialism inevitably produces stagnation, corruption and often worse’

    Dimon knows better; once again the boogeyman “socialism” is trotted out as pure propaganda without honestly acknowledging that socialism and democratic socialism are two different things. Bill Maher says it well: https://youtu.be/Y3vsGlAvr04

  8. Craig
    April 4, 2019 at 10:42 pm

    The whole capitalism-socialism thing is a distraction. The conflict is finance and its paradigm of Debt Only for the sole monopolistic form and vehicle for the distribution of credit/money…versus virtually everyone and every other actually legitimate business model (finance is not a legitimate business model). We can fight for another 5000 years about the merits and de-merits of capitalism versus socialism. It’s the biggest “intellectual hobby horse” out there. The financial powers that be foment that conflict of course, but sniff at it if they give it a thought at all because they know that their control of the paradigm of Debt Only is where the power actually is.

    Steve Keen says the problem with neo-liberal economics is they don’t factor in money, debts and banks. He’s right. So why doesn’t he see that these three aspects of the economy focus us perfectly toward the real problem? Because he’s still operating on the theoretical level instead of graduating to the philosophical and paradigmatic integrative levels of knowledge/insight.

    You can ask a zillion questions about economic details, but all you really have to do is ask: Does money as Debt/Burden Only integrate seamlessly into the economy? Answer: Yes. So why wouldn’t money as direct and reciprocal gifting not do the same thing??? Just find the best way to do that and you’ll actually change economics far, far more…than going on and on about capitalism versus socialism. Integrate them, and let’s talk about the synthesis/thirdness greater oneness of Direct and Reciprocal Monetary Distributism.

  9. Ken Zimmerman
    April 12, 2019 at 10:17 am

    Existence is chaotic. It’s messy. Humans bring order to this mess by framing it. Framing is simple sounding but difficult to accomplish and always creates disagreements and controversies. Framing demarcates, regarding the network of relationships, those which are considered and those which are ignored. There is always an institutional frame constituting the context in which economic activities take place. But it’s not that simple. Neither the framework nor actors within it are fixed. Both are agents and contexts. In the framework, the agents’ identities, interests and objectives, in short, everything which might stabilize their description and their being, are variable outcomes which fluctuate with the form and dynamics of relations between these agents. In other words, the actions of the agents (actors) changes the framework, which, in turn changes the agents. And this happens again and again. Thus, time is an important part of who acts and how it’s understood.

    “Externalities” is framing in action. Economists as a community have determined that there are certain events and actions they will not include in their work or their theories. They constructed a framework to do this. That framework is embodied in neoclassical theory, rational choice theory, etc. Since this framework is always changing and being repaired, I suggest attacking it by placing what it leaves out (e.g., externalities) back inside the framework and adding fuel to the fire. In other words, push the framework till it breaks. Then replace it.

    But by allowing the framework to survive so long and have such widespread effects, what you propose is now an uphill battle. A question that did not face Sapiens in the last ice age 26,500 years ago is the role of economic inequality in determining which members of Sapiens will survive the current changing climate? This helps us understand why so many of the 1% and their servants (e.g., politicians, economists) show little concern about climate change. As with surviving the last ice age, some locations in the world may be refuges from current climate change. It seems clear, at least to me that as current changes in climate become more threatening, the 1% will simply purchase all the refuges. From which most of us will be excluded.

  10. Craig
    April 13, 2019 at 10:23 pm

    What if chaos is actually the utterly integrative, interactive nature/state of grace of the cosmos pointed at and directly experienced by the individual without abstraction as the world’s wisdom traditions claim? And the remaining aspects of which science has not (yet) affirmed due to an overhang of its bias against anything smacking of religion (understandably), but (incorrectly and stupidly) invalidated because natural philosophy/spirituality are NATURAL mental processes?

    Despite and because of randomness grace IS the state of the cosmos because the cosmos is everything including seeming opposites….completely and continuously integrated. And one’s point of view on that fact is the only thing that arbitrates whether that is true for you or false.

    Align economic philosophy and monetary policy with the multitudinous and imminently applicable aspects of wisdom and its pinnacle concept of grace or suffer the consequences.

    After all, “It’s not nice to fool mother nature.”

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.