Home > Uncategorized > How economists came to ignore the natural world

How economists came to ignore the natural world

She’s right. One of the reasons nations fail to address climate change is the belief that we can have infinite economic growth independent of ecosystem sustainability. Extreme weather events, melting arctic ice, and species extinction expose the lie that growth can forever be prioritized over planetary boundaries.

It wasn’t always this way. The fairytale of infinite growth—which so many today accept as unquestioned fact—is relatively recent. Economists have only begun to model never-ending growth over the last 75 years. Before that, they had ignored the topic for a century. And before that, they had believed in limits. If more people saw the idea of infinite growth as a departure from the history of economics rather than a timeless law of nature, perhaps they’d be readier to reimagine the links between the environment and the economy.

In 1950, the economics profession had surprisingly little to say about growth. That year, the American Economic Association (AEA) asked Moses Abramovitz to write a state-of-the-field essay on economic growth. He quickly discovered a problem: There was no field to review.

The founding fathers of economics shared a belief that growth was finite, and that the reason for limits lay in the natural world.

Yes, John Maynard Keynes had offered a theory of stagnation, demonstrating the need for government spending to stimulate an economy mired in recession, and Austrian political economist Joseph Schumpeter had studied creative destruction, highlighting the importance of entrepreneurs and innovation. Wesley Mitchell, founder of the National Bureau of Economic Research, had looked at business cycles and others had analyzed monetary forces. But no one had put it all together in a theory of growth. Modern work was “fragmentary” and had “remained on the periphery of economics,” Abramovitz explained to AEA members. Development economist W. Arthur Lewis agreed, noting in 1955 that “no comprehensive treatment of [economic growth] has been published for about a century.”

It was an interesting turn for a field originally quite interested in growth, but convinced it was bounded. The founding fathers of economics—luminaries including Adam Smith, David Ricardo, and John Stuart Mill—shared a belief that growth was finite, and that the reason for limits lay in the natural world.

Christopher F. Jones

 

  1. October 2, 2019 at 2:41 pm

    Who is “she” referred to in the opening sentence?

    • October 2, 2019 at 3:34 pm

      I’m guessing she must be either Maria Alejandra Madi or Merijn Knibbe.

      • Econoclast
        October 2, 2019 at 4:27 pm

        No. The cited article from The New Republic refers to Greta Thunberg.

  2. John deChadenedes
    October 2, 2019 at 7:35 pm

    The fantasy of unlimited economic growth might arise quite naturally in the minds of American thinkers, whose country was founded on the conquest, expropriation, and unfettered exploitation of what they considered “virgin territory”. For a while there, it must have seemed as if infinite growth was really possible. Attaining the status of a world power, the US moved into other parts of the hemisphere and the globe where local resistance to exploitation was insufficient to prevent the continuation of this type of growth. Along the way, of course, the negative environmental and social effects of rapacious capitalist development were fully externalized, so activities that have proven in the end to be non-economic (fossil fuel extraction, for example) appeared amazingly profitable. No wonder then, that nobody was theorizing about limits to growth until fairly recently. Nothing in the real world – nothing economists were likely to be aware of, anyway – suggested we might run into hard limits soon. When you factor in the deliberate and systematic corruption of economics as a theoretical endeavor (see, for example, Mason Gaffney’s “The Corruption of Economics” and the suppression of any discussion of socialism as a valid way of organizing production and distribution) then it’s really no surprise that we are where we are now. Given all this, as Greta might say, “How dare you go on talking as if this world could support infinite economic growth without killing us all?”

    • October 2, 2019 at 10:02 pm

      John, it seems to me economists saw only the profitability and not the physical consequences of our wonderful achievements in mechanisation, transport and health care, while the moral arguments against mindless work and birth control became polarised instead of promoting time sharing of jobs and intelligent abstinence, as preferable to efficiency and condoms. But

      “No wonder then, that nobody was theorizing about limits to growth until fairly recently”?

      Actually, Malthus was on about it and Townsend proposing predator-prey balance as a cure before 1800 (see Polanyi’s “The Great Transformation”, p.117 ff). The Preface to Ruskin’s “The Crown of Wild Olive” (1866) is eloquent on it, suggesting replacement of profits with honours as a solution. In the 1920’s distributist G K Chesterton’s “Outline of Sanity” hoped to rebalance the factory system with a considerable return to local agriculture. In the early 1970’s we had a veritable flood of concern about the consequences of mass production, c.f. Meadows et al’s “The Limits to Growth”, Rachel Carson’s “Silent Spring”, “Gordon Rattray Taylor’s “Rethink”, Barbara Ward’s “Only One Earth” and E F Schumacher’s “Small is Beautiful”, to name just some that I personally am familiar with.

      • Craig
        October 2, 2019 at 11:44 pm

        Correct Dave. When you base a system most basically merely on tawdry ethics like profit and control what else are you going to get? One based on the philosophical concept of grace and policies aligned with it will look completely different.

    • October 3, 2019 at 4:27 pm

      John, I keep coming back to what you say, and what I’ve said merely reveals how your and Greta’s indignation is even more justified.

      It turns out that in the UK today is National Poetry Day, and co-incidentally my wife and I were reading this morning a marvellous article by Malcolm Guite in “The Newman” (he who is about to be canonised a saint: a journal celebrating a Victorian intellectual whose poetry and work on universality in education Catholic thinkers – unlike most administrators – still draw inspiration from). Pope Francis (named for St Francis, medieval friend of all the animals) wrote an encyclical letter on the environmental crisis. Guite’s article, “Laudato Si and the Ancient Mariner”, compares that with a famous poem by Coleridge about a bird who saved a ship lost in the Antarctic which echoes the biblical stories of paradise lost and the killing of a Christ who came to save us.

      ‘ “God save thee, ancient Mariner!
      From the fiends that plague thee thus! –
      Why look’st thou so?” – With my cross-bow
      I shot the ALBATROSS.’

      Like his Mariner, Coleridge (an opium addict) “endured the agony of loneliness, despair and
      suicidal thoughts”, but with the man who saved him, basically “invented rehab”. This is the bit I wanted to share here, for it echoes how I have been trying as a scientist rather than a poet to develop imagination there, hrough flow diagrams as Coleridge does about “rehab” through poetry:

      “They, and only they, can acquire the philosophic imagination, the sacred power of self-intuition, who within themselves can interpret and understand the symbol that the wings of the air-sylph are forming within the skin of the caterpillar” [i.e. formed by action]. Guite continues:

      “Mathematicians and scientists will tell you this, that you can imagine something before you have done the maths, and the role of the imagination is to carve out a space into which you will grow your antennae, and those antennae are precisely those organs which you will use to discover your knowledge of the world. What Coleridge is proposing [c.1820] is that the imagination is working sympathetically and intuitively with the other means of knowing”.

      What I’ve been saying as a mathematician and scientist is that the role of theory is not to tell you what you will find but to tell you where to look: at the economic structure directing the flows of goods and money within it, which the imagination enables one to see. To mobilise the army needed to fight ecological devastation we need to be able to see not just the enemy but how what it is doing affects the whole world.

      https://www.newman.org.uk

      https://www.papalencyclicals.net/document-directory

      • October 3, 2019 at 4:39 pm

        Apologies for Amazon posting itself, an unseen line break and a mis-edit in the same para producing an irritating typo (“there, hrough” should have been “here, through”).

  3. Jen Torpley
    October 5, 2019 at 5:39 pm

    Bravo! Stand Up for Snowflakes Ascendant! see https://sites.google.com/site/rtdlies/

  4. Gerald Holtham
    October 7, 2019 at 7:05 pm

    What is “growth”? Who thought it was “infinite”.? Marx and Malthus foresaw a limit to growth of capitalist production and human reproduction respectively – though neither constraint turned out to be as tight as they expected. Georgescu-Rogen worried about entropy and its relevance to economic theory. Nicholas Stern has written massively on the challenge of global warming and the economic changes needed to counteract it. It is ridiculous to point to the simple growth models of the 1960s as evidence of belief in “infinite” growth. All social scientists build models to address immediate problems. Ecological constraints began to be model when they began to appear relevant. Only on this blog do contributors attempt to solve all problems at once and the inevitable result is not comprehensive solutions but comprehensive confusion.

  5. Ken Zimmerman
    October 9, 2019 at 1:03 pm

    Apart from an almost maniacal devotion to markets, money, and mathematical models, none of which comes near to encompassing the “economy,” economists are ignorant about the basics of earth science, human anatomy, ecology, and chemistry. If they knew just little of these (in other words, if they would of had a reasonably well-rounded education) they would see clearly that economic expansion cannot be open ended. Take just one area, the fragility of humans. Humans have been adapting to life on Earth for at least the past 200,000 years. Earth and its atmosphere have provided us with air to breathe, water to drink, and food to eat, but these are not the only requirements for survival. Although you may rarely think about it, you also cannot live outside of a certain range of temperature and pressure that the surface of our planet and its atmosphere provides.

    Atmospheric gases must be within narrow limits for humans to survive. Too much or too little oxygen, CO2, argon, etc. ends human life. The most critical nutrient for all life on Earth is water. Any situation that reduces the water available is a threat to human life, in fact all life on Earth. An ever expanding economy does just this. It also places pressure on the other nutrients needed for life. The energy-yielding nutrients are primarily carbohydrates and lipids, while proteins mainly supply the amino acids that are the building blocks of the body itself. You ingest these in plant and animal foods and beverages, and the digestive system breaks them down into molecules small enough to be absorbed. The breakdown products of carbohydrates and lipids can then be used in the metabolic processes that convert them to ATP. The chemical reactions upon which the body depends can only take place within a narrow range of body temperature, from just below to just above 37°C (98.6°F). When body temperature rises well above or drops well below normal, certain proteins (enzymes) that facilitate chemical reactions lose their normal structure and their ability to function and the chemical reactions of metabolism cannot proceed. And we die. Each year for the past 20 years average temperature on Earth has increased. Now heat waves measuring as high as 120-125°F are common, particularly in Asia and Africa. At the same time in the Northern Hemisphere waves of intense cold 0 to -50°F are becoming more common. Heat or cold, without effective protection no human can survive such temperatures for more than few minutes. Atmospheric pressure is pressure exerted by the mixture of gases (primarily nitrogen and oxygen) in the Earth’s atmosphere. Although you may not perceive it, atmospheric pressure is constantly pressing down on your body. This pressure keeps gases within your body, such as the gaseous nitrogen in body fluids, dissolved. Atmospheric pressure does more than just keep blood gases dissolved. Your ability to breathe—that is, to take in oxygen and release carbon dioxide—also depends upon a precise atmospheric pressure. Changes in the volumes of mix of gases in the atmosphere can interfere with both processes, Unusually high or low temperatures further put the process out of kilter.

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