Green economics

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Green economics is an approach to economics in which the economy is considered to be a component of and dependent upon the natural world within which it resides and of which is it considered a part. It takes the widest possible view of stakeholders of a transaction to include impacts to nature, non human species, the planet, earth sciences, the biosphere. A holistic approach to the subject is typical, so that economic ideas incorporate learning from other disciplines in a true transdisciplinary fashion, and important theories from feminist economics, post modernism, critical theory, ecology, international relations and peace, deep ecology, animal rights, social and environmental justice, anti- globalisation, eco efficiency, participation and localisation theories. Green Economics includes and builds on some aspects of environmental economics and ecological economics.

Contents

[edit] The Essence of Green Economics

Green economists all share a common view that economics and human social interaction rest within and are dependent on the natural world. They reassert the etymology of the terms, since eco- refers to house, -logy refers to understanding and -nomy refers to administration. Economics, our "housekeeping", the way in which we sustain our being in the world, must be informed by ecology, the science of our relation to our planetary environment.

[edit] Axiomatic basis

Green Economics is based on three axioms:

  1. It is impossible to expand forever into a finite space.
  2. It is impossible to take forever from a finite resource.
  3. Everything on the surface of the Earth is interconnected.

[edit] Green is non-neoclassical

Neoclassical economics represents the main body of modern economics. Neoclassical economists begin with a set of assumptions that enable a mathematical treatment of the subject. Environmental and social considerations are categorised as externalities in conventional economics. The typical assumptions take societal preferences as fixed, rather than allowing them to evolve within the analysis. This co-evolution of ecological, environmental, and economic systems is a focus of green economics.

The green economists share broader ecological and social concerns, including a distrust of capitalism itself, that go beyond the narrower concerns of environmental economics, resource economics, and sustainable development, which are subsets of green economics.

The school of Post Autistic Economics could possibly be considered one aspect of a broader school of green economics.

[edit] Economics for Life

What defines green economists most clearly is the emphasis on the ecosystem as the right starting point for economics. This is in direct opposition to the neo-classical approach, which classifies the ecosystem as an "externality".

All green economists regard "economic growth" as a delusion, since it contradicts the first Axiom (above). Growthism is an ideology which disrupts and destroys growth in the life support capacity of the natural ecosystem: air and water filtering, food production, fiber growth. Green economists often characterize their work as "social ecology" and some may employ the Marxist analysis of means of production.

The central problem of economic growth is that it implies ever-increasing "throughput" of materials, through the linear process of mine-manufacture-use-dispose. There is a need for growth in the green sector of the economy, for instance, a growth in the recycling industry, as the world economy moves towards a sustainable mode. Lawson[[1]] identifies 20 sectors of the green economy in the UK offering enough work to annul the unemployment rates obtaining in 1996 in the UK.

Subsidiary characteristics of green economics may include rejection of all analyses of factors of production or means of production that fail to clearly and fundamentally distinguish between living (nature, persons) and non-living (financial, social, instructional, infrastructural) roles in a productive process. Some have detailed critiques of "Fordism" (after Henry Ford) and "productivism", as best developed by Alain Lipietz of the French Greens.

Ecosocialists such as John Bellamy Foster, Joel Kovel and Derek Wall draw strongly on Marx to develop an understanding of ecological issues and ecological economic alternatives.

There are also a number of green economists who emphasize the role of tax, trade, and tariff laws in disouraging destructive behavior - they often characterize "dirty subsidy" or "dirty money" as the problem, - and seek to change banking as well as social values.

[edit] Money

Money is a symbol of value, a symbol that represents the power to obtain real goods and services. Money has no intrinsic value. Its purpose is to serve the smooth running of the economy, but it should not dominate it to the exclusion of all other factors.

The huge international trade in money is intrinsically irrational as it is trade in a symbol, not a commodity or a service. The proposed Tobin tax on this trade, set at a fraction of one percent of transactions to be hypothecated to the poorest regions of the earth, would help to stabilise this trade and would inhibit divergence between rich and poor at the same time.

Theories and practices that treat money as an entity are not sustainable in the long term as they allow financial value to drift away from the ecological and social realities of life. Green economics internalises these realities into monetary or market values at every opportunity and uses concepts of fairness and ethics to try to reallocate them more constructively to where they might be usefully originate. Conventional economics makes society as a whole pay for these hidden costs.

Conventionally, money can be created through the lending process, on the basis of risk assessment. It is very important to understand that the money created is created by the banking sector, not the individual banks as is falsely believed by so called 'monetary reformers'. Green Economics is critical about certain aspects of the banking sector and its behavior but is strictly different in its approach from any 'social credit' type of monetary reform that is based on a misconception about how the monetary system works.

Debt and interest are regarded by some as one of the drivers of economic growth (Hoogendijk, 1991), through the cycle of borrowing to increase productivity, and increased productivity to pay off the loan.

Money has become the greatest source of power in the world. In theory, power in democracies is ultimately derived from the people, but in practice, state power lies with the wealthy, who can buy public opinion by owning newspapers and broadcasting industries. (See Greg Palast). This political system is more accurately described as a plutocracy or monetocracy than a democracy. Green politics would limit the power of individuals and corporations to monopolise the media as part of a healthy economy.

There is an intrinsic divergent tendency in an economy that is run in a capitalistic style that is, for the rich to get richer and the poor to get poorer. Green economics will seek to moderate this tendency, producing a convergent economy where wealth tends towards the median value.

[edit] Ecologies produce, people create, local is more reliable

Three assumptions that seem to be universal among green economists are:

  1. That living ecoregions are better valued as service-producing natural capital than as passive natural resources.
  2. That creative "enterprise" or individual capital must be differentiated from more general ideas or analyses of human capital or human resources, as what characterizes both evolution and intelligence is an unpredictable and creative movement towards greater energy economy, e.g. a tree spans a volume so as to most effectively convert available light to energy using its leaves.
  3. That local measurements are almost always better than global ones, and scale of measures must match the scale of the commons being managed.

However, for 'deep' Greens there is the all-important spiritual dimension to consider, with the belief is that life is, inter alia, holy and deserving of reverence. Buddhist Economics has something to say about this. People and nature cease to be mere factors of production, becoming instead, or as well, intrinsically valuable and worthwhile entities with rights and, where applicable, responsibilities, too. Because Marxism/Socialism are materialist philosophies their analysis are necessarily inadequate. Thus life is not merely mechanistic: it has goals beyond mere pleasure and physical survival. These must be recognised by the Green economic system if it is to be holistic and consistent internally and externally.

[edit] Small is beautiful

Of these three assumptions, the third is the oldest, and was first codified clearly in E. F. Schumacher's Small is Beautiful. It emphasized the value of a local point of view, like that of gardening, that would require "use-value" or "service value" to be assessed in context of a living ecoregion or economic process, and would de-emphasize the value of resource, commodity or product measures. In addition many de-emphasize protest, notably Brian Milani who has contributed significantly to a green micro-economics, e.g. of eco-villages, and notes that "efforts to encourage nature appreciation and environmental protection often reinforce the chasm between the human economy and non-human nature."

He argues that "The environmental movement in particular should put more emphasis on establishing an educational network that both formalizes its educational tasks and systemizes connections with the rest of the community. But this, of course, assumes that the environmental movement becomes more aware of, and proactive about, economic alternatives."

This bottom-up approach seems to mirror that which successfully promoted the emotionalist moral philosophy of Adam Smith and the classical economists, "that eventually caused fundamental changes in politics, culture, religion, and conceptions of human nature." A revolution not of politicians and theorists, but of gardeners, shop-keepers, and purchasers.

[edit] Can green go global?

At the other end of the scale is the view of Edward Goldsmith, that scientific understanding of human bodies, cognition, and Earth's ecology, constitutes "a single order" and "a single set of laws, whose generalities apply equally well to biological organisms, vernacular societies and ecosystems and to Gaia herself." Such views seem to inspire the Global Greens who believe that centralized measurements can perhaps be reformed, in line with a general ethic that emphasizes "Earth First" (the name of one influential NGO) and social and economic measurements as only secondary.

This "recognition that economy is nested within society which is nested within ecology, and that ecological flows (e.g. watersheds, air flows, gene flows) determine political power and bodily service relationships" is seen as pivotal by other greens who see The Enlightenment as being over, and a new movement, The Embodiment, replacing it on a cultural level.

[edit] Can green fight global?

This is a common theme among Greens in general, who have a broad critique of dominator culture and monoculture which has flowered in the anti-globalization movement to unite with other critics of global capitalism. The element of buying locally, reducing the environmental effects of long distance shipping directly pushes against global trade, while support for indigenous tribes and groups around the world inadvertently supports it. This creates a dichotomy for businesses seeking to both buy locally, yet support indigenous groups producing environmentally friendly goods. (Example: Green Earth Market)

Some, following systems biology, differentiate "between Plant (energy-binding), Animal (space-binding), Human (time-binding) and Truth-binding mechanisms" among which they variously count religion, banking, capitalism and economics itself.

[edit] Biology versus buying

There is, as yet, no clear agreement between greens on detailed terms of reference. Difficulty of measuring diverse "ecological flows" makes the field also diverse. It is generally impossible to distinguish green economists, ecology theorists and systems theorists, as the green analysis deliberately uses metaphors from natural capital to describe or design infrastructural capital, i.e. employing biomimicry in the broadest sense. A good summary of attitudes is that of Lynn Margulis who holds that ethics, economics, and biology are indistinguishable, and that all three apply to any study of ecology: "economists study the way that humans make a living, and biologists study how all other species make a living."

She also claims that certain tenets of biology are incompatible with ecology: Darwinian evolution "is totally wrong. It's wrong like infectious medicine was wrong before Pasteur. It's wrong like phrenology is wrong. Every major tenet of it is wrong," she writes, in Kevin Kelly's book "Out of Control : The New Biology of Machines, Social Systems and the Economic World".

Green economists vary drastically in how much they question conventional biology and ethics, how reliant they are on cognitive science as a neutral point of view for their micro-economics of human purchasing. Most however are committed to "moral purchasing" regimes that generally deny the value of nation-states or corporations to diffuse responsibility for moral harms done by one's consumption and purchase habits.

[edit] Value of life

Green economists struggle to understand why humans set the value of such commodities as gold higher than that of nature, (see diamond-water paradox) and why humans habitually reward social and sexual fitness (i.e. appearances) strongly over ecological fitness (i.e. energy efficiency, survival) whenever they have the luxury to build complex financial systems.

One theoretical explanation of this phenomenon may lie in the structure of our consciousness. Our ecological understanding (in the sense of scientific knowledge and theory, as opposed to the holistic understanding of, say, an aboriginal hunter-gatherer) is a recently acquired congnitive construct. Our current economic behaviour is motivated at a level of emotional and instinctual reward. In short, mainstream ("grey") economics is emotionally motivated, and green economics is rationally motivated. Green seeks the long term good; grey seeks immediate gratification. In neurological terms, green is coming from the frontal cortex; grey is stemming from the limbic lobe or the amygdala.

This clashes with the unfulfilled ambition of neoclassical economics to find scientific parity for its discipline with physics and chemistry. However, neoclassical and green economics may find points of overlap and come together in such doctrines as Natural Capitalism, which seems to reflect both green and neoclassical constraints.

This common ground expands in environmental finance which seeks to justify biodiversity directly as a unit of stored value, e.g. a rainforest standard replace the gold standard. Some refer to this as a "biosecurity standard" or "biosafety standard" of value, but these are not yet common usage - instead a broad strategy of using conventional financial instruments to save ecology deemed unique or irreplaceable has developed, without any agreement on any one standard of biodiversity's value.

[edit] Are humans infinitely precious?

There is a philosophical problem in reconciling the ambition of the United Religions Initiative, generic global ethics and humanism to place an infinitely high value on human life - because this, as the greens see it, places a constantly-decreasing value on other life.

Some hold that humans cannot be treated differently from great apes or whales or any other keystone species, for the green analysis to have integrity. As with other species, society must then set a finite value on what it will do to avoid losing a human life. Otherwise, humans seeking survival at all costs in ever-growing numbers must ultimately overcome sustainability on all levels and cannibalize the Earth's natural capital into "resources" - another outworking of the Axiom of Interconnectedness.

A fact highlighted by the IPCC illustrates that valuation differences occur not just on an inter-species level, but also at an intra-species level. The IPCC found that a human life in developed nations is valued 15× higher than in the developing nations - measured strictly in terms of ability to pay to prevent global climate change. Most political Greens reject such an analysis as hopelessly unsustainable given modern terrorism and asymmetric warfare, but the attempt on the part of some aspects of environmental economics to apply financial value to non-financial entities of is a cause of great offence to some workers in the field.

The solution to this problem may lie in the philosophical meaning of "value". If all value is to be referred to finance, then distortions and contracictions must occur, since finance is merely a symbol, not a universal reference point. If human life is given an infinite value in ethical and metaphysical terms, the clash disappears.

[edit] Influences and related theories

Important contributors to green economic theory and analysis include Murray Bookchin, Lewis Mumford, Miriam Kennet, Volker Heinemann, Rachel Carson, Brian Tokar, E. F. Schumacher, Robert Costanza, Lynn Margulis, David Korten, Buckminster Fuller, Herman Daly, Donella Meadows, Paul Hawken, Amory Lovins, Hunter Lovins, Kirkpatrick Sale, Jane Jacobs, and Robin Hanson. Green economic theory generally favors "local measures" and localized "grassroots" institutions over "global measures" and paternalistic and elite-driven global institutions (such as the IMF, World Bank, WTO, BIS, WIPO).

There are also a significant number of scientists working in fields outside of economics who have contributed to a green perspective. The list includes Edward O. Wilson, Rushworth Kidder, Peter Singer, Alain Lipietz, Amos Tversky.

When Robin Hahnel and Michael Albert originally formulated their vision of participatory economics it was not specifically oriented towards a full treatment of the economics-environment relationship. Nevertheless they pointed out that their proposal included a price mechanism that internalized environmental costs, along with participatory planning mechanisms designed to deal with externalities, which had obvious implications for addressing the impacts of economic activity on the environment. In recent years the authors have introduced further mechanisms designed to deal with such problems as intergenerational justice, natural resource conservation, and a specific description of mechanisms addressing pollution problems. A debate attempting to clarify how this model, the participatory economics model, relates to the "social ecology" model, is linked below.

[edit] References

The Green Economist Magazine, Edited by Judith Felton and Published by the Green Economics Institute www.greeneconomics.org.uk Miriam Kennet Ed., Procedings of the First Ever Green Economics Conference at Oxford University April 2005.Published by THe Green Economics Institute.www.greeneconomics.org.uk.

[edit] See also

Kennet. M, and Heinemann V., Setting the scene. Important innovations in Green Economics in International Journal of Green Economomics Spring 2006 Inderscience. Eds Miriam Kennet and Volker Heinemann Vols 1 Issue 1 and 2. www.inderscience.com/ijge 2006 In International Journal of Green Economics. Inderscience Academic Publishers.

[edit] Green economics blogs

[edit] External links

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