Ecological Economics

06Jun07

There is a new guest blogger over at OnTheCommons, Josh Farley, an assistant professor at the University of Vermont. Farley has presented an introduction to the ideas of “ecological economics” and its connection to the topic of commons. I have heard of ecological economics, but not read any, so I am looking forward to this series.

In looking at his introduction to the topic, I have one positive reaction, and one negative reaction. My positive reaction regards statements like this:

“Solving this problem instead requires a system based on common property rights and democratic decision making … Note that I equate common ownership with democratic allocation.”

The question of the economic efficiency of commons is tied to the economic efficiency of democracy. In all or most significant cases, commons are established by formal, government action. If democratic decisions are not or cannot be economically efficient, then the commons established by democratic processes are almost certainly also inefficient. Farley is right on the money to connect these two topics.

My negative reaction regards Farley’s outline of the general principles of ecological economics, of which this is an example:

“Ecological economics views the economy as a subsystem of the sustaining and containing global ecosystem. The laws of physics apply: it is impossible to create something from nothing, so all economic production requires raw material inputs provided by nature. Since we live on a finite planet, continuous physical growth of the economy is impossible.”

My reaction here is partly due to the high level of the concepts Farley is using. There are many things which sound reasonable at a high level of abstraction but turn out false when you get down to real situations. In fact, free market ideology itself is one of those things. But I am aware that a high level of abstraction is absolutely required in writing an introduction to a topic like this within the limits of a short, blog post, so I’m not much worried.

I do have another caveat about this position. When we think of global warming, it is clear that we are overwhelming a physical characteristic of the atmosphere, and that we are facing a physical limit of the ecosystem’s ability to recover from our varied forms of air pollution. However it is also true that we may over time develop ways to scrub carbon out of the atmosphere, or switch our primary energy source to solar energy. Physical limits are relative to the state of technology as well as the size of the economy. Physical limits are also relative to the types of goods being produced. If the materials that went into a 286-computer can be recycled into a dozen MP3 players, each of which cost as half as much as the computer, then you have continuing economic growth within the physical limits of the planet. But, again, in a short post Farley has to stress the areas where ecological economics differs from mainstream economics. This post is the menu, not the meal.

These are my quick, initial reactions. I’m really looking forward to seeing how the analysis progresses over time. But I have to mention one other statement of Farley’s that I had a quick, initial reaction to:

“In my opinion, the problem with economics as it is taught and preached these days is that it is not an objective science but a faith based ideology…”

Without indulging in neo-classical bashing, I can say that I’ve seen this phenomenon first-hand.

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