Green Economics

The original—and still the core—intention of green economics is to achieve consistency between the environment and economics. But agendas of various kinds and the opportunity provided for a broadly-based critique of economics have complicated matters, so green economics now comes in many forms. Here are three:

First, there is internalisation. This consists of ways of bringing environmental variables (such as emissions of carbon dioxide) into the market—into the world of measurable value and exchange—by attaching prices to them (see Economics > #5).G55

Secondly, there is the liberal agenda. Green economics is seen as a new context in which to argue for ideas which are already established as liberal objectives, such as gender studies, peace studies, animal rights, and social and environmental justice. Some interpretations of green economics include “critical theory”—that is, depictions of economics as a struggle; the struggle of people to release themselves from what is seen as the oppression of commerce and class, and the complicit role of literature and culture in collaborating with that oppression.G56

A third strand of argument which could be included under the heading of green economics is reconnection, the view that the proper field of study is a systems one, linking society, culture, the environment and economics within a single frame of reference. According to this argument, the disconnection of economics from society, allowing the exchange mechanism to be studied on its own, may be briefly helpful as a learning exercise and may achieve short-term aims, but as a practice applied to the human ecosystem as a whole over the long term, it fractures the logic—it can only produce ludicrous results, and its position as the guiding principle of public policy is acutely destructive. Green economics exists as a service to the human ecology, not the other way round. Nothing to argue with there.G57

 

For all that, it is reasonable to wonder whether green economics has invented a line of enquiry which economics has not already thought about. The place to look for an answer to this is the output of green economics—that is, the studies and recommendations on what to do about the present convergence of torments affecting energy, food, climate, society, mind and money. The Green New Deal is one, and it clearly sees itself as making a break from economics as it is normally taught and understood. Under the heading “A new well-being”, it notes,

The conflation of a growing economy with rising well-being in wealthy countries such as Britain has become a “given” in conventional economic theory and the minds of policy makers. To question it remains an economic heresy, punishable by excommunication from the company of the professional commentariat.G58

Well, it depends what you mean by “excommunicated”. As long ago as 1920 the economist A.C. Pigou, in his famous book, The Economics of Welfare, was clear about the limitations of money as a measure of welfare. In 1972, the Yale economists William Nordhaus and James Tobin, with the encouragement of the great Paul Samuelson himself, demonstrated the parting of the ways between growth (GNP) and well-being, and produced an alternative measurement, “Net Economic Welfare”, which has been in the textbooks ever since. Principles on which well-being and incomes can be distinguished have been explored exhaustively since then by economists such as E.J. Mishan, Mark Lutz, Kenneth Lux, Richard Easterlin, Fred Hirsch, Ed Diener and Amartya Sen.G59

The chief weakness of such alternative measures (discussed in Well-Being) is not that they are heretical, but that they are hard to measure, and the use of GNP is a fundamental direction-finder without which it would be impossible to make sense of the behaviour of the market economy at all. There is indeed a powerful correlation between well-being and GNP, as is cruelly shown when a falling GNP leads to rising unemployment and its consequences, including shortened life expectancy, marriage break-up and an increased likelihood of suicide. You have to be a wealthy society not to view a growing GNP (and the stable economy it produces) with the utmost gratitude—which does not preclude recognising its flaws: its less-than-ideal correlation with well-being, and its imminent passing.G60

And yet, the actual achievement of the new, fresh thinking that has been coming into economics is better than its rhetoric would have us believe. A Green New Deal gives the energy problem (i.e., oil/gas/coal/nuclear + climate) the focus and urgency which it needs. You do not have to agree with its advocacy of carbon tax and its top-down regulatory approach, nor with its proposed financial reconstructions, to recognise the value of a contribution which integrates economics and ecology as single subject. And the urgency and accuracy of its rethinking of the electricity grid—“every building a power station”—and of the “carbon army” of new skills, immediately deployed, are beyond challenge.G61

In the same tradition we have studies such as The Oil Crunch, an authoritative and devastating survey of the coming oil peak, its consequences, and responses to it. And we have a stream of studies from sources such as the New Economics Foundation, which has covered such matters as microfinance, time banking, social investment, debt relief, post office banking, community-development finance, and a “public benefit” model for social services, instead of the present (and inefficient) efficiency targets. And now we have the first of what is likely to be a stream of studies on how to live without economic growth.G62

Mainstream economics has not in fact comprehensively neglected key ideas—as green economists tend to accuse—but green economics’ recognition of economics as the means to well-defined personal and local ends is new and significant, and its early contributions to the matter of how to live without growth do indeed represent a break from the mainstream on the most fundamental topic of all.G63

 

Related entries:

Lean Economics, Usury.

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David Fleming
Dr David Fleming (2 January 1940 – 29 November 2010) was an economist, historian and writer, based in London. He was among the first to reveal the possibility of peak oil's approach and invented the influential TEQs scheme, designed to address this and climate change. He was also a significant figure in the development of the UK Green Party, the Transition Towns movement and the New Economics Foundation, as well as a Chairman of the Soil Association. His wide-ranging independent analysis culminated in two critically acclaimed books, Lean Logic and Surviving the Future. A film about his perspective and legacy - The Sequel: What Will Follow Our Troubled Civilisation? - was released in 2019, directed by BAFTA-winning director Peter Armstrong. For more information, including on Lean Logic, click the little globe below!

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