Economics and Sustainability the Fallacy of Misplaced Simplicity
Economics and sustainability – the fallacy of misplaced simplicity
Joachim H. Spangenberg, Sustainable Europe Research Institute, Germany
Every society comprises four dimensions, the economic, social, environmental and institutional one. Each of them is a complex, dynamic, self-organising and evolving entity in its own right, making the coupled system one of tremendous complexity. For this system to be sustainable, each of the four subsystems has to have the capability to maintain its capability to survive and evolve, and the interlinkages of the subsystems must enable a permanent co-evolution. For adequate analysis and prognoses – or at least to avoid wrong ones – the appropriate level of complexity for descriptions and models has to be found.
Body (249 words)
Systems theory can help to distinguish suitable and non-adequate scientific approaches to sustainable development, by defining the four dimensions as systems and sustainability as enhancing the viability of the metasystem. The key means to identify the complexity of a system is by analysing the system rules. One way of doing so is to define rules which gradually, when applied successively, drive a system from a rather undefined to a deterministic system.
Based on Allen (2001) five distinct rules are defined, which if applied together result in maximum determination. Lifting them one by one changes the character of the system towards a less deterministic one, and the resulting types of systems can be compared to economic reality itself, and to economic theory.
As a result, different lines of economic argumentation can be allocated to different “mental models” of a specific level of complexity.
Complex, evolving systems are shown to be the only ones to match the characteristics of the real economy. Neither self organisation models nor non-linear dynamic ones stand the test, but lest of all equilibrium models. Standard economic theory is not up to the challenge of understanding sustainable development.
In this case, the Orientor Theory, specifically developed to analyse the sustainability of complex, evolving systems, provides the means to assess the sustainability of the economic system, albeit on a rather abstract level.
It is evaluated if suggestions from economics and sustainability models are suitable in the more complex setting they have not been designed for or derived in.
Joachim H. Spangenberg
Sustainable Europe Research Institute
Grosse Telegraphenstr. 1
D 50676 Cologne