Restorative Economics for a Post-Carbon Planet
Current challenges
Climate change and waste emissions
Unsustainable use of fossil fuels. To keep atmospheric stocks from increasing, we need to reduce emissions by 80%. Since we do not seem inclined to do that in the near future, we’ll need to temporarily reduce emissions by even more to avoid ‘unacceptable’ risks of catastrophe.
Biodiversity loss and ecological degradation
Unsustainable use of living carbon stocks: forests and biomass. Human like all other species require functioning ecosystems to survive. To maintain life support functions, we must restore many of our ecosystems.
Sustainable agriculture
Unsustainable use soil carbon stocks, substituting with finite fossil fuels. Need to end reliance on fossil fuels and restore soils (carbon stocks).
Role of modern market economy in causing these problems
market economy fossil fuel economy.
Allowed mining of renewable resources, faster than they could regenerate.
Allowed us to spew pollutants faster than they could be absorbed.
Economy, even food production, came to depend on finite resources.
Markets determine how much oil to burn, forests to cut, soils to mine, and pollution to spew.
There is no price mechanism or other feedback loop to tell us when shared ecological and social costs exceeds the private benefits.
Glorification of greed and individual
Need fundamental re-design of economy to restore the damage done
Radical idea?
Economic systems are continually evolving. Hunter gatherers, agriculture, trade, fossil fuel economy, macroeconomics, ecological economics
Macroeconomics as response to crisis
More recent radical transformations
Radical transformations in our lifetimes: used half of all oil ever used, global trade has shifted from goods and services to financial instruments no one understands, but which probably accelerates degradation.
Ecological economics as response to new and more serious crises
Must build a system that is sustainable, just and efficient, that restores the damage
How to change complex systems
Insights from Donella Meadows.
What is biophysically possible?
Conventional view:
Limitless resources. Endless growth is possible. There are no limits.
Limitless resource substitution: fossil fuels for forest and soil carbon.
No particular resource is essential, but most resources are scarce.
E.g. Schelling and Nordhaus, Solow.
EE view:
Laws of physics
laws of ecology
Endless growth impossible. Steady state economy and restoration essential. Sustainable agriculture, sustainable ecosystems, sustainable energy systems (less use of different sources).
What is socially and psychologically desirable?
Conventional view:
Humans are insatiable, perfectly self-interested, don’t care about others.
Maximizing monetary value.
Ever-increasing economic growth.
Humans are insatiable. E.g. Stern review, 1% of GNP vs. 1.5%. Leads us to define crisis as too little consumption by Americans, prevents meaningful solution.
EE view:
Humans are satiable. Hunter gatherers and satiation. Pseudosatisfiers. We need enough economic production to meet our material needs. We should focus on social interaction, arts, culture—those things that are uniquely human.
Humans care about others. Sustainability and justice.
Retargets our efforts, current crisis easy to solve. Return to 96% tax brackets, etc.
What institutions are appropriate?
Conventional view:
Markets are an amazing system that maximizes monetary value.
Rationing mechanism and allocative mechanism of price.
Resources rationed and allocated to those willing to pay the most.
Preferences weighted by income
Markets fail in some areas, but we can extend market to encompass everything. The market channels our greed in the appropriate direction:
“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”
- John Maynard Keynes
EE view:
What institution is appropriate depends on the desired end, the physical characteristics of the resources required, and human nature.
Different institutions required to solve different problems.
Competition inherent to some resources
, e.g. oil. Must ration access. Requires collective institutions.
Cooperation is essential to solve the most serious problems we currently face. It is both necessary and possible.
Markets are impossible for things we can’t ration.
Cooperation required to ration access to oceanic fisheries, ecosystem structure in general, to waste absorption capacity, etc.
Markets are stupid for things that don’t wear out through use.
What’s the cheapest way to produce technology?
How do we maximize the value of technology once it’s produced?
Is cooperation possible?
Seems like a stupid question, but economists and many evolutionists argue that we cannot cooperate. What appears to be cooperation is really driven by pure self interest.
Behavioral economics
Concern for justice
Oxytocin
Human history
Hunter-gatherers
Evolutionary biology
Psuedomonas fluorescens
Wall street titans and bankers
Myxococcus xanthus, scarcity and oil
How to create a cooperative economy
Public goods game. Altruistic punishment and reciprocation
Elinor Ostrom’s work
Common Asset Trusts
Instigating reciprocation
From Common Asset Trusts to New Bretton Woods