The Other Road to Serfdom and the Path to Sustainable Democracy

The Economics Textbook that Just Might Save Civilization

55 the economics textbook that just might save civilization i n 2004, the same year that Frank and Bernanke published the second edition of their Principles of Economics, Herman Daly and Joshua Farley published the first edition of a dramatically different introductory economics textbook: Ecological Economics: Principles and Applications. Ecological economics is an emergent school of economic thought that stands in contrast to the neoclassical model, the model that prevails in policy circles and the overwhelming majority of academic departments. The new school is an outgrowth of the steadystate or no-growth economics that arose in the 1970s, as resource scarcity and pollution had begun to be recognized as problems that couldn’t be addressed by free markets and principled inaction. (On the whole, “ecological economics” represents better branding than “no-growth” or “steady-state” economics.) The book is a classic illustration of a moment in intellectual revolutions outlined by Thomas Kuhn: if an emergent paradigm is to succeed, it must at some point be codified into introductory texts; its ideas, insights, and theoretical apparatus must be brought out of the technical journals (most of which are start-ups created by the new paradigm’s advocates, who find themselves shut out of the established organs of disciplinary communication) and be laid in a coherent way in front of the discipline’s next generation of practitioners. By seeking adherents among students, the new paradigm submits itself to the discipline of free and informed choice in the marketplace of ideas; without a paradigm-setting textbook, the new ideas remain on the margin, known to few, influential to even fewer. In another classic illustration of the Kuhnian scheme, the new paradigm contained in this book can be represented as elegantly reversing some of the fundamental elements of the old. In mainstream, neoclassical economics, environmental values are treated as a subset of economic 56 the other road to serfdom values. How does a neoclassical economist know that nature has value? Because some people will pay money to experience it. Some will also spend money on clean air, clean water, on environmental quality in general; obviously, then (says the old paradigm), environmental goods and services have economic value and can be subsumed into economic thinking as a subcategory of all goods and services. In the new paradigm offered by ecological economics, that backward relationship between the economy and the planet is reversed and set right. Economic activity is one kind of human social activity, which itself is just one kind of activity within a larger environment. That environment, not the economy, is the containing whole. Crucial to this new paradigm is the recognition that traffic across the border of culture and nature obeys the laws of thermodynamics. The laws apply equally to both and are a definitive and controlling element in the relations between and within them; they are the fundamental truths that show how ecology and economics must be integrated. Biology was transformed by the integration of thermodynamics in the 1920s, giving us our contemporary understanding of ecological systems as energy systems. It was this understanding that Nicholas GeorgescuRoegen , a founding intellect of this view, had in mind when he admonished his fellow economists, “Biology, not mechanics, is our Mecca.” Whenonceyoubecomeacquaintedwiththelawsofthermodynamics, the neoclassical model looks like a never-was and never-will-be perpetual motion machine. If you model an economy as a closed system—one capable of sucking up low entropy from itself and discharging high entropy into itself forever—it’s no wonder that policy and practice built on your model run into ecological difficulties. Ecological economics models the economy as nature might. To the environment, the high-entropy output of the economy is more than heat and motion from burning fuel, is more than that plus all the waste matter discharged by the processes that produce the products we buy; as nature sees it, the waste stream includes those products themselves. Everything we value ages, rusts, rots, wears out, breaks, and is eventually discarded. Even our buildings and roads become, someday, a waste-disposal problem. As Georgescu-Roegen put it: seen strictly in material terms, an economy consists of nothing other than a set of institutions and processes for converting valuable, lowentropy matter and energy into degraded, high-entropy waste. economics text might save civilization 57 Producing waste is not, of course, the point of an economy. When we buy something, we may think that what we want is...