Economics and environmental degradation

New ideas, when they first surface, are often ignored. Eventually they work themselves into the imagination of a few. Some people adopt the idea, others test it, if they can, others speculate about the idea and many ignore or mock it. There are very few ideas that are genuinely new; ideas build on the ideas of others. When an idea gains a small level of acceptance it has started its journey in the world; the journey may be short or it may be beyond the wildest imaginations of those that conceived the ideas.

The largest resistance to new ideas often come from governments and those in authority. Most new governments have been elected on a platform of “change” but they do not really mean change in any fundamental sense. Whatever the politics most politicians these days aim for the same outcomes, they just use different policies in their efforts to achieve them. The new ideas of politicians are simply mechanical, not fundamental.

For hundreds of years science misunderstood fundamentals. At first, it hardly mattered. For example, it made no difference to anyone if the earth was the centre of the universe and everything in the heavens revolved around it. As technology based on science began to develop it was impeded by lack of understanding. The old ideas simply failed humanity.

We are working with faulty ideas in our understanding of economics, today and in our understanding of environmental protection today.

Our politicians and decision makers are making their decisions on the basis of faulty ideas. In the field of economics the traditional ideas, such as Keynesian economics, capitalist economics and communist economics are clearly failing to provide stability and prosperity, except in bursts of boom and bust. Whichever models the technicians use, they do not achieve the desired outcomes.

In the field of environment and its protection – the field that includes climate change, and the management of the resources upon which our lives depend – we are also seeing a failure by the politicians to work with fundamental ideas. They see a conflict between economic prosperity and environmental protection. They favour economics, without understanding that the economics has to be based upon environmental protection.

I cannot entirely blame them for that.

Politicians, like the bankers, depend on short term success. They find it convenient to believe that the earth is the centre of the universe and that the sun, moon and starts revolve around it. If politicians were given a better idea, they would have to be planning for long term success, and we, their electorates, would not punish them for working for the future generations.

Part of the problem is that for thousands of years resources that humanity needs have been plentiful. Now there are so many people that resources will become increasingly scarce. A fundamental resource, such as clean water, is becoming increasingly scarce. Fuel is becoming scarce. The more intensively we farm, the more we take out of the soil and the more soil we lose. We can only replace those losses with other resources, such as chemicals and fertilisers, which themselves are finite in their supply.

When there were far fewer people living in the world, we developed economic systems of massive consumption which created prosperity, albeit often unsustainable. The economics of the day was founded on the virtual limitless resources that our planet offered. Those assumptions are still the foundation of economics, as practised by politicians.

It was interesting that Gordon Brown, a technical economist whose ideas about economic theory are set in stone, reacted to the very high oil prices in 2007 by calling for the exploitation of more oil fields to lower the oil price. It was a typical old fashioned response to an economic circumstance, and one that is based on old ideas that no longer work. If we use more oil we more quickly reduce its availability and hasten climate change. Where is the economic sense in that?

The truth seems to me is that we should not compartmentalise economics and the environment. Nicholas Stern tried, in his review which still gathers dust, to show that the economic analysis required us to deal with climate change, rather than the traditional view which is that climate change measures impede an economy.

But I think he got it wrong, because his analysis was founded upon economic growth being a desirable and laudable aim. In the present economic crisis growth is still the objective. Mr Darling’s recent budget was based upon economic growth assumptions. The underlying message was that economic growth would get us out of recession.

However, we have to address a problem that is more pressing than economic recession – the problem of environmental recession. It seems to me that with the environment in recession there is no hope for any economic recovery, because the environment provides us with the resources that we need to live and prosper.

Economic growth is very closely related to environmental degradation; it creates the drivers for climate change, ocean degradation, drought, famine and desertification. We have to find a way to avoid these problems through our economics.

We have to stop thinking that economic growth is the centre of the universe and find an idea that is more accurate. Many will think this a heresy, but that was the reaction to virtually every new idea, which subsequently proved to be true.

One Response

  1. […] Read the rest here: Economics and environmental degradation […]

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