Green Economics: setting the scene.
Aims, context, and philosophical underpinning of the distinctive new solutions offered by Green Economics
Miriam Kennet* Green Economics Institute 6 Strachey Close, Tidmarsh Reading, RG8 8EP E-mail: greeneconomicsinstitute@yahoo.com Corresponding author
Volker Heinemann 166 Divinity Road Oxford, OX4 1LR E-mail: volkerheineman@yahoo.de
Abstract: Green Economics positions economics within a very long-term, earth-wide, holistic context of reality as a part of nature. It also incorporates and celebrates ‘difference', diversity, equity and inclusiveness within its concepts of society and community. Its philosophy is to manage economics for nature as usual, rather than to manage the environment for business as usual.
The paper introduces the new Green Economics discipline and reviews its shape and philosophical underpinnings. By combining economics with knowledge from the natural sciences, we argue that Green Economics can incorporate a much wider, more practical, multidisciplinary range of knowledge than other schools of economics. The paper suggests how Green Economics can offer unique insights into four of the key areas (‘eco', intellectual, political and moral) of today's significant and mounting problems and highlights how its novel insights provide new solutions. The development of this new branch of Economics is justified in this text by reviewing the main contradictions, deficiencies, assumptions, conventions, and inherent normative concepts to be found in dominant neo-classical economic thinking, which have accumulated over the past two centuries.
Keywords: Green Economics; ecological economics; environmental economics; environment; sustainability; social and environmental justice; holistic; methodology; long-term; specificity; philosophy.
Reference to this paper should be made as follows: Kennet, M. and Heinemann, V. (2006) ‘Green Economics: setting the scene. Aims, context, and philosophical underpinning of the distinctive new solutions offered by Green Economics', Int. J. Green Economics, Vol. 1, Nos. 1/2, pp.68-102.
Biographical notes: Miriam Kennet is a member of Mansfield College, Oxford University and currently researching at Oxford Brookes into the supply chain and stakeholder theory from a Green Economics perspective. Her research at South Bank University, London and at Templeton College, Oxford University focused on Green issues and strategic management of international firms. Copyright © 2006 Inderscience Enterprises Ltd.
Green Economics: setting the scene
She is coeditor (with Molly Scott Cato), of one of the few books on Green Economics, Green Economics, Beyond Supply and Demand to Meeting People's Needs, and author of articles on corporate backlash and supply chain issues, including the reduction in supplier base diversity and transparency. She is co-founder and Director of the Green Economics Institute, a member of the Chartered Institute of Purchasing and Supply (MCIPS) and founder and Editor of the International Journal of Green Economics.
Volker Heinemann is an Economist who studied at the Universities of Goettingen, Kiel and Nottingham. He is a Specialist in international and developing economics, monetary economics and macroeconomic theory and policy. He is the author of the book Die Oekonomie der Zukunft, (The Economy of the Future), a book outlining the principal structure for a modern economy that accepts the pressing changes required to the outdated current economic thinking. He is co-founder and Director of the Green Economics Institute, a member of the Institute of Chartered Accountants in England and Wales and Associate Editor of the International Journal of Green Economics. 1 Introduction: Green Economics innovation
The paper sets the scene for the development of Green Economics and describes how this new ‘Green Economics' school of thought is beginning to take shape and sets out to explore its aims, its roots and philosophical underpinnings. It critiques neo-classical economics from a Green Economics perspective, proposing reform where it is needed. Green Economics brings to economics the core drivers of ecology, equity, social and environmental justice; and the paper traces the development and contribution of these ideas through its sister disciplines, such as welfare economics, feminist economics, eco-feminism, eco-socialism, environmental economics and ecological economics. The paper also describes its distinctive methodology and innovation.
The significant and increasing problems of today are grouped into four headings (ecological/economical, intellectual, political and moral), which Green Economics particularly addresses with new insights. Green Economics is distinctive in six ways that build on much older ideas, which have evolved to be influenced by the full spectrum of more recent thinking.
These ways are: 1 enlightenment ideas of reason, imagination and memory (Jevons, 1871; Walras, 1865) 2 critical theory (Habermas et al.) 3 ideas about structure and institutions (Veblen et al.) 4 some post-modern concepts (Derrida and Soja) 5 feminist theories (Kuiper and Nelson) 6 eco-feminist ideas (Salleh et al.)
These allow Green Economics to examine reality by means of multidisciplinary, complex, holistic, and very long-term methods as well as to take into account the political and social aspects. The range provides an opportunity to frame economics both within the natural sciences, (which mainstream economists have been striving to achieve with limited success), and also within the social sciences. It reorients modelling approaches so they are congruent with natural science processes, and it embraces the context of more verbal narrative. The range particularly brings political economy, moral sentiments, and ethics back within its borders. The aim of Green Economics is to create a new discipline that works for the benefit of all people everywhere, for the planet, the biosphere, non-human species, nature, and other life forms. Green Economics integrates ideas and theories, which are also designed to help end the systemic and institutional causes of inequity and poverty. It therefore takes an inclusive approach, promoting fairness, equity, participation, freedom, democracy with social and environmental justice at its core. Rather than simply working for individuals (and their preferences) or the requirements of powerful private corporations, it is developing a new mix of needs and rights that will ensure genuine very long-term sustainability, survivability, well-being and happiness for all people everywhere, always within the limits and comfort of nature. 2 The four categories of significant and increasing problems that Green Economics is designed to address: eco, intellectual, political and moral As Green Economics and archaeology remind us, ‘civilisation' and mainstream economics are post-Ice Age phenomena. Climate instability is predicted to create unprecedented conditions more hostile to society; and the very survival of our society or our species starts to become uncertain. Mainstream economics tends to limit its focus to short-term concerns. Green Economics, with its precautionary principle, works to prevent foreseeable, adverse effects on people and nature. Green Economics is able to do this also because it is inherently more aligned with the natural sciences and many of its practitioners are trained in natural sciences and archaeology, as well as economics. As a consequence of adopting a very long-term view of events, intergenerational equity and the rights of future generations are integral. Not surprisingly, Green Economics strongly advocates the need for each generation to leave behind an adequate bundle of resources and a habitable planet. Mainstream economics is still too bound up with concerns of price, profit, economic growth and the perspective of the owners of production versus the workers and therefore entirely fails to grasp this new reality.
Green Economics methodology also brings new perspectives to conventional economics tools, in terms of both time and space. This new context enables it to reveal, disentangle, and unravel the power relationships and vested interests in the new global marketplace. The logic of Green Economics advocates local production for local needs, and reusing, reducing, repairing and possibly recycling, rather than global expansion of corporations. Thus, wisdom and holism are re-introduced into economic problem solving. It also re-incorporates political economy and the moral and transformational aspects of the economics of Smith (1776), while offering new solutions to ‘managing the commons', which has been often restricted to game theoretical models (von Neumann and Morgenstern), and exercises based on the prisoner's dilemma or voting issues (Arrow, 1951).
Attitudes to nature are completely revised. According to Goldsmith (2005), economics needs to keep within nature's carrying capacity and at the moment many of its systems are being so overloaded with the impacts of human economic activity that cannot continue. It is time to ‘Rewrite Economics' (Goldsmith, 2005) for the benefit of humans and the natural world and to accept the boundaries imposed by the earth. This new rationality and wisdom leads to an economics of increasing abundance as produced in nature, rather than an economics of scarcity. The most pressing current problems are grouped into four main categories, with the advantages of the Green Economics approach explained. They are ecological/economical, intellectual, political and moral. Table 1 Green Economics distinctive methodology and basic concepts Problem/Issue Green Economics methodology Green Economics unique insights Ecological/Economic Resources of the planet being annihilated, (Goldsmith) carrying capacity of the earth compromised (Georgescu Rogen) Species extinction (Boswimmer, Wilson) Limits to growth (Meadows) Ecology and Nature (Goldsmith) Emphasis on appropriate size or scale of production (Schumacher) Manage over-consumption downwards. Reuse, reduce, recycle, repair. Transparency of supply chain. Population issues (Malthus, Ehrlich) Change in behaviour, appropriate consumption (Brown, World Watch Institute). Focus on education and value of all people. Needs, right and equity met for all people. Access to economic opportunities and choice. Diversity of economic policies. Lack of dogma and domination by structures, ideologies and institutions. Growth equals abundance as in nature. Sees people and biosphere as beneficiaries not inputs Inclusive of people, planet, biosphere Intellectual Discipline of mainstream economics seen as out of touch with reality, (Kitson, Medena and Samuels) Inability to act on climate change, selection of nuclear power over renewables, industrialisation of the food chain (GMO) Reformulation of supply, demand and growth Long termism Holism Economics embeddied in nature New relationship to science/natural sciences and technology Specificity in examination of issues temporally and spatially Broader philosophical base Enlightenment (Rousseau, Diderot, Locke, Voltaire) Critical theory (Habermas, Marcuse, Adorno, Horkheimer) Post modernism (Derrida, Soja, Salleh, Kriestevas) Management of commons (Hardin, Lord) New mix of needs, rights, well-being and happiness (Neef) Social and environmental justice Equity (Albert), democracy, participation (Robertson, Rawls, Harrisson, Chong, Alderson) New attitudes to economics as part of nature Techno fixes inappropriate Uses planet wide scope and real world setting and complexity for research and observations.
Table 1 Green Economics distinctive methodology and basic concepts (continued) Problem/Issue Green Economics methodology Green Economics unique insights Political Undemocratic, untransparent power of multinationals, global institutional power, weak local economies One-half of all work not valued or included in GDP Progress in the economy measured by new indicators, well-being, quality of life, sustainability, long termism etc., examination of power structures Reform/replace of global institutions to provide global governance. Deconstructing power relationships Increased role of regional/local economies, communities, access Inclusive approach Intergenerational equity Re-embeds the economy in nature and the social system No longer axis of worker versus owner Moral Problem of world poverty (1.3bn out of 6.3bn global population in extreme poverty) (Sachs) Inadequate markets, corruption and crime. Non-beneficial trades: arms, prostitution, drugs Regional and locally diverse and democratic solutions Using analysis of power relations and institutions (Veblen, Foucault, Gramsci) Feminist analysis of patriarchy and accumulation. (Mies, Mellor, Kuiper, Salleh) Critique of trickle down theories. Wealth creation locally with local power and decisions. Priority given to ending poverty and enabling equity rather than through same patterns of industrialisation and development or conventional growth. Reform of global institutions to reflect specific local conditions, requirements and individual choices by people and communities. Social and environmental justice (Lord, Sen) Poverty as unfreedom. Reform of aims of economy, continued inequality problems with human happiness directly addressed. 2.1 Eco - ecological/economic It is becoming increasingly evident that the resources of the planet are being annihilated (Goldsmith, 2005), plundered (Gruhl, 1975) and disturbed at such a rate that even mainstream economic observers are starting to accept that the free inputs they rely on from nature will soon cease to be available. There is a growing consensus that the conditions of the natural world, so long regarded as abundant and available to be raided, are becoming scarce (Broswimmer, 2002, p.1). He cites the distinguished biologist Wilson (1992), who found that 100 species are disappearing everyday and he investigates the sociological and economic underpinnings of what he calls this ‘Ecocide' (Broswimmer, 2002, p.3). He shows how this actually constitutes only the fourth mass extinction in earth history, (the first three being, Permian - 250 million years ago, Paleozoic - 200 million years ago, Dinosaur - 65 million years ago), Mithen (2003, p.247) suggests that there may have even been another anthropogenic mega-fauna extinction in 11 500 BC caused by the Clovis hunters, which wiped out most of the mammoths, mastodons and giant sloths. Broswimmer (2002, p.105) argues that "it is the very lack of democratic participation in the economic sphere that lies at the root of the possibility that homo sapiens may be a very much shorter-lived species than the dinosaurs who managed to last 120 million years". We argue here that mainstream economics provides no analytical framework to counter or even address such problems.
Similarly, natural conditions, such as global climate, are changing and are becoming more challenging and more hostile to humanity. Our ‘civilisation' and its globalised neo-classical economic activities are therefore also vulnerable economically to such effects, which include increased intensity and severity of cyclones, hurricanes, (Hurricane Andrew cost $16,000 million) typhoons, floods, tsunamis and heatwaves, such as those in France in 2004 with 14 800 deaths (Brown, 2004, p.xxv) etc. (Houghton, 1997, p.3). Anthropogenic increases in carbon dioxide were up from 316 ppm in 1958 to 369 in 1998 and will have created warming parameters of between 1.4ºC-5.8ºC by 2100 (Maslin, 2004, p.146). Costs of damages due to climate change are predicted by the UN at $150 billion a year by 2010 (Brown, 2004). This should cause alarm bells to ring as the distinguished Intergovernmental Panel on Climate Change, the largest panel of scientists ever to work on an issue, in its IPCC Report of 1997 showed that the global average temperature difference between the coldest part of the Ice Age and a warm interglacial is only about five or six degrees (Houghton, 1997, p.8). There are also consequential sea level rises of up to 88 cm predicted by 2100 (Maslin, 2004, p.146). Archaeology informs us that our civilisation and agriculture only began at the end of the last Ice Age - we have no notion of our economic survivability in a changed climatic situation. We argue that as a consequence, this kind of data is highly relevant to the economic theory and that all of the evidence points to the fact that our economic systems must therefore adapt to operating within a ‘suitable carrying capacity' of the earth. Pegging the level of that capacity should be a pressing subject for economic debate, as well as determining where the balance of intended beneficiaries should lie among the planet, human species, non-human species or nature. Green Economics addresses these questions and re-embeds the economy firmly within ecological and social structures. It therefore de-commodifies society and nature. The Greek word ‘Oikia' or house, is the root of both economics and ecology. Economic growth, progress and development are measured by indicators in Green Economics that describe them as forms of ‘creation' mimicking the abundance of nature, not ‘annihilation' of resources (Goldsmith, 2005). Profit, prices, markets and competition are regarded as incidental, rather than drivers of the economic system. Green Economics treats people (not labour power), the planet, nature, non-human species, and the biosphere as beneficiaries, not just resources or economic factors of production. The aim is to ensure that they are all as well-off following an economic transaction as they were before it. This new discipline operates on the principle that the needs of people and natural systems must be simultaneously satisfied, and achieves this by redefining progress in economics to mean that all these requirements are met. The purpose of products is to satisfy needs, not to enhance the power of people or corporations or states, which means political and institutional analyses are key. Global industrialism, according to Dobson (2000, p.27), is regarded with suspicion. Mies's (1994) ideas about the new subsistence economy and Hines's (2000) Localisation thesis refocus the global economy around local markets. The meaning and welfare value of products is questioned, as well as their transformation into forms of identity and above all, their necessity. Gigantism and globalisation are seen as agents of oppression. Green Economics is multidisciplinary with ‘fuzzy' boundaries since it reduces its reliance on ceteris paribus and embraces the complexity, irreversibility and uncertainty found in the real and life-world.
Equilibrium should no longer reflect only price concerns but also advantage/disadvantage/impacts and effects in political/social, moral and ecological terms. In this way, Green Economics acts as a filter for other systems as it is non-dogma, and does not seek to impose one system or style globally, as in capitalism or Marxism, but rather advocates diversity using a Green Economics analysis for each situation. It replaces the axis of the dualism of the worker versus the owner of production with concern for people, society, non-human species, nature and the biosphere as a holistic whole, life-world. Demand and supply Green Economics also reformulates the concepts of Demand and Supply. According to the Worldwatch Institute (Brown, 2004), increasing demand, as stimulated and promoted by neo-classical economic logic is manifesting itself in the form of over-consumption in richer countries and is directly contributing to our failure to live within the carrying capacity of nature. This consumption stimulation, Green Economics would argue, is highly irresponsible. Green Economics is reformulating the concept of demand in making consumption effective, not stimulating it, and also bringing in supply-side realism (Kennet, 2004; Scott Cato and Kennet, 1999). That includes efficiencies in the distribution issues of transparency, equity and complexity and embedded human, social and environmental costs and impacts, which cannot be replaced by simple technology developments, end-of-pipe fixes or Economies of Scale. Green Economics therefore also researches into associated distribution and stakeholder effects and brings ethics, complexity, diversity, locality, and transparency into its analysis of the supply chain (Kennet, 2004; 2005a). 2.2 Intellectual Secondly, many practitioners of conventional economics are disappointed and critical of their own discipline, according to Medena and Samuels (1996) and Omerod (1994). "The subject has become so obscure that even orthodox economists are bemoaning its intellectual poverty," says Kitson (2005) in the Cambridge Journal of Economics. They are alienated, and unconvinced by the results generated by mainstream economic models. Mainstream economists thus observe that their work has little bearing on the real ‘life-world' or on ending poverty (Kitson, 2005), and disagreement is growing. However, disciplinary insurgence is rare because of the limited professional progress that usually follows rebellious action. Unfortunately, many well-known economists, for example, Pasinetti (2005) and popular commentators, for example, Sachs (2005) continue to advocate a more intensified business as usual approach, whereby growth, more profit, increasing theoretical elegance, and the increased economic hegemony of global corporations are promoted. Green economists argue that these solutions do not solve the problems of today. Clearly, mainstream economics remains strait-jacketed by the modern positivist stance it still openly adopts and embraces, in much the same way that modern architectural approaches (such as too much ‘Le Corbusier' and not enough human and natural consideration) result in alienating structures that fail to appropriately address the problems of today.
2.2.1 Long-Termism Green Economics takes a view that is much longer-term than the short business cycles found in neo-classical and business school economics. Due to its consideration of the effects of a transaction on the 200 000th generation and beyond (Myers, 1985), Green Economics can draw from history, palaeontology (glacial-interglacial cycles lasting 40 000 years) (Maslin, 2004) and archaeology. As a consequence, Green Economics does not simply discount the future, and even restitution for future generations could be considered. Future generations should not be unduly disadvantaged through the mass extinction and climate change currently underway. Intergenerational equity is investigated by such writers as Alderson (2006) who is greatly influenced by Chong in the current volume (2006). Instead of mobilising the resources of the planet in support of human kind, we must surely mobilise the resources of human kind in support of the planet. This postulates a revision of our value systems, social paradigms and consumption culture (Myers, 1985). Harrison (1992) argues that we might want to be remembered as the generation that made a difference by shifting the earth back into balance, and reconciling the needs of present and future humans and other species, instead of creating waste monuments and a ‘garbage mausoleum one to four thousand times our body weight'. Green Economics takes an even longer perspective, from the long-term past through anthropology, archaeology and environmental science and uses this knowledge to filter its analysis of economic decision-making. 2.2.2 Holism Leonardo da Vinci (1452-1519) believed that it was important to understand the connections between the ‘art of science' and the ‘science of art'. His argument was that his success in one field was due to his understanding of how the other fields work, namely anatomy and art. Science in the late 20th century realised that everything was interconnected. Particularly, the work of Lorenz (1996) indicated that a butterfly flapping its wings in Beijing could start a storm on the other side of the world. This was a key to the emergence of the New System Theory. Holism addresses and links traditions that are foreign to each other. It has no desire to be centralised, over-organised or hierarchical. Green Economics and its development is in fact one of the most holistic and multidisciplinary economics the world has ever seen. There is no human activity, no part of the planet that is not of interest to Green Economics; it is the very economics of interconnectedness. Bloom's (2000) edited collections contain an interesting set of writers on this theme including, Fritjof Capra, Carl Jung, Carl Rogers, E.F. Schuhmacher, Louise Hay, the Boston Women's Health collective and Robert Graves. As Harrison (1992, p.365) has argued, "The demands of the environment will present humanity with the challenge of breaking down the compartmentalisation of knowledge". Green Economics "could well become the science overarching all the others. As part of this, we desperately need an overarching science of human interactions, both with each other through an economic system and with the environment, combining socio-economic and technological studies with dynamic analysis of the physical environment". The Green Economics Institute will try to foster the realisation of Harrison's vision.
2.2.3 Attitudes to science Mainstream economics employs a set of positivist, modern tools to produce the desired strict and simple logic that is vital for a picture of the world purported to be the basis of economic thinking. But this is not necessarily a true reflection of reality. Reducing reality by the application of simplistic mathematical concepts appears to make the world more precise than it actually is. Commoner (1971, pp.97, 213) warned how modern technology caused intensifying ‘assaults on the environment, creating a debt to nature ultimately leading to ecosystem collapse'. ‘Modern technology extends man's effects on air, food and water, accumulating rubbish and junk.' Green Economics adds verbal reasoning and description to the quantitative methods used to reflect the interconnectedness of the world. It may appear that Green Economics rejects scientific methods that are more precise and formal in their structure. The contrary is the case. The findings of science for example in climate change tend to support Green methodology; Green analysis is significantly based on science data, too. Mainstream economics in spite of using quantitative methods is producing results that contradict insights from other sciences. It is focused on an infinite growth assumption, and on the belief that supposedly innate and uninfluenced consumer preferences should inform economic decision-making. It becomes increasingly evident that this is contradicting the scientific findings of ecologists (particularly climate change experts) and psychologists as far as consumption is concerned. Green Economics is proposing to be a holistic, interdisciplinary, natural and social science, which chooses appropriate tools for each problem from its wide portfolio of methodologies. This is comparable to modern archaeology where precise natural scientific methods of carbon 14 dating are adopted; but equally so is narrative carefully applied to capture theories about the social dimension of people's lives as they were a long time ago. Green Economics is economics that can accept and integrate differing positions on the world's big ideas, such as those presented in The New Scientist (Dawkins et al., 2005) The Big Bang, Evolution, Quantum Mechanics, Risk Theory, New System Theory, Relativity, Climate Change and Tectonics. Green Economics fundamentally incorporates the ideas of progress in scientific thinking and in scientific methodology. It is open and able to explore new ideas, which fundamentally change our perspective. We contend that Green Economics alone inherently combines a scientific with a social science approach. The ‘science' is not econometrics or mathematical economics at all, rather it is natural science, ecology and social science. Neo-classical economics has misused a narrow interpretation of Darwinism in order to justify capitalism, to advance the power of the strongest and fittest and to preserve inequalities. Green Economics challenges the reductionism and supposed objectivity of mainstream economics. This agenda tends to prioritise capitalism as a specific style to run the economy, and supremacy of unadjusted market solutions at the expense of people's needs. Environmental health, science and ecology have been formative influences on Green Economics. Busby (1995) and Lawson (1996) most potently illustrated Green Economics' treatment of the costs of nuclear power and climate change.