Understanding Sustainable Economics and the Future

Posted by on Oct 14, 2014 in Blog, envronmental industry, sustainable business, sustainable environment | 0 comments

Understanding Sustainable Economics and the Future

Economics and ecology are two disciplines that basically talk about the same problems from two different angles, in a slightly different way. In this website, we have tried to talk about all different topics that influence economy and ecology. We have also been talking about how these two fields are inter-connected and related. We will be writing more on the relationship of these two disciplines to show you how they relate to each other and what are the thing that they have in common. In general, it will help us to understand what the goals of these two disciplines are and how sustainability ties into it.

This blog will start with some of the very basics of economics. We will also try to give you some examples and scenarios to clarify what “Ecolonomics” really is.

From the very beginning of human civilization, human beings have utilized every resource available to him. The convolution of human civilization, economy and environment cannot be denied. Since our economy needs an environment to grow and evolve, we cannot prosper and improve our economic conditions or have an economic growth without environmental sustainability.

Classical economics

economicsClassical economics is widely accepted and taught across universities and schools around the world. This school of economics stresses that economies function most efficiently if everyone is allowed to pursue his or her self interest, in an environment of free and open competition, based on the ideas of eighteenth and nineteenth century British economists from Adam Smith (1723-90) through to Alfred Marshall (1842-1946). (businessdictionary.com)

Neo classical economics

This is the type of economics that is taught in most schools today. The foundation of neo economics lies in the 18th century classical economy. It is classical in the sense that it believes in fundamental theories of economy. It’s based upon the belief that competition leads to an efficient allocation of resources. It also explains the market forces of demand and supply and equilibrium through theories based on competition in the market that regulates economic activities. It is ‘neo’ in the sense that it departs sharply from the classical viewpoint in its analytic approach that places great emphasis on mathematical techniques. In opposition to Keynesian economics, this school states that savings determine investment (not the other way round), and is concerned primarily with market equilibrium and growth at full employment instead of with the under-employment of resources. (businessdictionalry.com)

achievement-18134_1280Economics has always tried to maximize benefits and minimize costs by allocating every available resource in the most efficient way. The classical or the neo classical economics was developed with an empty world mindset. It did not consider the natural environment as one of the factors of resources. It coincided with the industrial revolution and with the energy sources that were available during this time to fuel the economy, and it was basically developed to encourage a growth economy, which back then made a lot of sense.

Where do the sustainable economics come from?

When we start talking about sustainability or sustainable businesses, one question comes into our minds that what motivates these businesses or individuals into becoming a sustainable business or an individual working towards sustainability? To answer that question, we need to understand that as human beings, we care about the future. We not only care about the welfare of ourselves and our future, but also the welfare of others. The idea of sustainability and sustainable economy comes from our concerns about others, especially about our future generations.

According to Jon Ericson, Ph. D, at the Gund Institute of Ecological Economics, University of Vermont, the major motivating factor behind sustainable businesses and sustainable products is the care for each other in both intra and inter-generational situations.

320px-Gulf_Offshore_PlatformEcological economics emerges from the idea of full world economy. It’s a mindset that considers the natural environment, the fundamental absolute scarcity of natural resources and energy that has a major role to play in our economic decision making processes.

Ecological economics

Ecological economics is the basis of the word “Ecolonomics” which refers to a trans-disciplinary field. It’s not a sub discipline of ecology or economics, but really it’s a bridge between these two disciplines. There are also other related topics such as psychology, anthropology, archaeology, and history, which are covered in Ecolonomics, in order to fully understand the effects of human civilization, how humans have interacted with nature and each other, and how they are expected to evolve and behave in the future. As mentioned before, sustainability comes from our concerns about each other, and also about our future generations.

How is it different from environmental economics?

Environmental economics is a sub-discipline of economics, and so, it applies theories of economics and standard thinking, to the environment. Classic economics mainly focuses on market and competition, and how the competition in the market influences economic behavior and decision making. Ecolonomics studies everything in the absolute world. Nature and the environment are not just factors of economic activities, but the foundation of economic activity.

The three interrelated goals of ecological economics are fair distribution, sustainable scale and efficient allocation. All three of these contribute to sustainability and human well-being. (What is ecological economics? | Yale Insights)

The Idea of Ecolonomics is based upon the principles of economics and ecology and their sustainability.The reason for combining these words together is that these two academic fields are interdependent, correlated, and transdisciplinary. We cannot have real progress without taking the environment into consideration, and so, these two fields of study can actually be one combined field.(Ecolonomics -How Ecological Economics Can Improve Our Lives)

As one of the founders of the Institute of Ecolonomics, the deceased actor, Dennis Weaver used to say, “We work with ecopreneurs that are striving to make the planet better.”  Dennis used to say in his cowboy sort of way – “We’ve spent billions of dollars and thousands of years messin’ the planet up, now we need to show people how to make it better and make a little money too.” (About | Institute Of Ecolonomics)

What is the problem with classical economics?

graph-41423_1280The main problem with classical economics is that it doesn’t really recognize the importance of scale—the fact that we live on a finite planet. Our natural resources are limited. We cannot grow our economy infinitely large on a planet that’s finite itself.

The construction of society and various political and governmental structures have profound effect on the economics of a nation, and so, it has often been argued that, while economists like to portray their discipline as “scientific”, in reality it is very far from a science. Instead it is, to a large degree, highly subjective.

In an article published at the Anarchist Writers, the author writes, “…it [economics] is, to a large degree, deeply ideological and its conclusions almost always (by a strange co-incidence) what the wealthy, landlords, bosses and managers of capital want to hear.”

In Mises Daily, Nikolay Gertchev writes in an article titled Where the Classical Economists Went Wrong that “They made subtle errors that undermined their case for sound money and even paved the way for political intervention.”

According to the author, the number one error that the economists of the classical era made was the assumption that “an increase of the quantity of money is beneficial to the economy”.

presentation-34893_1280A sustainable economy is based on our generation’s relationship with future generations. Family ties, relationships and mutual care also play roles in the economy, which cannot be measured with a dollar value, and so, new ways to measure economy, other than calculating GDP need to be established. A sustainable economy has to take environmental factors into account. Factors like pollution, wastage and natural resources.

For example, the erosion control provided by mangrove forests; how much would it cost to achieve the same control by other means? Another is the pollination that insects perform; what is it worth to agriculture? That mind-set creates problems when resources turn out not to be limitless or indestructible. (The Sustainable Economy – Harvard Business Review)

Achieving sustainable goals and genuine progress forces us to focus on our goals and define what our desirable outcomes from the system are. Ecolonomics works in similar ways as economics does, but tries to address the problems with unlimited natural resources and sustainable issues in more depth, it starts from the belief that our economics needs to align with natural sciences. To understand our desirable ends, we need to align with ethics, philosophy, and the humanities.

P.S: Please put a few words in the comment box, should you have any questions or comments. Keep reading our blogs to learn more about Ecolonomics.

Source: institute of Ecolonomics

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