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Varieties of ecological economics: Do we need a more open and radical version of ecological economics?
Ecological Economics 119 (2015) 420–423
Contents lists available at ScienceDirect
Ecological Economics journal homepage: www.elsevier.com/locate/ecolecon
Commentary
Varieties of ecological economics: Do we need a more open and radical version of ecological economics? Peter Söderbaum School of Business, Society and Technology,Mälardalen University,Västerås,Sweden
a r t i c l e
i n f o
Article history: Received 13 March 2015 Received in revised form 4 September 2015 Accepted 13 September 2015 Available online 21 September 2015 Keywords: Paradigm Ideology Mainstreaming Pluralism Democracy TEEB-study
a b s t r a c t Should we aim at one single economics paradigm for all purposes or is it wise to accept the existence of more than one theoretical perspective? Is one ecological economics perspective enough or should we encourage competing paradigms as part of a pluralist perspective? Moritz Remig expresses his preference for ‘mainstreaming’ ecological economics in the January 2015 issue of Ecological Economics suggesting that alternative perspectives and alternative terminologies, such as “sustainability economics”, lead to confusion. In this reply I am arguing that there is no valuefree or value-neutral ecological economics and that therefore limiting economics or ecological economics to one paradigm is not compatible with democracy. We have to live with some complexity when dealing with sustainability issues and should not avoid issues of paradigm, ideology and political-economic system. © 2015 Elsevier B.V. All rights reserved.
1. Introduction This article is a response to an article by Moritz Remig (2015). It is about “mainstreaming” versus pluralism in ecological economics. In some of my writings I have referred to “sustainability economics” rather than ecological economics, suggesting that sustainability economics can be understood as one of the more radical varieties of ecological economics. I am also questioning the idea of “mainstreaming” ecological economics which I understand as looking for a compromise that ecological economists should agree about. Economics is science but at the same time ideology. There is no value-neutrality. In this article I am pointing to a new definition of “economics” that exemplifies an ideological turn of the discipline. A political and democratic microeconomics is indicated. The issue of “mainstreaming” is discussed in relation to the TEEB-study (The Economics of Ecosystems and Biodiversity) of 2010 where a number of ecological economists participated. 2. The Overview Article by Moritz Remig In his article “Unravelling the veil of fuzziness: A thick description of sustainability economics”, Moritz Remig (2015) presents his overview of literature where the concept of “sustainability economics” has been used. Remig is concerned about what he regards as “fuzziness”, to use his own word. Should we continue to refer to ‘ecological economics’ or do we need ‘sustainability economics’ as a term for a new field? In the latter case; what is the difference between ‘ecological economics’
http://dx.doi.org/10.1016/j.ecolecon.2015.09.007 0921-8009/© 2015 Elsevier B.V. All rights reserved.
and ‘sustainability economics’? Are we rather contributing to confusion by introducing a new term? Overview articles of the present kind can certainly be recommended. And such articles unavoidably reflect the conceptual and ideological orientation of its author. Moritz Remig is eager to list things that are “unclear” or “unspecified” in the publications identified (where the term ‘sustainability economics’ has been used). And worse still; lack of clarity may even lead to “un-sustainability” (p. 198, 199). His position is summarized as follows: “Rather than creating new tents, it is perhaps more productive to stabilize and extend the conceptual and methodological, epistemological and ontological poles of our big tent, ecological economics.” [(Remig 2015, p. 201).] Moritz Remig concludes that we should focus on further developing the concepts of “efficiency” and “externalities” to which he adds his own ideas. Remig should of course be encouraged to raise his concerns and the review article is already a contribution. But his arguments raise some fundamental issues for us as ecological economists. Let us for present purposes refer to a community of ecological economists which can be defined as members of the International Society for Ecological Economics and the different regional societies and let us also include those who sometimes consult our journal. In this community we should, according to Remig, reduce all versions of ecological economics to one paradigm which is clearly specified and presented. Contrary to such a view I think that it is natural and more constructive
P. Söderbaum / Ecological Economics 119 (2015) 420–423
to expect “varieties of economics” and also “varieties of ecological economics”. I will explain why. 3. The Illusion of Value-Neutrality According to Gunnar Myrdal (1978), an economist awarded with the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, “valuations are always with us” (p. 778) in economics research and education.1 Social science projects start from a viewpoint and in this viewpoint values are implied. Myrdal pointed to institutional economics as his theoretical point of departure. Also William Kapp who is mentioned at the end of Moritz Remig's article (in connection with ‘cost-shifting’) declared himself an institutional economist (Kapp, 1976).2 I respect Myrdal and Kapp and share their ideas about institutional economics. Following Moritz Remig's logic, does this mean that all three of us are mistaken and confused persons who instead should “stabilize and extend” the conceptual and methodological framework of neoclassical economics? Do we need ecological economics in a situation where neoclassical environmental economics already exists? Tanja von Egan-Krieger (2014) has written a book “Die Illusion wertfreier Ökonomie. Eine Untersuchung der Normativität heterodoxer Theorien”. In addition to mainstream neoclassical theory she is systematically studying feminist economics, institutional economics and ecological economics for differences and similarities with respect to values or normative aspects. In the case of ecological economics, she has selected Herman Daly as one of the founders of the field while my writings exemplify more recent contributions to ecological economics. As illustrated by Tanja von Egan-Krieger, schools of thought differ not only in conceptual terms but also with respect to values and ideological orientation. Feminist economists claim to take the present position of women in contemporary society seriously. Ecological economists are concerned about many environmental and social trends that are unsustainable. This role of values suggests that economics should rightly be referred to as “political economics”. It was therefore a mistake by the early neoclassical economists to abandon this terminology around 1870. Different schools of thought that exist today then represent varieties of political economics. And again, rather than reducing all schools of thought to one, each one of us should respect scholars with a different conceptual and ideological orientation. Democracy has a role also in the academia (Söderbaum and Brown, 2010). 4. Redefining Economics Myrdal and Kapp both pointed in an interdisciplinary and multidimensional direction. Their concern for the fact that values (and in my words ‘ideology’) is involved suggests that we may need to move to a new definition of economics (or rather ‘political economics’). In mainstream textbooks the definition of the subject is standardized: “Economics is the study of how society manages its scarce resources” (Mankiw and Taylor, 2011, p. 2). My proposal which admittedly does not claim value neutrality but rather points in specific directions is as follows: “Economics is multidimensional management of (limited) resources in a democratic society.” In relation to decision-making, neoclassical economists (and some ecological economists) make the recommendation that all impacts are 1 Gunnar Myrdal is certainly a worthy recipient of this so called “Nobel Prize in Economics” but the present author is skeptic to this award since members of the awarding committee do not appear to understand and openly discuss the ideological role of different contributions to economics. This Prize appears to play a conservative role further strengthening the monopoly of neoclassical economics with connected ideology. And this monopoly position may be an important part of our sustainability problems. 2 See also “The Foundations of Institutional Economics” by K. William Kapp (2011), a manuscript by Kapp that has been published after his decease.
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reduced to one single monetary dimension by reference to correct prices according to a specific market ideology. The recommendation that follows from the new definition of economics is to accept some complexity by separating various dimensions as part of a multidimensional analysis. Environmental performance is itself a set of multidimensional phenomena. Issues of inertia in non-monetary terms (pathdependence, lock-in effects, irreversibility etc.) have to be dealt with carefully. Georgescu-Roegen's energy analysis is only part of this. Trade-off thinking in monetary terms is abandoned since in a democratic society it is not legitimate to reduce all existing ideological orientations to one single ideological orientation. Neoclassical CostBenefit analysis (CBA) is not compatible with democracy but rather exemplifies extreme technocracy, i.e. reliance on experts even for ideological issues. Reference to democracy in the definition of economics points to the existence of a number of political ideologies and ideological orientations among citizens or member of a particular community or society. Essential steps have to be taken away from technocracy toward democracy. The present close to monopoly position of neoclassical theory with connected ideological orientation at university departments of economics and elsewhere has to be counteracted. A degree of pluralism then has to replace monologism and it is believed that an open dialogue that also focuses on ideological orientations and paradigms is a key issue in attempts to get closer to a sustainable development. 5. A New Microeconomics As already made clear there are many ideas about ecological economics and they may be close to, or depart significantly from, mainstream neoclassical economics. I believe that we – following the new definition of economics – should take substantial steps away from neoclassical theory by suggesting a new microeconomics. This is done as part of a pluralistic philosophy. Our logic is not one of ‘either-or’ as in Kuhnian “paradigm-shift” (Kuhn, 1970) but rather formulated in terms of “paradigm co-existence” (Söderbaum 2000, pp. 29–31). Neoclassical theory will still be with us among options and to understand the thinking and arguments of those millions of persons educated in neoclassical economics, we also need this particular theory. Outlines of a political microeconomics have been presented elsewhere (Söderbaum, 2000, 2008). Some elements can be indicated here: 1. Neoclassical Economic Man assumptions are replaced with Political Economic Person (PEP) assumptions. An individual is understood as an actor guided by her ideological orientation. 2. Neoclassical profit-maximizing firm assumptions are replaced with Political Economic Organization (PEO) assumptions. An organization is an actor guided by its ideological orientation or ‘mission’. 3. Neoclassical supply and demand models of markets in mechanistic terms are replaced by PEPs and PEOs interacting in markets and outside markets. 4. Neoclassical ideas of focusing on ‘optimal’ solutions to problems are downplayed in relation to a view of decision-making as a ‘matching’ process between an actor's ideological orientation and expected impacts of each alternative considered. 5. Neoclassical standardized ideas of efficiency and rationality are replaced by a view where efficiency is a matter of an actor's (or a set of actors') ideological orientation and expressed in dimensions relevant to this ideological orientation. 6. Neoclassical CBA is replaced by Positional Analysis (PA). PA is an approach to decision-making at various levels from the individual, through organizations to local, regional, national and global societies or communities. 7. Neoclassical economists tend to regard the present political-economic system as given. Recent developments in terms of transaction costs analysis (Williamson, 2000) represent a modification of this position. A different view is suggested here where the ideological orientation
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(mission) of actors plays a role also in understanding institutional change processes. It is assumed, for example that actors with a similar ideological orientation can work together in social movements. 8. Neoclassical accounting principles in monetary terms at the levels of organizations (firms) and nations are extended and opened up to include social, environmental and other non-monetary indicators (e.g. Brown, 2009, Brown and Dillard, 2014). Individuals are understood in socio-psychological and cultural terms rather than in neoclassical mechanistic terms. Not only ideological orientation but also concepts such as role, motive, relationship, trust, identity, dissonance, conflict and power are relevant. Individuals adapt to a context that is social, cultural, institutional, and physical and that changes over time. The ambition is not so much to study regularities in the behavior of individuals over time but rather to make the behavior and arguments of specific actors in specific situations visible. Ethical issues of fairness, exploitation, responsibility, and accountability are part of this. As indicated above the concept of ideological orientation plays a key role in the proposed kind of microeconomics. Ideology is about means– ends relationships. It is about where you are (present position), where you want to go (future positions) and how to get there (strategy). The ideological orientation of an individual as actor can be expressed in qualitative, quantitative and visual terms and is often uncertain and fragmented.3 It may emphasize self-interest or otherness and may vary for one specific individual between situations and over time. The ideological orientation of an individual or the mission of an organization is something to be investigated rather than assumed as given. Politics and policy at the national level are largely articulated in terms of ideology and ideological orientations. Sustainable development interpreted or articulated in a specific way is an ideological orientation that ‘competes’ with other, perhaps more established ideological orientations, such as beliefs in markets and economic growth. As economists we should enter into an open dialogue about ideological orientations rather than argue that ideology is something to be left to politicians (as part of mainstream ideas that science can and should be separated from politics). If the dominance of specific ideologies connected with specific political parties is judged to be part of the problems faced then we cannot regard those ideologies as being outside the analysis. Bringing in ideological orientation into economic analysis does not mean that the door is open for one-sided ideological analysis. While remaining conscious about the risks of manipulation, the imperatives of democracy once more come to our help. Analysis should be many-sided rather than one-sided. In the case of Positional Analysis mentioned above, the ambition is to look for a many-sided set of alternatives considered that correspond reasonably well to a manysided set of ideological orientations that appear relevant to interested parties and actors in relation to the decision situation. Any conclusions in the form of ranking the alternatives will then be conditional in relation to each ideological orientation considered. It should be added that the ambition to be many-sided does of course not make criticism superfluous. Democracy is a never-ending process and can always be strengthened. Democracy and the idea of listening to various voices means that ecological economics (and economics more generally) has to move some steps away from technicalities toward story-telling. Eva Kras as President for the Canadian Society for Ecological Economics has recommended us to listen to “visionaries” in our attempts to get closer to the problems faced as well as potential solutions (Kras 2007). Personally, I feel, that we have a lot to learn from the stories told by intellectuals and activists such as Vandana Shiva (2002, 2005), Naomi Klein (1999, 2014) and David Korten (2009). But such awareness of stories 3 As pointed out by Funtowicz and Ravetz (1991) in their essay on the relevance of postnormal science for studies in ecological economics, complexity and ‘fuzziness’ is a fact of life rather than something that can easily be avoided or handled.
presented by actors on world-wide arenas should not exclude interest in the stories told by less visible actors. 6. “Mainstreaming” — A Good or Bad Idea? These days trends referring to a large number of environmental and social indicators are unsustainable. To reverse these trends in attempts to get closer to sustainable development is a complex issue. While development is a multi-factorial process, we can probably agree about the judgment that mainstream economic theory has played a significant role in the road-maps used by influential actors in a period when many negative trends have been established. The idea that we need “more of the same” to deal with present problems is therefore not very convincing. Albert Einstein's dictum: “We cannot solve our problems with the same thinking we used when we created them” appears relevant. There is rather a need for ideas that depart significantly from previous doctrines. But we should be careful not to exclude thinking patterns. A degree of pluralism is recommended in line with our emphasis on democracy. Many ecological economists were involved in the so called TEEB study “The Economics of Ecosystems and Biodiversity” (Kumar, 2010). This study is useful for example by emphasizing the concept of ecosystem services. A typology of such services is presented in a table on page 26. The main idea through this 400 pages book is however to estimate “the total economic value” (TEV) of specific ecosystem services in monetary terms by relying on traditional (neoclassical) economic theory. “Economic value” is equal to “monetary value” and to arrive at TEV, aggregation of impacts is recommended. A careful reading of the different chapters reveals that some of the hundreds of economists who have contributed have pointed to serious problems with the strategy of monetary valuation. (To arrive at a specific value you have to reduce all possible ideological orientations to one single ideological orientation, for example.) But such doubts were not enough to change the main line of reasoning. One person, Pavan Sukhdev, representing the United Nations Environment Programme (UNEP) acted as “study leader” and appears to have played an important role. In a Preface, Sukhdev refers repeatedly to “our dominant economic model” (Sukhdev, 2010, p. xviii) or “the language of the world's dominant economic and political paradigm” (p. xix). He points to some failures of this economic model but still recommends its use in a summary conclusion entitled “Mainstreaming TEEB”: “Valuations are a powerful ‘feedback mechanism’ for a society that has distanced itself from the biosphere upon which its very health depends. Economic valuation, in particular, communicates the value of Nature to society in the language of the world's dominant economic and political model. Mainstreaming this thinking and bringing it to the attention of policy makers, administrators, businesses and citizens is in essence the central purpose of TEEB.” [(Sukhdev, 2010, p. xxvii).] Some of us ecological economists are not happy with this way of reasoning. Richard Norgaard has written an article “Ecosystem services: From eye-opening metaphor to complexity blinder” (Norgaard, 2010). In my own case I am disappointed because much of my engagement for ecological economics started with a criticism of “Total Economic Value” and the “monetary reductionism” it represents. The alternative here – as suggested in the new definition of economics – is to accept complexity in the form of multidimensionality as well as a recognition of the existence of more than one value, ethical or ideological orientation in a particular society. Facing complexity of different kinds, we should rather, again, listen to different voices and make our own judgments. “Varieties of ecological economics” is my preference and can be referred to as a security
P. Söderbaum / Ecological Economics 119 (2015) 420–423
strategy in the present situation. But again the most important thing is that we listen to each other. 7. Policy Recommendations That Follow If values and ideology are involved in economics research and education, as I have emphasized, then also our personalities and personal experiences are unavoidably involved. The first time I heard the term “sustainability economics” was at a conference with the European Society for Ecological Economics (ESEE), Gran Canaria, Spain, in 2002. A representative of Deutsches Institut für Wirtschaftsforschung, DIW, Reimund Schwartze, was acting on behalf of the German Federal Government and its Ministry of Education and Research to prepare a series of workshops at DIW, Berlin for spring 2003. At the time I was not totally happy with developments in economics, including the ecological economics community, and welcomed this initiative for more radical approaches to sustainable development. A mainstream neoclassical research organization was advised (or ordered) by the national government to take sustainability issues more seriously. Neoclassical environmental economics was no longer enough. I somehow felt that “sustainability economics” was an appropriate term for more radical versions of ecological economics. I certainly accept that other ecological economists may use the term differently or may prefer to abandon it altogether. While the TEEB-study mentioned previously suggests that there is no need for significant changes in the present global and national political economic system, I am of a different opinion. I think that we in the present situation need to discuss failures other than “market failure” (in the sense of externalities) or “government failure” (by subsidizing environmentally harmful activities). In addition we need to discuss “paradigm failures” and related “ideology failures” as well as “failures of the present political-economic system”. Business corporations and other organizations may fail. Individuals in different professional and other roles may fail and be held accountable as actors and political economic persons. It is not possible here to discuss institutional change at length. Only one example will be given. In neoclassical microeconomics, it is generally assumed that firms maximize monetary profits and it is often believed that monetary profits are a good indicator of efficiency at the organizational level and also for society. Joint stock companies play an important role in our economies and the existence of these organizations is defined in monetary, financial terms. But sustainable development is as much, if not primarily, about non-monetary performance. It may therefore be argued that the joint stock company is missconstructed in relation to present needs which are about non-monetary performance in various dimensions. We need a multi-dimensional idea of economics as previously discussed. Pursuing a one-dimensional monetary profit motive is too often leading to “ecological failures” or “social failures” (through ‘cost-shifting’ as suggested by William Kapp). Business leaders in the oil industry are working for profits by further exploiting oil resources. They may succeed in financial terms in the short run but are with certainty contributing to climate change and ecological failure. The CEOs are locked into a system where it becomes difficult to respond to recent demands for a broader responsibility and accountability. Shareholders are earning their financial returns in dubious ways etc. This suggests that we somehow need organizations that
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measure their progress in broad, multi-dimensional terms and therefore also new accounting systems. Multidimensionality is one part and democracy another part of our definition of economics. Normal imperatives of democracy suggest that we should not avoid certain issues such as a debate about the profit motive or about different institutions that are parts of our political economic system. Tendencies to avoid dialogue about conceptual and ideological issues may facilitate life for the scholar but are highly questionable. Rather, we should illuminate such issues in a many-sided way. But many-sided analysis can presumably be carried out in more ways than one and we should never forget that values, ideology and indeed, personality, are involved in our advocacy for specific ideas and approaches. And finally, mainstreaming by aiming at a single idea about economics or ecological economics is probably a bad idea. Such an idea is more compatible with monopoly and dictatorship than with democracy.
References Brown, J., 2009. Democracy sustainability and dialogique accounting technologies: taking pluralism seriously. Crit. Perspect. Account. 20, 313–342. Brown, Judy and Jesse Dillard, 2014. Integrated reporting: on the need for broadening out and opening up, accounting, Account. Audit. Account. J., Vol. 27, Issue 7, pp. 1120–1156. Von Egan-Krieger, T., 2014. Die Illusion wertfreier Ökonomie. Eine Untersuchung der Normativität heterodoxer Teorien (The Illusion of Value-Free Economics. A Study of the Normative Aspect of Heterodox Theories). Campus Verlag, Frankfurt. Funtowicz, S.R., Ravetz, J.R., 1991. A New scientific methodology for global environmental issues (Chapter 10) In: Costanza, R. (Ed.), Ecological Economics. The Science and Management of Sustainability. Columbia University Press, New York, pp. 137–152. Kapp, K.W., 1976. The nature and significance of institutional economics. Kyklos 29 (2), 209–232 (April). Kapp, K. William, 2011. The Foundations of Institutional Economics, edited by Sebastian Berger and Rolf Steppacher, Routledge, New York. Klein, N., 1999. No Logo. Money, Marketing and the Growing Anti-Corporate Movement. Knopf, Canada (Random House), Toronto, Alfred A. Klein, N., 2014. This Changes Everything. Capitalism vs. the Climate. Allen Lane, London. Korten, D.C., 2009. Agenda for a New Economy. From Phantom Wealth to Real Wealth. Berret-Koehler Publ., San Francisco. Kras, E., 2007. The Blockage; Rethinking Organizational Principles for the 21st Century. American Literary Press, Baltimore, MD. Kuhn, T.S., 1970. The Structure of Scientific Revolutions. Second edition. University of Chicago Press, Chicago, Ill. Kumar, P. (Ed.), 2010. The Economics of Ecosystem and Biodiversity (TEEB). Ecological and Economic Foundations. Earthscan, London. Mankiw, N.G., Taylor, M.P., 2011. Economics. Second edition. CENGAGE Publishing, Andover, Hampshire, UK, South-Western. Myrdal, Gunnar, 1978. Institutional economics. Journal of Economic Issues, vol. 12, no 4 (December), pp. 771–783. Norgaard, R.B., 2010. Ecosystem services: from eye-opening metaphor to complexity blinder. Ecol. Econ. 69, 1219–1227. Remig, M.C., 2015. Unravelling the veil of fuzziness: a thick description of sustainability economics. Ecol. Econ. 109, 194–202. Shiva, V., 2002. Water Wars. Privatization, Pollution and Profit. Pluto Press, London. Shiva, V., 2005. Earth Democracy. Justice, Sustainability and Peace. Zed Books, London. Sukhdev, P., 2010. Preface. In: Kumar, P. (Ed.), The Economics of Ecosystems and Biodiversity (TEEB). Earthcan, London, pp. xvii–xxvii. Söderbaum, P., 2000. Ecological Economics. A Political Economics Approach to Environment and Development. Routledge/Earthscan, London. Söderbaum, P., 2008. Understanding Sustainability Economics. Towards Pluralism in Economics. Routledge/Earthscan, London. Söderbaum, P., Brown, J., 2010. Democratizing economics. Pluralism as a path toward sustainability, annals of the New York Academy of Sciences. Ecological Economics Reviews 1185, pp. 179–195. Williamson, O.E., 2000. The new institutional economics: taking stock, looking ahead. J. Econ. Lit. 38 (3), 595–613.
Contents lists available at ScienceDirect
Ecological Economics journal homepage: www.elsevier.com/locate/ecolecon
Commentary
Varieties of ecological economics: Do we need a more open and radical version of ecological economics? Peter Söderbaum School of Business, Society and Technology,Mälardalen University,Västerås,Sweden
a r t i c l e
i n f o
Article history: Received 13 March 2015 Received in revised form 4 September 2015 Accepted 13 September 2015 Available online 21 September 2015 Keywords: Paradigm Ideology Mainstreaming Pluralism Democracy TEEB-study
a b s t r a c t Should we aim at one single economics paradigm for all purposes or is it wise to accept the existence of more than one theoretical perspective? Is one ecological economics perspective enough or should we encourage competing paradigms as part of a pluralist perspective? Moritz Remig expresses his preference for ‘mainstreaming’ ecological economics in the January 2015 issue of Ecological Economics suggesting that alternative perspectives and alternative terminologies, such as “sustainability economics”, lead to confusion. In this reply I am arguing that there is no valuefree or value-neutral ecological economics and that therefore limiting economics or ecological economics to one paradigm is not compatible with democracy. We have to live with some complexity when dealing with sustainability issues and should not avoid issues of paradigm, ideology and political-economic system. © 2015 Elsevier B.V. All rights reserved.
1. Introduction This article is a response to an article by Moritz Remig (2015). It is about “mainstreaming” versus pluralism in ecological economics. In some of my writings I have referred to “sustainability economics” rather than ecological economics, suggesting that sustainability economics can be understood as one of the more radical varieties of ecological economics. I am also questioning the idea of “mainstreaming” ecological economics which I understand as looking for a compromise that ecological economists should agree about. Economics is science but at the same time ideology. There is no value-neutrality. In this article I am pointing to a new definition of “economics” that exemplifies an ideological turn of the discipline. A political and democratic microeconomics is indicated. The issue of “mainstreaming” is discussed in relation to the TEEB-study (The Economics of Ecosystems and Biodiversity) of 2010 where a number of ecological economists participated. 2. The Overview Article by Moritz Remig In his article “Unravelling the veil of fuzziness: A thick description of sustainability economics”, Moritz Remig (2015) presents his overview of literature where the concept of “sustainability economics” has been used. Remig is concerned about what he regards as “fuzziness”, to use his own word. Should we continue to refer to ‘ecological economics’ or do we need ‘sustainability economics’ as a term for a new field? In the latter case; what is the difference between ‘ecological economics’
http://dx.doi.org/10.1016/j.ecolecon.2015.09.007 0921-8009/© 2015 Elsevier B.V. All rights reserved.
and ‘sustainability economics’? Are we rather contributing to confusion by introducing a new term? Overview articles of the present kind can certainly be recommended. And such articles unavoidably reflect the conceptual and ideological orientation of its author. Moritz Remig is eager to list things that are “unclear” or “unspecified” in the publications identified (where the term ‘sustainability economics’ has been used). And worse still; lack of clarity may even lead to “un-sustainability” (p. 198, 199). His position is summarized as follows: “Rather than creating new tents, it is perhaps more productive to stabilize and extend the conceptual and methodological, epistemological and ontological poles of our big tent, ecological economics.” [(Remig 2015, p. 201).] Moritz Remig concludes that we should focus on further developing the concepts of “efficiency” and “externalities” to which he adds his own ideas. Remig should of course be encouraged to raise his concerns and the review article is already a contribution. But his arguments raise some fundamental issues for us as ecological economists. Let us for present purposes refer to a community of ecological economists which can be defined as members of the International Society for Ecological Economics and the different regional societies and let us also include those who sometimes consult our journal. In this community we should, according to Remig, reduce all versions of ecological economics to one paradigm which is clearly specified and presented. Contrary to such a view I think that it is natural and more constructive
P. Söderbaum / Ecological Economics 119 (2015) 420–423
to expect “varieties of economics” and also “varieties of ecological economics”. I will explain why. 3. The Illusion of Value-Neutrality According to Gunnar Myrdal (1978), an economist awarded with the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, “valuations are always with us” (p. 778) in economics research and education.1 Social science projects start from a viewpoint and in this viewpoint values are implied. Myrdal pointed to institutional economics as his theoretical point of departure. Also William Kapp who is mentioned at the end of Moritz Remig's article (in connection with ‘cost-shifting’) declared himself an institutional economist (Kapp, 1976).2 I respect Myrdal and Kapp and share their ideas about institutional economics. Following Moritz Remig's logic, does this mean that all three of us are mistaken and confused persons who instead should “stabilize and extend” the conceptual and methodological framework of neoclassical economics? Do we need ecological economics in a situation where neoclassical environmental economics already exists? Tanja von Egan-Krieger (2014) has written a book “Die Illusion wertfreier Ökonomie. Eine Untersuchung der Normativität heterodoxer Theorien”. In addition to mainstream neoclassical theory she is systematically studying feminist economics, institutional economics and ecological economics for differences and similarities with respect to values or normative aspects. In the case of ecological economics, she has selected Herman Daly as one of the founders of the field while my writings exemplify more recent contributions to ecological economics. As illustrated by Tanja von Egan-Krieger, schools of thought differ not only in conceptual terms but also with respect to values and ideological orientation. Feminist economists claim to take the present position of women in contemporary society seriously. Ecological economists are concerned about many environmental and social trends that are unsustainable. This role of values suggests that economics should rightly be referred to as “political economics”. It was therefore a mistake by the early neoclassical economists to abandon this terminology around 1870. Different schools of thought that exist today then represent varieties of political economics. And again, rather than reducing all schools of thought to one, each one of us should respect scholars with a different conceptual and ideological orientation. Democracy has a role also in the academia (Söderbaum and Brown, 2010). 4. Redefining Economics Myrdal and Kapp both pointed in an interdisciplinary and multidimensional direction. Their concern for the fact that values (and in my words ‘ideology’) is involved suggests that we may need to move to a new definition of economics (or rather ‘political economics’). In mainstream textbooks the definition of the subject is standardized: “Economics is the study of how society manages its scarce resources” (Mankiw and Taylor, 2011, p. 2). My proposal which admittedly does not claim value neutrality but rather points in specific directions is as follows: “Economics is multidimensional management of (limited) resources in a democratic society.” In relation to decision-making, neoclassical economists (and some ecological economists) make the recommendation that all impacts are 1 Gunnar Myrdal is certainly a worthy recipient of this so called “Nobel Prize in Economics” but the present author is skeptic to this award since members of the awarding committee do not appear to understand and openly discuss the ideological role of different contributions to economics. This Prize appears to play a conservative role further strengthening the monopoly of neoclassical economics with connected ideology. And this monopoly position may be an important part of our sustainability problems. 2 See also “The Foundations of Institutional Economics” by K. William Kapp (2011), a manuscript by Kapp that has been published after his decease.
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reduced to one single monetary dimension by reference to correct prices according to a specific market ideology. The recommendation that follows from the new definition of economics is to accept some complexity by separating various dimensions as part of a multidimensional analysis. Environmental performance is itself a set of multidimensional phenomena. Issues of inertia in non-monetary terms (pathdependence, lock-in effects, irreversibility etc.) have to be dealt with carefully. Georgescu-Roegen's energy analysis is only part of this. Trade-off thinking in monetary terms is abandoned since in a democratic society it is not legitimate to reduce all existing ideological orientations to one single ideological orientation. Neoclassical CostBenefit analysis (CBA) is not compatible with democracy but rather exemplifies extreme technocracy, i.e. reliance on experts even for ideological issues. Reference to democracy in the definition of economics points to the existence of a number of political ideologies and ideological orientations among citizens or member of a particular community or society. Essential steps have to be taken away from technocracy toward democracy. The present close to monopoly position of neoclassical theory with connected ideological orientation at university departments of economics and elsewhere has to be counteracted. A degree of pluralism then has to replace monologism and it is believed that an open dialogue that also focuses on ideological orientations and paradigms is a key issue in attempts to get closer to a sustainable development. 5. A New Microeconomics As already made clear there are many ideas about ecological economics and they may be close to, or depart significantly from, mainstream neoclassical economics. I believe that we – following the new definition of economics – should take substantial steps away from neoclassical theory by suggesting a new microeconomics. This is done as part of a pluralistic philosophy. Our logic is not one of ‘either-or’ as in Kuhnian “paradigm-shift” (Kuhn, 1970) but rather formulated in terms of “paradigm co-existence” (Söderbaum 2000, pp. 29–31). Neoclassical theory will still be with us among options and to understand the thinking and arguments of those millions of persons educated in neoclassical economics, we also need this particular theory. Outlines of a political microeconomics have been presented elsewhere (Söderbaum, 2000, 2008). Some elements can be indicated here: 1. Neoclassical Economic Man assumptions are replaced with Political Economic Person (PEP) assumptions. An individual is understood as an actor guided by her ideological orientation. 2. Neoclassical profit-maximizing firm assumptions are replaced with Political Economic Organization (PEO) assumptions. An organization is an actor guided by its ideological orientation or ‘mission’. 3. Neoclassical supply and demand models of markets in mechanistic terms are replaced by PEPs and PEOs interacting in markets and outside markets. 4. Neoclassical ideas of focusing on ‘optimal’ solutions to problems are downplayed in relation to a view of decision-making as a ‘matching’ process between an actor's ideological orientation and expected impacts of each alternative considered. 5. Neoclassical standardized ideas of efficiency and rationality are replaced by a view where efficiency is a matter of an actor's (or a set of actors') ideological orientation and expressed in dimensions relevant to this ideological orientation. 6. Neoclassical CBA is replaced by Positional Analysis (PA). PA is an approach to decision-making at various levels from the individual, through organizations to local, regional, national and global societies or communities. 7. Neoclassical economists tend to regard the present political-economic system as given. Recent developments in terms of transaction costs analysis (Williamson, 2000) represent a modification of this position. A different view is suggested here where the ideological orientation
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(mission) of actors plays a role also in understanding institutional change processes. It is assumed, for example that actors with a similar ideological orientation can work together in social movements. 8. Neoclassical accounting principles in monetary terms at the levels of organizations (firms) and nations are extended and opened up to include social, environmental and other non-monetary indicators (e.g. Brown, 2009, Brown and Dillard, 2014). Individuals are understood in socio-psychological and cultural terms rather than in neoclassical mechanistic terms. Not only ideological orientation but also concepts such as role, motive, relationship, trust, identity, dissonance, conflict and power are relevant. Individuals adapt to a context that is social, cultural, institutional, and physical and that changes over time. The ambition is not so much to study regularities in the behavior of individuals over time but rather to make the behavior and arguments of specific actors in specific situations visible. Ethical issues of fairness, exploitation, responsibility, and accountability are part of this. As indicated above the concept of ideological orientation plays a key role in the proposed kind of microeconomics. Ideology is about means– ends relationships. It is about where you are (present position), where you want to go (future positions) and how to get there (strategy). The ideological orientation of an individual as actor can be expressed in qualitative, quantitative and visual terms and is often uncertain and fragmented.3 It may emphasize self-interest or otherness and may vary for one specific individual between situations and over time. The ideological orientation of an individual or the mission of an organization is something to be investigated rather than assumed as given. Politics and policy at the national level are largely articulated in terms of ideology and ideological orientations. Sustainable development interpreted or articulated in a specific way is an ideological orientation that ‘competes’ with other, perhaps more established ideological orientations, such as beliefs in markets and economic growth. As economists we should enter into an open dialogue about ideological orientations rather than argue that ideology is something to be left to politicians (as part of mainstream ideas that science can and should be separated from politics). If the dominance of specific ideologies connected with specific political parties is judged to be part of the problems faced then we cannot regard those ideologies as being outside the analysis. Bringing in ideological orientation into economic analysis does not mean that the door is open for one-sided ideological analysis. While remaining conscious about the risks of manipulation, the imperatives of democracy once more come to our help. Analysis should be many-sided rather than one-sided. In the case of Positional Analysis mentioned above, the ambition is to look for a many-sided set of alternatives considered that correspond reasonably well to a manysided set of ideological orientations that appear relevant to interested parties and actors in relation to the decision situation. Any conclusions in the form of ranking the alternatives will then be conditional in relation to each ideological orientation considered. It should be added that the ambition to be many-sided does of course not make criticism superfluous. Democracy is a never-ending process and can always be strengthened. Democracy and the idea of listening to various voices means that ecological economics (and economics more generally) has to move some steps away from technicalities toward story-telling. Eva Kras as President for the Canadian Society for Ecological Economics has recommended us to listen to “visionaries” in our attempts to get closer to the problems faced as well as potential solutions (Kras 2007). Personally, I feel, that we have a lot to learn from the stories told by intellectuals and activists such as Vandana Shiva (2002, 2005), Naomi Klein (1999, 2014) and David Korten (2009). But such awareness of stories 3 As pointed out by Funtowicz and Ravetz (1991) in their essay on the relevance of postnormal science for studies in ecological economics, complexity and ‘fuzziness’ is a fact of life rather than something that can easily be avoided or handled.
presented by actors on world-wide arenas should not exclude interest in the stories told by less visible actors. 6. “Mainstreaming” — A Good or Bad Idea? These days trends referring to a large number of environmental and social indicators are unsustainable. To reverse these trends in attempts to get closer to sustainable development is a complex issue. While development is a multi-factorial process, we can probably agree about the judgment that mainstream economic theory has played a significant role in the road-maps used by influential actors in a period when many negative trends have been established. The idea that we need “more of the same” to deal with present problems is therefore not very convincing. Albert Einstein's dictum: “We cannot solve our problems with the same thinking we used when we created them” appears relevant. There is rather a need for ideas that depart significantly from previous doctrines. But we should be careful not to exclude thinking patterns. A degree of pluralism is recommended in line with our emphasis on democracy. Many ecological economists were involved in the so called TEEB study “The Economics of Ecosystems and Biodiversity” (Kumar, 2010). This study is useful for example by emphasizing the concept of ecosystem services. A typology of such services is presented in a table on page 26. The main idea through this 400 pages book is however to estimate “the total economic value” (TEV) of specific ecosystem services in monetary terms by relying on traditional (neoclassical) economic theory. “Economic value” is equal to “monetary value” and to arrive at TEV, aggregation of impacts is recommended. A careful reading of the different chapters reveals that some of the hundreds of economists who have contributed have pointed to serious problems with the strategy of monetary valuation. (To arrive at a specific value you have to reduce all possible ideological orientations to one single ideological orientation, for example.) But such doubts were not enough to change the main line of reasoning. One person, Pavan Sukhdev, representing the United Nations Environment Programme (UNEP) acted as “study leader” and appears to have played an important role. In a Preface, Sukhdev refers repeatedly to “our dominant economic model” (Sukhdev, 2010, p. xviii) or “the language of the world's dominant economic and political paradigm” (p. xix). He points to some failures of this economic model but still recommends its use in a summary conclusion entitled “Mainstreaming TEEB”: “Valuations are a powerful ‘feedback mechanism’ for a society that has distanced itself from the biosphere upon which its very health depends. Economic valuation, in particular, communicates the value of Nature to society in the language of the world's dominant economic and political model. Mainstreaming this thinking and bringing it to the attention of policy makers, administrators, businesses and citizens is in essence the central purpose of TEEB.” [(Sukhdev, 2010, p. xxvii).] Some of us ecological economists are not happy with this way of reasoning. Richard Norgaard has written an article “Ecosystem services: From eye-opening metaphor to complexity blinder” (Norgaard, 2010). In my own case I am disappointed because much of my engagement for ecological economics started with a criticism of “Total Economic Value” and the “monetary reductionism” it represents. The alternative here – as suggested in the new definition of economics – is to accept complexity in the form of multidimensionality as well as a recognition of the existence of more than one value, ethical or ideological orientation in a particular society. Facing complexity of different kinds, we should rather, again, listen to different voices and make our own judgments. “Varieties of ecological economics” is my preference and can be referred to as a security
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strategy in the present situation. But again the most important thing is that we listen to each other. 7. Policy Recommendations That Follow If values and ideology are involved in economics research and education, as I have emphasized, then also our personalities and personal experiences are unavoidably involved. The first time I heard the term “sustainability economics” was at a conference with the European Society for Ecological Economics (ESEE), Gran Canaria, Spain, in 2002. A representative of Deutsches Institut für Wirtschaftsforschung, DIW, Reimund Schwartze, was acting on behalf of the German Federal Government and its Ministry of Education and Research to prepare a series of workshops at DIW, Berlin for spring 2003. At the time I was not totally happy with developments in economics, including the ecological economics community, and welcomed this initiative for more radical approaches to sustainable development. A mainstream neoclassical research organization was advised (or ordered) by the national government to take sustainability issues more seriously. Neoclassical environmental economics was no longer enough. I somehow felt that “sustainability economics” was an appropriate term for more radical versions of ecological economics. I certainly accept that other ecological economists may use the term differently or may prefer to abandon it altogether. While the TEEB-study mentioned previously suggests that there is no need for significant changes in the present global and national political economic system, I am of a different opinion. I think that we in the present situation need to discuss failures other than “market failure” (in the sense of externalities) or “government failure” (by subsidizing environmentally harmful activities). In addition we need to discuss “paradigm failures” and related “ideology failures” as well as “failures of the present political-economic system”. Business corporations and other organizations may fail. Individuals in different professional and other roles may fail and be held accountable as actors and political economic persons. It is not possible here to discuss institutional change at length. Only one example will be given. In neoclassical microeconomics, it is generally assumed that firms maximize monetary profits and it is often believed that monetary profits are a good indicator of efficiency at the organizational level and also for society. Joint stock companies play an important role in our economies and the existence of these organizations is defined in monetary, financial terms. But sustainable development is as much, if not primarily, about non-monetary performance. It may therefore be argued that the joint stock company is missconstructed in relation to present needs which are about non-monetary performance in various dimensions. We need a multi-dimensional idea of economics as previously discussed. Pursuing a one-dimensional monetary profit motive is too often leading to “ecological failures” or “social failures” (through ‘cost-shifting’ as suggested by William Kapp). Business leaders in the oil industry are working for profits by further exploiting oil resources. They may succeed in financial terms in the short run but are with certainty contributing to climate change and ecological failure. The CEOs are locked into a system where it becomes difficult to respond to recent demands for a broader responsibility and accountability. Shareholders are earning their financial returns in dubious ways etc. This suggests that we somehow need organizations that
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measure their progress in broad, multi-dimensional terms and therefore also new accounting systems. Multidimensionality is one part and democracy another part of our definition of economics. Normal imperatives of democracy suggest that we should not avoid certain issues such as a debate about the profit motive or about different institutions that are parts of our political economic system. Tendencies to avoid dialogue about conceptual and ideological issues may facilitate life for the scholar but are highly questionable. Rather, we should illuminate such issues in a many-sided way. But many-sided analysis can presumably be carried out in more ways than one and we should never forget that values, ideology and indeed, personality, are involved in our advocacy for specific ideas and approaches. And finally, mainstreaming by aiming at a single idea about economics or ecological economics is probably a bad idea. Such an idea is more compatible with monopoly and dictatorship than with democracy.
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