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Economics and the environment

Economics and the environment

This is the text, including slides, from a talk given on October 28 2020 during an online event organised by University College Cork’s Economics and Environmental Societies. (I didn’t follow the text word for word during the talk, but it covered the same ground)

Thank you very much, I’m delighted to be able to participate in this discussion.

My name is Caroline Whyte, I have a background in ecological economics and I do research and help with communications for a think tank called Feasta: the Foundation for the Economics of Sustainability.

Feasta, as some of you may know, is the Irish word for ‘in the future’. We have our administrative headquarters in at the ecovillage in Cloughjordan, and we’re in the Environmental Pillar of Irish environmental NGOs and in Stop Climate Chaos Ireland, but our focus is actually quite global and we have international membership. I’ll be explaining a bit more about Feasta later.

If I’m asked about the role economics plays in the environment and sustainability, my answer would be ‘what kind of economics are you talking about’ because there are a lot of different schools of thought within economics. You could be forgiven for not knowing that though, because there’s one particular school of thought that’s become quite dominant in university courses and in think tanks, political advisory groups, the media and so on – you could call it Neoclassical economics.

I find this approach to economies – particularly standard macroeconomic theory – quite problematic in many ways for the environment and for society and I’ll explain why in a minute. I’d argue that there needs to be a much broader range of economic thinking in universities, in the media, in advisory groups, all over really, if the economy is going to be able to adapt itself properly to our environment…

…click on the above link to read the rest of the article…

Frederick Soddy’s Debt Dynamics

Frederick Soddy’s Debt Dynamics

In the field of ecological economics, Frederick Soddy looms large. Born in 1877, Soddy became a chemist and eventually won a Nobel prize for work on radioactive decay. Then he turned his attention to economics.

Between 1921 and 1934, Soddy wrote four books that looked at how money relates to the physical economy. For his ground-breaking work, Soddy was rewarded with deafening silence. Here’s how ecological economist Eric Zencey puts it:

… Soddy carried on a quixotic campaign for a radical restructuring of global monetary relationships. He was roundly dismissed as a crank.

Although ignored during his life, Soddy’s work would become a central part of ecological economics. Let’s have a look at Soddy’s thinking.

Wealth vs. virtual wealth

Like a good natural scientist, Soddy insisted that human society is constrained by the laws of physics. Humans survive, he noted, by consuming natural resources. Exhaust these resources and we’re done for.

Think of humans (and our economy), says Soddy, like a machine. We transform energy into physical work. Like all machines, we’re bound by the laws of thermodynamics, which say that you can’t get something for nothing. Energy output requires energy input. That means humans are forever dependent on natural resources.

Now comes the problem. Our biophysical stock of resources — what Soddy called ‘wealth’ — is bound by the laws of thermodynamics. But money — which Soddy called ‘virtual wealth’ — is bound only by the laws of mathematics. Money can grow forever. Natural resource extraction cannot. This mismatch, Soddy claimed, is the root of most economic problems.

Cows and virtual cows

Here’s an example of Soddy’s thinking. Suppose that Alice is a would-be cattle farmer. She inherited some land and wants to use it to farm cattle. The problem is she has no money.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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