State Economics and Environmental Philosophy - Research Paper Example

? Marissa Sims Steve Naragon Environmental Philosophy May 8, Steady- Economics and Environmental Philosophy Herman Daly (2008) in his paper, A Steady State Economy defines a steady state economy as one with constant population and constant stock of capital, maintained by a low rate of throughput that is within the regenerative and assimilative capacities of the ecosystem. This really means that within the fluctuations and amplitude of elasticity of a system a steady state is maintained, of inputs and outputs, retaining the balance of the system within its threshold or outer limits. The concept of a steady state of economy or ecological economics dates back to the nineteenth century when classical economists like John Stuart Mill (1846) put forward the idea of a stationary phase. Here Mill postulated for a future where an informed human community could reign in the increasing population to achieve a comfortable standard of living and then look outwardly toward realign social issues. John Maynard Keynes, an influential economist of the twentieth century, also referred to a society that could focus on ends (happiness and well-being) rather than means (economic growth and individual pursuit of profit). Nicholas Georgescu-Roegen recognized the connection between physical laws and economic activity and wrote about it in 1971 in The Entropy Law and the Economic Process. His insight was that the second law of thermodynamics, the entropy law, determines what is possible in the economy. Georgescu-Roegen explained that useful, low-entropy energy and materials are dissipated in transformations that occur in economic processes, and they return to the environment as high-entropy wastes. The economy, then, functions as a conduit for converting natural resources into goods, services, human satisfaction, and waste products. Increasing entropy in the economy sets the limit on the scale it can achieve and maintain. Increase in environmental problems witnessed in the early sixties and their documentation by scientists in books such as Rachel Carson’s Silent Spring (1962), Barry Commoner’s The Closing Circle (1971), and The Limits to Growth (Donnella Meadows et al. 1972) led to concerns of ecology and natural resource depletion and pollution.Out of this arose the in the final decades of the 20th century the discipline of ecological economics that envisaged the combining of environmental protection and economic sustainability. Environmental philosophy now started to become an integral factor in all growth and development strategies. The concept of a steady state or equilibrium as defined in ecological science refers to a state of a system which interacts within its multiple trophic levels such that there is a flow of energy and cycling of matter. This steady state equilibrium has over the centuries assumed to have encompassed the entire planet such that the fluctuations in one trophic level resonated into the next and so on until an excited system vibrated within its amplitude of disturbance releasing and absorbing its energy flow within predetermined sinks to once again attain its equilibrium. Therefore it may be said that the earth has been in a steady state for centuries. The natural resources that took years to build in the form of fossil fuels, soil systems, the water and the mineral cycles, the biodiversity all remained within the limits of regeneration, replenishment and revival. With the advent of industrialization in the last century and the so called development within the cost benefit ratios of unlimited growth,a cycle of natural resource exploitation commenced..Global economic output surged some 18-fold between 1900 and 2000 and reached $66 trillion in 2006(Gardner and Prugh, 2008). An annual assessment of the most significant risks to the world’s economies commissioned by the business-sponsored World Economic Forum found that many of the 23 diverse risks did not exist at the global level twenty five years ago. These included environmental risks such as climate change, the strain on freshwater supplies; social risks, including the spread of new infectious diseases in developing countries and chronic diseases in industrial nations Beyond being new and serious, what is most striking is that half of the 23 were economic in nature or driven by the activities of modern economies In other words, national economies, and the global economy of which they are a part, are becoming their own worst enemies. (Global Risk Network, 2007). . According to the Global Footprint Network, global population has expanded more than six fold since 1800 and the gross world product more than 58-fold since 1820. As a result, humanity’s impact on the planet—its “ecological footprint”—exceeds Earth’s capacity to support the human race sustainably, Undoubtedly, economic globalization has gone well by many standards. The era of globalization has been accompanied by significant improvements in key indicators such as the human development index, life expectancy, cereal yields, and dissemination of critical information technologies(Talbraith,2008). Nonetheless, there is widespread recognition that globalization indicators are increasingly irrelevant and out of touch with the great environmental and humanitarian disasters unfolding on the planet, that they mask gross inequities in the distribution of resources, and that they fail to register overall declines in well-being that stem from loss of community, culture, and environment. It is beyond dispute, for example, that GDP fails as a true measure of societal welfare. While it measures the economic value of consumption, GDP says nothing about overall quality of life. Higher levels of consumption may or may not have anything to do with a higher quality of life if such consumption is detrimental to personal health, to others, or to the environment. In response to the grim realities of climate change, resource depletion, collapsing ecosystems, economic vulnerability, and other converging crises of the twenty-first century, a consensus is emerging among scientists, governments, and civil society about the need for a rapid but manageable transition to an economic system where progress is measured by improvements in well-being rather than by expansion of the scale and scope of market economic activity. We need to measure economic progress by how little we can consume and achieve a high quality of life. We need to measure progress by how quickly we can build a renewable energy platform, meet basic human needs, discourage wasteful consumption, and invest in rather than deplete natural and cultural capital. In 1987 the World Commission on Environment and Development defined sustainable development as meeting “the needs of the present without compromising the ability of future generations to meet their own needs. Given past misuses of single indices such as GDP, most sustainability practitioners recognize the need for a suite of indicators balanced across economic, environmental, and social domains. Talberth (2008) has presented a set of macroeconomic indicators that responsive to challenges of sustainable development in the twenty-first century. Each indicator is linked to one of five macroeconomic objectives common to popular sustainable development frameworks of promoting genuine progress based on multiple dimensions of human well-being, fostering a rapid transition to a renewable energy platform, equitable distribution of both resources and opportunity, protecting and restoring natural capital, and economic localization. Since the late 1980s, researchers have been working to develop substitutes for GDP that address the costs and benefits of economic activity on environmental and social dimensions of well-being. Collectively, these indicators are known as “green” GDP accounting systems, the most comprehensive of which is the genuine progress indicator (GPI) and its variants. The GPI is designed to measure sustainable welfare and thus replace GDP as a nation’s most important yardstick of economic progress. It adjusts a nation’s personal consumption expenditures upward to account for the benefits of non market activities such as volunteering and parenting and downward to account for costs associated with income inequality, environmental degradation, and international debt. The Ecological Footprint has emerged as the world’s premier measure of humanity’s demand on nature. Ecological footprint analysis (EFA) compares the surface area of Earth needed to sustain current consumption patterns and absorb wastes with what is available on a renewable basis. When the footprint exceeds biological capacity, the world is engaged in unsustainable ecological overshoot and depleting natural capital. The most recent accounts published by the Global Footprint Network find that “our footprint exceeds the world’s ability to regenerate by about 25%,” implying that we need 1.25 Earths to sustain present patterns of consumption. Other macroeconomic indicators have been created to supplement GDP with information on overall well-being. The Happy Planet index (HPI), first published by the New Economics Foundation and Friends of the Earth in 2006. The authors note that the HPI “measures the ecological efficiency with which, country by country, people achieve long and happy lives.” The basic formula is to multiply a country’s self-reported life satisfaction index (determined through surveys) by its average life expectancy and then divide by its ecological footprint. Global economic strategies thus integrated environmental philosophy into their cost benefit and input output ratios neoclassical economy thus made way for ecological economics. An interdisciplinary or transdisciplinary identity was formed comprising of ecologists, economists and social scientists. The three primary themes of ecological economics are scale, distribution, and allocation (Czech, B 2009). Scale refers to to the size of the economy relative to its containing, sustaining ecosystem. The scale encompasses all aspects of the economy/ecosystem relationship – pollution, crowding, climate stability as also the of biodiversity conservation. This may determine policy decisions on a local, national, regional or global level. The scale also takes into consideration the optimum levels, sustainable levels of growth and resource, thus taking inputs from ecology and economics to determine the viability of the economy and its relationship with ecology. A determined maximum sustainable scale can run a steady state economy with efficiency. Since continuous growth and sustainable scale are incompatible, growth cannot be relied upon to alleviate poverty, as has been done in the past Viewing the distribution of wealth as an issue in ecological economics in a steady state would follow the method of equalizing or at best crating a more or less uniform structure within the steady state. The challenge for ecological economics, then, is to incorporate de-growth research and policy implications without losing sight of the long-term goal of a steady state economy. The fundamentals of allocation have always been focused on efficient allocation of scarce resources. In steady state economies this would be achieved only after achieving sustainability and fair distribution. For centuries humans have lived in high growth economies therefore a steady state economy seems constricting but if one were to look at most developed nations it may be observed that their annual growth is almost flat .In the steady state economy model the developed regions need to reduce their throughput growth to make way for resource utilization by the poor and instead focus on the development and expansion of their own quality of life through technical and social improvements. The fundamentals of steady state economy is to bring the population growth to a constant, limited stock use to constant levels, lower throughputs and thus check depletion of stocks. This can be achieved only at the depletion or input level so as to maintain sustainability and reduce exploitation. To mimic an ecosystem at homeostasis is what a steady state economy should do. Reduce depletion at source and create space in the sinks for complete whole absorption of any waste generation. Practicing green economics would require raising resource prices at the depletion end which will indirectly limit pollution, and force greater efficiency at all upstream stages of production (Daly,2008). One problem for the SSE already raised by the demographic transition to a non growing population is that it necessarily results in an increase in the average age of the population—more retirees relative to workers. Adjustment requires either higher taxes, older retirement age, or reduced retirement pensions. The system is hardly in “crisis”, but these adjustments are surely needed to achieve sustainability. The SSE will also require a “demographic transition” in populations of products towards longer-lived, more durable goods, maintained by lower rates of throughput. The logic of the SSE is reinforced by the recent finding of economists and psychologists that the correlation between absolute income and happiness extends only up to some threshold of “sufficiency,” and beyond that point only relative income influences self-evaluated happiness. This result seems to hold both for cross-section data (comparing rich to poor countries at a given date), and for time series (comparing a single country before and after significant growth in income). Herman Daly (2008) summarizes the issues that would affect steady state economies in a ten point policy programme: The cap-auction-trade systems for basic resources, Ecological tax reform, limit the range of inequality in income distribution, free up the length of the working day, week, and year, Re-regulate international commerce, Downgrade the IMF-WB-WTO, Move to 100% reserve requirements instead of fractional reserve banking. Enclose the remaining commons of rival natural capital in public trusts and price it, while freeing from private enclosure and prices the non rival commonwealth of knowledge and information, stabilize population, Reform national accounts separate GDP into a cost account and a benefits account. In conclusion it would be apt to say if a steady state economy were merged with environment philosophy it would be to the benefit of all the species on the planet including the most selfish and self absorbed of them the Homo sapien. The ensuring of the natural capital along with increased quality of life would reap the harvests of a healthy environment. Rapid growth as we have seen in the last centuries cannot be sustained within the parameters of available natural resources consequently a realistic, practical steady state economy would answer the needs of the generations to come and retain a healthy environment and biodiversity capital for future generations. Works Cited Carson, R.. Silent Spring. Fawcett. Greenwich, Connecticut, USA. 1962. Print. Commoner, B. The closing circle: nature, man, and technology. Knopf, New York. 1971.Print. Czech, B., Ecological Economics, ed. Robert J.Hudson, in Encyclopedia of Life Support Systems Developed, Eolss Publishers, Oxford, UK. 2009. Web. 2 May, 2011 Daly H. E., A Steady-State Economy: A failed growth economy and a steady-state economy are not the same thing; they are the very different alternatives we face Sustainable Development Commission, UK.2008. Web. 2 May, 2011. Gardner, G.& Prugh, T. Seeding the Sustainable Economy Innovations for a Sustainable Economy State of The World 2008.The Worldwatch Institute 2008.Web.27 April 2011. Georgescu-Roegen, N. The Entropy Law and the Economic Process. Cambridge: Harvard University Press, 1971.Print. Global Risk Network, Global Risks 2007: A Global Risk Network Report (Davos: World Economic Forum, 2007.Web.2 May, 2011. Meadows, D.H., & Club of Rome. The limits to growth: A Report for the Club of Rome's Project on the Predicament of Mankind. Universe Books, New York. 1972. Web.2 May, 2011. Mill, J.S. Principles of Political Economy, with some of their applications to Social Philosophy. Revised edition. Colonial Press, New York. 1900. Print. Talberth, J. 2008.A New Bottom Line for Progress. Innovations for a Sustainable Economy State Of The World 2008. The Worldwatch Institute Web.27 April,2011. , Read More