Ecological Economics Pre-analytic Vision Modules
Activities (Part Two)
– Group 4
The Economy as a Subset of the Ecosystem
One of the most common assumptions behind Neoclassical economics is the belief that our economy can sustain continuous economic growth. However, in a world limited by the laws of thermodynamics this is an inaccurate assumption. Continuous growth is impossible to sustain indefinitely, and in acknowledgement of this, Ecological Economists turn to the more appropriate view of the economy as a subset of the ecosystem. In this view, the earth and the finite amount of natural resources it contains limit how much material and energy can go thorough a [linear throughput system], which governs our physical economies. There is a limit to the services nature can provide in terms of natural capital and waste absorption, and once these limits are reached, an economy cannot grow any further.
Activities:
A. Design a survey to test whether or not your peers believe the ecosystem is a subset of the economy or vice a versa. Here are some questions you might want to ask: Do you believe the economy has infinite space to grow? Are there limits to economic growth and what might they be? What is the connection between the natural resource bases (the biosphere/or individual ecosystems) and the economy? How does the economy interact with the ecosystem? Can you name a product that does NOT come from a natural resource? Are all resources finite (or are some infinite)? Compile the results of the survey based on similar responses. Present this data in a visually accessible way (i.e. Graphs, tables, charts.)
B. Write a letter to your senator or congress representative. This requires a little bit of research into a natural resource or economic issue of your region. Use this website to look up contact information- https://forms.house.gov/wyr/welcome.shtml. Be sure to make practical policy recommendations in a manner that shows how the economy is restricted by growth of biophysical laws. Make connections between environmental and economic issues of study and practical policy solutions in a real world scenario.
Empty vs. Full World
EXPLAIN FULL VS EMPTY WORLD
For the majority of human history we have lived in a relatively empty world. Human population growth remained materially constrained until technology increased the accessibility and allocation of goods. Over the past century the per-capita output has doubled more than three times and the human population has skyrocketed from 1.6 billion to 6.1 billion. It seems that we are approaching the point of a full world.
For Further Understanding: Read Environmental Economics: The Essentials from The Environmental Literacy Council. Chapter 10 will explain in depth how marginal cost and marginal benefit relate to the ecological economic view.
Activity:
Fill in the blanks with words from the word bank.
Word Bank
- Full World View - Economy (2)
- Empty World View - Ecosystem (2)
Understanding Peak Oil
Today, 85% of the world’s energy needs comes from natural fuels, and the demand will only grow worldwide as India and China gain more wealth and increase consumption. Peak Oil is the point when global extraction of oil is at its highest, which would lead to an ever-decreasing supply of accessible (above-ground) oil in the future.
Assessing when Peak oil will be reached is a difficult task that economists have been struggling with for decades. Geologist M. King Hubbert created a theory for estimating future oil production in 1954. He predicted that peak oil production in the US would occur from 1967-1971, a theory that has held up remarkably well as peak production was reached in 1970. Using his theories, geologists today believe worldwide oil production will peak between 2003 and 2020, with many believing peak oil production has already occurred.
For Further Understanding: Watch the following video clip on an introduction to the issue of peak oil-
http://www.youtube.com/watch?v=Ulxe1ie-vEY
Activities:
A. Make a comprehensive list of things that come from oil, and then answer the following questions; How many of those things end up as waste? How much can be reused? Recycled? What are the alternatives and what are the implications of implementation? What are the barriers and challenges associated with living in a post-peak oil world and how can they be overcome? Are there any benefits to living in a world that is independent of oil?
B. Research and then try some methods of reducing your reliance on oil. Write a casual essay on the impacts both economically, environmentally, and personally. For example, use public transportation or a bike instead of driving your car.
Quiz on Full World vs. Empty World View
Definitions [2 points each]
Write a short definition, in your own words, describing the terms listed below.
1. Optimal Scale
2. Marginal Cost
3. Marginal Benefit
Short Answer [5 points each]
1. Explain what causes the leveling out in The Hubbert Curve from 1970 to 1975?
2. Why is it better to view the economy as a part of the ecosystem?
3. How can the idea of the economy as a subset of the ecosystem be applied directly to the idea of peak oil?
Philosophical Foundations – Group 5
Distinguishing Determinism from other Philosophies
Humans are a part of reality and reality consists solely of moving matter. This implies that humans are made up of moving matter and because matter must follow physical and thermodynamic laws human actions are also determined by these laws. This dogma is called determinism and points out that only matter in motion has an effect on the world and our purposes, intentions, values, and choices are merely effects of moving matter. Those who follow determinism believe that we all are predestined to a particular fate and that free will is an illusion. All decisions have already been predetermined by the past. Non-determinism is the idea that we do have freedom and can make our own choices. There is not totally certainty in our fate; we can influence what happens to us and to the world around us.
Nihilism is the idea that no decision is morally superior to others; essentially it doesn’t matter what we decide to do. Non-nihilism, then, is the belief that some decisions are morally better than others. Materialism is related to nihilism. Everything is what it is, and if we cannot change our physical world, there is no need to worry about it. Mechanism is related to determinism, being the idea that we are ruled by physical laws, not purpose or free will.
These ideas are important to the application of economics. In order to come up with policies, one must be non-determinist and non-nihilist. Otherwise, what would be the point in regulating our behavior if we have no choice, and it doesn’t matter anyway?
Activities:
A. Read the Dinosaur Determinism cartoon, and create an original cartoon or other piece of media depicting the relativist point of view. Follow this link to see the cartoon:
http://www.owlnet.rice.edu/~psyc351/Images/DinosaurDeterminism.png
B) Explain how materialism, determinism, and mechanism are closely related.
C) Research Epicurus’ notion of “clinamen.” Is it a satisfactory way to restore the idea of free will?
Ends vs. Means
While ecological economics recognizes the importance of efficient allocation, it differs from neoclassical economics in its recognition that human welfare depends on more factors than provision of goods and services. Ecological economists believe that there are ends higher than those proposed by neoclassical economics. Happiness, quality of life, reaching heaven (or highest station of any particular religion), and even sustainability are all common answers to what some may consider ultimate ends. In reaching these ultimate ends, ecological economists have identified ultimate means which can be used most efficiently and sustainably to achieve those ends. Ultimate means are the common denominator of all usefulness, consisting of low-entropy energy-matter. Examples of such ultimate means are solar energy, minerals, and fossil fuels. Use of these ultimate means is the most efficient, sustainable, and environmentally acceptable way to achieve allocation in the market and reaching humans ultimate ends.
Activities:
1. The following is an Ends and Means chart. Take the words out of the list below and place them where you believe they belong on the chart. After you have done this, compare your answers with the correct chart. Can you think of examples for each of these terms?
Ethics
Economics Politics
Intermediate Ends
Ultimate Means
Answers:
2. Take this quiz on ends and means.
1. . What is the main difference between neo classicalist’s definition of ends and an ecological economist’s definition?
2. Briefly describe why it is more difficult to describe an ultimate end as opposed to an ultimate mean.
3. What mechanism do neo-classicalist economists believe reveal the most desired ends?
a. The market.
b. The stock market.
c. The aggregate demand-supply curve.
4. Ultimate means consist primarily of
a. raw materials.
b. low-entropy matter-energy.
c. synthetic materials.
5. Regarding ends and means, what do ecological and neo-classical economists agree upon?
Quiz answers:
1. Neoclassical Economists do not take into account ecological well being, only human welfare and economic growth.
2. Ethics makes defining an ultimate end difficult because everyone has a different perception of this end. Ultimate means are easier to define because they are merely what must be used up in order to get to the ultimate end.
3. A
4. B
5. Using means efficiently in the service of ends
3. To be done individually or as a group discussion:
Write down a list of what you consider to be your desired ends. Then, decide which one is your ultimate desired end. Why did you choose the intermediate ends and ultimate ends that you did? (If in a group, discuss as a group which desired ends you have in common, and which differ. Why? What desired ends are common to all humanity?).
Steady State Economy and Desirability
The ultimate end to an ecological economist is a sustainable, steady-state, economy. This type of economy was mainly developed by John Stuart Mill. The main idea of a steady-state economy is to maintain constant stocks of wealth and people at levels that are sufficient for a long and good life. The throughput by which these stocks are maintained should be low rather than high, and always within the regenerative and absorptive capacities of the ecosystem. The system is therefore sustainable – it can continue for a long time. The path of progress in the steady state is no longer to get bigger, but to get better.
Activities:
A. Read the original theory of the steady state economy by John Stuart Mill at: http://www.econlib.org/library/Mill/mlP61.html#Bk.IV,Ch.VI, answer the following questions:
a. Does a stationary state imply that development is not possible? If not, what would it look like?
b. We are continuing with economic growth as main policy today, yet it was pointed out as early as the 1850s this would not be possible forever. Why do you think nothing has changed since then?
c. How does John Stuart Mill see the structure of society in a stationary state, how is it different from what we have today?
B. Read “In my opinion: the steady state economy-what it is, entails, and connotes,” at
http://www.steadystate.org/files/SSE.pdf. Answer the following questions:
1. How do the principles of a steady state economy relate to wildlife populations?
2. What will population look like?
3. What form of government is most conducive to a steady state economy? Why?
4. Is a steady state economy practical for countries of the developing world?
5. How will the stock market differ in a steady state economy from the current model?