Green Economics
John Stone
May I make the following suggestions and comments?
A Guild of Green Economists needs to clearly set out its raison d’être.
Firstly: Why green economics?
Orthodox political economy fails to find answers to failing global economies, and the chronic social and environmental problems arising, because analysis of the problem is based on a flawed system of economics which gave rise to the problem in the first place. Neo-classical economics is based on a false premise: wealth creation. We cannot create material wealth, we can only transform, directly and indirectly, the wealth of nature (natural resources in economic terms) into the things we need for our human welfare. The natural system, which gave rise to and sustains life, is our real economic capital which cannot be grown. Neo-classical economics allows us to plunder this natural capital in the false belief that it is wealth creation. This is living off our capital and calling it revenue which is clearly irrational and unsustainable. Bankers do of course create abstract wealth in the form of money to facilitate economic activity; but it is when we confuse money wealth with real wealth that we get into trouble such as casino speculation in financial markets, endemic inflation etc.When abstract money wealth takes precedence over real wealth bankers take home their obscene bonuses while real wealth workers struggle and, perversely, are required to underwrite bankers’ incompetence.
The myth of wealth creation enables a gross mal-distribution of real wealth as rewards to the “wealth creators”, who are ironically the natural capital destroyers. Moreover, private ownership of natural capital such as land – the common wealth of nature – creates a growing gulf between rich and poor.
So, if we’re to arrive at a sustainable system of economics, both locally and globally, we need to transform our economics (Gk. oikonomia: household management) before it brings the house down about our ears. We must replace the false notion of wealth creation with metabolic (from Gk. Metabolē: change to sustain life) systems of utility realisation, whereby natural wealth is conserved, not degraded as at present. Real economic creativity would be the ingenuity employed in adapting chemical reactions, matter transformation, energy exchange etc. to this metabolic process. In doing so, we would necessarily address critical issues of climate change, bio-diversity and mal-distribution of real wealth etc.
Clearly there is already an intuitive understanding of what is right living and a growing movement and network of good practice at local, grass roots level, but there does need to be a philosophical rationale to replace orthodox economic theory and govern good practice at the wider national and international level.
Regards
John Stone
Molly Scott Cato
Molly Scott Cato
Green economist, social innovator, ideas merchant
Reader in Green Economics, Cardiff School of Management