Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Yes, I think very similar, as far as the Monetarist argument goes.  What Soddy & Daly and the perspective of Ecological Econ bring is the thermodynamic explanation; which adds quite a bit, as it leads us in new directions of theoretical explanation and understanding.  In historical terms, Soddy (and Daly and others) using thermodynamics here is more than a bit like Einstein using thermodynamics to explain black-body radiation, and in the course of that bootstrapping himself out of Newtonian physics and  into something new.  Okay, that's an extremely recondite allusion, but the point is:  the new perspective explains phenomena that were only partially visible and partially explainable in the old perspective, AND it goes on to explain other phenomena that the old perspective can't.

In this case, one "other" phenomenon is the recurrent crises in which an economy sheds debt.  "You've let money grow faster than real GDP," the Monetarists can/would/have said.  "Of course you have a problem."  But they don't talk about debt as a claim on real wealth, or how GDP doesn't measure real wealth.  (As a measure of wealth it's grossly overinflated--it counts costs as benefits, decreases in wealth as wealth.  Air pollution leads to increased lung disease; people spend money to get treated; by the measure of GDP, this is all win-win.)  Since the Monetarists are using a basic indicator that is flawed, they can't predict/explain debt repudiation crises as well as the Soddy/Daly EE model.  

If wealth as measured by GDP grows at the same rate as the claims on it (which are also imperfectly measured by increases in the money supply; debt is another kind of claim on future real wealth, a claim whose size has some relation to, but is not totally determined by, the size of the money supply), things look hunky dory.  BUT GDP is not real wealth, money is not the sum total of claims on real wealth, and the inevitable balancing of real wealth and the claims upon it comes as a surprise in the Monetarist paradigm.

I'm just sketching this out as I go along; the Q is a good one, one I haven't thought or read about before.  I don't know that anyone has tackled an answer from within EE.  

The other crucially important thing that the new, EE model makes central (and which the monetarist, or neoclassical economics, or NCE model) doesn't see at all, is the thermodynamic foundation of an economy.  An economy sucks low entropy matter and energy out of its environment, spins it around in the production "cycle" (in quotation marks because it is really a one-way flow) and spews out matter and energy that is degraded (pollution) or which must, with time and use, become degraded:  consumer items, capital.  Food.  Autos.  Solar cells.  All of it. In geologic time, all that stuff ends up thrown "away"--in a landfill or cast upon the planet somewhere.

That is, as Nicholas Georgescu Roegen put it, (I paraphrase from memory):  "considered solely as a thermodynamic system, an economy consists of nothing other than a set of human institutions, practices and conventions dedicated to taking valuable low entropy and turning it into valueless waste."   (He went on to point out that that was of course not the point of the economy, but that it existed to provide us with "an immaterial flux:  the enjoyment of life.")  

The economy has an ecological footprint on both the uptake and output sides.  The size of that footprint determines how much nature is left to go through its cycles, supplying us with ecosystem services, on which civilization crucially depends:  water purification.  Water (rainfall and storm surge) regulation.  Climate moderation (both globally and locally).  Pollination services.  Soil nutrient recycling.  Etc.  etc.  Ecological Economist Robert Costanza led a team that priced out world ecosystem services, and found that by a conservative estimate they are triple the value of world GDP.  

So, this isn't NCE monetarism, by a long shot.  

Great Q.

Industrial society is not sustainable. Unsustainable systems change--or disappear.

by Eric Zencey (Eric dot Zencey at UVM dot EDU) on Tue Mar 11th, 2008 at 02:55:57 PM EST
[ Parent ]

Others have rated this comment as follows:


Occasional Series