What Could a New Economy Look Like? Joshua Farley Community Development and Applied Economics Gund Institute for Ecological Economics University of Vermont

What is Economics? Allocation of scarce resources among alternative desirable ends Allocation of scarce resources among alternative desirable ends The desirable ends and the characteristics of the scarce resources determine how we should allocate The desirable ends and the characteristics of the scarce resources determine how we should allocate

Leverage Points for Changing Complex Systems Change the paradigm Change the paradigm What is possible? What is possible? Change the goals Change the goals What is desirable? What is desirable? Change the rules Change the rules How do we allocate? How do we allocate?

Changing the Paradigm

Changing the paradigm What is biophysically possible? What is biophysically possible? Laws of physics Laws of physics Laws of ecology Laws of ecology Basic requirements for sustainability Basic requirements for sustainability What is behaviorally possible? What is behaviorally possible? Self-contained globules of desire vs. persons in community Self-contained globules of desire vs. persons in community Competitive self-interest vs. cooperative altruism Competitive self-interest vs. cooperative altruism Behavior and institutions Behavior and institutions

Changing the Goals Efficiency: maximizing monetary value and economic growth? Efficiency: maximizing monetary value and economic growth? Is it ecologically sustainable? Is it ecologically sustainable? Is it just and efficient? Is it just and efficient? Income distribution Income distribution Food, water and eflornithine Food, water and eflornithine Does it make sense? Food and energy Does it make sense? Food and energy Or sufficiency? Or sufficiency? Ecological sustainability Ecological sustainability Social justice Social justice Economic efficiency, redefined Economic efficiency, redefined

Justice and Efficiency level of trust mental illness and drug addiction life expectancy and infant mortality obesity children’s educational performance teenage births homicides imprisonment rates social mobility

Changing the Rules: Resource Use Sustainability Sustainability Quantitative limits determined by science Quantitative limits determined by science Extraction and emissions Extraction and emissions Inalienable property rights for future generations Inalienable property rights for future generations Scale is price determining, not price determined Scale is price determining, not price determined Just distribution Just distribution Who is entitled to resources created by nature and society as a whole? Who is entitled to resources created by nature and society as a whole?

Changing the Rules: Energy and Technology Fossil fuels vs. alternative energy Fossil fuels vs. alternative energy Rivalry and excludability Rivalry and excludability Green technologies and ecological problems Green technologies and ecological problems Minimizing costs Minimizing costs Maximizing benefits Maximizing benefits From competition to cooperation From competition to cooperation

Changing the Rules: Monetary Systems Money as interest bearing debt Money as interest bearing debt Creation and destruction Creation and destruction Won’t finance public goods Won’t finance public goods Growth and inequality or collapse Growth and inequality or collapse

Changing the Rules: Monetary Systems Return seigniorage to the public sector Return seigniorage to the public sector 100% fractional reserves 100% fractional reserves Creation Creation expenditures on public goods, full employment, green technologies, ecological restoration, etc. expenditures on public goods, full employment, green technologies, ecological restoration, etc. Destruction Destruction AEAs AEAs Taxes Taxes Spend and tax Spend and tax Degrowth without misery Degrowth without misery

Taxation and Justice

Is Change Possible? Economies are complex adaptive systems; constantly evolving Economies are complex adaptive systems; constantly evolving e.g. fossil fuel economy, speculative economy e.g. fossil fuel economy, speculative economy Change is inevitable Change is inevitable Failed growth economy vs. planned degrowth Failed growth economy vs. planned degrowth Adaptive management required Adaptive management required