1. “Emancipated” Economics: A Loose Canon With thanks to Nicolas Kosoy

2. Outline Definitions of Economics Orthodox – Assumptions – Goods and Bads – Factors of Production

3. Definitions of Economics ‘How societies use scarce resources to produce valuable commodities and distribute them among different people’ (Samuelson and Nordhaus 2001, p. 4) Aristotle’s Oikonomia The management of the resources of the household for the benefit of all its members over the long run. Aristotle’s Chrematistiks The manipulation of property and wealth so as to maximize short-term monetary exchange benefits to the individual owner.

4. Fundamental Economic Assumptions Scarcity; Individuals and societies must choose among available alternatives; Decisions are taken based on self interest. The economic system is closed to energy and materials.

5. Economic goods, free goods, and economic bads Economic good (scarce good) - the quantity demanded exceeds the quantity supplied at a zero price. Free good - the quantity supplied exceeds the quantity demanded at a zero price. Economic bad - people are willing to pay to avoid the item

6. Economic resources Factors of Production Land – natural resources, the “ free gifts of nature ” Labor – the contribution of human beings Capital – plant and equipment – this differs from “ financial capital ” Entrepreneurial ability

7. Resource payments Economic ResourceResource payment landrent laborwages capitalinterest entrepreneurial abilityprofit

8. Positive and normative analysis positive economics – attempt to describe how the economy functions – relies on testable hypotheses normative economics – relies on value judgements to evaluate or recommend alternative policies.

9. Scarcity as the initial condition All three pioneers of marginal utility theory – Walras, Jevons, and Menger – referred to scarcity as the starting point for economic analysis (Jevons 1888, p. 37; Menger 2004, p. 94; Walras 1954, p. 65) Scarcity became an important theoretical premise for the advancement of contemporary neoclassical economics (Hayek 1994, p. 18; Robbins 1998, p. 277; Roll 1973, p. 387)

10. Scarcity in neoclassical economics Scarcity is general and universal Universal scarcity arises because we have unlimited wants and limited resources BUT—is everything scarce?

11. Scarcity in neoclassical economics ‘Scarcity means that trade-offs are a basic fact of life’ (Stiglitz and Walsh 2006, p. 7) Choice confronts any individual, organization, or human endeavour The existence of abundance (and sufficiency) is placed outside the set of possible objects of study

12. But no society has reached a utopia of limitless possibilities. Ours is a world of scarcity, full of economic goods. A situation of scarcity is one in which goods are limited relative to desire. An objective observer would have to agree that, even after two centuries of rapid economic growth, production in the United States is simply not high enough to meet everyone’s desires...Moreover, outside the United States, particularly in Africa and Asia, hundreds of millions of people suffer from hunger and material deprivation Samuelson and Nordhaus 2001, p. 4

13. Is Neo-cl Economics an Orphan? Doctrine of special creation Assumes the economy is a closed system. Assumes that indefinite expansion is possible and desirable. And automatic/Keynes/Yellen. No principle of justice is required, invisible hand. (Not true of the classical econs.) Fixed decision rules. Reversibility –Newtonian physics.

14. The invisible hand Adam Smith 1776: maximisation of individual welfare contributes to maximisation of social welfare. Market takes care of an efficient allocation of scarce means: sum of consumer and producer surplus maximal. This only holds if social costs = private costs.

15. Problems With the Neo-cl frame Anthropocentric One person has everything Commodification Discounting Sneaking cardinal measures back in. Economic efficiency doesn’t maximize utility Scale not considered/closed system

16. Anthropocentric Photo: Ap

18. The market $ Blocked & Penumbral exchanges Prohibited Unpriced Penumbral

19. Discounting

20. The comparison of utilities Www.challengeBP.com Cardinal

21. The comparison of utilities http://www.tiemaster.com/ Ordinal SoftHard

22. The Market and Efficiency Not by Mill’s standard. Do we want efficiency? Gilbert If so, which ones? Consumer or thermodynamic?

23. Economic efficiency doesn’t maximize utility (unless you accept the income dist.)

24. The problem of scale Overwhelming the biosphere.

25. What about the current economic system? Systems may be open or closed in respect to a number of classes of inputs and outputs World Economy is an open system: Matter Energy Information

26. Useful Tools for the Anthropocene? Only at the margin.

27. `Externality` does it work? “An externality is present whenever some individual's (say A's) utility or production relationships include real (i.e. non-monetary) variables, whose values are chosen by others without particular attention to the effects on A's welfare.” Baumol/Oates (1974/1988)

28. Betting on a weak horse Not for long term macro-problems Information overload Discounting and the confusion of time with value. Confuses harms with wrongs. Puts the power of eminent domain in private hands.

29. Is efficiency a foundation for collective choice? complex socio-ecological systems exhibit discontinuity, irreversible thresholds, emergent phenomena, and co- evolutionary change. Evolutionary change is characterized by hierarchies of selection, historical contingency and random events (O’Neill et al. 1986). In evolutionary systems it is impossible to change one thing and hold everything else constant. The existence of qualitative and non-marginal change argues for rejecting microeconomic theory as a foundation for macroeconomics (van den Bergh and Gowdy 2003) and instead embracing the science of complexity and coupled human-natural systems models in ecological economics (Liu et al. 2007).

30. Does Private Property Protect Resources? Discounting/substitution. Monbiot Ostrom

31. Does Contingent Valuation Work? Not in WTP pay surveys.

32. Does the Rational Actor Model Work? Individuals select the choices that make them happiest, given the information available at the time of a decision. But in fact decisions are socially contextual, have moral dimensions, and significant emotional dimensions from our biological nature and evolutionary heritage. There is no one decision rule.