Wednesday, August 25, 2010

Herman E. Daly and Ecological Economics

For the past year or so I’ve been thinking more and more about "ecology" and "economy," as two different and opposing pathways of thought regarding sustainability--and music. In an effort to bridge the gap between the two, a gap I’ve written about here previously, I’ve been reading some of the writings by economist Herman E. Daly, whose bona fides include six years working as an economist for the World Bank, as well as various professorships in the United States. Daly, who coined the term “uneconomic growth,” developed a kind of economics that he calls “ecological economics.” I’ve been interested to see if Daly’s view of economics can somehow reconcile ecology with economy and thereby provide a kind of sustainability thinking for cultural policy involved with music. But first, what is Daly about?

Throughout his writing, Daly issues a powerful indictment of contemporary mainstream economics, which he terms neo-classical economics (NCE), for the short-sighted and harmful assumption that technology will assure continued, indeed for practical purposes unlimited, economic growth and human prosperity. According to Daly, the growth and prosperity of capitalist democracies in twentieth-century Europe and North America, particularly in the US, enabled the triumph of NCE, which is based on the assumptions that continual economic growth, fueled by technological progress, will increase the prosperity of all nations. Third-world and fourth-world nations, by developing and modernizing along capitalist economic and democratic political lines, aided by Western experts and advances in agricultural technology, will become more productive and prosperous, lifting their populations out of poverty. Technological progress will insure that every succeeding generation, in every nation, has a higher standard of living and a better quality of life. As he puts it in his book Ecological Economics (2004), “Our strategy was to grow first, in the hope that a bigger pie would be easier to divide than a smaller one” (xxiii). Daly does not go deeply into the political aspects (he is not a politician) but it's now clear that in the last century — the “American century”— making the world safe for democracy also meant making it safe for capitalism and technological progress and, furthermore, making the world over partly in our own image.

In opposing unlimited growth, Daly joins the critique ushered in during the 1970s with the Club of Rome and, later, the Brundtland Report, much discussed earlier in this research blog. But his critique is more powerful in the sense that it is offered by a respected World Bank economist, and in that it is offered in economic terms. Specifically, he critiques with the economic concept of marginal utility, and claims that when the costs of growth outweigh the benefits, we have what he terms “uneconomic growth.” Global warming, aka climate change, is the prime example of costs outweighing benefits, but it is not the only example. As most of the examples, such as atmospheric pollution and an increase in human disease, involve the earth’s environment and its ecosystem, Daly’s ecological frame of reference, ecological economics, becomes particularly apt.

According to Daly, neo-classical economists assume(d) that growth could be unlimited and not adversely affect the earth’s ecosystem, or at least that the adverse effects would be inconsequential considering the size of the earth’s resources. Daly calls this “empty world” thinking; i.e., that economic transactions among humans have relatively little effect upon the world's ecosystem as a whole. On the contrary, environmental degradation caused by economic growth, with the predicted consequences of climate change, show that “full world” thinking is more appropriate, and that economic transactions, particularly those involving energy use, have a major impact upon the  ecosystem.

Daly’s ecological economics, then, takes into account the environmental and ecological contexts of economic life. Whereas neoclassical economists either ignore the natural world or view it as economic resource, ecological economists understand the interconnectivity between the natural world and the economic world. In this way they approach not merely economics, but economics within nature’s economy. They understand human dependence upon the natural world in a way that neoclassical economists do not. "Economic man" exists within the natural world, not apart from it.

But is ecological economics a reconciliation of economic and ecological approaches to sustainability? Or is it meant to be a triumph of the ecological over the economic? We know how ecological economists stand in terms of natural capital; how do they stand on cultural capital? If some growth is uneconomic, other growth must be economic—that is, growth whose marginal utility is positive. Are they, then, in favor of “sustainable growth” or “smart growth?” Or do they view these terms as oxymorons? Where does Daly stand on this issue, and what are the implications for sustainability and music? In future blog entries I will explore these questions. For now, however, I acknowledge his major contribution to a re-thinking of economics, incorporating an ecological perspective. (In his notions of the “full world” there are, of course, parallels with earlier economists such as Malthus; and it would be worth exploring the climate of opinion that produced both Malthus and the field of folklore.) I also applaud his attempts to go beyond merely critiquing neoclassical economics from an ecological base, and instead to try to work out the science of ecological economics, which he has done in his writings and teaching.