Deciphering what’s really at stake

Words by Jakob Kapeller, Professor of Socio-Economics, University of Duisburg-Essen

While climate change becomes a bigger and bigger topic in public discourse, recent research points to the severe implications climate change is going to have on actual living conditions of human beings (see, for instance, here and here). In this context, I think it’s worth illustrating why my regrets about our collective inability to tackle this challenge are intimately related to my views on paradigmatic division in economics. I’ll try to do so in the following.

Several years ago, I visited an interdisciplinary conference mainly populated by natural scientists (this one here). At one evening I had dinner together with some other researchers and we talked about our different disciplinary origins. Revealing that I am an economist by training got me some grim looks by the physicists at the table. They were obviously skeptical about something and asked me a straightforward, diagnostic question, namely: “What do you think, how can we stop climate change?” My answer was equally straightforward, basically stating that very strong forms of regulation would be required to reach emission targets, which are unlikely to be put in place given current political and economic circumstances. This answer astonished my natural science colleagues on the table – they even told me that they never have received this answer from someone, who is an economist by training.

Their observation is unsurprising against the backdrop that most studies on ‘consensus in economics’ find that an overwhelming majority of economists opts for ‘market-based’ solutions like taxes or emission licenses as opposed to direct regulation (see, for instance, here). Nonetheless, my answer seemed to have a large overlap with the views of my colleagues at the dinner table. What united us in this moment was a similarity in paradigmatic perspective: I, as a heterodox economists, followed broad arguments on the embeddedness of economic activities in a broader social and ecological context, which serves as an ultimate foundation for the former. They, as physicists, followed a thermodynamic perspective (like, for instance, in this classic book). Both starting points, led us to emphasize the ultimate scarcity of ecological capacities and, hence, to put greater weight on concerns of sustainability and conservation.

In more economic terms, our view on the problem as coined by the belief that either self-sustaining technologies or adequate substitutes for ecological services will not become available endogenously within the capitalist process. Hence, the basic divergence in the economic treatment of nature can be framed two related ways: either as being about the ultimate relevance and necessity of ecological foundations or, more practical, as a decision between technological optimism and technological pessimism, where the former is coined by the belief that the ‘ultimate’ character of ecological constraints will never materialize. In my teaching, I typically assign a very short, thirty year old paper on this by Robert Costanza from the inaugural issue of the Journal Ecological Economics, which pins down this crucial paradigmatic cleavage in a few pages (you can find this article here). Today, students typically grasp the immediate connection between this general argument and science and society’s capacity to confront climate change – they will typically ask me, why we are currently so badly prepared, while these issues had been illuminated for so long.

One part of the answer to this question is again paradigmatic division in the social sciences: In my view the paradigmatic perspective of mainstream economics, which always opts for market-based solutions, enshrines technological optimism and abstracts from the ultimate character of ecological constraints, has long served to obscure the issues at stake. It’s dominance within the sphere of economics has confined alternative views, which assign a prior role to nature in analytical contexts, to other disciplines and fields, where they had much less impact on economic and environmental policies. Hence, I see a deeper relationship between the young generation’s legitimate astonishment with regard to the errors of their parents and grandparents, and the partial inability of the older generations to decipher what is really at stake.

This blog was originally published in the Heterodox Newsletter which is edited by Jakob Kapeller. 

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