Faith in what kind of Economics? Past and Future Paradigms

The earth is full.

In fact our human society and economy is now so large we have passed the limits of our planet’s capacity to support us and it is overflowing.  Our current model of economy growth is driving this system, the one we rely upon for our present and future prosperity, over the cliff.  This in itself presents a major problem.  It becomes a much larger challenge when we consider that billions of people are living desperate lives in appalling poverty and need their personal “economy” to rapidly grow to alleviate their suffering.  But there is no room left.

This means things are going to change.  Not because we will choose change out of philosophical or political preference, but because if we don’t transform our society and economy, we risk social and economic collapse and the descent into chaos.  The science on this is now clear and accepted by any rational observer.  While an initial look at the public debate may suggest controversy, any serious examination of the peer-reviewed conclusions of leading science bodies shows the core direction we heading in is now clear.  Things do not look good.

Paul Gilding, The Great Disruption: Why the Climate Crisis Will Bring On the End of Shopping and the Birth of a New World

In response to this quote, I’ve copied below a schematic comparison between “eco-institutional heterodox economics” and conventional economics as expressed by Julien-Francois Gerber and Rolf Steppacher in their edited volume, Towards an Integrated Paradigm in Heterodox Economics: Alternative Approaches to the Current Ec0-social Crisis.

Open Systems Approach OR Closed systems approach

Economy as a social construct with its history and specificities OR Economy as a deduced structure based on a set of axioms

Heterogeneous, socio-ecologically embedded and institutionally conditioned agents OR Universal self-centered utility-maximizing, rational, well-informed agents/ unlimited wants

Social and environmental ethics (incl. needs fulfilled, equitable distribution, sustainability) OR Utilitarian ethics (incl. optimal welfare, Pareto efficiency, externalities)

(Co-)evolution OR Optimization

Metabolic view of society OR Marginalist view of the economy

Methodological Pluralism OR Methodological Individualism

Experiential and Algorithmic knowledge OR Algorithmic knowledge (mathematical formalism)

Value pluralism (incl. incommensurability) OR Monetary commensurability

Circular and cumulative causation OR Competitive equilibrium model

Focus on virtual, real, and real-real [?] economic levels OR Focus on micro- and macroeconomic levels

Steady-state and selective degrowth OR Conventional growth

Property and possession OR Focus on private property

Funds/services, stocks/flows and their control OR Natural capital

Biophysical and social indicators, multi-criteria analysis OR Monetary indicators, cost/benefit analysis

Focus on the community, within the biosphere OR Focus on the individual, within the nation-state

Focus on disadvantaged social groups and classes OR Focus on capitalists and managers

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