Human ecology economics applied to various issues and problems

The authors contributing to this volume are in general agreement that Human Ecology Economics is, indeed, as per the subtitle of the volume, a "new framework for global sustainability" as follows:

• Long run-time perspective. Unlike most economic analysis, the "world conditions and human systems" studied in this volume require perspectives and analysis for case studies stretching hundreds and thousands of years, such as climate change, the rise and fall of political and economic powers, assessments of mercantilism versus free trade, capitalism versus socialism, longrun resource availability, population-carrying capacity of the planet, long-run innovation and evolution, etc.

• Use of the humanities. Human ecology economics, to differentiate itself even from ecological economics, draws from the humanities, and formally incorporates into economic analysis the role of faiths, ideals, mythologies, belief systems, ways of being, etc. These "intangible components" of the economic system correlate with, and mutually impact, the tangible components.

• Everything varies and is dependent on everything else. Given the long runtime perspective of human ecology economics, all structural components of that human ecology - belief systems, social agreements, institutions, organizations, human populations, physical environments and resources -are allowed to change and co-determine changes in everything else. Most other frameworks within economics and related disciplines assume that some of these structures are constant.

• Global systems emphasized. The "world conditions and human systems" examined in this volume involve and impact most regions of the world. Unlike many other perspectives, the human ecology economics framework thus starts with broader and more comprehensive global perspectives, and treats smaller regional situations as "sub-ecologies" of the global system.

• "Sustainability" and other interdisciplinary issues juxtaposed with "economic" issues. As per the challenge of H.G. Wells, this more comprehensive human ecology approach is designed to help economists and others rethink the boundaries and methods of their discipline so that they can participate more fully in debates over humankind's present problems and on the ways that they can be solved. The four-quadrant diagram of Figure 1.1 -literally a framework - has proved useful among contributing authors to define "economics" (as per the use of Figure 1.3) and "sustainability." Regarding "sustainability," given the diversity of approaches to this topic, this book suggests the following: In order to define sustainability, please indicate which structural elements within the four quadrant diagram of Figure 1.1 are being "sustained" and which are allowed (or required in many cases) to change, so that an ecology is defined as "sustainable."

In Chapter 2, George Modelski correlates elements from the four quadrants of Figure 1.1 in order to explain technological innovation, economic growth, and global political leadership over the long history of economic development. Modelski identifies an evolutionary process whereby clusters of new technologies, leading industrial and commercial sectors (currently the post-1973 information-industries), and supporting institutions allow "long-waves" of economic growth, which coincide with political leadership by the successful nation or nations (currently the U.S. and others). Periodic "clashes of civilizations," as well as the rise and fall of economies, are explained by these processes. While involving all structural components of the human ecology as per Figure 1.1 in his analysis, Modelski develops the dynamics of this human ecology approach, including Darwinian "human species" processes of search, selection, cooperation, innovation, reinforcement, etc. The reader is allowed a more comprehensive interdisciplinary understanding of economic change compared to the growth models found in contemporary economics literature. The long-term formation of "the world market," as well as the recent "information economy" are seen as evolutionary stages of the human ecology. The processes of evolution and change in the economic system identified by Modelski are used by other authors throughout the book.

Modelski examines the interaction and "coevolution" of economic and political processes in the evolution of the world economy and world politics, and he "reacquaints" economics with politics. Back in 1776, when Adam Smith published An Inquiry into the Nature and Causes of the Wealth of Nations, the field of political economy was in its beginning stages as a sub-field within "moral philosophy." Adam Smith, sometimes called "the father of market capitalism," was a Professor of Moral Philosophy. Economics did not break free from political economy and try to escape from politics, ethics, and various other fields until much later -notably through the writings of Alfred Marshall (1890), among others.

One disadvantage, as the author mentioned earlier, of separating economics from moral philosophy, is that typical economic research now fails to identify the belief systems that are embedded in the analysis, which therefore results in severe "missing variables" and "incoherent specification" problems and difficulties in comparing literature. In the language of Douglass North:

it is the belief systems of societies and the way they evolve that is the underlying determinant of institutions and their evolution... [furthermore] contrary to both the economic history literature and the economic growth literature -old and new - the primary source of economic growth is the institutional/ organizational structure of a political economy and until we focus on that subject we shall not advance knowledge on economic growth.

Modelski's Chapter 2, along with this chapter, thus establishes Part I of this book. This chapter provides a structural identification of "the human ecology" along with the scope of economics topics and interdisciplinary methodologies to be allowed, and Chapter 2 elaborates various dynamic and evolutionary perspectives that "give life" to this human ecology economics structure.

Chapters 3 and 4 comprise Part II of this book, which applies the human ecology economics framework to a more in-depth understanding of the global economic system and the factors that are currently influencing growth and development within that system.

Chapter 3 by Donald Snyder uses the human ecology framework to identify and critique belief systems within the economics literature surrounding the controversial and important topic of recent "globalization." Through this literature, one can identify whatever common understanding of the global human ecology is currently available, including an understanding of what might be needed to sustain the system. Identifying these competing beliefs, and reconciling and verifying them where possible, constitutes a response to H.G. Wells' challenge and to the challenge of this book.

Snyder's thesis is that disagreements about globalization processes are primarily due to differences in belief systems and social agreements (Basic structural components of the human ecology economics framework of Figure 1.1 are italicized here for emphasis).

Specifically, the physical environment and resources factors (natural resources, transportation, communications) and human population factors (migration, spatial distribution) that are relevant to globalization have been widely discussed elsewhere. Though vastly important, they do not play much of a causal role in disagreements about globalization, so Snyder's chapter treats them as given and focuses on belief systems and social agreements.

Different observers, each viewing globalization through the lens of his or her own belief system, see different "globalization realities." Evidence which is persuasive to one group is deemed irrelevant by another. Concepts crucial to one organization's world view (fairness, for example) play a secondary role in the world view of others. These belief-system differences affect opinions about globalization-related social agreements, and thus about the institutions and organizations of globalization (e.g. the proper role of the IMF).

In Chapter 3 Snyder describes the belief systems of those who are for and against globalization. It starts with Kanbur's (2001) rough distinction between "finance ministry" types and "civil society" types, from which a more detailed set of groupings is developed. Globalization manifests itself in a multitude of ways. The chapter focuses on two areas where the disagreements have been intense: the relationship between openness and growth; and linkages from globalization to poverty and inequality. The chapter concludes with an assessment of reasons for differences in views, and prospects for greater agreement in the future.

Chapter 4, by Ravi Bhandari, examines in greater detail several of the "strange priors" mentioned by Donald Snyder that have to do with economic development in less developed countries. What is generally examined by Bhan-dari is the current call for land reform in many developing countries, and what is specifically examined is the use of land reform as a key intervention for sustainable agricultural systems in Nepal. The author argues that present problems in Nepal are a result of external needs and their alliances in Kathmandu, rather than the factual conditions on the ground.

Chapter 4 draws upon Bhandari's experience as a World Bank consultant in Nepal and employs the human ecology framework to uncover the curiously persistent and unanimous support for various kinds of land reform by both the far right and left. On the right, market-assisted land reforms are led chiefly by the World Bank, policymakers, and government officials, and a plethora of NGOs; and on the left, radical land reforms are led by the state and supported by civil society groups such as members of the "People's War" in Nepal today. These are curiously persistent positions given that nearly all land reforms throughout the entire Third World (with the notable exception of East Asia) have failed miserably. In fact, the welfare of the very same people the reforms were designed to protect (namely, the poor tenant-cum-borrower) have more often than not declined. An assessment of past land reforms confirms this view. A history of sustained regressive ecological distribution, in which the economic policies of the monarchy and Government of Nepal overwhelmingly favored the feudal aristocracy and political elite at the expense of the poor, are shown to have contributed to ecologically unsustainable practices also disproportionately affecting the latter.

In particular, a human ecology approach challenges the established belief system in economics where formal titled ownership of land, no matter how small is assumed to be generally more efficient than the diverse "pre-capitalist" social arrangements and contractual agreements that prevail in developing country agriculture. At the core of this dominant belief system is the long-term pursuit of individual property rights, small proprietorship as a goal, a depoliticization of the rural population where political actors are equated with economic ones, and where potential sources of conflict and inequality are best approached through market mechanisms and minimal state intervention.

Moreover, a human ecology perspective towards land reform, as applied to the case study of present Nepal whose future hangs in the balance, weakens the case for all types of land reform considerably. Unlike competing belief systems in the current global debates on land reform and tenure security that suffer from key 'omitted variables,' all four quadrants of Figure 1.1 are explicitly taken into consideration including:

1 an adverse macroeconomic environment that induces increasing economic inequality, political instability and conflict;

2 how rural markets actually work with respect to existing social arrangements;

3 economic deprivation and related grievances of the poor; and

4 the pressure of modern forms of property rights on the natural, physical, and social environment.

This chapter suggests, based on the experience of Nepal, that the highly unequal and unegalitarian land distribution may be the result of these structural conditions rather than a cause. In parallel with Snyder's chapter on the debates on globalization, a human ecology of land reform is a telling example of how strong "politically correct" beliefs from each opposing side are ideologically based, and as such, can lead to dangerous policy conclusions.

Part III of this book moves the analysis from the more tangible and physical growth and development processes discussed in Part II to the more intangible and symbolic financial processes of the global system. In this regard, belief systems are found to be especially important determinants of financial outcomes. For example, financial crises can occur if the belief system of debtors and creditors is not compatible with the ability of the human population working with the physical environment and resources to produce wealth. Invisible belief systems have supported a money economy based on the transcendental "law of compound interest" and an easing of lending restrictions. The acceptance and growth of "offshore finance" is an example of how belief systems - in this case freemarket capitalist ideology - drive changes in institutions, social agreements, and ultimately, physical environments and resources. Offshore market institutions, such as the Bangkok International Banking Facility, encouraged unsustainable over-lending, excessive unprofitable construction of real estate, etc., and ultimately contributed to the risk of crisis, recession and misery throughout Asia in 1997. "The logic of global finance," with its interest-rate-parities and other formal and informal rules, can be thought of largely as an "institution" as per North's definition above. And, this institution, for much of the world economy, now seems to serve as a global controller. In the language of human ecology discussed above, human populations, their belief systems, their social agreements, and their relationship with the physical environment and resources are increasingly impacted by, and are conforming to or reacting against the logic of global finance.

These issues are addressed in Chapter 5. The author suggests that the new global economy, especially its financial side, has evolved over time to become the "infrastructure of the infrastructure" - largely as a result of advances in information-processing technology, other innovations, and changing social agreements and belief systems such as government deregulation based upon free-market capitalist ideology. In his 1944 book, The Great Transformation, Karl Polanyi argued that during the industrial revolution "self-regulating market economy" became dominant over most other social systems and even constrained what nation-states could do - the late nineteenth century, often called a period of "British hegemony," was actually a period of transnational market hegemony which was only centered in London. Chapter 5 argues that a new great transformation is now occurring within self-regulating transnational market economy: global financial markets are now becoming more autonomous and controlling than non-financial markets.

The human ecology approach, with its emphasis on belief systems and institutions, can be used to reinterpret economic history as well as current trends. Many of the financial processes identified in Chapter 5 to explain recent U.S. prosperity are used by Guillaume Daudin in Chapter 6 to explain early European history. Chapter 6 elaborates the importance of financial processes in the ancien régime of France during the early industrial revolution period, and it provides insights into these "great transformations." Then, as now, the ability of the human population working with the physical environment and resources to produce wealth can be significantly affected by social agreements regarding the use of money and by financial institutions. In particular, both the ancien régime of the eighteenth century, and the U.S. in recent decades benefited from the inflow of foreign monetary wealth, which was used to expand domestic money, credit, economic growth, and wealth. This process allowed economic activity to be better coordinated and more efficient on a large scale, and it encouraged more intensive production and consumption activities.

Compared to typical literature, the human ecology approach to economics might allow for better modeling of both the successful ancien régime and recent U.S. prosperity. Typical literature has been puzzled by these two epochs, because it looks for the source of new economic growth more narrowly in technology, physical resources, and inherent labor productivity while assuming incorrectly that the impact of money, changing institutions, and international political power is fairly neutral. This new framework of Allen and Daudin is supported by other researchers including Clark (1998), whose work indicates that the Industrial Revolution was more of an "industrious revolution" resulting from new workforce participation and coordination, rather than a breakthrough in technology and inherent skills of the average worker as per the emphasis of common economics literature.

England, like France, supported its economic growth in the early industrial revolution period with massive amounts of imports and appropriation of wealth from its empire. The "Malthusian Trap" of overpopulation and poverty was avoided, and human populations grew fast, as aided by new political-economic institutions and organizations, and by belief systems regarding work and exploitation of the physical environment and resources. Enhanced money transaction systems brought, especially, under-utilized rural labor into the formal economy in Britain as well as France. Exploitation of coal, and thus railroads, steam engines, and other changes in the physical environment and resources all co-evolved with these other structural conditions in the human ecology.

In the human ecology approach used by Daudin and Allen to arrive at these conclusions, as in any natural science ecology approach, intraspecies negotiations and transactions are exploratory, adaptive, often individualized, and the outcomes are not known to all members of the species. This belief system has different consequences than the belief system of neoclassical economics in which transactions costs (a catch-all category for a variety of intraspecies activities) are assumed to be either trivial or not worth exploring except as a general constraint on the otherwise superior "efficiency" of markets. For example, if full information, to all, on intraspecies transactions, is not available, as per the human ecology approach, the evolution of prices is not as straightforward, because prices cannot be changed by spontaneous unanimous social agreement. Thus, as Daudin and Allen find, money is not simply a veil on the real economies, but can actually play a major role, in the eighteenth century as well as nowadays, in determining the comparative and absolute prosperity of nations. Money, as an invisible element of the human ecology or "social agreement," as well as related notions of "capital," within a complicated process of intraspecies negotiation and transaction, are shown to be system drivers.

An important component of this process Allen calls, in Chapter 5, "money-mercantilism."

Historically, "mercantilism" is the use of restrictive trade policies and colonial empires, especially by the European ancien régime of the seventeenth and eighteenth centuries, in order to accumulate monetary wealth such as gold and silver. The institutional advantage used by powerful European states to appropriate unequal gains from international commerce was recognized by the German Historical School in the nineteenth century as an important determinant of "the wealth of nations" - perhaps a more important determinant than the decentralized "invisible hand" interactions and efficiencies of supply and demand which Adam Smith described in An Inquiry into the Nature and Causes of the Wealth of Nations. What Allen adds to the historical mercantilist perspective, in order to make it "money-mercantilism," is the notion that extraction of money-wealth from other regions, through institutional advantage, does not require trade in merchandise and services, but instead it only requires dominance in financial affairs. Elaboration of these issues provides new insights into the historic free-trade versus mercantilism/nationalism debate.

Through the issues raised by Part I, II, and III of this book, the human ecology approach might thus shed light on economic growth, development, financial stability and wealth debates. While these issues are not new, a framework such as Figure 1.1 might at least help clarify the debates and increase the coherence of various models. One well-known model that has been around for decades is the effort by Herman Daly and others to describe a "steady-state" economy as an antithesis to the "growth economy." By "steady state" Daly means that "two basic physical magnitudes are to be held constant: the population of human bodies and population of artifacts (stock of physical wealth)" (Daly, 1991, p. 16). In the framework of Figure 1.1, the lower two quadrants - human populations and physical environments and resources - would have stationary magnitudes (although their composition would change). Daly and others then proceed to identify coherent belief systems and social agreements, and hence organizations and institutions, which would be compatible with a steady state.

A "steady state" economy or ecology is an older notion that is increasingly replaced by notions of a "sustainable" economy or ecology. Part IV of this book - Chapters 7, 8, and 9 - applies the human ecology framework to, as per the H.G. Wells challenge, "coming challenges to humankind." Most of these challenges have to do with challenges to the "sustainability" of what we know and value.

Chapter 7 by Asbjorn Moseidjord helps define notions of sustainability while at the same time contrasting "sustainability analysis" with the "cost-benefit analysis" typically applied by economists. Moseidjord applies both frameworks to one of the most important (depending on your belief system) sustainability issue and global concern of our generation: climate change.

Sustainable development is currently defined by the Intergovernmental Panel on Climate Change in the same way that it was defined earlier by The World Commission on Environment and Development (1987) as: "Development that meets the needs of the present without compromising the ability of future generations to meet their own needs." As elaborated by Moseidjord in Chapter 7, this popular and general notion of sustainability integrates "three sets of values: economic well-being, social justice, and environmental quality in a limitless time perspective." To make this notion of sustainability useful, contributing authors agree that it needs to be broken down more carefully in the four quadrant diagram of Figure 1.1 - an exercise that also requires identification of the "belief system" used to define these vague concepts of well-being, justice, and quality. In other words, which structural elements within the four quadrant diagram of Figure 1.1 are being "sustained" and which are allowed (or required) to change, so that an ecology is defined as "sustainable?" Furthermore, not only structural but also dynamic cause-effect linkages between the three core values need to be identified. Some may argue that there are trade-offs between the core values; others that environmental quality is just a means to realizing the other two values. In particular situations, controversies may arise over the criteria to judge the degree to which the values are realized.

In terms of climate change, as discussed by Moseidjord, the U.N. has begun to clarify its position on what needs to be held constant or sustained: partly in response to the IPCC's findings since its establishment in 1988, the U.N. entered into the United Nations Framework Convention on Climate Change (1992) with the essential objective being "... stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system." Given this starting point, and a new consensus that potentially dangerous (however defined) global warming as caused by humans is happening, Moseidjord turns his attention to mitigation policy and the role of economics and other frameworks in identifying solutions. His general conclusion is that global warming results from a specific failure of human institutions and its solution requires appropriate institutional change. Within certain limits (in order to maintain its integrity) economics can help with peaceful and cost-effective ways to accomplish that institutional change in response to climate change and other global concerns.

And how does appropriate institutional change happen in response to global concerns? As quoted above from Douglass North, "it is the belief systems of societies and the way they evolve that is the underlying determinant of institutions and their evolution..." Chapters 8 and 9 by Cassella and Allen, respectively, delve further into the belief system roots of personal, cultural, and institutional change. The notion of "belief system" is expanded to encompass personality traits, social behaviors, physical energies, etc. - all of which might need to change or evolve in response to the global sustainability concerns raised by this book.

A list of major interrelated global sustainability concerns is discussed by Cassella in Chapter 8, and it includes climate change catastrophes, abject poverty, starvation, scarcity of energy, food, water, shelter, pandemics, use of weapons of mass destruction, loss of the support of communication and other infrastructures, social strife and violence, failure of global institutions, financial crises, and governance crises.

In order to better identify the risk of these global concerns over the next fifty years, in Chapter 8 Antonio Casella provides two hypothetical long-term scenarios (actually "drifts") that constitute a challenging paradox: the history-based "Siege of Troy" (in which the gap between the wealthy and the poor becomes socially intolerable) and the imaginary "Chimera" (in which that gap is decreased). Both drifts prove to be untenable. However, considering them is useful in a quest for global sustainability within the framework of the dilemmas posed by population growth, intolerable poverty, reduced biodiversity, imperiled quality of the atmosphere, potential food restrictions, and increased competition for space-energy resources.

Although no definitive solutions for overcoming these dilemmas are presented, the issues discussed by Casella point to an urgent need to "re-imagine" methods of planning that link respect for tradition with new, inter-subjective educational schemata that might reconcile human social growth with the global environment at large. Ultimately then, examination of our belief systems, and resulting social agreements, and modification of our "invisible conditions" might be the only way that human populations can sustain themselves with limited physical environments and resources. Maybe new, more environmentally sound ways to achieve psychic wants, perhaps allowed by new, low-fuel-using communications technologies, is a way out of the Malthusian dilemma. The emphasis within human ecology economics, on the systematic understanding of the role of belief systems and other intra-species relations, might then prove to be propitious indeed.

Drawing upon his research on the social limitations of autistic individuals, as well as other understandings of creativity and social change, Cassella explores ways that the human ecology might avoid less sustainable "ways of being" in the like of self-importance, hatred, fear, greed, and ambition, in favor of more sustainable ways of being that nurture the human ecology toward understanding, seeking and displaying altruism, humility, motherly love, serenity, sobriety, responsibility, etc.

In various authors' views, less tangible beliefs and ways of being change along with, and mutually impact, the more tangible conditions - productive resources, human populations, commodities, etc. Thus, to exclude the less tangible conditions results in what economists call "missing variable problems," and what others might call incoherence, confusion, misunderstanding, or narrow-mindedness. For example, if economic analysts or decision-makers are operating under different hidden ideologies, or if they are not aware of the "deep mythic structures" that drive them, then shared understanding and effective problem solving are difficult. In this situation people often do not know when they agree with each other, or when it is necessary to "agree to disagree."

In Chapter 9, the author struggles further with questions such as these, and broadens ethical frameworks to include "ideologies, mythologies, and ways of being in the economic system." From the four basic components of the human ecology proposed in this chapter - belief systems, social agreements, human populations, and physical environments and resources - the author constructs "ways of being" as "bundles of faiths, beliefs, social behaviors, personality traits, and physical energies." Six specific examples (many more can be posited) of ways of being are discussed which the author believes to be "at play" in the economic system.

Economic decision-makers, policymakers, business groups, environment or social movements etc., might all be, at certain times, "in the grip" of one or more of these ways of being. The advantage of "holding at arms length" and contemplating these ways of being is that one might then be in a better position to "chose" a way of being, or at least be aware of its consequences. Also, the author demonstrates that economic history, including developments in capitalism, socialism, technology, environmentalism, etc., can be better understood when the "deep mythic structures" underlying these developments are exposed and discussed.

In the author's view, at the root of many economic problems, in addition to misunderstood, ignored, or dysfunctional "invisible conditions" - belief systems, ethical frameworks, ways of being, social agreements, etc. - there is also misunderstanding of complex feedback processes between the visible conditions - human populations and physical environments and resources. In many cases, perhaps misunderstanding of the feedback processes between the visible conditions is due to ignorance of an intermediary role played by invisible conditions. In the human ecology approach, allowing for the possibility that each of the structural conditions in the four quadrants of Figure 1.1 might be dependent on the others, in complex ways, might result in better descriptions, modeling, and predictions of a variety of economic processes.

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