Understanding Sustainability Economics

1.       What makes neoclassical economics attractive? What are its strengths based on?

First issue to be discussed: Is it at all important to discuss alternative economic theories? Why not use a more direct approach to present environmental and other problems followed by proposals for action?

Sustainability issues can no doubt be approached in many ways but I am eager to point to approaches that for different reasons are too often avoided by more or less influential actors. I think that we need to challenge the mental maps of actors in different categories, be they business leaders, university professors, politicians, representatives of Civil Society Organizations or others.

There is probably more than one way of describing or understanding such mental maps but I suggest that perspectives of three kinds are important: theory of science (including views of relationships between science and politics), paradigm (conceptual framework and theories) in economics and ideology (in a broad sense).

No actor category can be expected to be completely homogenous with respect to mental maps (implying that there are relevant differences to be investigated) but as I understand it, there is dominance for positivism as a theory of science, dominance of neoclassical economics as paradigm and of neo-liberalism as ideology. There are signs that competing perspectives are gaining ground these days but we still face a situation of dominance for the mentioned perspectives. For many actors, positivism, neoclassical economics and neo-liberalism are attractive perspectives, each by itself and in combination. These dominant perspectives support and contribute to make a large part of existing institutions legitimate.

My first answer to the question about the attractiveness of neoclassical economics is to point to the historical background. We have been locked into a situation in a step by step fashion through scientific and political propaganda, education, private and public dialogue. Positivism with its simplistic ideas of science has been dominant in natural science for a long time and also had an important role in social sciences. The idea of the scientist as an outside observer objectively testing hypotheses about various phenomena is simple as is the idea that science can somehow be separated from politics. But in cases where science deals directly with political issues, such simplistic ideas of a clear separation become increasingly strained. Other ideas of good science, where the subjectivity and ideological orientation of various actors are considered are very much needed.

Neoclassical economic theory is based on positivism as the only theory of science and is thereby limited in scope. The emphasis on markets (at the expense of other institutional forms), on egoism or narrow objectives (at the expense of broader ethical considerations) and on prices and the monetary dimensions (rather than various non-monetary dimensions) are additional features of a simplistic analysis.

Neo-liberal ideology as a kind of market fundamentalism is made legitimate by neoclassical economic theory and further strengthens it. Actually, the dominance of certain perspectives is not just a matter of how simple an approach is when compared with another but also the result of a power game where transnational corporations and politicians play important roles.

I am not convinced that neoclassical theory is attractive in so many actor groups. If it is dominant, it is more the result of inertia and path dependence. The present paradigm and ideology can easily be protected compared to the efforts needed to strengthen pluralism and develop new perspectives.

2.       Challenges, roles and limits (?) of an economic science that wants to help realize sustainability

There is a popular belief (encouraged often by scientists) that science (economics included) will automatically solve all kinds of problems in society. I do not agree with such a view. Science may solve some problems but often also creates new ones. The paths considered and chosen by scientists have therefore to be scrutinized.

With the Brundtland report ‘sustainable development’ became symbolic of new development paths in society. To face these challenges we obviously need an economics that deals with:

–          More inclusive forms of ethics than reference to self-interest

–          Various non-monetary dimensions in addition to the monetary ones

–          Power issues and institutional arrangements rather than assumes them away

The conceptual framework of neoclassical theory is not performing well in relation to the above demands. We need to bring in other social sciences and competing paradigms in economics as part of a pluralistic approach.

3.       Possibilities, impediments and opportunities of pluralism in economic science – in research and teaching- strategies for achieving it, in order to reinforce pro-sustainability economic policy

Each one of us participating in this RLF-workshop is guided by a specific engagement and ideological orientation. Sustainable Development is important and we do not believe that neoclassical economics is enough to deal with the challenges. We are looking for some other economics and involved in a kind of ‘paradigm advocacy’.

While we are strongly in favor of some other economics – in my case a kind of institutional economics – we know that each theoretical perspective is specific not only in scientific terms but also in ideological terms. While advocating a specific alternative paradigm we should however respect the meta-ideology of democracy which concerns society as a whole, science included. Paradigm co-existence, rather than paradigm-shift, becomes the natural state of affairs in a democratic society. Paradigms with their ideological features should somehow reflect the diversity of ideological orientations in society. While each one of us tends to believe more in one paradigm than another and wishes to work for a stronger role for that paradigm, we should not repeat the mistake of neoclassical economists and aim at a monopoly position and dictatorship.

4.       Conclusions for an alternative economic policy

One of the main conclusions is that all individuals as actors and all organizations as actors are policy makers. Attempts to influence economic policy in a broad sense are largely channeled through the government but institutional change is also the result of initiatives and action not controlled by the government. This is where reference to ‘governance’ is appropriate.

As I see it, it becomes urgent to make a list of all institutions – from the joint stock company to the World Trade Organization – that are based on and made legitimate by neoclassical economic theory. Institutional arrangements more in line with sustainability economics can then be outlined and made the subject of dialogue.

Similarly, it is possible to list a number of actors and actor categories, such as professional in business, actors in universities or connected with Civil Society Organizations and enter into a dialogue with them about possible strategies for sustainable development.

Influencing mental maps to become more in line with sustainability economics will hopefully facilitate moves towards a more sustainable society. What is needed is a new social movement in the scientific and ideological domain that connects with other contemporary social movements. University education, scientific research and dialogue play key roles as does public debate.

As I see it a lot ‘already’ happens and our workshop is an example of this. There are many new journals and books dealing with sustainability issues and there seem to be many actors in publishing companies looking for new thinking rather than repeating the mainstream messages. If we need examples I suggest that the International Journal of Pluralism and Economics Education and the Handbook of Pluralist Economics Education (both edited by Jack Reardon) can serve in that role.

Some final thoughts about pluralism; A paradigm is normally thought of as a theoretical perspective which is rather clear-cut and unambiguous, neoclassical economic theory as presented in textbooks being one example. But what I am aiming at is not a similarly clear-cut paradigm with only one idea of individuals, one idea of organizations, of markets, decision-making etc. that replaces neoclassical Economic Man, theory of the firm etc. What I wish to accomplish is a more open, complex and composite idea of economics where alternative and sometimes complementary ideas of the individual, the organization and the market are presented and considered[1]. We need a broad idea of economics where even some of the elements of neoclassical theory are among the options and sometimes can contribute (together with other theories and models) to our understanding. It is the exclusive reliance on neoclassical theory in economics education that has brought us to the present precarious situation.

I will stop now but there may be room for a final remark. Thinking in terms of paradigm-shift is largely connected with positivism and its search for the truth about various phenomena. Paradigm-shift implies that one paradigm replaces another as being closer to some (final?) truth. While respecting such truth claims our ambition for the social and policy relevant sciences is broader. We are bringing in subjective aspects, such as interpretations that are part of ideological orientations. This open-endedness in relation to a diversity of interpretations and ideological orientations is perhaps what makes us differ from neoclassical monists. Relevance and other ideas of good science will of course imply limits to these open-ended features of our sustainability economics.