As we can see from the production function in Fig. 3.1, non-production-related
environmental benefits or waste impacts on nature do not figure in mainstream
thought unless producers need to pay a price for them. This way it is only viewed as
a fictitious commodity, an input factor whose price producers will try to lower in
order to stay competitive. The best mechanism to counter this trend and govern
scarce resources is to ‘get the prices right’ so that markets avoid exhausting
resources. With increasing scarcity, they become more expensive and therefore
unattractive for continued use, hence an alternative will be found. Nature is thus not
viewed as a web of life but as a heap of resources whose chunks have different
exchange values (prices), depending on their scarcity. Degradation does not matter
as long as alternative resources or technologies can fill the spot in production
chains.
The solution to this problem requires more than merely grouping input factors
into social, human, manufactured, and natural capital. As long as the models freely
exchange one type of capital for another in doing the math on successful development, we see nothing of the real world changes underneath. On the input side the
models track flows of single chunks of nature (e.g., cubic meters of wood) but are
blind to the laws of their reproduction, which would help identify how, or which,
important resources are renewed at what rate (how quickly does a forest grow and
which soils are necessary for that?) and which stocks are indeed limited and
therefore need careful exploitation if long-term use is necessary. Regarding the
output side, superficial exchange value (market prices) says nothing about the actual
use values (need satisfiers) that were generated. Growing output in the financial
sector, for example, counts as positive growth in GDP standards even if it results
from speculative gains on staple food commodities that make the prices of these
prohibitively high for hungry people. From this point of view there is nothing
beyond the economic sphere and everything within it can be converted into
everything else—and nothing really gets lost. Everything is either capital as
expressed in market prices or invisible.
This is why economists like Daly have argued for the introduction of
non-monetized benchmarks, warning of “uneconomic growth” in which monetized
indicators like GDP still show growth even though the use value (utility) created for
humans becomes negative and/or natural capital stocks are destroyed beyond
recovery rate. The following sections will pick up on these aspects by zooming in
on each of the key concepts captured in Table 3.1 that refer to governing nature.
3.2.1 What Types of Capital Exist and Where Do They
Come from?
As in Sect. 3.1, I would like to start this discussion by presenting the typical
mainstream economic model that students are shown when studying macroeconomic dynamics. Figures 3.1 and 3.2 highlight the blind spots when thinking about
3.2 How Mainstream Economics Views Nature and Its Governance
81
environmental benefits or waste impacts on nature do not figure in mainstream
thought unless producers need to pay a price for them. This way it is only viewed as
a fictitious commodity, an input factor whose price producers will try to lower in
order to stay competitive. The best mechanism to counter this trend and govern
scarce resources is to ‘get the prices right’ so that markets avoid exhausting
resources. With increasing scarcity, they become more expensive and therefore
unattractive for continued use, hence an alternative will be found. Nature is thus not
viewed as a web of life but as a heap of resources whose chunks have different
exchange values (prices), depending on their scarcity. Degradation does not matter
as long as alternative resources or technologies can fill the spot in production
chains.
The solution to this problem requires more than merely grouping input factors
into social, human, manufactured, and natural capital. As long as the models freely
exchange one type of capital for another in doing the math on successful development, we see nothing of the real world changes underneath. On the input side the
models track flows of single chunks of nature (e.g., cubic meters of wood) but are
blind to the laws of their reproduction, which would help identify how, or which,
important resources are renewed at what rate (how quickly does a forest grow and
which soils are necessary for that?) and which stocks are indeed limited and
therefore need careful exploitation if long-term use is necessary. Regarding the
output side, superficial exchange value (market prices) says nothing about the actual
use values (need satisfiers) that were generated. Growing output in the financial
sector, for example, counts as positive growth in GDP standards even if it results
from speculative gains on staple food commodities that make the prices of these
prohibitively high for hungry people. From this point of view there is nothing
beyond the economic sphere and everything within it can be converted into
everything else—and nothing really gets lost. Everything is either capital as
expressed in market prices or invisible.
This is why economists like Daly have argued for the introduction of
non-monetized benchmarks, warning of “uneconomic growth” in which monetized
indicators like GDP still show growth even though the use value (utility) created for
humans becomes negative and/or natural capital stocks are destroyed beyond
recovery rate. The following sections will pick up on these aspects by zooming in
on each of the key concepts captured in Table 3.1 that refer to governing nature.
3.2.1 What Types of Capital Exist and Where Do They
Come from?
As in Sect. 3.1, I would like to start this discussion by presenting the typical
mainstream economic model that students are shown when studying macroeconomic dynamics. Figures 3.1 and 3.2 highlight the blind spots when thinking about
3.2 How Mainstream Economics Views Nature and Its Governance
81