Ikonoclast — Mathematics and the constructions and emergent outcomes of socioeconomic phenomena

Digging into systems. Not as wonkish as it may sound.

Real-World Economics Review Blog
Mathematics and the constructions and emergent outcomes of socioeconomic phenomena

Ikonoclast

Also at RWER

Ecological limits and hierarchical power
from Blair Fix, Shimshon Bichler and Jonathan Nitzan

Stephen Williams — How mainstream economics has led to clueless governments

More framing.

This is a really good article. Concise, precise, and clearly formulated so that anyone can understand it. Disseminate widely.

Here is the lede:

Governments of all stripes base their policies on mainstream economics. Powerful challenges to the mainstream, especially from ecological economics and modern monetary theory, explain why we are in a hole and can’t seem to get out.

If this article is largely correct, we can conclude that the economics profession is a major cause – directly or indirectly – of most modern evils.

In saying that, I draw heavily on the work of Australian academic economists Professor Robert Costanza, Associate Professor Philip Lawn, Professor Bill Mitchell and Dr Steven Hail.

Taken together, their work – in conjunction with colleagues overseas – claims that mainstream economics is fundamentally wrong left, right and centre — although I don’t mean to imply that these four scholars agree on every point.

Mitchell – a co-originator of modern monetary theory (MMT) – shows that we could have full employment quickly with a job guarantee, that federal budget deficits are normal and desirable, that the federal government never needs to borrow money, and that federal taxes do not fund anything.

The Federal Government should focus on non-inflationary full employment and not budget outcomes, because we can run deficits forever without borrowing.
In short, the Federal Government does not have the budget constraints of a household, business, or state government, because it can create unlimited money — but should spend prudently to avoid inflation and ecological overshoot....

Independent Australia
How mainstream economics has led to clueless governments

Stephen Williams

See also

For many, Brexit is a right-wing project because the principal authors are an extreme element of the British Tory Party. However an Australian academic will be putting forward a very different view at a public meeting in Galway.

Bill Mitchell is professor of economics at the University of Newcastle, New South Wales, Australia, a widely published author, and a notable proponent of Modern Monetary Theory. He is also the co-author, with Italian political theorist Thomas Fazi, of Reclaiming the State – A Progressive Vision of Sovereignty in a Post-Neoliberal World.
That book will form the basis of his talk in Galway, entitled Reclaiming the State, which takes place on Wednesday October 3 at 8pm in the Harbour Hotel. Prof Mitchell argues that progressives and the political Left should not regard Brexit - and the current problems of the EU and monetary union generally - as a cause for despair, but as an opportunity to embrace a progressive, liberating, vision of national independence, to reject the EU’s austerity straitjacket and to implement a democratic socialist platform, “which is impossible within the EU, let alone the euro-zone”.

In Reclaiming the State, Mitchell and Fazi dispute that national independence has become irrelevant in a globalised world. They contend that it is only by reclaiming the state from supranational institutions, such as the EU, that people can break away from the neo-liberal economic dogma of the privatisation of resources and public services, deregulation of finance, the reduction of workers’ rights in collective bargaining, cuts to social programmes, and the lowering of taxes on wealth and capital at the expense of the middle and working classes.

The event is organised by The Desmond Greaves School, and will be chaired by Terry McDonough, Professor Emeritus of Economics at NUI Galway.

Galway Advertiser
Public meeting to ask ‘Is Brexit is an opportunity for Ireland?’

David Orrell and Roman Chlupatý — What Role Should Money and Markets Play in a Good Society?

How can we redesign money— and our mind-set—for a mature economy or an ecological civilization?…

Perhaps the defining issue of our age is that the human economy has grown to a scale where it impacts the environment at every level: on land, in the oceans, and in the air. As Kenneth Boulding put it, we are transitioning from a cowboy economy, where the world is an open frontier, to a spaceman economy, where we are restrained by natural limits.

This transition, ecologist Eugene Odum argued, resembles that followed by ecosystems as they become established. At the early stages of an ecosystem’s development, available energy (whose ultimate source is the sun) is rapidly exploited by a few species in a sudden bloom of growth. As the ecosystem matures, the food chain switches from a linear chain—carnivores eating herbivores eating plants—to a more web-like, decentralized structure in which multiple species interact in increasingly complex ways. The waste of one organism is recycled as food for another, and resources such as nutrients and minerals are conserved. An example of a mature ecosystem is a tropical rain forest, where most of the nutrients are not in the ground but in the trees and the species that live in them. The land itself has little agricultural productivity, as farmers discover if they cut down the trees and try to grow soy or provide pasture for cattle.

Economies also develop in a similar manner. In a society of pioneers, wrote Odum, “high birth rates, rapid growth, high economic profits, and exploitation of accessible and unused resources are advantageous.” As the economy matures, the emphasis switches to “considerations of symbiosis (i.e., civil rights, law and order, education, and culture)” and the recycling of resources. However this transition is a work in progress: “Until recently mankind has more or less taken for granted the gas-exchange, water-purification, nutrient-cycling, and other protective functions of self-maintaining ecosystems, chiefly because neither his number nor his environmental manipulations have been great enough to affect regional and global balances. Now, of course, it is painfully evident that such balances are being affected, often detrimentally.” And matters have not improved in the ensuing half-century, as carbon dioxide emissions have climbed and the lifesupport abilities of the planet have continued to degrade. We have grown richer in monetary terms but the hidden charges are mounting up.…

Very much worth the read.

As the Harvard political philosopher Michael J. Sandel explains, “We have drifted from having market economies to becoming market societies. The difference is this: A market economy is a tool—a valuable and effective tool—for organizing productive activity. A market society, by contrast, is a place where almost everything is up for sale.” In this case: “What role should money and markets play in a good society?

Lots of info that raises more questions than the authors are able to answer, which they recognize, but these are the kinds of questions that we need to answer in a complex adaptive system subject to emergence.

Evonomics
What Role Should Money and Markets Play in a Good Society?
David Orrell and Roman Chlupatý

Why Economists Don’t Know How to Think About Growth — Eric Michael Johnson interviews Fritjof Capra

Quantitative versus qualitative, physics versus biology, market system versus welfare system, growth versus harmony and balance, and unsustainability versus sustainability.

Evonomics
Why Economists Don’t Know How to Think About Growth
Eric Michael Johnson interviews Fritjof Capra

Avaneesh Pandey — Land Degradation Could Create 50 Million Climate Refugees Within A Decade

Desertification -- climate change-triggered degradation of land ecosystems -- might, in a decade, create 50 million refugees, the Economics of Land Degradation (ELD), a global initiative led by 30 different research groups, warned in a new study published Tuesday. The study, backed by the United Nations, also found that $6.3 trillion to $10.6 trillion worth of resources -- equivalent to up to 17 percent of the world’s GDP -- were lost annually due to land degradation.

“Our lands are no longer able to keep up with the pressures placed on its limited resources. Increasing misuse and demands for its goods are resulting in rapidly intensifying desertification and land degradation globally -- an issue of growing importance for all people and at all scales,” the report, titled “The Value of Land,” said.

Water.

International Business Times
Land Degradation, Desertification Might Create 50 Million Climate Refugees Within A Decade
Avaneesh Pandey

Pope Francis — Laudato Si'

ENCYCLICAL LETTER

LAUDATO SI’

OF THE HOLY FATHER

FRANCIS

ON CARE FOR OUR COMMON HOME

“The 21st century, while maintaining systems of governance inherited from the past, is witnessing a weakening of the power of nation states, chiefly because the economic and financial sectors, being transnational, tend to prevail over the political.” (p. 128)

ht/ Bill Moyers & Co.

Greg Hannsgen — An Ecological Future for SFC Macroeconomics?

SFC (stock-flow-consistent) economics is about watertight accounting: each model strictly accounts for all financial stocks and flows, making sure, for example, that when a change in someone’s income is assumed, all corresponding changes to other incomes and balance sheet items and their behavioral effects are taken into account. Along the same lines are the laws of physics, as ecological economists have emphasized—though seemingly with little regard for the all-important world of finance, government deficits, MMT, etc. This subfield has represented another group of dissenters in academic economics and the policy world since the 1970s or so. Some early ecological dissenters rejected academic economics altogether, with anti-economist Hazel Henderson, for example, devoting a chapter of one work to a critique of the Post-Keynesian school, which she found far too narrowly focused on economic growth and the distribution of wealth.

It is fortunate then that among the papers presented at the Post Keynesian Study Group (PKSG) workshop in the U.K. last month were two that attempted to meld Post-Keynesian economics with ecological economics. In particular, the paper by Yannis Dafermos, Giorgos Galanis, and Maria Nikolaidi echoed themes in SFC modeling, bringing back to mind the map in this news article on land subsidence in California (accompanying image above) which had appeared in the New York Times last weekend and seemed to be a good illustration of Dafermos’s theme.....

Multiplier Effect
An Ecological Future for SFC Macroeconomics?
Greg Hannsgen | Research Scholar, Levy Institute

Merijn Knibbe — An ecomodernist manifesto

Meaningful climate mitigation is fundamentally a technological challenge. By this we mean that even dramatic limits to per capita global consumption would be insufficient to achieve significant climate mitigation. Absent profound technological change there is no credible path to meaningful climate mitigation.

While we reject the planning fallacy of the 1950s, we continue to embrace a strong public role in addressing environmental problems and accelerating technological innovation, including research to develop better technologies, subsidies, and other measures to help bring them to market, and regulations to mitigate environmental hazards. And international collaboration on technological innovation and technology transfer is essential in the areas of agriculture and energy.

Real-World Economics Review Blog
An ecomodernist manifesto
Merijn Knibbe

Robert Hunker — Eco Economics Takes on Neoliberalism

Ever since Milton Friedman, American economist (1912-2006), who considered himself the heir to Adam Smith, used the term neoliberalism in an essay “Neoliberalism and its Prospects” in 1951, the world has tilted in that direction, starting with Chile as the “Chicago Boys” lab experiment under the watchful eye of the infamous dictator General Augusto José Ramón Pinochet Ugarte, president from 1974-90. The world has never been the same.

Today, neoliberalism reigns supreme across the oceans, whereby control of economic principles shifts from the public sector to the private sector with limited governmental interference, the less the better, open markets, free trade for all and deregulation piled upon deregulation as well as austerity for the masses (look at Greece and Spain for major pushback movements, happening today).

With neoliberalism, the market pretty much determines everything. When looked at from another angle, the world becomes a gigantic commoditized sphere spinning around the solar system, as markets set prices for everything, except for the biosphere, a very big “except for,” indeed.

Does it make sense to set prices for everything, except for the biosphere? Since everything, from wheat to space travel, is market-driven, why not the atmosphere, why not oceans, why not soil? Why leave the biosphere out of the realm of the market?

After all, since survival of the fittest is as old as nature, and since neoliberalism, in practice, dictates ‘survival of the fittest economics’ it mirrors nature’s behavior, although, as it happens in real life, neoliberalism is bottom-feeder economics whereby the rich accumulate more and more and more at the expense of lower and lower and lower wages, less benefits, and crushed self-esteem. What could be worse?

There is a better way, a sharper focus found within eco economics, which ties the whole picture together, the externalities outside of markets as well as everything inside markets, thus, integrating important externalities into the market system, e.g., biophysical limits….

On natural capitalism.

Natural capital is defined by Sir John Richard Hicks, British economist, 1904-1989, Hicksian natural capital, bringing forth Hicksian natural income, which is the level of consumption that can be sustained from one period to another period without reducing natural wealth, which is key to successful eco economics. [Yes, that John Hicks]

Humanity's "natural capital" is the environment as a commons. Neoliberalism draws on natural capital inefficiently through externalities that distort true cost and, therefore, the vaunted price mechanism of the market, to make life poorer for all not only by privatizing gains and socializing losses but also through ecological degradation the actual cost of which is diminished quality of life. while this cost can be estimated monetarily though factors like health costs, life is priceless and cannot be valued monetarily.

The solution lies in converting from an ownership society and economy to a stewardship society and economy.

Far from preventing "the tragedy of the commons" as Garrett Harkin theorized, privatization is leading to not only a tragedy of the commons as the ecological system but also a catastrophe for humanity as its life-support system collapses.

Counterpunch
Eco Economics Takes on Neoliberalism

Robert Hunziker

Also

“Libertarians” For Ethnic Cleansing

Kevin Carson

[Walter Block] starts out by defending gentrification as a simple manifestation of autonomous market preferences, of course. The gentrifier does, he admits, drive existing residents — sometimes third or fourth-generation residents — out of their homes. They are forced to retreat to “less preferred real estate. We know this since if they liked their new domiciles more than their previous ones, they would have already moved there, without any pressure being placed on the market by the new gentry.” And the homes they’re driven from “are part of neighborhoods, communities, associations. They have a history there. Their children are wrenched away from their friends.” 

But, says Block, so what? Gentrifiers do all these awful things entirely by trying to rent or purchase real estate in a neighborhood, “thus bidding up rents and sales prices higher than would otherwise exist.” 

Is this unfair? he asks. “Certainly not. Assume that the rich came by their wealth in an honest way, not through government grants of special privileges, subsidies, bail-outs, a la crony capitalism, but via laissez faire capitalism.” Having thus assumed away the entire real world of privilege enjoyed by actually existing rich people, and the fact that local governments are nothing but showcase properties of the local real estate interests, Block goes on to argue that anything short of inequality and merciless gentrification would be grossly unfair to the rich, because they “have contributed more to everyone else than the poor.”

"Just deserts."

J. Barkley Rosser — On The Origin of Ecological Economics

There are two questions here to be answered, one of which has a new answer. The first is the origin of tbhe concepts that make up modern ecological economics. The second, which has a new answer, is who first neologized the label:"ecological economics"?

Econospeak
On The Origin of Ecological Economics

J. Barkley Rosser | Professor of Economics, James Madison University

Oleg Komlik — Ulrich Beck has died. His powerful concept of ‘Risk society’ is relevant as never was before

His 1986 book Risk Society: Towards a New Modernity is a scholarly (and political) bestseller which was translated into 35 languages, with about 24,000 academic citations. While firm in criticising those who claim Western societies are “postmodern”, Beck also offers an immanent critique of modernity’s failed promises. Due to its own successes, modern society now faces failure: while in the past experiments were conducted in a lab, now the whole world is a test bed. Whether nuclear plants, genetically modified organisms, nanotechnology – if any of these experiments went wrong, the consequences would have a global impact and would be irreversible.… 

Risk society is ‘an inescapable structural condition of advanced industrialization”. Modern society has become a risk society in the sense that it is increasingly occupied with debating, preventing and managing risks that it itself has produced. The changing nature of society’s relation to production and distribution is related to the environmental impact as a totalizing, globalizing economy based on scientific and technical knowledge becomes more central to social organization and social conflict. Whereas in earlier class-based societies only the proletariat was victimized, in the emerging worldwide risk society all groups – even the rich – are threatened.… 

“After all, the ecological issue, considered politically and sociologically, focuses at heart on a systematic, legalized violation of fundamental civil rights – the citizen’s right to life and freedom from bodily harm… In the ecological crisis we are dealing with a breach of fundamental rights that is cushioned and disguised during prosperity but that has socially destabilizing long-term effects that can scarcely be overestimated.” (quoted from: Beck, Ulrich. 1995. Ecological Enlightenment: Essays on the Politics of the Risk Society. Humanities Press. P. 8)

Economic Sociology and Political Economy
Ulrich Beck has died. His powerful concept of ‘Risk society’ is relevant as never was before
Oleg Komlik

Robert Costanza — What Is Ecological Economics?

Robert Costanza is one of the founders of a trans-disciplinary effort to understand how economics is embedded in the broader ecosystem that supports all human activity. From this perspective, he sees both limits for economic growth and opportunities to improve long-term human well- being.

Yale School of Management — Yale Insights

What Is Ecological Economics?

Robert Costanza | Professor of Public Policy at the Crawford School of Public Policyat The Australian National University.

Larry Elliott — Saving the planet from short-term thinking will take ‘man on the moon’ commitment

Instead of dealing with the global challenges emerging from increasing complexity, the argument is over "affordability" in a fiat system and pursuing maximum utility as individuals and nations. Myopic in the extreme.

Pascal Lamy had a stab at tackling some of these difficult issues last week when he presented the findings of the Oxford Martin Commission for Future Generations, which the former World Trade Organisation chief has been chairing for the past year.

The commission’s report, Now for the Long Term, looks at some of so-called megatrends that will shape the world in the decades to come, and lists the challenges under five headings: society; resources; health; geopolitics and governance.

Change will be difficult, the study suggests, because problems are complex, institutions are inadequate, faith in politicians is low, and short-termism is well-entrenched....

Lamy expressed concern that the ability to address challenges is being undermined by the absence of a “collective vision for society”. The purpose of the report, he said, was to build “a chain from knowledge to awareness to mobilising political energy to action”. 

The Raw Story
Saving the planet from short-term thinking will take ‘man on the moon’ commitment
Larry Elliott, The Guardian

Tara Lohan — The Coming Crash: Our Addiction to Endless Growth on a Finite Planet

Tara Lohan: How did this book project come about? I know it started out as a book about tar sands, but then it evolved into so much more.

Richard Heinberg: The economy is all about energy. Almost all of our environmental issues relate to energy in one way or another. Certainly, climate change does. War and peace, it's all about energy. Upping the energy literacy of the American people and thought leaders is a pretty high priority....

...over the course of the next few years, we're going to be making absolutely critical decisions about our energy future, our environmental future and our economic future. Unless we have these basic elements of energy literacy, unless more of us understand the criteria by which to evaluate these different sources of energy, we're going to get a lot of things wrong. We think energy literacy is really important. 

AlterNet
The Coming Crash: Our Addiction to Endless Growth on a Finite Planet [With Photo Slideshow]
Tara Lohan

Tom Zeller — National Climate Assessment Details Stronger Evidence Of Global Warming And Its Impacts

A federal committee has published a draft of the nation's third climate assessment report, a comprehensive analysis of the latest and best peer-reviewed science on the extent and impacts of global warming on the United States.

None of the body's findings are entirely new, but the report suggests that evidence is now stronger and clearer than ever that the climate is rapidly changing -- primarily as a result of human activities, including the copious burning of fossil fuels. Observed weather extremes are on the rise, and the possible connection between at least some of these events and human-induced climate change is also more strongly supported by the science.

The nation can expect increased impacts on everything from crops to fresh water supplies, and better and broader national plans for adaptation are needed, the assessment noted.
The draft report, which was prepared by the so-called National Climate Assessment Development Advisory Committee and written and amassed by a group of 240 scientists, will be subject to a three-month period of review and public comment.
"Climate change presents a major challenge for society," the committee's leadership said in a letter addressed to the American people. "This report and the sustained assessment process that is being developed represent steps forward in advancing our understanding of that challenge and its far-reaching implications for our nation and the world."

The Huffington Post

National Climate Assessment Details Stronger Evidence Of Global Warming And Its Impacts
Tom Zeller, Jr.

Lead story on the front page today.

Bill Mitchell — Modern Monetary Theory and environmental sustainability – Part 1

There is regular commentary here that seeks to argue that Modern Monetary Theory (MMT) is flawed, bereft or worse because apparently it avoids any discussion of the natural environment. This apparently arises from the inherent conclusion in MMT that growth in aggregate demand (and real GDP) is required to maintain high levels of employment, which are considered both economically and socially desirable. This is the first part of a two-part blog on this topic. We will see that MMT is highly sympathetic to the challenges posed by anthropogenic global warming (a catch-all term) and central policy indications that follow from an understanding of MMT (for example, the superiority of employment buffer stocks) lead to an understanding of how MMT is a green paradigm as opposed to mainstream (neo-liberal) economics and much of Post Keynesian thinking, the latter which relies on generalised expansion as the solution to entrenched unemployment. We conclude that those who seek to dismiss MMT because it doesn’t satisfy their particular pet solution to climate change issues have probably not read some of the earlier MMT literature nor understood fully what is required to develop and disseminate a new way of thinking about the economy. Further, MMT is not a theory about everything! What we will see is that when MMT advocates economic growth it does so with a very different view of what that economic growth might be comprised of and driven.

Bill Mitchell — billy blog
Modern Monetary Theory and environmental sustainability – Part 1
Bill Mitchell

Jeff Spross — Report: Humanity Has Overshot The Earth’s Biocapacity

In 2008, the Earth’s total biocapacity was 12.0 billion gha, or 1.8 gha per person, while humanity’s Ecological Footprint was 18.2 billion gha, or 2.7 gha per person. This discrepancy means it would take 1.5 years for the Earth to fully regenerate the renewable resources that people used in one year, or in other words, we used the equivalent of 1.5 Earths to support our consumption.

Climate Progress
Report: Humanity Has Overshot The Earth’s Biocapacity
Jeff Spross

Emanuele Campiglio — Towards an Ecological Macroeconomics

A couple of weeks ago I attended the International conference on Ecological Economics, held in Rio de Janeiro just a few days before the Rio+20 UN Summit, where a few hundreds researchers have been presenting their work together with some high-level keynote speakers (Peter Victor, Mathis Wackernagel, William Rees, the Prime Minister of Bhutan, Ignacy Sachs and others).

One of the most debated topics during sessions and informal discussions seemed to be the one nef has been intensively working on lately, that is Ecological Macroeconomics (otherwise termed Macroeconomics of sustainability). The aim of this line of research is to give sound macroeconomic foundations to ecological/environmental issues, and more in general to include sustainability (including financial sustainability) into the macro picture.

Read it at nef | new economics foundation
Towards an Ecological Macroeconomics
Emanuele Campiglio | 
Economics researcher

Steve Keen gets a shout out.

"Sustainability" is the new buzz word. MMT is ahead of the curve on financial sustainability.

To budding economists — integrating financial and non-financial sustainability is the cutting edge field in economics.

Joe Romm — James Lovelock Finally Walks Back His Absurd Doomism

Famed scientist James Lovelock has always been in a category of one when it comes to global warming. See for instance my June 2009 post, “Lovelock still makes me look like Paula Abdul, warns climate war could kill nearly all of us, leaving survivors in the Stone Age.” That’s mostly because he doesn’t follow the scientific literature.

 Now that he has dialed back his doomism — alarmism is a wholly inadequate word for Lovelock’s (former) brand of unjustified hopelessness — the media and the deniers are just so excited. That’s especially true since Lovelock has now overshot in the other direction of climate science confusion and just keeps peddling nonsense.

Read it at Climate Progress
James Lovelock Finally Walks Back His Absurd Doomism, But He Still Doesn’t Follow Climate Science
By Joe Romm

While I agree that Lovelock's scenario was extreme, I think that his basic premise was and remains correct, namely, the earth is an ecological system of great complexity, with many factors influencing each other reciprocally through feedback. Therefore, it is misleading to conclude anything about the system as a whole only by studying a part in isolation, which most studies do.

We see evidence of this in the frequent reports that the pace is increasing more quickly than anticipated. Should we be concerned about unknown unknowns as as well as known unknowns? Definitely. The science of complexity is still in its infancy,and we aren't even all that good in predicting the weather.

The Solar Envelope: How to Heat and Cool Cities Without Fossil Fuels

For weekend reading: this is a long but fascinating post about passive solar that is a must read for anyone interested in alternative energy, environmentalism, energy economics, environmental economics and ecological economics. I suggest reading it in conjunction with the Tom Murphy post on economics and physics that just went up. The post looks at passive solar historically and how it can not only be adapted today, but also scaled up.

Read it at The Oil Drum
The Solar Envelope: How to Heat and Cool Cities Without Fossil Fuels
Posted by Rembrandt