2973. The "Sunk Cost Fallacy" Not Limited To People

By Erica Goode, The New York Times, July 12, 2018

Suppose that, seeking a fun evening out, you pay $175 for a ticket to a new Broadway musical. Seated in the balcony, you quickly realize that the acting is bad, the sets are ugly and no one, you suspect, will go home humming the melodies.

Do you head out the door at the intermission, or stick it out for the duration?

Studies of human decision-making suggest that most people will stay put, even though money spent in the past logically should have no bearing on the choice.

This “sunk cost fallacy,” as economists call it, is one of many ways that humans allow emotions to affect their choices, sometimes to their own detriment. But the tendency to factor past investments into decision-making is apparently not limited to Homo sapiens.

In a study published on Thursday in the journal Science, investigators at the University of Minnesota reported that mice and rats were just as likely as humans to be influenced by sunk costs.

The more time they invested in waiting for a reward — in the case of the rodents, flavored pellets; in the case of the humans, entertaining videos — the less likely they were to quit the pursuit before the delay ended.

“Whatever is going on in the humans is also going on in the nonhuman animals,” said A. David Redish, a professor of neuroscience at the University of Minnesota and an author of the study.

This cross-species consistency, he and others said, suggested that in some decision-making situations, taking account of how much has already been invested might pay off.

“Evolution by natural selection would not promote any behavior unless it had some — perhaps obscure — net overall benefit,” said Alex Kacelnik, a professor of behavioral ecology at Oxford, who praised the new study as “rigorous” in its methodology and “well designed.”

“If everybody does it, the reasoning goes, there must be a reason,” Dr. Kacelnik said.

Even more important than the similarity among species was the study’s finding that sunk cost effects appeared only after the subjects had decided to pursue a reward, Dr. Redish noted, not while they were still deliberating whether to do so.

In effect, the animals seemed to consider the deliberation time not to be part of their investment — an indication, Dr. Redish said, that different brain processes might be at work in different aspects of decision-making.

The idea runs counter to the notion that “time is time, and you’re wasting it either way,” he said.

Shelly Flagel, an associate professor of psychiatry at the University of Michigan who was not involved in the study, said the research had “far-reaching implications across fields including education, economics, psychology, neuroscience and psychiatry.”

For example, she said, persisting in a behavior even though it has adverse consequences is reminiscent of the conduct “exhibited by people with addictions.”

“Once they start searching for their next ‘fix,’ they will often go hours or days on the same quest, even if it means giving up food, relationships, their job,” Dr. Flagel said.

Learning more about the distinct processes that go awry in psychiatric disorders like addiction might yield new strategies for treatment, she added.

In the study, led by a doctoral student, Brian M. Sweis, three research laboratories at the University of Minnesota collaborated to conduct tests on mice, rats and humans. The rodents were trained to forage for the flavored pellets — banana, chocolate, grape or plain — in a square maze with a “restaurant” in each corner.

The humans were taught to “forage” on a computer for videos of kittens, a dance competition, landscapes or bicycle accidents. Both rodents and humans were given an overall time limit for the foraging tasks.

In the rodents’ version of the task, the animal first entered an “offer zone” outside a restaurant and heard a pitched tone that informed it how long the wait would be for the pellet reward — a delay that varied randomly from 1 to 30 seconds.

The animal could skip the offer, in which case it was withdrawn, or it could enter the “wait zone” of the restaurant, setting off a countdown signaled by a descending tone. At any time during the countdown, the rodent could choose to leave the restaurant, but once it left it could not return without going all the way around through the other restaurant offer zones.

In the human version of the experiment, subjects were offered a video and presented with buttons saying “stay” or “skip.” A download bar informed them how long they would have to wait to view the video. Clicking the “stay” button started a countdown, and the screen showed the progression of the download.

The study found that the more time the rodents spent in the “wait zone,” the more likely they were to stick out the delay to the end, even though the longer they waited, the more it cut into their overall time to seek food.

Similarly, the longer the human subjects spent waiting for a video to download, the more likely they were to stay the course until the download was finished.

Surprisingly, the amount of time that the subjects — rodent or human — spent deliberating whether to accept the “offer” of a reward did not affect whether they quit before receiving it or stayed through to the end.

“Obviously, the best thing is as quick as possible to get into the wait zone,” Dr. Redish said. “But nobody does that. Somehow, all three species know that if you get into the wait zone, you’re going to pay this sunk cost, and they actually spend extra time deliberating in the offer zone so that they don’t end up getting stuck.”

Dr. Flagel, of the University of Michigan, noted that as compelling as the new research was, it was not without limitations, including the fact that the tasks presented to humans and rodents, though similar in some ways, were still quite different.

“The challenge moving forward,” Dr. Flagel said, “is going to be to know that one is truly capturing the same phenomenon across species. Or perhaps more appropriately, what is the meaning of the differences that will be revealed between species?”

2328. Biology and Homo Economicus

By David Sloan Wilson, New Scientist, March 21, 2012

One of the most influential articles published in the field of economics is Milton Friedman’s (1953) “The Methodology of Positive Economics”, in which he argues that people behave as if the assumptions of neoclassical economic theory are correct, even when they are not. One of the most influential articles in the field of evolution is Stephen Jay Gould and Richard Lewontin’s (1979) “The Spandrels of San Marcos and the Panglossian Paradigm”, which argues against excessive reliance on the concept of adaptation.

Different disciplines, different decades. No wonder these two classic articles have not been related to each other. Yet, there is much to be gained by doing so, for one reveals weaknesses in the other that are highly relevant to current economic and evolutionary thought.

The reason they can be related to each other is because Friedman relied upon an evolutionary argument for his “as if” justification of neoclassical economics. I cannot improve upon his own framing of the problem:

The abstract methodological issues we have been discussing have a direct bearing on the perennial criticism of “orthodox” economic theory as “unrealistic” as well as on the attempts that have been made to reformulate theory to meet this charge. Economics is a “dismal” science because it assumes man to be selfish and money-grubbing, “a lightning calculator of pleasures and pains, who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact”; it rests on outmoded psychology and must be reconstructed in line with each new development in psychology; it assumes men, or at least businessmen, to be “in a continuous state of ‘alert,’ ready to change prices and/or pricing rules whenever their sensitive intuitions … detect a change in demand and supply conditions;” it assumes markets to be perfect, competition to be pure, and commodities, labor, and capital to be homogeneous.

Friedman admits that the orthodox theory’s assumptions about human preferences and abilities, which are often labeled Homo economicus as if they are a description of a biological species, are manifestly unrealistic. Yet, he claims that they are still predictive of human economic behavior by way of three analogies. First, trees distribute their leaves as if they are maximizing their exposure to sunlight, yet no one pretends that they are performing optimization equations. Likewise, an expert pool player acts as if he is performing complex calculations when making his shots, when in fact his behavior has been molded by countless hours of play. Finally, a firm acts as if it is maximizing its profits, when in fact its continuing survival is the result of a selection process in which the non-optimizing firms were eliminated.

The first is an example of genetic evolution, the second is an example of individual learning, and the third is an example of cultural evolution. In all cases, a process of selection results in entities that behave adaptively, as if they are solving complex optimization equations, when mechanistically they are doing nothing of the sort.

Evolutionary biologists will recognize Friedman’s point as a distinction between ultimate and proximate causation. Ultimate causation explains why a trait exists, compared to many other traits that could exist, based on the outcome of a selection process. Proximate causation explains how the trait exists in a physical sense. Sunflowers turn towards the sun because selection has favored phototropism (the ultimate explanation); but within each individual sunflower is a physiological mechanism that causes the plant to do so. The proximate explanation need bear no resemblance to the ultimate explanation, other than to reliably cause the adaptive behavior to come into existence.

So far, Friedman is standing on firm evolutionary ground with his “as if” argument. Evolutionists frequently reason about the properties of species “as if” they are maximizing their fitness, without worrying about the proximate mechanisms. As a simple example, we can confidently predict that many desert animals are sandy colored to avoid detection by their predators and prey. The prediction holds true for different kinds of desert animals, such as insects, snails, reptiles, birds, and mammals, even though different proximate mechanisms in these animals cause the sandy coloration to develop. The ability to predict the properties of organisms in functional terms, without reference to proximate causation, is one of the most powerful features of evolutionary theory.

But reasoning on the basis of adaptation delivers the correct answer only if the trait in question is a product of selection and if we have correctly identified the relevant selection pressures. If the trait isn’t adaptive in any sense, we’ll be wrong. If we assume that the trait is a solution to one adaptive problem (such as the need for a foraging animal to maximize energy intake per unit time), when it is a solution to another adaptive problem (such as the need for a foraging animal to manage a trade-off between energy gain and predation risk), we’ll also be wrong.

That’s where Gould and Lewontin’s “Spandrels” paper comes in. They chastised some of their evolutionist colleagues for assuming that every trait must have an adaptive explanation and for accepting adaptive “just-so” stories without adequate proof. They outlined a more comprehensive approach that requires strong evidence for any given adaptationist explanation and reflects the many ways that nonadaptive traits can persist in a population. The compleat evolutionist might begin with an adaptationist hypothesis to explain a given trait, but then tests the hypothesis and modifies it as warranted, keeping both other adaptation and non-adaptation hypotheses in mind as live options. Compleat evolutionists also study proximate mechanisms, development, and phylogeny in conjunction with their focus on natural selection.

Some evolutionists complain that Gould and Lewontin created a straw man with their critique, but their portrait of “naïve adaptationism” accurately describes Friedman’s defense of neoclassical economics. He assumed that one or more selection processes (genetic, learning, or cultural) resulted in people who resemble Homo economicus as far as ultimate causation is concerned. He did not consider other adaptationist or nonadaptationist hypotheses. He did not indicate that proximate mechanisms, development, and phylogeny need to be considered along with ultimate causation. The only evidence that he provided to support his hypothesis was to claim that economic policy based on the orthodox theory was successful. His “as if” argument was evolutionary, but not evolutionary enough.

The weakness of Friedman’s article, when related to Gould and Lewontin’s article, reveals a widespread problem in the basic and applied human social sciences. All accounts of human social behavior that are not creationist strive for consilience—consistency with other branches of knowledge. An economic or social policy that ignores the way we are as a species and the way that cooperation evolves in all species is no more likely to succeed than an architectural plan that ignores the laws of physics. Yet, for complex reasons, evolutionary theory has been avoided as an explanatory framework for most branches of the social sciences since before most of the current experts were born. When theories and policies derived from the social sciences are related to modern evolutionary science, they often fail the consilience test as miserably as Friedman did in 1953.

Social scientists and policymakers need to become compleat evolutionists, no less than biologists. The bad news is that a lot of work needs to be done for our current theories and policies to pass the consilience test. The good news is that when we start to earn passing grades, our economic and social policies will start working better than they do now.

2046. The Noble Prize and Economics "Sciences"

By Joris Luyendijik, The Guardian, October 11, 2015

Business as usual. That will be the implicit message when the Sveriges Riksbank announces this year’s winner of the “Prize in Economic Sciences in Memory of Alfred Nobel”, to give it its full title. Seven years ago this autumn, practically the entire mainstream economics profession was caught off guard by the global financial crash and the “worst panic since the 1930s” that followed. And yet on Monday the glorification of economics as a scientific field on a par with physics, chemistry and medicine will continue.

The problem is not so much that there is a Nobel prize in economics, but that there are no equivalent prizes in psychology, sociology, anthropology. Economics, this seems to say, is not a social science but an exact one, like physics or chemistry – a distinction that not only encourages hubris among economists but also changes the way we think about the economy.

A Nobel prize in economics implies that the human world operates much like the physical world: that it can be described and understood in neutral terms, and that it lends itself to modelling, like chemical reactions or the movement of the stars. It creates the impression that economists are not in the business of constructing inherently imperfect theories, but of discovering timeless truths.

To illustrate just how dangerous that kind of belief can be, one only need to consider the fate of Long-Term Capital Management, a hedge fund set up by, among others, the economists Myron Scholes and Robert Merton in 1994. With their work on derivatives, Scholes and Merton seemed to have hit on a formula that yielded a safe but lucrative trading strategy. In 1997 they were awarded the Nobel prize. A year later, Long-Term Capital Management lost $4.6bn (£3bn)in less than four months; a bailout was required to avert the threat to the global financial system. Markets, it seemed, didn’t always behave like scientific models.

In the decade that followed, the same over-confidence in the power and wisdom of financial models bred a disastrous culture of complacency, ending in the 2008 crash. Why should bankers ask themselves if a lucrative new complex financial product is safe when the models tell them it is? Why give regulators real power when models can do their work for them?

Many economists seem to have come to think of their field in scientific terms: a body of incrementally growing objective knowledge. Over the past decades mainstream economics in universities has become increasingly mathematical, focusing on complex statistical analyses and modelling to the detriment of the observation of reality.

Consider this throwaway line from the former top regulator and London School of Economics director Howard Davies in his 2010 book The Financial Crisis: Who Is to Blame?: “There is a lack of real-life research on trading floors themselves.” To which one might say: well, yes, so how about doing something about that? After all, Davies was at the time heading what is probably the most prestigious institution for economics research in Europe, located a stone’s throw away from the banks that blew up.

Howard Davies, pictured in 2006. Photograph: Eamonn McCabe for the Guardian

All those banks have “structured products approval committees”, where a team of banking staff sits down to decide whether their bank should adopt a particular new complex financial product. If economics were a social science like sociology or anthropology, practitioners would set about interviewing those committee members, scrutinising the meetings’ minutes and trying to observe as many meetings as possible. That is how the kind of fieldwork-based, “qualitative” social sciences, which economists like to discard as “soft” and unscientific, operate. It is true that this approach, too, comes with serious methodological caveats, such as verifiability, selection bias or observer bias. The difference is that other social sciences are open about these limitations, arguing that, while human knowledge about humans is fundamentally different from human knowledge about the natural world, those imperfect observations are extremely important to make.

Compare that humility to that of former central banker Alan Greenspan, one of the architects of the deregulation of finance, and a great believer in models. After the crash hit, Greenspan appeared before a congressional committee in the US to explain himself. “I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms,” said the man whom fellow economists used to celebrate as “the maestro”.

In other words, Greenspan had been unable to imagine that bankers would run their own bank into the ground. Had the maestro read the tiny pile of books by financial anthropologists he may have found it easier to imagine such behaviour. Then he would have known that over past decades banks had adopted a “zero job security” hire-and-fire culture, breeding a “zero-loyalty” mentality that can be summarised as: “If you can be out of the door in five minutes, your horizon becomes five minutes.”

While this was apparently new to Greenspan it was not to anthropologist Karen Ho, who did years of fieldwork at a Wall Street bank. Her book Liquidated emphasises the pivotal role of zero job security at Wall Street (the same system governs the City of London). The financial sociologist Vincent Lépinay’s Codes of Finance, a book about the division in a French bank for complex financial products, describes in convincing detail how institutional memory suffers when people switch jobs frequently and at short notice.

Perhaps the most pernicious effect of the status of economics in public life has been the hegemony of technocratic thinking. Political questions about how to run society have come to be framed as technical issues, fatally diminishing politics as the arena where society debates means and ends. Take a crucial concept such as gross domestic product. As Ha-Joon Chang makes clear in 23 Things They Don’t Tell You About Capitalism, the choices about what not to include in GDP (household work, to name one) are highly ideological. The same applies to inflation, since there is nothing neutral about the decision not to give greater weight to the explosion in housing and stock market prices when calculating inflation.

GDP, inflation and even growth figures are not objective temperature measurements of the economy, no matter how many economists, commentators and politicians like to pretend they are. Much of economics is politics disguised as technocracy – acknowledging this might help open up the space for political debate and change that has been so lacking in the past seven years.

Would it not be extremely useful to take economics down one peg by overhauling the prize to include all social sciences? The Nobel prize for economics is not even a “real” Nobel prize anyway, having only been set up by the Swedish central bank in 1969. In recent years, it may have been awarded to more non-conventional practitioners such as the psychologist Daniel Kahneman. However, Kahneman was still rewarded for his contribution to the science of economics, still putting that field centre stage.

Think of how frequently the Nobel prize for literature elevates little-known writers or poets to the global stage, or how the peace prize stirs up a vital global conversation: Naguib Mahfouz’s Nobel introduced Arab literature to a mass audience, while last year’s prize for Kailash Satyarthi and Malala Yousafzai put the right of all children to an education on the agenda. Nobel prizes in economics, meanwhile, go to “contributions to methods of analysing economic time series with time-varying volatility” (2003) or the “analysis of trade patterns and location of economic activity” (2008).

A revamped social science Nobel prize could play a similar role, feeding the global conversation with new discoveries and insights from across the social sciences, while always emphasising the need for humility in treating knowledge by humans about humans. One good candidate would be the sociologist Zygmunt Bauman, whose writing on the “liquid modernity” of post-utopian capitalism deserves the largest audience possible. Richard Sennett and his work on the “corrosion of character” among workers in today’s economies would be another. Will economists volunteer to share their prestigious prize out of their own acccord? Their own mainstream economic assumptions about human selfishness suggest they will not.

1838. Economics: The User's Guide

By Lynn Fries, therealnews.com, May 10, 2015 

LYNN FRIES, TRNN: Welcome to The Real News Network. I'm Lynn Fries, in Geneva.

Unless we want our societies to be run by a body of self-elected experts, we all need to learn economics. So says Economics: The User's Guide, by economist Ha-Joon Chang. In a series of interviews with Ha-Joon Chang, we look into this. In this opening segment, we get some history on how we got here. Neoclassical economics is key to the story.

Our guest, Ha-Joon Chang, joins us from the UK, where he teaches economics at the University of Cambridge. Economics: The User's Guide is his latest book. Earlier books include Kicking Away the Ladder, and 23 Things They Don't Tell You About Capitalism.

Welcome, Ha-Joon.

HA-JOON CHANG, ECONOMIST, UNIV. OF CAMBRIDGE: Hi.

FRIES: What we call economics used to be called political economy. So let's start there, with the story behind changing the name of the discipline. Tell us about that.

CHANG: Yes. In the beginning, economics was called political economy. Adam Smith, David Ricardo, these people never wrote any, anything on economics. They all wrote on political economy.

In the late 19th century, early 20th century the then-rising school of economics, Neoclassical economics, which is today's dominant school of economics, decided that they want to become scientists. You know, in modern world the title of science has a great aura, because after all, that progress in scientific knowledge is what has built the modern world. So if you can call yourself scientist, you immediately get much greater credibility. And, I mean, that, this is what the Neoclassical economists have aimed to achieve since the late 19th century.

And the most important thing they did at the beginning to achieve this goal was to rename the subject. So it wasn't political economy anymore, because when you say politics, you're already implying that people may disagree, you know. But if you're a, a scientist, you cannot have that kind of disagreement. So it was really important to get rid of that word politics from the name of the subject so that they can now claim that this is free of ethical judgments, this is free of political disagreement, and therefore there is a science like physics or chemistry.

FRIES: The Neoclassical school claims to be the intellectual heir of the Classical school. So first tell us what central ideas of the Classical school remain key to the Neoclassical, and then what's new? In other words, the Neo in Neo-classical.

CHANG: Yes. Classical economists actually thought about the economy in quite different ways from what you see in Neoclassical economics. But Neoclassical economics is still an heir of classical economics in the sense that it is--and I'll explain this in a minute--it is trying to make the same propositions in different ways.

So the two central propositions of Classical economics that have been adopted and advanced by the Neoclassical school is that first of all, market competition keeps producers efficient. So you have to become efficient, otherwise you'll be wiped out by market competition. That's the first idea. And the other one is that you have a self-equilibrating quality of the market. So market can be just left alone. There might be some disturbances that through, I don't know, war, or bad weather. Bad harvest, or things like that. But the market will always find equilibrium.

So when you have that view you could say that leaving things to the market will make sure that everyone remains efficient, and that--this is what the Classical economists believe. Now, Neoclassical economists are saying the same thing, but actually in quite different ways. And there are quite a lot of differences between the two approaches. But I would say that the two most important are the following.

First of all, unlike Neoclassical economics, Classical economics is a class-based theory. Of course in Classical economics there are individuals at the rhetorical level, but the core of their theory is all about class struggle, if you like. So in Classical economics there are capitalists, there are workers, and there are landlords. And most of their theory is about how the division of income between these three groups affect the way that an economy makes investment, generates economic growth, and manages itself.

Now, Neoclassical economics deny that. They even deny that class is an analytically meaningful category. And they construct the theory on the basis of individuals. So individuals are all different. I mean it's not, you know, unlike in Classical economics, in which position they are in in the economy, it doesn't really affect the way they behave. Whereas in Classical economics, it is assumed that the capitalists are behaving in particular ways, workers behave in particular ways. Landlords are behaving in particular ways. So the Neoclassicals have turned the theory into an individualistic theory, whereas Classical economics is a class-based theory.

Although the important difference is that the Neoclassical economists basically conceptualize the economy as a series of market exchange, whereas Classical economists put a lot more emphasis on the production. Of course, there was some market competition. But Adam Smith, for example, in the very first chapter of his famous book The Wealth of Nations wrote about a factory, not a market. I mean, he wrote about this famous example of pin factory, and he was discussing how can twelve people working together to produce a pin can increase productivity by hundreds of times, even thousands of times. And he started that, the whole discussion from there trying to explain how these changes in the domain of production have created a new type of society and how you need a different way of looking at things, that which he proposed the name of political economy.

Neoclassical economists do not really pay attention to production. I mean, you could--to exaggerate a little bit, you could even say that Neoclassical economics ends when people go to work. It doesn't really have a lot to say about what happens within the factories, within the shops, within offices. Most of it is about what happens after people leave work, bring salaries and wages from their work, go and buy the things, and then consume them. So in that way, the focus of economics was shifted from production to exchange and consumption.

And it does that two important ways. The theory might produce similar conclusions, but became something that is very different from Classical economic theory. And in that sense that we call it Neoclassical theory. Actually, some of the aspects that the Neoclassical economists have abandoned, the class-based approach to economics and the emphasis on production, they actually have been kept by the Marxist work. As you can say, is the half-brother of the Neoclassical school.

FRIES: Let's go deeper into all this in the next segment. Please join us for Part 2 of our conversation with Ha-Joon Chang. Ha-Joon Chang, thank you.

CHANG: Thank you.

FRIES: And thank you for joining us on The Real News Network.

Ha-Joon Chang, a Korean native, has taught at the Faculty of Economics, University of Cambridge, since 1990. He has worked as a consultant for numerous international organizations, including various UN agencies, the World Bank, and the Asian Development Bank. A best selling author, his latest book is Economics: the User's Guide. He has published 11 other books, including Kicking Away the Ladder, winner of the 2003 Myrdal Prize. In 2005, Ha-Joon Chang was awarded the 2005 Leontief Prize for Advancing the Frontiers of Economic Thought.

1753. The Externality Trap, or, How Progress Commits Suicide

By John Michael Greer, The Archdruid Report, February 25, 2015

I've commented more than once in these essays about the cooperative dimension of writing:  the way that even the most solitary of writers inevitably takes part in what Mortimer Adler used to call the Great Conversation, the flow of ideas and insights across the centuries that’s responsible for most of what we call culture. Sometimes that conversation takes place second- or third-hand—for example, when ideas from two old books collide in an author’s mind and give rise to a third book, which will eventually carry the fusion to someone else further down the stream of time—but sometimes it’s far more direct. 

Last week’s post here brought an example of the latter kind. My attempt to cut through the ambiguities surrounding that slippery word “progress” sparked a lively discussion on the comments page of my blog about just exactly what counted as progress, what factors made one change “progressive” while another was denied that label. In the midst of it all, one of my readers—tip of the archdruidical hat to Jonathan—proposed an unexpected definition:  what makes a change qualify as progress, he suggested, is that it increases the externalization of costs.  

I’ve been thinking about that definition since Jonathan proposed it, and it seems to me that it points up a crucial and mostly unrecognized dimension of the crisis of our time. To make sense of it, though, it’s going to be necessary to delve briefly into economic jargon. 

Economists use the term “externalities” to refer to the costs of an economic activity that aren’t paid by either party in an exchange, but are pushed off onto somebody else. You won’t hear a lot of talk about externalities these days; it many circles, it’s considered impolite to mention them, but they’re a pervasive presence in contemporary life, and play a very large role in some of the most intractable problems of our age. Some of those problems were discussed by Garret Hardin in his famous essay on the tragedy of the commons, and more recently by Elinor Ostrom in her studies of how that tragedy can be avoided; still, I’m not sure how often it’s recognized that the phenomena they discussed applies not just to commons systems, but to societies as a whole—especially to societies like ours. 

An example may be useful here. Let’s imagine a blivet factory, which turns out three-prong, two-slot blivets in pallet loads for customers. The blivet-making process, like manufacturing of every other kind, produces waste as well as blivets, and we’ll assume for the sake of the example that blivet waste is moderately toxic and causes health problems in people who ingest it. The blivet factory produces one barrel of blivet waste for every pallet load of blivets it ships. The cheapest option for dealing with the waste, and thus the option that economists favor, is to dump it into the river that flows past the factory. 

Notice what happens as a result of this choice. The blivet manufacturer has maximized his own benefit from the manufacturing process, by avoiding the expense of finding some other way to deal with all those barrels of blivet waste. His customers also benefit, because blivets cost less than they would if the cost of waste disposal was factored into the price. On the other hand, the costs of dealing with the blivet waste don’t vanish like so much twinkle dust; they are imposed on the people downstream who get their drinking water from the river, or from aquifers that receive water from the river, and who suffer from health problems because there’s blivet waste in their water. The blivet manufacturer is externalizing the cost of waste disposal; his increased profits are being paid for at a remove by the increased health care costs of everyone downstream. 

That’s how externalities work. Back in the days when people actually talked about the downsides of economic growth, there was a lot of discussion of how to handle externalities, and not just on the leftward end of the spectrum.  I recall a thoughtful book titled TANSTAAFL—that’s an acronym, for those who don’t know their Heinlein, for “There Ain’t No Such Thing As A Free Lunch”—which argued, on solid libertarian-conservative grounds, that the environment could best be preserved by making sure that everyone paid full sticker price for the externalities they generated. Today’s crop of pseudoconservatives, of course, turned their back on all this a long time ago, and insist at the top of their lungs on their allegedly God-given right to externalize as many costs as they possibly can.  This is all the more ironic in that most pseudoconservatives claim to worship a God who said some very specific things about “what ye do to the least of these,” but that’s a subject for a different post.

Economic life in the industrial world these days can be described, without too much inaccuracy, as an arrangement set up to allow a privileged minority to externalize nearly all their costs onto the rest of society while pocketing as much as possible the benefits themselves. That’s come in for a certain amount of discussion in recent years, but I’m not sure how many of the people who’ve participated in those discussions have given any thought to the role that technological progress plays in facilitating the internalization of benefits and the externalization of costs that drive today’s increasingly inegalitarian societies. Here again, an example will be helpful. 

Before the invention of blivet-making machinery, let’s say, blivets were made by old-fashioned blivet makers, who hammered them out on iron blivet anvils in shops that were to be found in every town and village. Like other handicrafts, blivet-making was a living rather than a ticket to wealth; blivet makers invested their own time and muscular effort in their craft, and turned out enough in the way of blivets to meet the demand. Notice also the effect on the production of blivet waste. Since blivets were being made one at a time rather than in pallet loads, the total amount of waste was smaller; the conditions of handicraft production also meant that blivet makers and their families were more likely to be exposed to the blivet waste than anyone else, and so had an incentive to invest the extra effort and expense to dispose of it properly. Since blivet makers were ordinary craftspeople rather than millionaires, furthermore, they weren’t as likely to be able to buy exemption from local health laws. 

The invention of the mechanical blivet press changed that picture completely.  Since one blivet press could do as much work as fifty blivet makers, the income that would have gone to those fifty blivet makers and their families went instead to one factory owner and his stockholders, with as small a share as possible set aside for the wage laborers who operate the blivet press. The factory owner and stockholders had no incentive to pay for the proper disposal of the blivet waste, either—quite the contrary, since having to meet the disposal costs cut into their profit, buying off local governments was much cheaper, and if the harmful effects of blivet waste were known, you can bet that the owner and shareholders all lived well upstream from the factory.  

Notice also that a blivet manufacturer who paid a living wage to his workers and covered the costs of proper waste disposal would have to charge a higher price for blivets than one who did neither, and thus would be driven out of business by his more ruthless competitor. Externalities aren’t simply made possible by technological progress, in other words; they’re the inevitable result of technological progress in a market economy, because externalizing the costs of production is in most cases the most effective way to outcompete rival firms, and the firm that succeeds in externalizing the largest share of its costs is the most likely to prosper and survive. 

Each further step in the progress of blivet manufacturing, in turn, tightened the same screw another turn. Today, to finish up the metaphor, the entire global supply of blivets is made in a dozen factories in  distant Slobbovia, where sweatshop labor under ghastly working conditions and the utter absence of environmental regulations make the business of blivet fabrication more profitable than anywhere else. The blivets are as shoddily made as possible; the entire blivet supply chain from the open-pit mines worked by slave labor that provide the raw materials to the big box stores with part-time, poorly paid staff selling blivetronic technology to the masses is a human and environmental disaster.  Every possible cost has been externalized, so that the two multinational corporations that dominate the global blivet industry can maintain their profit margins and pay absurdly high salaries to their CEOs. 

That in itself is bad enough, but let’s broaden the focus to include the whole systems in which blivet fabrication takes place: the economy as a whole, society as a whole, and the biosphere as a whole. The impact of technology on blivet fabrication in a market economy has predictable and well understood consequences for each of these whole systems, which can be summed up precisely in the language we’ve already used. In order to maximize its own profitability and return on shareholder investment, the blivet industry externalizes costs in every available direction. Since nobody else wants to bear those costs, either, most of them end up being passed onto the whole systems just named, because the economy, society, and the biosphere have no voice in today’s economic decisions. 

Like the costs of dealing with blivet waste, though, the other externalized costs of blivet manufacture don’t go away just because they’re externalized. As externalities increase, they tend to degrade the whole systems onto which they’re dumped—the economy, society, and the biosphere. This is where the trap closes tight, because blivet manufacturing exists within those whole systems, and can’t be carried out unless all three systems are sufficiently intact to function in their usual way. As those systems degrade, their ability to function degrades also, and eventually one or more of them breaks down—the economy plunges into a depression, the society disintegrates into anarchy or totalitarianism, the biosphere shifts abruptly into a new mode that lacks adequate rainfall for crops—and the manufacture of blivets stops because the whole system that once supported it has stopped doing so. 

Notice how this works out from the perspective of someone who’s benefiting from the externalization of costs by the blivet industry—the executives and stockholders in a blivet corporation, let’s say. As far as they’re concerned, until very late in the process, everything is fine and dandy: each new round of technological improvements in blivet fabrication increases their profits, and if each such step in the onward march of progress also means that working class jobs are eliminated or offshored, democratic institutions implode, toxic waste builds up in the food chain, or what have you, hey, that’s not their problem—and after all, that’s just the normal creative destruction of capitalism, right? 

That sort of insouciance is easy for at least three reasons. First, the impacts of externalities on whole systems can pop up a very long way from the blivet factories.  Second, in a market economy, everyone else is externalizing their costs as enthusiastically as the blivet industry, and so it’s easy for blivet manufacturers (and everyone else) to insist that whatever’s going wrong is not their fault.  Third, and most crucially, whole systems as stable and enduring as economies, societies, and biospheres can absorb a lot of damage before they tip over into instability. The process of externalization of costs can thus run for a very long time, and become entrenched as a basic economic habit, long before it becomes clear to anyone that continuing along the same route is a recipe for disaster. 

Even when externalized costs have begun to take a visible toll on the economy, society, and the biosphere, furthermore, any attempt to reverse course faces nearly insurmountable obstacles. Those who profit from the existing order of things can be counted on to fight tooth and nail for the right to keep externalizing their costs: after all, they have to pay the full price for any reduction in their ability to externalize costs, while the benefits created by not imposing those costs on whole systems are shared among all participants in the economy, society, and the biosphere respectively. Nor is it necessarily easy to trace back the causes of any given whole-system disruption to specific externalities benefiting specific people or industries. It’s rather like loading hanging weights onto a chain; sooner or later, as the amount of weight hung on the chain goes up, the chain is going to break, but the link that breaks may be far from the last weight that pushed things over the edge, and every other weight on  the chain made its own contribution to the end result

A society that’s approaching collapse because too many externalized costs have been loaded onto on the whole systems that support it thus shows certain highly distinctive symptoms. Things are going wrong with the economy, society, and the biosphere, but nobody seems to be able to figure out why; the measurements economists use to determine prosperity show contradictory results, with those that measure the profitability of individual corporations and industries giving much better readings those that measure the performance of whole systems; the rich are convinced that everything is fine, while outside the narrowing circles of wealth and privilege, people talk in low voices about the rising spiral of problems that beset them from every side. If this doesn’t sound familiar to you, dear reader, you probably need to get out more. 

At this point it may be helpful to sum up the argument I’ve developed here:

a) Every increase in technological complexity tends also to increase the opportunities for externalizing the costs of economic activity;

b) Market forces make the externalization of costs mandatory rather than optional, since economic actors that fail to externalize costs will tend to be outcompeted by those that do;

c) In a market economy, as all economic actors attempt to externalize as many costs as possible, externalized costs will tend to be passed on preferentially and progressively to whole systems such as the economy, society, and the biosphere, which provide necessary support for economic activity but have no voice in economic decisions;

d) Given unlimited increases in technological complexity, there is no necessary limit to the loading of externalized costs onto whole systems short of systemic collapse;

e) Unlimited increases in technological complexity in a market economy thus necessarily lead to the progressive degradation of the whole systems that support economic activity;

f) Technological progress in a market economy  is therefore self-terminating, and ends in collapse. 

Now of course there are plenty of arguments that could be deployed against this modest proposal. For example, it could be argued that progress doesn’t have to generate a rising tide of externalities. The difficulty with this argument is that externalization of costs isn’t an accidental side effect of technology but an essential aspect—it’s not a bug, it’s a feature. Every technology is a means of externalizing some cost that would otherwise be borne by a human body. Even something as simple as a hammer takes the wear and tear that would otherwise affect the heel of your hand, let’s say, and transfers it to something else: directly, to the hammer; indirectly, to the biosphere, by way of the trees that had to be cut down to make the charcoal to smelt the iron, the plants that were shoveled aside to get the ore, and so on. 

For reasons that are ultimately thermodynamic in nature, the more complex a technology becomes, the more costs it generates. In order to outcompete a simpler technology, each more complex technology has to externalize a significant proportion of its additional costs, in order to compete against the simpler technology. In the case of such contemporary hypercomplex technosystems as the internet, the process of externalizing costs has gone so far, through so many tangled interrelationships, that it’s remarkably difficult to figure out exactly who’s paying for how much of the gargantuan inputs needed to keep the thing running. This lack of transparency feeds the illusion that large systems are cheaper than small ones, by making externalities of scale look like economies of scale. 

It might be argued instead that a sufficiently stringent regulatory environment, forcing economic actors to absorb all the costs of their activities instead of externalizing them onto others, would be able to stop the degradation of whole systems while still allowing technological progress to continue. The difficulty here is that increased externalization of costs is what makes progress profitable. As just noted, all other things being equal, a complex technology will on average be more expensive in real terms than a simpler technology, for the simple fact that each additional increment of complexity has to be paid for by an investment of energy and other forms of real capital. 

Strip complex technologies of the subsidies that transfer some of their costs to the government, the perverse regulations that transfer some of their costs to the rest of the economy, the bad habits of environmental abuse and neglect that transfer some of their costs to the biosphere, and so on, and pretty soon you’re looking at hard economic limits to technological complexity, as people forced to pay the full sticker price for complex technologies maximize their benefits by choosing simpler, more affordable options instead. A regulatory environment sufficiently strict to keep technology from accelerating to collapse would thus bring technological progress to a halt by making it unprofitable. 

Notice, however, the flipside of the same argument: a society that chose to stop progressing technologically could maintain itself indefinitely, so long as its technologies weren’t dependent on nonrenewable resources or the like. The costs imposed by a stable technology on the economy, society, and the biosphere would be more or less stable, rather than increasing over time, and it would therefore be much easier to figure out how to balance out the negative effects of those externalities and maintain the whole system in a steady state.  Societies that treated technological progress as an option rather than a requirement, and recognized the downsides to increasing complexity, could also choose to reduce complexity in one area in order to increase it in another, and so on—or they could just raise a monument to the age of progress, and go do something else instead.

The logic suggested here requires a comprehensive rethinking of most of the contemporary world’s notions about technology, progress, and the good society. We’ll begin that discussion in future posts—after, that is, we discuss a second dimension of progress that came out of last week’s discussion. 

1521. Book Review: To Change or Reform Capitalism: Addressing the Ecological Crisis

By Lynne Chester, Review of Radical Political Economics, July 2014

The Ecological Rift: Capitalism’s War on the Earth. John Bellamy Foster, Brett Clark and Richard York; New York: Monthly Review Press, 2010.

Green Economics: Confronting the Ecological Crisis. Robin Hanhel; Armonk, New York: M.E. Sharpe, 2011.

Nature, Social Relations and Human Needs: Essays in Honour of Ted Benton. Sandra Moog and Rob Stones (eds); Basingstoke: Palgrave Macmillan, 2009.

Ecology and Socialism: Solutions to Capitalist Ecological Crisis. Chris Williams; Chicago: Haymarket Books, 2010.

There is a burgeoning inter-disciplinary discourse on the causes, consequences, and solutions to capitalism’s contemporary ecological crisis. Four publications are strongly illustrative of the spectrum of perspectives and points of differentiation concerning the contributions of growth and population to ecological degradation, the specificity of the human-nature relation, and if the ecological crisis is inherent or not to capitalism. These four works are: Foster, Clark, and York’s The Ecological Rift: Capitalism’s War on the Earth, Hahnel’s Green Economics: Confronting the Ecological Crisis, the edited collection by Moog and Stones Nature, Social Relations and Human Needs: Essays in Honour of Ted Benton, and Williams’s Ecology and Socialism: Solutions to Capitalist Ecological Crisis.

Abstract philosophy is the genre within which Nature, Social Relations and Human Needs very much falls whereas the other three works are more directed towards solutions to urgently address the global nature and unparalleled extent of ecological degradation. These solutions range from reforming capitalism or changing it to another form of economic and social organization.

Nature, Social Relations and Human Needs is a festschrift honoring the work of the British sociologist Ted Benton whose scholarship, over four decades, has spanned the philosophy and sociology of science, social theory, Marxism, and ecological sociology.1 The book’s structure reflects this breadth being divided into four parts: Realism, Naturalism, and the Philosophy of the Social Sciences; The Continuing Relevance of Marxism; Philosophical Anthropology and Human Needs; and Ecology, Society and Natural Limits. Benton himself contributes an insightful well-reasoned conclusion commenting on each of the preceding nine chapters and weaving threads between. The editors, Sandra Moog and Rob Stones, also provide an excellent introduction for those less familiar with Benton’s oeuvre and particularly his stratification of reality which asserts that:

higher-level entities . . . are partly explained by their lower-level constituents . . . [but] their emergent . . . distinctive properties and powers result from the effects of their structural combination on the behavior of their constituent elements [and] can exercise a downward causality. (8-9, original emphasis)

This approach endeavors to determine the conditions under which these influences are exercised and relationships between entities.

Benton started his working life as a high school science teacher and the “subsequent shift to philosophy and sociology took with it a continuing respect for the intellectual achievements, methodological rigour, and revelatory character of the natural sciences” (209). Highly influenced by Thomas Kuhn’s work, Benton champions the exceptional capacity of “scientific understand- ing to inform our thinking about our place in the wider world” (210) whilst acknowledging its fallibility and provisional nature. It is this view of science, and commitments to naturalism and realism, which has informed Benton’s “green” historical materialism approach.

Chapters by Sandra Moog and Kate Soper herald Benton’s insightful analysis of what needs to change if the contemporary ecological crisis is to be addressed. Moog’s chapter “Ecological Politics for the Twenty-first Century: Where Does Nature Fit in?” demonstrates the argument of some radical ecologists that environmental problems stem from Western anthropocentrism which views humans as separate from nature. If this is accepted, changing “our very idea of nature” becomes critical to addressing the ecological crisis but “which nature should we get back to . . . finding a solution to our problems cannot be as simple as looking back to recover an earlier and less alienated stance, a less corrupted definition” (154-55). Benton’s approach to this issue is to transcend traditional sociological dualisms, such as humans and animals, and investigate the ongoing dynamic relations between culture and nature. Moog contends that investigation of these complex relationships between different organizational strata or levels, including “the multiple causal networks which encompass nature – non-human and human, internal and external” (164), is facilitated by Benton’s stratified conceptualization of the world, his stratified reality.

Soper’s chapter “Realism, Naturalism and the Red-Green Nexus” extends Moog’s discussion to focus on Benton’s contribution to ecological theory through his distinction “between what is and is not changed when human beings modify nature – in other words, between nature conceived as causal powers and processes and the ‘nature’ which is the outcome of our own interventions” (174) i.e. between “deep” and “surface” natures. Natural laws regulate natural processes and thus, according to Benton, set natural limits “as products of the articulation of specific socio-technical relations and dynamics with the various naturally and socially ‘given’ conditions, resources, and media upon which they rely” (225, original emphasis). Moreover this deep-surface distinction avoids the misleading conceptualization of nature “as that which is untouched by human beings but . . . by reference to parts of the environment that have clearly been modified by us” (174).

An abstract philosophical work from a sociological perspective, this festschrift nevertheless provides discussion of issues about how we can understand the organization of nature and the relationships between humans and nature, and humans as part of a social and natural environ- ment. This discourse is a necessary precursor to positing the transformation of human-nature relationships if our objective is to decrease ecological degradation.

A more empirically grounded work is Hahnel’s Green Economics: Confronting the Ecological Crisis which offers an ecological economics perspective of the environmental crisis. Methodologically pluralist, ecological economics is distinguishable from mainstream environmental economics through inter alia its: condemnation of reliance on technology to solve the problems of scarcity and waste; respect for the complexity and holism of natural systems; scientific approach; use of key ecological concepts such as capacities for assimilation, regeneration, and carrying; vision of the earth as being thermodynamically closed; valuing of nature in bio- physical terms; and, an emphasis on issues of distribution and justice. Ecological sustainability is the primary objective and the approach of ecological economics can be broadly described as to:

First, establish the ecological limits of sustainable scale and establish policies that assure the throughput of the economy stays within these limits. Second, establish a fair and just distribution of resources using systems of property rights and transfers . . .. Third, once the scale and distribution problems are solved, market-based mechanisms can be used to allocate resources efficiently. (Costanza, Perrings, and Cleveland 1997: 83)

So, despite differences with mainstream environmental economics in explaining the economic- environment relation and the current crisis, ecological economics advocates the use of mainstream policy measures – property rights and market-based mechanisms – to achieve ecological sustain- ability. 2 In other words, the ecological destruction of capitalism will be overcome by the “reform” of capitalism using the same policy measures that have accelerated that destruction.

This approach is well reflected in Green Economics which, in many respects, is a fusion of earlier publications (e.g. Hahnel 2002, 2007; Hahnel and Sheeran 2009) and some chapters have subsequently been published albeit in a revised form (e.g. Hahnel 2012a, 2012b). This perhaps explains some of the disjointedness which the reader experiences with the order of material and unfolding of the argument.

Over ten chapters, Hahnel sets out his reasoning for an “environmental economic paradigm” which deploys “insights from mainstream environmental economics . . . that help explain why the economic system puts the environment at risk” (75). A critique, of sorts, is offered of the mainstream’s obsession with the environmentally destructive “growth imperative” and “free- market environmentalism” (chapters 5 and 6), and the values embedded in its highly prized technique of cost-benefit analysis (CBA) (chapter 2). These critiques provide the foundations for his approach to “real-world environmental policy” (chapter 7) to prevent “cataclysmic climate change.” Basically Hahnel advocates tackling climate change with the mainstream policy mea- sures (after a few tweaks) of regulation, taxes, and tradeable permits using property rights, zon- ing, transfer development rights, and community management, and “when we feel safe, it makes sense to engage in CBA” (32). Chapters 9 and 10 focus on the shortcomings of the Kyoto Protocol and “five concrete changes that would make a post-Kyoto cap-and-trade climate treaty more effective, efficient, and equitable” (195).

Despite not being convinced by Hahnel’s argument that the use of adapted mainstream policy measures can effectively and equitably deal with climate change, there are parts of the book which I think warrant attention. The historical and institutional details of international climate change negotiations and the Kyoto Protocol are very well-documented in chapters 8 and 9. The chapter 3 discussion “What on Earth Is Sustainable Development?” is worthy of a read because it highlights the problem of contested conceptualizations which are critical to the ecological cri- sis debate. The book’s conclusion also exemplifies some of the weaknesses inherent to advocacy of capitalist reform as the solution to widespread entrenched social and economic problems.

Hahnel posits that a political coalition is needed which is “determined enough and powerful enough to implement these policies” (229). But herein lies a key weakness in the plausibility of his argument. How are the conflicting interests to be reconciled within his coalition of those most environmentally harmed and those who stand to gain the most from the conversion to renewable energy sources? No explanation is provided. Perhaps it is assumed that fundamental conflicts will be put aside in order to protect the environment. Given the state which society has reached this seems pretty improbable. The plausibility of Hahnel’s argument that policy switches will be sufficient is further weakened when he states that “every policy to reduce pollution or increase environmental protection . . . is merely a stopgap attempt to correct for some destructive dynamic that is an intrinsic part of the way we go about our daily economic business” (232). Now he inti- mates that there is something fundamentally wrong with capitalism but stops short of advocating change to its social relations.

On the contrary, in Ecological Rift: Capitalism’s War on the Earth, Bellamy Foster, Clark, and York argue there must be fundamental changes to the social relations of capitalism if the ecological crisis is to be transcended. This tome, written from a Marxist sociological perspective and running to nearly 550 pages including 87 pages of detailed footnotes and a great deal of repetition, comprises a 40-page introduction and 18 subsequent chapters. Sixteen chapters are revi- sions, some extensive, of previously published journal articles and book chapters which for me, as someone familiar particularly with Bellamy Foster’s scholarship and debates in the Monthly Review, is somewhat disappointing. Nevertheless, there is much to commend.

First, Ecological Rift reinforces the potent message from the Stockholm Resilience Centre Project (Rockström et al. 2009) that climate change, the headline-grabbing hallmark of contem- porary environmental concern, is but one of nine “planetary boundaries” critical to “maintaining an earth-system environment in which humanity can exist safely” (14). The other boundaries are: chemical pollution, land use change, global freshwater use, ocean acidification, biodiversity loss, ozone depletion, the nitrogen and phosphorous levels cycles (that impact soil fertility and thus food production), and atmospheric aerosol loading. The project drew from scientific knowledge to quantify boundaries. For aerosol loading and chemical pollution, there are as yet insufficient physical measures; for the other seven, the project concluded that three boundaries have been breached – climate change, rate of biodiversity loss, the nitrogen cycle – and the remainder are on the brink (Rockström et al. 2009).

The mapping out of planetary boundaries in this way gives us a better sense of the real threat to the earth system [sic]. Although in recent years the environmental threat has come to be seen by many as simply a question of climate change, protecting the planet requires that we attend to all these planetary boundaries, and others not yet determined. The essential problem is the unavoidable fact that an expanding economic system is placing additional burdens on a fixed earth system to the point of planetary overload. . .. Business-as-usual projections point to a state in which the ecological footprint of humanity will be equivalent to the regenerative capacity of two planets by the mid-2030s. (17-18)

Second, Marx’s conceptualization of a metabolic rift between humanity and the environment is central to the book and well-articulated for which Bellamy Foster must take much credit. Using the example of soil robbed of nutrients through agricultural intensification and the use of chemi- cal fertilizers, which were transferred to urban areas though food and fiber and contributed to pollution, Marx demonstrated the ruptures created by capitalism in the ecosystem’s regenerative capacities, and thus the never-ending chasm between human society and the natural conditions needed to sustain life. Ecological Rift extends Marx’s analysis to explain the depth and breadth of the contemporary ecological crisis as well as the spatial and technological shifts of capitalism in response to rifts in metabolic relations. It is this analysis which underpins the book’s argument that advanced capitalism’s insatiable quest for growth, through the accelerated use of fossil fuels and serviced by imperialism, directly threatens survival of the human species.

Third, this book discusses in some detail, and effectively rebuts using well-reasoned argument and evidence, mainstream views and “ecological modernization theory” which have become embedded in the responses of nation-states to the growing ecological legacy of capitalism. Yale economist William Nordhaus, a prominent climate change analyst, exemplifies, for the authors, the lack of understanding of the true cost of ecological degradation because of reliance on measuring wealth with the limited concept of GDP and placing little value (through high discount rates) on the welfare of future generations. The different positions of Nordhaus and Nicholas Stern, and the implications of their respective policy prescriptions towards an ecologically unsustainable target, are well-documented through the six chapters forming part one Capitalism and Unsustainable Development.

Using the analogies of the Jevons and paperless office paradoxes – technological efficiencies leading to greater not less resource use – part two of the book, Ecological Paradoxes, argues that

improvements in the efficiency of use of a natural resource and the development of substitutes for a natural resource may not lead to reductions in consumption of that resource – in some circumstances they may even lead to an escalation of consumption of that resource. (191)

Part three is devoted to Dialectical Ecology (chapters 11 to 15) which reads, in part, as a jus- tification of their thinking about the rupturing of metabolic relations and creation of the ecologi- cal rift. Identified as an extension of Engels’s application of the dialectical method beyond society to nature, the authors build the case for their argument by way of contrast with critics such as Lukács. These chapters are akin to the philosophical discussion of Nature, Social Relations and Human Needs and one, “The Sociology of Ecology,” arguing for realism and materialism, pro- vides an interesting adjunct to the earlier discussed contribution by Soper.

Ways Out forms the book’s part four and final three chapters. Not surprisingly, “technological fixes” and “green-market fetishism” are given short shrift. Given the scale and pace of change needed to address the global ecological crisis and its inexorable relationship with capitalism’s incessant drive to accumulate, “what is required is an ecological revolution that would need to be also a social revolution” (426). A social revolution is needed to create a just and sustainable soci- ety. An ecological revolution, it is posited, requires short-term strategies such as leaving fossil fuels in the ground, reducing carbon emissions as quickly as possible to near zero, direct intervention of the state through expenditure and regulation, and “contraction and convergence” in greenhouse gas emissions between the North and the South. “The long-term strategy for eco- logical revolution throughout the globe involves the building of a society of substantive equality – the struggle for socialism” (441). Sustainable human development, the restoration of harmony between humans and nature and thus elimination of the ecological rift, so the book’s argument goes, will only be achieved through [a] social ownership and social use of nature, [b] social pro- duction organized by workers and regulation of the metabolic relation between humans and nature, and [c] satisfaction of present and future communal needs.

Despite its strengths, this lengthy book does suffer from repetition and bringing into being a “universal revolt” against capitalism is not explained. The arguments are set forth forcefully and with passion (as well as considerable empirical supporting evidence). Not quite a political manifesto but perhaps undercurrents thereof which appear somewhat more explicitly in Ecology and Socialism: Solutions to the Capitalist Ecological Crisis.

Like Hahnel’s Green Economics, Chris Williams’s book treats climate change as the epitome of the contemporary ecological crisis despite the passing reference to problems such as ocean acidification. The first four chapters cover the science of climate change, debunk the overpopulation myth, and argue the reasons why capitalism is unsustainable development. These are well- written and structured, supported by the author’s obvious strong scientific knowledge. The same does not describe the remaining four chapters which are lacking in coherence, contain contradictory statements, and poorly express a view of socialism. The discussion of immediate “real solu- tions” is somewhat superficial and the rhetoric would raise little objection from those concerned with addressing the ecological crisis. But this is where Williams creates confusion. “Real environmental reforms can and have been won under capitalism . . . when we collectively demand, organize and fight for them” (147). So then why “only a socialist future holds out the hope of a sustainable one for the planet” (238)? Williams does not reconcile these statements and leaves the impression he is unsure if reform of capitalism or its change to socialism is the preferred strategy. Generally speaking, this book adds little to the contributions of the pioneering ecoso- cialists (e.g. Bellamy Foster 2002, 2009; Kovel 2007).

The notion that capitalism is hostile to the environment is not new and now generally well- accepted. All four books agree that the ecological crisis of capitalism is global and vast in scope, and all share a sense of urgency to either reform or change capitalism. The common weakness of all four books lies in the lack of attention to, or cursory consideration of, what is entailed in the necessary transition that capitalism must undergo to be a reformed or changed society, if the ecological crisis is to be overcome. The need for political activism is acknowledged by all but, in the words of Ted Benton, “there is much work to be done in thinking through the sorts of feasible institutional forms that might take us into a more convivial and sustainable future” (Moog and Stones 2010: 243).

1Benton is also renowned for his political activism and being a field naturalist with particular expertise in the lives of bumblebees, dragonflies, and butterflies.

2For those seeking an introduction to the fundamental concepts and approach of mainstream environmental economics, Goodstein (2011) and Harris (2006) provide two excellent starting points.

References

Bellamy Foster, J. 2002. Ecology against capitalism. New York: Monthly Review Press.
Bellamy Foster, J. 2009. The ecological revolution: Making peace with the planet. New York: Monthly Review Press.

Costanza, R., C. Perrings, and C.J. Cleveland. 1997. The development of ecological economics. Cheltenham, UK: Edward Elgar.Goodstein, E. S. 2011. Economics and the environment, 6th ed. Hoboken, NJ: John Wiley & Sons. Hahnel, R. 2002. The ABCs of political economy: A modern approach. London: Pluto Books.

Hahnel, R. 2007. The case against markets. Journal of Economic Issues 41(4): 1,139-1,159.

Hahnel, R. 2012a. Left clouds over climate change policy. Review of Radical Political Economics 44(2): 141-159.

Hahnel, R. 2012b. Desperately seeking left unity on international climate policy. Capitalism Nature Socialism 23(4): 83-99.

Hahnel, R., and K. Sheeran. 2009. Misinterpreting the Coase theorem. Journal of Economic Issues 43(2): 215-237.
Harris, J.M. 2006. Environmental and natural resource economics: A contemporary approach, 2nd ed. Boston: Houghton Mifflin.

Kovel, J. 2007. The end of capitalism: The end of capitalism or the end of the world?, 2nd ed. London: Zed Books.

Rockström, J., W. Steffen, K. Noone, Å. Persson, F. S. Chapin, III, E. Lambin, T. M. Lenton, M. Scheffer,

C. Folke, H. Schellnhuber, B. Nykvist, C. A. De Wit, T. Hughes, S. van der Leeuw, H. Rodhe, S. Sörlin, P. K. Snyder, R. Costanza, U. Svedin, M. Falkenmark, L. Karlberg, R. W. Corell, V. J. Fabry, J. Hansen, B. Walker, D. Liverman, K. Richardson, P. Crutzen, and J. Foley. 2009. Planetary boundaries: Exploring the safe operating space for humanity. Ecology and Society 14(2). Available at: http://www .ecologyandsociety.org/issues/article.php/3180

United Nations Environment Programme (UNEP). 2012. The emissions gap report 2012. United Nations Environment Programme, Nairobi. Available at: http://www.unep.org/publications/ebooks/emissions gap2012/

Lynne Chester is a Senior Lecturer in the Department of Political Economy at the University of Sydney. Her research focuses on energy and the environment, electricity and carbon derivatives, markets for goods and services previously provided direct by government, and Australia’s institutional architecture.