The Neoclassical and Ecological Economic Approaches to Sustainable Development.

Topics: Sustainability, Ecology, Ecological economics Pages: 7 (2089 words) Published: September 26, 2008
The term sustainable development is very much in vogue and is often inanely (even superficially) used by many individuals or societies trying to gain favour. However, its popularity is not without reason; ethical considerations and to a lesser extent, fear has cast it in the spotlight.

Within an economics context, the neoclassical and ecological schools have explored the topic vigorously, and based on their individual beliefs, recommend different policy ideals to ensure that sustainable development is indeed realised. Though both schools hotly contest each other, both agree that sustainable development is an indispensable goal if we intend to improve intragenerational and intergenerational equity and efficiency.

A workable definition of sustainable development is provided by Asheim, “Sustainable development is a requirement to our generation to manage the resource base such that the average quality of life we ensure ourselves can potentially be shared by all future generations” (1991: ch14).

This definition does not make explicit reference to a particular type of resource base (man-made or natural); thus it appears equally applicable to both schools of thought and succinctly captures the objective of sustainable development. The manner in which this objective is pursued is what distinguishes the Ecologists from the Neo-classicalists.

Before delving into the mechanics and ideologies of the respective schools, I must admit that I appreciate more, the arguments of the Ecological economists than those of Neo-classical descent. In my, albeit novice opinion, I find the Neo-classical theory fits to neatly to be realistic. In true Neo-classical style, most idiosyncrasies are assumed away. Furthermore, I have been taken by Daly’s exposé’s and the legitimacy of his propositions. Not only is his writing eloquent and humorous, but he makes valid points and identifies a variety of ‘logical glitches’ in the Neo-classical theory that are too serious to be ignored. That being said, it is only fair to admit that Ecological economics might appear superior as it has the advantage of being formulated after, and in response to Neo-classical environmental theory.

Daly makes the assertion that it is ultimately our pre-analytic vision that divides us between the two schools of thought. In his words, “everything depends on the which paradigm one accepts, the economy as a whole, or the economy as a subsystem” (Daly, 1991: 3)

The Ecologist’s perception of the human economy is graphically represented below:

(Hussen, 2004, The natural environment and the human economy, chapter 2, figure1.2)

The above diagram illustrates the Ecologist’s view of the human economy as a subsystem within the realm of natural ecosystem (biosphere) and stresses the importance of the functional linkage between two.

Their mutual interdependence requires that both the sustainability of the economy and the biosphere be addressed if they are to be preserved. As humans, we are a biotic species (or more specifically, a keystone species) existing within the natural ecosystem – a required linkage in the chain. We in turn depend on the biosphere for the provision of inputs and to function as a repository for our wastes. As we are “completely and unambiguously dependent on the ecological system” (Hussen, 2004, 3) for our needs, it is imperative that we preserve it or at least insure ourselves against further damage to ensure our survival into the future.

The natural ecosystem is finite. The economy, represented by the box, is bounded by the biosphere; that is, the human economy is subject to growth constraints. It is for this reason that Ecologists dismiss the merits of ‘sustainable growth’ and the demographic transition hypothesis – it is not plausible as growth is limited.

We should also be wary of the continuous economic growth advocated by the Neo-classicalists, as, with amplified growth, comes increased...
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