Macro-Omission

by Nelson Harvey

If my current macroeconomics class is any indication, ecological economics are a long way from the mainstream. I’m taking an introductory class to find out where economic principles diverge from environmental ones, and how we can bridge those gaps. Yesterday we began discussion of the GDP, which economists consider one of the three basic indicators of the health of an economy, along with the unemployment rate and inflation. The definition of GDP that we were given was as follows:

“The monetary value of all good and services produced within the U.S. in a year, either by citizens or foreign nationals.”

I raised my hand, and asked the professor whether there was any effort within the economics profession to account for the condition of ecosystem services, so that we could subtract declines in their productivity from the overall GDP figure, as China has done. He stopped me before I was even through talking. “No, no,” he said, “I’ve never heard of anything like that.” He paused. “You know, you may be the first person to ever think about that,” he said, only half joking. “You could write a paper on it.” The class laughed. “I’m serious!” he insisted.

I knew, of course, that I was far from the first person to conceive of ecological economics. I could have pointed the professor to scores of sources on the subject, from organizations like the World Resources Institute, Redefining Progress or the New Economics Foundation, to books by Robert Costanza and Herman Daly. But I didn’t. I just smiled, and the class went on.

My class is the first one that anyone interested in economics must take when they start at NYU, so it’s discouraging not to see any mention of the “value” of nature. Certainly, courses at many other universities (like the University of Vermont) incorporate this, and its absence in my course is understandable. If the discipline of economics has been around for more than 300 years, then ecological economics has only come into its own in the last 30. As the discipline develops, incorporating it into introductory courses will be a critical step in reconciling conflicts between economics and the ecosystems that support us.

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One thought on “Macro-Omission

  1. Dave Aakhus says:

    Nelson, word. Great question to ask. Especially in a class introducing basic economic ideas to people. And I agree, most of the fundamental ideas about production and value began their formations two centuries ago–those cats weren’t thinking too much about carbon footprints then.

    But I do see progress in some incorporating concepts like natural capital (as a fixed stock in some cases, not renewable income). My economic development course includes discussion of “sustainable” princples: fishery managment, forest harvest deplation rates, and taxation of pollution.

    Economists still think of these problems as externalities, though, and that has its limitations. I think in the coming decades, however, there will be a transformation in designing theses models to include ecological costs. I mean, there was a period in the history of economics when labor costs never included the concept of wages–slavery–and that definitely changed.

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