ECON 101 Disconnect

I studied economics as an undergraduate.  I even followed the “honors” curriculum and wrote a thesis.  I have to admit that I was mainly interested in environmental science (my other major), and majored in economics to be more employable upon graduation.  Nonetheless, I got a solid schooling in the prevailing theories of economics from a highly regarded department at a highly regarded university.

At the time I was taking all those courses, from Econ 101 to advanced econometrics, I felt like something was out of place.  I liked the analytical methods used.  Economists are adept at drawing simple line graphs to represent complex ideas and analyze various behaviors exhibited by individuals and societies.  I also liked the clean logic of some of the underlying principles, like the law of diminishing returns.  But there was something about my economics training that left me with a sense of uncertainty.

While I was in school, I was never able to put my finger on the source of that uncertainty.  Like many students, I felt like the field of economics was overly concerned with mathematics and statistics.  It seemed like a fruitless attempt to demonstrate scientific rigor where it wasn’t warranted.  But that wasn’t enough to explain my disenchantment with my studies.  It was only years later, when I read Ecological Economics by Herman Daly and Joshua Farley that I figured it out.

The most basic difference between today’s standard university economics (neoclassical economics) and ecological economics is the world view.  The neoclassical economists believe that the ecosystems of the planet are a subsystem of the economy – the economy is the containing whole.  Ecological economists believe the opposite.  Namely, the economy is a subsystem of the Earth’s ecosystems – the Earth is the containing whole.  I don’t recall any explicit utterance of the neoclassical world view in my studies, but the assumptions used by my professors, text books, and readings align with that world view.  This was the source of my discontent.

I believe that the economy is something we have built on our finite planet.  The logic seems pretty straightforward to me.  The ideas about economic growth and efficiency that derive from this starting point are quite different from those pushed in economics lecture halls today.  If I were a student of economics today, I would be sure to ask my professor about this underlying world view.  What is the system and what is the subsystem?  What is the logic behind the neoclassical view?  It’s time for the models in economics to bear a resemblance to the reality they purport to describe.