Economic Theory for the Anthropocene:

Towards Heterodox Understandings of Sustainable Economies

3 - 4 July 2018

University of Surrey, UK

Book of Abstracts

John Wood

Relational Money

Although the invention of money helped to shape the Anthropocene, recent developments in cryptocurrency technology offer new opportunities to re-design money in a way that might foster ecological and social regeneration. Money is alienating because it reduces all values, contexts and qualities to single quantities. For example, whereas living systems exploit diversities in an interdependent and opportunistic way, the mathematics behind money is granular, inert and summative. This probably reflects the fact that humans have mined, shaped and collected physical objects for millions of years, therefore feel comfortable in exchanging individual tokens, or units. However, it was the logic of mining that inspired the pessimistic 'law of diminishing returns', and which underpins the current obsession with economic 'growth' at all costs. Electronic peer-to-peer ledger exchange is an attractive idea, partly it would enable money to record many more contextual relations that are an intrinsic to value. The prevailing industrial mindset has made us forget that relations always outnumber things-in-themselves. Indeed, they have much more potential value (i.e. utility, not speculative). Currently, the stupendous energy requirements of a global cryptocurrency system rule it out as a substitute for money, as we know it. But money is already grossly over-scaled and, thereby, inherently unstable. Indeed, the scaling-up of finance also makes it dissipative. Designing money to be less 'granular' and more 'relational' would encourage a new economic order, based on the quest for a diversity-of-diversities. Euler’s Law (1751) offers a starting point for sharing unforeseen dividends with more recipients, using existing assets. It would also encourage a monetary prosperity based on the creative and auspicious combination of entities, whether these assets are of high, or low value. Ultimately, this approach can find unforeseen value in situations hitherto seen as 'problems'.

Romain Svartzman

Monetary institutions and global liquidity for an age of limited substitutability - Revisiting endogenous money theories through the socio-ecological frontiers to capital accumulation

A socio-ecological approach to money is missing among the various streams of economics sharing an endogenous view of money – such as Regulationists (Aglietta et al. 2016; Orléan 2015), neochartalists (Wray 2015) and post-Keynesians (Rochon and Rossi 2013). The financial sphere is assessed as if monetary economies of production existed on a planet with endless natural resources and ecosystem services. This ontological position of a "world of abundance" (Lavoie 2014: 22) leads to treat nature as a post hoc and separate topic of inquiry, and provides an incomplete framework to assess two questions at the core of this thesis:

How biophysical limits – e.g. declining energy availability – and ecological risks – e.g. climate change and biodiversity loss – can affect financial stability (Carney 2015)? How the collective decision to engage in a socio-ecological transition may contribute to develop new forms of "monetary contestations" (Ould Ahmed and Ponsot 2015), aimed at promoting a more equal and sustainable access to liquidity at the global scale?

Addressing this theoretical gap calls for a transdisciplinary 'political economy of human-nature relationships and endogenous money', which combines institutional approaches to money with ecological economics and world-ecology perspectives. These enable us to assess the multiple forms of exploitation of nature as historical processes that have supported specific regimes of capital accumulation (Mitchell 2011; Moore 2015; Sager 2016). In other words, the ways in which societies control and transform their natural environment are "constitutive of and internal to the productive forces and social relations of capital" (Huber 2013: 18). This approach suggests that ecological and financial crises are more entangled than often assumed, and that their union forms a systemic roadblock towards a sustainable transition.

Based on these considerations, this research explores different possible co-evolutions between new monetary contestations – aimed at redefining money in its ambivalent nature as a public good and object of private accumulation – and the development of a much-needed ethical relationship between humans and nature (Brown 2012; Descola 2005; Merchant 1996).

Jon Mulberg

The Politics of Environmental Economics: A Foucauldian Approach to Re-Centring Nature

While the 2008 financial crisis may have raised the profile of heterodox economics, orthodox economics remains the major influence on policy, and also dominates environmental policy worldwide. Yet orthodox economics has remained largely unchanged in the last decade, with only token gestures towards reform. A heterodox approach to environment would therefore require not only a critique of orthodox environmental economics but would also need to offer an understanding of the basis of the influence exerted by orthodox economics if it is to impact on the current environmental policy discourse.

This project employs a Foucauldian approach in order to explain the status of economic ‘science’, develop a critique and to help generate alternative, transdisciplinary approaches. The project consists of three parts: a Foucauldian deconstruction of the scientific basis of economics; a Foucauldian approach to the history of economics; and the generation of an alternative discourse for ecological political economy.

1. The Politics of Economics

Habermas refers to ‘the scientization of politics’, whereby political decisions are removed from the political forum and taken instead by policy ‘scientists’—the project demonstrates how economics exemplifies this.

For Foucault, economics is to be regarded as part of a power structure, performing an ideological function to justify essentially political decisions, and is best viewed as a form of political governance. Foucault believed the scientific status of a discipline is not a result of the endeavours of the practitioners. Instead the discipline determines what is to count as evidence and which questions can legitimately be asked. Foucault terms this a ‘discourse’. The Foucauldian concept of discourse is bound up with power. The scientific disciplines maintain discipline—they set the scientific agenda and sanction anyone who breaks their ‘rules’. In doing so they affect our beliefs as to the valid policy set, which Foucault terms ‘governmentality’. An emancipatory human science would remove the human body from its central position and replace it with nature.

2. The Hidden History of Economics

In order to analyse disciplinary power, Foucault suggests we look to the discipline’s past—the ‘archive’—to look for ‘ruptures’ within what is portrayed as scientific progress. This will belie claims of universal ‘truth’ or ‘progress’. He termed this an ‘archaeology’. The project applies this to economics, showing how the founders of the discipline denied the central tenets of the current orthodoxy (so in fact contemporary economics is not neoclassical), and how the current ubiquitous ‘choice’ definition of economics is subjective, tacit and explicitly non-scientific in order to avoid the socialist corollaries arising from the theories of the neoclassical founders.

Employing the history of economics as critique adds strength to heterodox economics, since the criticisms are from the very authors whose analyses populates the content of the discipline—the critique is internal, not from ‘outsiders’.

3. Application to environment

Critique: The project applies these insights to environment. Ironically, the introduction of parameters from physical science stretches an economics based on methodological individualism beyond its limits. All the issues with environmental economics can be traced back to philosophical and methodological concerns. The critique of environmental economics—the main justification for current policy—mirrors that of wider economic ‘science’. In particular, the current ‘choice’ definition leads to a variety of macro-level issues, since choice cannot be measured. The definition renders GDP inconsequential, also it removes conceptions of efficiency—technical improvements will actually lower GDP. Since costs and benefits are undifferentiated, some expenditures will be costs and others benefits, they cannot simply be aggregated. It is unclear what GDP is measuring. Furthermore, since technical efficiency lowers costs, consumption may rise instead of fall (the ‘Jevons paradox’). Better fuel efficiency has simply increased car mileage.

The current policy set involves commodification of the environment, by cap-and-trade schemes or taxation. These are criticised on ethical grounds, but also for being ‘politics with numbers’—the cap or tax level are politically contestable. There are huge distributional and governance issues if the policies are implemented properly. Furthermore the ‘choice’ approach to environment is inoperative if no choices or substitutes are available. Any ‘choices’ over depleted resources are zero-sum, and not everyone can

exercise a choice. Markets may be inadequate under such circumstances, and an alternative allocation mechanism is required.

Alternatives: A new definition of economics is therefore proposed—the allocation of depleted or scarce resources. This will involve an analysis of allocation processes, of which markets are only one of the options. The project employs the work of the original Institutionalist school of Veblen and J.R.Commons, but in particular the overlooked work of K.W.Kapp, to refocus away from ‘growth’ and risk towards economic security. It also investigates the legal basis of economic activity, suggests legal changes facilitating market management and the democratisation of economic institutions, as well as demand management to control the effects of advertising and demand manipulation. These are all long-standing designs within the Green movement.

Foucault suggested a counter-discourse (a ‘genealogy’) which challenges the current hegemony would involve combining ‘subjugated’ approaches (such as heterodox economics) with ‘sub-science’ ideas from social movements to generate a counter-discourse. The new Green political economy will therefore involve ideas from the Green and other social movements, and is bound up with political engagement.

One of the main underlying themes of contemporary popular movements has been the need to consider ethical questions. These are invariably collective rather than individual in character. The issue of what is morally right cannot be reduced to questions of individual preference—it is not the individual making the choices who is facing the loss or hazard. A new, Green political economy will therefore be concerned with a process rather than an outcome. It will be as much concerned with the public forum and participatory democracy as with the outcomes of market mechanisms.

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The critique of environmental economics therefore mirrors a wider critique of orthodox economics. The project shows how the Green movement can move from the language of sacrifice to a Green New Deal, offering security in place of acquisition and risk, and outlines how economic institutions can be democratically managed.

References

Mulberg, J. (2017). The challenge of environmental governance: Ecology and the need for a heterodox political economy. Journal of Australian Political Economy, (80), 129.

Mulberg, J. (2013). Social limits to economic theory. Routledge. (e-book edition, 1st ed. 2005).

Henry Leveson-Gower

The potential of institutional economics for informing a transition to a sustainable economic system

For the last 30 or so years, the standard model for achieving sustainability has been through state intervention presented by neo-classical or standard economics as either ‘command and control’ or market-based instruments. Standard economics suggested that the latter type of instruments was more efficient both statically and dynamically, which some disputed but all agreed that the Government had to drive action by economic enterprises which were reasonably seeking only to maximise profits. Companies may indulge in corporate social responsibility, but this was only understood as instrumental and requiring a ‘business case’ (Kemper 2010). Although behavioural economics had some impact on thinking in the noughties, it was mainly with regards to the regulation of ‘irrational’ consumers. Businesses continued largely to be seen as rational maximisers of profit within the law.

Hodges (2015) however points out that both ‘command and control’ and market based instruments attempt to use incentives to achieve behaviour change, the former through the threat of penalties, while the latter more obviously. His extensive research shows that both approaches are ineffective as they rely on a compliance culture in business, which the approaches fail to recognise and potentially undermine if the regulatory behaviour is seen as unreasonable or unfair. If business are unwilling to comply, regulators can do little due to asymmetric information and lack of resources, and the result is generally ineffective regulatory escalation (e.g. see Haldane (2012) description of Basel I, II and III).

Hodges proposal, which has now significantly influenced government policy (see HM Government 2017), is that regulators should treat businesses as entities with ethics and develop a shared purpose with them to reinforce their tendency to comply. ‘Hard’ regulation combined, with auditing of compliance, should be a fall back instrument to catch ‘baddies’, which ideally the majority that comply will help to identify.

This though raises the question as to what makes organisations likely to be more or less ethical. Indeed according to standard economic theory, corporations should act to maximise shareholder value, which may not mean doing the ‘right thing’ according to other stakeholders apart from shareholders. Furthermore Friedman’s (1970) dictum that businesses should act only in the interests of shareholders has had a huge impact on the culture of businesses, even though his proposal did not and does not today represent the legal situation (Stout 2012).

Although Hodges moves outside orthodox economics to call on behavioural economics in reaching his conclusions ie looking at how businesses really respond to incentives, he could well have done better to call on institutional economics (e.g. Hodgson 2018). This examines the effect of formal and informal rules on behaviour and how such rules interact with values. If the morality of organisations matters as Hodges demonstrates, then we need to examine the effect of business culture and legal forms on their likelihood to be moral. For corporations to be moral, it would seem they would need to take account of some sense of broader public interest as opposed to only the immediate financial interests of shareholders.

Various models, such as Fair Shares (see http://www.fairshares-association.com/index.html), look to create legal forms that are claimed to support a more ethical business. In effect a Fair Shares approach can bring the ‘voice’ of a range of interests to have a legal influence on enterprises effectively potentially democratising them in some sense. This potentially radically changes the relationship between enterprises and democracy so the public interest of pursuing sustainability can be ‘hard-baked’ into the structures of enterprises rather than just the responsibility of governments and their agencies.

There are also potentially further benefits to explore. If corporations were more trusted to be public interested due to their legal structure, this could substantially reduce transaction costs across the board between such corporations leading to increased efficiency. This could be particularly important in the context of knowledge industries such as the giving of financial advice where trust is so important.

Governments would also no longer necessarily need to use standard competitive tendering procedures to ensure good value. They could just examine the adequacy of company democratic procedures to ensure public interest compliance. This could be particularly helpful in the case of long-term and/or complex relationships with corporations where uncertainty and the need to innovate can mean competitive tendering for long-term contracts lead to highly ineffective and inefficient relationships (Leveson-Gower 2017).

Beyond this, it might be possible to surmise that employees in enterprises with a clear public interest or purpose, could find their work more meaningful. As a result they may have less requirement for monetary compensation or for consumption to make up for doing ‘meaningless’ work. This could reduce pressures both towards inequality and unsustainability more broadly.

However one of Hodges’s (2015) key points is that in a contest between formal rules (e.g. the legal structure of an enterprise) and informal rules driven by culture, beliefs, values etc, the latter will be dominant in determining

behaviour. So a change in legal form might support different values, but while business culture remains highly influenced by Friedman’s dictum, a change in legal form is unlikely to have much impact by itself.

Hence the key issue becomes business culture and the shared idea of the purpose of business. This debate has opened up over recent years with increasing awareness of the fragility of the current business narrative in the face of political turbulence. These concerns are even being voiced by the mainstream such as investors (e.g. Fink 2018) and the media (e.g. Financial Times 2018). This raises the question of whether the potential for institutional evolution exists and whether the formal rules can then change to embed that change such as suggested by the Fair Shares approach.

Hence a heterodox economics approach, in this case institutional economics, provides a research space for understanding business behaviour that recognises the importance of informal and formal rules, values and culture. None of these are considered in standard economics. These issues though seem central to the transition towards an economic system that is fit for the Anthropocene period.

Financial Times, 2 January 2018, A better deal between business and society, FT.com

Fink, L, 2018, A Sense of Purpose, BlackRock

Friedman, M., 1970, “The social responsibility of business is to increase its profits”. New York Times Magazine, 13 September

Haldane, A, 2012, The dog and the Frisbee, Bank of England

HM Government, January 2017, The Regulatory Futures Review - https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/582283/Regulatory_Futures_Review.pdf

Hodges, C, 2015, Law and Corporate Behaviour: Integrating Theories of Regulation, Enforcement, Compliance and Ethics (Civil Justice Systems), Oxford and Portland Oregan

Hodgson, G, 2018, Institutional Economics, in ‘Rethinking Economics. An Introduction to Pluralist Economics’, Routledge

Kemper A, Martin R.L. (2010). “After the fall: The global financial crisis as a test of corporate social responsibility theories” European Management Review

Leveson-Gower, H, 2017, Public Infrastructure and Private Finance: Can there be a happy ever after?, CECAN

Stout, L. 2012, The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public, Berrett Keohler Publications

Roberto Pasqualino

Network of feedback system models of Annex Parties for addressing structural inequality and role of climate finance towards global sustainability

The role of climate finance in the transition towards a sustainable global economy has taken more and more importance in the last decades as demonstrated within the various Conference of Parties till COP23 in Bonn 2017. Global system models based on feedback and networks have the capability of addressing the needs of the United Nations Framework Convention on Climate Change (UNFCCC) at the macro-level, particularly based on the representation of Annex parties and inequality among those. In particular, 49 parties classified as the least developed countries by the United Nations are considered having limited capacity to respond to climate change as well as non-sufficient resources to adapt effectively to it (UNFCCC 2017). Annex I and Annex II parties, and the emergent Brazil, China, Russia, South-Africa are called to provide such resources through international aids. However, models able to address the effectiveness of such investments have to be developed to facilitate such a global scale transition.

Within the Centre for the Understanding of Sustainable Prosperity (CUSP) we are engaged in the development of simulations models which foundations is on the use of feedback loop concept to study macro-economic dynamics and transitions towards a sustainable and prosperous world. With particular focus on structural inequality, social policies, climate change, resources limits and trade, the models aim at supporting the definition of narratives that can be brought under discussion at the UK government level by mean of the newly formed All Parties Parliamentary Group on Limits to Growth (CUSP 2017, Jackson 2016).

The conceptual model presented in here is a specific one which allows for the modelling of the global economy, based on the flexible representation of macro-regions (groups of countries in aggregated form) connected as system networks to analyse systemic risk dynamics emerging from their interaction. Each generic macro-region will rely on the system dynamics economic-resource model that will be available in Pasqualino and Jones in 2018. There exist several combinations of macro-regions that can allow for the assembling of a full global economy. In the conceptual model of Climate Finance proposed in here, we use a variant of the UNFCCC Annex Parties to the Convention Division. In particular, we represent the world as composed of three macro-regions: (i) Annex I countries, (ii) Brazil, Russia, China, and South-Africa, and (iii) the rest of the world which include the less developed countries which are resource limited to face climate change effectively. The final aim is to provide policy makers with a systemic risk assessment tool that

can support the evaluation of various economic stresses and possible cascading impact on the rest of the economy.

The methodological foundations of the within macro-region model rely on the System Dynamics National Model framework as proposed by Forrester during 1970s (Forrester 1976, Forrester 1980). One simplified version of such a model, used to analyse inflation rise after US peak oil and relative transitions towards non-conventional energy resources, was proposed in Sterman (1981). Our generic macro-economic model consists of an update of Sterman (1981). In particular, the banking system and its relationship with households’ savings have been restructured. In this model the role of a central bank, commercial and investments banks has been aggregated in a single agent which is in charge of money supply, setting interest rates, and responsible to defaulted assets from the private sector. The government sector has also been included to collect taxes from every economic agent, and provide those with public expenditures and subsidies. In addition, considerations on the model production function were made to allow for testing scenarios with both neoclassical and heterodox economic approaches. A balance sheet for the representation of every financial transactions has also been adopted, and stock and flow consistency has been assured. The model has been applied to the transition of a generic economy towards a green economy, accounting for feedback loops between energy and agricultural sectors. Figure 1 represents the division in macro-sectors of our generic resource-economic model.

Global Economy

Energy supply

Manufacturing

Goods andServices

Food andBiofuels

Fossil Fuels

RenewableEnergy

Households

Banks

Public Sector

Figure 1 – Sectors representing a generic macro-region within the model

The final model can be considered as a General Disequilibrium Model of the economy, which relies on the use of nonlinearities for defining structural relationships among variables. Exogenous variables include population growth, technological change, as well as the limits to growth as the natural extremes of the global economy. The dynamics of business as usual growth have been placed as the foundation of the economy, relying on both public stimuli from government (Keynesianism), financial leverage from central banks as money supplier (Chicago School of Economics), and relying on population growth and income rise as increase in demand. The endogenous variables represented in the model include GDP, consumption, investments, savings, commodity prices (both real and nominal), wages (both real and nominal), inflation rate, labour, employment and unemployment, interest rates, default rate, money supply, debt and borrowing rate, energy production, agricultural land, food production and biofuel production among others. The final structure can be easily calibrated based on available public historical data (World Bank, International Monetary Fund, International Energy Agency, Food and Agriculture Organization), to represent the overarching dynamics of a generic macro-region. Econometric analysis has also been performed for the estimation of critical parameters in order to support meaningfulness in the calibration.

In order to model the interconnection among macro-regions, data are taken from UNFCCC database relying on the methodology proposed by Buchner et al. (2017), to describe overall dynamics in climate finance initiatives and possible results on Inequality of capabilities in the green economic transition in current business as usual scenario. The model will allow for climate stress test, including climate shocks, analysis of stranded assets, and sustainable policy making, and possible implication for economic adaptation and global inequality. As initial prototype, this works also aims at being an effort towards a global network climate finance model to support global sustainability transition.

References

Buchner, B.K., Padraig, O., Wang, X., Carswell, C., Meattle, C., and Mazza, F. (2017). The Global Landscape of Climate Finance 2017, (October).

CUSP 2017. https://www.cusp.ac.uk/

Forrester, J.W., Mass, N.J. and Ryan, C.J., 1976. The system dynamics national model: understanding socio-economic behavior and policy alternatives. Technological Forecasting and Social Change, 9(1-2), pp.51-68.

Forrester, J.W., 1980. Information sources for modeling the national economy. Journal of the American Statistical Association, 75(371), pp.555-566.

Jackson, T., 2016. Prosperity Without Growth: Foundations for the Economy of Tomorrow. Taylor & Francis.

Sterman, J. D., 1982. The energy transition and the economy: A system dynamics approach (Doctoral dissertation, Massachusetts Institute of Technology).

Sterman, J.D., 2000. Business Dynamics: Systems Thinking and Modeling for a Complex World, Irwin/McGraw-Hill: New York, NY, USA.

UNFCCC, 2017. http://unfccc.int/2860.php

Antoine Monserand

A macroeconomic stability analysis of a degrowth transition trajectory.

In the hypothesis of a low possibility for decoupling production and various types of environmental damage such as GHG emissions, taking seriously the necessity to dramatically curb emissions in the following two decades requires considering reducing aggregate production before reaching a sustainable level. Previous studies in this field have focused on several policy proposals, such as working time reduction to avoid mass unemployment (Zwickl et al., 2016), but few have investigated the macroeconomic conditions of possibility for such a degrowth trajectory as well as the risks associated with it, such as instability or crisis triggering.

We start the discussion with a critical analysis of two articles that are the closest to our work and of our approach: Padalkina (2012) and Rosenbaum (2015). Both study the possibilities for a stable equilibrium of zero growth, in neo-Kaleckian and post-Kaleckian models. The first one proposes to influence animal spirits in order to reduce aggregate investment and a tax on the saving flows in order to reduce aggregate saving. However, it is likely that the implementation of this tax would result in a effect that is opposite to the intended one (inducing zero growth), since taxing the flow of saving would produce an increase in the propensity to consume. The second article that we examine proposes to use the rate of depreciation of capital as a economic policy variable in order to reduce both aggregate investment and saving and therefore bring the rate of growth down to zero. In our opinion, considering the rate of depreciation of capital as a policy variable is problematic and unrealistic, but more importantly this work ignores the “paradox of costs” phenomenon which, if taken into account, shows that Rosenbaum’s proposition to increase the rate of depreciation of capital would lead to an increase in the rate of growth of the economy rather than in a decrease.

In the second part of our work, we develop our own proposition, describing the possibility for a phase of transition during which the rate of accumulation of capital is negative while keynesian stability is preserved, followed by a zero growth regime once the ecologically sustainable level of production is reached. We keep the framework of a Kaleckian model of growth and distribution, therefore staying in the post-Keynesian strand of economic theory, and take inspiration from the two previously cited works. Indeed, the elements allowing for the stability of this transition phase are the depreciation of capital on one hand – which in reality plays more on the saving side than on the investment one – and the management of animal spirits, which have an influence on investment.

To this comparative statics analysis we add an element of dynamics: the autonomous component of household consumption expenditures. We make the assumption that during the phase of degrowth transition this component degrows at a given rate (therefore modelled exogenously), representing in a very stylised manner the progressive change in the way of life – mainly in terms of consumption, transportation and housing. The “supermultiplier effect” of the change in autonomous consumption ends up driving the rate of accumulation of the whole economy (Serrano, 1995 ; Lavoie, 2016). This means, in our case, that GDP decreases and capital disaccumulates during the transition phase, and

then when autonomous consumption stabilises the economy converges towards a stable stationary equilibrium.

This article shows that, at least in a fairly simple Kaleckian model, a trajectory of capital disaccumulation can be stable, making it easier for a society to reach strong sustainability.

JEL Codes: E12, E21, E22, O41, O44.

Keywords : Kaleckian, Stability, Degrowth, Autonomous consumption, Supermultiplier.

References :

Lavoie, M. (2016). Convergence Towards the Normal Rate of Capacity Utilization in NeoKaleckian Models: The Role of NonCapacity Creating Autonomous Expenditures. Metroeconomica, 67(1), 172-201.

Padalkina, D. (2012). The macroeconomics of degrowth. Ponencia presentada en Sustainability Summit.

Rosenbaum, E. (2015). Zero growth and structural change in a post Keynesian growth model. Journal of Post Keynesian Economics, 37(4), 623-647.

Serrano, F. (1995). Long period effective demand and the Sraffian supermultiplier. Contributions to Political Economy, 14, 67.

Zwickl, K., F. Disslbacher, and S. Stagl. (2016) Work-Sharing for a Sustainable Economy. Ecological Economics, 121 (January): 246–53. https://doi.org/10.1016/j.ecolecon.2015.06.009.

Beth Stratford

The socialisation of rents: a prerequisite for ‘prosperity without growth’?

Over the past few decades, analysts of diverse political persuasions have noted a shift in investment patterns: away from productive investment, where returns are achieved through innovation and the expansion of output, and toward non-productive investment, where returns are achieved by gaining control of rent-bearing assets (Baumol, 1996; Konczal, 2013). Evidence for this shift is found in the rise of the Finance, Insurance and Real Estate (FIRE) sectors (Hudson and Bezemer, 2012), the expansion of the intellectual property regime (Zeller, 2007), and various indicators of increasing monopoly power (UNCTAD, 2017), including over personal data.

There has been relatively little discussion of this phenomenon among ecological economists, perhaps because the call for investment to be redirected from value-extractive to value-expansive purposes is perceived as a strategy for increasing economic growth. Most ecological economists believe that the higher the global growth rate, the harder it will be to remain within ‘planetary boundaries’ (Daly, 1996; Jackson, 2009; Kallis et al., 2012; Victor, 2008).

I believe this neglect is regrettable, as both rent-seeking and private rent-extraction are key barriers in the way of achieving ‘prosperity without growth’. The threat posed by rent-extraction in a post growth context is thrown into stark relief by Piketty’s simple observation: if returns to wealth (r) are higher than the rate of growth of average incomes (g), inequality will inevitably climb (Piketty, 2014). This raises an urgent question for ‘economic theorists for the anthropocene’: how are we to ensure that r remains below g, if we anticipate that resource caps and other environmental protections will force g towards zero?

The only study in ecological economics to address this question is an article by Jackson and Victor (2016), presenting a simple model to explore how rewards from the productive process might be divided between capital and labour as growth slows. Their model highlights an important point: achieving a rate of return to capital that is smaller than the rate of growth will be easier in contexts characterised by a low ‘elasticity of substitution’, i.e. where it is relatively difficult to substitute capital for labour.

However, for understanding how inequality may develop in a resource-constrained future, it is important to consider some limitations of Jackson and Victor’s model. They adopt the neoclassical assumption that returns to capital are determined by marginal productivity under conditions of perfect competition. In reality, returns to capital - and indeed wages for many well paid workers - are bolstered by control of rent-bearing assets/capabilities

which are scarce and difficult to replicate. Barriers to replication/imitation may come in the form of intellectual property rights, economies of scale, monopoly power, asymmetric information, the inherent finitude of natural resources such as land, and so on. Such barriers to competition enable the capitalist to respond to an increase in demand by raising prices, rather than increasing supply. In other words, Jackson and Victor’s model overlooks the effect that rentier power may have on distribution in a resource constrained future.

My research aims to plug this gap. Drawing on insights from classical, institutional and post-Keynesian economics, management literatures and Marxist geography, I aim to highlight (1) the threats that private rent capture and rent seeking could pose in a resource-constrained future, and conversely (2), how a reduction and/or socialisation of rents could help to smooth the path to post growth prosperity. I would value feedback from workshop participants on some hypotheses that I am currently developing:

• Rent can be defined as income in excess of real cost, which is sustained over time through control of scarce and inimitable assets and capabilities.

• Environmental protections and resource caps, though essential, are likely to reduce the scope for making profit through the expansion of output. This may trigger an intensification in rent-seeking.

• Experiences in the US, UK and other places with liberalized mortgage markets suggest that, where rent-seeking is fuelled by credit creation, the likely result will be asset price bubbles, over-indebtedness and financial crises (Alessi and Detken, 2011; Borio, 2014; Scatigna et al., 2014).

• The presence of widespread rent extraction and debt-fuelled booms and busts will lead to rising inequality and indebtedness, which could strengthen calls for the weakening/abandonment of resource caps and environmental protections. This is because the dominant story from orthodox economics is that inequality and indebtedness are best remedied through ‘inclusive growth’.

• Ecological economists need a simple and persuasive narrative to counter this economic orthodoxy. I propose that the concept of ‘economic rents’ – if carefully defined - could be a useful component in this story, allowing us to challenge ‘the morality, the economic efficiency and the social utility’ of certain forms of income that are delivered through capitalist market exchange (Frayssé, 2015, p. 176).

• Policies which reduce private rent extraction where possible, or socialise rents which are unavoidable (e.g. rents arising from inherent scarcity and natural monopolies) could facilitate a convergence of incomes, and potentially bring additional benefits:

o Greater tax revenue to support the labour-intensive employment that various ecological economists have advocated (Jackson and Victor, 2013)

o Popular support for maintaining or even tightening resource and pollution caps (e.g. in the case of carbon and other resource rents being used to fund a Citizens Dividend (Boyce, 2016)).

o A reduction in: the cost of many goods and services whose cost currently includes a rent component; the time and resources wasted on rent-seeking; the incidence of destabilising booms and busts

• Finally, I hope the workshop will provide a space to discuss some of challenges and risks associated with relying heavily on the concept of rent in deliberations around just and unjust distribution.

Alessi, L., Detken, C., 2011. Quasi real time early warning indicators for costly asset price boom/bust cycles: A role for global liquidity. Eur. J. Polit. Econ. 27, 520–533.

Baumol, W.J., 1996. Entrepreneurship: Productive, unproductive, and destructive. J. Bus. Ventur. 11, 3–22.

Borio, C., 2014. The financial cycle and macroeconomics: What have we learnt? J. Bank. Finance, Liquidity Risk, Reform of Bank Regulation, and Risk Management, Liquidity Risk Management, New York, USA, 14 June 2014 45, 182–198. https://doi.org/10.1016/j.jbankfin.2013.07.031

Boyce, J.K., 2016. Distributional Issues in Climate Policy: Air Quality Co-benefits and Carbon Rent (412), Working Paper Series. Political Economy Research Institute, University of Massahusetts Amherst.

Daly, H., 1996. Beyond Growth. Beacon.

Frayssé, O., 2015. Is the Concept of Rent Relevant to a Discussion of Surplus Value in the Digital World?, in: Fisher, E., Fuchs, C. (Eds.), Reconsidering Value and Labour in the Digital Age. Palgrave Macmillan UK, London. https://doi.org/10.1057/9781137478573

Hudson, M., Bezemer, D., 2012. Incorporating the rentier sectors into a financial model. World Soc. Econ. Rev. 2012, 1.

Jackson, T., 2009. Prosperity without growth? Sustainable Development Commission.

Jackson, T., Victor, P. a., 2016. Does slow growth lead to rising inequality? Some theoretical reflections and experimental simulations. Ecol. Econ. 121, 206–219. https://doi.org/10.1016/j.ecolecon.2015.03.019

Jackson, T., Victor, P., 2013. Green Economy at Community Scale. A Report to the Metcalf Foundation. Metcalf Foundation, Toronto.

Kallis, G., Kerschner, C., Martinez-Alier, J., 2012. The economics of degrowth. Ecol. Econ. 84, 172–180. https://doi.org/10.1016/j.ecolecon.2012.08.017

Konczal, M., 2013. How an anti-rentier agenda might bring liberals, conservatives together. Wash. Post.

Piketty, T., 2014. Capital in the 21st Century. Harvard University Press, Cambridge MA.

Scatigna, M., Szemere, R., Tsatsaronis, K., 2014. Residential property price statistics across the globe. BIS Q. Rev.

UNCTAD, 2017. Trade and Development Report 2017. United Nations, New York, Geneva.

Victor, P., 2008. Managing Without Growth. Edward Elgar.

Zeller, C., 2007. From the gene to the globe: Extracting rents based on intellectual property monopolies. Rev. Int. Polit. Econ. 15, 86–115. https://doi.org/10.1080/09692290701751316

Alexander J. Bisset

Additional ingredients for doughnut economics

Orthodox neoclassical economic theory attempts to explain an idealised, imaginary system made up of perfect agents and perfect information coming together in a perfect equilibrium. In this way it attempts to completely detach itself from the world. In reality, the way that individuals, classes and institutions conceive of the economy is as much a part of reality as the deeply unsustainable outcomes that those perspectives have created. Economists cannot continue to ignore or mischaracterise the role of the economic system because of its integral role in contributing to global crises; from recessions to inequality to climate change.

While heterodox economists have been correct to point out that the world is far more complex than the orthodox imagination of it, they have fared little better in explaining it. Heterodox economics has failed to build a theory that attempts to deal with this complexity from the outset. The heterodox contribution has primarily been to replace the ideas of perfection with the opposite ideas of imperfection. It is therefore hardly surprising that heterodox economics has been able to illustrate that orthodox theory deviates from reality, because orthodox theory does not even try to explain reality, it seeks to compare the world to an idealised world. Heterodox economists have collapsed into their own preferred alternative conception of economic reality, which has reified rather than transcended the positivist and scientistic tendencies of orthodox economics.

In this way economics as a whole has been stuck in a theoretical binary that must be transcended in order to create an economic theory to explain the observable behaviour of the economic system. In order to so, there needs to be a shift away from incremental critiques and piecemeal attempts at new theories. Economics now needs a systematic new theory that has empirical and logical consistency. The opportunity for heterodox economics is not only to start from observed reality, but to then build up a systematic theory that can account for complexity, emergence and heterogeneity. This requires abstraction by typification rather than abstraction by idealisation.

Kate Raworth’s doughnut economics heads in a more appropriate direction, by acknowledging that the economy is a complex adaptive system which must be analysed as such. This takes the starting point beyond the positivistic, mechanistic worldview of both orthodox and heterodox economists. The other key starting points brought together in the uniting doughnut framework are the fact that the economic system is both heavily interconnected with, and also heavily dependent on, wider social and ecological systems. In sum, we have a

compelling and much more acceptable visual and narrative framing for such an important set of issues.

The doughnut now also needs to incorporate a new economic theory for the Anthropocene. Because the challenge of sustainability is to radically transform the existing economic system in order to avoid the ecological and social tipping points that it is directly and indirectly driving towards, there is a clear need for a theory that can explain capitalism at a systemic level. Without it, the consequences of such a transformation of the economic system will not be adequately understood. Because the economic system is such a crucial part of the social systems in which we live, we risk losing the necessary social cohesion required to deliver this transformation. I propose that two key perspectives are also required.

Firstly, I propose to extend the doughnut to include a new framework that provides an empirically grounded starting point for explaining how the capitalist system behaves at a systemic level. This is the framework laid out by Anwar Shaikh in Capitalism: Competition, Conflict, Crises. Shaikh has created a new theory of real competition, underpinned by theories of aggregate demand and persistent unemployment, and secondly a new theory of turbulent macro-dynamics, underpinned by theories of effective demand and inflation. Shaikh manages to re-engineer the micro-foundations of economics, and lay out a new approach to macroeconomics.

The focus of Shaikh's framework is on profit, which Shaikh argues is the central regulating mechanism of both supply and demand in the economy. The importance of focusing on profit is that the internal limits of the economic system become much clearer, and it is from this profit that a wide array of turbulent, reflexive processes flow from. By placing Shaikh’s framework within the doughnut, two of the most important relationships relevant to sustainability can be understood far more effectively. Firstly the sustainability of profit within the system. Secondly, once capitalism is better understood then so too will the interrelationships between capitalism and the social and ecological systems which both enable capitalism and which increasingly threaten its existence.

Secondly, I propose to extend the doughnut framework to focus also on aggregate efficiency and the key converging technologies. This incorporates Jeremy Rifkin’s Third Industrial Revolution. Automation, zero marginal cost structures, the internet of things and decentralised networks will impact on how profit is made, not just the rate of profit and how it is shared. This will also changing how human networks are organised.

Because profit is the lifeblood of capitalism, economists need to understand how to maintain capitalist systems while systematically reducing profit rates across the economy. This includes understanding how a more constrained

macroeconomic environment might reflexively impact on individual expectations about future profitability, willingness to invest and lower wages for individuals in the context of extreme levels of private debt.

I show in this essay how the doughnut can act as an umbrella framework, provide access to complex systems science and its toolkit of network and agent based modelling. Within this framework Shaikh allows a focus on aggregate profit and Rifkin on aggregate efficiency. Both frameworks are equally important within the doughnut because we live in a world where the old command-and-control economy with high wastage, while a new decentralised and potentially less wasteful economy is emerging, conflicting and complementing various elements of capitalism. We cannot study one and not the other because both require transformation.

Elena Hofferberth

Post-Growth Macroeconomics - Advances in Economic Theory and Policy

In face of the worsening ecological and social crises there have been increasing calls for a reshaping of the economic system in order to make it more socially and environmentally sustainable. There exists a variety of proposals of how to achieve this aim, ranging from reformist approaches ('Green Growth') to claims of a fundamental system change. The adequacy of economic growth as a measure of well-being and as a policy target is increasingly discussed in the wider public. The All-Party Parliamentary Group on Limits to Growth in the UK, the Enquete-Commission ‘Growth, Prosperity and Quality of Life’ in Germany, the 'Commission on the Measurement of Economic Performance and Social Progress' launched by former president of France Sarkozy or the European Commission’s 'Beyond GDP' initiative are exemplary for this development.1The quest for a 'degrowth’ or ‘post-growth' economy represents a more radical approach that has gained increasing

popularity in recent years.2

Despite these trends, research on a 'degrowth transition' has remained limited so far, especially in

the academic discipline of economics. At most, the adequacy of GDP as adequate indicator of wellbeing is put into question. The general desirability of economic growth is rarely contested and even the consideration of negative implications of pursuing economic growth as a policy target represents an exception. And while there exists a vast amount of different growth theories, there are (almost) no theories that explicitly deal with non-growing or de-growing economies: ‘There is yet no fully fledged macroeconomics for a post-growth economy’ (Jackson 2017: 174).

                                                                                                                         1  See  http://limits2growth.org.uk/  [23/05/2017],  https://www.ratswd.de/en/info/enquete-­‐commissiongrowth-­‐prosperity-­‐and-­‐quality-­‐life  [23/05/2017],  http://ec.europa.eu/eurostat/documents/118025/118123/Fitoussi+Commission+report  [16/07/2017],  and  http://ec.europa.eu/environment/beyond_gdp/index_en.html  [23/05/2017].    2  There  neither  exists  the  one  degrowth  perspective  nor  is  there  a  clear-­‐cut  differentiation  between  ‘degrowth’  and  ‘post-­‐growth’.  A  range  of  proposals  is  being  discussed  under  the  labels  of  varying  in  their  analysis  of  drivers  of  growth,  their  vision  or  goal  as  well  as  concerning  the  necessary  steps  and  instruments  and  the  respective  actors  of  change  (Schmelzer  2014).  The  different  strands  will  be  discussed  in  more  detail  in  the  literature  review.  For  the  time  being,  I  will  use  the  terms  interchangeably.    

However, when aiming at changing the economic system it is key to systematise the way it works today to then be able to assess ways in which it can be transformed. A lack of analysis of the relation between specific proposals for change and the fundamental dynamics of the (economic) system can undermine their success and feasibility and, at worst, even bring about counterproductive outcomes. It is at this intersection that I would like to make a contribution and thereby help advancing both economic theory and policy.

I will do this by developing a theoretical framework for comprehending the economic system, that will allow me to assess the potential of the degrowth agenda to bring about a social-ecological transformation of the economy. In view of the complexity and scope of such a degrowth transition, sound theoretical underpinnings are essential for several reasons. First, an appropriate theoretical framework allows for the key elements and tendencies of a system and their interconnections to be identified. An understanding of the working of a system, in turn, makes it possible to identify leverage points for change (Meadows 1999). A systematisation of the diverse proposals for a postgrowth economy will be key to gain an overview of the range of propositions that are being discussed and, on that basis, choose the proposals that I will include in the subsequent evaluation. These cover, amongst others, 'resource and CO2 caps; extraction limits; new social security guarantees and work-sharing (reduced work hours); basic income and income caps; consumption and resource taxes with affordability safeguards; support of innovative models of “local living”; commercial and commerce free zones; new forms of money; high reserve requirements for banks; ethical banking; green investments; cooperative property and cooperative firms' (Kallis, Kerschner and D'Alessandro 2012: 175; see also Alexander 2012: 361ff, Farley et al. 2013: 2802, Jackson

2017: 153ff, Lange 2016: 32-33, Victor 2008: 194-221, Videira et al. 2014). I will have to identify those interventions that interact with elements of the economic system that are conceptualised in my framework. My focus will be on what is generally considered macroeconomic interventions.

When it comes to the elaboration of a sound theoretical framework, I will of course not start from scratch but consider theories that exist already. I will draw on Marxist Political Economy, Ecological Economics and other bodies of literature to elaborate a theoretical framework addressing the capitalist system, that is specifically tailored to address the issues raised by the concept of degrowth. As the main concern is with the interconnections between and the consequences of the economic system on social and ecological

conditions, the focus is on the identification of the key dynamics shaping the economic system as well as their implications on both humans and nature. As the system is dynamic and changing over time, the nature of certain recent developments will be examined.

In addition to ecological degradation and climate change, a focus will be on the expansion of finance ('financialisation') and increasing in inequality as well as their interconnections. There seems to be an agreement among the authors raising the need for a new (macro-) economic theory that these issues have hitherto been missing or neglected and need to be integrated more thoroughly (cf. Dietz and O’Neill 2013, Hardt and O’Neill 2017, Jackson 2009/2017, Rezai and Stagl 2016). A brainstorm of the newly founded Post-Growth Economics Network on what constitutes Ecological Macroeconomics reveals a similar allocation of priorities, namely biophysical limits, power relations and distribution, finance, debt and money as well as connections between economy, environment, and society more generally (internal document). I attempt to scrutinise their degree and novelty and assess to what extent they are inherent to the system. The outcomes of this analysis will allow me to adequately integrate these elements into my theoretical framework.

The final step will be the assessment of degrowth policies and strategies in light of the previously established theory. The proposals will be scrutinised against their contribution to the improvement of the social and ecological conditions on this planet. I will explore if and how the different proposals address the key pillars and dynamics of the economic system and what potential there exists for its deeper transformation. Through this, I hope to contribute to the advancement of a socially and ecologically literate economic theory on the one hand, and a better understanding of possible ways of transforming the economic system on the other.

References

Alexander, Samuel (2012). 'Planned Economic Contraction: the Emerging Case for Degrowth', Environmental Politics 21 (3): 349-368.

All-Party Parliamentary Group on Limits to Growth, http://limits2growth.org.uk/ [23/05/2017].

Commission on the Measurement of Economic Performance and Social Progress,

http://ec.europa.eu/eurostat/documents/118025/118123/Fitoussi+Commission+report [16/07/2017].

Dietz, Rob and O'Neill, Dan (2013). Enough Is Enough: Building a Sustainable Economy in a World of Finite Resources. Routledge: London.

Enquete-Commission ‘Growth, Prosperity and Quality of Life’, https://www.ratswd.de/en/info/enquete-commission-growth-prosperity-and-quality-life [23/05/2017].

European Commission’s 'Beyond GDP' initiative, http://ec.europa.eu/environment/beyond_ gdp/index_en.html [23/05/2017].

Farley, Joshua, Burke, Matthew, Flomenhoft, Gary, Kelly, D., Brian, Murray, Forrest, Posner, Stephen, Putnam, Matthew, Scanlan, Adam and Witham, Aaron (2013). ‘Monetary and Fiscal Policies for a Finite Planet’, Sustainability 5: 2802-2826.

Hardt, Lukas and O'Neill, Dan (2017) 'Ecological Macroeconomic Models: Assessing Current Developments', Ecological Economics 134: 198-211.

Jackson, Tim (2009). Prosperity Without Growth. Economics for a Finite Planet. London: Earthscan.

Jackson, Tim (2017). Prosperity Without Growth. 2nd Edition. London: Earthscan.

Lange, Steffen (2016). Macroeconomics Without Growth. Sustainable Economies from Neoclassical, Keynesian and Marxian Perspectives. Institute for Ecological Economy Research. Hamburg, November 2016. https://www.ioew.de/fileadmin/user_upload/BILDER_und_Downloaddateien/Publikationen/2017/Lange_Steffen_Macroeconomics_Without_Growth__Hamburg_.pdf [20.04.2017].

Meadows, Donella L. (1999). Leverage Points: Places to Intervene in a System. Hartland: The Sustainability Institute.

Rezai, Armon and Stagl, Sigrid (2016). 'Ecological Macroeconomics: Introduction and Review', Ecological Economics 121: 181-185.

Schmelzer, Matthias (2014). '“Wachstumsrücknahme”, “Postwachstum”, “Entwachsen”? An introduction to concepts and approaches of the German degrowth movement’, Degrowth Bolg. 18. July 2014, https://www.degrowth.de/en/2014/07/wachstumsrucknahmepostwachstum-entwachsenan-introduction-to-concepts-and-approaches-of-the-germandegrowth-movement/ [04.04.2017].

Victor, Peter A. (2008). Managing Without Growth. Slower by Design, Not Disaster. Cheltenham, UK, Northampton, MA: Edward Elgar.

Videira, Nuno, Sekulova, Filka, and Schneider, Francois (2014). 'Improving Understanding on

Degrowth Pathways: An Exploratory Study using Collaborative Causal Models', Futures 55: 58-77.

Ben  Gallant  

The  Macro-­‐dynamics  of  Sustainable  Work:  Baumol’s  Cost  Disease  and  Environmental  Structural  Change  

Environmental structural change has been proposed a means of reducing environmental harm (Jänicke, Mönch and Binder, 1993; Jespersen, 1999; Jackson and Victor, 2011; Mattauch, Creutzig and Edenhofer, 2015). However, to date, structural change appears to have had relatively limited impact on overall material and energy use (Henriques and Kander, 2010; Bithas and Kalimeris, 2018). In addition, it is not clear whether the promise of long term full employment in a green economy will be accompanied by an equitable distribution of income.

The theory of Baumol’s cost disease (Baumol et al., 2012) has the potential to provide some insights into the underlying macroeconomic dynamics of these problems. I will discuss the cost disease in the context of environmental degradation and inequality as well as presenting some preliminary approaches to modelling these dynamics.

References

Baumol, W. J. et al. (2012) The Cost Disease: Why Computers Get Cheaper and Health Care Doesn’t. Yale University Press.

Jackson, T. and Victor, P. (2011) ‘Productivity and work in the “green economy”: Some theoretical reflections and empirical tests’, Environmental Innovation and Societal Transitions. Elsevier B.V., 1(1), pp. 101–108. doi: 10.1016/j.eist.2011.04.005.

Jänicke, M., Mönch, H. and Binder, M. (1993) ‘Ecological aspects of structural change’, Intereconomics, 28(4), pp. 159–169.

Jespersen, J. (1999) ‘Reconciling environment and employment by switching from goods to services? A review of Danish experience’, European Environment, 9(1), pp. 17–23. doi: 10.1002/(SICI)1099-0976(199901/02)9:1<17::AID-EET180>3.0.CO;2-J.

Mattauch, L., Creutzig, F. and Edenhofer, O. (2015) ‘Avoiding carbon lock-in: Policy options for advancing structural change’, Economic Modelling. Elsevier B.V., 50, pp. 49–63. doi: 10.1016/j.econmod.2015.06.002.

Lukas  Hardt   Structural  change  for  a  post-­‐growth  economy:  What  can  we  learn  from  Pasinetti?  

Successful mitigation of climate change will require a radical transformation of our economic system, including significant reductions in energy consumption in developed countries. In response to this challenge (as well as other environmental challenges) research in the field of post-growth economics has been growing over the past years (e.g. Hardt & O’Neill 2017; Jackson 2017). Post-growth economic research recognises that continued GDP growth might not be compatible with ecological sustainability and therefore aims to develop strategies for achieving a stable economy that provides for human needs without GDP growth but within planetary boundaries (Røpke 2016). Structural change towards low-energy goods and services will be an important element of the transition to such an economy. For example, Jackson (2017, p.142) promotes a shift from “material products” towards “dematerialised services” with lower labour productivity, to reduce environmental impacts as well as unemployment in a post-growth economy. However, there has been very little research on how this kind of structural change can be achieved and how it would be related to changes in other economic features, such as wages, prices and consumption patterns.

In general, structural change, in terms of both output and employment, is a constant feature of economies throughout time and it is closely intertwined with the process of modern economic growth (Syrquin 2010). To find out how we can achieve structural change towards a low-energy, post-growth economy we need to understand the dynamics of structural change in the current system and how it is related to energy consumption. In my contribution to this workshop, I will discuss the early stages of a research project that contributes to this understanding and that forms part of my PhD research. The project specifically focuses on the seminal work by Pasinetti (1993; 1981), which represents one of the most-cited works on the topic of structural change (Silva & Teixeira 2008). In two complementary parts, the project will explore in how far Pasinetti’s framework can be useful for analysing the transition to a post-growth economy.

The first part examines how the theoretical framework proposed by Pasinetti could be adapted to analyse structural change towards a post-growth economy. At first sight the framework reveals some promising characteristics that are compatible with post-growth economic research. Firstly, Pasinetti uses the framework to assess the conditions necessary for full employment in the face of differential rates of change in labour productivity across sectors. As outlined above, the relationship between the sectoral shifts, labour productivity and employment is an important topic in post-growth research. Secondly, Pasinetti’s framework conceptualises the economy in the form of vertically

integrated sectors, which represent the whole supply chain for each end-product. This is similar to the consumption-based energy accounting used in ecological economics (e.g. Owen et al. 2017) and it fits well with the post-growth focus on consumption and human needs. However, there remain open questions about the suitability of the framework as it does not include a role for energy or natural resources in production and would therefore have to be extended. In addition, Pasinetti’s framework has been criticised for being too idealised for the analysis of the real-world economy (Taylor 1995). My research in this part of the project will explore these questions in more depth.

The second part of the research project focuses on the potential empirical application of Pasinetti’s framework. Specifically it will explore the use of the latest multi-regional input-output (MRIO) databases to provide an empirical representation of vertically-integrated sectors and their characteristics. As a starting point, the research will be focused on the integrated labour productivity for each sector, or the total amount of labour embodied in each unit of sectoral output. This is a key variable in Pasinetti’s framework. It also presents a potential link to energy use, if integrated labour productivity is related to integrated energy intensity. The research project will employ a MRIO database to calculate both integrated labour and energy productivity for a range of sectors in the UK and study their relationship. This will provide insights into how Pasinetti’s framework can be applied empirically and how energy consumption might best be integrated into the framework.

References: Hardt, L. & O’Neill, D.W., 2017. Ecological Macroeconomic Models: Assessing Current Developments. Ecological Economics, 134, pp.198–211. Available at: http://dx.doi.org/10.1016/j.ecolecon.2016.12.027. Jackson, T., 2017. Prosperity without Growth 2nd ed., Oxon, New York: Routledge. Owen, A. et al., 2017. Energy consumption-based accounts: A comparison of results using different energy extension vectors. Applied Energy, 190, pp.464–473. Pasinetti, L.L., 1981. Structural change and economic growth: A theoretical essay on the dynamics of the wealth of nations, Cambridge: Cambridge University Press. Pasinetti, L.L., 1993. Structural Economic Dynamics: a theory of the economic consequences of human learning, Cambridge, UK: Cambridge University Press.

Røpke, I., 2016. Complementary system perspectives in ecological macroeconomics — The example of transition investments during the crisis. Ecological Economics, 121, pp.237–245. Available at: http://dx.doi.org/10.1016/j.ecolecon.2015.03.018. Silva, E.G. & Teixeira, A.A.C., 2008. Surveying structural change: Seminal contributions and a bibliometric account. Structural Change and Economic Dynamics, 19(4), pp.273–300. Syrquin, M., 2010. Kuznets and Pasinetti on the study of structural transformation: Never the Twain shall meet? Structural Change and Economic Dynamics, 21(4), pp.248–257. Available at: http://dx.doi.org/10.1016/j.strueco.2010.08.002.

Taylor, L., 1995. Pasinetti’s processes. Cambridge Journal of Economics, 19, pp.697–713.

 

   

Jeff  Althouse  

Exploring  the  Macroeconomics  of  Water  Variability  in  the  Era  of  Climate  Change  

Much has been written about the lack of consideration for environmental inputs in standard economic analysis (Spash \& Ryan 2012). With the rise of ecological economics as an established and distinct field of analysis, natural systems have slowly crept into economic debates as a fundamental aspect of production (Holt 2005). Continued interest in environmental issues has pushed economists to reconsider macroeconomic theories which neglected the potentially dangerous effects of climate change and shortages of material and energy resources on unemployment, inequality and growth.

Post-Keynesians have been particularly active in the new and growing field of ecological macroeconomics (Fontana \& Sawyer 2015, Rezai et al. 2013, Foley 2012, Rezai et al. 2018). Much of this research has focused on the dynamics of energy demand and supply, highlighting the importance of a continuous cheap energy source for growth, while remarking on the negative impact of consuming too much energy and releasing greenhouse gases into the environment. Further research has embedded energy and the effects of climate change within the economy through Stock-Flow Consistent modeling to show the negative effects of living beyond acceptable temperature thresholds (Naqvi 2015, Dafermos et al. 2017, Berg et al. 2015).

Yet the dilemma of a changing climate and exhaustible or degraded natural resources extends far beyond energy. From air pollution to biodiversity loss, deforestation and ocean acidification, there are myriad ways in which economic demands endogenously produce ecological degradation with profoundly negative consequences on health, well-being, and socio-economic stability. Ironically, one resource that has been relatively overlooked in economic debates is the very elixir that allows life to continue on this planet: water.

While generally assumed to be a “free” good with inexhaustible renewable supply, declining reservoirs, changing precipitation patterns, and pollution of strategic water resources represent a serious threat to livelihoods and proper ecosystem functions. Water’s importance as a primary input of production and a necessity for human and ecological health should not be overlooked, especially as population growth continues to swell in some of the driest areas on Earth (Rockström et al. 2014). As the “bloodstream” of the biosphere, water is a natural fund that regulates air temperatures, preserves soil fertility, sustains habitats and provides incalculable benefits to all human and non-human beings (Ripl 2003, Bronstert et al. 2004). Rising rates of water scarcity and projected water supply gaps have led the World Economic Forum (2016)

to rank the proliferation of water crises as one of the greatest existing threats to global economic stability.

Despite the well-known consequences of water scarcity on environmental and socio-economic well being, there has been surprisingly little research incorporating water into economic models at the macro-level, outside of the mainstream. The vast majority of existing research tends to adhere to strict neoclassical assumptions of optimization of resource allocation and full employment (Calzadilla et al. 2017). Such models either minimize or out-right ignore the immediate and long-term consequences of polluted or scarce water on health and productivity, the cascade effect of an increase in prices of wage goods on consumption and investment, or the role of unequal land and water resource distribution on employment and inequality, to name a few.

This paper first analyses the macroeconomic dilemmas posed by declining quantity and quality of water resources from an ecological macroeconomic perspective. Next, a stock-flow consistent input-output (SFC I-O) model is developed, providing the first demand-driven sketch of water use dynamics along with monetary and financial variables. Following Dafermos et al. (2017), the stock-flow-fund approach is used to model water withdrawals from the environment as an input to different sectors, as well as the cost of overshooting resource availability.

Iana  Nesterova    

Small  Business  Transition  Towards  a  Degrowth  Economy  

The author reviews multi-disciplinary, heterodox literature (including economic anthropology, biophysical economics, sustainability, ecological economics, post-growth, degrowth) which addresses the conflict between the economy and nature arising from the pursuit of economic growth. Critical analysis of the literature leads to the selection of degrowth, a vision of economy based on ecological economics, which emphasises a simultaneous decline in energy/material use and an increase in well-being and welfare, as an underpinning theory for her research. While macroeconomic models for degrowth economy have been addressed, business models are underdeveloped. The potential of small firms becoming important players in this alternative model of economy has been highlighted by Trainer (2010). Small firms are more responsive to change due to their flexibility (North ad Smallbone, 1996), their preference towards better rather than more (Liesen et al, 2014), their content with their size (Johnson, 2007), their emphasis of non-monetary objectives and their embeddedness in local communities (Soderbaum, 2008). The author aims to evaluate the potential for small businesses to transition to a degrowth economy and deduces a number of elements of a degrowth small business from the literature which are organized into five groups including (1) material and energy throughput and waste, (2) internal business operations, including governance, wellbeing and production (3) wider society, (4) growth, and (5) attitudes, values and motives.

However, she takes this theoretical insight further and utilises a case study approach, informed by the philosophy of critical realism, to identify existing and additional elements to develop a comprehensive model of a degrowth small business, based on an interplay between both, the theoretical and the real-world insights. The case study participants are located in East Midlands, England and are small firms which already demonstrate the presence of degrowth business elements and are socially and/or environmentally inclined. These firms are a rich source of information and are expected to offer an in-depth understanding of a pro-social and pro-environmental (including a unique qualitative growth perspective) firm in a context of a capitalist, free-marker, competition- and profit-driven economy (see UK Government (2017b)).

The case study approach is then supplemented by a survey and an expert panel to enhance a better understanding of a degrowth business concept and phenomenon, alongside the potentiality of its application and practicalities associated with this implementation. The transition towards degrowth is not seen by the author as a function of small firms only and entails a complex societal transition of which small firms are a part. The implications of the model for businesses, the broader society and policy are then discussed. The

limitations of application are also discussed alongside the practical limitations including political resistance and other context specific considerations, such as culture, education and economy.

Currently this research is at the early data collection stage with preliminary findings expected to be available for discussion and critique in summer 2018. New lines of enquiry are expected to emerge throughout multiple cases and interactions with various stakeholders such as owner-managers, customers, suppliers. These new insights will inform the theoretical framework itself and are expected to stimulate further research in the area of post-growth, degrowth and micro and macroeconomics for these visions of economy.

   

Julien  Vastenaekels  

Crafting  visions  of  sustainable  economies  from  the  field:  the  case  of  food  cooperatives  in  Belgium  

It is now widely acknowledged that the development of conventional industrial food systems has provoked multiple social, environmental and economic problems which are undermining the sustainability of food production and consumption (Blay-Palmer, 2008; Konefal et al., 2005; Oosterveer & Sonnenfeld, 2012). As a response to the prevailing capitalist systems, bottom-up initiatives that are structurally challenging producer-consumer relations and experimenting with alternative economic models have emerged (O’Hara & Stagl, 2001; Goodman, DuPuis, & Goodman, 2012). In particular cooperative initiatives have brought together consumers, producers, distributors and/or other actors of the food sector with the objective to reconfigure a set of more democratic and participatory governance schemes of alternative food systems (Berge, Caldwell, & Mount, 2016; Spaargaren, Oosterveer, & Loeber, 2012; Starr, 2010).

These food cooperatives redefine a part of the economic system following a more sustainable paradigm, driven by reasons and ends shaping their action orientated towards a desired future (Le Velly, 2017). Such small-scale experiments are sometimes assumed to provide guidance for the transitions of our whole economies towards sustainability (Gibson-Graham, 2008; Wright, 2013). However, without a more holistic vision of what they seek to achieve, it remains unclear how they can contribute to transforming more widely the dominant economic system towards sustainability. Crafting a detailed vision of a sustainable economy and society seems to be an essential precondition to produce any movement towards it (Costanza, 1997, pp. 177–178; Forstater, 2004).

In this research, I address the question of what a sustainable economy might be by looking through the eyes of actors who are already striving to redefine the economy at their own level, in the field, with their values and ethics. The aim is to clarify the implicit and explicit expectations of these bottom-up initiatives for the future of the economy, embracing the need to incorporate a more explicit futures orientation in the work on sustainability transitions (Hinrichs, 2014). For this purpose, I examine the projective imagination (Emirbayer & Mische, 1998) of food cooperatives and attempt to piece together their visions of a sustainable economy. This will allow further work analysing these visions, assessing their desirability and conditions of viability—e.g. through modelling—, and thereby contributing to theory on sustainable economies.

By exercising imagination to produce visions, it is possible to sketch components of transformed, sustainable economies and open them to scrutiny. A vision implies “ideational” change—i.e. a projection of what should be, notwithstanding what is—and “transformational” change—i.e substituting old structures by new ones (van der Helm, 2009). Any vision is inherently “pre-analytical”, it comes from the realm of imagination (Forstater, 2004). As such, it is naturally followed by analysis: “Analysis attempts to link the imagined future back to the present reality” (Forstater, 2004, p.23). As Prugh et al. (2000) explain: “The rational process of figuring out how to achieve a sustainable world must begin with a non-rational act of imagination” (p. 41). From pre-analytical visions of sustainable economies by small-scale experiments, it is possible to contrast what is and what should be (in their view), allowing to analyse of the underlying transformations of the current economic system and identify what might be missing or inconsistent in these visions.

The economic system can be considered as an intertwinement of subsystems with complementary purposes (Røpke, 2016). Breaking it down into subsystems can make it easier to manage the crafting of visions of a sustainable economy, as well as their subsequent analysis in a systems perspective. Following a systems perspective, Røpke (2016) proposed a simple typology breaking down the economy in three types of interacting systems: (i) macroeconomic and other geographical systems; (ii) provision systems; and (iii) distribution systems. Therefore, the transformations underlying the visions of a sustainable economy by food cooperatives may concern for example the food provision system—e.g. the phasing out of long and opaque supply chains—but also other types of subsystems—such as the financial activities.

This research empirically examines the hypotheses (i) that food cooperatives have visions of what a sustainable economy might be—even partially—and (ii) that these visions have transformative implications for different sub-systems of the economy. These hypotheses are explored for three Belgian food cooperatives of different types: (i) Bees Coop, a participatory supermarket organised as a consumer-based cooperative; (ii) Agricovert, a sustainable food cooperative governed by producers and consumers; (iii) Färm, a cooperative network of organic shops driven by entrepreneurs. The common patterns as well as particularities in their visions will be identified.

The study draws on empirical material from multiple sources: the promotional speeches and other documents setting out the essential principles and purposes of these initiatives (Le Velly, 2017), extracts from interviews and workshops with members of these initiatives to clarify elements of their vision of a sustainable economy.

I will present the conceptual framework, methodological propositions and first empirical results. This research is still at an early stage of development and could highly benefit from discussions at the workshop.

References

Berge, S., Caldwell, W., & Mount, P. (2016). Governance of Nine Ontario Food Co-Operatives. Annals of Public and Cooperative Economics, 87(3), 457–474. https://doi.org/10.1111/apce.12134

Blay-Palmer, A. (2008). Food fears: From industiral to sustainable food systems. Hampshire: Ashgate.

Costanza, R. (1997). Introduction: building transdisciplinary bridges at the frontiers of ecology and economics. In Frontiers in ecological economics : transdisciplinary essays by Robert Costanza. Cheltenham, UK: Edward Elgar.

Emirbayer, M., & Mische, A. (1998). What Is Agency? The American Journal of Sociology, 103(4), 962–1023.

Forstater, M. (2004). Visions and scenarios: Heilbroner’s worldly philosophy, Lowe’s political economics, and the methodology of ecological economics. Ecological Economics, 51(1–2), 17–30. https://doi.org/10.1016/j.ecolecon.2004.07.015

Gibson-Graham, J. K. (2008). Diverse economies: performative practices for “other worlds”. Progress in Human Geography, 32(5), 613–632. https://doi.org/10.1177/0309132508090821

Goodman, D., DuPuis, M., & Goodman, M. (2012). Alternative Food Networks: Knowledge, Practice, and Politics. Oxon: Routledge.

Hinrichs, C. C. (2014). Transitions to sustainability: a change in thinking about food systems change? Agriculture and Human Values, 1–13. https://doi.org/10.1007/s10460-014-9479-5

Konefal, J., Mascarenhas, M., & Hatanaka, M. (2005). Governance in the Global Agro-food System: Backlighting the Role of Transnational Supermarket Chains. Agriculture and Human Values, 22(3), 291–302. https://doi.org/10.1007/s10460-005-6046-0

Le Velly, R. (2017). Sociologie des systèmes alimentaires alternatifs. Une promesse de différence. Paris: Presses des Mines.

O’Hara, S. U., & Stagl, S. (2001). Global Food Markets and Their Local Alternatives: A Socio-Ecological Economic Perspective. Population and Environment, 22(6), 533–554. https://doi.org/10.1023/A:1010795305097

Oosterveer, P., & Sonnenfeld, D. A. (2012). Food, Globalization and Sustainability. London: Earthscan.

Prugh, T., Costanza, R., & Daly, H. E. (2000). The Local Politics of Global Sustainability. Washington, DC: Island Press.

Røpke, I. (2016). Complementary system perspectives in ecological macroeconomics—The example of transition investments during the crisis. Ecological Economics, 121, 237–245. https://doi.org/10.1016/j.ecolecon.2015.03.018

Spaargaren, G., Oosterveer, P., & Loeber, A. (2012). Food practices in transition: changing food consumption, retail and production in the age of reflexive modernity. New York, London: Routledge.

Starr, A. (2010). Local Food: A Social Movement? Cultural Studies <=> Critical Methodologies, 10(6), 479–490. https://doi.org/10.1177/1532708610372769

van der Helm, R. (2009). The vision phenomenon: Towards a theoretical underpinning of visions of the future and the process of envisioning. Futures, 41(2), 96–104. https://doi.org/10.1016/j.futures.2008.07.036

Wright, E. O. (2013). Transforming Capitalism through Real Utopias. American Sociological Review Pro Quest on, 78(1), 1–25. https://doi.org/10.1177/0003122412468882

   

Agni  Dikaiou    

Understanding  Sustainable  Performance  in  B  Corporations  in  the  US  (work  in  progress)  

Moving from shareholder value to stakeholder theory, firms have marked a shift in sustainable performance reporting since the 1990s in the Western corporate world. In line with this reporting evolution, Certified B Corporations (B Corps) have met rigorous standards of sustainable performance, receiving scores in dimensions such as Governance, Workers, Community and Environment. The purpose of this research project is to identify the nature of the relationships between dimensions of sustainable performance, such as those of employment conditions, social and environmental impacts as well as financial performance for different B Corps across sectors. A sample of B Corp case studies from various service sectors is employed in this paper, attempting to investigate the complementarities and trade-offs between dimensions of sustainable performance using qualitative evidence in order to identify the relationships across dimensions, as well as the special features of the best performing B Corps. This study intends to highlight the role of management, integrated reporting of key performance indicators and that of government and institutional frameworks in assisting the transition to a new form of business and a new way of measuring value creation.

   

Tadhg  O’Mahony    

Seeking  wellbeing  in  development:  a  challenge  to  sustainability  or  an  opportunity?  

As critiques of economic growth as the ends of development are widely accepted, the concept of multidimensional wellbeing and sustainability are emergent development priorities. There is no universal definition of wellbeing with little exchange across the disciplines. Discussions are synthesised from the micro individual focus to the more macro development approaches. Commonalities support multidimensional wellbeing, the importance of the social and relational as contextual factors and balance as both psychological and development definition. ‘Integrated wellbeing pathways’ unify individual wellbeing and establish the importance of balancing life domains. Sustainability exhibits common challenges with those in individual wellbeing and ‘balancing’ development establishes potential synergies. There are conceptual and ethical issues in; defining wellbeing while facilitating freedom, establishing ‘sustainable’ patterns of development and adopting a wellbeing approach whilst there are co-existing social inequalities and poverty. Nevertheless, a sustainable wellbeing approach does not preclude these issues, the wellbeing of the individual is theoretically and practically linked to that of society and sustainability, and a holistic approach may be useful as a framework for thinking. The concept of ‘sustainable wellbeing pathways’ is articulated to encompass the individual level, linked to a systemic perspective and offering opportunities to enhance human wellbeing and sustainability in parallel.

   

Tommaso  Ciarli  

Modelling  the  Evolution  of  Economic  Structures  and  Climate  Changes:  A  Review  

This paper looks at the relation between two sets of changes, structural and climate changes. We single out six related aspects of structural change accompanying most occurrences of economic growth, and which have significant consequences on climate changes: sectoral composition, industrial organisation, technology, employment, final demand, and institutions. Economic models from different traditions vary substantially with respect to the structural changes and climate changes that they include, and with respect to how they are modelled. We review systematically different modelling families and compare these differences: integrated assessment models (IAM), computational general equilibrium (CGE), structural change models (SCM), ecological macroeconomics models in the Keynesian tradition (EMK), and multi agent and evolutionary models (EABM). We find that IAM and CGE address only few aspects of structural change identified above; SCM the sectoral composition and industrial organisation, and EKM the final demand and employment structure, but all are aggregate models and ignore the complexity of the interactions between structural and climate changes. Micro and macro EABM have explored a higher number of aspects of structural change, modelling their emergence from the interaction of microeconomic actors, but have not yet exploited their enormous potential to study the interactions among interrelated structural and climate changes.

 

   

James  Juniper  

Competing  Theories  of  Value  in  Modelling  Sustainability  

Critiques of mainstream have been developed by Social Ecological Economists (SEE) such as Clive Splash (2011) and Arild Vatn (2005) as well as by advocates of an entropy-based approach to the determination of value. Prominent Eco-Socialists such as John Bellamy Foster (2000) and Paul Burkett (2006), however, while championing notions of “metabolic rift extracted from Marx’s enthusiasm for the soil science of his day, have argued against the shadow pricing environmental goods and bads on the basis that this contributes to the alienation of labour by reinforcing commodity fetishism. The latter two Schools of thought have, thus, proposed diametrically opposing views about how value should be measured and accounted for. Meanwhile, Douai (2009) has suggested that SEE would benefit from the rigorous application of Ricardo and Marx’s theories of value to an understanding of sustainability.

More recently, the entropic approach of Georgescu-Roegen and Daly would seem to have been given a new lease of life via the stock-flow-consistent macroeconomic modelling, which has extended the process of accounting for stocks of wealth and capital and flows of income and expenditure (Dafermos et al., 2015, 2016). Entropy-based approaches, however, have attracted their share of hard-hitting criticism (Schwartzman, 2007, 2008).

These debates raise some profound modelling issues for SEE. Given that entropy-based metrics represent an alternative conception of value to that proposed by Marx with his distinction between use value and exchange value, do we really need three value systems (Burkett, 2003)? Which of these should be privileged in responding to issues of sustainability? What are the important reasons for preserving the labour theory of value and can important problems relating to the environment be fully resolved while solely remaining within the sphere of use value? In what way can they be resolved? How do these debates also relate to Industrial Ecology research grounded in multi-sectoral models of production such as input-output based life-cycle analysis (Suh and Kagawa, 2005). This paper addresses these important matters from a perspective informed by Classical Political Economy.

Stefano Menegat

Towards a Biophysical Theory of Economic Growth: empirical testing and theoretical extension

As the call for contributions clearly stated, what an heterodox economic theory might look like is still object of strong debates. Convincing arguments come from many fields, including ecological economics. However, also within this discipline, contrasting views are hindering the development of a consistent biophysical economic theory. This presentation aims to provide an empirical testing and a theoretical extension of the biophysical theory of economic growth, as formulated by Blair Fix (2015). Fix’s preliminary work is in fact extremely relevant from both a theoretical and empirical point of view, and because of its epistemological and ontological consistency, it is a very good candidate to host a broader discussion about the development of a new biophysical economic theory.

Drawing from the literature in critical heterodox economics, Fix suggests to abandon the approaches based on the neoclassical theory of capital, and to move towards the understanding of the economy as a purely biophysical process. Building on Veblen’s approach as defined by Nitzan and Bichler (2009), Fix argues that monetary value (like for example the price of a commodity, or the GDP indicator) should lose its duality between real and nominal, becoming, instead, a purely socially-constructed concept. Notwithstanding, monetary values are still “real” in the sense that they impact the functioning of both social and ecological systems by carrying information. Quantum of monetary flows (i.e. currency) regulate the interactions between the biophysical dimensions of the economy, and the organizational structure of the society, working as a feedback mechanism. When monetary dynamics negatively affects the performance and the stability of social organizations, the cause is to be find in the biophysical fundamentals upon which society at large relies. As Fix puts it: “financial constraints are not a “cause” of economic problems; instead they are a manifestation of a deeper biophysical/social issue”. [..] Therefore, when we witness a financial constraint we must insist that this is actually a barometer for a more fundamental process that is occurring” (Fix 2015, p. 41).

The first part of the presentation offers a general overview of the two theoretical pillars sustaining the biophysical theory of economic growth: the theory of complex, far-from-equilibrium systems (as synthesized in Giampietro et al. 2011), and the power theory of value (Nitzan and Bichler 2009). This study adds two more contributions to Fix’s theoretical framework: Tainter’s theory of declining marginal returns to complexity (1988) and Bonaiuti’s great wave hypothesis (2017).

The second part focuses on the analysis of biophysical and monetary indicators for 6 major US commodities: corn, coal, wheat, oil, cotton and soybeans. Consistently with the theoretical framework adopted, the empirical analysis is conducted through a specific accounting protocol for the basic productive sectors of the economy (agriculture and energy). As an indicator of biophysical performance, the ratio between biophysical output per hour of work is used. This measure, called biophysical productivity of labour (BPL), when calculated for the agriculture and energy sectors is strongly correlated with both the level of technical capitalization of the sector and the level of economic development (Giampietro et al. 2011). As an indicator of monetary feedback, only nominal prices are considered. Oil has been chosen as commodity of reference, given its role in sustaining contemporary industrial economies (Smil 2006). Changes in BPL and prices for the five commodities relative to oil, are then plotted and analysed for the period 1943-2014.

Results show that, for each of the five commodities, historical trend of relative BPL is strongly correlated with the pattern followed by relative prices. In order to avoid spurious correlation, de-trended values are also analysed, and the Spearman’s coefficient calculated for each time-series. Results show that changes in relative prices are strongly and negatively correlated with changes in relative BPL; however, limited periods of moderate, weak or very weak correlation are also found in correspondence of the 1970s’ and the beginning of the 2000s’.

These results support the hypothesis that changes in the value of commodities produced in the US are associated to changes in the ability of the society to extract those resources and make them available to the rest of the society. Therefore, it is legitimate to affirm that monetary values (prices) directly connect socio-economic structures and biophysical dimensions. Surely demand pressure (as in the case of the 1971 Soviet wheat purchase), geopolitical context (as the recursive use of agricultural dumping by US federal government or the OPEC cartel’s action) and climatic conditions (climate change, or the great drought of the 1980s’) play a huge role in determining commodities’ price dynamics.

However, the preliminary results obtained in this study help to shed light on one aspect of the economic theory that is often underestimated: the biophysical nature of developed countries’ socio-economic metabolism. Results also legitimate further enquiries into the financial and the food price crises that took place between 2007-2009. The limitations of the theory and the methodology proposed in this presentation are many, for example the quality of data and the epistemological issues hindering the effective development of dynamic models. However, the biophysical theory of economic growth is still at its beginning, and it is opened to both contributions

and critiques. An economic theory for the Anthropocene would greatly benefit from rejecting the neoclassical theory of capital and integrating and developing a new macroeconomic theory from a scientifically solid biophysical perspective.

References:

Bonaiuti, M. (2014). The great transition. Routledge.

Fix, B. (2015). Rethinking economic growth theory from a biophysical perspective. Springer.

Giampietro, M., Mayumi, K., &Sorman, A. H. (2011). The metabolic pattern of societies: Where economists fall short (Vol. 15). Routledge.

Nitzan, J., & Bichler, S. (2009). Capital as power: A study of order and creorder. Routledge.

Smil, V. (2008). Energy in nature and society: general energetics of complex systems. MIT press.

Tainter, J. (1988). The collapse of complex societies. Cambridge University Press.

Simon Mair

Capital, Energy, and the Wealth of Nations

In this paper we set out two stylised facts of the modern economy: that the economy is becoming more energy efficient but economic growth is still tightly coupled to energy use, and that at a global scale different energy carriers are complements not substitutes. We then develop a framework based on a reading of Adam Smith’s The Wealth of Nations which explains these facts. We argue that in Smith’s conception capital is fundamentally about energy. In Smith, capital accumulation generates growth by supplementing and substituting human energy with other energy flows, or by enabling more efficient use of existing energy flows. Moreover, Smith views labour as a form of capital, which is consistent with a view of the economy as an energy gathering system. Based on this interpretation of Smith’s views on capital, we construct a causal loop diagram of a simplified vision of Smith’s growth theory. We argue that the stylised facts of increasing energy use, increasing energy efficiency and a complementary relationship between energy carriers follows naturally from the dynamic relationship between capital and markets in a Smithian growth framework. Finally, we conclude by arguing that in a Smithian framework, ongoing energy use is essential for growth and that renewables will not substitute for fossil fuels. Consequently, the only way to escape catastrophic climate change is through a fundamental shift in the social logic of capitalism.

Elke Pirgmaier

Understanding Capital

Capitalism is a complex adaptive system. Many complex systems spring out from simple elements and organising principles. From this basic systems thinking perspective we can ask: What is the core of the capitalist system? What are its foundational elements and organising principles? How are these elements entangled to form a system? How do such entanglements give rise to social ecological impacts and crises? How can we, on this basis, think about systemic changes? And: is it possible to answer such big questions at all, given that reality is complex, messy and ever-changing?

The idea of this contribution is to start exploring these questions by drawing on Marxian Political Economy. ‘Understanding Capital’ is meant in a two-fold sense. The contribution aims to derive substantive insights about the functioning of the capitalist system as a whole with a view to pushing a progressive agenda of social ecological transformation. By unravelling what ‘capital’ means from a Marxist perspective it is possible to explain fundamental drivers of energy and resource overuse, barriers to change and societal lock-ins. At the same time, this contribution also intends to make Marxian theory and ways of thinking accessible to non-Marxists, show its explanatory power and future potentials.

The contribution starts from the Marxian understanding that capital is a form of value, it is value in motion. If the capitalist system is characterised by an expansion of value, we need to understand what value is first. Marxian value theory provides a systemic and structural explanation of value that emphasises the dominant role of exchange value creation, labour productivity advances and the possibilities of crises formation in the system. It incorporates both monetary and real (i.e. biophysical and social) considerations in a unique way, which is crucial for consistently theorising more complex economic categories such as profits, growth, and crises. As such, it is part and parcel of understanding the essence of the capitalist system. It lays the foundations for theorising capitalism as a monetary market economy, rather than a real economy, as in neoclassical economics based on the marginal utility theory of value.

As value starts to move, it explains the essence of the system: capital. The simplest characterisation of ‘capital’ and the capitalist system is M-C-M’. Also known as the general circuit of capital, M-C-M’ forms the Marxian theoretical backbone of the system as a whole that explains long-run dynamics, irrespective of accumulation regimes and countries. It highlights the character of capitalism as a mode of production for profit, not need. An understanding of this basic structure is crucial because it enables us to understand emerging

dynamics and outcomes thereof. We will start to see not just what is happening, but why and equally important, why not. Why is it that progressive climate change policies are lacking, despite the urgency and wide-spread recognition of disastrous consequences of in-action? I argue that M-C-M’ is a simple and intuitive but powerful framework that yields a systemic understanding of global environmental changes and barriers to change.

Next, I intend to clarify how surplus creation, profit and competition dynamics are tied to the general circuit and how this core develops further into mechanisms that fuel destructive ecological impacts. I identify six such dominant tendencies of capitalist economies: commodification, technological dynamism, appropriation, overconsumption, acceleration and alienation. These tendencies are sticky, i.e. not easy to change, because they are embedded in a network of supporting structures. Taken together, they form the social fabric of capital, the entangled web of the system as a whole. In the capitalist system, it is the interplay between these tendencies that gives rise to social ecological dynamics. Ultimately, these tendencies result in macroeconomic outcomes, most importantly growth dynamics and potentials for crises formation, such as increasing inequalities.

Taken together, a conception of capitalism as a structured or ‘nested totality’ can be derived, in which different drivers and mechanisms operate at different levels of complexity and different levels of importance for the reproduction of the system. As such, M-C-M’ helps to understand how environmental problems and crises emerge out of capitalist structure and how and why they persist. For instance, it explains the vital role of cheap fossil fuels, materials, energy, transport and IT infrastructure to keep wages and costs of production low. M-C-M’ can also be used to think through different alternatives or elements of more sustainable forms of organisation, or to consider the role of different institutions, such as the State or universities (i.e. our role as researchers!) in supporting or challenging basic system structures.

Ultimately, an understanding of capital explains the spiralling reproduction of the capitalist system, associated with ecological overshoot, societal lock-ins and barriers to social ecological transformation. Through this lens, solutions to pressing problems appear more difficult than often portrayed. Nevertheless, a realistic and systemic understanding of capitalist economies is vital as a basis for thinking more effectively about transformational change and spaces for intervention.

Ian Chapman

Four Horsemen of Economic Collapse: Maps of the Future Economy

The global economy would appear to be stable after a difficult decade following the financial crisis that impacted most developed countries. Although growth is up, and unemployment is down in many of the major economies, there are a number of problematic underlying issues that policymakers appear unable or unwilling to confront. Indicators and market responses no longer concur with predictions and suggesting the policies for mid to late 21st Century is becoming increasingly difficult.

Many of the difficulties are caused by the inabilities of mainstream economics to deal with value-based, qualitative and time-related issues, so that forecasts and solutions tend to rely on static macroeconomic models or dogmatic application of market-liberalisation. Aside from this failure to fully describe many of the facets of contemporary globalisation, economists have also shown little appreciation of the impacts of society, politics and ecology on economies. To this end, a more complex and dynamic approach to predictive modelling is long overdue.

The suggestion is to have a two-stage, multi-disciplinary process, initially assessing the likely forthcoming state of the global economy before constructing a framework for response to this, built using as few current approaches and assumptions as possible.

For the assessment phase, methodology from ecological economics (Daly & Farley, 2011), and political ecology (Faber, 2008), will be utilised alongside the religious trope of The Four Horsemen of the Apocalypse (Flegg, 1999). Therefore, the unstable and dynamic features of globalisations will be organised around four themes, replacing the original four riders - Conquest, War, Famine and Death - with Conflict, Squalor, Mammon and Dearth. This has a two-fold purpose, firstly to provide a more realistic model to the usual PESTLE or 5-forces style frameworks to assess the environmental, social, economic and political issues facing the world economy, identifying individual components but grouped under non-disciplinary headings. Secondly, it is hoped it will offer a more compelling narrative for non-specialists than the usual prosaic and technical analytical models.

Once the assessment is completed the findings will feed into the second stage which is a socio-political structure with policy and investment indicators. This has already been devised, based on historical rather than economic analysis. Looking back to the pre-industrial age (Sahlins, 2013), key elements of successful societies have been condensed into the acronym MAPS: Mutual, Artisan, Present and Spiritual, representing alternative approaches to societal organisation and economic management more in tune with the natural

environment (Wood, M, 2005). Each is a mirrored facet of industrial capitalism, reversed to give an alternative end-point to aim for. Since the current globalised world is competitive, mass-produced, future-orientated and governed by the laws of economics (Berardi, 2011), the MAPS framework starts from the oppositional positions to avoid any inclination to ‘fix’ current problems with minor incremental changes.

Though the Four Horsemen and MAPS models have been defined and articulated, both are currently at the gestation stage and the intent is to explore them further through discussions with colleagues from a range of disciplines to consider modifications and enhancements that might prove fruitful. By extending beyond mainstream economics and taking an interdisciplinary approach, the intent to is to formulate a more extensive view of the global economy for the latter part of the 21st Century and beyond.

Bibliography

Benson, M. and Craig, R. (2014) The End of Sustainability. Society and Natural Resources, 27, 777-782.

Berardi, F. (2011) After the Future. Edinburgh: AK Press

Daly, H. E., & Farley, J. (2011). Ecological economics: principles and applications. Washington: Island press.

Diamond, J. (2011) Collapse. London: Penguin Books

Dietz, R., & O’Neill, D. (2013) Enough is Enough. Abingdon: Routledge

Faber, M. (2008). How to be an ecological economist. Ecological Economics, 66 (1), 1-7.

Kallis, G., Kerschner, C., & Martinez-Alier, J. (2012). The economics of degrowth. Ecological Economics, 84, 172-180.

Flegg, C. G. (1999). An Introduction to Reading the Apocalypse. Crestwood, N.Y.: St. Vladimir's Seminary Press.

Foster, J. (2015) After Sustainability. Abingdon: Earthscan

Gkanoutas-Leventis A., (2016) Spikes and Shocks: The Financialisation of the Oil Market from 1980 to the Present Day. London: Palgrave Macmillan

Greer, J.M. (2016) Dark Age America: Climate Change, Cultural Collapse, and the Hard Future Ahead. Gabriola Island: New Society Publishers

Hamilton, C. (2010) Requiem for a Species. London: Earthscan

Hamilton, C. et al. (eds.) (2015) The Anthropocene and the Global Environmental Crisis. Abingdon: Routledge.

Jamieson, D. (2014) Reason in a Dark Time, Oxford: Oxford University Press.

Jensen, D., & McBay, A. (2009) What We Left Behind, London: Turnaround

Keen, S. (2011). Debunking Economics: The Naked Emperor Dethroned? Revised and expanded ed. London: Zed Books.

Mulgan, T. (2011) Ethics for a Broken World, Durham: Acumen.

Orlov, D., (2014) Communities that Abide, Createspace

Orlov, D., (2016) Shrinking the Technosphere: Getting a Grip on Technologies That Limit Our Autonomy, Self-Sufficiency and Freedom. Gabriola Island: New Society Publishers

Orlov, D., (2013) The Five Stages of Collapse. Gabriola Island: New Society Publishers

Pimentel D., (Editor) & Pimentel M.H., (2007) Food, Energy, and Society, Third Edition. Boca Raton: CRC Press

Sahlins, M. (2013). Stone age economics. Abingdon: Routledge.

Wood, M., (2005). In Search of the Dark Ages, London: BBC Books.

Clare Devaney

A Fourth Way: Cultural heritage as the key to unlocking place-driven innovation economies

A fourth way’ is a new and holistic economic paradigm designed for 4.0, the age of the fourth industrial revolution. Building on emerging thinking around ecosystem economics (Scharmer, 2016) and mission-oriented innovation (Mazzucato, 2017), it is predicated on a critical shift to an ideologically generative economic model in which the role of individual agents within economic ecosystems is explicitly recognised, and in which those agents (including people, places, industry sectors and economies) no longer compete in the accumulation of wealth, but work collectively toward shared human and global sustainability goals.

Grounded in the academic discipline of the built environment, but incorporating elements from economics, sociology, human geography and literary theory, the principles behind ‘A Fourth Way’ are founded on an exploration of the notion of ‘place’, and specifically its interrelationship with definitions and manifestations of ‘innovation’. Interpretation, development and evaluation of place, which – despite its incompleteness - has seen a rapid incorporation into policymaking and practice, has thus far been dominated by two fairly static definitions: a physical understanding of ‘a place’ as a defined, geographic territory and a socio-economic understanding of place as a self-contained economic and social system. At its core research questions the dominance of ‘place-based’ approaches, specifically through incorporation of a more fluid definition of ‘embeddedness’ (building on Granovetter’s seminal 1985 sociology text), and introduces cultural heritage as a third and critical criterion in realising a more comprehensive understanding of place. Its exploration of place and innovation notes and questions the continued rise of innovation districts, building on a suite of works by The Brookings Institute (Katz and Wagner 2014, 2015). Utilising pragmatic application of mixed methods including ethnographic interview, questionnaire and survey, design science and action research, and incorporating interdisciplinary techniques including arts-led ‘visual matrix’ imagery response (Froggett et al, 2015) and cutting-edge ‘living platform’ mapping (currently in development at the University of Salford’s ThinkLab) in analysis and visualisation, the foundational research for ‘A fourth way’ seeks to further interrogate the inter-relationship between place and innovation in 4.0 economies, exploring that nexus through a cultural heritage lens.

Extending that interrogation to explore the nature of capital flows (building on Harvey, 2017) and integrating critical factors of space and time, it creates a new conceptual framework for sustainable place-driven development. In demonstrating the relationship between recent dominant economic schools of

thought and how place and innovation are manifest within those paradigms, it proposes and creates a new economic paradigm within which a whole series of previously accepted tripartite models can be elevated to align with 4.0 thinking; presented collectively as ‘A fourth way’.

A new system of economic measurement ‘CIV4.0’ has been developed in support of ‘A fourth way’. Highly commended and published in the 2017 Indigo Prize as a viable alternative to GDP, CIV4.0 is place-driven and incorporates relational metrics based on individual assessment of connectedness, experiential indicators of place (cultural, spatial and social) and sustainable development goals, creating a multi-faceted measurement system designed to evaluate the extent to which people invest in place and place invests in people, alongside comparative performance and collective progress.

A pilot programme of action research is being delivered in Manchester, UK under the banner of ‘M4’. Now in its tenth month, the M4 programme has sought to work with individuals and groups as citizens in delivering a series of distinctly civic innovation projects, co-designed to meet the city’s most pressing social challenges. Evaluation of the projects has incorporated and fed into the further development of CIV4.0, key metrics and application. Working with key stakeholders from the neighbouring city of Salford and with the Greater Manchester Mayor’s office, the M4 programme is set to expand across Greater Manchester (as ‘GM4’) in May 2018.

References

Granovetter, M (1985) ‘Economic Action and Social Structure, the Problem of Embeddedness’, American Journal of Sociology Volume 91, Issue 3. Chicago. University of Chicago Press.

Harvey, D (2017) Marx, Capital and the Madness of Economic Reason. London: Profile Books

Katz, B & Wagner, J (2014). The Rise of Innovation Districts: A New Geography of Innovation in America. Washington: Brookings

Katz, B, Vey JS, Wagner, J (2015). One Year After: Observations on the Rise of Innovation Districts. Washington: Brookings

Mazzucato, M (2017) Mission-Oriented Innovation Policy. London: The Royal Society of Arts

Scharmer, C.O (2016) Theory U: Leading from the Future as it Emerges. Oakland: Berrett-Koehler Publishers

Joanna Boehnert

Mapping the Political Economy of Design: Designing the Ecocene

Design is problem-solving practice-based discipline that draws on a variety of disciplinary traditions to construct new ways of living with new communications, products, spaces, buildings, systems and services. The approach to knowledge nurtured by the assorted design disciplines (communication design, product design, architecture, service and system design, interaction design, fashion design, etc.) includes an understanding of generative processes along with the various ways that design establishes function and encourages new behaviours. Sustainable design theorists interrogate the social and environmental consequences of design. While progress towards sustainability agendas is evident across the various design disciplines, progress is not happening at a sufficient scale or rate to address the most severe global challenges. In earlier work, I have described how the political economy itself thwarts efforts by individual designers to design sustainable ways of living (Boehnert 2014; 2018). Likewise, sustainable design theorist David Orr claims that sustainability

is not in the particular techniques of design, which have become very sophisticated, but in the haphazard structures – economic, political, social – in which design occurs, which slows the effort to take ecological design to the necessary scale. The rules of the system permit change only at the margins, which is to say only slight adjustments in the coefficients of change but none at the level of social structures and system design... To really improve the human prospect the precepts of ecological design must inform politics, governance, law, and economics (2018, 8).

This is the line of the thinking that informs the ‘Mapping the Political Economy of Design’ research project. The reproduction of unsustainable design practice due to the priorities of the political economy of design is the starting point for this project.

The project will use mapping methods to investigate the research questions. Do the rules and priorities ‘designed into’ the economic system reflect current understanding of the environmental and social sciences? What types of values, practices and behaviours are encouraged and rewarded by the design of this economic system? What are the implications of these values and priorities? Where are the possible leverage points that can affect systems change in the political economy of design? While these questions are still marginal in the design industry, many designers and theorists suggest design can be an important leverage point for sustainability transitions. But the transformative potential of design depends on the depth of its engagement with ecological thought and subsequently the ability of designers to harness a

new ecologically ontology, epistemology and ethic for the transformation of the systems that determine what is designed. The Ecocene concept (Boehnert 2018) describes an era of where the generation of new futures is driven by this ecologically aware and critically engaged perspective that enables a redesign of the systems that determine what is designed.

The ‘Mapping the Political Economy of Design’ project will use system oriented design methods (SOD) to make flows and structures visible. The research project will approach the political economy of design as a complex adaptive system that can be modelled and mapped as a means of understanding its basic structure, to study its system dynamics and explore sites for interventions. SOD uses knowledge mapping strategies to help interdisciplinary groups to explore complexity by visualising relationships and context across various scales and domains. These mapping techniques illustrate systemic processes such as flow and feedback with stylized representations that can help to identify tensions within dynamic processes. These methods will help the research group map the construction of value and values by design.

I will use previous ecological and feminist models of economic processes as a starting point for the mapping processes. Kate Raworth’s Embedded Economy (figure 1) visualises four economic domains: market, household, state and commons in a socially and ecologically embedded economy (2017). Katherine Gibson and Julie Graham’s The Iceberg model (figure 2) displays a selection of economic processes supporting market activities (2006). The explicit theorisation of alternative economies opens space for an exploration of how design can cultivate alternative types of value and different values than those prioritised by market activities. The research aims to encourage the design of new projects to develop structures that will work with, rather than against, ecological circumstances. Using feminist and ecological economic theories, the research will also serve to develop a stronger socio-economic theory of design. This abstract describes the theoretical basis of the early stages of an interpretivist research project that will map challenges and opportunities for the design of interventions towards a redirected, regenerative and distributive economy. The research will provide an overview of the economic dynamics that are relevant to designers concerned with sustainability and analysis that can lay foundation for an emergent Ecocene.

Figure 1 Embedded Economy. (Raworth 2017) [modified by author to situate Ecocene design].

Figure 2 The Iceberg, drawn by Ken Byrne. (Gibson-Graham, 2006, pp. 70).

References

Boehnert, J. (2014) Design vs. the Design Industry, Design Philosophy Papers. London: Bloomsbury, 12 (2), pp. 119–136.

Boehnert, J. (2018) Design, Ecology, Politics: Towards the Ecocene. London: Bloomsbury Academic.

Gibson-Graham, J. K. (2006) A Postcapitalist Politics. London: University of Minnesota Press.

Orr, D. (2018) The Political Economy of Design in a Hotter Time. In R. B. Egenhoefer (ed.), Routledge Handbook of Sustainable Design. London: Routledge, pp.3-10.

Raworth, K. (2017) Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist. London: Random House Business Books.

Jorge Buzaglo

Expanding Human Capabilities: Lange’s ‘Observations’ Updated for the 21st Century

Poland has produced two of the greatest economists of the past century, namely Michał Kalecki and Oskar Lange. Both worked with a wide and penetrating view of the economy and society, more typical of the great classical economists than of those of their own time. During the post-World War II ‘Golden Age of Growth’, while Keynes was the patron saint of economic theory and policy in the industrialised capitalist countries, Kalecki and Lange had a similar influence and role among the developing nations and – perhaps to a lesser extent – in socialist countries. Kalecki’s ‘The problem of financing of economic development’ (Kalecki, 1954), and Lange’s ‘Some observations on input-output analysis’ (Lange, 1957), in particular, deeply influenced the approach to economic and social development of a whole strand of structural economics, both in terms of economic analysis and practical policy. With the end of the Golden Age and the momentous neoliberal reaction then started, they became almost forgotten. The economics of Kalecki, however, has inspired in the last few decades the renaissance of a genuine –albeit still marginal(ised) – form of Keynesianism, the so called ‘post-Keynesianism’ (‘bastard Keynesianism’, as Joan Robinson called it, being the dominant, mainstream form of Keynesianism). Oskar Lange, on the other hand, does not yet seem to have been re-discovered to inspire a similar renaissance of advanced analysis and planning of policies for modern structural change and development. This paper proposes such a re-discovery. The main concern of Lange’s ‘Observations’ is the appropriate intersectoral allocation of investment for efficient output growth. While output growth is still one of the main objectives in most societies, the growth of human capabilities should be an increasingly relevant concern, both in its own right, and in view of the existing ecological constraints. Buzaglo (2014a; b) postulated the existence of an À (aleph) matrix, describing the proportions of the different capabilities necessary for the achievement of every particular capability. The present paper is about introducing capabilities within Lange’s framework of analysis. A Lange-inspired analysis investigates the appropriate structures and properties of capability-enhancing growth paths.

Michael Roos

Values, attitudes and economic behaviour

Economic theory has little to say about the nature and origins of preferences. Standard microeconomic household theory assumes that people have preferences and make choices in line with their preferences. Yet economics does not attempt to say anything about who has which preferences. For economists preferences are a black box, only known by people themselves, but not directly observable by the researcher (see Opp 1999 for a discussion). In principle, people can have any kind of preferences. The only strong statements economists dare making about preferences is to require the rationality properties completeness and transitivity. They often also assume that there is non-satiation and decreasing marginal utility. This agnosticism of economists is in stark contrast with the conviction of marketing researchers who aim at segmenting consumers into groups with identifiable tastes and behaviors. According to Allenby and Rossi (1999, p. 76), it is a “fundamental assumption of marketing [.] that people are different. People differ in the products they prefer, where they shop, how they communicate and in their sensitivity to variables such as price”.

For sustainability research, it is very important to understand the origin of preferences and the ultimate drivers of behavior. Several papers have shown that sustainable lifestyles and consumption choices are related to people’s values. Especially the link between pro-environmental values and pro-environmental behavior is well-documented in the empirical literature, e.g. Kahn (2007), Nayum and Klöckner (2014), Gilg et al. (2005).

In this paper, I propose an economic model based on values and attitudes (values-attitudes model of economic behavior) that explains why individuals can have systematic differences in tastes and behaviors. The model heavily draws on research in social psychology, in particular the Schwartz theory of human values (Schwartz 1992, 1994, Schwartz et al. 2012), the theory of the values-attitudes-behavior hierarchy (see Homer and Kahle 1988) and the theory of planned behavior (Ajzen 1985). The main objective of this paper is to combine these well-established approaches in psychology and to formalize them in a way so that they can be used in economic models. Research in psychology is very empirical and seeks to explain human behavior in all its facets. Research in economics, in contrast, is less interested in understanding the behavior of specific individuals, but rather attempts to make general statements about human behavior in larger contexts. I hence develop a stylized model of human behavior that is applicable in a variety of market and

non-market situations. The model necessarily is less detailed as the original psychological theories, but richer than the usual economic model of constrained utility maximization. The model, which is not based on the axiom of pervasive rationality but on extensive empirical evidence, is a conceptual alternative to the neoclassical model of behavior.

Schwartz (1994, p. 21) defines “values as desirable transsituational goals, varying in importance, that serve as guiding principles in the life of a person or other social entity”. Values have a number of functions and characteristics: “(1) they serve the interests of some social entity, (2) they can motivate action – giving it direction and emotional intensity, (3) they function as standards for judging and justifying action, and (4) they are acquired both through socialization to dominant group values and through the unique learning experiences of individuals” (Schwartz 1994, p. 21). The Schwartz theory of values makes two central propositions. First, the theory postulates that there is a structure of relations among values, which has the form of a circular continuum. In other words, we can arrange values on a circle with neighboring values being motivationally compatible and values on opposite sides of the circle being motivationally opposed. In the original version of the theory, Schwartz (1992) identified ten different values. Among them are tradition and conformity, which are motivationally compatible in that one can pursue them with the same action, e.g. attending a religious service. In contrast, tradition is opposed to stimulation and self-direction, because an action conducive to tradition is often in conflict with self-direction. The second important proposition is that individuals have a hierarchy of values. For each person, some values are more important than others determining how the person resolves value trade-offs by his or her behavior. The Schwartz theory of values is very important in social psychology and has been tested extensively with different methods and data from hundreds of samples in over 75 countries and 40 national representative samples.

Values are linked to behavior, but often only indirectly because of their abstractness. In between values and behavior are attitudes, which according to Petty (2001, p. 894) “are one of the most studied and important constructs in psychology because of the critical role of attitudes in guiding behavior”. Attitudes can be “defined as stable psychological tendencies to evaluate particular entities (outcomes or activities) with favor or disfavor” (McFadden 1999, p. 74). In contrast to the more abstract values, attitudes relate to specific objects that could be “anything a person discriminates or holds in mind” (Vogel and Wänke 2016, p. 2), such as things, persons, groups or abstract ideas. Homer and Kahle (1988) speak of a value-attitude-behavior hierarchy in which attitudes are more specific cognitions than can be derived from values as the most general cognitions. A link between attitudes and behavior is postulated in the theory of reasoned action (Fishbein and Ajzen

1975) and its extension, the theory of planned behavior (Ajzen 1985). The theory of planned behavior is another cornerstone in social psychology and it has received “overwhelming empirical support in literally thousands of studies” (Vogel and Wänke 2016, p. 238). Due to their strong empirical confirmation, the Schwartz theory of values and the theory of planned behavior are attractive candidates as foundations of a psychologically valid economic model of behavior.

Tim Foxon Energy and Economic Growth: Why we need a new pathway to prosperity Drawing on the presenter’s recent book, this presentation reports on insights for a transition to a sustainable low carbon energy future that can be drawn from a study of the role of energy technologies in historical waves of industrial change. Drawing on evolutionary economics and ecological economics, this study examines the role that access to new sources of (fossil fuel) energy and economy-wide energy efficiency improvements have played in these historical waves, which have driven surges of economic growth. This has lessons for the scale of changes in technologies, institutions, business strategies and user practices that will be needed for a low carbon energy transition, and for recent debates on green growth vs post growth perspectives, implying the need for new economic thinking.