Skip to main content
SpringerLink
Log in
Book cover

Economics of a Crowded Planet pp 231–272Cite as

Palgrave Macmillan

Conventional Economics on a Crowded Planet

  • Chapter
  • First Online:

  • 184 Accesses

Abstract

Conventional, or mainstream, economics contains much theory and practice that will be indispensable to a future economics for a crowded planet. It also incorporates a great deal of thinking that it antithetical to a world-view of economic alignment with nature. The challenge is to tease apart what is useful from what should be replaced. This chapter surveys the twentieth-century economic orthodoxy, identifying disconnects with the foundational propositions outlined earlier. It proposes new ways of thinking about the economy and of conducting economic analysis, while retaining core concepts from existing economic theory.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   59.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   79.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    Krugman and Wells (2009, p. 3): “the study of how individuals make decisions and how these decisions interact.” or Colander (2010, p. 15): “the study of individual choice, and how that choice is influenced by economic forces.”

  2. 2.

    For example, Goodwin et al. (2009) mention ecological economics in a list of ‘fringe’ areas of economics near the end of the book. Colander (2010) and Krugman and Wells (2009) mention only ‘environmental’ issues, briefly, in the context of economic growth.

  3. 3.

    Goodwin et al. (2009, p. 3).

  4. 4.

    Goodwin et al. (2009, p. 11).

  5. 5.

    Goodwin et al. (2009, pp. 20–25).

  6. 6.

    Goodwin et al. (2009, figure 1.6, p. 29), which is taken from Goodland et al. (1992).

  7. 7.

    Marglin (2008, p. 4).

  8. 8.

    Georgescu-Roegen (1971, p. 319). Georgescu-Roegen acknowledged that Lionel Robbins, for one, awoke from his “dogmatic slumber”, citing Robbins’ The Economic Problem in Peace and War (1947). Yet examples like Robbins, Georgescu-Roegen noted, are rare exceptions.

  9. 9.

    Hill and Myatt (2010, p. 9).

  10. 10.

    Marshall (1920, ch. XIII).

  11. 11.

    Goodwin et al. (2009, pp. 480–483).

  12. 12.

    For a market to achieve Pareto-efficiency, it must be a ‘free market’ in the sense defined in the first welfare theorem of economics, which imposes various restrictive assumptions necessary for the mathematical proof. The Arrow-Debreu model (Arrow and Debreu 1954) is one of the classic works on this topic. It assumes that markets exist for all possible goods, all markets are in full equilibrium, markets are perfectly competitive, transaction costs are negligible, and market participants have perfect information.

  13. 13.

    See, for example, Hill and Myatt (2010, pp. 180–183) and Prasch (2008, pp. 87–92).

  14. 14.

    “We ought to worry more about how agents behave, about dynamics outside of equilibrium, and less about the existence of equilibrium,” wrote Stephen Marglin (2008, p. 168). “In fact, if we understood these disequilibrium dynamics, we could let equilibrium take care of itself.”

  15. 15.

    “The assumptions of a theory consist of what is taken by the theorist as not essential to the main matter to be explained, and can therefore be ‘set aside’—not examined or taken into account in the theory. [However,] when the assumptions of a theory are ‘relaxed’ and the relevant reality brought back into focus, the theory should retain its validity. Thus, when Newton assumed away friction in his model S = ½GT2, his theory of gravity still held when tested in the real world of ubiquitous friction. That is notoriously not the case when any one (let alone all!) of the neoclassical assumptions are ‘relaxed’” (Dowd 2004, p. 82).

  16. 16.

    Georgescu-Roegen (1971, p. 323), quoting Fisher (1925, p. 11).

  17. 17.

    Marglin (2008, p. 269).

  18. 18.

    Prasch (2008, p. 138).

  19. 19.

    New York Times, February 7, 1992, p. D2.

  20. 20.

    As David Orrell and Roman Chlupatý note, “money objects are designed to have price and value be equivalent, and this equality is actively enforced by the issuing authority” (Orrell and Chlupatý 2016, p. 154).

  21. 21.

    Blinder et al. (1998) cited in Hill and Myatt (2010, p. 103).

  22. 22.

    Cohen (1983) cited in Hill and Myatt (2010, pp. 104–106).

  23. 23.

    Galbraith (1973, p. 129).

  24. 24.

    Boulding (1962, p. 163).

  25. 25.

    Colander (2010, p. 485).

  26. 26.

    Baumol and Oates (1988, ch. 8).

  27. 27.

    Prasch (2008, p. 28).

  28. 28.

    See, for example, Prasch (2008).

  29. 29.

    Stiglitz (2003, p. 284).

  30. 30.

    Marglin (2008, p. 40).

  31. 31.

    Bridgman et al. (2012).

  32. 32.

    Georgescu-Roegen (1971, p. 281).

  33. 33.

    Krugman and Wells (2009, figure 2–7).

  34. 34.

    “[N]o other conception could be further from a correct interpretation of facts,” wrote Georgescu-Roegen (1971, p. 281).

  35. 35.

    Boulding (1962, p. 160).

  36. 36.

    Horst (2005), for example, modeled financial price fluctuations in a stock market model with many interacting agents using a discrete approach with diffusion dynamics. Adland and Strandenes (2007) developed a discrete-time stochastic partial equilibrium model of the spot freight market. Recent monographs on discrete-time models and techniques in, or applicable to economics include Haddad and Nersesov (2011) and Ljungqvist and Sargent (2012).

  37. 37.

    Eldredge and Gould (1972) argued for a similar empirical interpretation of the fossil record, and paleontology was never the same afterward.

  38. 38.

    Marglin (2008, p. 166) echoed this point by stating, “the virtue of the real market is precisely that it calls forth knowledge … by the incentives it provides for action and the ruthlessness with which it weeds out error.” (Emphasis mine.)

  39. 39.

    Nelson and Winter (1982, p. 356).

  40. 40.

    Nelson and Winter (1982, p. 402).

  41. 41.

    Crutchfield et al. (2003, p. 366).

  42. 42.

    See, for example, Whitley et al. (1993).

  43. 43.

    Crutchfield et al. (2003, p. 366).

  44. 44.

    For example, Waldspurger et al. (1992) and Wellman (1993).

  45. 45.

    Crutchfield et al. (2003, p. 362).

  46. 46.

    Beinhocker (2006, pp. 408–414).

  47. 47.

    Beinhocker (2006, p. 392).

  48. 48.

    Hill and Myatt (2010, p. 91).

  49. 49.

    Hill and Myatt (2010, p. 16).

  50. 50.

    LeGrand (1991, p. 111).

  51. 51.

    Hill and Myatt (2010, p. 202).

  52. 52.

    LeGrand (1991, ch. 6).

  53. 53.

    See, for example, Luyendijk (2015) and other references therein.

  54. 54.

    For example, Knack and Keefer (1997) and Dayton-Johnson (2001).

  55. 55.

    Helliwell (2003) cited in Hill and Myatt (2010, p. 20).

  56. 56.

    Stiglitz (2003, p. 274).

  57. 57.

    Wilkinson and Pickett (2009, p. 195).

  58. 58.

    Wilkinson and Pickett (2009, p. 246).

  59. 59.

    Wilkinson and Pickett (2009, p. 193).

  60. 60.

    Starmans et al. (2017).

  61. 61.

    See, for example, Gintis et al. (2005) and Henrich et al. (2004).

  62. 62.

    Coates (2015).

  63. 63.

    Wilkinson and Pickett (2009, p. 30).

  64. 64.

    Wilkinson and Pickett (2009, figure 1.1, p. 7).

  65. 65.

    Wilkinson and Pickett (2009, figure 15.1, p. 219).

  66. 66.

    Hill and Myatt (2010, p. 158) and Zinn (2002) cited on p. 167 therein.

  67. 67.

    Dodd (2014, pp. 205–206), quoting Brown (1992).

  68. 68.

    Friedman (2006, p. 15).

  69. 69.

    Colander (2010, pp. 575–577).

  70. 70.

    The ecological analogy is with interspecific competition for limited environmental resources within mature ecosystems.

  71. 71.

    This is part of the so-called endogenous growth theory within economics, for which Paul Romer received a Nobel Prize in 2018.

  72. 72.

    Meadows et al. (1972, p. 183).

  73. 73.

    Fortin (2005).

  74. 74.

    Mill (1871) cited in Meadows et al. (2004, pp. 256–257).

  75. 75.

    Solow (1971).

  76. 76.

    Marshall (1920, pp. 55, 78).

References

  • Adland, R., and S.P. Strandenes. 2007. A Discrete-Time Stochastic Partial Equilibrium Model of the Spot Freight Market. Journal of Transport Economics and Policy 41 (2): 189–218.

    Google Scholar 

  • Arrow, K.J., and G. Debreu. 1954. Existence of an Equilibrium for a Competitive Economy. Econometrica 22 (3): 265–290.

    Article  Google Scholar 

  • Baumol, W.J., and W.E. Oates. 1988. The Theory of Environmental Policy, 2nd ed. Cambridge: Cambridge University Press.

    Google Scholar 

  • Beinhocker, E.D. 2006. The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics. Boston, MA: Harvard Business School Press.

    Google Scholar 

  • Blinder, A.S., et al. 1998. Asking About Prices: A New Approach to Understanding Price Stickiness. New York: Russell Sage Foundation.

    Google Scholar 

  • Boulding, K.E. 1962. A Reconstruction of Economics. New York: Science Editions (reprinting of 1950 edition, Wiley, New York).

    Google Scholar 

  • Bowles, S., and Y. Park. 2005. Emulation, Inequality, and Work Hours: Was Thorsten Veblen Right? The Economic Journal 115 (507): F397–F412.

    Article  Google Scholar 

  • Bridgman, B., et al. 2012. Accounting for Household Production in the National Accounts. US Bureau of Economic Analysis, Survey of Current Business 92: 23–36.

    Google Scholar 

  • Brown, N.O. 1992. Apocalypse and/or Metamorphosis. Berkeley, CA: University of California Press.

    Google Scholar 

  • Coates, S. 2015. Verdict on Capitalism: Unfair and Corrupt. The Times, November 3, 2015.

    Google Scholar 

  • Cohen, A.J. 1983. ‘The Laws of Returns Under Economic Conditions’: Progress in Microeconomics Since Sraffa (1926)? Eastern Economic Journal 9 (3): 213–220.

    Google Scholar 

  • Colander, D.C. 2010. Economics, 8th ed. New York: McGraw-Hill.

    Google Scholar 

  • Crutchfield, J.P., M. Mitchell, and R. Das. 2003. Evolutionary Design of Collective Computation in Cellular Automata. In Evolutionary Dynamics: Exploring the Interplay of Selection, Accident, Neutrality, and Function, ed. J.P. Crutchfield and P. Schuster (Santa Fe Institute Studies on the Sciences of Complexity). New York: Oxford University Press.

    Google Scholar 

  • Dayton-Johnson, J. 2001. Social Cohesion and Economic Prosperity. Toronto: James Lorimer & Co.

    Google Scholar 

  • Dodd, N. 2014. The Social Life of Money. Princeton: Princeton University Press.

    Google Scholar 

  • Dowd, D. 2004. Capitalism and Its Economics: A Critical History, 2nd ed. London: Pluto Press.

    Google Scholar 

  • Eldredge, N., and S.J. Gould. 1972. Punctuated Equilibria: An Alternative to Phyletic Gradualism. In Models in Paleobiology, ed. T.J.M. Schopf, 82–115. San Francisco: Freeman Cooper.

    Google Scholar 

  • Fisher, I. 1925. Mathematical Investigations in the Theory of Value and Prices. New Haven, CT: Yale University Press.

    Google Scholar 

  • Fortin, P. 2005. From Productivity to Well-Being: Keep the Focus on Basic Skills. International Productivity Monitor 11: 3–13.

    Google Scholar 

  • Frank, R.H. 2007. Falling Behind: How Rising Inequality Harms the Middle Class. Berkeley, CA: University of California Press.

    Google Scholar 

  • Friedman, B.M. 2006. The Moral Consequences of Economic Growth. Society 43 (2): 15–22.

    Article  Google Scholar 

  • Galbraith, J.K. 1973. Economics and the Public Purpose. Boston, MA: Houghton Mifflin.

    Google Scholar 

  • Georgescu-Roegen, N. 1971 The Entropy Law and the Economic Process. Cambridge: Harvard University Press.

    Google Scholar 

  • Gintis, H., et al. 2005. Moral Sentiments and Material Interests. Cambridge, MA: MIT Press.

    Book  Google Scholar 

  • Goodland, R., et al. 1992. Population, Technology and Lifestyle: The Transition to Sustainability. Washington, DC: Island Press.

    Google Scholar 

  • Goodwin, N., et al. 2009. Microeconomics in Context, 2nd ed. Armonk, NY: M.E. Sharpe.

    Google Scholar 

  • Haddad, W.M., and S.G. Nersesov. 2011. Stability and Control of Large-Scale Dynamical Systems: A Vector Dissipative Systems Approach. Princeton: Princeton University Press.

    Google Scholar 

  • Helliwell, J. 2003. How’s Life? Combining Individual and National Variables to Explain Subjective Well-Being. Economic Modelling 20: 331–360.

    Article  Google Scholar 

  • Henrich, J., et al. (eds.). 2004. Foundations of Human Sociality: Economic Experiments and Ethnographic Evidence from Fifteen Small-Scale Societies. New York: Oxford University Press.

    Google Scholar 

  • Hill, R., and T. Myatt. 2010. The Economics Anti-Textbook: A Critical Thinker’s Guide to Microeconomics. London: Zed Books.

    Google Scholar 

  • Horst, U. 2005. Financial Price Fluctuations in a Stock Market Model with Many Interacting Agents. Economic Theory 25 (4): 917–932.

    Article  Google Scholar 

  • Iacoviello, M. 2008. Household Debt and Income Inequality 1963 to 2003. Journal of Money, Credit and Banking 40 (5): 929–965.

    Article  Google Scholar 

  • Knack, S., and P. Keefer. 1997. Does Social Capital Have an Economic Payoff? A Cross-Country Investigation. Quarterly Journal of Economics 112 (4): 1251–1288.

    Article  Google Scholar 

  • Krugman, P., and R. Wells. 2009. Microeconomics. New York: Worth Publishers.

    Google Scholar 

  • LeGrand, J. 1991. Equity and Choice: An Essay in Economics and Applied Philosophy. London: HarperCollins.

    Book  Google Scholar 

  • Ljungqvist, L., and T.J. Sargent. 2012. Recursive Macroeconomic Theory. Cambridge: MIT Press.

    Google Scholar 

  • Luyendijk, J. 2015. How the Banks Ignored the Lessons of the Crash. The Guardian, September 30, 2015.

    Google Scholar 

  • Marglin, S. 2008. The Dismal Science: How Thinking Like an Economist Undermines Community. Cambridge: Harvard University Press.

    Google Scholar 

  • Marshall, A. 1920. Principles of Economics, 8th ed. Amherst, NY: Prometheus Books (reprint 1997).

    Google Scholar 

  • Meadows, D.H., et al. 1972. The Limits to Growth: A Report for the Club of Rome’s Project on the Predicament of Mankind. New York: Universe Books.

    Google Scholar 

  • Meadows, D.H., J. Randers, and D. Meadows. 2004. Limits to Growth: The 30-Year Update. White River Junction, VT: Chelsea Green Publishing Company.

    Google Scholar 

  • Mill. 1871. Principles of Political Economy, 7th ed. New York: D. Appleton & Company (reprint 1885).

    Google Scholar 

  • Nelson, R.R., and S.G. Winter. 1982. An Evolutionary Theory of Economic Change. Cambridge, MA: Belknap Press.

    Google Scholar 

  • Orrell, D., and R. Chlupatý. 2016 The Evolution of Money. New York: Columbia University Press.

    Google Scholar 

  • Prasch, R.E. 2008. How Markets Work: Supply, Demand and the ‘Real World’. Cheltenham, UK: Edward Elgar.

    Book  Google Scholar 

  • Solow, R.M. 1971. The Economist’s Approach to Pollution Control. Science 173: 498–503.

    Article  Google Scholar 

  • Starmans, C., M. Sheshkin, and P. Bloom. 2017. Why People Prefer Unequal Societies. Nature Human Behaviour 1: Article 0082.

    Google Scholar 

  • Stiglitz, J.E. 2003. The Roaring Nineties. New York and London: W. W. Norton.

    Google Scholar 

  • Waldspurger, C.A., et al. 1992. Spawn: A Distributed Computational Economy. IEEE Transactions in Software Engineering 18: 103–117.

    Article  Google Scholar 

  • Wellman, M.P. 1993. A Market-Oriented Programming Environment and Its Application to Distributed Multicommodity Flow Problems. Journal of Artificial Intelligence Research 1: 1–23.

    Article  Google Scholar 

  • Whitley, L.D. (ed.). 1993. Foundations of Genetic Algorithms 2. San Mateo, CA: Morgan Kaufman.

    Google Scholar 

  • Wilkinson, R.G., and K. Pickett. 2009. The Spirit Level: Why More Equal Societies Almost Always Do Better. London: Allen Lane.

    Google Scholar 

  • Zinn, H. 2002. Declarations of Independence: Cross-Examining American Ideology. New York: HarperCollins.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. San Rafael, CA, USA

    Fraser Murison Smith

Authors
  1. Fraser Murison Smith
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

Copyright information

© 2019 The Author(s)

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Murison Smith, F. (2019). Conventional Economics on a Crowded Planet. In: Economics of a Crowded Planet. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-31798-0_8

Download citation

  • DOI: https://doi.org/10.1007/978-3-030-31798-0_8

  • Published:

  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-030-31797-3

  • Online ISBN: 978-3-030-31798-0

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation