The Neo-Classical and Steady State Approaches to Environmental Economics: a few methodological remarks

Abstract

In this chapter I attempt to analyse the methodological foundations of environmental economics. Attention is paid to two important schools of thought: the neo-dassical and the steady state analysis. The first school, which is the mainstream school of thought in contemporary (non-environmental) economic analysis, concentrates on the subjective welfare or utility theoretical approach, while the second pays particular attention to physical laws. The latter is also known as ecological economics. This essay attempts to gain a dearer insight into the methodological backgrounds or meta-economic structures of both schools. The term meta-economics which was used by Schumacher (1973) is defined here as the underlying assumptions of economic analysis. Underwood and King (1989) spoke of the ‘set of first principles shaping theoretical development’. In particular, Gunnar Myrdal (1954) and Joan Robinson (1962) re-established the importance of these (metaphysical) first principles for the development and evolution of economic thought. They both argued that all analyses ultimately rest on ideologically conditioned subjective beliefs. Economists may approach the subject differently and come to different conclusions, depending on how they think about meta-economic and ideological principles.

R. A. Jongeneel is Lecturer in the Department of General Economics of Wageningen Agricultural University. The author would like to thank Professor E. Schuurman, Department of Philosophy, Delft Technical University and Wageningen Agricuitural University, and Emeritus Professor B. Goudzwaard, Department of Economics, Amsterdam Free University, for their valuable comments on an earlier draft of this paper. Tbe usual disclaimer applies.