Understanding Modern Economics from Ecological Perspective

News Bharati    15-Jan-2020 07:56:28 AM
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- Interview by Harshad Tulpule
 
This is an exclusive interview of Dr. Gurudas Nulkar, who is a researcher and student of a less known subject ‘Ecological Economics’. Formerly an entrepreneur, he currently teaches sustainability in Symbiosis Institute and Ecological Society. He has authored a book titled ‘Ecology, Equity and the Economy’. This interview gives us a basic understanding of the interrelation between Ecology and Economics. Such understanding is much required today to overcome the challenge of environment.
 

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‘Ecology’ and ‘Economics’ are usually looked at as two separate, or most often contradictory subjects. So, first of all, we are curious to know what’s the interrelation between the two:
 
It is not a coincidence that both ‘Economy’ and ‘Ecology’ start with the word ‘Eco’. The word has its origin in the Greek Word ‘Oikos’, meaning ‘the house’. The function of the Economy is to convert natural resources like timber, metals, fossil fuels, plants, animals, soil, etc. into money, which can be put to us in social welfare. Thus, Economy is founded upon Ecology. 
 
However, in Economy, the valuation of a natural resource is done on its ‘extrinsic’ value i.e. the value of a natural resource to human beings. When we use coal, we pay the price to coal companies but not to mother earth for taking away its part. By considering the ‘extrinsic’ value, the ‘intrinsic’ value of a resource is ignored. 
 
Intrinsic value is the value of the existence of the resource. Its value of being in that place in nature e.g. the value of minerals being there in soil, the value of a plant or animal being there in the forest, etc. Existence of physical and biological elements in nature generate ecosystem services such as the hydrological cycle, food chain, pollination, maintaining oxygen level, etc. All these ecosystem services are possible only when these physical and biological resources are present in their appropriate places in nature in the right quantity.
 
Extrinsic value of natural resources endows material well-being to humans, whereas intrinsic value bestows the capacity to sustain life, upon the planet. Such intrinsic value is never considered in the economy. Therefore people tend to look at ‘Economy’ and ‘Ecology’ as two separate subjects, or most often contradictory to each other. 


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Today, ‘Gross Domestic Product (GDP)’ is the universally accepted indicator of economic development. Why do you think that this is not an appropriate indicator from ecological perspective?
 
The founding principle of measuring GDP as an indicator of economic development is that ‘monetary growth solves all problems’. But, historical evidence proves that mere monetary growth has not solved all social problems like inequality, crimes; and, on the other hand, it has aggravated ecological problems.
 
Growth in GDP necessitates more and more extraction of natural resources and more and more creation of waste. For manufacturing one car we have to extract metals and fossil fuels from the earth. Hence manufacturing of any good simultaneously contributes to rise in GDP and degradation of the environment. 
 
Allowing corporate firms to do fishing in deep sea will add to the GDP but it will have detrimental effects on marine ecology and deprive small fishermen of their livelihood. Hence, any economic activity has social as well as ecological footprints which are not considered in GDP. Such GDP growth reduces the planet’s capacity to sustain all forms of life, making the development unsustainable.

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So, what could be the alternative indicators that can encompass social and ecological welfare along with monetary growth?
 
The answer is not simple though the question is! First, we have to stop relying only on monetary growth measured in terms of GDP and things like social welfare, equitable distribution of natural resources, reduction in natural capital, development of social and human capital must be given due importance. If we observe the tribal life, they don’t have any quantitative indicator but they are living a happy social life with the least environmental cost.
 
However, GDP became popular because it is very easy to measure! Moving away from such easy quantitative indicator to another complicated qualitative one, is a task which no government is willing to undertake, due to its ‘political cost’! If the performance of the previous government is measured on GDP growth, then, naturally the next government will not want to go ahead with different indicators because of the fear that low GDP will lose the trust of the voters. Moreover, the uncertainty lies in what to measure and how to measure.
 
Qualitative measures are more complex and pose issues of comparison, since they can be highly localised. For countries like Bhutan, Singapore, measurement becomes comparatively easy as they are uniformly resource rich or poor. Thus countries like Bhutan can measure 'Gross National Happiness’ (GNH), while it is tough to measure in India, where diverse biogeographic regions have created diverse cultures.

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Today, national and international policies are focusing on shifting from non-renewable resources to renewable ones. Can it be the ultimate solution?
 
Yes, it it is indeed one of the solutions. However, even though governments are encouraging the use of renewable energy, like solar PV for example, it is evident that the current demand for electricity will not be met purely by Solar PV. Moreover, solar and wind energy is highly undependable, especially when the climate is turning more unpredictable. So, as a matter of abundant precaution, governments could look at Herman Daly's three principles.
  
  • The speed of using renewable resources should not exceed the speed of their regeneration.  
  • The pace of using non-renewable resources should not be faster than the pace of their substitution by renewable ones. 
  • The rate of waste generation should not be faster than the natural rate of its assimilation.
 

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If we look at the evolution of modern Economics over the last 2-3 centuries, do we find any economist/s who have thought of sustainability?
 
All economists, right from Adam Smith to David Ricardo, John Stuart Mill, Alfred Marshall, William Stanley Jevons, etc. have, at some point of time, talked about nature’s limitations to economic growth. Simon Kuznets, who suggested GDP as an indicator of development has himself talked about its limitations. Kuznets suggested this indicator at the time of great depression when America was in extreme economic trouble. However, He had strictly recommended to use this measure only in times of great depression and not to use thereafter.
 
In India, philosophers like Mahadev Govind Ranade had warned the British Government that western models of economic development are not applicable to India where there are diverse biogeographic regions, diverse means of livelihood and diverse cultures. How can we define the development path for India on the assumptions made in Western context? Even Gopal Krishna Gokhale and Rabindranath Tagore have vociferously written on how the Indian economy should be. Contemporary economists like Dr. Amartya Sen and Partha Dasgupta also talk about Economy and Ecology. 

What can we learn from Gandhian and Marxian Economics in today’s context of sustainable development?
 
Marxian economics was essentially based on social equity but he has talked extensively about ecological equity as well. One of the fascinating notions of Karl Marx is, what was later termed as the ‘metabolic rift’. This talks much about the widening gap in the relationship between humans and nature.
 
Marx talks about ‘robbery of the soil’, which is a critical issue in today’s context of sustainable development. One repercussion of urbanisation is that through the food supply from rural to urban area, nutrients are taken away from the soil, concentrated in cities and through the excreta of urban people, they are dumped into a river or sea. This linear process creates ecological imbalance where villages are depleted of nutrients and oceans are overpopulated with the same. Marx also talked about incorrect or fictitious valuation of natural resources.

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Gandhiji talked about economics completely from value and ethics point of view. He firmly believed that economics is about social values and ethics rather than wealth creation. His idea of ‘trusteeship’ rather than ‘ownership’ of resources is very relevant in modern times. The Brundtland Commission defines sustainability as meeting present needs without compromising the ability of future generations to meet theirs, this is not much different from Gandhiji’s concept of trusteeship. 
 
Gandhiji very eloquently said that what is wrong for an individual is also wrong for organisations as well. Today, we see people living in a state of ‘cognitive dissonance’. A CEO of a company may be living an eco-friendly lifestyle, using a bicycle, but at work he will frame policies for his company which could be ecologically harmful! Such competitive pressures of economic growth, make humans take decisions which go against the ecology. 
 
What’s the difference between ‘Environmental Economics’ and ‘Ecological Economics’? And why the latter possesses more significance?
 
‘Environmental Economics’ doesn’t change the founding principle of Economics i.e. ‘market solves all problems’. Once the externalities are taken care of by taxation, the market efficiency will automatically reverse the degradation of the environment. Therefore, concepts like ‘carbon credit’, ‘polluter pays principle’ come under Environmental Economics. However, it doesn’t put any cap on human greed. Environmental Economics deals with cost-benefit analysis but ignores behavioural change, which is critically important in ecological improvement. 
 
Ecological economics believes that each and every resource in nature has an intrinsic value and that value is always greater than the value of it being in the economy. Value of a standing tree is greater than the chair made up of its timber. Environmental Economics talks about equity within human species but Ecological Economics talks about equity within all species on earth. If the river is polluted, humans have options to drink from purified sources. However, plants and animals do not have such options. Ecological Economics stresses the need of spending money on improving water quality for all creatures, which is not the subject matter of Environmental Economics.

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Consumer is the king of any economy but consumerism itself is killing the planet. What changes are required in our today’s consumption patterns? What is your definition of ‘Ecologically Sensible Consumer’?
 
The current economic model is based on consumption driven growth. Thus increasing consumption in society is actively pursued by all stakeholders in the economy. Advertisements urge consumers to buy their products on the promise of comfort, convenience or status. Nowhere is there any mention of the ecological cost of making the product. 
 
For me, an ecologically sensible, or conscientious consumer is one who seeks to reduce the ecological footprint of his lifestyle. He would demand to know what is the energy consumed in the life-cycle of the product he intends to buy, how is the waste disposed, what can be done at the end of the life of the product, and so on. It is impossible for us to do this for each purchase, hence every product must carry at least its carbon and water footprint on its package. When this is disclosed, a large section of society will have the option to make better decisions for the planet.
 
How much do you think that today’s young generation, which has skyrocketed aspirations, would acclimatise with concepts like ‘localisation’, ‘minimalist lifestyle’, etc?
 
It seems quite difficult, because right from childhood we are teaching children how to compete, to produce more wealth. Our education glorifies the doctor but demeans the farmer and the plumber! The education system has succeeded in setting the sole aspiration of wealth accumulation. Hence today’s youth is not trained to understand concepts like minimalist lifestyle. And yet, I believe that we can bring about change in the aspirations of our youth, if we start inculcating the need to protect nature for our own survival, at the school level. We must restructure our education system in a way that the child will realise the value of protecting nature and what happens when GDP is pursued. 
 
Can conservation become an economic activity? Do you see any job potential in environment conservation?
 
Indeed! Couple of years back, former American President George Bush said that one of the biggest employment generators for America is ecological restoration. Countries like Canada, New Zealand have prepared comprehensive documents on Green Jobs potential. In India also, there are many ways through which ‘Green Collar Jobs’ can be generated. 
 
I would like to share here that Ecological Society and MKCL made a presentation on creating green jobs, which was presented to the Prime Minister. Right on the next day, the PM announced that the government will focus on creating ‘Green Color Jobs’.
 

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Currently, Ecological Society and MKCL are preparing a roadmap for employment potential in ecology sector. India has a huge potential to provide such jobs at village level, particularly to those who are academically less educated. And more importantly, these jobs will not be affected by the economic ups and downs!
 
For contact:
gurudasn@gmail.com