Download Ecological Economics * Environmental Challenges

Circulation economics - A new economic paradigm
Professor Ove Jakobsen
Centre for Ecological Economics and Ethics
Bodø Graduate School of Business
Climate Bottom Meeting – Windows of Hope in Copenhagen
Christiania 8. Dec. 2009
Challenges
•
Increasing awareness that our global natural, cultural,
and economical systems are endangered (eg. Climate,
finance and poverty crisis), are forcing us to realize
that decisions made on the basis of local, short-term
economic criteria, in the long run can produce
disastrous results.
Problems to be Solved
 Sustainable scale of production and consumption
 Fair distribution of resources and wealth
 Efficient resource allocation
Paradoxes
•
To solve the financial crisis we recommend initiatives to
stimulate economic growth, while we know that a continued
growth in the economy worsen the environmental problems
•
To achieve attractive contracts we bribe the decision-makers
even if we know that it reduce the rationality of the market.
•
To enhance our own competitiveness, important information is
held back even though we know that it undermines the trust
between the actors in the market
The Need for Change
•
We can't solve problems by using the same
kind of thinking we used when we created
them
Albert Einstein
•
We are the first generation to be confronted
with the unpaid bills and the last generation to
get away with it
Øystein Dahle
Economics and Metaphysics
•
Economists normally suffer from a kind of metaphysical
blindness, assuming that theirs is a science of absolute and
invariable truths, without any presuppositions.
•
Some go as far as to claim that economic laws are as free from
metaphysics or values as the law of gravitation
•
Conventional economics offers a very misleading view of how the
world actually operates, and needs to be replaced
(Ormerod 1994)
The Mechanical Worldview
•
The universe is understood as a machine
(clockwork), completely causal and deterministic
•
All that happen have a define cause and give rise to
a define effect
•
The future of any part of the system could – in
principle – be predicted with absolute certainty if its
state was known in detail
•
There is no capacity for creativity, spontaneity, selfmovement, or novelty in the mechanistic worldview
Economics based on a mechanical worldview
•
The actors in the market are isolated individuals
(atomism), related to each other only externally
•
The market is a mechanism based upon interplay
between egocentric individuals seeking their own ends
•
The goal of science is to control, manipulate and exploit
nature
The Organic Worldview
•
The earth is a system comprised of closely interacting
and interdependent subsystems
•
The earth and its constituent systems are dissipative
structures
•
Since every system is connected to and dependent of
all others, everything evolves together over timeIt is the
essence of life that it exists for its own sake, as an
intrinsic reaping of value
•
It is the essence of life that it exists for its own sake, as
an intrinsic reaping of value
•
Change is the rule rather than the exception
Circulation Economics based on an organic worldview
•
Economy, nature and culture are integrated parts within a ‘living’
organism
•
The interplay between economy, nature and culture possess
properties like dynamism, evolution, integrity and change
•
Throughput of material and spiritual energy are affecting the
integrating structures and processes
•
Economy has the ability, through human action, to restructure and
reform processes in ecosystems and societies of which they are a
part
•
Theory and practice in constructive interplay with the cultural and
natural environment
Amitai Etzioni (1988)
The moral Dimension – Toward a New Economics

Neo-classical economics (NCE) presuppose that people seek
to maximize utility, New economics (NE) asserts in addition that
people have morality as a source of evaluation

NCE treats the market as a separate self-containing system,
NE asserts that the economy is a subsystem of society and
culture

NCE assumes that the market is basically competitive, NE
argues that cooperation between interrelated actors are
fundamental
We are members of one-another (Baldwin 1902)
Interdependent Relationship
Ecosphere
Sociosphere
Economy
The Value Triangle
Economy
Welfare
Culture
Quality of life
Nature
Basis of existence
Economy, nature and culture

It is one thing to argue that companies have to make money to
survive, but quite another to argue the far stronger position that
companies exist exclusively to make profits for shareholders
(Zadek 2001)
Life quality in the perspective of positive psychology

The pleasant life
 Positive emotions about the past, present and the future

The good life
 Using your signature strengths to obtain abundant gratification
in the main realms of one’s life

The meaningful life
 Using your signature strengths and virtues in the service of
something much larger than your selves
Circulation economics
Nature
Energy
Material
Energy
Material
Redistribution
Input
Production
Economy
Consumption
Output
Distribution
Knowledge
Values
Knowledge
Values
Culture
Evidence of global limits
Source and sink
 The global ecosystems source and sink functions have large but
limited capacity to support the economic subsystem
Imperative:
 Maintain the global economy to a sustainable size
 The path to sustainability will be through qualitative improvement
rather than quantitative increases in throughput.
The Communicative arena
Customers
Economy
State/government
Suppliers
NGO’s
Employees
Research
Communicative arena
Competitors
Universities
Re-distribution
Art
Bank/Assurance
Owners
Distributors
Church
Politics
Local community
Culture/
Nature
The communicative arena

Provides a remedy for the lack of coordinated planning and
action in the circular value chain.

Open up for a dialog between economic actors and
spokesmen representing other sectors in the society, including
nature and culture

Co-ordinate the interaction between the actors on the market,
and to integrate values from economy, nature and culture
Epilogue
A synthesis of the previous presentation leads to the following conclusions;
•
Economics can no longer be studied in terms of competition between
isolated actors
•
Individual parts do not exist neither in nature nor in culture, only integrated
networks, and these form and shape each other
•
On the one side economic activity depends on access to matter and
energy from nature and knowledge and values from culture (input)
•
On the other side both social and eco-systems are affected by the output
from economic activity
Changes to be made

From competition to cooperation

From atomism to holism

From value monism to value pluralism

From linear to circular value chains

From welfare to quality of life