Contents:
The authors report initial consumer research results and discuss some of the implications. Chapter 10 by John Gowdy, Mario Giampietro, Jesus Ramos-Martin and Kozo Mayumi claims that economic theory is currently in a state of disarray because neoclassical welfare economics collapsed in the face of empirical evidence that Homo economicus offered a poor description of actual human behavior and led to erroneous predictions and policy disasters.
In response, this chapter extends the Post Keynesian model of production to include the biophysical nature of human activity. The energy and mineral bonanza of the twentieth century put the issue of biophysical limits on the back burner for neoclassical and heterodox economists alike. However, that is changing with issues of resource scarcity and environmental degradation.
They then report an application of the method to the case of China making a transition to a sustainable modern economy. In Chapter 11 J. Barkley Rosser, Jr considers the implications of 20 Post Keynesian and ecological economics complex ecological economic dynamics from a Post Keynesian perspective. Rosser argues that catastrophic, chaotic, and other complex dynamics reinforce the conceptual foundations of the Keynesian notion of uncertainty.
He also shows that predator—prey models can be linked to Post Keynesian macrodynamic models. He then shows how these can be linked to ecological models, which include fisheries, forestry, lake dynamics, and global climatic—economic dynamics. Chapter 12 by James Juniper draws on the work of Michael Porter, which addresses the potential for corporations to meet stringent environmental regulations and at the same time improve their competitive advantage.
The work of Porter needs to be linked with two other strands of research to make a case for the viability of stringent environmental regulations. First, the literature on smart or responsive regulation argues that regulation is needed to provide pressure to innovate and to promote innovation that is environmentally friendly. Second, the Post Keynesian literature argues that government deficit spending is necessary to guarantee that there will be demand for environmentally friendly consumer goods. Such deficit spending would help achieve full employment and adequate demand by guaranteeing largely full-time jobs within the public sector.
In Chapter 13 James Kahn and Alexandre Rivas attempt to bridge the gap between ecological economics and Post Keynesian economics by looking at how ecological services, social capital and human capital can help achieve sustainable development in a developing country.
The chapter argues that when the importance of environmental capital is recognized, one must look at the growth process in a fundamentally different way, especially when considering the economic development of indigenous and traditional peoples. This chapter contributes to the Post Keynesian perspective by showing that the consideration of environmental capital, its potentially irreversible destruction and the non-substitutability of other types of capital for environmental capital, leads to important pathdependency problems.
The first half of this chapter argues that optimization strategies fail to address two failures at the core of capitalism: This undermines any effective investment policy towards sustainable development, but provides an opportunity for a major contribution from a non-optimal perspective. The second part of this chapter uses Post Keynesian principles to set forth some steps toward a sustainable development investment policy. It emphasizes that Alternative perspectives on sustainability 21 optimality needs to be replaced by satisficing for future development that guides and supports broad economic—ecological institutional settings.
Clear ecological goals set for the long-term future are a prerequisite in this framework. Work in this area of psychological and irrational behavior has mostly been carried out by economic research in behavioral economics. Recent examples would include Richard H. Thaler and Cass R. Akerlof and Robert J. Ayres , Industrial Ecology: Simonis eds , , Industrial Metabolism: Restructuring for Sustainable Development, Tokyo: United Nations University Press.
Johns Hopkins University Press, pp. Johns Hopkins University Press. University of Michigan Press. Schulze eds , Valuing Environmental Goods: World Meteorological Organization, pp. Vane eds , Modern Macroeconomics: The Economy, Society and the Environment, Dordrecht: Munn eds , Sustainable Development of the Biosphere, Cambridge: Cambridge University Press, pp.
Alternative perspectives on sustainability 23 Kneese, A. Resources for the Future. Fisher , The Economics of Natural Environments: The Price We Pay, London: Energy Systems and the Industrial Revolution, Cambridge: Much of this new work stems from a methodological critique of neoclassical economics, borrowing heavily from the philosophy of science as well as economic methodology, and from increased awareness of and concern for the environment. The methodological developments are located in three main literatures, all of which have a potential impact on how Post Keynesians understand environmental issues.
Especially important is the Treatise on Probability Keynes, , which contains a critique of existing theories of probability and develops an alternative theory. This work has led to a better understanding of methodology, of uncertainty, and of assorted theoretical issues, such as the role and existence of money in the economy. Two literatures, both inspired by Keynes, are more controversial.
These are not universally accepted by Post Keynesians, many of whom regard them as incorrect, or at best distracting from theoretical and empirical work. Babylonianism,1 developed principally by Sheila Dow, holds that science does not search out great truth claims; rather, the aim of theory is explanation and understanding. The nature of reality, comprising organic, complex and open systems, dictates that complete explanations are impossible.
The Babylonian approach shares much with that of Keynes. However, it should be noted that many Post Keynesians view Babylonianism with suspicion, claiming it is insufficiently rigorous, eclectic and incoherent Davidson, —04; Dow, ; Holt, Even more controversial has been Critical Realism, a philosophy developed by Roy Bhaskar , Bhaskar provided an argument for a reality existing independent of our present conception of it, which has depth, and is open.
Both the social and natural sciences seek to identify these mechanisms. Critical Realism has been brought to economics by Tony Lawson , It shares many concerns of Keynes and Babylonianism. Its main contribution to economics has been to urge that a greater prominence be given to ontology. Lawson uses Critical Realism to argue against mathematical and statistical techniques except in highly unlikely circumstances. There are, of course, critiques of Critical Realism; one prominent criticism is that it is unable to inform empirical work Downward, This chapter examines these methodological developments and draws out their implications for a Post Keynesian economics of the environment.
It is beyond the scope of this chapter to argue for a single Post Keynesian methodology for environmental economics or to contrast this with existing alternatives, such as neoclassical environmental economics or nonneoclassical ecological economics. Each of these will be considered in turn and related to a Post Keynesian economics of the environment. They agree that while it is reasonable to argue that our perceptions of reality, our actions upon it, and our understanding of it, are complex, there is a reality to be studied.
It would seem strange to argue that tigers or ecosystems or pollution are Recent developments in Post Keynesian methodology 29 social constructions. Yes, our understanding of them is mediated by social activity; for example, our concern for, and actions towards, tigers reflect the value put on them by society. Nevertheless, it is worth restating this basic realist principle because of the influence of constructivist thought in economics, which sometimes argues that reality is purely a social construct with no material element. A Post Keynesian environmental analysis must take this realism seriously, which means engaging in ontological analysis.
Recognizing the importance of ontology reinforces the Post Keynesian belief that theories should be realistic — they must refer to real things and have some basis in reality. In that sense, Post Keynesian economics shares one of the main strengths of ecological economics, which is that an understanding of the object of knowledge and of ecological concepts informs economic concepts. Existing economic concepts are rejected if they are unable to illuminate ecological factors. Post Keynesians claim that its realism is an advantage in environmental economics.
Orthodox treatments accept that there is a reality, but are less concerned that their theories are realistic; they are happy to use convenient fictions, such as the notion of a rational economic person maximizing their utility. A similar concern for realism exists in ecological economics. For example, Gowdy argues that models of the consumer in environmental analysis should capture behavioural regularities supported by experimental results. How might this affect a Post Keynesian economics of the environment?
The capital controversy of the s and s see Harcourt, provides a suggestion. The controversy focused on the possibility of an aggregate production function, and on the possibility of valuing aggregate capital and the profit rate independently. This debate showed that calculating capital stock depends on the profit rate, which itself depends on the valuation of the capital stock. As a result, aggregate capital stock was considered infeasible along with aggregate production functions.
While the capital controversy centred on several theoretical curiosa, an essential element of the debate was an ontological concern about whether capital was homogeneous and perfectly malleable in historically reversible ways. Neoclassical economists advocated such a conception, whereas Post Keynesians argued that capital is more inflexible and heterogeneous.
The capital controversy may have implications for the concept of natural capital. Ecological economists also distinguish between critical and non-critical natural capital, to stress how crucial some resources are Spash and Clayton, , p. From the perspective of the capital controversies, however, we must question the notion of natural capital since it attempts to measure the aggregate stock of a vast number of heterogeneous objects.
While manmade capital is reproducible in an identical form, natural capital is not. Further, when some natural capital is critical, and other natural capital is not, how could they be compared and measured? The natures of natural capital and man-made capital might be so different as to render them incommensurate. Likewise for different types of natural capital. All this creates difficulties for environmental analysis.
Such criticisms significantly undermine further concepts, such as weak sustainability, which holds that man-made physical and natural capital can be easily substituted. Weak sustainability is undermined as a concept, because it holds that a decrease in natural capital should be compensated for by an increase in physical capital. However, if the two types of capital are essentially different, it is difficult to see how they could be compared and even further how we could substitute one for another.
As his work on probability evolved, Keynes adopted an organic ontology. An internal relation is one in which an entity A is defined partly in terms of another entity B. Thus, we can talk of internal relations between polluter, pollutant and polluted, predator and prey, input and output, invader and invaded, and so on. Social examples of internal relations include landlord—tenant, master—slave and employer—employee. Babylonianism also explicitly adopts organicism. There may be parallels between this literature and ecological economics; for example, Norgaard , p. The concept of organicism has now been superseded by the concept of open systems.
Indeed, there are a number of different treatments of open systems, all with distinct advantages. Their nature is discussed further below. This example is only illustrative; it is perhaps most useful as a vehicle for discussing some of the main characteristics of open systems and their implications.
The permeable boundary allows the impact of external causal factors to be felt inside the system. There is no assumption that external factors can be excluded, and so the objects inside the system are not isolated. In contrast, economics 32 Post Keynesian and ecological economics tends to treat outside factors as an inconvenience for their models.
This is justified as a necessary abstraction, but in fact they make assumptions that deny the nature of the system in question.
Systems are sets of entities and the relations between them. From organicism, we know that some relations may be internal; and from complex adaptive systems, we know that some relations may be internal, while others are external. Because the system moves through time, entities within the system evolve over time, as do relations between them.
Furthermore, over time the entities may act in different ways, combine in different ways and create new emergent phenomena. The history of the system therefore matters in understanding its current state. For this reason, the system is shown with a time arrow. Of course, the importance of history to economic analysis has been emphasized by Post Keynesian economists for example, Robinson, Similarly, ecological economics has stressed history — for instance through the co-evolution of systems Norgaard, , As stated above, one aspect of recent work in Post Keynesian methodology has been to shift the focus of analysis onto ontological concepts, such as structure and mechanism.
In the system being discussed, the entities found may be structured. These structured entities may be very different from each other in nature. For example, a human and a fish are both structured entities but are very different. Causal mechanisms or processes such as M1 and M2 in Figure 2.
They may act independently, or and perhaps differently at different times in combination, creating events. Other events also may trigger mechanisms to operate; this is why the vertical arrows shown in Figure 2. Furthermore, the objects may be internally related or organic , and this relationship itself may have a causal function M3. For example, in trying to explain fish stocks, one mechanism may be the actions of the fisherman and another mechanism the actions of other fish; these relationships affect the final outcome.
However, these mechanisms may not always operate. Mechanisms inside the system may operate intermittently, thereby creating uncertainty about and within the system. Similarly, mechanisms outside the system may not always operate to affect the system. Thus, there is a focus on potentialities and not just actualities. In addition, the ways in which causal mechanisms combine also change over time. Another important concept is ontological depth. Causal mechanisms lying beneath the level of events operate to change the system. Conceptualizing the nature of reality in this way has specific implications.
First, the ecological dimension of the economy is clearly acknowledged. Given that the open system contains depth, it must automatically include Recent developments in Post Keynesian methodology 33 the ecological. It is therefore incorrect to envisage the economic and the ecological as separate spheres see Figure 2.
The concept of depth also enriches all the approaches seeking to embed the economic within the ecological see Figure 2. In formulations such as Figure 2. Depth requires us to think of the economic as embedded in and at a higher level emergent from the ecological. That still allows one to envisage the economic reacting back on the ecological.
For this reason we draw the two-way arrows in Figure 2. Moreover, beneath the mechanisms shown in the diagram, there are further levels. Economic events are determined by combinations of economic mechanisms, but also political, social and psychological mechanisms, which are in turn all affected by the biological, chemical and physical mechanisms.
Therefore, any ecological feature or event is complexly determined by a range of causal mechanisms located at various layers of reality. Take the pollution of a river. One can construct a causal sequence as a story of how the pollution occurred and what its effects were. A physical process of production has created a toxic effluent. This is partly a product of the physical and chemical mechanisms and hence engineering.
The economic mechanisms are those causing in the sense of a temporal causal sequence a particular productive technology to be chosen. Class relations may also affect the choice of technology. The physical and chemical output also affects the biological nature of the river and humans. The chemical in the river harms organic elements in the river, such as fish, and anything else that consumes the water or the fish.
The pollution may cause ill health and the loss of enjoyment from activities related to the river, such as swimming or fishing. The fact that the pollution is noticed is the result of social mechanisms that value rivers and create institutional structures for monitoring them. The impulse to act against pollution is, in turn, partly psychological and partly cultural it may emanate from religious or other cultural norms. This story is familiar to economists. What does the concept of ontological depth add?
Principally, it impels comprehending the pollution as not merely a causal sequence of events, in which an event occurs and leads directly to another event like one billiard ball striking another , but in terms of layers of reality with different causal mechanisms. Further, the higher layers in the overall structure, such as the economic, are dependent on lower levels such as physical structure; but they also have their own properties which are emergent from the lower. This conceptual framework provides a broader and deeper apparatus for understanding reality than those approaches that focus on the economic as a separate entity.
It is impossible to ignore the bigger picture in 34 Post Keynesian and ecological economics a Economy and ecology as separate, interacting spheres Resources Ecological Economic Wastes b Economy as lying within the ecological Sun Economic Ecological Waste heat c Economic emergent from ecological Economic Ecological Sources: Such a wider view is crucial in dealing with highly complex ecological issues. That does not mean that an economist must understand every detail of every aspect at every layer of reality, but neither can all these layers be ignored.
An economist informed by this view must pay more attention to the interaction between the economy and ecology. Methodologically this has important implications. Most of the time, economists ignore the underlying physical to focus on the economic, and claim that this is a necessary abstraction. However, taking ecological considerations into account, this abstraction is clearly not justified. Every production decision has irreducible ecological dimensions and implications. It could even be argued that classical economists recognized this Christensen, As an aside, methodologically this could mean that an economic analysis of the environment is necessarily interdisciplinary; it must take information from other disciplines to inform its own judgements.
Further, the lessons from methodological developments such as those found in Kuhn and Babylonianism, as well as arguments for pluralism, suggest that strategies of economic imperialism are unlikely to be successful. However, analysis in terms of depth and causal mechanisms means that it is important to focus on mechanisms, and their potential activity and effects and their interaction with other mechanisms. This changes the policy focus. The key ontological questions are: That is not to say that the framework described here is without flaws.
The concept of depth does not let us determine the mechanisms that are most important. Clearly, when applied to the environment, this is crucial. Some mechanisms may be crucial to life, or death, and thus there is a hierarchy of mechanisms to consider. There is an analogy here with lexicographic preferences, which imply that substitutability between goods is not complete van den Bergh et al.
Lexicographic preferences are a staple of Post Keynesian consumer theory see Lavoie, , passim. The ontology outlined may have other implications for economics generally, and for an economics of the environment specifically. For example, the concept of equilibrium appears problematic. Equilibrium has been a concern of Post Keynesians since at least Kregel and Robinson Equilibrium encompasses multiple, very different senses, including expectations being met, a balance of forces, an equality of two quantities and no tendency to change. It might be possible for individual expectations to be met, but only by luck because the current actions of agents make the construction of probability distributions very difficult see below.
Similarly, given emergence, it is difficult to conceive of equilibrium as the end of an economic process. Questioning the concept of equilibrium also raises questions about economics. In the context of the environment, many concepts are thrown into doubt. For example, all notions of optimization must be questioned. This has a considerable impact on environmental economics, and even on ecological economics where optimum is a less popular concept, but still used.
It is clear that environmental analysis and decision-making are dogged by uncertainty. All economists would accept that. However, Post Keynesians have long taken a particular view on uncertainty — that it is non-probabilistic. Davidson claims that through crucial decisions those that are irreversible or difficult to reverse future possibilities are changed, and thus probability distributions for future events are impossible to formulate.
That has implications for economic modelling and for the economy.
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It explains the existence of money as something people seek to hold as a store of wealth during uncertain times Keynes, , Chapter 17 ; and it means that individual agents make decisions based not on rational calculation, but often on a whim. Recent developments in Post Keynesian methodology have refocused attention on Keynes and provide ontological support for his views. Consider a prediction about the rate of economic growth in the UK 20 years from now. This cannot be derived from a past frequency distribution because the conditions under which the past frequencies occurred no longer hold.
Long-term prediction in particular is therefore difficult. Agents are held to form, on the basis of induction, a degree of rational belief in a hypothesis, which itself is formed by analogy. Although Keynes did not define uncertainty, for him, and contra mainstream economics, uncertainty is not a probabilistic concept.
Probability helps define uncertainty, since there is a correspondence between certainty and knowledge of a probability relation, and therefore uncertainty can be defined as the absence of such knowledge. Agents form probability estimates about outcomes but also a weight, similar to a degree of confidence not to be confused with the statistical concept of confidence interval — see Franklin, , that they have in those estimates. If a probability carries a low weight, that probability is likely to be unstable.
The state of long-term expectation, upon which our decisions are based, does not solely depend, therefore, on the most probable forecast we can make. It also depends on the confidence with which we make this forecast — on how highly we rate the likelihood of our best forecast turning out quite wrong.
As Dow argues, Keynes places an emphasis on judgement in decision-making in uncertain environments. She offers monetary policy through committees of decision-makers, such as those in central banks, as an example. The distinction between probabilistic risk and non-probabilistic uncertainty has influenced ecological economists Spash and Clayton, ; Spash, It supports the view that environmental futures cannot have probabilities attached to them based on past relative frequencies, given that in open systems ecological entities are evolving in non-random ways.
For example, the notion of a feedback loop suggests that rising levels of carbon dioxide lead to irreversible changes in the ecosystem such as the oceans producing their own net carbon dioxide. This changes the basis of life. Under such circumstances, simply extrapolating from past instances even with some stochastic adjustment is flawed. Such arguments have parallels in complexity theory. In complex adaptive systems, agents adapt to new circumstances, often creating new rules and routines and mechanisms that govern future behaviour, thereby creating emergent phenomena. Thus, although the present and future are rooted in each other and 38 Post Keynesian and ecological economics in the past, in the past it would have been difficult to predict the future.
In the language of non-ergodicity, past frequency distributions would have different averages than current or future ones. Furthermore, it could be argued that even with a logical theory of probability, there is no basis for constructing a probability for some ecological outcome. Or, to be more precise, one could not construct a probability distribution in which one has much confidence because the available evidence is likely to be small relative to our ignorance about the problem. Events far in the future are difficult to predict; attempting to make forecasts about the economy 20 years from now is fruitless Keynes, For example, it would seem impossible to construct a probability distribution of the effects of peak world oil production Campbell, , which include economic reorganization and social dislocation.
But what is the probability of any one of these outcomes, or even of counteracting events or mechanisms, such as the ability of individuals to sustain themselves without access to oil? Such variables appear beyond estimation; certainly past data provide little support for any estimate, however precise. The Arrow and Debreu model of general equilibrium requires the existence of a complete set of futures markets. These would simply not exist in the world pictured here. The problems are specifically acute for environmental problems.
The conventional analysis of pollution suggests that there may be an optimal amount of pollution. A typical analysis of pollution calculates marginal private and social costs and benefits of units of pollution and production. The contrast between social and private involves the recognition of externalities.
Moreover, the calculation of costs and benefits requires, for accuracy, that future costs and benefits are taken into account. However, those future effects are unknown. They would need to be estimated probabilistically, but the arguments above suggest that the relevant probability distributions may not even exist.
These problems plague all cost—benefit analyses, the most popular tool employed by environmental economists. The pervasiveness of uncertainty leads to methodological objections to cost—benefit analysis Harris, , pp. Such an approach assumes methods of projecting the future, which uncertainty would suggest have dubious reliability. Further, cost—benefit analysis usually rests on there being a discount factor so that future costs and benefits can be viewed in current terms.
However, they also reflect a prediction of how our current actions might affect the future and therefore what rate of Recent developments in Post Keynesian methodology 39 discount would be safe and reasonable for us to assume; thus, our ability to predict becomes relevant. For policy analysis, from a realist perspective, one would prefer that discount factors had some objective anchor. It may be possible to employ random discount factors, simulations, sensitivity analysis and the like to the problem, but without much confidence that this will improve the prediction and valuation of future outcomes.
Of course, the same analysis applies to cost-effectiveness analysis, which avoids the problems of comparing costs and benefits, but still must engage in calculation of the future and its translation into present values. Babylonianism is organic in its practice. Investigations evolve, often in unpredictable ways, and perhaps halt, to start again from a different point. Science is trial and error, not in the sense of moving incrementally to a perfect theory, but in trying out theories and taking elements from one and parts from another to tell a story. Thus, Babylonianism holds that there is unlikely to be a single set of axioms, or a single theory, which can explain a set of phenomena.
Theories beginning from different assumptions and different paradigms, therefore, must be respected and explored Feynman, Babylonianism also advocates theories whose assumptions form and content bear some relation to reality. It holds that atomistic theories are less likely to be successful than organic theories. However, atomistic theories should not be thrown out because they might throw some light on reality, particularly if there are parts of it which are more atomistic. However, simple theories that are deduced from simple axioms are problematic.
This is partly because, due to uncertainty about the world, there is no set of axioms that we can be reasonably certain about, and also because deductions assume that no other interfering factors will change the conclusion.
As illustrated above, pollution is complex, and so we need several different strands of reasoning and evidence to understand its causes. On the issue of climate change, although models generally predict a dire future, there are a range of models and therefore different predictions. Different models contain different assumptions and different causal mechanisms. Support for this view is given implicitly by studying the behaviour of major decision-makers, such as central banks, who may use one main structural model and support this by using a set of auxiliary models.
The problems associated with modelling and forecasting those economic systems in the fairly short term are likely to be much greater in models attempting to capture climate change and its effects for an illustration, see Spash, There are grounds for further pessimism. For Keynes, the assumptions of the uniformity of nature and fixed coefficients undermine the usefulness of econometrics in an organic reality.
Econometrics assumes an independence of observations, and this in turn assumes an atomic rather than organic reality. This critique has been embraced by Davidson, by Critical Realism and by Dow. All argue against traditional methods of economic analysis, driven by econometrics, because they rely on closed systems. Such arguments can appear rather sceptical and even nihilistic. What can we as agents do? Facing uncertainty about the world and about which methods to use, researchers and policy-makers require a basis for action. Advocating the precautionary principle can be understood in the context of uncertainty, open systems and the limited prospects of developing knowledge in such environments.
However, critics of the precautionary principle might argue that it is merely a way of avoiding or suspending judgement and analysis. This is not strictly fair, because precaution, judgement and analysis are connected; indeed, precaution often follows the others. A Post Keynesian approach would be to apply judgement directly and base action on that.
One way that confidence in a course of action may be increased and the weight of argument increased is to gather more evidence. However, this cannot be a simple inductive exercise of generalizing from a number of cases, or counting similar instances. Rather, Keynes saw benefit in negative analogy; that is, gathering evidence in unlike situations. If a finding occurred in a range of contexts, it was more likely to be true.
According to Dow , p. None of this guarantees greater accuracy; neither does it claim faux precision. Recent developments in Post Keynesian methodology 41 PLURALISM Babylonianism and Critical Realism argue that methods should be tailored to the reality they are studying; however, given the complexity of the environment, it is difficult to be confident that the correct method has been chosen.
For this and other reasons, there have been many recent calls for pluralism. Inevitably, there are many definitions of pluralism Salanti and Screpanti, Pluralism can be defined as the advocacy of plurality. This can operate on various levels. One can envisage a plurality of realities, or a fragmented, complex reality in which there is a plurality of heterogeneous types of entity. Given that, and given the difficulties in establishing knowledge in those environments, one can advocate a plurality of methodological approaches including some that make prediction their standard for theoretical success and others that eschew this standard and of methods.
Significantly, ecological economists have also argued for pluralism Martinez-Alier et al. Given the difficulty of choosing the correct method, some authors have argued that several methods be combined. Downward and Mearman argue for mixed-methods research. Mixed methods combine, in a single investigation, multiple data types, theoretical accounts, methods and methodologies. Downward and Mearman contend that economic agents, such as the Bank of England, use mixed methods as a response to the uncertainty they face.
Using mixed methods has implications for environmental economics. As with all economics, environmental economics has a quantitative and formal bias. Mixed methods see this bias as misplaced. Multi-criteria analysis attempts to gather together pieces of evidence from different perspectives to aid decision-making in complex environments. As its name suggests, it tries to avoid the problems with attempting to make optimization decisions based on a single criterion.
However, multi-criteria analysis has a quantitative bias, since it attempts to generate an algorithm that quantifies all the evidence Martinez-Alier et al. A mixed-methods approach would see this final step as unnecessary. Rather, following Keynes, evidence would be presented in its raw quantitative and qualitative form, and decision-makers would then use their judgement in drawing conclusions.
However, it is unlikely that any kind of formulaic response would be suitable. Rather, 42 Post Keynesian and ecological economics each investigation requires its own context-specific response. This is not eclecticism; some methods will be better than others in different contexts, and some methods will be better per se modelling versus reading tea leaves. But this approach recognizes that complex environments require complex investigation. Sceptics and other critics might ask: That is true; however, the recent work has codified the earlier work.
Further, a critic may say that the recommendations above are light and weak. Again, that is true; methodological arguments are necessarily vague. Yet vagueness may be a virtue in uncertain environments. To paraphrase Keynes, it is better to be vaguely right than precisely wrong. Furthermore, recent methodological work has highlighted the problem of prescriptive methodology. Thus, the developments in a Post Keynesian methodology should act only as suggestions for practice, not rules. Any useful developments in a Post Keynesian economics of the environment will emerge from theoretical and empirical work, albeit with the assistance of methodology.
Much of the theoretical apparatus already exists; the new methodology will assist future work. This chapter also has identified some key features of a Post Keynesian economics of the environment, which is rooted in the methodology of the approach. A Post Keynesian environmental economics would embrace realism; ontological reflection; an ontology of depth, layers and emergence; an ontology of uncertain openness, history and change; a scepticism about current methods, including long chains of deduction, mathematical modelling, econometrics and concepts such as equilibrium and optimization; and a recognition that ordinary logical thought might require weighing different types of evidence drawn from a variety of locations and methods.
Finally, there are many overlaps between the Post Keynesian approach to economics, especially its methodological positions and recommendations, and ecological economics. This commonality is much more than a shared opposition to neoclassical environmental economics. To be sure, that opposition is shared; but the dialogue beginning between Post Keynesian economics and ecological economics will likely lead to an array of positive developments Holt, Furthermore, the ground is shared without making either approach redundant.
Ecological economists Recent developments in Post Keynesian methodology 43 have already drawn on Post Keynesian influences, for instance on natural capital and on uncertainty; conversely, Post Keynesians can learn much from the practical and theoretical developments in ecological economics, for instance on multi-criteria analysis.
The former conveys the pluralism she advocates, but eschews eclecticism. Dow feels that Babylonianism has become associated with eclecticism despite her many statements to the contrary. Since Babylonianism is better known, it shall be retained here. This distinction is rather blunt but common Harris, It is beyond the scope of the chapter to explore either environmental or ecological economics in detail, or the distinction between them.
Generally, environmental economics tends to be neoclassical, while ecological economics does not. Many realists argue for a moral realism; that is, a morality existing independent of us, in the same way that objects might Mearman, Spash and Clayton note that there are many definitions of natural capital and that none of the available definitions is particularly effective. This case applies also to natural and non-natural capital.
Holland argues that the distinction between natural and man-made capitals is complicated, even unsustainable. For example, cultivated nature is partly natural, partly man-made. Holland argues further that the distinction between weak and strong sustainability is flawed. It could be said that such scenarios are characterized by ignorance; that is, not knowing the possible outcomes of processes. Under uncertainty, the possible outcomes could be known, even if no probability could be attached to them. See Stirling and Faber et al. There are limits to this argument. Some effects may be easy to identify and predict such as pouring excess chemicals into a river ; however, Babylonianism urges caution about making strong causal claims.
It should be noted that the decision to reject axiomatic thought has been controversial among Post Keynesians. Davidson —04 has argued that Post Keynesians must adopt an axiomatic framework to compete with mainstream approaches. Specifically, Post Keynesian axioms should be empirically grounded and not lead to long chains of logic reasoning. A similar procedure occurs under multi-criteria mapping Stirling, ; Stirling and Mayer, Multi-criteria mapping is seen as eschewing any analytical fix, such as those allegedly attempted by cost—benefit analysis.
This claim deserves further investigation, since multi-criteria mapping retains concepts such as utility maximization across criteria Stirling, , p. Proops , Ecological Economics: A Contemporary Approach, New York: Recent developments in Post Keynesian methodology 45 Holt, R. Pressman eds , Post Keynesian Macroeconomics: Essays in Honour of Ingrid Rima, London: University of Chicago Press. Government and Policy, 19, — Challenges for Post Keynesian growth theory: More specifically he regards three propositions as constitutive of PKE. First, the economy is a process in historical time.
This emphasizes the time taken for production and consumption, that knowledge is asymmetric and incomplete with the past revealed and the future hidden, and that failing to account for time in economic models makes them irrelevant. Second, uncertainty and surprises are unavoidable which makes expectations central to understanding economic decisions. Uncertainty refers to ignorance of the future and should not then be equated with risk assessment of uncertain but knowable futures. Different people have different histories and experiences and so expectations.
This inherent variety adds heterogeneity and plural perspectives to economic agents. Third, economic and political institutions play an important role in determining economic outcomes. Thus, PKE is concerned about the distribution of income as a basic struggle by individuals for control of their destinies and between various groups and social organizations. Each of these three elements can also be found in ecological economics.
Second, concern has been expressed over the epistemology of ignorance and uncertainty Faber et al. This 47 48 Post Keynesian and ecological economics conceptualization can be traced back to Keynes [] and Knight ; although in developing the concept of strong uncertainty Spash b makes more substantive use of Loasby , Funtowicz and Ravetz and Wynne Institutional analysis outside game theory is recognized as absent from orthodox economic approaches and politics is ignored or hidden.
However, the struggle within the political economy can be seen as going well beyond the PKE concern for income distribution among currently existing voices in the body politic. This brings together environmental ethics, political science and social psychology as necessary to inform a revision of how socio-economic systems can be understood. Thus, while ecological economics is more interdisciplinary and has a broader perspective, there appear general areas for agreement across a range of concerns expressed as falling within PKE and ecological economics.
Common ground clearly arises in criticizing orthodox approaches to economics. Both see policy problems requiring new approaches and better analytical tools. There is a mutual concern that human well-being is inadequately approached as a quasi-utilitarian concept based upon individual preferences. Both express the need for a more realistic model of human psychology and of the world in which we live. In PKE there have been some notable minority interests in psychological and behavioural theories relating to consumption and market structures for example, Earl, ; Earl, , and there is the related work of Galbraith [], which addresses itself to the political power and behaviour of the modern corporation.
Orthodox economics is also believed by both Post Keynesians and ecological economists, but for different reasons, to exclude consideration of factors which create instability in social and economic systems. Indeed, where a divide can be clearly discerned is in terms of the objects of attention. PKE seems to have been primarily concerned with effective demand, unemployment, inflation, interest rates and money as a means of economic management.
PKE has almost totally failed to pay attention to the environment until more recently Holt, ; Mearman, , and has neglected limits to growth. A more heterodox macroeconomic approach sharing basic methodological concerns would therefore be a significant step forward. However, the role and meaning of macroeconomic growth is a core area where disagreement seems most likely. Although emphasizing distributional concerns, PKE, like mainstream economics, assumes growth is good and more is better.
Rather than questioning growth and capital accumulation the concern is for how to achieve more of the same. Economic growth is then discussed, in what follows, as a topic upon which divergence between PKE and ecological economics exists and any collaboration will need to focus. In the next section we employ a historical analysis of the industrial revolution to show how dependent growth has been upon exhaustible energy sources and the exploitation of other countries.
A picture is painted of an internationally divisive economic system, which creates material affluence for the minority, gross inequity in resource use, and fails to increase human well-being beyond some minimum level. The global environmental and social prognosis is seriously worrying and the social—ecological—economic regime is one which cannot be sustained for long.
A problem then arises as to how economists should respond. One approach is to adjust the existing theories to include aspects of the environment.
The list is hidden by default because some Web browsers are extremely slow at displaying and updating text boxes containing large amounts of text. The list can be edited manually if desired. Consider a game like Lingo in which players have to identify a five-letter word of which only the first letter is known at the outset. Each turn, a player guesses a word and is told which of the letters in that word are in the correct location in the mystery word, which letters are in an incorrect location, and which letters do not appear at all in the mystery word.
Suppose that the given initial letter is P. One approach is as follows:. Each type of game may favor a different set of commands for filtering the word list. You are allowed to run this program from http: You are allowed to provide links to http: You are not allowed to embed Scott Pakin's handy-dandy word-filtering program within another Web page e. The word must contain exactly at least at most letters, not necessarily unique all unique. Intelligently Randomly select a word letter from the original current list honoring current word lengths. The best candidate found after seconds or less is displayed below.
The following commands are supported: Words containing a number of letters that does not match the given tally are filtered out of the list. If all unique is selected, a further restriction is that no letter can appear more than once anywhere in the word. With must , a word must contain all of the given letters to remain in the list. With must not , a word must contain none of the given letters to remain in the list. If multiple letters are specified, they will be searched for anywhere in the word. Words containing the wrong tally of the given letter are filtered out of the list.
Words containing the wrong tally of matched letters at the specified position type any , same , or different are filtered out of the list. Note, though, that same -position or different -position matches do not preclude the existence of any additional matches at the other position type. For example, if exactly 3 letters of SWORD must appear at a different position, the word birds is retained because the r , the d , and the s appear in different positions than in SWORD.
If desired, further specifying that exactly 3 letters of SWORD must appear at any position will eliminate brows while retaining birds. This sort of back-to-back invocation is likely to be popular when playing Word Mastermind -style games. With exactly once i. It filters the word list as follows: The pattern must contain as many characters as each word that should be retained.
An uppercase letter in the pattern specifies that that letter must appear in the corresponding position in each word that should be retained. A lowercase letter specifies that that letter must appear in each word but not at the position in which it appears in the pattern.
A dash means either that any letter can appear at the corresponding position or that only any other letter i. Regular expressions are a powerful mechanism for describing letter patterns. You can search the Web for regular expression to find more thorough explanations and tutorials, but the basic syntax is as follows: A letter in the regular expression matches the same letter in a word.
Ranges such as k-q are allowed. Parentheses can be used to group multiple subexpressions into a single, new subexpression. Only words that are no shorter than the shortest word in the list and no longer than the longest word in the list are eligible for selection. With Intelligently , the program selects the word or letter that is most likely to narrow down the list of remaining words.
A word selected Intelligently from the original list is not necessarily a candidate for the mystery word. For instance, if the word is known to end with an E , there is little knowledge to be gained by guessing a word that also ends with an E ; the program may therefore use that last position to test a letter that it knows nothing about. Intelligently guessing a word is a time-consuming process. Specifying a time limit tells the program to return the best word found at the point at which time ran out.
One approach is as follows: The program begins with a list of letters. Process The word must contain exactly 5 letters. Process The word must contain the letter s P at position 1.