Economics

 
 
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Economics may be thought of as the process by which resources are removed from the environment, converted to goods and waste products, and then circulated among people to meet their needs. Service transactions between people with no exchange of goods is also economic activity. Economics is an interaction and transaction between people and the environment or people and people. The most pressing needs of people in the world to be met by economics are food security, adequate shelter, clothing, health care and education. The lack of these is true deprivation. While the basic resources and capacity to achieve these things are to be found in almost every country, those who control resources do not always make them a priority.


We are currently at a crossroads of economic thinking. The guiding pattern of our Era of Economics is termed 'neo-classical' economics with its center in the World Bank and the world's universities. This theory discounts the natural environment, natural resources and pollution as significant factors in the economic formula. It treats them as 'externalities.' It views growth as inherently good, the corporate good as the public good, and the gross national product (GNP) as an adequate measure of progress. Neo-classical economics works from a set of "logical implications they have taken to calling the canonical assumptions." (Herman Daly in Development at the Crossroads article by Karl Hansen) Unfortunately, these fundamental assumptions pretty much ignore all notions of social or ecological community. While economists have had notable success in improving efficiency and productivity, the world's poor still get poorer and environmental degradation continues to worsen.


A new economic paradigm is represented by the International Society for Ecological Economics (ISEE), the Sweden-based Beijer Institute, and authors such as Herman Daly, John Cobb, Paul Ekins and others. Della Meadows of the Club of Rome states, "the economics they are inventing values nature, people, communities and the future. It is very different from the short-term, money-centered economics that devalues and devours all of these things." The major shift in thinking is that ecological economics puts national economies into the wider context of natural ecosystems. It concerns total throughput -- the total flow of resources from nature's larder to society's

wastebasket. It accepts the natural limits set by environment to produce raw materials and absorb waste. This has been termed 'steady-state' economics based on zero, not rising, economic growth; it subtracts the downside costs of growth from the GNP, not adding it in as does the traditional approach.


A stable economic system is based on democratic pluralism and a balance of forces among civil society, government and markets. At the base is the civil society force of representational and volunteer organizations making their needs known and forming governments to carry out their collective will. Civic sector alliances act to demand rights and fulfill responsibilities, supplement political parties, educate the public and serve as watchdogs. Government is assumed to exist to pursue collective aspirations of society and assure conditions of fair competition, moral capital, public infrastructure, full-cost pricing, just distribution, and ecological sustainability. The market, made up of small scale, locally capitalized and owned providers who internalize production costs are assumed to operate within the constraints of local, state and national civic and governmental bodies. This system is being thrown out of adjustment by transnational corporations in their pursuit of profit maximization without accountability.


Economics is frequently thought of as money, whereas, in reality, there are two economies. The money economy is the one we are most familiar with. We are 'paid' in money and we in turn use it as a medium of exchange for goods and services. In traditional societies, and increasingly in monied societies, the social economy is an important factor of the economic life of the community. In the social economy men and women carry out most of "the productive and reproductive activities through which people meet their basic needs for food, shelter, clothing, child care, health care, care of the elderly, housekeeping, education, physical security and entertainment. Social economies are by nature local, nonwaged, nonmonetized and nonmarket. They are energized more by love than money." (David Korten, 1995. When Corporations Rule the World. Kumarian & Berrett-Koehler, pg. 44-45) The direct exchange of services and goods by people and the growth of Local Exchange Trading Systems (LETS), Community Assisted Agriculture (CSA) and shopping CO-OP's are indicative of a revival of the social economy. Permaculture demands economic approaches that are environmentally responsible while meeting human needs.