Macroeconomics and the Environment

Macroeconomics and the Environment

Essays on Green Accounting

Advances in Ecological Economics series

Salah El Serafy

Though scientists and environmentalists have long expressed concern over the rapid deterioration of the global environment, economists have largely failed to recognize the issue’s relevance to their field. Salah El Serafy argues for an increased focus on the economic aspects of environmental degradation, calling for a fundamental shift in how economists measure and discuss national income.

Chapter 16: Population and national income

Salah El Serafy

Subjects: economics and finance, environmental economics, international accounting, environment, ecological economics, environmental economics


What I intend to cover here about population is very limited, and relates only to national income. Population as a source of labor was recognized by the early economists, along with land as being the major creators of wealth. But these wealth creators had claims on the product, and it is labor’s claim on the product as consumers that constitutes a potential danger for ecology. Provided that labor’s contribution exceeded its claims on consumption the danger remained latent. Situations where excessive labor through diminishing returns has caused labor output to fall short of its consumption is exactly what environmentalists have in modern times been warning against. Adam Smith gave great importance to this problem and distinguished between a nation’s ‘gross revenue’ and its ‘neat revenue’, the latter being the portion out of national income available for spending upon subsistence, conveniences and amusements.

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