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Frontier Issues in Ecological Economics

Frontier Issues in Ecological Economics

Philip Lawn

Ecological economics formally emerged in the late 1980s in response to the failure of mainstream economic paradigms to deal adequately with the interdependence of social, economic and ecological systems. Frontier Issues in Ecological Economics focuses on a range of cutting-edge issues in the field of ecological economics and outlines plausible measures to achieve a more sustainable, just, and efficient world for all.

Chapter 14: Reconciling the Policy Goals of Full Employment and Ecological Sustainability

Philip Lawn

Subjects: development studies, development economics, economics and finance, development economics, environment, ecological economics

Extract

INTRODUCTION As we have seen in this book, ecological economists believe that the growth of macroeconomic systems must be curtailed to achieve ecological sustainability. Impoverished nations aside, ecological economists are strongly urging governments to commence a rapid transition towards a steady-state economy. Naturally, this demands that restrictions be placed on the rate of resource throughput which, as was demonstrated in the previous chapter, severely limits the growth in real Gross Domestic Product (GDP). The problem confronting ecological economists is that, under the institutional arrangements of most countries, a growth rate of around two to three per cent is required to prevent unemployment from escalating. This raises a very important question: How can low rates of unemployment or, preferably, full employment be achieved in a low growth or steady-state economy? Ecological economists have been largely silent on this issue. I believe their failure to adequately respond to this question significantly harms their cause. To answer the above question, the fundamental factors underlying the conflict between the sustainability and full employment goals are sketched. It is then argued that a critical step towards achieving full employment is the severing of the GDP-employment link. Following this, the various means to achieving full employment in a low growth or steady-state economy are surveyed and discussed. At this point, the IS-LM-EE framework is invoked as a means of assessing the use of expansionary demandside policies in circumstances where the incoming resource flow is limited to an ecologically sustainable rate. Also analysed in the...

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