Table of Contents

Post Keynesian and Ecological Economics

Post Keynesian and Ecological Economics

Confronting Environmental Issues

Edited by Richard P.F. Holt, Steven Pressman and Clive L. Spash

It is argued that mainstream economics, with its present methodological approach, is limited in its ability to analyze and develop adequate public policy to deal with current environmental problems and sustainable development. This book provides an alternative approach. Building on the strengths and insights of Post Keynesian and ecological economics and incorporating cutting edge work in such areas as economic complexity, bounded rationality and socio-economic dynamics, the contributors to this book provide a trans-disciplinary approach to deal with a broad range of environmental concerns.

Chapter 3: Challenges for Post Keynesian Growth Theory: Utopia Meets Environmental and Social Reality

Clive L. Spash and Heinz Schandl

Subjects: economics and finance, environmental economics, post-keynesian economics, environment, environmental economics

Extract

Clive L. Spash and Heinz Schandl INTRODUCTION The methodological approach of Post Keynesian economics (PKE) has been explained by Paul Davidson (1981) as involving ‘historical and humanistic models’ which, while abstract, aim for descriptive realism. 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.1 First, the importance of the economy’s historical path is revealed by analysis of energy and materials use over the last few hundred years and the related concept of industrial metabolism (Ayres and Simonis, 1994; Schandl and Krausmann, 2007; Schandl and Schulz, 2002). Second, concern has been expressed over the epistemology of ignorance...

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