Economic pluralism, yes – but don’t ignore the planet

NASA_Earth_America_2010This post is by Kate Raworth and was originally posted on her blog. Kate is an economist focused on the rewriting of economics for 21st century challenges. She is a senior visiting research associate at Oxford University’s Environmental Change Institute, and creator of Oxfam’s ‘doughnut’ of social and planetary boundaries. 

The rewrite of economics is on the move. Student groups from 30 countries (and rising) recently issued a call for a pluralist approach to teaching economics. Known as ISIPE – The International Student Initiative for Pluralism in Economics – they plainly point out that, ‘What is taught shapes the minds of the next generation of policy makers, and therefore shapes the societies we live in.’

Their mission? To get universities teaching a range of economic perspectives, theories and methods, rather than offering neoclassical economics alone, which has throttled (or ignored) its academic competitors for decades. ISIPE is a fantastic initiative, led by an inspiring cohort of next generation economists (and economic cartoonists).


Cartoon by Neil Lancastle and Sophie Bedard of ISIPE

Their call for pluralism is a smart strategy: who could reasonably object to alternative points of view being aired? Some universities are responding,  like Kingston University in London, which has just appointed Professor Steve Keen to head up its Department of Economics, History and Politics, and is promising that it will be a great place to rethink economics.

Will all economic perspectives feature in pluralist curricula?
So pluralism is in. But just how plural is it shaping up to be? Will all economic perspectives that matter for future policy makers get a place in the new curricula? I’m starting to doubt it.

Having a choice of theories to debate is great, but surely they should include among them perspectives that capture the defining characteristics of the times. And one of the most defining facts of our times – one which makes this era so utterly different to the days of the founding fathers of economics – is that the scale of the global economy in relation to the biosphere has been profoundly transformed.

Today, the global economy is 300 times greater than when Adam Smith wrote The wealth of nations, and over ten times bigger than when Paul Samuelson wrote his classic textbook Economics in 1948, just before the ‘Great Acceleration’ of rapidly increasing use of cars, fertilizers, water, and energy, matched by rapid growth of deforestation, greenhouse gas emissions, and chemical pollution. Yet Samuelson’s pre-acceleration world view still underpins almost all economics textbooks today.

Circular flow of goods and money: a magic trick
Ignoring the economy’s dependence on nature’s sources and sinks looks increasingly ridiculous. It means that the classic diagram of the ‘circular flow of goods and money’, featured in almost every textbook, amounts to little more than a magic trick. Why? Because it presents inputs of capital and labour as the factors of production which are then transformed into outputs of goods and services. And so it conjures those goods and services out of thin air, and disposes of their wastes without a trace. In doing so, it defies the first law of thermodynamics which tells us that matter and energy cannot be created or destroyed. Fun for a magic show, but worrying for a discipline whose conceptual frameworks form the backbone of public policy.

circular flow

Circular flow of goods and money: a magic trick

The necessary starting point for economists
Recognising that the economy is a (rather large) subset of ecological systems has to be a foundational starting point for 21st century economics. As Herman Daly and many other ecological economists have long pointed out, we have gone from empty world to full world. Indeed, we have entered the Anthropocene, the geological era in which humanity is the major driver of change at the Earth system scale, and we are driving much of that change through economic activity.

empty world

From empty world to full world – size does matter


So I’m worried. Because recognising the ecological foundations of the economy does not seem to feature high among priorities in the current academic promise to rewrite the teaching of economics.

Rewriting economics, but too narrowly
Much of the current call for pluralism was triggered by the financial crash of 2008. It quickly gave rise to books promising the rewriting economics, but their focus was clear, from Adair Turner’s Economics after the crisis, and Diane Coyle’s What’s the use of economics? Teaching the dismal science after the crisis and Philippe Legrain’s After shock: reshaping the world economy after the crisis. The words ‘after the crisis’ sing through every time. The economy created just one crisis, it seems, and we are through it.

But these are not the only books on rewriting economics. So I held out high hopes for Ha-Joon Chang’s just published book Economics, the user’s guide. It’s brilliantly written and gives the reader a really valuable overview of many heterodox approaches alongside the mainstream. Chang compares and contrasts what he calls the nine major schools of economics (classical, neoclassical, Marxist, developmentalist, Austrian, Schumpeterian, Keynesian, institutionalist and behaviouralist) but – to my real surprise – he gives only a footnote of passing mention to ecological economics, and moves swiftly on.

So I turned next to the Institute for New Economic Thinking and its promising CORE project, the Curriculum in Open-access Resources in Economics, which is about ‘teaching economics as if the last three decades had happened’. Great strapline, and quite a lot has happened to the biosphere over the past 30 years. So will CORE deliver?

CORE’s 20 modules are works in progress on their website at the moment, so it’s too early to say exactly how much the curriculum will acknowledge the ecological underpinnings of the economy. But, to be honest, I don’t feel it bodes well. Yes, the first module promises to present climate change as an example of the negative impacts of contemporary capitalism. But out of the twenty modules planned, it’s only when we reach Module 17 that we learn about ‘The economy of the Earth’ (does that make it something separate from the rest of the economy?). And in the outline of the whole curriculum there doesn’t appear to be any room to discuss whether or not unlimited economic growth is theoretically, technically or socially possible. Yet this question has ramifications for every school of thought that presumes an endlessly growing economy, ie all of them.

So, yes to the call for pluralism in economics. It’s a sure step forward from the long held monoculture of neoclassical economics. But, so far, this version of a pluralistic response is shaping up to be an unhelpfully narrow one, putting the behaviour of financial markets and the monetised economy at the heart of its rethink, while leaving the economy’s (and of course humanity’s) life support systems in the margins of concern.

I hope the activists in ISIPE and every other student group calling for rewriting the way economics is taught will push back against such a narrow interpretation of economic pluralism. As the future policy makers of the 21st century, the challenge of ecological crisis is hardly something they can afford to let drop off the curriculum.



  • It is surely impossible for any form of economic theory or modelling to predict what the impacts will be of the ecological deficit that has been created. If those nations and scientists who sought a 1.5 degrees C threshold limit for climate change driven warming are proven correct (and the 2 degrees C enthusiasts got it wrong) then we are definitely going over the climate change cliff. The only possible way to avoid the collapse of capitalism in virtually every nation (communism being the politics of poverty, and there will be plenty of that) will be if geo-engineering buys us more time. The problem is that we cannot tell if geo-engineering will work. Even if geo-engineering trials point us to a combination of geo-fixes, these may consume an unprecedented level of economic output. So, while it is sensible for policy makers to anticipate a new level of economic activity which is akin to that expended in total warfare, we cannot be sure that this will happen. If planetary systems turn out to be a little more robust and resistant to warming than most scientists think, then humanity may just scrape through with a few hundreds of millions of lives lost to extreme weather events and the increased spread of disease. But, even if we are that ‘lucky’, what is abundantly clear is that the public clamour for a dynamic reduction in polluting activities is coming. The scale of extreme weather events we can expect shortly after 2030 guarantee us that. The inescapable fact is that climate change is set to change everything, not just the climate !

  • I am not sure about a need for pluralism but most of what passes for academic economics is plain bogus. There are three factors of production – land, capital and labour. “Land” is the natural world and the bare surface of the earth in its natural condition. Capital is, for example, the artisan’s tools or the fisherman’s boat ie part of the man-made world. For the past century, land has been treated as a part of capital, so inevitably the relationship between the ecosystem and the economy will be ignored. That description seems to me fundamental and universal, and leaves no room for other views except as refinements of this basic principle.

  • I’ll repost the comment that I made to Kate’s blog on behalf of the CORE project – we are happy to discuss our position on this (and many other) topics about what should be in the curriculum. Apologies to anyone who has already read this:

    The CORE project is in its early stage, but we are working to make sure that humanity’s life support systems will not be in the margins of our material. One of our goals has been to bring traditional “back of the textbook” topics to the front and to teach that the economy is an integral part of a biological, physical and social system.

    One example – we frame the discussion of strategy, altruism and cooperation (Unit 4) like this:

    “To avert a climate catastrophe we need to cooperate on a vast scale, but individuals and firms may benefit by continuing to do business as usual in the hope that everyone else will take the steps to meet the challenge. The problem of climate change is called a social dilemma: a situation in which we all benefit by cooperating towards some common goal; but each of us as individuals, if we are entirely self-interested, can benefit by reneging on this cooperation. We call it a dilemma because, if this is true of everyone, and if everyone is selfish, then it is difficult to see how people would ever cooperate – even though they would be better off if they did.

    “We will analyse climate change in more detail in Unit 17. In this unit we introduce social dilemmas and show how they can be surmounted. Humanity has been dealing with social dilemmas since prehistory, and we have learned a lot about our capacity to cooperate and why we sometimes fail to do it.”

    Also at our launch, Juliet Schor spoke powerfully about the importance of teaching the limits to growth:

    When we test the course we will be as open as possible to feedback like yours. It’s one of the advantages of electronic publishing that our materials can be constantly improved.

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