According to the Global Tipping Points Report published by the University of Exeter and other partners, “The world has entered a new reality. Global warming will soon exceed 1.5°C. […] where multiple climate tipping points pose catastrophic risks to billions of people.” Most tragically, “warm-water coral reefs are crossing their thermal tipping point and experiencing unprecedented dieback, threatening the livelihoods of hundreds of millions who depend on them.”
This is a betrayal of a generation, and the product of systemic political failure. A failure to recognise the climate crisis for what it is – an urgent crisis with serious, long-lasting consequences for the most vulnerable. A failure of politicians to understand the implications of what a warming climate truly means for those who will live, and are living to suffer it. Where surpassing Earth System Tipping Points poses “a potentially catastrophic, irreversible outcome for humanity.”
There seems to be a fundamental misunderstanding by politicians and conventional economists as to why we are currently facing the problems we are facing. The economy is a social construct, which means you cannot have an economy without a society, and you can’t have a society without a home: our planet. The economy is not external to our environment; you cannot have an economy without a society nor an environment. However, our current dominant economic paradigm, neoclassical economics, which is advising our policymaking, is based on complete fiction. For example, it puts forward a circular flow diagram, which states that all you have is households and businesses, and as long as there is a flow of capital and labour between them both, growth can continue forever. But this is pure fantasy. Where do you extract resources from? Where does the waste that households produce go? Our environment – but yet it is nowhere to be found in this diagram.
Economics is in desperate need of an update, and in the wake of the first tipping point being passed, the time is now for us to call on our party for a new economic vision for our country. We cannot continue to desperately chase fairytales of endless growth without looking at the costs of our increasing consumption on the environment. If you accept that the economy is a social construct within our environment, then you also accept that we must live within planetary boundaries and limits. However, because our current economics does not recognise the environment as the fundamental basis for our society or economy, these limits are being far exceeded.
If you still somehow believe that neoclassical economics is going to be the solution to our problems, then I would ask you this question. If your house was on fire, and you only had two hoses, would you choose the old, leaky hose which has been showing signs of disrepair for decades, or would you choose the new hose? The answer is pretty obvious – you would choose the new hose, right? The old hose is out of date, it served a purpose once but it cannot do that any longer. The assumptions neoclassical economics has made have completely detached us from reality and our natural world, and with people suffering in the wake of catastrophic climate change, we must reclaim our reality. Neoclassical economics is using a hose full of holes to try and stop our house burning down, and yet it continues to wonder why nothing is working.
Most crucially, neoclassical economics includes environmental economics. Environmental economics treats nature as an “externality”, rather than the reality which is that it is our fundamental life support system. It sees climate change as a “market failure”, not as a product of systemic failure because of outdated neoclassical foundations. Environmental economics tinkers around the edges – when what we need is a completely new system. If you try to build your policymaking from foundations of sand, then you must always expect to fail. If you are overweight, you cannot expect to improve your health by only eating one fast food meal a day rather than three, whilst not exercising. You need to completely change your lifestyle, exercise more, and eat a healthy balanced diet. An urgent emergency requires systemic change because the current system is clearly not working for people or the planet.
Neoclassical economics has had its time in the sun; it is time for it to retire. There is currently growing research into a new, interdisciplinary field of economics: ecological economics. Ecological economics is an economics grounded in reality, grounded in the physical limits of our planet, but most importantly, offers the biggest scope for creativity and innovation which can help us out of the climate crisis. As a liberal democrat, I am proud to believe in the hope of having a “fair, free and open society […] in which no-one shall be enslaved by poverty, ignorance or conformity.” But now, as we have passed our first tipping point, we have a political choice to make.
The choice is simple. We can either follow the neoclassical economic path of poverty for the most vulnerable, ignorance of the natural world, and conformity with suffering, or a new path with ecological economics. We must take seriously the ideas which ecological economists are developing, because they are developing crucial new tools which will help us tackle one of the greatest problems to ever face mankind.
Most importantly, pursuing a new path will give us something that people have been crying out for for years: hope. If we can provide a new narrative, one of creativity, aspiration and wonder within planetary limits, then we can truly say that we want to pursue a “fair, free and open society,” because once we fix the environment, only then can we start to fix everything else.
* Rodrigo is a Liberal Democrat party member and a Young Liberal.
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8 Comments
Just two comments.
First, John Maynard Keynes challenged the neo-classical model almost 100 years ago. Economics has developed considerably since then. You are correct that pollution is usually not regarded as a cost of production in economic models, but that is because politicians allow this – taxing producers the full cost of the environmental damage caused by their production could be done and would force producers to factor it into their calculations (which would undoubtedly result in less production overall but higher prices for consumers).
Secondly, the biggest problem we face is not ‘politicians’ but the voters who elect them. Unless voters can be persuaded to vote for politicians who will prioritise the environment over running the economy to generate greater prosperity, we will continue to have politicians who will be willing to sacrifice the needs of the environment in order to get elected. Democracy itself may be an impediment to protecting our environment for future generations.
Does following Rodrigo’s ‘ new path’ include cooperating with the Green Party ?
Economics may be a social construct, but poverty, homelessness and unemployment are very real to the people experiencing. The destruction of coral reefs is a tragedy but the total extent of the global catastrophe is still a matter of speculation. We live in a democracy and people have decided to put their short term standard of living ahead of a radical economic experiment which may or may not lead us to a new Jerusalem. The response of politicians, a transition towards a green economy rather than a tearing down of our present economic and political structures, is a rational reaction to this democratic reality. I might add that trying to terrify the voters into acquiescence is unlikely to bear fruit.
Thank you for a really relevant article!
Might the actual basic purposes of Neoliberalism, aka. Austerity, be as follows?
1) Transfer wealth from the not wealthy to the very wealthy, not least by taxation bias
2) Reduce/conroll Government so that the wealthy-powerful have fewer obstacles to getting their own ways
3) Reduce discussion and opposition to Neo-liberalism
4) Increase control over protests by regular citizens in preparation for the inevitable protests concerning proportionally reduced incomes and reduced/removed essential infrastructures such as food availability, housing, health, education, armed forces etc.
P.S. Would that thpat L. D. H.Q. read your article!
Hi Chris, thank you for your engagement with the article. I am not by any means denying that poverty, homelessness or unemployment are very real problems to the people experiencing them, nor am I trying to push a certain agenda. All I am doing is outlining that using mainstream economics as a foundation for policymaking when it has outdated assumptions and massive gaps in knowledge is doomed to fail. Using outdated tools to solve these real-world problems is not the solution, I am simply proposing the use of new tools to solve these problems – such as ecological economics. This is not about being radical, this is about evolving in order to meet new 21st century needs. Secondly, regarding your point on democracy, the Liberal Democrats, I would argue rightly, still campaigned against Brexit in 2019 – despite it being “the will of the people”. If you know that something catastrophic is to come, such as the impacts of climate change, you cannot give up just because of the “will of the people,” you have to inspire them to act – and that is what I am calling on the Liberal Democrats to do.
Thank you Rodrigo for an excellent post, and I like your answer to Chris Cory. I would ask if you could point us to the relevant economic research you mention that expounds ecological economics as my impression (as a layman who would love us to find a better path) is that there is little agreement amongst economists about what could replace the classical approach. I like what I read in Simon Sharpe’s ‘Five Times Faster’ which I recommend to others, particularly his demolition of William Nordhaus and his equilibrium economics. He is also, in the first part of his book on the science of climate, very clear that we are underplaying the risks of climate change and far from Chris Cory’s aversion to terrifying the population, generally we have failed to get decision makers to appreciate how bad things could become.
Hi Jean, thank you for bringing up the work of Keynes to me, as I was unaware of the extent of which Keynes challenged the economic status quo, so I have learned something there. I still believe however that there needs to be a reinforced push towards a new ecological economic paradigm being implemented by policymakers in the wake of climate change, because I believe the only way we can solve such complex problems is with systems thinking and looking at the bigger picture. It requires interdisciplinary cooperation, and a completely new vision of freedom within planetary limits. Fundamentally, this requires recognising that all the problems we are currently facing come all the way back to a broken environment – because our societies and economies rely on the environment to grow and thrive. To your second comment, voters cannot be expected to be persuaded to any cause without politicians being willing to persuade them towards it. Continuing with the current status quo will aggravate the suffering which people are experiencing, and will contribute to the inevitable rise to extremism. We now have a responsibility to steer us away from that path, and to provide a new inspirational narrative of hope to the most vulnerable.
Hi Nigel, thank you for your words of praise! There are many different ecological economists within the sphere – such as Tim Jackson with books such as the Care Economy, and Prosperity Without Growth which is certainly worth a read. I would also point you towards Kate Raworth’s “Doughnut Economics” which is something which I will be diving into as part of my degree! There are many ecological economists within the sphere – so my suggestion would be to just dive right into what people are saying within the sphere and see what you think! I am a university student studying Business and Environment, and I am still learning along the way and I am still developing my stance within the ecological economic sphere. I understand enough to know that the status quo (neoclassical economics) is very broken and out of touch with reality – and that an economic paradigm based on the fundamental scientific reality of the world we live in is the only way we can get out of this mess!!