What Could a New Economy Look Like?

Joshua FarleyCommunity Development and Applied

EconomicsGund Institute for Ecological Economics

University of Vermont

What is Economics?

Allocation of scarce resources among alternative desirable ends

The desirable ends and the characteristics of the scarce resources determine how we should allocate

Leverage Points for Changing Complex Systems

Change the paradigm What is possible?

Change the goals What is desirable?

Change the rules How do we allocate?

Changing the Paradigm

Changing the paradigm

What is biophysically possible? Laws of physics Laws of ecology Basic requirements for sustainability

What is behaviorally possible? Self-contained globules of desire vs.

persons in community Competitive self-interest vs. cooperative

altruism Behavior and institutions

Changing the Goals Efficiency: maximizing monetary value and

economic growth? Is it ecologically sustainable? Is it just and efficient?

Income distribution Food, water and eflornithine

Does it make sense? Food and energy Or sufficiency?

Ecological sustainability Social justice Economic efficiency, redefined

Justice and Efficiency

• level of trust• mental illness and drug

addiction• life expectancy and

infant mortality• obesity• children’s educational

performance• teenage births• homicides• imprisonment rates• social mobility

Changing the Rules: Resource Use

Sustainability Quantitative limits determined by science

Extraction and emissions Inalienable property rights for future

generations Scale is price determining, not price

determined Just distribution

Who is entitled to resources created by nature and society as a whole?

Changing the Rules: Energy and Technology

Fossil fuels vs. alternative energy Rivalry and excludability

Green technologies and ecological problems Minimizing costs Maximizing benefits

From competition to cooperation

Changing the Rules: Monetary Systems

Money as interest bearing debt Creation and destruction

Won’t finance public goods Growth and inequality or collapse

Changing the Rules: Monetary Systems

Return seigniorage to the public sector 100% fractional reserves

Creation expenditures on public goods, full

employment, green technologies, ecological restoration, etc.

Destruction AEAs Taxes

Spend and tax Degrowth without misery

Taxation and Justice

Is Change Possible?

Economies are complex adaptive systems; constantly evolving e.g. fossil fuel economy, speculative

economy Change is inevitable

Failed growth economy vs. planned degrowth

Adaptive management required