A READING OF THE CURRENT ECONOMIC POLITICAL DOCTRINE AS A HURDLE TO CLIMATE CHANGE

University of Exeter College of Social Sciences and International Studies May 2018 Student ID: 650037583 Words: 10,136

ACKNOWLEDGEMENTS

I would first like to thank my dissertation advisor Dr. Duncan Russell for the support and interest provided throughout the academic year while giving me the opportunity to develop my own ideas. I want to thank my grandfather, Dr. Francesco Grianti, to whom I owe much of my belief in humanity and in the power of ideas. He is the inspiration of my work and my life. I want to thank economists such as Kate Raworth and Jeremy Rifkin and the political theorist George Monbiot. They are a source of hope for new generations and a living demonstration of the fact that there are alternatives to the current management of human life and that the world system can only change if we believe in change to be possible. I want to thank the University of Exeter for motivating me to undergo this study. This study not only represents a dissertation, but the very beliefs with which I want to run my future life and on which I hope to structure my career.

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ABSTRACT

Xiuhtezcatl Martinez, an Indigenous climate activist of 15 years old, during a talk in the UN, calls for the urgency and necessity of the resolution of climate change, not only to save the environment and the planet that guests us, but he argues that if we want to save the human race, we need to act, because that is what it is really at stake. The common sense and clear thinking that characterize Martinez is what Keynes argued to lack in the economic-political doctrine, and what today still lacks.

In this study I argue for a Kuhnian paradigm shift, so as to restore that common sense and clear thinking. My interest for climate change brought me on a journey of thoughts from how to effectively tackle climate change to which economic system and society we want to inhabit. A change from the current economic orthodox paradigm to a new paradigm is the only effective way climate change can be tackled and sustainable economies develop. To argue for this shift, I undergo a critical analysis of the mainstream economic doctrine. The analysis discusses economic theory and the implications of its assumptions on the world paradigm. It questions the scientific character of economics and the perception of its models as laws, which has emphasized the power of its claims. It provides criticism from ecological economists who have argued since the 70s for different models that account for the environment. Then, it historically grounds neo-liberalism, highlighting its origin from the economic doctrine and the ideologies it professes. The consequences of the doctrine will be discussed, drawing links with what that means for climate change.

The methodology approached in this study and the content used all regards one purpose: highlighting the importance and power of ideas. The vision, the mode of behavior of the current economic-political paradigm is what forms the barrier for climate change solutions and the mode of behavior can only be changed by changing the paradigm itself.

The content chosen and the structure used attempts to demonstrate how this mode of behavior is a barrier for climate change solutions and hence explain why we need a paradigm shift.

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CONTENTS

Acknowledgements 2

Abstract 3

Introduction 5

Section 1: Historical Evolution Of The Economic Discipline 8

I: Who is an Homo Oeconomicus? Is he still alive in the current economic doctrine? 8

II: Is Economics a Science? 14

III : Vision and Economic Growth 19

Section 2: The Political Counter-Part Of The Economic Doctrine 24

Section 3: An Analysis Of Restoration 29

Conclusion: 35

Appendix: 37

Bibliography: 42

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INTRODUCTION

This study arouses from a belief in the power of humanity and an interest into tackling climate change. Prior to the research carried out, the focus was on the notion that if humans want to tackle climate change, they can achieve a switch from fossil fuels dependency to 100% green energy resources. Due to the financial and political power held by the financial sector, I initially thought that intensively channelling investments into renewable energy would trigger such a shift. I found various banking initiatives of different sorts, committing high sums of investments into sustainable solutions. A positive example is the Banking Environmental Initiative uniting 11 international leading banks with $11 trillion assets combined (Cambridge Institute for Sustainability Leadership 2018)1.

However, my focus shifted from the belief that financial institutions and the banking sector were the solutions to climate change, to a critical analysis of neo-classical mainstream economics and an insight into the political counter-part: neo-liberalism. My initial focus started to look like a mere optic fix solution, not tackling the root of the problem, as the outcome of the analysis developed into the inability of the current doctrine to effectively solve climate change. My thought process underwent a ‘paradigm shift’ from the current neo-liberal economic paradigm to a new paradigm, in accordance with humanity and the environment; in order to tackle the economic, social and ecological crises we experience today. The ‘paradigm shift’ is what my overall argument falls into, but it will only be encountered in conclusion, gaining strength on top of preceding discussions.

What I attempt to criticise and dismantle is the mainstream economic-neoliberal orthodox doctrine, because of the harmful effects it has on the ‘mode of behaviour’ (the set of beliefs) of the world paradigm. A paradigm shift in the orthodox economic paradigm consequently results in a shift in the world paradigm. This argument is embedded in the dissertation, as the current orthodox paradigm is the world paradigm. This will be clarified in the last section, which explains how the material base (the economy) affects the ideological consciousness of its participants.

My motivation and the reasons behind it, is because of the nature of climate change. It is a wicked problem: a complex, inter-dependent and inter-connected issue leading to other problems and subject to feedback mechanisms, which will not be solved if continuing with business-as-usual (IPCC 2014). Climate change is the warming of the climate system and its impacts can already be felt. It is caused by anthropogenic

1 (Bloomberg 2008) (climatebonds (CBI) 2018), these are similar examples. Under the website Climate Initiative Platforms by the UN, accessible at http://climateinitiativesplatform.org/index.php/Welcome, many initiatives of this sort can be found. Accessed on 10th of October 2017. 5 | Page greenhouse gas emission and driven largely by economic and population growth (IPCC 2014, 2-8). The Sustainable Development Goals recognize the inter-connectivity between poverty, development and the climate (United Nations 2017). In this respect, common sense and ideas suggest that solutions for climate change require interdisciplinary and pluralist approaches, co-operation, a sense of the common good and respect/value for nature. The current economic-political doctrine does not allow for these solutions to be addressed and the nature of climate change’s problem and the requirements of its solutions highlight the root cause: the mode of behaviour of the economic paradigm, which is consistent with its ontology, methodology and policy.

The analysis I provide is divided into three sections which shows the vision of the doctrine to be necessarily counter-opposed to a way of life that is in harmony with the environment.

The First Section is in turn divided into three parts. It starts with a historical evolution of mainstream economic theory and highlights the assumptions on which the theory is built. This allows us to understand the foundations for the vision and mindset of society. I do not question whether economics projects a vision on society or not, because as heterodox economists generally believe, the economy is a necessary key component and factor of society, and not a separate sphere.

The orthodox and scientific character of economics enlarges the influence of its statements on human nature and its implication. Part II debates if economics is a science and if the laws it writes are universal or not. This debate pertains to the purpose/end goal of economics. The methodology of a doctrine reveals the mode of thought taken by the doctrine and its practitioners (Dow, On Economic Methodology: An interview with Sheila Dow 2012). Part III presents the mode of thought of the doctrine and its criticism from ecological economists, as early as the 70s. These criticisms are applicable to today’s world, which in fact, remarks the failure of a needed paradigm shift since those times.

The power and strength of this vision are complemented by neo-liberalism. The Second Section presents a historical evolution of how it came about and its implications, together with the economic doctrine, on the world system. Its importance relies on the demonstration that politics is related, connected and dependent on economics, theoretically and practically. The last section completes the picture and explains how the doctrine evolved around the needs of and dependence on fossil fuels. The required reduction of greenhouse gas emissions for humankind’s and the planet’s survival is an opportunity for a paradigm shift (IPCC 2014, 2-7). A new paradigm based on a different source of energy: renewable, a different vision and mode of thought of the world and a different economy.

I do not argue either for or against economic theory, policy or the political doctrine, but I use them to argue against the ideologies they lead to. They are the first barrier that action towards climate change needs to

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overcome, if solutions want to materialize and sustainable economies develop. My purpose is placing emphasis on the whole picture to argue that a new paradigm driven by the human good would drive change towards the right direction.

Thus, my premise becomes the following.

The central point relies on something extremely basic: humankind. Humankind is able to understand the Laws of Nature, which are eternal and incomputable; it can create, not from anything, but from natural resources that the planet Earth offers.

Science is the only book of truth written by humans. The laws of thermodynamics cannot be created or destroyed; but they were comprehended for the first time by Boltzmann in 1870 (J J e Robertson 1996).

Humankind’s understanding and use of the laws of Nature, its developments and its influence on the climatic conditions and on the natural systems which take place on Earth brought Brandon Carter to propose in 1973 the Anthropic Principle in Physics (Stenger 2012). It proclaims that humanity holds a special place in the universe because of the combination of coincidences that exist to allow life on Earth. If the Universe happens to give such favourable conditions for human life to exist, it sounds humanly stupid to remove humanity from it. Climate change is a threat to such favourable conditions2 (IPCC 2014, 8).

I use the term ‘climate change’ only when mentioned by someone as such, since ‘climate change’ is open to discussion, and different perceptions can lead to different meanings. My references to the issue of climate change will be framed as ‘climate disruption’, referring to anthropogenic environmental degradation and destruction.

For purposes of clarification:

- The term ‘economics’ always assumes mainstream economics - The terms mainstream, orthodox, neo-classical are analogous - In regard to which economy, society, vision I am referring to geographically, it is assumed Western societies

2 “Continued emission of greenhouse gases will cause further warming and long-lasting changes in all components of the climate system, increasing the likelihood of severe, pervasive and irreversible impacts for people and ecosystems” (IPCC 2014, 8).

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HISTORICAL EVOLUTION OF THE ECONOMIC DISCIPLINE I. Who Is An Homo Oeconomicus? Is He Still Alive In The Current Economic Doctrine?

This section regards a historical overview of the mainstream economic doctrine, which runs the economic system. It provides the building blocks for the infrastructure of my dissertation’s argument. The emphasis on the ‘homo oeconomicus’ helps identify the theoretical roots of the ‘mode of thought’ adopted in regard to economic, political and social activities.

The father of Economics is known as Adam Smith and his landmark thesis "An Inquiry into the Nature and Causes of The Wealth of Nations" written in 1776 still domains the economic paradigm. He was a proponent of free market and argued for the existence of an 'invisible hand' to exist which naturally adjusts exchanges between supply and demand and allows for the market to correct itself. Building on this work, arguments by David Ricardo, Thomas Malthus and John and James Stuart Mill set the foundations of Classical Economics. Humans are self-interested individuals and social order can unintentionally be accomplished by the invisible hand (Pijl 2009). The ‘Marginal Revolution’ occurred in the 1870s and is associated with Stanley Jevons (1835- ’82), Carl Menger (1840-1921) and Leon Walras (1834-1910). It is not a revolution as such but is seen as setting the way for the subjective turn in Economics (Pijl 2009, 31). The notion of marginal utility of capital/labour/consumption is the last tool that adds to the profitability. Marginal utility curves are also used to determine the price of goods and services, established at the point where marginal utility curves of buyers and sellers interact. This changes the notion of value as it is no longer understood in terms of labour time, but it becomes associated with utility, a subjective valuation of what an item is worth (Pijl 2009, 32). The notion of utility changed the view of the market as a mechanism for the satisfaction of human wants and driven by consumer desires. Humans are economic beings, self-interested and seek to maximize utility based on his/her preferences under full information and competition.

Alfred Marshall (1842-1924) seals the continuity with the classical tradition and combines marginalism with the price mechanism that ensures long-term equilibrium of supply and demand, setting the groundwork for what is the neoclassical synthesis (Pijl 2009, 36). Neoclassical

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Economics experienced a change in its ontology and epistemology3 from the implicit materialist perspective of classical political economy to 'subjective idealism' (rationalism), as it is based on subjective valuations (Pijl 2009, 32). The economy is an anonymous arbitrator of individual decisions, where one inserts one asset as long as the last asset inserted brings a return.

The passage from the neo-classical age to the strategic age (middle of 20th century) happens with the application of game theory to Economics, originally formulated by the mathematician John Von Neumann. The theory has been widely applied to sociology, politics and social sciences generally. It is based on rational choice theory which assumes that social action refers to free choices made by interest-maximizing rational individuals and which reject any notion of society as an objective configuration of forces (Tseng 2007, 3). Economic interactions are zero-sum games as one benefiting would necessarily mean one losing out, which is the concept of Pareto Optimality.

Thus, game theory, the supply and demand equilibrium given by price mechanisms, marginal utility and rational choice theory are what Microeconomics is composed of, which studies the theory of the firm and of the household.

Microeconomic theory, developed throughout the 19th and 20th centuries, carries with itself strong assumptions about human nature: rational, self-interested and utility-maximizer. Assumptions are used so as to study in isolation tendencies of the world reality and then apply the knowledge to the reality to explain more complicated situations (Robbins 1984, 94).

Does economics try to represent the objective world? Many would answer negatively (Pijl 2009) (Lawson 2012) (Dutt 2011). Kate Raworth would certainly argue that Microeconomics says nothing about the household (Raworth 2018, 78-81).

Economists argue that, as a tool, its objective is not to study behaviour, nor the role and identity of human (like Sociology) but predict outcomes of that behaviour, using an algorithm based on rationality and self-interest (Kirchgassner 2010). The economic man has an atomistic nature. Society, norms and relations are constraints to his choices, not something that may impact, or influence their choices (Flomenhoft 2017). The Homo Sociologicus takes man and society as

3 For more detailed information and definitions about ontology and epistemology, access the source cited (Pijl, 2009) pages 14-25

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inseparable. He is the product of social processes and an agent who can reconstruct these processes, often driven by social forces beyond its control (Tseng 2007, 4) (Kirchgassner 2010, 62). Attempts of reconciliation between the Homo Oeconomicus and Homo Sociologicus are concluded to be impossible because of these different assumptions of human nature (Tseng 2007, 8). Frank H. Knight, in a paper arguing about the reconciliation of economics and anthropology, concludes for the problematic to regard sociology’s reliance upon positivism and the failure to understand the opportunities that arise from deductive reasoning and intuitive knowledge in the field of social phenomena (Knight 1941, 268).

Economics’ restrictive vision of human nature allows policy decisions to see economic interactions free of an implicit message stemming from its assumptions and its methodology and mostly avoids that the dynamics of the market shapes individuals, their decisions, their actions and perceptions. In Robbins’s opinion, the Homo Oeconomicus has no harmful implications, it simply means that ends and means are taken separately and in isolation4 (Robbins 1984, 96). The objective world shows that the notion of humans nurtured by academia, society and institutions becomes the basis of the worldly beliefs. If the Homo Oeconomicus is the notion constituting the market dynamics, it shapes individual ends and/or means, consequently shaping society, because individuals are not free of constraints, the only one being the budget constraint. Some academics recognize its consequences (Raworth 2018) (Flomenhoft 2017) (Hinnant 1998) (Kirchgassner 2010). Behavioural science, which has evolved recently, has refuted the premise of the economic man (Flomenhoft 2017, 1). Economics needs to portray humankind anew, accounting for the social character, fluid preferences, interdependency, approximation and embeddedness into the web of life5 (Raworth 2018, 102).

If the solutions of Economic Science are applied, it is essential to know exactly the implications and limitations of the generalisations it establishes. (Robbins 1984, 3) Economics here fails.

The taking of the models as given lies at the heart for understanding the obstacles (environmental, social and economic) faced today. Hitherto, the relevance of this analysis relies on the perceptions

4 “All that it means is that my relation to the dealers does not enter into my hierarchy of ends. It is assumed only that, so far as that transaction is concerned, my labour is only a means to an end; it is to be regarded as an end in itself.” (Robbins 1984, 97) 5 Instead of the previous assumptions: self-interested, fixed preferences, isolated, calculation, domination over nature. 10 | Page

of these notions as universal and fixed, of which their universality will be questioned in the coming section.

For matters of space, I do not focus overall on explaining why this economic doctrine dominates, as I have attempted to develop the doctrine in relation to what I have been taught, as a demonstration that opponents of the doctrine are not part of the mainstream picture. The analysis below is a useful demonstration of how the theories are taught and how they are perceived by Economics’ students, who are marked by a philosophy of individualism and no trust in institutions, such as the government (Institute of Economic Affairs (IEA) 2015).

In current mainstream microeconomic textbooks, scarcity is at the start because of its importance. Scarcity gives reasons to maximize efficiency in economic activity (Walter Nicholson 2015, 5). That is important, as either capital, resources or labour should not be wasted and time employed at its utmost, especially when dealing with limited or non-renewable resources. Economic efficiency is given by Pareto optimality; that optimality, however, is taught as value-free and objective under the assumption of perfect information (Flomenhoft 2017, 14). Kenneth Arrow and Gérard Debreu demonstrate mathematically that “competitive equilibrium” in free markets leads to Pareto efficiency, which is almost impossible in the absence of perfect information (Kirchgassner 2010, 61). Uncertainty and incomplete information are dealt with diversification, insurance and other practices, under the concept of game theory and prisoner dilemma. The same theory accounts for The Tragedy of The Commons: when individuals share a common resource, they are led to oversupply the market. Climate disruption, global warming, and exploitation of resources are consequences of a Tragedy of the Commons. In the theory, overproduction and overconsumption "are typical finding in settings when multiple parties have free access to a common resource" (e.g. oil) which gives reasons for licensing and interventions (Walter Nicholson 2015, 186). Under perfect equilibrium, there are still three sources of market failure: a situation where the market fails to equilibrate itself and the invisible hand is not at work. These are monopoly/oligopoly power, public goods and externalities (both positive and negative), which are mitigated by government intervention through taxes and subsidies. The environment is a public good, oil is a public good, the production and consumption of CO2 is a negative externality. Monopoly and oligopoly powers are often the ones that organise and deal with this primary source of energy and with natural resources, such as water or food (Werner-Lobo 2009). The weaker the

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government’s role is, the higher the population’s dependency on monopolies/oligopolies for primary resources.

“Lord Nicholas Stern called climate change the biggest market failure the world has ever seen” (Rodrik 2017).

Section two looks at the context that has led economics and governments to not tackle properly these market failures.

Macroeconomics studies the aggregates: the goods market, the labour market, the money market and the implications of economic policy. The most important variables are unemployment rate, inflation rate and growth rate or gross domestic product (GDP) (Kirchgassner 2010, 73). The 40s and 50s saw the rise of macroeconomics within economics. John Hicks, in comparing Keynes’ views with classical economics, gave rise to the IS-LM model, transforming Keynes’ verbal presentation into a simple system of simultaneous equations (Malgrange e De Vroey 2011, 2). From the 40s, macroeconomics focused on the use of the Phillips Curve, a relationship between unemployment and inflation which relies upon historical data. It was suggested for the government to be a ‘menu of choice’ of which point of the curve to be on, as its predictive power was thought of as a law’s outcome (Kirchgassner 2010, 76). From the 1970s, stagflation, the appearance of high inflation and high unemployment, defeated the Phillips Curve as law (Cassidy 2010, 193). Macroeconomics underwent a ‘change’6, in no respect a ‘paradigm shift’, as “New Classical Macroeconomics” is based on the basic premise (to which economists should abide when constructing theories) of two postulates: a) agents act in their self-interest and b) markets clear (Malgrange e De Vroey 2011, 9). Macroeconomic relations rely on micro-foundations; and with that, methodological individualism and the notion of homo oeconomicus.

The Dynamic Stochastic General Equilibrium (DSGE) was developed on the grounds of the ‘neoclassical synthesis’ to study aggregate economic phenomena (Kirchgassner 2010, 77) (Krugman 2009)(Kay 2011). The reliance upon a model which works as if the economic system is complete and in perfect equilibrium is problematic in a system that is neither complete nor in perfect equilibrium (Kay 2011). The problems came to be understood with the aftermath of the

6 Both waves of “revolutions”, the 40s and the 70s failed to account for the financial system, although Keynes’ acknowledgement of this failure. They saw banks playing the function of intermediaries without having any effect on the economy and not being profit-seeking institutions. (G. C. Harcourt, 2011). 12 | Page financial crisis of 2008-2009, as it failed to predict that a crisis could occur. Robert Lucas responded to the Queen of England’s question “Why did nobody see it coming”? That “The crisis was not predicted because economic theory predicts that such events cannot be predicted” (Kay 2011). The fact that economics was consistent in its ability of prediction warns its reliance on mathematical models, as they are built on unrealistic assumptions and ignore the human element.

The mathematization of economics has been the main critique of the economics’ doctrine by Paul Krugman, John Cassidy and others (Cassidy 2010) (Bezemer 2011) (Dutt 2011) (Lawson 2012). The problem is not with the use of mathematics itself, useful for theoretical purposes, but with an extreme and exclusive use of mathematics, complemented by the rigid premises of micro- foundations. This makes the perception of the models as if they were universal and accurate. Lucas in 2004, at the University of Chicago, stated that the “central problem of depression-prevention has been solved”, demonstrating that he clearly believed in the accuracy and predictable power of the models (Krugman 2009).

In the next section, I attempt to challenge the vision of economics as scientific. The systemic effects that the orthodoxy of economic assumptions upon human nature brought to social sciences, society, humans and the environment makes the coming analysis a necessity.

Future references to the term ‘homo oeconomicus’ imply all the notions it carries with itself: assumptions, methodology, ontology, epistemology and policy. In any orthodox doctrine, these components are consistent with each other, tending towards the same vision.

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II. Is Economics A Science?

For the purpose of this dissertation, my focus is not economic theory and the details offered are sufficient, but the evolution of economics highlights the underlying issues at play, which in my opinion, fall down to two main points:

I. The vision and perception of economics as a science II. The challenged, but not defeated assumptions of human nature which float onto the ontology, methodology, policy and overall mentality/vision of economic interactions, its institutions, their management and ultimately the societal condition.

We will notice how these two points stem from the same root. On one side this has emphasised their force, on the other, it obliges a paradigm shift so to solve today’s crises.

I remark that I am not criticising either the use of assumptions or mathematics (which give ground for the notion of economic man), they remain useful for purposes of theory as it is impossible to account for too human and uncertain factors objectively. The search for objectivity and the factual truth is itself understandable, not only in Economics. Since the 19th century all social sciences were tending to become more objective so as to be subjective-free: see Emile Durkheim in making sociology a science based on objective/empirical facts (Douglas 2002). However, Economics has pushed too hard in trying to become a science, and not hard enough in being objective and empirically proved, as often theories do not align with reality (J. K. Galbraith 1973, 1977).

The vision of Economics as a science was a concern for John Stuart Mill, a classical economist who lived in the 19th century, known to be the first to describe man as Homo Oeconomicus without having coined the term. In the essay "On the Definition of Political Economy; and on the Method of Investigation proper to it" (1831), he argues that economics as an abstract science requires a reformulation which "does not treat of the whole of man's nature as modified by the social state, nor of the whole conduct of man in society, it is concerned with him solely as a being who desires to possess wealth and who is capable of judging comparative efficacy of means for obtaining that end" (Mill 1874, 2000, 97). The term Homo Oeconomicus has risen from this comment upon the reformulation of Economics' methodology in order for it to be a science.

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Sheila Dow, a heterodox economist, argues that the methodology of a doctrine expresses its mode of thought and its vision (Dow, On Economic Methodology: An interview with Sheila Dow, 2012) (Dow, Consistency in Pluralism and Microfoundations 2014). Economics as a science adopts a monist methodological individualism and a closed-system approach. The methodological individualism implies an atomistic vision of the economy and society and the mechanical approach7 allows for the perception of its laws as natural and unchangeable (Georgescu-Roegen 1986).

Mill had argued that economics’ conclusions, as deductive science, are true only in abstract theory and no economist would believe that man is driven only by wealth, but "for the purposes of their arguments", they are justified in assuming this motive (Mill 98, 103). Robert Lucas, with the aftermath of the financial crisis (‘08-‘09), acknowledges that the efficient market hypothesis does not take account of anomalies because "for the purpose of macroeconomic analysis, they are too small to matter" (Kay 2011). John Kay reminds us that those anomalies are the dynamics of the capitalist economy, by nature idiosyncratic and not derivable by logical deduction. However, my argument is not that the financial crisis failed to be prevented necessarily because Economics is a deductive system rich in mathematical applications and in continuous search for a priori consistency, but certainly because, being exclusively that, it led to the beliefs that “models are not just useful tools but are also capable of yielding comprehensive and universal description of the world” (Kay 2011).

Mill wisely argued that if economics is a science, the economist “stands in the same relation to the legislator, as the mere geographer to the practical navigator telling latitude and longitude of all sorts of places, but not now to find whereabouts he himself is sailing” (Mill 1874, 2000, 108). These warnings have been forgotten as, even besides and after the financial crisis, economists such as Bhekuzulu Khumalo, in 2016, argue for Economics to be a science such as physics (Bhekuzulu 2017).

7 Stanley Jevons builds an economic science after the model of mechanics as “the mechanics of utility and self- interest” (Georgescu-Roegen 1986) Jevons intentionally drew the demand curve in a style that closely resembled Newton’s depiction of the laws of motion. And that demand curve still features in the diagram encountered by the novice student today (Raworth 2018,17). 15 | Page

The two reasons I offer below suggest that Economics is not a science and its laws are neither universal nor natural. This discussion falls down to what is Economics’ purpose (the telos), and in that respect, the methodology it should use.

Economics as a social science studies human behaviour, assuming that humans decided to act as they did, while natural sciences describe and seek regularities of the behaviour of natural objects which do not “choose” to behave as they do (Heilbroner, 1999, p. 175). In Physics, the mere existence of an aleatory phenomenon within a deterministic law that governs nature brings scientists to study the theory of Chaos (Halpern 2018)8. Some generalities and regularities are found in economics, (the relationship between the price of goods and quantity bought, changes in income and consumer spending and so on) however Economics should not exaggerate in seeking abstract and perfect models avoiding disequilibrium conditions, as those aleatory phenomenon exists even within the universal laws of Nature.

Another reason is that social life is highly political (Heilbroner, 1999, p. 175). I interpret ‘political’ in an Aristotelian sense, based on Salkever’s reading of Aristotle’s Politics neither as-intrinsic- good (desirable) nor as-spontaneous-drive (natural) but as “the best reasonably possible way of organizing that variety of inclinations and needs that comprise the human biological inheritance” (Carnes e David 1991, 26). Human is a zoon politikon, a political animal. That is because to a greater extent than other animals, we desire things as the result of habituation (acculturation or learning) rather than as direct consequence of our biologically responses (Carnes e David 1991, 23). Mill explained the implicative problems that economics’ consideration as a science causes: it makes utter abstraction of every other human passion or motive; everything taking place in the social state and in the individual is ruled exclusively by the pursuit of wealth (Mill 1874, 2000, 101). The ‘homo oeconomicus’ notion is clearly in contrast with the zoon politikon. As humans, our “pre-analytic” vision precedes our logical scenarios colouring our visions and perceptions with our values and preferences (Heilbroner 1999, 170). The pre-analytic vision in economics are the notions of the Homo Oeconomicus. This becomes problematic in the case of any orthodox paradigm of belief where the same analysis will only be given adaptions and corrections but not

8 “Chaos theory points to the limitations of predictions for even deterministic, Newtonian Physics.” (Halpern, 2018)

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major changes or ‘paradigm shifts’ in Kuhnian terms9, hence not challenging the ‘homo oeconomicus’ notion. It becomes more problematic when the world is made of zoon politikon who are assumed to be homo oeconomicus. Leaving aside the failed prevention of the crisis of 08-09, the problematic of economics vision as a science stands on the deeper systemic effects that it has on society and individuals. Economics is the mother tongue of public policy, the language of public life and the mindset that shapes society (Raworth 2018, 6).

Aristotle argued that politics is a practical science. The end goal is the human good, making all other practical sciences means to this end (Carnes e David 1991, 23). Economics as “the science which studies human behaviour…”10, must be a practical science in Aristotelian terms (J. K. Galbraith 1973, 1977, 20). I believe that if its end goal had been the human good, it would have depicted itself differently; attempting to account for what the human being is (dynamic, complex, social, idiosyncratic and not mathematically explicable) and to understand the implications that the logical structures of economies have on humanity and nature. In this case, it would imply a realization of the harm provoked by these structures to individuals, society and the environment (Millenium Ecosystem Assessment 2005) (IPCC 2014).

The establishment of the Homo Oeconomicus’ notion within our logical scenarios is a barrier to solving a situation like the current one, a global climate disruption. Its solutions require an unprecedented level of global co-operation and changes in some economic subsystems entirely, such as those for energy provision and transport (IPCC 2014) (Rodrik 2017). Climate disruption is an economic problem, and the orthodoxy of the economic science, necessarily in lack of pragmatism and pluralism, cannot provide the necessary solutions (Samuel e Nicholas 2008). As pluralism has been recognised essential for the formation of the most adept outcome to economic problems, system dynamics, open systems ontology and methodology are gaining foot in global discussions and studies.

Sheila Dow argues for a Babylonian method based on an understanding of the social system as open and evolving (Dow, On Economic Methodology: An interview with Sheila Dow 2012). As

9 It can no longer be that “specialization within the subject matter of economics keeps scholars from any need to reflect on the larger truth or role of the subject” (J. K. Galbraith 1973, 1977, 24). 10 “Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses” is one of the most accepted definition in Economics. It was formulated by Lionel Robbins. 17 | Page

there is not one right model, but different doctrines of economics11, a pluralist approach highlights that climate disruption solutions require a new ideological infrastructure, economic and political (Samuel e Nicholas 2008, 2). The orthodoxy of economics’ methodological individualism has gradually weakened the sense of collectivism and of social, common good; a crucial logic so to tackle climate disruption (Chomsky, Kick Starting the Environmental Movement: An interview with Noam Chomsky 2009).

11 Neoclassical, Evolutionary, Marxist, Ecological, Environmental, Behavioral and Institutional. All have a different method, ontology and approach, from which stem other differences regarding essential concepts such as rationality and uncertainty, which change perceptions of problems and solutions (Dow, On Economic Methodology: An interview with Sheila Dow, 2012) (Dow, Consistency in Pluralism and Microfoundations 2014). 18 | Page

III. Vision And Economic Growth

I focus on the current vision of Economics – scientific vision and homo oeconomicus notion - because of the problem that it poses to the solution of the three interlocked crises: ecological, social and economic. The depiction of the crises as one is not simply because it has been presented as such by various academics (Rodrik 2017) (The Club of Rome 1970) (Brian Czech 2013) (Ropke 2016) (Tim Jackson 2014), but because it sheds light on the fact that Economics or Politics are failing neither independently nor together; the whole world is exhibiting reactions to something that I can only address as the ideological ‘mode of behavior’ of the world system.

Inge Ropke, Peter Victor and Tim Jackson (2016) (2014), proponents of ecological macroeconomics, underline these three major crises and argue that an economy “predicated on continual expansion of a debt-driven, materialistic consumerism is ecologically unsustainable, socially divisive and financially unstable” (Ropke 2016, 10).

Environmental or ecological economists are at times dismissed because they seem (and some are) against growth, calling for steady-state economies or zero-growth economies which gives pro- growth institutions an easy ground on which to attack them (Brian Czech 2013). To avoid confusion, I consider progress, innovation and growth to be essential for human development and I do not mean in any respect that economic growth needs to cease. There are middle paths between a zero-growth economy and a growth economy with a purpose of growth in itself. Economics as a practical science committed to the human good would be agnostic about growth and not addicted to it. It would be distributive by design and would not rely on more growth to ‘even it up again’ (appendix 1B) (Raworth 2018, 26-27). The perception and purpose (telos) behind the term ‘economic growth’ needs defining. This section regards this perception, providing criticisms written in the ‘70s by ecological economists. I find the criticism particularly adept to today’s crises.

International conventions have highlighted the existence of problems which fail to be addressed at their root cause (United Nations 1987) (UN, Kyoto Protocol To the United Nations Framework: Convention on Climate Change 1998) (IPCC 2014) (UN, Paris Agreement 2015). In this dissertation, I refer to the root cause with the terms: vision, purpose, telos, end goal, ‘mode of behaviour’ and ‘mode of thought’. They are equivalent in meaning as they grasp the quintessence

19 | Page of what drives change: ideas and perceptions. The vision of ecological economists is helpful to tackle the three crises because, given their concern for the environment, they attribute a different purpose to economics, consistent with their pluralist, dynamic and pragmatic approach (system dynamics, open-system and trans-disciplinary approaches) (Ropke 2016) (Tim Jackson 2014). To be clear, I appeal to ecological economics here, but it is not to mean that is the only field which sees economic growth and economics with an end goal as such. There are many other academics who take this view (Chomsky, The Economics of Climate Change 2009) (Monbiot 2017) (Rifkin 2014,2015) (Raworth 2018) (Robert, et al. 1997) (Rodrik 2017) (Vines 2018).

I must limit myself and not enter into a discussion about the problems of economics theory highlighted by Ecological economists, who fill many of the theoretical gaps about the environment and society (Samuel e Nicholas 2008, 10). That is because my argument is that this vision - consistent to its theory and doctrine in the failure to account for social, political and environmental matters - avoids any theoretical gap that does not fit into an orthodox thinking and that is not relevant to the end goal of wealth and growth. There is extensive evidence showing how the incentives of the price mechanism are not always correct and a bad indicator of absolute or long- run scarcity (Brian Czech 2013) (Rodrik 2017). For example, solar panels and microchip data storages’ prices are very low; however, following the law of demand and supply, they are less attractive the more they are deployed (The Economist 2018). Herman Daly notifies neoclassical economics’ failure to account for distribution (of resources, information…) and scale (physical size of the economy relative to the containing ecosystem); it only focuses on the allocation of resources (Daly 1996). An effective distribution is important, as a failed one is what draws the original framework for such inequality gaps, present today, to develop (Emmanuel e Gabriel 2014).

The Club of Rome was formed in 1968 by scientists, intellectuals, educators and business leaders who were conjoined by their worries about the future and the problems confronting mankind (The Club of Rome 1970). The overview of the situation was constituted by orthodox problem-solving models and the dynamism, complexity and inter-relation of poverty, inequality and environmental deterioration, which could not be solved in isolation. The coined term ‘the problematique’ referred to the meta-system of problems, as the postulation of a problem into closed and bounded problems creates new problems whose solution goes beyond the scope of the employed concepts (The Club

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of Rome 1970, 12-13). ‘The problematique’ and the wave of environmental alarmism of the 70s resemble our present-day situation, although our situation is more drastic (IPCC 2014). The delay and the temporary fix of problems, their postulation into closed problems in the 80s helped the rise of the bigger problems of today, whose solutions are beyond the scope of concepts we employ.

MIT researchers, Donella and Dennis Meadows, utilised system dynamics to understand the dynamic behaviour of complex systems. The output represented the consequences of economic growth for natural resources depletion and environmental degradation with three scenarios and was published in “The Limits to Growth” (1972) (The Club of Rome 1970)12. Free-market and pro-growth organisations disregarded the evidence as false and pessimistic, this perhaps being one of the reasons for the lack13 of fundamental change (‘70s) towards sustainability in policy and behaviour (Brian Czech 2013, 138). In recent years, many analysts have shown their scenarios not to be as pessimistic (Turner 2008), however, others such as Bjorn Lomborg, argue in ‘Foreign Affairs’ for their analysis to be wrong (Lomborg 2012, 29).

Lomborg argued that they overestimated human ingenuity and because of the technological breakthroughs and improvements in efficiency and productivity, much more can be extracted and used from the environment now than before (e.g. shale revolution in the US) (The Economist 2018, 4-5) (Lomborg 2012, 30). ‘What our world needs is more growth and not less’ (Lomborg 2012, 40). In his opinion, attempts to fundamentally change policy behaviour to reach sustainability is especially harmful to the poor and developing countries who need economic growth to escape poverty (Lomborg 2012, 39-40). Lomborg is ‘growth addicted’ and believe in the ‘growth will even it up again’ (Raworth 2018, 26-27). However, Lomborg’s argument is not a viable option, as it would require an estimated 4.5 planets to extend current levels of US consumption of resources and emissions to 7 billion people (Flomenhoft 2017, 17). Sunita Narain, an Indian environmentalist would also disagree with him (Agarwal 1986).

12 They examined five basic factors that determine and limit growth on this planet – population, agricultural production, natural resources, industrial production, and pollution. The consequences of economic growth for natural resources depletion and environmental degradation was represented with three scenarios: dramatic technological progress, business as usual (BAU) and steady-state economy. 13 Not to disregard the success of “The Limits of Growth”, which sold 12 million copies in more than 30 languages (Lomborg 2012). 21 | Page

Sunita’s argument for India is that the sustainable management of resources is directly related to economic growth. If poverty does not decrease, growth cannot succeed14. The Energy Access Outlook (2017) states that in developing Asia, 1.65 billion people (43% of the population) rely on biomass for cooking. As do the 80% of Sub-Saharan population (International Energy Agency (IEA) 2017). If their pollution is not tackled, overall global pollution will not be tackled either (Agarwal 1986). UN Sustainable Development Goal #7 states that access to energy, reliable and sustainable, is essential to end poverty, which is essential to meet climate change needs (Samuel e Nicholas 2008) (The World Bank 2018, United Nations 2017). Biomass consumption declined only 3% since 2000 and the is yet to come: it is estimated that in 2030 the use of solid biomass will be decreased only by 6% (International Energy Agency (IEA) 2017). It does not seem that the economic growth that Lomborg or many pro-growth, free-market institutions praise is the path to eradicate poverty. Georgescu-Roegen’s solution for developing countries to reach a good standard of life is to outlaw wars and production of armaments, so to release energy and matter (Georgescu- Roegen 1986). That, to me, seems a far sounder argument for the future than Lomborg’s.

We have succeeded in developing, accumulating and propagating extraordinary technological capital (The Club of Rome 1970, 5), as Lomborg argued we can extract even more now than before. But our developments, brought about by civilization and mankind, have failed to provide us with those requirements for which we would have evolved in a more “balanced” way (The Club of Rome 1970, 5). Hence, learning that natural resources do not need to be depleted until the last drop if the implications that this lifestyle implies are visible on the environment and on humankind (Appendix 1A)(UNEP 2016, 51) (IPCC 2014) (Millenium Ecosystem Assessment 2005).

One cause for that is the effects of the division of labour which pushed us on a path of extreme specialisation giving rise to expertise but simultaneously causing orthodoxy and closure of thought. Civilization helps us to notice the problematic consequences that come with orthodoxy. Since the enhanced division of labour follows civilization (Jones 1986), trans-disciplinary approaches are required for the orthodoxy to be tamed. The other causes can be summarised as related to the pursuit of wealth (and growth as a by-product) as the final goal of humanity. I highlight these two causes because they offer a spacious ground for many other systemic

14 ‘The industrialise or perish model’ enacted with the 2nd Five Year Plan, coal plants’ constructions and many other business activities have deepened the urban environmental crisis. Shortages of means of survival in villages create ‘ecological refugees’ (Agarwal 1986). 22 | Page mechanisms to originate. When the two causes are combined, the mechanisms widen in size and ultimately emphasise the original problem. These two themes regard civilization and the mode of thought of the system. They relate to the economic problems emphasised beforehand, and they necessarily relate to the political framework in which the mode of thought operates. The latter will be covered in the coming section.

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THE POLITICAL COUNTERPART OF THE ECONOMIC DOCTRINE

In accordance with the theoretical framework established in Section One, the Homo Oeconomicus does not exist, as it is a superficial creation of the human mind for purposes of theory. In another sense, it came to life as a priori economics structured our economy and interactions on the basis of its assumptions. Since the economic realm is not isolated but is related to other realms of social existence, the Homo Oeconomicus consequently sets in mechanisms that enabled its personification (Smelser 1973, 4-5). As Zoon Politikon assumed to be Homo Oeconomicus we become one as such, which may explain the contradictions inherent to this doctrine. That is not to undermine humanity or its capabilities, but it is human nature. It means neither that humans are irrational and purely altruistic nor rational and self-interested. Marcel Mauss, in 1925, reveals for humans to be neither free of self-interest nor only self-interested; but a hybrid of both. However, he argues for our Western tradition to have turned us into an economic animal of a new sort (Mauss, The Gift: Forms and Functions of Exchange in Archaic Societies 1966, 71-74).

This section is the last piece of the infrastructure for my final and only argument. I do not provide extensive debates but draw together the implications and the contradictions inherent in the doctrine, in relevance to humanity and the topic of climate disruption. For the purpose of this study, in this section, it is important to not focus on the precision of each claim but to grasp how and in which way each claim draws from the previous discussions and prepares for the final argument.

I provide a brief summary for the reader to understand my motivation to place such emphasis on the notions of homo oeconomicus, which are not confined to the economic realm. The political current formed around its doctrine and allowed it (with law reforms when needed) to expand factually and ideologically almost worldwide, with the rise of globalisation since the ‘90s.

Gary Becker and James M. Buchanan applied the vision of economic man to social sciences; public choice theory and human capital theory are just two examples of its application. (Pijl 2009, 51) They were taught alongside Milton Friedman by Frank H. Knight (1885-1972), who was one of the main proponents for the application of axioms of economic rationality to social reality (Pijl 2009, 49). The expansion of economic science and its notions into the social world has been the intellectual and ideological prelude and the starting point of neo-liberalism (Pijl 2009, 45-52). After World War II, Friedrich Von Hayek formed the Mont Pelerin Society with the aim of

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reviving intellectualism and individual freedom in Europe. The ideals were free markets and ‘the less government intervention the better’ (Butler 2014). The first half of the 20th century saw the appearance of two wars and the rise of totalitarian regimes; socialism, fascism and communism were extreme forms of economic and social planning which suppressed individual freedom and annihilated its humanity. Neo-liberal doctrine rose out of fear of totalitarian rule and of government planning. From the 70s onwards, the neo-liberal free market doctrine saw its success with the rise of Margaret Thatcher (UK) and Ronald Reagan (USA), opening the road towards privatisation. The Mont-Pelerin’s concerns were inflation (due to the oil embargo of 73/74 and stagflation) and the effective power of labour unions (Butler 2014). In 1989, the Iron Curtain fell which proved for the Society the victory of neo-liberal free-market capitalism and the doomed failure of planning.

Jeff Harrod argues for the 21st century to be the century of corporations which act as political organizations and have power of influence and decision over society, governments and nations compared to previous centuries (Harrod 2006, 29). As an example, the US Chamber of Commerce has spent 770.68 million since 1998 and is the most powerful lobby in Washington DC (Greenpeace, 2018).

From 1980 to 2004, the total number of multinationals increased from 17.000 to 70.000. The biggest 500’s control around 70% of the global market (Werner-Lobo 2009, 30). Privatisation, the frequent mergers & acquisitions and the presence of an oligopolistic structure (3-5 multinational corporations) in all global sectors do not nurture a purposeful spending on Research & Development (Harrod 2006, 25). The global spread gives corporations newfound power as it alters the relationship between the head quarter’s country and where it operates. Canada, United Kingdom and USA have 59% of the FT500 corporations headquartered in their countries and they account for only 37% of World GDP15 (Harrod 2006, 26). As I argued beforehand, monopoly and oligopoly are market failures and most of them deal with primary sources, such as energy (see Appendix 2.A) (Werner-Lobo 2009) (RBA 2016). Theoretically, government intervention is supposed to tackle their effects but, as little government intervention is part of the neo-liberal agenda, it is difficult to see how the markets are adjusted.

15 from an analysis of corporations based on size, sectarian power, structure and governance (hierarchical, executives at the top), global spread. 25 | Page

The Mont-Pelerin original ‘statement of aim’ argues that an effectivively competitive market needs proper legal and institutional framework (Butler 2014, 6). The path towards the boom, which preceded the financial crisis of ’08, was facilitated by the repeal of the Glass-Steagall Act16 in 2000, which was previously enacted in the aftermath of the Great Crush in 1929 (Cassidy 2010, 229). However, the financial crisis caused the loss of 5 million jobs in the US and a global spending of $11 trillion to save the credit system (Cassidy 2010, 332).

Could economics be serving the purposes of organizations? Galbraith, in 1973, argues that economics has an instrumental function because it serves the goals of whoever has power within that system (J. K. Galbraith 1973, 1977, 23). It is not my purpose to make this claim but to present its possibility. However, Galbraith seems right when arguing that “left to themselves, market forces do not work for the best except perhaps for the powerful” (J. K. Galbraith 1973, 1977, 3). The dynamism and efficiency of competitive markets drive up productivity and marginal costs fall to zero. However, to maintain profits and shareholders’ pays, companies race to monopolies and oligopolies, preventing the work that the invisible hand would have done, a contradiction in practice of what the theory praises (Rifkin 2014,2015). Neo-liberalism still argues for a limited role of government intervention. In 2014, the Paragon Initiative started by the IEA (pro-growth think tank), on the grounds that 70% of the UK population has no trust in the government favours a more liberal approach with a decreased role of the government (Institute of Economic Affairs (IEA) 2015). Will that decrease the percentage?

The rise of corporatist power, the corporate influence of lobbying in governments and the weakened labour unions decreases the degree of democracy within societies (Bernstein 2013, 30). Harrod argues we have moved from a tripartite system of negotiations (state, business and labour unions) to a bipartite one (state and business) (Harrod 2006, 29). In principle, the basis of this society remains individual freedom (Butler 2014). However, economic freedom is the prerequisite of any individual freedom (Wilfred Pareto) (Pijl 2009, 48). The neo-liberal free-market doctrine may be effective for whoever has economic freedom which opens a multitude of choices, such as the one of the Koch brothers to be spending around $88 million on climate change denial and

16 For more information, access the source cited: (Cassidy 2010). The relevance of this argument does not necessitate knowledge about what those acts sgnified for the financial system. The relevance relies upon the fact that legal reforms follow the needs and serve the purposes of whoever has power within the current doctrine. 26 | Page

lobbying since 1997 (Greenpeace 2018) (DesmogBlog 2018), but no economic freedom is equal to no social existence (J. K. Galbraith 1973, 1977, 3).

“Wealth is liberty, liberty to recreation, to enjoy life… (Boianovsky 2017, 9)”

In the name of liberty (this liberty) and in the name of wealth, The Mont Pelerin Society participates in climate change denial (see Appendix 2.B). One member, Vaclav Klaus, argues for climate change “to be about ideology, and not about science. Not about global temperature, but about the concept of human society” (DesmogBlog 2008). Unfortunately, climate disruption is about science and global temperature but he is right in the sense that action and commitment to solutions bring to light the concept of human society. The light has shined on something unpleasant to see. The arguments that technological developments and growth outweigh climate change costs (Lomborg 2012) and the existence of climate change denial promoted by free-market, pro-growth institutions17 is sufficient evidence (Riley E. e Peter J. 2013) to suggest that the vision of Economics and its playground lacks concern for the environment and the consequences on its society, today as it already did in the 80s. The belief that economic growth is the grand objective of economic policy (Boianovsky 2017) is defeated by a mere recognition of the Laws of Nature.

If climate disruption talks are about the concept of human society, then neo-liberals by denying climate disruption are in some sense denying Article 3 of the Universal Declaration of Human Rights: “Everyone has the right to life, liberty and security of person” (United Nations 1948). That same technology and scientific evidence is clear about the anthropomorphic causes of climate disruption. Even without that clarity, the causes of air pollution18 and mass production on human health and animals are visible facts19 (UNEP 2016, 51) (IPCC 2014) (Millenium Ecosystem Assessment 2005).

17 Riley E. Dunlap and Peter J. Jacques provides data from a study of 2008 by Jacques et al who examine 141 books of 2005 which are climate change denial and 92% of those books are linked to Conservative Think-Tanks (CTT). Heartland Institute, Competitive Enterprise Institute (CEI), CATO Institute and Marshall Institute are CTTs who plays a big role in climate change denial. See appendix 2. B for the data which regards some pro-market think tank institutions (CATO Institute, the IEA, Mont Pelerin Society are present and they are the ones referred to in this dissertation). 18 “Each year, air pollution causes 7 million premature deaths around the world, with outdoor pollution responsible for more than half of that total. Tragically, these deaths are wholly preventable”. 19 Already in the early 2000’s the Millenium Ecosystems Assessment estimated that “60% of the world’s major ecosystem goods and services that underpin livelihoods have been degraded or used unsustainably”. 27 | Page

Galbraith has argued that economics serving the interests of the powerful cultivates the beliefs and behaviour that such interests require (J. K. Galbraith 1973, 1977, 2) Neo-liberalism is built on an atomistic vision of society. Noam Chomsky argues that the atomization of the masses, the corporate-state power and the lack of morality, embedded in the institutions and markets where humans interact, is a barrier to the solution of climate change (Chomsky 2009). As I argued before, climate disruption because of its very complex nature requires a sense of collectivism and social good and the methodological individualism does not go in its favour by depicting the issues on an individualistic basis (see appendix 2. C) (Bloomberg 2008). A real commitment to climate disruption, implies no return to the Dark Age but a different conception of human society and economy, a different meaning of living, in consonance with the planet and other humans. That is why action is hard because the solution to climate change needs a whole new paradigm to come to life (Stern, Nicholas 2015).

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AN ANALYSIS OF RESTORATION

The purpose of the preceding analyses is the creation of a ground on which to argue for a paradigm shift, which gradually transforms an orthodox paradigm into a new paradigm. Kuhn calls the process a “Scientific Revolution” defined as an ‘unstructured and sudden event’, which in our case would be defined as a gradual change that, develops on new ideas. A ‘normal science’ (or orthodox paradigm) is “an enterprise that aims to refine, extend and articulate the paradigm in existence” but an enterprise unable to correct it (Kuhn 1920, 122). The normal science is the mainstream neo- liberal economic doctrine.

I have analysed and criticised so far the orthodoxy and the unrealistic scientific character of the doctrine, because of the systemic effects on the vision of the economy, society and its political management. It gradually shaped the purpose of the doctrine into an economic growth with the end goal of growth in itself, and of individuals’ life into a pursuit of wealth and profit. I do not argue that this happened intentionally, as the mode of production of material life (economy) conditions the social, political and intellectual life (Smelser 1973, 5). Capitalism as a mode of production developed around fossil fuels, seeing the first and second Industrial Revolution, which called for a centralized and hierarchical management of the economy and society. Changes in the productive forces of society onset changes in the method of production and in the economic relations, gradually shaping the ‘superstructure’ (the legal, political and social consciousness of the economy) (Smelser 1973, 5). This affects the world vision, especially in a much-interconnected world.

In the 19th century, the productive forces changed from land to fossil fuels (carbon [1850s]), oil [1853], gas and uranium). The wealth of nations shifted from a dependency on land agriculture and development to the hegemonic control of carbon, oil and its prices. The factors of production changed from land, labour and capital, to enterprise, labour and capital (RBA 2016). The different nature of fossil fuels allowed for the production on a bigger scale of primary goods, which raised the standard of living in many countries. Industrialization, economic growth, the rise of technology, brought incredible benefits to human progress, as efficiency decreased marginal costs. The pace of production and industrial development was quicker and beyond the physical limits that land imposed and the physical needs of human beings. The superstructure has inevitably

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changed in respect to the material productive force: a scarce resource that allows generating high amounts of energy.

“Civilization has failed to provide us an ethos, morality, ideals, institutions, vision of man and mankind and politics in consonance with our way of life, which evolved as expression of our success” (The Club of Rome 1970, 5).

The ethos and morality that the ‘Predicament of Mankind’ (1973) argued to lack in humankind is what Keynes calls ‘clear thinking’ or ‘common sense’ (Parsons 2003, 54). A dynamic and pragmatic approach would suggest a change in the mode of use of this extremely beneficial productive force, strictly because of its scarcity. That clear thinking lacked and the economic orthodoxy did not incentivize it. A consumption economy driven by needs changed into a consumerist economy that needed to create wants (J. K. Galbraith 1973, 1977). The manufacturing of desires proved that individuals were not as rational as the economic doctrine assumed, but they were economic animals who easily learnt to give space to their material passions20 (Chomsky, Kick Starting the Environmental Movement: An interview with Noam Chomsky 2009). The satisfaction of desires becomes something such as a disturbance, which feeds on itself. The societal nature of humans and the relativity of wants and happiness allows the desires to expand limitlessly until the contours of the planet fracture. The expansion reached the extent to alter the optimal environmental conditions necessary for the existence of life on Earth (IPCC 2014).

The vision of neoliberalism, built on liberal values, and its orthodox economic doctrine reigned as if - Margaret Thatcher argued - “There is no alternative!” (Bateman 2002, 310). Francis Fukuyama in the ‘90s argued that the legitimacy of liberal democracy as a system of government may constitute the “final form of human government” and as such constituted the end of history (F. Fukuyama 1989). The end of history is logical also when applied to the end of a history written by politics, a practical science with a purpose directed to the human good. A politics and economics for the pursuit of wealth and profit, following Fukuyama’s sense, writes no history as it does not seek to improve the management of human life. The dynamics of the changing world, the need to adapt ideas and institutions to our faster material change and the need for continuous pragmatism

20 Recall what stated in precedence: What makes humans a zoon politikon, political animal, is that to a greater extent than other animals, we desire things as the result of habituation (acculturation or learning) rather than as direct consequence of our biologically responses (Carnes e David 1991, 23).

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in a much-interconnected world so for the liberal and democratic principles to be in practice and not only on paper, had been forgotten (Parsons, 2003, p. 54).

The institutional and ideological framework that such an economy created lacks moral values. The non-profit sector, which is what works for the human good, is called the third sector and is not taken into account by economists, because it has no economic value (Rifkin 2014,2015). In this sense, it is not only totalitarian regimes that can make human beings superfluous, but an individualism and rationalism structured in a short-term framework based on profit, is also capable of that, going against its very essence of democratic values (Fenton 2018).

Today’s crises are well represented by the Brundtland Report (1987) entitled “Our Common Future” (United Nations 1987). It defines the term ‘sustainable development’ for the first time and it calls for a forceful economic growth and development which is socially and environmentally sustainable (United Nations , 1987, p. I. 3). I do not pay attention to the report itself, but instead to what sparked its publication. After the oil crisis of ’73, and a series of environmental accidents (oil spill of the Olympic Bravery (1976), nuclear accident at the Three Miles Island Pant (1979), etc.) while global and national inequalities were spreading, this type of growth already showed to be problematic and of factual evidence to call for a different and sustainable management of the earth and human activities (United Nations , 1987, p. I. 2 (point 13, 19)). Perhaps in the ‘80s, adjustments within the paradigm were enough for temporary solutions and fixes. However today, due to the nature of the problem, adjustments within the same paradigm cannot be accepted. As predicted by ‘the problematique’ the bounded problems aggravated, making now action urgent (Millenium Ecosystem Assessment 2005) (IPCC 2014) and the rise of a new world paradigm a necessity. For this reason, I leave aside many key elements, solutions and actions taken for climate change (carbon markets, cap-and-trade schemes…) not out of ignorance, but out of acknowledgement that they are refinements, extensions of the current paradigm. They rather tame the root cause21 and by no means enable a Scientific Revolution setting the grounds for the creation of ‘a new paradigm’. The shift is required not only from an ecological perspective and for the continuation of the existence of the human species but also because climate disruption, shining light on human society, reveals that the orthodox paradigm in same sense denies humanity. This shift occurs in the

21 Recall what stated in precedence: I refer to the root cause with the terms: vision, purpose, telos, end goal and ‘mode of behaviour’, equivalent in meaning as they grasp the quintessence of what drives change: ideas and perceptions. (page 16)

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economics and political realm, but it implies a shift in the world paradigm, as the latter is determined by the environment and the normal-scientific tradition (mainstream neo-liberal orthodox approach) (Kuhn 1920, 112).

Today, thanks to civilisation, industrialization, and mineralogical discoveries, which allow technological breakthroughs, “the basic economic problem has been solved” as the basic needs of the whole population is met with a purposeful distribution which aim is to reach its goal (Parsons, 2003, p. 63). The prolonged failure of distribution and its criticism since the 70s is the manifestation of the purpose of economics and politics to feed an economic machine in search for continuous returns (Brian Czech 2013) (Daly 1996) (Emmanuel e Gabriel 2014). A zero cost marginal revolution is Keynes’ words coming to reality if the race to monopolies and oligopolies is better controlled (Rifkin 2014,2015). Robotics and AI can allow humankind to “focus on the arts of life”, but in this world paradigm, it is depicted as a threat to a vast part of the global population (Parsons, 2003, p. 63). If they are not economically useful, their existence becomes useless. Human value, similarly to goods and services, depends on the marginal notion of utility. It is not uncommon to see articles in newspapers today entitled “what to do with the useless class” (Harari 2017). Yuval Noah Harari is a historian who argues that this useless class is in need of purpose and he argued for the purpose to be found in virtual reality or gaming. A totalitarian regime destroys humanity, but this mode of behaviour of the world makes social existence, or existence at all, meaningless without an economic source. Besides, it is self-destructive, as it disrupts that home and space which allowed its existence from the very beginning, the planet Earth.

The current vision denies what the right vision for the human good and co-operation with the environment can bring to the future of humanity22. Climate disruption is an opportunity for humankind to revive its sense of humanity and belonging to Earth (Stern, Nicholas 2015). It is important to recognize that “The accepted image of economic society is not the reality, it is what is available” and the instrumental role of economics is not immutable, as it is a by-product of history (J. K. Galbraith 1973, 1977, 23-24). A purpose of existence motivated by profit and economic value is not an alternative, but a past from which to learn.

22 Recall Aristotle’s words: “as humans when he has reached his telos (goal, purpose) is the best of his animals but when apart from nomos (law, custom) and justice, the worst.” (Carnes and David 1991, 28) 32 | Page

My argument ends with a call for the right purpose, ideas, vision. In this study that was the message, as it is what drives change, in theory, and policy to tackle climate disruption. Since Aristotle, it has been understood that humans need the right purpose to manage well their society (Carnes and David 1991, 28). Keynes believed ideas embodied in institutional conventions and expectations had a far greater capacity for ‘good or ill’ (Parsons, 2003, p. 58). The pre-analytic vision of Schumpeter echoes as the ‘mode of behaviour’ affects how we colour our visions and perceptions23.

A paradigm shift works through gradually leading to a shift of vision, which allow the perceptions to change not only of the living beings, which are the ones that need to be re-educated but also of the future generations (Kuhn 1920, 112). Political theorist, George Monbiot, argues for the new politics to be a politics of belonging, built on communities, which are inclusive, open and self- sustainable (Monbiot 2017). It is has been understood that alone, neither free markets nor government intervention is optimum, the concept of hybrid returns. It is the time for a third Industrial Revolution to develop through inter-disciplinary and plural approaches (Rifkin 2014,2015). Jeremy Rifkin presents a new paradigm, which engages with all those components necessary for a meaningful management of life. It is constituted by the Internet of Things (IoT), a core operating system formed by Communications, Energy and Logistics, and by the Collaborative or Social Commons (Rifkin 2014,2015). The so-called ‘third sector’ is the very essence of the Social Commons which can collaborate through the IoT.

Through the development and implementation of new productive forces, such as renewable energy and energy efficiency solutions, new economic relations can be created based on a decentralized management of activities.24. I cannot argue for a 100% renewable-based economy, but I can argue that clear thinking and pragmatic common sense will make a better use of resources, especially non-renewable ones. It is has been acknowledged that the new economic paradigm needs to be as much as possible a reflection of the natural order, so as to be in harmony with the environment

23 As demonstrated by the United Nations Climate Change Conference (2009), it is not what some assume to be the “facts” that elicits a political consensus or reflects the actual dynamics of a global psychosocial system. The challenge remains one of engaging with divergent “perceptions” and determining what scope there is for configuring them more fruitfully (laetus in praesens 2012). 24 Jacobson and Delucchi, Amory Lovins, are working towards a renewable future, which makes effective use of the only source of energy that we know we can rely on, the Sun. The possibilities that are opening for the future are thrilling. (Mark Z. e Mark A. 2011) 33 | Page

(Raworth 2018). If that is achieved, human life will be the closest to a universal condition, as only the Laws of Nature are Universal.

The new ideological infrastructure is being created to replace the old and obsolete one. Due to the limit of space in this dissertation I could only name few of these new thinkers, but have I had to do another dissertation I would concentrate on how the future world paradigm will look like, based on the work by Kate Raworth, author of ‘Doughnut Economics’, George Monbiot, Jeremy Rifkin, Paul Hawken, with the help of Graham Institute, Ellen MacArthur Foundation, Cambridge Institute for Sustainability Leadership, Institute for New Economic Thinking and many others yet to be found and yet to be created. Together they will be the components of the new world paradigm, which nurture humankind and which vision is the human good.

This change revives that History that thought to be ended. As civilization continues, there is “no final form of human government” that is universal for human nature. The persistence and the strength of these ideas professed by these new paradigms will restore the sense of what makes us humans. The barriers and contradictions of neo-liberal free-market capitalism will be overcome. The new paradigms will gain more foot in younger generations and will restore collective action, if not the survival of the planet will trigger the failure of human pride under the weight of the Universal Laws of Nature.

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CONCLUSION

In name of humanity, the survival of it and of the planet Earth, I argue for a paradigm shift away from an orthodox neo-liberal economic doctrine. This implies a change in the world paradigm and in the ‘mode of behaviour’. The argument of such a paradigm shift in a study of this size is pretentious hence my claim relies upon the ideas and beliefs of the current paradigm so as to present the need for a new paradigm. The relevance to the academic literature regards the use of pluralist and heterodox economics to criticise the current mainstream doctrine with the intent to argue for the new academic literature to constitute the new paradigm.

I addressed and developed my research question in relation to the lines of thought elicited while studying the applied academic literature. The study runs through a historical evolution of economics, its political counter-part of neoliberalism and their implications on the world. It criticises the doctrine on the basis of its inability to solve the three interlocked crises: ecological, social and economic and on the basis of its ability to emphasise and expand their extension.

The First Section provided the theoretical notions of economic assumptions, economic theory and its vision as scientific which emphasised the effects on the unrealistic assumptions on the world paradigm. The individualistic methodology, the orthodox closed-system approach are shown to not be acceptable constituents of a future depiction of a sustainable economy, in consonance with the environment. The current vision, consistent with economics’ methodology, is the pursuit of wealth and growth. On a methodological level, this future depiction requires a pluralist approach which account for complexities and interdependent factors. On an ideological level, it requires a sense of common good and of the global commons, with the pursuit of the human good and a lifestyle in accordance with the planet Earth.

The second section shows how the economic doctrine and its vision expanded to the political, social and legal realm. It shows the contradictions inherent within this economic-political doctrine. It bases itself on individual freedom, but it denies humanity by being the pro-growth institutions’ key players in climate change denial, and by constraining that individual freedom to an economic one. The systemic ideological barriers that the normal science poses to the solution of climate disruption and to humanity itself push me towards my last section where I argue for a paradigm

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APPENDIX

1. A

This is an extract that the “Limits of Growth” asked its readers to consider. I find it relevant and interesting for it to follow the line of thought of ‘growth will even it up again’ or ‘growth will clean it up again’ (Raworth 2018, 26-27) Source: (Lomborg 2012, 26)

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1. B Kate Raworth, seven ways to think. I only use number 1 and 5, but my dissertation argues against all 7 and calls for the 21st centuries

ways of thinking to come to place (Raworth 2018, 26-27). The Doughnut Raworth proposes:

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(Raworth 2018, 44)

2. A

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OIL BUSINESSES, MULTINATIONALS POWER (Fortune 500 2018) It is important to note that The Seven Sisters were created after World War 1, and they are composed of the following oil multinationals. Exxon Mobil, Royal Dutch Shell, BP and Chevron. 1976 is a date chosen at random, this is to show how today the same companies that had power all over the 20th century still own their place at the top. Multinationals, corporations, oil businesses have clearly dominated.

2. B

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LIST OF PRO-MARKET INSTITUTIONS AND KOCH BROTHERS COMMITED TO CLIMATE CHANGE DENIAL

• American Enterprise Institute • CATO Institute - Founded by 1977 b Edward H. Crane, Murray Rothbard, and Charles Koch (chairman of the board and chief executive officer of Koch Industries, Inc. - Received millions of founding from its co-founders, Koch Brothers, and also 125,000 from ExxonMobil since 1998 - The CATO Institute was originally incorporated under the name “Charles Koch Foundation” in 1974. (Indeed the Koch Family Foundations have spent over $ 88 million to 80 groups denying climate change since 1997 (Greenpeace))

• Center for Organisational Research and Education (CORE) • Competitive Enterprise Institute • Global Climate Coalition • Greening Earth Society • Heartland Institute • Heritage Foundation • Institute of Economic Affairs IER Publication by Robert L. Bradley Jr. titled “Climate Alarmism Reconsidered” “Government intervention in the name of energy sustainability is the major threat to real energy sustainability and the provision of affordable, reliable energy to growing economies worldwide. Free- market structures and the wealth generated by markets help communities to best adapt to climate change”.

• Koch Family Foundations • Koch Industries, Inc. - Largest privately owned energy company in the United States, and the country’s second largest private company. • Koch Industries, Inc. Lobbying Activities - According to data from OpenSecrets, Koch Industries has spent more than $11,372,700 on combined lobbying activities between 1998 and 2017 with approximately 96% of that total going to the Oil and Gas industry. The remaining 4% to Mining, General Contractors, Forestry & Forest Products, Chemical & Related Manufacturing • Mont Pelerin Society - On the list of recipients from Donors Trust/Donors Capital Fund, two sister organisations who had financed 102 organisations either dismissing climate change or downplaying the need to take action. - Accepted funding from Kock family’s multiple Charitable Foundations SOURCE: (DesmogBlog 2018)

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2. C METHODOLOGICAL INDIVIDUALISM

Retrieved from: (Chomsky, Kick Starting the Environmental Movement: An interview with Noam Chomsky 2009)

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