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Value, Capital and Nature

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Value, Capital and Nature Value, Capital and Nature Rethinking the foundations of ecological economics Elke Pirgmaier Submitted in accordance with the requirements for the degree of PhD in Economics The University of Leeds Leeds University Business School & School of Earth and Environment September 2018 The candidate confirms that the work submitted is his/her own and that appropriate credit has been given where reference has been made to the work of others. The work in chapter 2 of the thesis has appeared in the following publication: Pirgmaier, E. (2017). The Neoclassical Trojan Horse of Steady-State Economics, Ecological Economics 133, 52-61. This copy has been supplied on the understanding that it is copyright material and that no quotation from the thesis may be published without proper acknowledgement. The right of Elke Pirgmaier to be identified as Author of this work has been asserted by her in accordance with the Copyright, Designs and Patents Act 1988. © 2018 The University of Leeds and Elke Pirgmaier ii Acknowledgements Writing a PhD is not an individual achievement. This PhD would not have been possible without the continuous intellectual and emotional support of several wonderful people. Above all, I would like to express my deep gratitude to my supervisors: Andrew Brown, Julia Steinberger and David Spencer, for allowing me to explore bigger questions, providing so much of their time and energy and for being genuinely nice people. Andy, you have been a continuous and invaluable source of support in many ways. Thanks for opening doors for me, to Marxian economics, dialectics, the importance of clear and systematic thinking, and the madness of mainstream economics. Thanks for always having an open ear when I needed it. Julia, it is rare to meet someone like you. Your sharp intellect, generosity, directness, humour and dedication to fight injustices is unparalleled. David, thanks for being straightforward and playing devil’s advocate many times; your critical attitude and comments crucially helped me to rethink ideas. Learning from and with you all has been a tremendous privilege. Many thanks to my colleagues – Lina Brand-Correa, Tim Foxon, Lukas Hardt, Elena Hofferberth, Will Lamb, Andrew Mearman, Dan O’Neill and Beth Stratford – for critical comments on various parts of the PhD. You have substantially helped me to develop ideas further. Special thanks to Marta for a tremendous effort to put the PhD together. A big thank you to my friends, who have made this PhD journey such a pleasant and warm experience in Leeds: Anna, Astrid, Beth, Blandine, Ersilia, Flo, Jefim, Joel, Joy, Lucia, Marta and Sophia. Special thanks to Gauthier for innumerable debates and supporting me in so many ways throughout the last four years; to Elena for motivating and supporting me in our joint venture to fight for a better economics; to Andrew for being a long time caring friend and mentor. Will, I would like to thank you for seeing and believing in me, for your love, enthusiasm and energy, even in your absence. Kweku, thanks for helping me in the last stretch of the PhD, especially with proofreading and providing healthy food and green tea. I would also like to thank my parents, Helga and Gerhard, who have always encouraged me to go my own way and oppose what I think is wrong. iii iv Abstract Ecological economists aim to study the interrelations between ecological and economic systems, with a view to promoting changes towards sustainability. They agree that the nature of global environmental crises is systemic and rooted in economic dynamics. Yet, core economic categories, such as prices, profits, money and their interrelations with ecological destruction, are surprisingly undertheorized. The ‘economic’ becomes either tied to neoclassical economics or remains neglected. Marxian Political Economy has the potential to address this gap, but is mostly ignored in ecological economics, especially in what it is best at: explaining dynamics of the capitalist system as a whole. This PhD advocates a more systemic and theoretically grounded ecological economics. I find that neoclassical economic reasoning is rooted much deeper in ecological economics than often assumed. I present a critique of the neoclassical underpinnings of ecological economics, and a Marxian alternative. I identify the Marxian understanding of ‘value’ and ‘capital’ as the missing core of ecological economics: a realistic understanding of the capitalist system, spelled out from basics in simple and abstract terms. I explain these foundations and integrate them with a system dynamics understanding of global ecological destruction, social crises and barriers to social change. I conclude that ecological economics needs to be grounded in a realistic understanding of capitalism – if it aspires to meet its own ambitions. Economic theory and methodology are powerful political tools towards this end: they expose or conceal root causes of social ecological problems and offer better or worse guidance on how to act. Pragmatism about the role of theory and methodology is dangerous, more often than not, because it promotes the reproduction of power relations that prevent, instead of encourage, sustainability transitions. I argue for the need to break with existing prejudices against the Marxian approach and take it seriously as realistic economic theory. v vi Table of Contents Acknowledgements .................................................................................................................iii Abstract....................................................................................................................................v Table of Contents ...................................................................................................................vii List of Tables.............................................................................................................................x List of Figures............................................................................................................................x 1 Introduction ............................................................................ 1 1.1 The argument of this thesis........................................................................................ 1 1.2 The state of ecological economics.............................................................................. 2 1.2.1 Common ground................................................................................................. 2 1.2.2 A missing core?................................................................................................... 7 1.2.3 A united but fragmented community................................................................. 9 1.3 The untapped potentials of Marxian Political Economy............................................ 10 1.3.1 Theory and methodology fit for purpose ......................................................... 10 1.3.2 Uneasy relations............................................................................................... 11 1.3.3 Lost in translation............................................................................................. 13 1.4 Aims, ambition and architecture of the thesis.......................................................... 14 1.4.1 Aims.................................................................................................................. 14 1.4.2 Research questions........................................................................................... 16 1.4.3 PhD structure.................................................................................................... 17 2 Contradictions....................................................................... 19 2.1 Introduction ............................................................................................................. 19 2.2 The ambiguous nature of steady-state theory.......................................................... 22 2.2.1 Allocation and perfect markets: the adoption of neoclassical microeconomics .. ...................................................................................................................... 23 2.2.2 Unrealistic, flawed and inconsistent theoretical underpinnings ...................... 24 2.2.3 The narrow confines of neoclassical economics............................................... 29 2.2.4 The neglect of interdependencies, dynamics and change................................ 30 2.3 The logic of steady-state economics......................................................................... 32 vii 2.3.1 Unrealistic vs. realistic thinking ........................................................................ 33 2.3.2 Externality vs. systemic thinking....................................................................... 34 2.3.3 Equilibrium vs. evolutionary thinking ............................................................... 35 2.3.4 Biophysical vs. monetary thinking .................................................................... 36 2.3.5 Open vs. closed systems thinking..................................................................... 37 2.4 Discussion .................................................................................................................39 2.5 Conclusions...............................................................................................................42 3 Value......................................................................................44 3.1 Introduction..............................................................................................................44
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