Brave New Economic Theory

for Sustainable DevelopmentTóth Gergely

New economics

1. Moral economics has a history!

2. Utilitarian economics is over?

3. Beware: Mainstream is a religion.

1817

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B.C. a.D.333

1269

1375

1776

1664 1716

1798

1759

Moral Economics, Uti l i tarian Economics

1871

1874

1890

Adam Smith, 1776

„It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own interest… We address ourselves, not to their humanity but to their self-love”

„And he is … led by an invisible hand to promote an end which was no part of his intention.”

Baker – p. 27.Book 1, Chapter 2.: On the Principle which gives occasion to the Division of Labour

Invisible hand – p. 456Book 4, Chap 2.: Of Restraints upon the Importation from Foreign Countries of Such Goods as can be produced at Home

429 pages

1970-20081848-1917-1929-1945

1971

1934

19701976

1998

1936

19711973

1989

2006

1891 1931 1961, 63 1965 1967, 71 20091981, 84, 86, 87, 91

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1906

1916

New economics

1. Moral economics has a history!

2. Utilitarian economics is over?

3. Beware: Mainstream is a religion.

Ecological footprint and biocapacity

Source: WWF, GFN, ZSL [2012]: Living Planet Report, p. 40.

Own research on EFwith Cecília Szigeti

1. Trends before 1961?

2. What are the turning points in history?

3. Birth of the current growth paradigm?

Estimation of the Ecological Footprint from 10,000 B.C.

Sources Bolt , J. and van Zanden J. L [2013]: The

First Update of the Maddison Project; Re-Estimating Growth Before 1820. Maddison Project Working Paper 4.

Kremer, M [1993]: Population Growth and Technical Change: One Million BC. The Quarterly Journal of Economics Vol. 108 No 3. (Aug. 1993) pp. 681-716.

Angus Maddison [2001]: The World Economy: A millennial perspective Paris: OECD.

Angus Maddison [2003]: The World Economy: Historical Statistics. OECD.

J. M. Keynes [1930]: Economic Possibilities for Our Grandchildren. in Essays in Peruasion Ch. 5. 360-361 Macmillan, London.

1. GFN database

2. Maddison data table

3. Bolt-van Zanden data

yearNo. of

countries R2 Consumption dependent EF (x=GDP)

„Autonomous EF”

1961 113 0,5075 0,0004x 1,1331

1962 119 0,5323 0,0004x 1,0221

1975 118 0,6044 0,0004x 1,1185

1980 118 0,6332 0,0003x 1,1621

1985 119 0,6938 0,0003x 1,1652

2005 114 0,7231 0,0002x 1,2501

2008 113 0,7529 0,0002x 1,2618

Regression Functions

Major sustainability indicators of mankind among major transitions, from 10.000 B.C. to

2008 Era(Year)Variable

Birth of Agriculture

(10,000 B.C.)

First Civilizations(3000 B.C.)

European Conquests

(1500)

Technological-Scientific

(R)evolution(1820)

2008

World Population

[million]4 14 438.43 1041.71 6 694.83

World GDP [billion G-K $] 1.87 6.53 248.32 693.5 50973.94

EF per capita [global hectare] 1.21 1.21 1.25 1.29 2.7

Biocapacity per capita [global

hectare]2493.82 712.52 22.75 9.58 1.79

Earth Fullness (%)[1] 0.05 0.17 5.48 13.48 150.84

Earth fullness in the period (%)[2] 0.04 - 0.06 0.15 - 0.19 4.59 - 6.04 11.24 - 14.55 -

[1] That is total eco-footprint divided by total biocapacity, in a given year.[2] Lowest and highest value of saturation (Earth Fullness) in the historic period, based on eight data lines of the model.

Earth Fullness from 10,000 BC to 2008

0,00%

20,00%

40,00%

60,00%

80,00%

100,00%

120,00%

140,00%

160,00%

-10 000 -4 000 -2 000-500

11500 1700 1913 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Earth fullness [% ]

Earth fullness [%]

Long term changes in Earth Fullness and World Total Population, from 10.000 B.C. to

2008

0%

20%

40%

60%

80%

100%

120%

140%

160%

-10 000 -3 000 -2 000 1500 1700 1820 1913 1961 1990 2008

0

1000

2000

3000

4000

5000

6000

7000

8000

Earthfullness (%)

WorldPopulation(million)

New economics

1. Moral economics has a history!

2. Utilitarian economics is over?

3. Beware: Mainstream is a religion.

1. God (HC*)

2. Commandments (TG)

3. Chief command (HC*)

4. Credo (TG)

5. Holy Trinity (TG)

*Harvey Cox [1999]: The Market as God: Living in the new dispensation. The Atlantic Monthly, March 1999, p. 18-23.

Furnishing of the Religion of Economism

1. Marketgod Invisible, but overwhelming Power over time (credit) Infuses everywhere (family) Solves everything – Do not disturb! Confessional box, indulgence tickets Priests (econologians) Transformation

4. The creed of unsustainable development

I believe in Growth, the sustainable, almighty maker of products and services, and the Invisible Hand, which corrects all market failures and leads us to the Pareto optimum.And in the Competition, the only safeguard of development and natural selection, which led from the big boom, through evolution, to the appearance of Man.Science of science, rationality of rationality, idol-worship from paradigm, from science pretending omnicompetence.

Everybody believes but not one has proven, of one essence with the meme, commanding and controlling all our thoughts.

It was created for us men and for our welfare, but has become our enemy, descended into hell and made the earth an impersonal hell.

It became a spiritual reality, and was incarnate of the enlightenment and Darwin, Freud, Marx, Mill, Einstein. It became a Spirit.

…

5. The ‘holy trinity’ of

economism

Go back, boys.This is a TRAP!

Thank you for your attention!

Extra

Between 10,000 and 3000 B.C.

Between 3000 B.C. and 1500

Between 1500 and

1820

Between 1820 and

2008

a. Length of periodapp. 7000

yearsapp. 4500

years320 years 188 years

b.

Change of World Population [million/100 years]

0.14[1] 9.43 188.53 3141.17

c.Change of Earth-fullness in 100 years [ratio]

0.17[2] 11.8 250 7696

d.

b/a 1.2 1.25 1.33 2.45

[1] Method of calculation: difference in population (from Table 3) divided by the number of years. For a specific year: (14-4)/70=0.14.[2] Change in World Fullness (from Table 3) divided by the number of years. For a specific year: (0.17-0.05)*100/70=0.17.

Length and pace of sustainabil i ty changes from

10.000 B.C. to 2008

Data tableyears 1

B.C. 10 000 1000

B.C. 5000 1500

B.C. 4000 1600

B.C. 3000 1700

B.C. 2000 1820

B.C. 1000 1913

B.C. 500 1950-1960

B.C. 200 1961-2008

Indicator UnitTotal World Population

million people

GDP per capita 1990 international Geary-Khamis dollars

Ecological Footprint global hectares

EF per capita global hectares

Total biocapacity global hectares

EF-BC balance global hectares - minus if deficit

„Earth Fullness” %

USA: GDP and poor

0

2000

4000

6000

8000

10000

12000

14000

1930193419381942194619501954195819621966197019741978198219861990199419982002

2004: 11 734 bl USD(114 X)

1929: 103 bl USD

Own calculation based on data from U.S. Department of Commerce

1959: 18.5%2004: 10.2%

2. The „decalog” of uti l i tarian economicsI. commandment:Man is self ish

Az ember haszonmaximalizáló, önérdekkövet lő ény, viselkedj hát te is így, s mások ilyen motívumaira építsd viselkedésed!

II. commandment:Cost/benefit

analysisMindig mérlegeld a két oldalt! Hiszen racionális lény vagy. Csökkentsd költségeidet, növeld hasznodat! Törekedj a mindig nagyobb profitra!

III. commandment:Division of Labor

A munkamegosztás segít, hogy ne csak alapszükségleteinket elégítsük ki, hanem luxusigényeinket is. Márpedig fogyasztani jó.

IV. commandment:Competit ion

Igyekezz legy zni versenytő ársaidat, a versenyképesség fejleszti folyamatosan képességeidet. Így van ez a természetben is.

V. commandment:Power, s ize

A természetben a gyorsabban alkalmazkodó nyer. Alkalmazkodj hát te is gyorsan, pörögjél, növekedjél, legyél er s ő és nyertes. Sikeres!

VI. commandment:Unlimited world

A piacoknak nincs határa, globális szinten kell gondolkodni. Egy piaci szerepl tő úl kicsi ahhoz, hogy kin je a rendszer hatő árait.

VII. commandment:Self assurance

Légy biztos magadban! A rendszer régóta m kű ödik, sokan megjósolták a végét, de még egyiknek sem lett igaza. A szocializmus csúfos kudarcot vallott.

VIII. commandment:Safety

Törekedj a tökéletes biztonságra, semmit ne bízz a véletlenre. Tervezz, ellen rizz, javő íts! Csökkentsd az emberi hibalehet ső éget.

IX. commandment:Limits

Ne szegd meg a törvényeket – ha nem muszáj (ld. 2. commandment) – ne szennyezd a környezetet, légy etikus. CSR!

X. commandment:„Trust”

A többit bízd a technikára, a piacra, a gazdasági fejl dő ésre!

3. Chief command

Consume!

But what is economics?

Making money? A Science? Natural Science? Paradigm?

Religion!

Per capita ecological footprint and GDP from 10,000 BC to 2008

0,00

1,00

2,00

3,00

4,00

-10 000-1 000

1500 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Ecological footprint per capita [global hectare]

Ecological footprint per capita [globalhectare]

0

2000

4000

6000

8000

-10 000-1 000

1500 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Per Capita GDP [1990 International Geary-Khamis dollars]

Per Capita GDP [1990 InternationalGeary-Khamis dollars]

Importance and problems

1.Finding correlation of GDP & EF

2.Long term data series (1:255)

3.Exact proof for the obsolescence of the Growth Paradigm (1776 – 10%, 2008 – 152%)

4.Proof against populat ion bomb

5.Proof for a seventh jump

1. Historians, geographers, anthropologist must join!

2. Anthropo-centric

3. „Backcasts” the current consumption habbits

4. No IF>3 publishes (6)

5. Angry economists (1)

Input data, in signif icant historical moments

Era(Year)Variable

Birth of Agriculture

(10,000 B.C.)

First Civilizations(3000 B.C.)

European Conquests

(1500)

Technological-Scientific (R)evolution

(1820)

2008

GDP per capita (G-K $) 467 467 566 666 7614Total

Population (million) 4 14 438.43 1041.71 6 694.83

Sources: Keynes (1930), Kremer (1993), Maddison (2008), Takács-Sánta András (2004)

Eco-footprint and Earth-fullness from 10.000 B.C. to 2008

YearWorld

population [million]

Per Capita GDP

[1990 Int'l G-K

dollars]

EF per capita [global hectare]

Total EF [1000 global

ha]

Total biocapacity [1000 global

ha]

Footprint balance

[global ha – minus if deficit]

Earth fullness

[%]

-10 000 4 467 1,21 4,8 9 975,3 9 970,5 0,05%

-5 000 5 467 1,21 6,0 9 975,3 9 969,3 0,06%

-4 000 7 467 1,21 8,4 9 975,3 9 966,9 0,08%

-3 000 14 467 1,21 16,9 9 975,3 9 958,4 0,17%

-2 000 27 467 1,21 32,6 9 975,3 9 942,7 0,33%

-1 000 50 467 1,21 60,3 9 975,3 9 915,0 0,60%

-500 100 467 1,21 120,7 9 975,3 9 854,6 1,21%

-200 150 467 1,21 181,0 9 975,3 9 794,3 1,81%

1 226 467 1,21 272,5 9 975,3 9 702,8 2,73%

1000 267 453 1,20 321,2 9 975,3 9 654,1 3,22%

1500 438 566 1,25 546,5 9 975,3 9 428,8 5,48%

1600 556 596 1,26 699,8 9 975,3 9 275,5 7,02%

1700 603 615 1,27 764,0 9 975,3 9 211,3 7,66%

1820 1 042 666 1,29 1 339,9 9 975,3 8 635,4 13,43%

1950 2 528 2 111 1,86 4 712,9 9 975,3 5 262,4 47,25%

1970 3 691 3 729 2,77 10 208,8 10 230,8 22,1 99,78%

1990 5 269 5 150 2,66 14 063,9 11 282,1 -2 781,9 124,66%

2008 6 695 7 614 2,70 18 191,7 11 967,5 -6 224,2 152,01%

„The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority…”

„It is ideas, not vested interests, which are dangerous for good or evil.”

J. M. Keynes, 1935.

(1986) 2008

1945

1492 (1640)

1760 (1789)

476

B.C. a.D.

1269

1776

1936

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John Maynard Keynes, 1930.

„For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.”

2008

1945

1789

1848 1989

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)What about marxism?

1971-1986-2008

1973

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)

2012

2006

Religious economics

Source: GFN [2011]: Global Footprint Network Annual Report 2010, p. 28-29.

Ecological footprint: Debtors and Creditors

Impossible to be human and sustainable

„These nineteenth-century ideas are firmly lodged in the minds of practically everybody in the western world today, whether educated or uneducated. …The leading ideas of the nineteenth century, which claimed to do away with metaphysics, are themselves a bad, vicious, life-destroying type of metaphysics. We are suffering from them as from a fatal disease.”

„…the sins of fathers will be visited upon the children unto the third and fourth generation … and make them think by [these ideas].”

E.F. Schumacher, 1973.

Power of the six paradigm

1. Evolution

2. Competition

3. Class conflict*

4. Biologism

5. Relativism

6. Positivism

*economic reductionism and determinism = economism

Darwin, 1859

Marx, 1848

Freud, 1917

Einstein, 1905Comte, 1844

Mill, 1905

Mach, 1905

Content

3. How

2. What

The Miscarriage of Economism1. Why

Moral vs. Utilitarian Economics

Bionomy – Economic Theology

Lack of-paradigm

Shift(BAU)

Paradigm-shift

Capitalism(mainstram economics)

Reformers and challangers of economism

Alternative

economicsReligious moral

teachingsSustainability

„science”

Socialism

Feudalism

Somethingism(42)

Economic theories of SDBionomia is a new kind of economic theory, which is based

on the thorough study of the laws of life, with the primary objective of serving life, especially human communities.

Economic theology is an economic philosophy from the school of moral economics,

which considers material goods as a means to advance towards God, to human improvement,

which embraces the economic teaching of world religions, alternative schools of economics and sustainable

development science.

homo oeconomicus

Objective utility, marginal happiness

Benefit and marginal utility

Vocation meaning-ful work)

Specialization (mean-ingless work)

Truly Responsible Enterprise (manager)

Profit -maximizing corporation

(Local) money, as a means of exchange

Money, as a means of speculation

Extending cooperationExtending competit ion

Localization (fullness, independence, freedom)

Globalization (theory of comparative advantages)

GDP + ecol. footprint GDP

Peaceful balance (grown up!)Growth

Internalit iesExternalit ies

BionomyEconomism

antras teleios

Biology, etology – laws

Religion - goals

Economics- material basis

Economic theology

Bionomy

Opportunity for theoretical unity

Gaps in existence

1.1. GodGod

2. Angel

3. Community

4. Man

5. Animal

6. Plant

7. Machine

8. Material

9. Nothing

Utilitarian econom

ics

Bionomia

Economic theology

too effectiveuneffective

optimum

Efficiency should not be maximized but optimized!

Rethinking eff iciency

X Efficiency means

Y Effectiveness own goal

Z Public-effectiveness

public goal

„We are not blindly opposed to progress … we

are opposed to blind progress”

Thank you for your attention!

OK, I tell them. But they won’t

like it…