Question

Briefly explain three differences between neoclassical economics and ecological economics. [Note: There are many differences, but you must explain three of them using good arguments and examples]. 1000 word need

Answer 1

Answer:

The core idea of ecological economics is that human economic activity is bound by absolute limits. These limits are not entirely fixed, however, since they are co-determined by: (1) (fixed) ‘planetary boundaries’ (Rockström et al. 2009); and (2) (dynamic) social factors, such as values, institutions etc. The economy is viewed as a sub-system embedded in the larger systems of society and the biosphere. The emphasis of the relevance of the laws of thermodynamics to economics is at the core of this view, and is also vital to the historical foundations of ecological economics. This is exemplified by the pioneering book by Nicholas Georgescu-Roegen on The Entropy Law and the Economic Process (1971). Thus, ecological economics, as opposed to neoclassical economics, focuses not only on questions of efficiency and distribution, but it does so against the backdrop of the scale of material throughput (see Terms, analysis, conception of economy). Furthermore, the following issues are emphasized: institutions, power relations, uncertainty and ignorance. In this context, interactions between the economy, society and the environment are analysed, while always keeping in mind the goal of a transition towards sustainability.

While the absolute limits of material throughput is the main idea underlying ecological economics, there are further more or less agreed-upon ‘core beliefs’ (Røpke 2005), upon which different representatives lay different emphasis. These are:

environmental problems as the critical challenge faced by modern societies;

a strong focus on sustainability;

pluralism of methods, values etc.;

a post-normal understanding of science and transdisciplinarity;

a systems perspective, holism;

a focus on distributive issues (both intra- and intergenerational); and

acknowledgement of the intrinsic value of nature.