Sustainability as an Economic Issue: A BioPhysical Economic Perspective

Abstract

This essay focuses upon how questions of sustainability are integrated into the teaching of introductory economics. While economics is insufficient by itself to understand the efforts we must take in order to live within nature’s limits, an understanding of economic theory is a vital part of a larger interdisciplinary whole. Yet sustainability is not well integrated into economic theory, especially mainstream, neoclassical, economics. Allocative efficiency and the rate of economic growth are the fundamental metrics while sustainability questions such as the stability of earth systems and the quality of energy resources are relegated to secondary status, if addressed at all. However, in order to address questions such as the earth’s continuing ability to support life, economists need to consider a variety of theoretical perspectives. In the late 1970s, Robert Carson published Economic Issues Today. It presents various economic topics from liberal, radical, and conservative viewpoints, and looking at crucial issues such as sustainability from various ideological perspectives could be an important teaching tool in this era of polarization. This article contends that environmental concerns today are no longer simply microeconomic but biophysical. Biophysical economics sees a sustainable economic theory as one that is grounded in the unity of social and natural sciences. The economy is embedded in a finite and non-growing biophysical system and is subject to its laws and its limits. The accumulation of carbon dioxide in the atmosphere, and the decline in the quality of energy resources limit further economic growth. So does the internal structure of capital accumulation. A system in overshoot cannot grow its way into sustainability, but a non-growing capitalist economy is mired in stagnation. We must develop new economic theories in order to achieve a sustainable future. Valuable insights can be found in behavioral economics, heterodox political economy, and natural science. Questions drawn from behavioral economics concerning how people think in difficult situations should be of great interest to sustainability educators.