The Whole And The Part

Ecological economics shares many concepts with conventional neoclassical economics. For example, both take as basic the concept of opportunity costs, defined as the best alternative that has to be sacrificed when you choose to do something. But ecological economics has a fundamentally different starting point - a different vision at its core of the way the world really is. To put it starkly, conventional economics sees the economy, the entire macroeconomy, as the whole. To the extent that nature or the environment are considered at all, they are thought of as parts or sectors of the macroeconomy - forests, fisheries, grasslands, mines, wells, ecotourist sites, and so on. Ecological economics, by contrasts, envisions the macroeconomy as part of a larger enveloping and sustaining Whole - namely, the Earth, its atmostphere, and its ecosystems. The economy is seen as an open subsystem of that large "Earthsystems." That larger system is finite, nongrowing, and materially closed, although open to solar energy.

It is important to understand the distinctions among open, closed and isolated systems. An open system takes in and gives out both matter and energy. The economy is such a system. A closed system imports and exports energy only; matter circulates within the system but does not flow through it. The Earth closely approximates a closed system. An isloated system is one in which neither matter nor energy enters or exits. It is hard to think of an example of an isloated system, except perhaps the universe as a whole. We say the Earth is approximately a closed system because it does not exchange significant amounts of matter with outer space - an occasional meteor comes in, an occasional rocket never returns, and we have a moon rock in a stained glass window in the National Cathedral. Maybe material exhanges will be greater someday, but so far they are negligible. However we do have a significant flow-through or throughput of energy in the form of incoming sunlight and exiting radiant heat. That throughput, like the ecosystem, is also finite and nongrowing. For the Earth, the basic rule is: Energy flows through, material cycles within.

Back to the problem of the whole and the part. Why is it so important? Because if the economy is the whole, then it can expand without limit. It does not displace anything and therefore incurs no opportunity cost - nothing is given up as a reulst of physical expansion of the macroeconomy into unoccupied space. But if the macroeconomy is a part, then its physical growth encroaches on other parts of the finite and nongrowing while, exacting a sacrifice of something - an opportunity cost, as economists would call it. In this case, if we choose to expand the economy, the most important natural space or function sacrificed as a result of that expansion is the opportunity cost. The point is that growth has a cost. It is not free, not a void, it is our sustaining, life-supporting envelope. It is therefore quite conceivable that at somepoint the further frowth of the macroeconomy could cost us more than it is worth. Such growth is known an uneconomic growth. This leads to another insight that is funamental to ecological economics and distinguishes it from conventional economics: Growth can be unconomics as well as economic. There is an optimal scale of the macroeconomy relative to the ecosystem. How do we know we have not already reach of passed it?