Real Life Economics: Understanding Wealth Creation

484 Pages·3.437 MB·English

by  Ekins, Paul;Max-Neef, Manfred

Real-life economics
Since the end of the Second World War industrial economic activity has been
sought and generated on an unparalleled scale. Ever greater output and
productivity have been the dominant policy objectives of practically every country
in the world for the past 50 years. The cost of this kind of development has been
and is being paid in widespread social and cultural disruption and potentially
catastrophic effects on the global environment.
This book challenges traditional economic theories which have promoted this
situation and constructs an economic framework within which it can be both
understood and ameliorated. This framework is designed to illuminate and offer
guidance about practical matters of an economic nature in the real world, in order
to help in the construction of an economy more productive of human welfare. The
book is divided into three parts. The first part defines the place of the economy in
broader human culture. It begins with a clarification of issues of methodology,
process and purpose. It goes on to develop a perspective of the whole economy and
models the process of wealth creation. Part II presents a deeper discussion of
economic progress and development and how they can be measured in practice.
Part III discusses the relationship between the market, the state and non-monetary
production. Despite its innovative interdisciplinary approach, Real-Life
Economics remains recognisably economic in nature, incorporating many of the
means and concepts from a variety of the schools of thought (including the
neoclassical) which constitute the economics discipline today. The individual
papers, from contributors many of whom are among the acknowledged leaders in
their respective fields, are woven together by editorial comment into a powerful
statement of an important new economic perspective.

Real-life economics
Understanding wealth creation
Edited by
Paul Ekins and
Manfred Max-Neef
London and New York
First published 1992
by Routledge
11 New Fetter Lane, London EC4P 4EE
Simultaneously published in the USA and Canada
by Routledge
a division of Routledge, Chapman and Hall, Inc.
29 West 35th Street, New York, NY10001
This edition published in the Taylor & Francis e-Library, 2001.
© 1992 Paul Ekins and Manfred Max-Neef
All rights reserved. No part of this book may be reprinted or reproduced or utilized in any
form or by any electronic, mechanical, or other means, now known or hereafter invented,
including photocopying and recording, or in any information storage or retrieval system,
without permission in writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this title is available from the British Library.
ISBN 0–415–07976–4 (Print Edition)
ISBN 0–415–07977–2 (pbk)
Library of Congress Cataloging in Publication Data
Real-life economics · understanding wealth creation / edited by Paul Ekins and Manfred
Max-Neef.
p. cm.
Includes bibliographical references and index.
ISBN 0–415–07976–4 (Print Edition). – ISBN 0–415–07977–2
1. Economics. 2. Economic development – Sociological aspects. I. Ekins, Paul. II.
Max-Neef, Manfred A.
HB71.R34 1992 92-8827
330–dc20 CIP
All royalties from the sale of this book are payable to the Living Economy Network.
ISBN 0-203-01279-8 Master e-book ISBN
ISBN 0-203-15193-3 (Glassbook Format)
Contents

List of figures viii
List of tablesx
List of contributors xi
Acknowledgementsxvi
Introduction xviii
PART I ON THE NATURE OF THE ECONOMY AND
ECONOMIC SCIENCE
1 Economics, knowledge and reality 3
The economist’s prejudice by Wolfgang Sachs 5
Economic science and political democracy by Alejandro Sanz de Santamaria 10
Abstraction, tendencies and stylized facts by Tony Lawson 21
2 Economy, society and ethics 39
Rationality and the influence of institutions by Geoff Hodgson 40
The I & We paradigm by Amitai Etzioni 48
Socio-economic justice by John Oliver Wilson 54
3 Economy and ecology 60
The economic functions of the environment by Roefie Hueting 61
Economics, equity and sustainable development by David Pearce 69
Coevolution of economy, society and environment by Richard Norgaard 76
4 Living economics in perspective 89
Humanistic economics: history and basic principles by Mark Lutz 90
PART II ON ECONOMIC ACTIVITY, PROGRESS AND
DEVELOPMENT
5 Seeing the whole economy 123
The household in the total economy by Jane Wheelock 124
The modern economy as a service economy: the production of utilization
value by Orio Giarini 136
A four-capital model of wealth creation by Paul Ekins 147
vi Contents
6 Progress and development 156
Bygone splendour by Wolfgang Sachs 156
Poor not different by Wolfgang Sachs 161
A humanistic approach to socio-economic development by Mark Lutz 165
People’s self-development by Anisur Rahman 167
7 Human needs and aspirations 181
The economics of the satisfaction of needs by Mario Kamenetzky 181
Development and human needs by Manfred Max-Neef 197
Sustainable livelihoods: the poor’s reconciliation of environment and
development by Robert Chambers 214
8 Indicators of development 231
Constructing an indicator framework 231
Environmental and resource accounting by Øyvind Lone 239
Growth, environment and national income: theoretical problems and a
practical solution by Roefie Hueting 255
Measuring households’ non-monetary production
by Luisella Goldschmidt-Clermont 265
Social indicators for real-life economics by Ian Miles 283
Development: evaluation and decision-making by Peter Söderbaum 300
PART III ON THE MECHANISMS OF ECONOMIC POLICY
9 Markets, ethics and competition 315
Competitive systems: a sociological view by Mitchel Abolafia and
Nicole Biggart 315
Towards a progressive market by Paul Ekins 322
10 Three levels of state action 328
The evolution of development thought: facing up to global interdependence
by Paul Streeten 328
The enabling (and disabling) state by Geoff Mulgan and Helen Wilkinson 340
Popular planning in practice by Maureen Mackintosh and
Hilary Wainwright 358
11 Direct provision in the social economy 370
A new direction for community development in the United States
by Severyn Bruyn 372
Beyond welfare by Peter Beresford and Suzy Croft 383
Changing neighbourhoods by Tony Gibson 388
People’s participation: reconciling growth with equity by Ponna Wignaraja 392
12 Achieving sustainability 402
The practical implications of sustainable development by David Pearce 403
Sustainability first by Paul Ekins 412
Contents vii
Conclusion 423
Appendix: contacts and addresses 426
Bibliography 431
Index 451
Figures
2.1 Socio-economic justice and associated outputs 57
3.1 Supply and demand curves for environmental functions 68
3.2 Capital and the economic process 71
3.3 Capital complementarity and sustainability 75
3.4 The dominant (or Newtonian) world-view 78
3.5 The coevolution of knowledge, values, social organization, 80
technology and the ecosystem
3.6 Four-dimensional human space: Swadhyaya (S) and 87
Chipko (C)
3.7 Four-dimensional human space: attitudes to environment 87
and resources
4.1 The historical flow of humanistic economics 103
4.2 Two types of normative economics: neoclassical versus 110
humanistic
4.3 Schools of economic thought 119
5.1 A typology of productive economic institutions 127
5.2 Selected characteristics of economic sectors 131
5.3 The role of services in the economy 138
5.4 The real final outcome of the production process 142
5.5 The creation of wealth and utility 148
5.6 The environment–economy interaction (excluding built 153
environment)
7.1 Set of needs 184
7.2 Maslow’s hierarchy of needs (values) 194
7.3 Schematic illustration of Doyal and Gough’s theory of 195
human needs
7.4 Four modes of thinking compared 220
7.5 Applying sustainable livelihood thinking 222
7.6 Disciplines, departments and professional gaps 224
8.1 Alternative measures of economic welfare 233
8.2 Translation of costs in physical units into costs in 262
monetary units
Figures ix
8.3 Road planning 308
11.1 The role of the community development corporation (CDC) 379
12.1 A pay-off matrix for approaches to environmental uncertainty 406
12.2 The accumulation of capital funds from UK North Sea oil 416
according to El Serafy’s formula
12.3 Linear economy model 416
12.4 Circular economy model 417