1.

0 Introduction

1.0.1 Why sustainable economics?

This is to answer two questions: first, why is it necessary when economic theory assumes
sustainability in its approach to efficiency and secondly is it any different from a normal
approach.to economics.

The need to approach economics from a sustainable perspective grew out of approaching it
from a global perspective. The globalised economy that exists today needs a global
perspective to understand local markets; the price of petrol, food, transport and clothes on
the local or individual level can only really be understood from a global perspective. The
unsustainable environmental problems that globalisation has brought with it, deforestation,
over-fishing, carbon emissions and plastic waste etc, are global in either their consequences
or by their nature, if not both, and reflect the need for a holistic approach as a solution.

Economics sees these environmental problems of sustainability as a part of

micro-economics; the failure of a single market to operate efficiently. The problem with this
approach is that it is difficult to define which market has failed: in the case of plastic waste
whether it is the oil producers (the raw material of plastic), refiners (that create base plastic
ready for production), producers (of plastic wrapping, cups, bags, packaging etc.), retailers
(that sell goods of plastic) with end consumers (that buy the goods). A holistic sustainable
perspective tries to solve the problem by looking at the whole process rather than that of a
single market and uses multiple different policies to correct failure in multiple different, but
inter-connected, markets. This answers both questions; how it differs from the regular
approach and why it is necessary.

The unsustainable nature of economics today is not a single or multiple market failure but a
failure on a global macro-economic system. Carbon emissions are a result of an entire
production system that relies on fossil fuels. If a solution is not found, global production will
contract, not for a year or so as during recessions today, but continue to contract for
decades reducing global population (as current levels of agricultural production will not
continue) and the ability to produce many goods (as global supply chains collapse).
Everybody will become significantly worse off. The argument that the market will find a
solution if things go seriously wrong ignores the fact that it is taking decades for things to
start going wrong and it will take decades to adjust back again even if the market adopts
solutions. Everybody will be much worse off than if these solutions are adopted in the near
future before things really start to go wrong.

The division between natural and social science all but disappears when economics is
studied from a sustainable perspective. The society and natural environment, in which we
exist, are interdependent and one can’t be studied separately from the other. Exploitation of
our natural environment by humans is unsustainable at the current level; future generations
will be worse off if we continue as we currently function.