THE GOD WITH THE INVISIBLE HAND
Neoclassical Economics and
One of the largest and most important questions facing the governments of the
industrial countries is that the economics profession—I choose my words with
care—is intellectually bankrupt. It might as well not exist.
— JOHN KENNETH GALBRAITH
The causes of the crisis in the global environment may be staggeringly complex, but the most effective way to deal with it in economic terms seems rather obvious. We must use scientifically valid measures of the damage done to the global environment by large-scale economic activi- ties as a basis for assessing the costs of this damage, and we must develop means and methods for including these costs in the economic system. If this could be accomplished within the framework of mainstream econom- ics, we could begin rather quickly to posit viable economic solutions to en- vironmental problems based on assumptions about the character of eco- nomic reality that are well known and almost universally accepted. The business of managing natural resources and developing more environ- mentally friendly technologies would be “business as usual,” and global economic planners and environmental scientists could work together in harmony to fashion a global economic order that is both prosperous and secure. Unfortunately, this cannot and will not happen because meta- physically based assumptions about part-whole relationships in the neo- classical economic paradigm are categorically different from and entirely incompatible with the actual dynamics of part-whole relationships in the system of life.
These metaphysical assumptions became embedded in neoclassical eco- nomics as a result of the failed attempt by its creators to transform the