Ecological Economics in relation to a digital world

Please cite the paper as:
Peter Söderbaum, (2019), Ecological Economics in relation to a digital world, World Economics Association (WEA) Conferences, No. 1 2019, Going Digital, 15th November to 16th December, 2019

Abstract

The digital revolution has taken place in a social and institutional context dominated by specific conceptual and institutional perspectives. Neoclassical economics and neoliberalism has made monetary profits (in unlimited amounts) and economic growth in GDP-terms legitimate. Today we understand increasingly that sustainable development with the 17 UN sustainable development goals is a partly different idea of progress and ideological orientation.

At issue is now if ecological economics as a different conceptual framework is helpful in understanding and handling this new situation. In the paper elements of ecological economics – including a different definition of economics – are presented. Economics is defined as “multidimensional management of limited resources in a democratic society”. It is argued that value neutrality is an illusion and that values have to be dealt with openly.

The conceptual framework proposed can be applied to any industry, be it the oil industry or the digital industry. It is clear however that the latter industry raises issues of a partly different kind, such as surveillance, privacy and security. Pluralism in economics education and a reconsideration of laws regulating limited reliability corporations are among recommendations. The power positions of globally operating companies deserve increased attention.

5 comments

  • Dr.Mahesh Kumar Jha says:

    The digital revolution in the world economy is the most recent part for sustainable development.The concept of ecological Economics is a new trend for it.

    • Peter Söderbaum says:

      Comment to Mahesh Kumar: I would say that the digital revolution need to be examined in relation to sustainable development. There are (hopefully) positive impacts but also negative ones. Ecological economics is one among heterodox schools of thought in economics. It suggests a different perspective in terms of conceptual framework and ideological orientation from that of mainstream neoclassical economics. Ecological economics claims relevance for the digital industry but also for other industries, such as the oil industry.

  • Grazia Ietto-Gillies says:

    This is a very interesting paper. It opens up a variety of areas in which the links between digitalization and ecology can be further explored. The paper makes suggestions in the last section. I here want to add a couple of further suggestions.
    1. In Section 4 Peter discusses the dominance of the neoclassical paradigm. I would like to add that such dominance is strengthened by the various research assessment systems now widespread in many countries. In most cases they are based on a mixture of metrics and peer review. The metrics rely on digitalization therefore we could note that digitalization has become part and parcel of the assessment exercises. But the assessment processes and results are a key player in the perpetuation of the neoclassical dominance in economics. Brownie points are acquired for publication into highly-rated journals; they acquire their rating by the rating, reputation and citation of the authors that publish with them. There is circularity in the process but there is also a bias as papers which express views linked to minority paradigms are more difficult to break into highly-ranked journals.
    2. Digitalization is now pervasive and not linked specifically to a particular industry. Can we say that digitalization increases or decreases pollution? There are ecology-friendly elements in the technology: papers can be sent across the world without the use of land, sea or air transport; consumers do not have to travel to do their shopping. Yes, it all sound great till we look closer. Consumers do not travel but the material objects they acquire are transported to them. And here comes a key element in the whole discussion.
    3. When analysing innovation we are greatly tempted to consider technological innovation. However, technological innovation usually goes hand-in-hand with organizational innovation and change. Digitalization has led to the development of a variety of companies whose business it is to provide the consumer with a service by developing networks of transportation either for the users themselves – as in the case of Uber – or for the products they buy – as in the case of Amazon and many retailers. From my front room window I can see daily Amazon or John Lewis or Ocado vans passing by in my street. Every time I see one I cannot help thinking how more efficient it would be at the macro and ecological level if the transport for all their product were organized differently. Specifically, on the basis of one van delivering them all: yes, the postal service system in which the network is organized on the basis of geographical areas rather than on the basis of the retailing company. This is where the business interest may stand in the way of efficient novel organization of the distribution of products. Digitalization could help organize it if only the political will could be harnessed. Uber is a polluting transport system which may prevent the development of public transport through its cheap exploitative prices.
    Best wishes,
    Grazia

    • Peter Söderbaum says:

      All the comments by Grazia are relevant and interesting: “Digitalization has become part and parcel of assessment exercises”. It is certainly convenient for established neoclassical professors to assess candidates for a professorship by counting the number of publications in so called highly-rated (neoclassical) journals. I just want to make it clear that such a system – based on a monopoly for neoclassical theory – cannot be accepted in a democratic society. Those highly-rated neoclassical journals are not exclusively scientific journals. Connected with neoclassical theory is an ideological orientation which is close to neoliberalism, i.e.a kind of market fundamentalism. Assessments based on publication in a number of neoclassical journals will therefore systematically encourage candidates who are imitators of the neoclassical conceptual framework and ideology.
      It has become clear for an increasing number of citizens and professionals that the market and economic growth ideology of neoclassical theory is not enough for us to get closer to sustainable development, handle climate change and other sustainability challenges. The monopoly of neoclassical theory rather appears as a barrier to sustainable development.To make economics a relevant discipline, it has to be opened for competing paradigms and ideological orientations.
      Hopefully, those digital assessment techniques are not used when candidates for the Bank of Sweden Prize in Economics in Memory of Alfred Nobel are examined. Again the limitation to neoclassical theory is a limitation not only in scientific but also in ideological terms and thereby a threat to democracy. Economics has to reflect more than one ideological orientation in society.

  • Bin Li says:

    The comment focuses on pluralism. The economic goals vary, and economic means or measures vary. This is to say, price or money, as quantative variables, is not enough to lead economics. Why? Because of the Bounded Rationality, and hence a variable cannot be “entirely” transformed into another. But, do things always remain? No, they will change, although transformed less earlier, more tomorrow probably. So, pluralism should not be treated absolutely and metaphysically, but dynamically and scientifically. How to do? An accurate theory describing mindful evolution is thus needed, i.e. the Algorithm Framework Theory. Thanks.

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