Understanding Sustainability Economics. The Examples of Health and Environment

When mainstream neoclassical economics is presented in textbooks for students, the values and ideological orientation of the perspective is not discussed. In this essay it is argued that neoclassical economics is specific not only in conceptual but also in ideological terms. These value or ideological issues need to be discussed openly in a democratic society. They become accentuated in relation to present attempts to get closer to sustainable development. Economics is here understood in political terms, making democracy and ideology essential elements of a conceptual framework. Individuals are understood as ‘political economic persons’ guided by their ideological orientation and organizations as ‘political economic organizations’ guided by their mission. Even markets are interpreted in political terms as relationships and networks. The ‘trade-off’ principle in neoclassical theory and method is criticized and a careful consideration of non-monetary impacts, for example on health and environment, recommended. Inertia in its different forms (commitments, path-dependence, irreversibility) should be illuminated. Among heterodox schools of thought in economics (e.g., Beker 2020) a kind of ‘sustainability economics’ or ‘ecological economics’ is proposed as part of a pluralist understanding of economics. It is argued that the theoretical and practical tools offered by neoclassical economics are not sufficient and indeed may be misleading in relation to the challenge of sustainable development. The kind of ecological economics advocated can be named an “institutional ecological economics” in the spirit of Gunnar Myrdal (1972) and William Kapp (1971). The naming suggests that not only minor but also major institutional change can be considered. Two examples of needed institutional change are discussed, the legal framework of business companies and the so called “Nobel Prize in Economics”.