Ecological Economics 54 (2005) 370 – 381 www.elsevier.com/locate/ecolecon
METHODS
Value from a complex dynamic system’s perspective Andri W. Stahel* Ca´tedra UNESCO en Tecnologı´a, Desarrollo Sostenible, Desequilibrios y Cambio Global de la UPC (UNESCO Chair in Technology, Sustainable Development, Imbalances and Global Change of the Polytechnic University of Catalonia), C/Colom, 1, 08222-Terrassa, Spain Received 6 October 2003; received in revised form 18 March 2005; accepted 31 March 2005 Available online 23 May 2005
Abstract This paper examines critically the concept of value which emerged within modern economic theory and which is still the main basis for value theories in environmental and most strands of ecological economics. Building upon modern complex dynamic systems theory, the author highlights the relational and emergent characteristics of value—stressing that the economic and ecological value of a given good has to be assessed within its particular spatiotemporal context. This analysis presents some of the inherent weaknesses of conventional value theories and the problems which arise from free-market based regulation of economic processes. These problems, it is suggested, may be overcome by what is termed post-normal value theory introduced at the end of the article. D 2005 Elsevier B.V. All rights reserved. Keywords: Value theory; Ecological value; Complex systems theory; Post-normal science; Critical natural capital
1. Introduction—wealth and value The point of departure and the essence of modern economics was outlined by Adam Smith’s seminal work An Inquiry into the Nature and Causes of the Wealth of Nations. Economics was thereby defined as the study of both the origins of human wealth and the way this wealth was socially distributed—hence Political Economy. Of course, this should be still the main focus of any economic inquiry, since what we
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wish to obtain from the economic system is not an increase in economic activity per se but the means to achieve an objective external to it: the (re)production of human existence and welfare. It is in this sense too that we can understand Georgescu-Roegen’s proposition that there is an beconomy of life at all levelsQ (Georgescu-Roegen, 1971, p. 4). All living systems tap energy and materials from their environment in order to maintain their autopoiesis, their self-(re)creation process. For us humans, the means for sustaining and reproducing our life assume not only a biophysical dimension, but also a self-reflective cultural dimension. Thus socioeconomic processes, as an extension of
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biological life processes, remain means to an end: the culturally defined and physically realized (re)creation of human welfare. Defining use-value as bthe utility of a particular objectQ, Smith equated wealth with the access to usevalues, since bevery man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniencies, and amusements of human lifeQ (Smith, 1961, p. 34). Along the same lines, Marx (and all the authors of Classical Political Economy) started from the acknowledgment that buse-values (. . .) constitute the substance of all wealth, whatever may be the social form of that wealthQ (Marx, 1967, p. 35). Nevertheless, although recognizing use-values as the very essence of wealth and a prerequisite for any exchange-values, the emerging discipline of economics would leave considerations about use-value behind, and come to focus solely on the basis and origins of exchange-value. Taking use-value for granted, the whole academic field of economics would be erected around the discussion about the mechanisms of value creation (equated, significantly, to exchange-value tout court) and later, with the neoclassic economics, the mechanisms of price determination and the functioning of a market economy. Everything else (including the physical and cultural dimensions of use-values, and thus the very essence of wealth) was seen as something external to the greatly narrowed field of economic inquiry. It was only recently, with the emerging field of ecological economics and its critique that increased (re)production of exchange-values does not necessarily mean an equal increase in human wealth (in many cases even the inverse correlation holds), that economics can once again start looking at the economic process as a means to an end: a life-supporting, usevalues generating activity. This emerging field has shown that along with traditional production factors as labour and human made capital, there is a third factor, namely natural capital, which refers to the various environmental systems which (re)produce manifold use-values independently of human economic activity (Costanza and Daly, 1992; De Groot, 1992). These use-values, known as ecosystem services and other life-supporting functions, are, moreover, a fundamental part of the economic process. And, as the argument follows, exchange-value often emerges as a
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capitalization of previously socially or ecologically created use-values which, having been generated outside the market, had no previous monetary value. They were, thus, simply taken as a dfree giftT by the economic agents and considered as such by the economists. Notwithstanding, human economic activity often represents only the last and minor part of the economic (re)production process as a whole, the one which gives the product its commodity form (O’Connor, 1988, 1992; Stahel, 1999). Taking use-value for granted, that is not directly integrating it into economics as a discipline, had important effects on the way economics would be established. First of all, it made it possible to disregard the material, concrete basis of the economic process, and to focus on the more abstract and quantifiable aspects of exchange-value creation and market price formation. It allowed, as Georgescu-Roegen rightly saw, the constitution of economics according to the paradigm of mechanical physics, disregarding other fields like thermodynamics and biology which should have been bthe true Mecca of economistsQ (Georgescu-Roegen, 1971, p. 11). Moreover, it allowed the elision of another central issue for the legitimization of modern capitalist economy and the modernization process as a whole, namely the question of whether increasing economic growth (or, more precisely, exchange-value creation, which is what, in fact, we measure with our modern National Account system) can be equated with a higher living standard. By ignoring the more complex (and, as we will see, dfuzzyT) question about the source of use-value, modern economics was able to ignore the psychological, social, cultural and ecological basis of wealth. Implicitly, it assumed a direct or at least a linear correlation between exchange-value and wealth, which is most striking since the famous water and diamond paradox discussed by Smith and Ricardo seemed to negate this assumption. In fact, Smith seemed even to imply the opposite correlation when he stated that bthings that have a high use-value generally have little or no exchange-value, while things with a high exchange-value have often little or no use-value at all. Nothing is more useful than water. Nevertheless there is little you can buy or receive for it. By the contrary, diamonds have little use-value and, notwithstanding, we can, usually, receive a lot of goods for themQ (Smith, 1961, p. 25). If
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he had expanded this example to the fresh air we breath, our climatic balance and our woods, and, moreover, if he could see those factors not as a dfree giftT of nature, but as the product of the functioning of different ecosystems (as were his famous deer and otters, depicted only from the perspective of their exchange-value and not of their use-value), he could probably have established ecological economics right from the start. It was only in the field of public goods and services that traditional economics recognized that in some cases use-values were not reflected in exchangevalues, thus requiring the intervention of the public sector since private agents (focusing on price indicators) would be inefficient in providing them. More recently, ecological economics enlarged the scope of possible market inefficiencies, showing that not only traditional public goods have use-values which are not reflected by their exchange-value, but that there is a huge area of ecological goods and services whose usevalues are not reflected in their market prices, generating all kinds of market dinefficienciesT if the market is left to its own devices. Although an important amendment to traditional economic theory, this recognition of a gap between use and exchange-value did not change the basic assumption underlying the economic value theory, namely that a single value of any good may be assessed in a linear and unidirectional way, starting from the definition of its production function and/or general demand conditions. As I will try to show in this paper, an in-depth look at the very essence of economic value (both in its use and exchange-value aspects) from a dynamic system’s perspective leads us to question this assumption and to rethink the value notion altogether. It leads us to dcontextualizeT value instead of simply trying to complement traditional value theory by adding the social and ecological cost to a given fixed amount.
2. Value from a system perspective: the three levels of thermodynamics As Prigogine showed, modern thermodynamics was born very classical, within the paradigm of mechanical physics of linearity, equilibrium and an external, abstract concept of time. This, as he
showed, did not allow blinear thermodynamics to bypass the paradox of the opposition between Darwin and Carnot, between the appearances of organized natural forms and the physical tendency towards disorganizationQ (Prigogine and Stengers, 1996, pp. 211–212). Ecological economists often overlook the fact that Georgescu-Roegen’s path-breaking analyses were based on classic thermodynamics (mainly Boltzmann’s statistical approach)–which Prigogine termed the dsecond step of thermodynamicsT–and not on the non-linear, far from equilibrium approach developed by Prigogine and others as early as the 1950s in order to understand the (re)creation of ordered dynamic structures. By doing so, he introduced, the Darwin vs. Carnot paradox into ecological economics in form of the contradiction between economic processes and the second principle of classical thermodynamics, the bentropy lawQ. This contradiction was stated very graphically when he said that dbigger and betterT washing machines, automobiles and superjets must lead to dbigger and betterT pollutionQ (Georgescu-Roegen, 1971, p. 19). Thus, right from the start of ecological economics, a seemingly unsolvable contradiction between the economic sub-system and the biosphere as a whole was established. The opposition between expanding GNPs and the dlimits to growthT. . . This contradiction, which is the logical result of considering the capitalist economic system (and its inherent expansionary drive) from the perspective of classical thermodynamics, obscures the creative side of every economic activity, namely the creation of organized structures (be they material or immaterial) or, to come back to our nomenclature, the generation of use-values characterized by their low-entropy, high-informational content. If, as Schumpeter had already argued, economic development has to be seen as a dcreative-destructionT process (Schumpeter, 1934), then standard economics only looked at the creative side (exchange-value creation), while the classical formulation of the entropy law led ecological economists to focus on the destructive side of it. Here again, Georgescu-Roegen put this very graphically when he stated that beven if only the physical facet of the economic process is taken into consideration, this process is not circular but unidirectional. As far as this facet alone is concerned, the
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economic process consists of a continuous transformation of low entropy into high entropy, that is, into irrevocable waste or, with a topical term, into pollutionQ (Georgescu-Roegen, 1971, p. 281). However, if we consider the economic process, as Roegen himself proposed, as an extension of the biological life-sustaining process, we will see that its primary aim is to generate low and not high entropy. Therefore, in order to understand this process as a whole, we have to study the generation of high entropy external to the economic process, as well as the generation of low entropy, of ordered structures, within it. As an extension of the process of cosmological and biological evolution, the driving force of any economic process (although not necessarily its outcome) is to generate ordered, low entropy structures such as houses, bread and computers. In fact, if we take a long-term, cosmological perspective, then contrary to the accepted wisdom of classical thermodynamics, which pointed to a linear and irreversible future dthermal deathT, the general evolution of our universe as a whole and of our biosphere in particular, seems to be characterized by an increasing complexity and diversity of life-forms (Reeves, 1986; Kauffman, 1996). From this perspective, bthe isothermy (thermal death) of 19th century physics lies not in the future, but in the far pastQ (Reeves, 1986, p. 85). In order to understand this continuous (re)creation of ordered structures, Prigogine’s dthird level of thermodynamicsT (non-linear, far from equilibrium thermodynamics) can be very useful, overcoming this apparent contradiction between the creative and destructive side of every dynamic system in general, and of economic activity in particular. The term ddissipative structuresT used by Prigogine to characterize these systems, already points to this double character of the development process described by Schumpeter. As he noted, the term ddissipative structureT btranslates the association between the idea of order and waste. It was carefully chosen to express the fundamental new insight, namely that the dissipation of energy and matter, usually associated with the idea of efficiency loss and movement towards disorder-becomes, far from equilibrium, a source of order. Dissipation is at the basis of what we could call new states of matterQ (Prigogine and Stengers, 1996, pp. 215–216).
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3. From linear to relational value This approach proposed by the far from equilibrium thermodynamics may help us to understand the economic process as a whole, as a dcreativedestructionT process. Any economic system represents what Funtowicz and Ravetz (1994a, p. 569) termed an demergent complex systemT and brequires dialectical thinking, with dcontradictionT as a key conceptQ. While most modern science has been constructed on the notion of isolated, self-contained and reducible objects, systems’ thinking focuses on the idea of organized wholes where, more than the part by itself, it is the way different parts interrelate that is crucial to understanding its properties. In this sense, systems theory leads us to reconsider what was once seen as the defining properties of an object, as emergent properties of systems (Morin, 1977). This need to re-conceptualise the way we conceive reality has not yet reached economics or even mainstream ecological economics. The idea of value within economics has been built on the idea of objects, of an attribute of this or that good or service. In this view, a careful definition of its underlying production function would allow us to determinate its cost value at any given level and, by adding its hidden environmental and social costs, we could determinate its dreal ecological valueT. Nevertheless, as we will see, value (whether we look at it from the perspective of use-or exchange-value) is an emergent, context dependent relational property. In the case of use-value this is quite self-evident since, as already Marx pointed-out, bthe utility of a thing makes it an use-value. But this utility is not a thing of air. (. . .) Every useful thing (. . .) is an assemblage of many properties, and may, therefore, be of use in various ways. (. . .) Use-values become a reality only by use or consumptionQ (Marx, 1967, pp. 35, 36 and 35, respectively). Use-value is realized only in the relational act of consumption, as a subset of all different potential utilities of a given good or service, This process is clearly context dependent: it will depend on the material (or informational) content of the particular commodity, but also on the environmental, socio-cultural and individual (subjective) context in which it is consumed. Different social, cultural and environmental contexts can radically alter the usevalue of given goods. Water may irrigate deserts or
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flood towns, and Smith’s water/diamond paradox could become even more dramatic in the case of a miner who finds himself lost in the desert, with his pocket full of diamonds and his canteen empty. Thereby, if content only defines potential uses and context determinates how this use-value realizes itself, it makes no sense to talk about use-values in an abstract and static way. At the demand side, human needs and preferences are not fixed, but culturally and individually changing over time and space. In this sense, if the goal of economics is to determinate the dnature and causes of wealthT, the way necessities are culturally and historically defined by different societies and different environmental contexts should be a primary issue for any economic inquiry. Our wealth and our poverties do not exist in the abstract, but emerge from the relational qualities of the environment we live in and the cultural and personal values that confer meaning to our existence (Stahel, 2002). This need to take a close lock at dhuman needsT is particularly acute if we are looking for different development strategies in order to dmeet the needs of the present without compromising the ability of future generations to meet their own needsT (Our Common Future, 1987, p. 43). If we fail to take into account different historical and spatial contexts, including and especially within the ecological economics field, discussions around the issues of sustainable development will remain shallow and even misleading since they fail to answer key questions. If poverty and the satisfaction of human needs are the problem to be solved, what are they in the first place? Only once we start answering those kinds of questions can we look for ways of optimizing the means that is looking at the socially, culturally and ecologically optimal ways to generate different usevalues—that is, human wealth. We can find the same kind of context-dependency if we look at the other side of the coin of economic value, namely exchange-value. Traditional economic thinking, as well as cost analysis in conventional environmental economics try to determinate value starting from a given production function and looking at its intersection with a demand function in order to establish the market price of a given commodity. Within the classical labour theory of value, this was achieved starting from a linear production function and an external, quantitative time concept, whereby
the dsocially needed labourT to produce a given commodity was translated into a quantifiable exchangevalue of that commodity. The same assumptions of linear causality allowed neoclassic economists to build-up their production functions and demand curves whose market interaction lead to the definition of the price/value of different commodities. Finally, present day cost analysis methodologies only try to complement this framework, expanding the production function in order to include hidden social and ecological costs which were not accurately reflected by standard economics. Already within the classical framework it was acknowledged that different subsistence levels (seen as historically determined and thus varying over time according to the relative political force of the different classes) would lead to different distributions of the product between wages, benefits and rent. These different levels thus lead to different relative exchangevalues of the commodities depending on the degree of labour-intensiveness of their production. In fact, this variability of the relative exchange-value of different commodities was the basis of Sraffa’s still unanswered critique of the very notion of neoclassical capital, depicted as a fixed, a priori explanatory variable instead of an ever-changing variable, a function of the social patterns of production and distribution (Sraffa, 1972). Moreover, for the classical thinkers, natural rent was clearly a property of the system: it emerges only in the context of different natural productive forces which may be appropriated and controlled by private entrepreneurs. As Ricardo–maybe the best exponent of this view–stated, bif all land had the same properties, if it were unlimited in quantity, and uniform in quality, no charge could be made for its use, unless where it possessed peculiar advantages of situation. It is only (. . .) because in the progress of population, land of an inferior quality, or less advantageously situated, is called into cultivation, that rent is ever paid for the use of itQ (Ricardo, 1970, p. 70). Rent depends, thus, on scarcity and differential productive powers of different natural capitals. Moreover, it is only in the context of private property and monopoly position in the market that differentiated use-values generated by these dnatural productive powersT can be translated into exchange-values and thus generate economic rent.
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The way this dynamic and systemic character of exchange-value has been avoided was to consider all production factors as fixed, particularly with respect to natural capital and services. Thus, a given social and environmental context was assumed (thereby a given subsistence/wage level and a given distribution between wages, benefits and rents). It was only for the distributional conflicts between labour and capital that classical economics recognized their dpoliticalT character, showing how different policies and relative powers of contradictory interests affect the exchange-value of different commodities. This becomes very clear when we look at Ricardo’s famous polemic about England’s trade policy and the way taxes on imported corn affected the earnings and interests not only of the different classes, but of the different members of each class, since in the medium and long-term they affected the relative prices of all commodities of the economy and, thereby, the distribution of the social product (Ricardo, 1815). This tendency to take dynamic factors as fixed was brought to its extreme by the famous neoclassical ceteris paribus condition, allowing standard economics to study the exchange-value (equated to prices) of different commodities in a linear, de-contextualized form. By taking for granted the cultural context (tastes, the definitions of needs, etc.), the political and distributional context (available dmonetary budgetT, capital, etc.), technological context (labour productivity in the different sectors), institutional context (taxes, degree of market freedom, wage agreements, etc.) and the environmental context (in the form of available natural capital and services, as well as environmental factors affecting the different bconsumer’s preference curvesQ) , neoclassic economics is able to establish the different supply and demand curves and thereby the prices/values of different commodities. However, all those contexts change continuously, both in space and in time. They cannot be taken as given. After all, we’re speaking about an economic process, which happens in different places (with their different cultural, political, distributional and environmental context) and over time. It is a constituent part of a historical process which continuously changes culture, society, politics, technology and our physical environment. Thereby, we have to think about value dynamically, as a changing emergent property of dynamic systems. And, as an emergent property, it
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cannot be reduced to its constituent parts through linear production and consumption functions. As Morin put it, bemergence is a novel quality with respect to the constituent parts of a system. It has, thus, the virtue of a happening, which occurs in a discontinuous way once the system is created. Moreover, it has the characteristic of being irreducible: it is not a quality which can be decomposed, nor can it be inferred from its previous elements. (. . .) These emergent properties (. . .) imbue the whole as a whole, while they retroact over the parts as suchQ (Morin, 1977, pp. 108 and 107).
4. From static to dynamic value We can see that Newton’s classical laws of motion only apply to closed systems, to objects that passively follow inertial movements until they are disturbed by an outside force acting upon them. These systems bcannot nourish themselves with energy and restructuring organisation from the outside, which is the reason why they can only evolve towards higher disorganisationQ (Morin, 1977, p. 122). Only this kind of system follows, inexorably, Boltzmann’s probabilistic tendency towards a higher entropy level. However, most known systems, including our universe as a whole, are of a dynamic nature: they continuously (re)create ordered structures through the flux of matter/energy/information that crosses them. They do not follow inertial trajectories along an external, linear time-arrow, but are marked by an internal, irreversible time, following the ramifications of dbifurcative pathsT (Prigogine and Stengers, 1996). While stones, minerals and petrol represent passive organisations, subjected to classical thermodynamics, within the context of our Earth’s dynamic geo-biophysiology they have been continuously (re)produced towards lower and not higher entropy states. Our geo-biospherical history, at least until we humans passed through our Neolithic revolutions and our increasing use of available biochemical energy sources, has been one of an improvement in available energy sources, of an increasing negentropy, and not of a march towards an irreversible thermal death. Georgescu-Roegen, as an exponent of classical thermodynamics, probably would object that the
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only way a system may increase its internal order is by generating disorder without. This is quiet true. But the important point is that our economic system and the biosphere in which it develops are dynamic, open systems in the context of an evolving universe marked, as we saw, by an increase of its overall negentropy. Although the emergence of the classic formulation of the entropy law is understandable in the 19th century context–in which the ancient social and ecological order was being destroyed, matter and energy cycles were being replaced by linear fluxes of increasing raw-material consumption and waste disposal by the emerging high-throughput capitalist economy–this paradigm does not shed light on how this same new order was being created. Social and ecological systems, as well as our human economy, are of a dynamic nature. They cannot, therefore, be studied adequately from the perspective of classic equilibrium thermodynamics, much less within the paradigm of classical physics. For economics, as for other sciences concerned with the (re)organization of dynamic systems, we have to replace the equilibrium paradigm and static model thinking by complex dynamic systems thinking. Then, from a dialectical perspective, we can try to understand, as Morin put it, the way the bUniverse is not only constructed in spite of the disorder, but through and by disorder tooQ (Morin, 1977, p. 75). Within this continuous dialectics, where history–in the sense of change and irreversibility–become an attribute not only of human, but also ecological and even physical systems, value too assumes an everchanging, dynamic nature. Not only because as a system’s context dependent, emergent properties, changes in the system alter this value, but because at each and every moment the value of every component of a system is given by the way it relates to the others and the way it participates in the dynamic (re)organization process of that system. Within a system’s (re)organization process, there needs to be not only the right elements in the right relation one to the other, but they have to be in the right proportions too. Interrelations and scale, not the object per se, become the key elements of order (Kohr, 1957; Thompson, 1992). We can get an idea of the significance of the problem of scale if we think about dcritical capitalT. There is always a particular level below which the
remaining amount of a given natural capital may be not enough to sustain the eco- or the social system of which it is a part, thereby impairing the (re)production of given natural and social services. Moreover, in the case of dcritical capitalT, the amount of these services which is produced by this capital is critical for the long term sustainability of natural and social systems which depend on them. Thus once the critical point is approached, the social and ecological value of the key elements rises exponentially, approaching infinity at the dpoint of no-returnT in the most extreme cases where the systems’ survival is threatened (See the special issue on this subject in Ecological Economics, in March 2003). In most cases, in fact, the cost of increasing contamination follows not a linear, but an exponential curve. Moreover, within the functioning of chaotic systems and irreversibility, this relationship may not even be continuous, but discontinuous, since bthe same tiny grain of sand may unleash a tiny avalanche or the largest avalanche of the century. Big and little events can be triggered by the same kind of tiny causes. Poised systems need no massive mover to move massivelyQ (Kauffman, 1996, p. 236). Moreover, as Poincare´’s famous studies about resonance showed, this kind of irreversibly bifurcating paths can be found even in a planetary system made up of only three cosmic bodies (Poincare´, 1957). This non-linearity, scale and context dependency of any value is particularly true for what Funtowicz and Ravetz called emergent complex systems, which, as we saw, is the case of the human economic system, which bflourish dat the edge of chaosTQ (Funtowicz and Ravetz, 1994a, p. 578). In this context, not only the modern ideals of perfect foresight and complete control have to be abandoned, but we need to review the very idea of the social and ecological value of a given element per se. It is only within a given context that we may assess the value and importance of any given element of a system. And every element participates in multiple, ever-changing contexts. In this sense, the ecological and social cost of, let us say, one litre of oil, cannot be established as a fixed, immanent value. In some contexts, fossil fuels consumption may contribute to increased negentropy in social and ecological systems, while in other contexts it does the opposite. In some cases it asks for
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subsidies, in other for eco-taxes. The social and ecological value of fuels used by firemen to arrive and combat a forest fire is not equal to its value when used to accelerate the dF-1 circusT. Although selfevident in this ratter crude example, this variability is a common feature which permeates the social, ecological and even economic value of all commodities. Standard economic value-theory and cost evaluation procedures, even if considering the context, aim to arrive at a final, fixed, objective value. This mean value not only does not reflect the different particular cases, but ignores the dynamic changes undergone by the system too.
5. Market regulation and sustainability Of course, not only our economic theory, but our economic practice is based on this abstract value notion. Once offered for sale, a given commodity has the same price for whoever is willing to buy it and whichever context and way this commodity will be used (and thus, the way this particular commodity affects the more general dynamic of the system). And this leads us to the important question whether the free market (even if an ecologically and socially reformed one) is an adequate institutional framework to lead the economic process towards a sustainable path. Within the framework of classical thermodynamics, the analysis of this question generally leads to the idea of limits to growth, the idea that within a constrained biosphere there cannot be an unconstrained economic growth. Although rarely explicitly considered, implicitly the main conclusion here has been that a free-market economy is unsustainable since the market is based on the existence of different competing capitals whose modus operandi is the drive for increasing benefits—that is, a continuous need to expand. It is this in-build expansionary drive, selecting the most profitable capitals and eliminating the stagnant or receding ones, which in the long term may collide with the ecological limits. In this framework, only dfactor-4 or 10T economies (producing higher outputs with less material input) would allow for a sustainable capitalist economy from the material point of view. And this is clearly not what is occurring, given that some central economies which could be ddematerializingT are in fact increasing their
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ecological footprint. They are, thus, dexternalizing their materializationT. If, as we argued above, we want to move a step further in this critique and analyze what happens inside the deconomic black boxT too, classical thermodynamics is not the adequate framework to do so. It gives us no clues about the wealth generated within the economic process and how different economic activities interrelate with the (re)production of the far from equilibrium order of the larger social and ecological environment. And once we consider the economic process as an emergent complex system, generating both negentropy within and entropy without, we discover other limitations of free-market regulation of the economy which may highlight some limitations of traditional economic policies for sustainability as well. First of all, as we argued above, while prices are an attribute of the commodity, the social and ecological value of this commodity is a context dependent, relational property. It is only within this larger framework that the net effect of any particular commodity in terms of social and ecological wealth creation (that is, a far from equilibrium negentropy) can be assessed. If the decisions of the different economic agents are based on prices only (which is the way market regulation process works, through dobjectifying valueT), there is no reason why these decisions should be congruent with sustainability—that is, the (re)production process of the larger whole. As Polanyi already argued more than half a century ago, at least for what he termed dthe false commoditiesT (labour, land and money), market-regulation is incongruent with the larger social and ecological organization logic within which they are actually reproduced (Polanyi, 1944). The dunemployment levelT clearly affects individual life and the whole society, in the same way as the dconsumption rate of natural resourcesT affects ecosystems and our biosphere. Finally, the dmoney supplyT affects the economic activity and thus man and nature. All these elements are not dproducedT according to a linear industrial logic and, thereby, cannot be dconsumedT according to a simple demand vs. supply logic without generating contradiction between the capital accumulation process and the ecological and the socio-cultural dynamics (Stahel, 1999). The market is simply the wrong system level to deal with theses dfalse commoditiesT.
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Prices, as fixed and objectified quantities, are always an average value. This means that they send different signs to different agents. This is clearly seen in the neoclassical idea of consumer and producer surplus: if we take a standard demand and supply curve, the resulting equilibrium market price only reflects the production cost and utility for the marginal (least efficient) producer and consumer, respectively. There are producers willing to supply at lower prices and consumers willing to buy at higher ones. Symmetrically, there are producers and consumers who are, altogether excluded from participating in the ddemocraticT market bidding and offering process, since they are located, for one reason or another, beyond or below (respectively) this equilibrium price. Thus, changing prices do affect differently different deconomic agentsT (according to the price sensibility of their demand and/or supply curves). The net effect of a price change over a system’s dynamic depends thus on the different roles those different actors play in that system. To give an example: imagine the global cost of climatic changes could be evaluated and this total value divided by global fossil fuel consumption. Would the resulting carbon tax increase or decrease the sustainability of our social and ecological systems? How would this tax affect the creation of socioeconomic wealth on a global scale? Would it affect the dF-1 circusT or even reduce fossil fuel consumption by the global upper classes, or would it mainly affect those for whom the dfuel budgetT already represents an important burden, and thereby increasing the socioeconomic distance between rich and poor, and adding further social stress to the system? Who would be most affected by the resulting inflationary pressures and how would these affect the traditional use of carbon and firewood, and thus the desertification process, which in turn generates further economic pressures, in a positive feedback process leading to an unsustainable socio-ecological trend? Clearly, a carbon-tax would affect differently different social actors, leading to a net result-in terms of the overall development process in its interdependent socioeconomic, political and environmental dimensions—which is nor linear, nor straightforward. We can see these same difficulties and complexities if we go back to our example of the social and ecological value of ecosystem services of mangroves. Besides the technical difficulties to consider all the
relevant elements and that, as we argued before, their value is not unitary in time nor in space, let us imagine that a good and robust (that is, relatively unchanging) world-average value could be estimated. How to translate this estimate into sensitive policy options aimed to increase our global sustainability? Would an eco-tax on shrimp produced by shrimp-farms located on former mangroves do? Within the context of our free-market regulation process, this is not at all clear. The effect on the demand side depends clearly on the overall demand curve of those who consume shrimp, mostly third-world upper-class and rich developed countries’ population. And for them, the price-effect could be not enough to stop or even decrease the expansion of shrimp-farms at a global scale. Moreover, it would send a stimulus for more over-fishing of wild shrimp stocks, generating a pricefexploitation spiral in a kind of Jevons’ paradox (Jevons, 1965/1865). In this way, higher consumer prices mean a dhigher economic efficiencyT of the capitals devoted to shrimp-fishing relative to capitals devoted to other fishing activities, which would lead to further investments on shrimp fishing, depleting even more the existing wild stocks. Thereby, we clearly need to consider the value and relevance of the different elements not on the objectified market level, but within the higher context of the system (re)production process. General prices changes (due to taxes, quotas, scarcities, etc.) will affect different systems differently, sometimes in undesired negative ways. It is only in a case-by-case framework that the best policy for each case can be decided. This calls for a social control of each economic activity, (re)directing it into ways that increase the overall system stability and ability to generate a negentropic far from equilibrium order, that is to say: wealth.
6. Recovering political economy: towards a post-normal value theory Modern economics was named at its birth dPolitical EconomyT. This term alludes to the different competing interests that manifest themselves in the economic process—particularly with respect to the problem of the social distribution of the created economic wealth. Economics was thus seen as a matter of political
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power relations too. Moreover, the term was an acknowledgment of an organization of the economic (and social) life not yet dominated by the working of the market mechanism, a social system in which the working of the economic subsystem still was controlled by the larger political options and decisions of the society (thus reflecting its cultural and historical idiosyncrasies). This was true for all non-modern economies, as well as for the mercantilist system with its strong political control of the economic life. Economy, in fact, could not be dissociated from politics, and the creation of a dfree-marketT was a matter of political (and in many cases military) dispute between different interests. There was not yet the idea that the economy could work as a self-organized and self-referential process, free from any kind of external control and intromission. If not explicitly, at least implicitly, the current social and ecological crisis, as well as the discussion around the need to dinternalizeT social and ecological costs, put on the global agenda again the need to dpoliticizeT economics and to politically control or redirect the economic process. Moreover, the acknowledgement that there are not only economic wealth distribution issues, but also social and ecological cost and risk issues, add a further political dimension to the dpolitical economyT (Martinez-Alier, 2002). Thereby, economics, as such, can no longer be thought as a neutral, objective science, but has to be seen as a science which has to deal with these conflicting interests and contexts. Behind price-formation and the more or less free market, as well as behind the different evaluation procedures of the dreal valueT of a given good, we can always find political distribution conflicts. Different prices lead to different responses by the different deconomic agentsT and thus, to different social and environmental wealth production and distribution patterns. At the same time, different perspectives lead to different, legitimate value claims with respect to any single element. Economic evaluation procedures are, thus, not only a technical matter but, and most of all, a political question in the sense that any single value assessment privileges one perspective in spite of others. If, as in the case of our modern economic system, price formation is done within the free-market regulation process, serious system malfunctions arise. This is
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due, as argued above, to the self-referential information on which the organization of the economic systemTs dynamic is based—that is, internally generated price signs. These signs are blind to the needs and requirements of the larger social and ecological systems on which, nevertheless, the economic subsystem depends. As Funtowicz and Ravetz put it, bno single perspective from within a subsystem of fewer dimensions can fully encompass the reality of the whole systemQ (Funtowicz and Ravetz, 1994a, p. 575). Nonetheless, it is exactly this magic that the dinvisible handT is supposed to perform, generating a dcollective goodT by means of the competing interest of the individuals who base their decisions solely on market-prices and their own selfinterest.
7. Conclusions If we are willing to take seriously the critique of conventional value theories and evaluation procedures which emerges from dynamic complex systems theory, we have to consider the need to establish dynamic, contextualized evaluation procedures in order to avoid a clear category error—that of considering value an immanent property of the object and not an emergent, relational property of each element within different systems’ dialectics. Following the insights of Funtowicz and Ravetz, we could term this proposed approach post-normal value theory. The terms post-normal make reference not only to the fact that it goes beyond standard, normal, economic value theory and its tendency to relegate buncertainties in knowledge and complexities in ethics firmly to the sidelinesQ (Funtowicz and Ravetz, 1994b, p. 197), but mostly to show that all the elements Funtowicz and Ravetz showed to be relevant for what they called postnormal science are relevant (and fundamental) for our discussions about value from the perspective of dynamic complex systems. Going one step further, we can even argue that the uncertainties regarding the value of any given element of a dynamic system, besides their technical and methodological nature, are of an irreducible and unsolvable epistemological nature: within dynamic systems, there simply is no such unique value. Not least because in our universe made up by dsystems of systemsT (Morin, 1977), every single element partici-
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pates simultaneously in the (re)organization of different systems and performs different roles in each one of them. In their effort to determinate the value per se of a given good, all dnormalT value theories implicitly or explicitly, assume the ceteris paribus condition. They assume that the system in which the value of a given element is assessed is unchanging and, moreover, that the value of this element for other systems is fixed. Nevertheless, recognizing that natural systems are bdynamic and complexQ and bthose involving interactions with humanity are demergentT, including properties of reflection and contradictions,Q we have to enlarge the scope of economic evaluation procedures assuming not only bunpredictability, incomplete control and a plurality of legitimate perspectivesQ (Funtowicz and Ravetz, 1993, p. 739) but, fundamentally, dynamic and changing conditions too. The ceteris paribus assumption, properly used, is a fundamental (and unavoidable) condition for any analytical exercise and evaluation procedure. Any analysis requires a delimitation of the subject, a simplification of reality. Nevertheless, every model or theory represents at best a good map, never a complete description of reality (even less if we consider that reality is ever changing, outdating even the best of our maps). Thereby, once we establish a given body of drelevant facts, data and analysisT to support different policy options, we have to recognize the limitations of this analytical tool. Not only do we have to explicitly consider the drobustnessT or not of our results (that is, how the changes in time of the system are prone to change the interrelations between its different elements and thereby its organizations and demergentT properties), but that there are multiple legitimate perspectives in time and space too. For a same element, there are multiple (and often incommensurable) values attached, according to the perspective of which system we consider this element from. The economic and ecological benefits and costs of a new dam, for example, will show not only a historical evolution (varying with the socio-historical and environmental context changes), but will be different for the different affected systems. The costs will vary from zero (for the unaffected systems) up to infinite for the flooded ecosystems, living beings killed and those local people who would rather commit suicide
than allow themselves to be displaced from their homeland. In between lies all kind of new environmental and social costs and benefits, like the effect on the different systems of local and/or global climate change, new irrigation and transportation means, related infrastructures, etc. Moreover, economic benefits will vary greatly too, according to the way different economic agents benefit (as entrepreneur or labourer) from the dam construction and the way new species, ecosystems, local communities and the different social actors at the national and international level benefit are affected by the new environmental and sociocultural reality resulting from the creation of this new dam, etc. Thereby, as Funtowicz and Ravetz argue, there are different competing and equally legitimate perspectives in each evaluation procedure whereby bthe traditional analytical approach, implicitly or explicitly reducing all goods to commodities, can be recognized as one perspective among several, legitimate as a point of view and as a reflection of real power structuresQ (Funtowicz and Ravetz, 1994b, p. 199). In this framework, the role of expertise and traditional evaluation procedures–like those provided by most field research within ecological economics–is to provide not only quantitative, but qualitatively sensitive information input for decision making. At the same time, it has to recognize its own limitations: it may, at best, give an accurate portrait of some aspects of reality and some hints about where a given process is heading too. But it cannot give us the whole picture. Moreover, these inputs will be considered within the communications and political framework or, as these authors put it, bthe negotiating and mediating of the institutionalized political processQ (Funtowicz and Ravetz, 1994b, p. 199). And here, as these authors repeatedly argue, the inclusion of the dextended peer communitiesT becomes a methodological as well as an ethical need in all evaluation procedures including risk, uncertainty and different legitimate perspectives. Thereby, once bthe old dichotomies of facts and values, and of knowledge and ignorance, are being transcendedQ (Funtowicz and Ravetz, 1993, p. 739), post-normal economics becomes political in a sense that the founding fathers of modern Political Economy could not even grasp. It includes not only social but ecological and inter-generational distribution issues.
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At the same time, we abandon the solid ground of linear and abstract value theories to navigate in the ocean of dynamic complex systems value theory. Then we can start to look how to conduct the economic process accordingly to each social and ecological context, as a life-sustaining, wealth creating activity and not simply a means for the exchangevalue accumulation process.
Acknowledgements Special thanks are due to Roger Strand and Mark Lutes for their valuable and thoughtful comments on previous drafts of this paper.
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