UNSW Sydney Media Release
Research led by UNSW Sydney sustainability scientists challenges the basis of leaving major socioeconomic and environmental decisions to the market.
Our current economic system is based on poor science and should not be used to guide government decision-making when faced with threats to existence like climate change. That’s the conclusion of a new paper led by UNSW Sydney sustainability scientists that finds our economic system is driving environmental damage and social inequality and needs substantial reform.
The research, published recently in the peer-reviewed international journal Global Sustainability, critically reviews, from a natural science perspective, the basis of neoclassical economics – the theory that underpins the neoliberal ideology of free markets, deregulation, and minimal government expenditure and taxes. Many countries, including Australia, follow neoliberalism in policymaking.
The research found that hypotheses underlying neoclassical economics – including supply-demand determined pricing, and claims like Gross Domestic Product (GDP) is a meaningful measure of well-being and markets can solve major environmental and social problems – are based on invalid assumptions and lack empirical support.
“Neoclassical economics is fundamentally flawed, bad science, and irrational in the common meaning of the word,” said Honorary Associate Professor Mark Diesendorf, lead author of the study from the School of Humanities & Languages at UNSW Arts, Design & Architecture. “It is doing more harm than good by supporting politically powerful corporations that are driving environmental destruction and social inequality, and therefore must no longer be used for government socioeconomic policies.”
Misconceptions of neoclassical economics
For the study, the research team, consisting of sustainability experts from across scientific disciplines, refuted 10 key hypotheses and four claims of neoclassic economics on the grounds they are either contradicted by observation, lead to different results from those reported by neoclassical economics, are ill-defined, or are inconsistent. The review found each hypothesis or claim failed to satisfy one or more of these conditions – basic requirements of good scientific practice.
Co-author Thomas Wiedmann, Professor of Sustainability Research in the School of Civil & Environmental Engineering, said that neoliberal ideologies and many neoclassical economists strongly support the notion that endless growth on a finite planet is feasible and desirable.
“[However] science shows that growth in GDP is closely correlated with growth in the consumption of materials and energy,” said Prof. Wiedmann. “This leads to major environmental impacts that are threatening our life support system, the biosphere.
“The assumptions that the natural environment is an infinite resource and an infinite reservoir for waste and that it can be separated from the economic system are refuted by the findings of Earth System Science, which show that six out of nine planetary boundaries have been exceeded.”
Another claim the researchers contest is that wealth trickles down from the rich to the poor. While not all neoclassical economists accept this claim, the review cites a major study finding that tax cuts for the rich of OECD countries are correlated with higher income inequality and have no effect on economic growth and unemployment in the short and medium term.
Other hypotheses and claims challenged scientifically in the review include:
- Existential environmental threats can be managed by pricing alone when the market has failed to curb global heating and other major environmental threats.
- Humans can be credibly modelled as entirely self-interested, economically ‘rational’, competing individuals and able to process all available information on prices, despite scientific findings in anthropology and sociology showing that cooperation is fundamental and coexists with competition in all societies.
- Government budget deficits are generally inflationary, even though many countries, such as Japan, have historically had significant budget deficits without inflation.
- The economic efficiency ideal of neoclassical economics, Pareto efficiency, is useful, even though it’s unattainable in practice and fosters socially unjust policies.
“While a common defence of neoclassical economics is that it has advanced and no longer depends on all the assumptions critiqued, it still depends on at least three hypotheses that are not generally true”, A/Prof. Diesendorf said. “These are the hypotheses that individual decisions can be separated from social influences, that economic systems are generally in or near equilibrium, and that neoclassical economics theory doesn’t need to explain or predict economic phenomena such as the Global Financial Crisis.”
A new economic approach is needed
The researchers said neoclassical economics can be replaced with an improved mixed economic system. However, this will require pressure on governments from community organisations and academics.
“Leaving it to the market alone is another way of saying leaving it to the 1%, that is, the big corporations and super-rich that control the market,” said A/Prof. Diesendorf. “It’s too late for the market to solve a major problem like climate change and the market cannot reduce the increasing gap between the rich and poor.
“We need stronger government intervention guided by genuine community consultation.”
The researchers recommend a new economic system that prioritises ecological sustainability and social justice over economic efficiency. This would move beyond striving for increased GDP to include wellbeing indexes such as educational attainment and public health measures.
“If we look at Scandinavian countries, their quality-of-life measures are the highest because their governments don’t leave everything to the market,” said A/Prof. Diesendorf. “They simply spend more to provide universal basic services to their people.
“To achieve ecological sustainability, it is necessary, but not sufficient, to limit the scale of human activity in a considered way and, with it, policies to support managed de-growth.
“At a fundamental level, we must reduce our physical consumption of energy, land and other natural resources, which could be done while still improving the quality of life for all.”
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Our economic system thrives on greed and waste, which is why the military/industrial complex is such a key plank. How else can you make extraordinarily expensive items, sell them and have them blown up almost immediately.
As for GDP, surely it has been noted that there is nothing like a major disaster to get things like the building industry moving, at the same time, by putting no value at all on things people do to help each other without a monetary exchange.
When the only value is from digging up the land and cutting down the forests, there is no chance that sustainability and care for the environment can be recognised
Sustainability is not grounded science, but a fossil fuel PR construct to tag and greenwash anything, so it can then be equated with environmental care.
It comes in a lexical set of other words or expressions masquerading as grounded science from the past including Rockefeller Bros. (Exxon) ZPG Zero Population Growth (now Tanton Network), applied to modern day ‘immigrants’ and humanity including carrying capacity, limits to growth degrowth and sustainable population; based on debunked ‘limits to growth’ promoted by fossil fuel/auto Club of Rome
Worse than not being empirical science and process based, the same expressions or tropes are popular with Anglo ethno separatists now white Christian nationalists and those who promote ‘the great replacement’.
Yep, thanks Lyndal.
In a closed system, like a planet, on which at this time we are grounded, it seems circularity is what’s needed, rather than endless growth in a system with designed-in biases as we currently have – biases where the designers decide without sound reason what the ‘expendables’ are.
Andrew,
You have offered minor variations on that exact same spiel hundreds, if not thousands of times on this site, yet I can’t recall you making any actual informational contributions regarding the natural environmental.
It’s almost as if the statistician from marketing was entirely anthropocentric in outlook and subject ignorant and/or indifferent regarding patently obvious, ground-proven environmental concerns.
At the risk of repetition,
In terms of total mammalian biomass,
-Around 34% is human meat.
-About 62% is composed of human domesticates (mostly foodstock).
-That leaves 4% remaining biomass for all the wild mammals, a figure which includes sea-mammals (2%) and human vectored ferals (eg Rattus rattus).
Unsurprisingly, extinctions increasingly abound.
Exiting the Holocene, entering the Anthropocene.
Clakka,
No offense, but…
Your ‘environmental’ gabble about ‘infinite growth’ within a ‘closed system’ reeks of ‘limits to growth’ and other lexicon surrounding “sustainability”.
This indicates that you are either a white Christian nationalist (aka a theocratic racist), a cynical shill greenwashing the fossil fuel agenda, or, at best, a clueless but useful idiot…
No offence, but.
Since AS has decided that any reference to “sustainability” is somehow synonymous with racism and rapine, perhaps he could provide an alternative term for ‘existing in ways that don’t deplete/exhaust irreplaceable resources, destabilise/destroy biospheric habitat and facilitate mass extinctions’.
A young fff, a rich real estate salesman:
“Ok, SOLUTION! Instead of raising/ lowering interest rates to try to curb inflation, how about the government enforces the banks to increase/decrease the minimum payments on family home loans to curb the spending on those who the rate changes tradionally target!
This will then have the desired effect of slowing spending by the majority of Australians who have a mortgage and also doesn’t top up the pockets of those who don’t have debt who keep spending and propping up inflation.
Ok, SOLUTION! Instead of raising/ lowering interest rates to try to curb inflation, how about the government enforces the banks to increase/decrease the minimum payments on family home loans to curb the spending on those who the rate changes tradionally target!
This will then have the desired effect of slowing spending by the majority of Australians who have a mortgage and also doesn’t top up the pockets of those who don’t have debt who keep spending and propping up inflation…”
Seems like if you give the poor more they will spend it and ^#@@%#4 the economy???
Beyond mammals into birds, the statistical breakdown is slightly more ‘encouraging’ (aka less depressing).
Of total current planetary avian biomass, the most reliable scientific estimates put percentages at around;
57% farmed chickens
14% farmed turkeys & ducks
29% wild birds.
Good news is, we probably don’t actually need to keep increasing growth of human population and attendant resource exploitation in order to ensure we sustain/increase current levels of species extinctions (although it will definitely help).
Just as positive feedback loops are already occuring with greenhouse emissions (FREE THE METHYL HYDRATES!), so too are locked in repercussions of prior land abuse starting to yield negative dividends, as climate destabilisation (weather extremes) and fragmentation of (‘edge effect’) means that some of the more specialised (ie vulnerable) remnant ecosystems are already starting to wither and wilt then topple (or burn), then successively transition into more generic ecotypes (eg multi-strata canopy forests collapsing into vine thickets).
Anyways, that’s a few lighthearted environmental observations from someone who has been actively involved in field ecology (both professionally and voluntarily) for the last quarter century.
If you wanna hear some truly depressing shit, go listen to a climate scientist (or an entomologist).
Dear Corvusboreus,
I am at a loss to understand your ‘critique’ of my comment. Perhaps you read-in things that were not there or intended.
Whilst you started and ended “No offence, but”, without any simple explanation so that I can understand how you come to the assumptions you make, which I note are utterly wrong, and also note I don’t have access to or any understanding of the obscuraties of the (possibly) specialist lexicon you cite, you go on to do your darnedest to be hostile and abusive.
For your edification, I am well aware of the various stats you later cite about biomass, and they are of deep concern to me, as is the prevailing system of politics, economy and agricultural ecology based on absurd notions of human supremacy and unfettered extraction, exploitation and destruction. I not only have deep concerns, but also live my life doing the feeble best I can, considering the constraints imposed, to remove any negative impacts and increase positive impacts I may have on all nature’s living things and the environment which we all share. I sincerely hope you don’t scrounge for any ambiguities in this, but take it prima facie as meant.
Clakka,
Yeah, my bad, sarcasm doesn’t translate well into type.
Rereading AS’s14:27 dismissal of ‘environmental sustainability’ as nothing but a racist trope devised by fossil fuel interests (a tiredly familiar refrain) might give some insight into the source of my snarkiness of tone.
But…
You are right and justified to express resentment at me for passing my irritation your way without giving any context clues or indication of facetiousness.
Good on you for attempting to lighten your footprint (sincerely), every bit helps.
Corvus out.
CB How do you expect anyone to respond when you offer a word salad masquerading as a question or threat, and shoot messengers?
A form of coarse and abusive discourse learnt from our RW MSM, influencers and MPs imported from Fox News (who would agree with you)?
You avoid the issue, what is ‘sustainability’ i.e. beyond fossil fuel greenwashing PR construct and attacks on immigrants?
You claim that I have written falsehoods, can you address, couter and rebut these specifically eg. where is the grounded and empirical science of ‘sustainability’ etc.? There isn’t any, like lack of detail in their uncosted nuclear policies…… just talking points.
AS
Section by section;
1; I did not make any ‘threat’ or ‘shoot’ anything, and if my ‘word salad’ confounds you, then expand your vocabulary palate.
2; yeah, whatever.
3; to repeat, ‘existing in ways that’s that don’t deplete/exhaust irreplaceable resource, destabilise/destroy surrounding biospheric climate/habitat or cause the extinction of other coexistent species’.
If you think that defined concept is fundamentally invalid then we have some serious perspective dissonances.
4; I do not claim you write falsehoods (that would be SB), just that yo write from a purely anthropocentric and entirely ecologically detached perspective, and that spend far too much time and space rehashing the exact same talking points.
Anyways, on the bright side, I genuinely appreciate and salute your efforts on the social media front of the defense against the ongoing ‘special military operation to liberate the Western parts of Greater Russia’
Good work young man, carry on.
PS, to translate into crayon, “so long, and good luck with the tankies”.
It’s interesting, almost amusing if it was not so tragic, that since the “unprovoked Russian invasion” myth has been exploded by a certain youtube video, promoters of US propaganda are forced to describe the invasion, through gritted teeth, in terms pretty close to the truth.
Russia is indeed liberating the Donbass from an illegal attack by Ukraine.