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Ecological economics and institutional change.
1Department of Economics, SUNY Cortland, Cortland, New York, USA. Krallm@cortland.edu
Annals of the New York Academy of Sciences
|February 22, 2011
Summary
Ecological economics needs to integrate institutional economics to effectively limit economic activity within planetary boundaries. This requires understanding markets embedded in social structures for a sustainable economy.
Area of Science:
- Ecological economics
- Environmental social science
Background:
- Ecological economics aims to align economic activity with biophysical limits but lacks a complete transformation framework.
- Progress has been made in valuing natural capital and ecosystem services, and acknowledging the need to limit economic scale.
Purpose of the Study:
- To clarify the institutional changes required for limiting economic activity.
- To identify the limitations of neoclassical economic theory in this context.
- To expand the theoretical framework of ecological economics.
Main Methods:
- Analysis of the limitations of neoclassical economic roots.
- Integration of institutional economics and heterodox political economy concepts.
- Examination of market embedding within social and institutional structures.
Main Results:
- The current framework of ecological economics is insufficient for transforming the economy to respect biophysical limits.
- Understanding the embeddedness of markets in social and institutional structures is crucial.
- Neoclassical economic assumptions hinder the development of a compatible economic transformation framework.
Conclusions:
- Ecological economics must overcome its neoclassical limitations to develop effective strategies for economic transformation.
- Incorporating insights from institutional economics and heterodox political economy is essential.
- A comprehensive framework is needed to ensure economic activity remains compatible with planetary boundaries.
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