Can the Market Economy Deal with Sustainability?
Dirk Schoenmaker1,2, Hans Stegeman3
1Rotterdam School of Management, Erasmus University, Rotterdam, Netherlands.
De Economist
|December 28, 2022
Summary
Market economies, focused on growth, struggle with sustainability. Alternative systems incorporating ecological and social domains, alongside economic ones, offer better solutions, including private collective decision-making.
Area of Science:
- Ecological Economics
- Environmental Sociology
- Socio-economics
Background:
- Neoclassical economic theory prioritizes growth, leading to overproduction and consumption.
- Market-driven systems often neglect public goods and common resource preservation.
- Current economic models are ill-equipped to address sustainability challenges effectively.
Purpose of the Study:
- To analyze if market economies can achieve sustainability.
- To investigate the limitations of neoclassical economic theory regarding sustainability.
- To explore alternative frameworks for integrating sustainability into economic systems.
Main Methods:
- System analysis of neoclassical economic theory.
- Examination of economic system components: goal function, interaction mechanisms, actors, and outcomes.
- Comparative analysis of market economics versus alternative models.
Main Results:
- Market economies, driven by growth, inherently favor private goods over public goods and commons.
- A 'one size fits all' economic approach fails to deliver social outcomes for sustainability.
- Recognizing distinct economic, social, and ecological domains broadens sustainability integration options.
Conclusions:
- Market economics alone is insufficient for achieving sustainability.
- Alternatives to pure market economics include government intervention and private collective decision-making.
- A framework for an efficient economy within an inclusive society and biophysical boundaries is achievable.
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