We are living in a world that is relatively full of humans and capital infrastructure. This has call for a need to re-conceptualize what the economy is and what it is for in this new context of economy.
It is worth remember that the goal of the economy should be to sustainably improve human well-being and quality of life, and that material consumption and GDP are merely means to that end, not ends in themselves. Check out what is sustainable development, click here!
Materialistic vs Well-being
We have to recognize, as both ancient wisdom and new psychological research tell us, that too much of a focus on material consumption can actually reduce our well-being (Kasser 2002).
We have to better understand what really does contribute to sustainable human well-being and recognize the substantial contributions of natural and social capital, which are now the limiting factors to improving that well-being in many countries.
What is “Green Economy”?
There are different basic characteristics of the current economic model, the green economy model, and the ecological economics model. There is some argument that minor adjustments to the current economic model will produce the desired results.
For example, it is argued that by adequately pricing the depletion of natural capital (E.g. putting a price on carbon emissions) we can address many of the problems of the current economy while still allowing growth to continue. This approach is called the “green economy” (GE) model. Some of the areas of intervention promoted by GE advocates, such as investing in natural capital. This is necessary and we should pursue them. However, it is not sufficient to achieve sustainable human well-being.
Paradigm shift: New model of economy
We need a more fundamental change, a change of our goals and paradigm. Both the shortcomings and the critics of the current model are massive, and a coherent and viable alternative is needed. Thus, a new model of the economy based on the world-view and principles of ecological economics are coming up with the following ideas:
- Our material economy is embedded in society which is embedded in our ecological life-support system, and that we cannot understand or manage our economy without understanding the whole, interconnected system.
- Growth and development are not always linked and that true development must be defined in terms of the improvement of sustainable human well-being, not merely improvement in material consumption.
- A balance of four basic types of assets (capital) are necessary for sustainable human well-being: built, human, social, and natural capital (financial capital is merely a marker for real capital and must be managed as such).