Where neoclassical economics fails the environment
This paper surveys the points where economics, as conventionally understood and taught, leads to conclusions which are less than helpful in relation to environmental policy decisions, with particular reference to the urgent problem of climate change. In particular, the fact that there is great danger that global warming could pass a ‘tipping point’ where it could run out of control in self-enhancing feedback. It is clearly difficult to integrate moral considerations in relation both to successor generations and populations already suffering from adverse weather events, associated with climate change, within any formal economic theory framework. However, the doctrine of discounting the value of the future, known as cost benefit analysis, is flawed in its own terms. The second point is the professions inability to face the urgency of the income distribution side of carbon pricing. In addition, the current reality is that a large scale investment program in renewable energy generation capacity, would actually support the stability of the market economy as a Keynesian prescription.