[Swarm-Modelling] Review: The wealth of nature: how mainstream economics has failed the environment.

[Steve Railsback]

The economists and ecologists out there may find this review 
interesting. I find it a little ironic that the book's criticisms could 
just as well be leveled at mainstream ecology.

Steve Railsback

)))))))))))))))))))))))))))))
Ecology: Vol. 85, No. 6, pp. 1766–1767.

The Emperor Has No Clothes
Todd Wellnitza


aColorado State University, Biology Department, Fort Collins, Colorado 
80523 E-mail: address@hidden

Nadeau, Robert L. 2003. The wealth of nature: how mainstream economics 
has failed the environment. Columbia University Press, New York. xii + 
253 p. $29.50 (cloth), ISBN 0-231-12798-7 (alk. paper); $29.50 (paper), 
ISBN 0-231-12799-5 (alk. paper).

In essence, what Nadeau tells the reader of The wealth of nature is 
this: neo-classical economic theory, the basis for mainstream economics 
as it is presently understood and practiced, cannot solve our global 
environmental problems because it is a sham. Its founders endowed their 
discipline with ill-got legitimacy and false rigor by hijacking 
equations from 17th century physics, replacing physical variables with 
economic qualities, and fostering a discipline that quickly forgot its 
bastard origins. Modern economics, therefore, is premised on an outmoded 
cosmology based on Newtonian physics, not a modern understanding of how 
the universe functions. This cosmology envisions a self-contained 
universe comprised of autonomous parts, obeying intuitive laws, and 
embedded within fixed frames of reference. The modern economist does not 
realize, or is afraid to acknowledge, that this model is fundamentally 
flawed—that parts (e.g., economic actors and organisms) are 
interdependent and show complex behavior, that wholes (e.g., markets and 
ecological communities) are open systems that respond readily to outside 
influences, and that the accepted frame of reference (neo-classical 
economic theory) is in desperate need of revision. To prevent 
environmental catastrophe we must dismantle this antiquated and 
dangerous version of reality with all possible speed. In its place we 
must erect a new economic paradigm based on a clear-eyed understanding 
of the part-whole relationship and a sobering acknowledgement that 
complex systems, whether they be global markets or ecosystems, are 
interconnected, idiosyncratic and unknowable.

Rather heavy stuff, this, but Nadeau pulls it off in just 223 pages 
(minus introduction, notes, and index). “[A]n interdisciplinary scholar, 
historian of science, and a professor at George Mason University,” 
Robert Nadeau has a burly intellect and watching him flex is both 
impressive and, at times, somewhat intimidating. With consummate skill 
he surveys scientific disciplines ranging from ecosystem ecology to 
quantum physics, and pulls out conceptual slabs from each to support his 
contention that modern economics is not equipped to handle today's 
problems. For example, he uses ecology to show that the emergent 
properties exhibited by complex systems (e.g., markets or ecosystems) 
can neither be understood by, nor predicted from, the properties of 
their constituent parts, as conventional economics would have us 
believe. Elsewhere he uses quantum physics to illustrate that 
neo-classical economic theory fails to appreciate that descriptions of 
reality (e.g., economic trends) cannot be viewed as objective and 
independent from the observer; rather, the very act of observing can 
change what is observed.

Although the breadth and depth of the author's knowledge is remarkable, 
his writing style is not. Nadeau has a nasty propensity for complex 
verbage. In his chapter entitled “A green thumb on the invisible hand,” 
for example, Nadeau complains that market-based solutions to 
environmental ills appear workable “only because assumptions about 
part-whole relationships in economic reality implicit in the formalism 
preclude the prospect that actual or real costs associated with damage 
done to the environment by economic activities can be included in the 
calculations.” Oftentimes his well-ordered sentences become so densely 
worded that reaching a period became a minor intellectual achievement 
and paragraph breaks were welcome respites. More than I would have 
liked, understanding required concentrated effort and a second reading.

Despite the verbosity of much of The wealth of nature, Nadeau still 
demonstrates some obvious strengths. Nadeau is at his best when 
squeezing reams of complex information into tight summaries. Especially 
good was Chapter 4, entitled “No free lunch,” in which he deftly reviews 
the genesis of the global market economy, from the development of the 
International Monetary Fund and World Bank in the closing days of WWII 
to the formation of the World Trade Organization (WTO) at the end of the 
century. He also makes insightful observations about recent events, such 
as the collapse of Enron and the United States' failure to sign the 
Kyoto Treaty limiting greenhouse gas emissions. Throughout these surveys 
Nadeau stays on topic and faithfully returns to environmental concerns. 
Writing about Enron, for example, Nadeau observes that

    there has been no discussion thus far in print or the electronic 
media of the fact that the core business of Enron was to make enormous 
short-term profits by deregulating global markets for the exchange of 
scarce natural resources without any concern whatsoever for the 
long-term availability of those resources or the adverse environmental 
impacts associated with their wholesale exploitation and use. Another 
large something that seems to be conspicuously missing in the current 
soul-searching public debate is that the vast majority of resources 
traded by Enron were massively subsidized by taxpayers.

Excellent and stimulating summaries of evolutionary biology and quantum 
physics also occur later in the book.

Disappointingly, Nadeau is less successful in exploring the historical 
landscape to find where the early economists stumbled. I was expecting a 
lively romp across familiar territory with forays into unknown hollows 
and furtive glens. There we did go, but at a plodding trudge rather than 
an invigorating hike. After only 25 pages I found my attention waning. 
Nadeau is an impressive scholar, but he is too fastidious. He uses a 
dental pick and forceps to uncover evidence when a hammer and chisel 
would have done just fine. Although Nadeau does an admirable job of 
gathering facts here, I wish he could have done so with a little more gusto.

I suspect the author's dense writing style and the book's slow start 
will put off the casual reader, which is too bad because Nadeau rewards 
the resolute. He has some good stuff to share, making The wealth of 
nature well worth the read. The connections he makes between economics 
and the natural sciences are as fascinating as they are inspired. His 
ideas are unique, packed with substance, and bundled together with 
persuasive arguments. He so pummels mainstream economics that by the 
last chapters the reader is more than ready to learn what steps must be 
taken in order to launch the New Paradigm, the economic theory that will 
move environmental concerns front and center and save our planet from 
growth-driven disaster.

Trouble is, Nadeau doesn't know what the steps are. He can tell us what 
the New Paradigm will look like when it's built, but hasn't the foggiest 
idea of where to start, much less a blueprint for building it. Granted, 
developing new paradigms is difficult even under the best of 
circumstances, but I still felt somewhat cheated. Nadeau implies that 
there is a better way, and that he will get to it just as soon as he has 
finished chipping away the scientific pretense that surrounds 
neo-classical economics. In the end, however, there are only hopeful 
allusions to what might be done and should be considered. We are left 
feeling like a passenger on the Titanic who has just read an excellent 
account of the vessel's design flaws and conceptual mistakes by an 
author who, while quite good at times, is no shipwright.