Economics without land is a disaster

Molly Scott Cato
Economists have all but forgotten about the source of real wealth - the land under our feet. They do so at their peril

It is more than 40 years since the prototype green economist Kenneth Boulding made the distinction between a linear and a circular economy.

The linear economy takes in raw materials at one end, and uses energy to transform them into complex products, which are sold in the market. The transformation process creates wastes; and built-in obsolescence ensures that much sooner than is necessary the products themselves are waste too. This rapid cycling of materials and energy enables the extraction of profits, but in terms of an energy-limited and materials-limited planet it is a disaster.

The economic holy grail

Since that time the holy grail of environmentally minded economists has been the closed-loop system, which mirrors the circular flow of materials and energy in natural systems. Perhaps the best image we can use to model the closed-loop system is that of compost. We take vegetables from the ground, their peelings can be allowed to decompose to produce more soil, which can then be the beginning of a new process of producing more vegetables. Our consumption is just one part of a natural circular flow.

It is no coincidence that the image for the good life — in green economics terms — is embedded in the land, for in our romantic notions that is where natural systems prevail and natural species, including the human species, live in a primeval balance with nature. The neoclassical economists, by contrast, have forgotten about land almost entirely.

Economics has been focused on trade rather than land for 250 years, since the physiocrats, with their conception of Mother Earth as the source of all value, were supplanted by the marketeers. Their opponents the mercantilists argued for a market regulated so as to ensure the most efficient and rapid production of manufactured goods, which could then be traded. They began to equate wealth with money, in contrast to the physiocratic view that all wealth came from the land.

The mercantilists in turn were brushed aside by Adam Smith’s invisible hand and David Ricardo’s idealisation of the merchant, and ‘the land’, which we might see as at least partly analogous to ‘the environment’, slipped from the central place in thinking about the economy that it had always held.

Taking back the land

A hugely ambitious report soon to emerge from the Dublin-based think-tank FEASTA puts land right back at the centre of our thinking about economics — and specifically the economics of climate change. In contrast to the crazed schemes to cover the earth with mirrors or bury millions of tonnes of liquid CO2, this report into carbon cycles and sinks beings to outline a new partnership with the earth. Through afforestation, changed farming practices and the use of pyrolysis rather than decomposition to recycle our vegetable wastes, it offers creative thinking about how we might reinforce rather than undermine the cyclical wonder of nature’s chemistry.

Proposals for geoengineering can be high-risk, especially when they come under the rubric of ‘ecosystem services’, a prostitution of beautiful biology to repair the damage of destructive industrialisation. Any plan to use natural sinks for our excess CO2 emissions can only work on the basis of three absolute conditions: that they are not used as a substitute for tackling our unsustainable production and consumption systems; that land with sequestration potential is viewed as a commons to be governed democratically; and that any value that is created through the beneficial use of that land stays with the communities who inhabit it.

It would be comforting to think that the return of land to its place at the centre of economic debate indicates a renewed respect for the natural world among a community of scholars who are unique in using the word exploitation without a hint of shame. Sadly, no such conversion has taken place, which is why we must watch the developing debate over carbon sinks with caution and care.

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