Demography and welfare economics

The focusing on demographic issues as an important part of welfare-economic assessment shifts the evaluative space in the direction of public discussion and social concern. A commoditycentred view of individual success and social welfare is often used in economics. But the linkage between our economic wealth and our ability to live as we would like has strong limits. This is partly because of interpersonal variations between individuals, but also because of variations in public and social arrangements (for example, for public health care, education and social security). The use of demographic perspectives can enrich economic analysis in several ways. In particular a demographically oriented system of evaluation can not only focus on variables that we all value, but it also gives us the freedom to decide what weights would be most appropriate for the exercise in which we might be engaged. The problem of valuation in welfare economics is ultimately a social-choice issue, requiring the use of explicit judgments on which the society can achieve some consensus through political processes.Lecture presented to the annual meeting of the Austrian Economic Association in Vienna, 24 May 1994. The author is grateful for support from the National Science Foundation for the research on which this paper draws.     

Reducing protest responses by deliberative monetary valuation: Improving the validity of biodiversity valuation

This paper focuses on examining the validity of biodiversity valuation methodologies. The results of a group deliberation technique (deliberative monetary valuation) are compared to those derived from a contingent valuation (CV) survey using the same environmental topic. Evidence is here presented that DMV can address some of the limitations of CV; namely a prevalence for lexicographic preference ordering due to psychological reasons and the lack of a priori or well-formed preferences. Both of these methodological shortcomings can result in protest responses which decrease the external validity of results. It is common environmental valuation methodology practice to exclude protest responses from the analysis on the grounds that they are illegitimate choices, thus the sample and consequently the environmental valuation analysis may become less representative of the population. An advantage of the DMV methodology is that it was found to significantly reduce the rate of protest responses to less than half (from 29% to 13%). Furthermore, DMV significantly increased the proportion of positive bids but not the amounts contributed. In relation to preference formation issues, we suggest rethinking the current practice of the DMV method, and propose dedicating the entire initial discussion session to introducing the good outside of a valuation context.     

Marx 200: The Abiding Relevance of the Labour Theory of Value

ABSTRACT

Marxist political economy is alive and well, and not just because of the habitual turn to Marx in response to any crisis of capitalism. Both through Capital and through the continuing evolution of Marxism, Marxist political economy offers valuable insights that can illuminate the modalities of social and economic reproduction and the relationships between (different aspects of) the economic and the non-economic. Marxism’s presence has been felt through its own internal debates and debates with other approaches to political economy, and even through its influence on those reacting against Marxism. The key to the continuing relevance and analytical strengths of Marxist political economy lies in its capacity to provide a framework of analysis for unifying disparate insights into and critiques of the contradictions of capitalism across the social sciences. The instrument for forging that unity is Marx’s theory of value, the potential of which is examined and illustrated with reference to the Sraffian critique and two key concepts in Marxian political economy: the value of labour power and financialisation. They are explored in the light of the processes of commodification, commodity form and commodity calculation.     

The shallow or the deep ecological economics movement?

Ecological economics and its policy recommendations have become overwhelmed by economic valuation, shadow pricing, sustainability measures, and squeezing Nature into the commodity boxes of goods, services and capital in order to make it part of mainstream economic, financial and banking discourses. There are deeper concerns which touch upon the understanding of humanity in its various social, psychological, political and ethical facets. The relationship with Nature proposed by the ecological economics movement has the potential to be far reaching. However, this is not the picture portrayed by surveying the amassed body of articles from this journal or by many of those claiming affiliation. A shallow movement, allied to a business as usual politics and economy, has become dominant and imposes its preoccupation with mainstream economic concepts and values. If, instead, ecological economists choose a path deep into the world of interdisciplinary endeavour they will need to be prepared to transform themselves and society. The implications go far beyond the pragmatic use of magic numbers to convince politicians and the public that ecology still has something relevant to say in the 21st century.     

The Role of Ethics in Economics and Management: Galbraith–Drucker approaches

Ethics has been linked to virtue, considering it within an individual sphere. It has also been related to good social behaviour or even religious factors, and so on. In general, economic thinkers have not questioned some of the basic principles which help to shape the fundamental ethical criteria in economic behaviour. The pursuit of individual interest has been identified as pecuniary profit maximization and, in this sense, Peter Drucker states that this has been the fundamental motivation of any economic agent, even before capitalism was born and Galbraith pointed out that the lack of consideration of other motivations, apart from earning money, has been one of the biggest mistakes in economics. The main goal of this paper is to analyse the Drucker and Galbraith approaches on ethics.      

Hicks's Valuation of Social income: an appraisal *

This paper attempts to reconstruct and assess the intellectual itinerary of Hicks on the valuation of social income. His 1958 and 1981 papers on that topic have been wholly ignored in the economic literature. In both of them differentmeasures of real income are provided. These show to what extenteach one of them can be relied upon. Our assessment argues that it is impossible to measure social income independentlyof the reasons for which that measure is required and that any valuation cannot ultimatelybe made independently of political and ethical considerations.     

An Operative Framework for Total Hicksian Income Measurement: Application to a Multiple-Use Forest

A methodology for estimating total hicksian income in multiple-use forests is presented. The approach consistently incorporates commercial as well as non-commercial economic values and enables the measurement of national accounting aggregates taking into account variation in man-made and natural capital. Innovative solutions are developed (i) for the estimation of non-market values, such as recreation, where an attempt to determine exchange values has been made simulating markets, (ii) for timber, where standing timber valuation methods have been extended to cover uneven stands, and (iii) for carbon fixation valuation, where only permanently fixed carbon after 1990 has been taken into account. The methodology is applied to a multiple-use pinewood in the Guadarrama mountains, near Madrid (Spain). Timber, cattle grazing, hunting, recreation, carbon fixation and conservation values are measured and integrated in the accounting system, using primary microeconomic data from the case study. Results indicate the importance of non-commercial income, which accounts for 51% of the total income, and the social relevance of the analysed forest, implying that only 31% of the total income generated is appropriated by the forest owner.     

Foundational explorations for a normative theory of political economy

I set out an individualistic and pragmatic choice framework for a normative theory of political economy, and argue that, given pluralism with respect to individual ends, a consensus on any political or economic institution presupposes that it is perceived to serve as a public means to private ends. Concerning the crucial question of the distribution of the benefits that political and economic cooperation can make possible, I argue that the various models typically employed—those pertaining to competitive market interaction, decision making under uncertainty, bargaining theory, and social choice theory—fail to provide for a stable consensus, i.e., one that is resistant to non-compliance and renegotiation. Since, however, such instabilities are mutually disadvantageous, these approaches fail to establish how rational individuals can capture all the gains that cooperation makes possible. Appealing to a modified version of the social-psychological construction that Rawls introduces in chapter 8 ofA Theory of Justice I argue that stability is a function of a perceived sense of mutual concern. I conclude by arguing that Rawls own egalitarian/efficiency principle gives natural expression to such a concern, and thus can serve as the object of a stable consensus.     

Commentary on economic valuations of biodiversity

Our planet's biodiversity is in steep decline. Assigning economic values to the impacts of this decline can be very useful in overcoming economic-based objections to sustainable policies at all levels of government. However, economic valuations that are not based on sound scientific analysis threaten to undermine the credibility of ecological valuations in general and could also lead policy makers to misallocate the limited resources available for conservation efforts. Researchers at Cornell University have introduced a valuation into several peer-reviewed journals that asserts that each individual bird in the United States has an average economic value of $30, and they use this valuation to estimate the economic impact of various causes of bird mortality. The $30 valuation is explained with a single sentence that lacks any discernible scientific analysis and can at best be considered a symbolic valuation. While this valuation garnered widespread media attention, it creates a dangerous precedent and could ultimately do more harm than good to native bird populations. As such, further discussion of the role of symbolic valuations in the scientific literature is warranted.     

Physical energy cost serves as the “invisible hand” governing economic valuation: Direct evidence from biogeochemical data and the U.S. metal market

Energy supply is mandatory for the production of economic value. Nevertheless, tradition dictates that an enigmatic “invisible hand” governs economic valuation. Physical scientists have long proposed alternative but testable energy cost theories of economic valuation, and have shown the gross correlation between energy consumption and economic output at the national level through input-output energy analysis. However, due to the difficulty of precise energy analysis and highly complicated real markets, no decisive evidence directly linking energy costs to the selling prices of individual commodities has yet been found. Over the past century, the US metal market has accumulated a huge body of price data, which for the first time ever provides us the opportunity to quantitatively examine the direct energy-value correlation. Here, by analyzing the market price data of 65 purified chemical elements (mainly metals) relative to the total energy consumption for refining them from naturally occurring geochemical conditions, we found a clear correlation between the energy cost and their market prices. The underlying physics we proposed has compatibility with conventional economic concepts such as the ratio between supply and demand or scarcity's role in economic valuation. It demonstrates how energy cost serves as the “invisible hand” governing economic valuation. Thorough understanding of this energy connection between the human economic and the Earth's biogeochemical metabolism is essential for improving the overall energy efficiency and furthermore the sustainability of the human society.     

Linking political ecology with ecological economics in tree plantation conflicts in Cameroon and Ecuador

Industrial tree plantations are rapidly expanding worldwide and notably causing a growing number of conflicts between companies and local populations. Such conflicts — the focus of the article — have been neglected by ecological economists although there is a proliferation of related reports by environmental non-governmental organizations. This paper uses empirical evidence to show how elements of political ecology and ecological economics can be combined for understanding the languages of valuation deployed in tree plantation conflicts in Southern countries. Combining qualitative fieldwork on a Cameroonian rubber plantation and an Ecuadorian eucalypt plantation with a methodological framework taken from the study of social metabolism, we find that both conflicts (although with different emphasis) arise because of land and biomass appropriation, ground clearing, pollution from agrochemicals, and water shortage and are expressed as conflicts on valuation. The metabolism of such tree plantations, through the exchanges of materials with the local environment, explains the bio-physical basis of such conflicts. In the Cameroon case, resistance is mainly sporadic and individual, while in Ecuador, a grassroots organization has been able to respond to rural demands in a structured way. Both patterns of resistance are found in other present-day resource extraction conflicts.     

The economic valuation of biodiversity as an abstract good

The notion of an economic valuation of biodiversity raises major philosophical and practical challenges, especially due to the fact that biodiversity is an abstract good. Insights from political philosophy and philosophy of language can help to clarify the reliability and scope of the current economic methods that can be used for the purpose of valuing it. The analogy with another abstract good, justice, indeed shows that thinking about abstract goods is a very specific exercise. If they do not take account of this specificity, applications of hedonic and contingent valuation methods can hardly claim to be relevant to value biodiversity. Rawls' theory of justice provides for the conceptual tools to overcome this problem. A reinterpretation, based on the theory of counterfactuals, allows generalizing this account of justice to outline a theory of thinking about abstract goods. This new framework emphasizes the importance of the institutional context in determining the reliability of thinking about abstract goods. It points toward substantial reforms of the methodology of economic valuation. Specifically, it suggests reinterpreting valuation as a dynamic expressive process, where initial steps aim at reinforcing the reliability of later steps through an institutional transformation and stabilization of preferences for abstract goods.     

Linking political ecology with ecological economics in tree plantation conflicts in Cameroon and Ecuador

Industrial tree plantations are rapidly expanding worldwide and notably causing a growing number of conflicts between companies and local populations. Such conflicts — the focus of the article — have been neglected by ecological economists although there is a proliferation of related reports by environmental non-governmental organizations. This paper uses empirical evidence to show how elements of political ecology and ecological economics can be combined for understanding the languages of valuation deployed in tree plantation conflicts in Southern countries. Combining qualitative fieldwork on a Cameroonian rubber plantation and an Ecuadorian eucalypt plantation with a methodological framework taken from the study of social metabolism, we find that both conflicts (although with different emphasis) arise because of land and biomass appropriation, ground clearing, pollution from agrochemicals, and water shortage and are expressed as conflicts on valuation. The metabolism of such tree plantations, through the exchanges of materials with the local environment, explains the bio-physical basis of such conflicts. In the Cameroon case, resistance is mainly sporadic and individual, while in Ecuador, a grassroots organization has been able to respond to rural demands in a structured way. Both patterns of resistance are found in other present-day resource extraction conflicts.     

Good in a crisis: the ontological institutionalism of social constructivism

This paper seeks to recover and establish the distinct (and distinctly) institutionalist social ontology that underpins social constructivism as an approach to political economic analysis. It views social constructivism as a profoundly normative mode of political inquiry which seeks to discern, interrogate and elucidate the contingency of social, political and economic change – restoring politics (broadly understood) to processes and practices typically seen to be inevitable, necessary and non-negotiable. More controversially, perhaps, it also sees social constructivism, after both Berger and Luckmann and Searle, as ontologically institutionalist. Social constructivism, it is argued, has its origins in the attempt to establish the ontological distinctiveness of institutions as ‘social’ (as distinct from natural or ‘brute’) facts. This leads it to a distinct understanding of the relationship between actors and the environment (both natural and social) in which they find themselves and to its characteristic emphasis on the ideational mediation of that relationship. That in turn leads it to a particular type of analytic purchase on political economic realities, reflected in its distinctive emphasis on interpretive ambiguity, the social construction of political and economic imperatives and on disequilibrium. The argument is illustrated and developed further through an elucidation of the implications of such a social constructivism for the analysis of the period of crisis through which we now acknowledge ourselves to be living.     

A dynamic heterogeneous labour demand model for German manufacturing

There is currently general agreement amongst economists that the discount rate to compute the present value of benefits and costs in the economic evaluation of public policies is defined according to the social time preference approach. However, whether this rate has to be used for the discount of non-monetary health consequences is a question for which there is no satisfactory reply. In this paper, it is argued that such a reply rests on the estimation of the relationship between the individual time preference for health and money in the contexts of private and social choice. In support of this argument an empirical analysis has been carried out in which the individuals making-up a representative sample of the population of Zaragoza (Spain) have been faced with a series of hypothetical inter-temporal choices. Their replies have implicitly revealed their temporal preference rates and have led to the conclusion that health consequences are discounted at a higher rate than monetary consequences. This would appear to be contrary to the standard practice applied in the economic valuation of health programmes.     

The Social Value of Biodiversity for R&D

The value of genetic resources for use in research and development (R&D)activities has been the subject of a literature modelling the activity as onewhere individual firms engage in optimal search. Here we develop a moregeneralised framework in which genetic resources are used in R&D at thebase of an industry that addresses recurring problems of resistance, as inthe pharmaceutical or plant breeding industries. The R&D process is onein which firms are engaging in a continuing contest of innovation againsta background of both creative destruction (Schumpeterian competition) andadaptive destruction (natural selection and adaptation). This frameworkdemonstrates that the search model is conceptually inadequate because itfails to incorporate the important dynamic characteristics of biologicalphenomena. We then demonstrate the important differences between firm-based valuation of genetic resources and the social value of geneticresources for use in this contest of innovation. There are six externalitiesin private patent-based genetic resource valuation, and five of theseindicate that private valuations will under-estimate social values.     

Feminist Ecological Economics and Sustainability

Synopsis New developments in feminist ecological economics and ecofeminist economics are contributing to the search for theories and policy approaches to move economies toward sustainability. This paper summarizes work by ecofeminists and feminist ecological economists which is relevant to the sustainability challenge and its implications for the discipline of economics. Both democracy and lower material throughputs are generally seen as basic principles of economic sustainability. Feminist theorists and feminist ecological economists offer many important insights into the conundrum of how to make a democratic and equity-enhancing transition to an economy based on less material throughput. These flow from feminist research on unpaid work and caring labor, provisioning, development, valuation, social reproduction, non-monetized exchange relationships, local economies, redistribution, citizenship, equity-enhancing political institutions, and labor time, as well as creative modeling approaches and activism-based theorizing.      

Reconsidering Heterogeneity and Aggregation Issues in Environmental Valuation: A Multi-attribute Approach

The economic valuation of complex environmental goods (composed of multiple attributes) is an expanding field of research in ecological and environmental economics. However, several issues are still subjects of debate. This paper focuses on three of them: the linearity of the valuation function in the attributes; aggregation criteria for obtaining social values; and the heterogeneity of individuals’ utility functions. A methodological approach based on Multi-attribute Utility Theory, which enables us to contrast the impact of these concerns on the valuation of environmental goods, is proposed. We employ the methodology to value a protected natural area and, from the results obtained, we can conclude that the non-linearity and the heterogeneity of the individual utility function are relevant aspects of environmental valuation that need to be taken into account when valuing environmental goods.     

Motives behind willingness to pay for improving biodiversity in a water ecosystem: Economics, ethics and social psychology

This paper reports on empirical work extending the standard economic approach to valuation by including psychological and philosophical factors. More specifically a contingent valuation method survey was applied to biodiversity improvement while simultaneously assessing rights based beliefs, consequentialism and the theory of planned behaviour. The latter was assessed using measures of attitudes, subjective norms and perceptions of control over willingness to pay. The results show that standard socio-economic explanatory variables are far inferior to those of social psychology and philosophy, and that these factors offer a better understanding of the motives behind responses to contingent valuation. The implication is that alternative means of measuring an individual's pluralistic values should be taken into account in order to assess the validity and meaning of willingness to pay.     

Economic valuation of biodiversity: A comparative study

In recent years, an intensive debate on the economic valuation of biodiversity has entered the environmental-economics literature. The present paper seeks to offer first a critical review of key concepts that are essential for a proper understanding of such evaluation issues. Particular attention is given here to various monetary valuation approaches and to comparative (i.e., meta-analytical) methods from the perspective of conservation and sustainable use of biodiversity. Several illustrative examples are presented in order to highlight the usefulness of the various approaches discussed. Next, an attempt is made to infer general findings and lessons from past applied research by means of meta-analysis. In this context, a multi-dimensional technique originating from the field of artificial intelligence is deployed. It allows us to identify the most important variables responsible for changes in economic estimates of biodiversity.