PERSPECTIVES FROM THE FIELD: The Practice of Ecological Economics: Response to Harold Draper’s “President’s Message” and James Montgomery’s “Letter from the Editor” in Environmental Practice 16(1), March 2014

Abstract

In the March 2014 issue of Environmental Practice, NAEP president Harold Draper lamented that “despite all that is being written in the scientific community, efforts to address the unfolding crisis are failing miserably.” He further points out the need to get businesses involved with their considerable leverage in society. The present essay suggests that the emerging discipline of ecological economics can serve as a bridge and a model giving common language to connect the scientific and business communities. Then the many and varied projects of the readers of Environmental Practice can be placed within the context of the economy. In this context, the business community can more easily appreciate and value just how important the environment and these projects are to the proper functioning of the economy. A particular point of emphasis will be on the efforts to rescue economics from the grip of maximizing return to shareholders and to make the case for the importance of physical place such as communities and bioregions, in the past referred to as the Commons.

Environmental Practice 16: 1–9 (2014)

The statements by these two NAEP leaders in the March 2014 issue of Environmental Practice lay out an admirable articulation of the perennial ecological crisis problem: Why aren’t we making more progress? This essay attempts to connect their comments as a way toward outlining a possible solution. First, here are the statements by Harold Draper (2014), president of the National Association of Environmental Professionals, in his “President’s Message”:

Despite all that is being written in the scientific community, efforts to address the unfolding crisis are failing miserably. One thing that will have to happen to prod government action is for businesses to get behind the need to take action. (p. 1)

He notes that businesses need to realize that “their interests and livelihood are being affected and that their customers support corrective action” (p. 1), and cites the impact of climate change on the tourism industry as one example. He then turns to the environmental practitioner community:

Also needed is better analysis by the environmental practitioner community.... It is difficult to account for and address global climate change at the project level.... We have tended to defer these global and/or landscape issues to strategic or programmatic impact assessment. (p. 1)

Hmm... it sounds like, in Dr. Draper’s view, the business practitioner and the environmental practitioner share the same trouble relating to a larger picture. I understand their difficulty, but a helpful suggestion on how to broaden the perspective of both camps comes just two pages later, in the James Montgomery’s (2014) “Letter from the Editor,” where he announces that this September issue will feature articles on the field of ecological economics where “recent research has focused on quantifying the monetary benefits of ecosystem services such as pollution, water filtration, and carbon storage” (p. 1). He goes on to state that the guest editor, Dr. Christie Klimas, is looking for manuscripts addressing such topics as these:

• ∙ Valuation of natural resources or ecosystems

• ∙ Ecologic–economic modeling

• ∙ Use of ecological economics to inform conservation

• ∙ Application of ecological economics in the preparation of environmental assessments and environmental impact statements

How might we address these two problems of perspective within the business and environmental practitioner communities that Dr. Draper articulates? While quite different audiences, could there be a way to connect the problems each group faces?

This essay attempts to describe ecological economics as a physical, political, and moral—as well as economic—system. I first set the context of the challenge “to address the unfolding crisis” within the ideological grip of “free markets” on economics (sects. 1 and 2). Seen in this broader frame, I then suggest ways in which we all might better develop, manage, and communicate sustainable strategies for both business and environmental practitioners to address the “unfolding crisis” (sects. 3–5).

1. The Problem and the Opportunity

[E]fforts to address the unfolding crisis are failing miserably.

Draper (2014, p. 1)

President Draper was echoing Aldo Leopold’s thoughts with this quote from his landmark work on “The Land Ethic,” which figures prominently in the story that follows:

[D]espite nearly a century of propaganda, conservation still proceeds at a snail’s pace.... On the back 40 we still slipped two steps backward for each forward stride. (Leopold, 1966, p. 243)

Leopold goes on to observe that the usual answer is “more conservation education... but is it certain that only the volume of education needs stepping up? Is something lacking in the content as well” (p. 243, his emphasis). What might be added content? Will more scientific data do the trick? That doesn’t seem possible with the daily outpouring of headlines. So what else is holding back awareness? A study conducted by Braman et al. (2011) found that if people were opposed to action on climate change, the more facts they got about it, the more dismissive they became. And for those inclined to action on climate change, the more they learned, the more committed they became—the familiar cognitive dissonance filtering phenomenon at work.

The polarization comes from the ever-enduring dualism of the collective versus the individual, not a new problem in human thought (e.g., Tocqueville, 1850/1969). Those who put personal freedom before all else see that climate change will just open the way of more regulation and infringement on human freedom. Business people in particular can see what is coming ahead (Braman et al., 2011; Krugman, 2014; Mirowski, Walker, and Abboud, 2013).

In opposition to the language of concern for the environment looms the huge edifice of the free market. The most forceful voices often come from the so-called Chicago school of economics, famously articulated by Milton Friedman (1962): “[T]here is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game” (p. 133). Specifically, efforts to move business to embrace social and environmental responsibility are “pure and unadulterated socialism” (Friedman, 1970, p. 33). In economic circles, this is called a preanalytic vision. However, Friedman goes on to cite what might be called such a preanalytic vision seven years after the initial “social responsibility” statement: “[M]ake as much money as possible while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom” (p. 33). This is a critical modification to the “increase profits” goal. So, where do our narratives, our “ethical custom” reasoning about reality, begin? What are our premises, beliefs, and values? Joseph A. Schumpeter, who coined the brilliant oxymoronic phrase “creative destruction” (1942/1962, p. 81) and was one of the giants of 20th-century economics, states that being aware of this vision is essential before proceeding with any sort of economic analysis (1954, p. 41).

Insightful genius that he was, Schumpeter is articulating the heart of the central debate or dividing line between science and philosophy. Science must be values free and only facts driven, as Schumpeter (1908/2009), in his early lectures, insists, “It is a sentence of fundamental importance that has never been stressed enough: exact economics is not a philosophy of the economic actions of humans” (p. 50). Much less their beliefs driving their actions. Contrast this with the opposite point of view, concluding a lecture given at the Harvard Business School, no less, by Alfred North Whitehead (1967): “Philosophy is an attempt to clarify those fundamental beliefs which finally determine the emphasis of attention that lies at the base of character” (p. 99).

Schumpeter (1908/2009) goes on to state such a philosophical belief:

[F]or our axioms, though, only one observation is necessary: that everybody wants to buy as cheaply as possible and sell as expensive as possible. (p. 24)

Hold on a minute... talk about a philosophy... a fundamental belief. This statement should be immediately recognizable to all of us as defining the familiar “rational optimizer, homo economicus” or “maximizing economic reasoner” that is the foundation—the fulcrum—of modern microeconomics.

Thus, we have no less authorities than Friedman and Schumpeter, leading advocates for free markets, making our case that we need both facts and beliefs—science and philosophy—working together to inform economics as a “moral science and not a natural science. That is to say, it employs introspection and judgments of value (Keynes, 2003a)... it deals with motives, expectations, psychological uncertainties” (Keynes, 2003b).

The premise of our argument in this essay is that ecological economics can be a method linking science and the humanities to present the ecological story more persuasively. We need both facts and beliefs working together, pragmatically as we will define in section 3 to bring about what has been called nothing short of a “global mind change” (Harman, 1998).

This pragmatic testing of beliefs through facts has a long and honored history, beginning with the world-changing episode of Copernicus and Galileo, which changed our understanding of the universe... and our place in it. This was perhaps the first example of systematically marshaling physical experiments specifically designed to test and refute a philosophical position (Edwards, 1967, p. 266).

In our present age, we are engaged in the daunting task of moving from the free-market individual or organization profit maximizer to the citizen and manager with an ecological conscience, resting “upon a single premise: that the individual is a member of a community of interdependent parts... to include soil, water, plants and animals, or collectively: the land” (Leopold, 1966, p. 239). Changing our understanding of our place in nature may just be as daunting as changing the medieval conception of our place in the solar system, much less the universe (Berry and Tucker, 2009; Lasn and Adbusters, 2012)!

If you think the importance of the idea of a preanalytic vision is overstated, consider the outrage engendered by any effort to address other problems (like financial reform, guns, income inequality, health, education, and regional planning) that might involve increasing the reach of government (Burgin, 2012). As one conservative has said, “[T]he real reason for progressives’ passion for trains [read also “environment”] is their goal of diminishing Americans’ individualism in order to make them more amenable to collectivism” (Will, 2011, p. 13).

Enter the comforting language of ecological economics and its focus on extending and deepening the idea of markets as ways of addressing human needs. In familiar supply-and-demand terms, “Consumption is the sole end and purpose of all production” (Smith, 1776/1981, p. 660), or in more modern terms, “All production is for the purpose of ultimately satisfying a customer” (Keynes, 1938/2006, p. 46). From this prosaic beginning, we will attempt to articulate the whole concept of human flourishing... in a finite world.

Economic studies are moving to the forefront of sustainable system management—for regions as well as for individual organizations (as indicated by the articles in this issue)—by taking the seemingly obvious step of quantifying the money benefits of ecosystem services. Where might these environmental economic ideas be articulated and taught? We should look to our schools of business and particularly the enormously successful master of business administration (MBA) programs

2. Business Education—The MBA

There has been a battle for the soul of business education ever since the nation’s first business school—the Wharton School—was attached to the University of Pennsylvania in 1881. The debate raged over the nature of business as profession, like medicine and law, versus business as profit maker/maximizer (Kelley and Nahser, 2014). It is a battle many academics and observers think we are losing (Ferraro, Pfeffer, and Sutton, 2005; Ghoshal, 2005; Khurana, 2007; Porter and Kramer, 2011; Wang, Malhotra, and Murnighan, 2009).

Economics can be seen as the primary battlefield because the usual definition of economics is something along the lines of the allocation of scarce resources that have alternative uses. That about covers all the investment activities we engage in. Mathematical equations then help determine and describe various pricing, supply and demand, and optimal distribution strategies, (almost) always based on notions of rational optimizers. But many economists and commentators are persuasively and passionately dissenting (Drucker, 1993; Faulhaber, 2005; Khalil, 2004; Mintzberg and Gosling, 2002; Spash, 2007, 2012, 2013). We will hear from one prominent Chicago school dissenter, Gary Becker, in the final section.

Today, along comes concern for the environment. The tried-and-true answer put forth by econometricians is simply to put prices on the natural system and—voilà—let the free market sort things out. Back to business—and business education—as usual. But many economists are coming to acknowledge that it is not that simple and are even decrying what they call the shallow or new environmental pragmatism. They are beginning to distance themselves from relying solely on environmental economics and are coalescing around such ideas as pragmatic and social philosophies to “stimulate discussion leading to progress and a new synthesis or a transformation in thought” (Spash, 2011, p. 380).

How might you go about stimulating this kind of thought? A growing number of philosophers and ecological economists are looking to philosophy to help in this effort, and they are coming to examine and apply Pragmatism: America’s only original contribution to the history of philosophy, and not the consequentialist “whatever works” definition. Scholars of all stripes are coming to see that this method of inquiry can help stimulate the conversations many feel need to take place—but, more importantly, we think there is an opportunity to see it as a way of practicing ecological economics (Davis and Marciano, 2004).

3. Pragmatism: A Method of Inquiry

The theory of economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a technique of thinking which helps its possessor to draw correct conclusions.

—John Maynard Keynes (1922, p. v)

What would a simple method of inquiry—an “apparatus of the mind, a technique of thinking”—actually look like? As stated in virtually every introductory economics textbook, we begin with the basic purpose of any organization—profit, nonprofit, or government—which is that it exists to serve a need. Every pragmatic inquiry has the goal of developing a so-called sustainable strategy to serve some need.

There are many intricacies and subtleties to the pragmatic philosophy. So as not to scare off the business community, we seldom mentioned that it really is the practice of ontological epistemology. Rather, we engage inquirers directly by asking ontological, epistemological questions along these lines: Who are we, how do we know who we are, what is our purpose, what do we value, and what we are to do (Nahser, 2009, 2013)? At heart it’s very simple: we know who we are by our actions. Our beliefs are evident by their consequences or, in familiar terms, “By your fruits you shall know them” (Metzger and May, 1977, p. 1179). In this case, we are referring to actions as strategies. The process begins with five simple questions that any action-oriented person will intuitively understand:

• As you move forward, what market need, problem, issue, or opportunity do you see that you and your organization might address?

• What challenges, questions, barriers, concerns, problems, or issues do you face in meeting this need?

• What is your preliminary answer now?

• What are your organizational and personal values and vision, and how are they impacting your answer?

• What actions are you planning to take, or are taking now?

In keeping with the spirit of pragmatic inquiry, which is to start with a position of doubt, we then treat the answers to these five questions as hypotheses to be tested. We then go through a very simple process, though it is much deeper than the usual see, judge, act. It involves multiple mind-sets and looks something like a cable or rope, with many strands of thought (Peirce, 1868/1998) (Figure 1).

Figure 1 The pragmatic inquiry helix.

During the explore phase, we ask the participants to look at their inquiry topic and challenge question through the lens of different perspectives—a so-called stakeholder analysis to see the idea as part of a larger community (Nahser, 2009, 2013, Peirce, 1868/1998) (Figure 2).

Figure 2 The stakeholder network.

As participants go through the various exercises and explore different points of view, they begin to see their project of meeting some need—the fundamental purpose of any economic activity—within what we might call an ecological economic systems perspective (Nahser, 2012, 2014).

With this understanding of the system (see Figure 3), they can more clearly see leverage points where the change can be made (Meadows and Wright, 2008). They articulate the narrative networks forming their systems and often literally draw or map what the systems looks like now and how it might look after their intervention. While this method of inquiry has been taught extensively over the past 30 years engaging thousands of business practitioners, the work of environmental practitioners, analyzed from this perspective, can help further literally ground and enrich the practice of the ecological economics.

Figure 3 A values-driven economic model.

We offer pragmatic inquiry as a way to further address Draper’s call for “better analysis by the environmental practitioner community.” And to heed Leopold’s (1966) concern that “conservation has not yet touched these foundations of conduct lies in the fact that philosophy and religion have not yet heard of it” (p. 246). But he would be delighted to know the outpouring of thought, articles, and books around the subject, often framed in the terms of pragmatism and the environment (Light and Katz, 1996; McDonald, 2004; Norton, 2005) such as we have just outlined. Your community provides much in return by literally providing the ground for pragmatic inquiries through your projects, which are cited on virtually every page of Environmental Practice.

4. How and Where Do Environmental Practitioners’ Projects Fit in Ecological Economics?

The image commonly employed in conservation education is called the ‘balance of nature.’... A much truer image is the one employed in ecology: the biotic pyramid.... Land... is a fountain of energy flowing through a circuit of soils, plants, and animals.

—Leopold (1966, pp. 251, 253)

If this is true at all, then your work points the way toward the land ethic that Leopold spent his life articulating and advocating. We can all then see our projects—commercial and environmental—as parts of the pyramid that connects us all. It might be the way to get us beyond the usual cost–benefit, self-interest calculations. Think of your projects as emerging niches, just as new species emerge within a competitive ecosystem, in some way playing a role in a similar kind of community building. Your projects help make the whole ecosystem—market—more vibrant and attractive to investment by framing the projects as filling various societal needs. They may be called public goods, such as water and air, or they may be even more closely connected to economic activity, such as parks and wetlands. We are beginning to realize that these are really common goods—res communes—an ancient idea from Roman and Justinian law (Ando, 2008, p. 78), identifying the middle ground between public goods and private goods. These are goods that literally link us and begin to get us beyond the usual cost–benefit, self-interest, profit-maximizing analysis (Ostrom, 1990).

Too vague a thought? On the contrary, this seems to be all that moves people to take the stance together for the common good (Bornstein, 2012). And, if the movement of events proves right, we are moving toward better articulating a long-standing idea deeply understood in the environmental community.

5. Toward an Ecological Consciousness

All ethics so far evolved rest upon a single premise: that the individual is a member of the community of interdependent parts. His instincts prompt him to compete for his place in the community, but his ethics prompt him also to co-operate (perhaps in order that there may be a place to compete for).

Leopold (1966, p. 239)

In this essay, we have taken as a basic premise that economics needs to embrace ecological economics as a way of getting beyond the narrow profit maximization calculus driving strategic decisions today. Our premise has simply been that if rational, thoughtful people examine a particular need or problem within a larger systems context, they will come to a better understanding of possible solutions and strategies.

I have referenced the fortress of the Chicago school of economic thought on tying economics directly to the exercise of individual freedom. One of their stars, Gary Becker, who pioneered the approach to economics as the study of human behavior, opened his Nobel laureate address “The Economic Way of Looking at Life” with these words:

I have tried to pry economists away from narrow assumptions about self interest. Behavior is driven by a much richer set of values and preferences. (Becker, 1992, p. 38)

This may appear as counterintuitive, but by comparing and contrasting Becker’s thoughts with Leopold’s on the limits, or rather the expanse, of self-interest, we can see how their views—from such different starting points—can enrich the study of ecological economics.

Since I have been arguing that we need to position the ecological crisis within a larger social and ethical context, let’s take another world-changing example: the founding of this nation—from the signing of the Declaration of Independence to the ratification of the Constitution. It shows how this kind of argument for decisions and actions beyond narrow self-interest plays out.

The story, of course, is a familiar one: How do you balance the interest of the states versus the central government. On and on the debate went between the Federalists, who favored a strong central government and the anti-Federalists, who wanted a weaker central government and more states’ rights. The first draft of the Constitution was called Articles of Confederation. The debate among thoughtful uneducated people raged on for several years. In another example of the power of a well-reasoned argument, it was primarily the Federalist Papers that articulated the case for a stronger central government and eventually carried the day

Later, the South in the Civil War was called the Confederacy to return to this idea of states’ rights. Abraham Lincoln, in his genius, launched the Civil War on this issue when he forbade Kansas to allow slavery. Many politically conservative commentators, no friends of strong central government, acknowledge that this was a brilliant act of “statecraft as soulcraft” (Will, 1997, p. 105). A similar issue is going on today as chief executive officers (CEOs) around the country are fleeing to business-friendly states defined as “states that reduce the burden of government and extend greater economic freedom tend to grow and expand more rapidly than those that do now” (Donlon and Buss, 2014, p. 25).

Have the CEOs forgotten the oldest American story that citizens who developed local communities were a key element of what built this country, as articulated by Elizabeth Warren in her successful Massachusetts senatorial race (“Elizabeth Warren’s Appeal,” 2011; Madison, 2011)? Enlightened, commonsense CEOs recognized that it was good for them not just financially but in the pride they took in exercising their freedom, industry, and creativity (Bellah et al., 1991; Pope Francis, 2014). The CEOs’ workers had a safe, productive environment to work in and in which to raise and educate their families. It made the town and region more attractive for business and tourism. This thinking drove and guided the development of the Plan of Chicago in the early 20th century, better known as the Burnham Plan (Smith, 2006). Today, consider also the inspirational work of Elinor Ostrom, another Nobel laureate who pioneered research on the Commons as communities, bioregions, and watersheds that need to be protected for the good of all—resurrecting the time-honored concept of the Common Good (Nahser, 2012, 2104). In all these examples, you can see ecological economics as an evolving narrative or story engaging us all in this practice.

Contrast this concern for the common good with the mind-boggling debacle created by the free-market advocates to weaken regulation and unleash the creative power of the financial world to improve overall society, leading to the Great Recession instead. This cautionary tale should show us all just how deeply embedded is the belief in unfettered free markets, especially among the financial markets themselves (Burgin, 2012). But a few voices have been articulating another point of view (Madison, 2011; Yohanan, 2011). Studying them offers insights into framing and language for ecological economic communication, as well.

Is all this too far-fetched; a chasm too great for economics to bridge? Refer to Adam Smith’s (1759/1976) foundational documents launching the classical economic era in the 18th century. In his first book, revised through five editions—Theory of Moral Sentiments—describing his system of moral philosophy, he concluded his analysis of society by attacking the narrowness of self-love; what we would describe as self-interest, enlightened or otherwise:

In directing all our actions to promote the greatest possible good... in regarding oneself but as one of the many... consisted the perfection of virtue. (p. 303)

But in earlier, seldom-read writings, a collection of essays published posthumously, Smith (1795/1980) describes his principles of philosophical inquiry as applied to the history of astronomy and the application of the scientific method. It is no coincidence, by the way, that, in all three works, the famous “invisible hand” is referenced.

Having established methods or systems of inquiry and moral philosophy, Smith (1776/1981) then went on to outline the subject of economics by writing Wealth of Nations. Putting the three books side by side, we can see a way for ecological economics to reweave science, virtue, and free-market fundamentals together as the practice of moral philosophy.

Aldo Leopold (1966) articulated similar vivid concepts as covered in the sections “The Ethical Sequence,” “The Community Concept,” and “The Ecological Conscience” pointing the path toward a true “Land Ethic” (pp. 237–264), an essay that began with the premise that ecological arguments must be framed within the larger context of democracy and freedom to get us beyond the increasingly divisive individualist vs. collectivist dualism that characterizes today’s debates.

Ecological economics (Common and Stagl, 2005; Daly and Farley, 2004) offers the language and concepts for bringing together the thoughtful members of the business and the ecological practitioners communities so they can develop strategies in their local areas—maybe over a cup of coffee or a pint or two—to serve the common good (Woodworth, 2013, p. 131)... to protect and restore our cherished land of the free and home of the brave.

It is fitting to give Leopold the last word, because he argued that

[g]ood citizenship is the only effective patriotism, and patriotism requires less and less of making the eagle scream, but more and more of making him think. (Leopold, Flader, and Callicott, 1991, p. 147)