Economic pluralism, yes – but don’t ignore the planet.

The rewrite of economics is on the move. Student groups from 30 countries (and rising) recently issued a call for a pluralist approach to teaching economics. Known as ISIPE – The International Student Initiative for Pluralism in Economics – they plainly point out that, ‘What is taught shapes the minds of the next generation of policymakers, and therefore shapes the societies we live in.’

Their mission? To get universities teaching a range of economic perspectives, theories and methods, rather than offering neoclassical economics alone, which has throttled (or ignored) its academic competitors for decades. ISIPE is a fantastic initiative, led by an inspiring cohort of next-generation economists (and economic cartoonists).


Cartoon by Neil Lancastle and Sophie Bedard of ISIPE

Their call for pluralism is a smart strategy: who could reasonably object to alternative points of view being aired? Some universities are responding – like Kingston University in London, which has just appointed Prof Steve Keen to head up its Department of Economics, History and Politics, and is promising that it will be a great place to rethink economics.

So pluralism is in. But just how plural is it shaping up to be? Will all economic perspectives that matter for future policymakers get a place in the new curricula? I’m starting to doubt it.

Having a choice of theories to debate is great, but surely they should include among them perspectives that capture the defining characteristics of the times. And one of the most defining facts of our times – one which makes this era so utterly different to the days of the founding fathers of economics – is that the scale of the global economy in relation to the biosphere has been profoundly transformed.

Today the global economy is 300 times greater than when Adam Smith wrote The Wealth of Nations, and over 10 times bigger than when Paul Samuelson wrote his classic textbook Economics in 1948 – just before the ‘Great Acceleration’ of rapidly increasing use of cars, fertilizers, water, and energy, matched by rapid growth of deforestation, greenhouse gas emissions, and chemical pollution. Yet Samuelson’s pre-acceleration worldview still underpins almost all economics textbooks today.

Ignoring the economy’s dependence on Nature’s sources and sinks looks increasingly ridiculous. It means that the classic diagram of the Circular Flow of Goods and Money – featured in almost every textbook – amounts to little more than a magic trick. Why? Because it presents inputs of capital and labour as the factors of production which are then transformed into outputs of goods and services. And so it conjures those goods and services out of thin air, and disposes of their wastes without a trace. In doing so, it defies the first law of thermodynamics which tells us that matter and energy cannot be created or destroyed. Fun for a magic show, but worrying for a discipline whose conceptual frameworks form the back bone of public policy.

The Circular Flow of Goods and Money: a magic trick

Recognising that the economy is a (rather large) subset of ecological systems has to be a foundational starting point for 21st century economics. As Herman Daly and many other ecological economists have long pointed out, we have gone from Empty World to Full World. Indeed, we have entered the Anthropocene, the geological era in which humanity is the major driver of change at the Earth system scale – and we are driving much of that change through economic activity.


From empty world to full world. Size does matter.

So I’m worried. Because recognising the ecological foundations of the economy does not seem to feature high among priorities in the current academic promise to rewrite the teaching of economics.

Much of the current call for pluralism was triggered by the financial crash of 2008. It quickly gave rise to books promising the rewriting economics, but their focus was clear, from Adair Turner’s Economics After the Crisis, and Diane Coyle’s What’s the Use of Economics? Teaching the Dismal Science After the Crisis and Philippe Legrain’s After Shock: reshaping the world economy after the crisis. The words ‘after the crisis’ sing through every time. The economy created just one crisis, it seems, and we are through it.

But these are not the only books on rewriting economics. So I held out high hopes for Ha-Joon Chang’s just-published book Economics, The User’s Guide. It’s brilliantly written and gives the reader a really valuable overview of many heterodox approaches alongside the mainstream. Chang compares and contrasts what he calls the nine major schools of economics (classical, neoclassical, Marxist, developmentalist, Austrian, Schumpeterian, Keynesian, institutionalist and behaviouralist) but – to my real surprise – he gives only a footnote of passing mention to ecological economics, and moves swiftly on.

So I turned next to the Institute for New Economic Thinking and its promising CORE project, the Curriculum in Open-access Resources in Economics, which is about ‘teaching economics as if the last three decades had happened’. Great strapline, and quite a lot has happened to the biosphere over the past 30 years. So will CORE deliver?

CORE’s twenty modules are works in progress on their website at the moment, so it’s too early to say exactly how much the curriculum will acknowledge the ecological underpinnings of the economy. But to be honest I don’t feel it bodes well. Yes, the first module promises to present climate change as an example of the negative impacts of contemporary capitalism. But out of the twenty modules planned, it’s only when we reach Module 17 that we learn about ‘The economy of the Earth’ (does that make it something separate from the rest of the economy?). And in the outline of the whole curriculum there doesn’t appear to be any room to discuss whether or not unlimited economic growth is theoretically, technically or socially possible. Yet this question has ramifications for every school of thought that presumes an endlessly growing economy – ie all of them.

So yes to the call for pluralism in economics. It’s a sure step forward from the long-held monoculture of neoclassical economics. But so far this version of a ‘pluralistic’ response is shaping up to be an unhelpfully narrow one, putting the behaviour of financial markets and the monetised economy at the heart of its rethink, while leaving the economy’s (and of course humanity’s) life support systems in the margins of concern.

I hope the activists in ISIPE and every other student group calling for rewriting the way economics is taught will push back against such a narrow interpretation of economic pluralism. As the future policymakers of the 21st century, the challenge of ecological crisis is hardly something they can afford to let drop off the curriculum.

26 May Update: movement in response to this blog:

1. Prof Steve Keen has agreed, via Twitter, that economics must start with the laws of thermodynamics. Go Kingston! You get my vote. 

2. Tim Phillips of INET’s CORE online economics curriculum has confirmed (in a comment below) that one of the goals of the course is “to teach that the economy is an integral part of a biological, physical and social system”. My response: if CORE puts this commitment at the heart of its conceptual framing, it can be truly ground-breaking in the teaching of economics. I’m watching with hope…

Keep up with this debate by subscribing to the Doughnut Economics blog in the side bar, and get in touch on Twitter @KateRaworth

21 thoughts on “Economic pluralism, yes – but don’t ignore the planet.

  1. 23 May 2014 at 09:04

    Kate, thanks for an interesting article. The CORE project is in its early stage, but we are working to make sure that humanity’s life support systems will not be in the margins of our material. One of our goals has been to bring traditional “back of the textbook” topics to the front and to teach that the economy is an integral part of a biological, physical and social system.

    One example – we frame the discussion of strategy, altruism and cooperation (Unit 4) like this:

    “To avert a climate catastrophe we need to cooperate on a vast scale, but individuals and firms may benefit by continuing to do business as usual in the hope that everyone else will take the steps to meet the challenge. The problem of climate change is called a social dilemma: a situation in which we all benefit by cooperating towards some common goal; but each of us as individuals, if we are entirely self-interested, can benefit by reneging on this cooperation. We call it a dilemma because, if this is true of everyone, and if everyone is selfish, then it is difficult to see how people would ever cooperate – even though they would be better off if they did.

    “We will analyse climate change in more detail in Unit 17. In this unit we introduce social dilemmas and show how they can be surmounted. Humanity has been dealing with social dilemmas since prehistory, and we have learned a lot about our capacity to cooperate and why we sometimes fail to do it.”

    Also at our launch, Juliet Schor spoke powerfully about the importance of teaching the limits to growth:

    When we test the course we will be as open as possible to feedback like yours. It’s one of the advantages of electronic publishing that our materials can be constantly improved.

    1. 23 May 2014 at 11:25

      Many thanks for your comment Tim and that’s very encouraging to hear. If you can teach that the economy is part of a biological, physical and social system from the outset, you will be making a huge difference to the pre-analyical vision that students bring to their studies and that is crucial. CORE is a really important project for many reasons and I really look forward to seeing it evolve.

      1. 23 May 2014 at 13:33

        Thanks Kate. We’re very happy to have this type of debate, and will do our best to keep everyone informed too.

        1. 23 May 2014 at 21:40

          Great, Tim. And I’m hoping, therefore, that the Circular Flow of Goods and Money diagram (which is planned, according to the website, to be in Module 1) will be depicted:

          a) as a subset of the biosphere, and not circular at all (because that would be a magic trick)

          b) as drawing on inputs and generating outputs of matter and energy, interconnected with Earth’s sources and sinks.

          If CORE can start with that richer diagram, it will be truly ground-breaking in the teaching of economics.

          1. 6 June 2014 at 11:30


            Sorry for the late reply. I’d encourage you to discuss this with Wendy Carlin at UCL, who heads the CORE steering group. Although we are still testing the course material I think she can give you some insight that will reassure you. You are welcome to contact her direct, or I can pass on a message if you email me!

          2. 6 June 2014 at 13:21

            Thanks Tim, I will do.

  2. 23 May 2014 at 09:19

    Great blog piece (as ever). But I have a number of concerns with current approaches to ecological economics. In particular, where is the equity? With a very few exceptions (you, Caroline Lucas and a few others), advocates for new economics are, to my mind, worryingly indifferent to the political economy of distribution.

    The data from Piketty, Tony Atkinson and Emmanuel Saetz’s top incomes data base (and Piketty’s best-seller version) capture how the benefits of ecological mining are skewed towards the elite (witness the secular decline in labour’s share of income). Meanwhile, the risks and vulnerabilities that come with over-exploitation of water tables, carbon sinks etc. are carried disproportionately by the poor. I can’t help wondering whether plugging in some good old-fashioned marginal utility numbers adjusted for distribution might reveal some interesting results.

    Keep up the great work!

    1. 24 May 2014 at 20:13

      Kevin, many thanks for your comment. I’ve been slow to reply because I’ve been mulling it over – and having thought further, I don’t agree that ecological economists are indifferent to the political economy of distribution.

      One basic test is a look at textbooks. The two Ecological Economics textbooks that I have to hand (Common and Stagl, Daly and Farley) both have explicit chapters addressing the issues of poverty, distribution, inequality, justice, wellbeing. It’s far far more explicitly addressed than anything I’ve seen in an Econ 101 textbook.

      But you are right that we don’t get to hear enough about it. And I think that is because ecological economists end up spending so much energy having to make the case that we need to understand the economy as a subset of ecological systems, they rarely get a chance to go further in debate with the analysis. Of course they could jump the debate further by pointing out, as you say, the profound distributional questions of resource use and ecological degradation.

      I agree, plugging in marginal utility adjusted for distribution is one way to make the issue visible. Better still, how about an approach to economics that recognises human rights from the outset. That has never been cracked (and barely been tried). I’d love to hear from anyone tackling it.

      Many thanks again for the comment.

      1. 25 May 2014 at 09:55

        “Better still, how about an approach to economics that recognises human rights from the outset. That has never been cracked (and barely been tried). I’d love to hear from anyone tackling it.”

        Well we are, sort of. Our work isn’t fundamental economics research or teaching, but rather the attempt to apply what can broadly be termed steady-state thinking to our local and bioregional economy in Manchester (as in our ‘In Place of Growth: Practical steps to a Manchester where people can thrive without haring the planet’. “Steady State” though is a bit of a turn off, so we are refreshing our work with a more positive message, talking now about the ‘viable economy’ – where we mean ecological, social and economic viability. That seems to be resonating with people, but we are just beginning the hard slog of putting that down on paper. It also makes for a straightforward message on things like measurement – we have to align economic, social and ecological indicators. But yes, we too would be very keen to hear of anyone attempting something simlar.

        1. 25 May 2014 at 21:25

          I agree, Mark, steady state can be a turn-off, or at the very least confusing (what’s being held steady?…). A viable economy makes more sense, especially if well defined. I’d love to see what comes out on paper as you go.

  3. 23 May 2014 at 09:31

    I fear that we will need more crises before those in ivory towers face up to practicalities.

  4. 23 May 2014 at 17:28

    An excellent piece as always. I don’t agree with Kevin that equality is generally ignored by ecological economics. Look at the Enough collection, Dally’s own work, DOuthwaite/FEASTA’s ‘SHaring for Survival, not to mention the more socialist inspired degrowth fork. Our own attempt to articulate the approach in relation to a local/bioregiona economy has certainly emphasised this, and we’ve worked with equality and anti-poverty campaigners precisely on this question.
    My concerns are a bit different – I see the North American school of ecological economics as rather naive with regard to the drivers of GDP growth – they tend not to problematise capitalist accumulation. They also tend not to emphasise that the implications of climate change almost certainly imply the need for areduction in the scale of economic activity (as we know it) so tending to a steady state won’t give us rapid enough reduction of the emissions that continue to cumulate devastatingly.
    But with that caveat, I think Kate is absolutely right to take the heterodox economics project to task for not giving sufficient emphasis to the ecological basis, and limits, for the economy. But the tools of the other elements (Marxian, post-Keynesian, etc) of the heterodoxy are needed to deal with the generative processes.

    1. 23 May 2014 at 21:13

      Great comment Mark.

  5. Karl J.G.
    24 May 2014 at 02:52

    is it your position to leave or let go of the teachings of environmental and natural resource economics since they are for a fact a subset of neoclassical economics?

    1. 24 May 2014 at 20:24

      Hi Karl. My main concerns with environmental economics, as I have seen it taught, are

      a) it is rarely introduced as one among several possible approaches to understanding the environment-economy relationship. It is just presented as *the* approach.

      b) it introduces environmental issues through the lens of externalities. As Bernard Lietaer (known for his work on complementary currencies) once commented on this framing, “If you think the environment is external to your system of concern, why are you talking about it?”. If we shift from externalities thinking to systems thinking, then environmental degradation becomes a feedback loop within the wider system, and an important one at that.

      c) environmental economics rarely addresses the question of scale: the material scale of the economy in relation to the biosphere’s sources and sinks. This is a key question in these days of the Anthropocene (particularly concerning the feasibility of ‘sustainable growth’, and sufficient absolute decoupling of GDP from resource use and pressure) but it very rarely arises.

      There is an excellent journal article by Tom Green (now at the Stockholm Resilience Centre) which reviews and assesses the treatment of sustainability in Econ 101 textbooks. I strongly recommend it as a great source for anyone who wants to understand the analytical consequences of framing economic-ecological issues through the lens of environmental economics.

      Green, T. L. (2012). Introductory economics textbooks: What do they teach about sustainability? International Journal of Pluralism and Economics Education, 4(3), 189–223. doi:10.1504/IJPEE.2012.049198

      And you can read it for free here:

  6. Frank
    24 May 2014 at 15:47

    I have taught an ‘Economics of the Environment’ module for the past 3 years that attempts at viewing the ‘environment’ and the ‘economy’ as two aspects of what is a single systems that has evolved jointly over millennia. What does continuously pose a problem is the degree to which the ‘typical’ economist or economics undergraduate is alienated from the workings of the natural world. An alienation they share with a large fraction of the urban population I should add. My conclusion is … Bridging that gap requires real work and takes more than a single term … but it is definitely worthwhile. And I do like seeing when it suddenly dawns on a student for the first time that human economic thinking is as much a product of evolution as the human capacity to use technology … both things we share in different degrees with our fellow organisms on this planet.

  7. Ben
    28 May 2014 at 10:24

    It is inspiring to read about the CORE approach and the comments below. I agree with Frank in that our whole worldview, unconscious values and frames of meaning (as George Lakoff would describe them) have become out of alignment with the fundamental principles of life, biology and interconnectedness. Even studying mainstream economics with its reductionist, dissociated language has an effect on how you view human society and life in general This initiative is very much needed and I wish Tim and all the CORE team good luck and strong hearts in starting to change an archaic, unbalanced but very entrenched worldview.


  8. Caroline Walker
    29 May 2014 at 13:15

    Great article. Can I possibly also signpost you to the Ellen Macarthur Foundation’s work on the circular economy as another useful contribution to the challenge to conventional economics?

  9. Olaf Schilgen
    29 May 2014 at 22:12

    The question for an economic theory integrating the physical world is a breath of fresh air for me. That is the core of my work.

    I would say, the answer is the use of “Energy as the numéraire for any given economy always and everywhere”.
    It is the total amount of energy used to directly produce all common or capital goods and to deliver all kind of any given services.
    This single physical unit gives the physical scale for the economic circle – it defines the total size of the “100 %” of each years economic size.