Compiler Press'

Elemental Economics

Not Accounting, Not Business, Not Commerce, Not Mathematics  - Economics  






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Cultural Econom


Compiler Press

Compleat World Copyright Website

Competitiveness of Nations

Cultural Econom


Elemental Economics

World Cultural Intelligence Network


Dr. Harry Hillman Chartrand, PhD

Cultural Economist & Publisher

Compiler Press


215 Lake Crescent

Saskatoon, Saskatchewan

Canada, S7H 3A1

Curriculum Vitae


Launched  1998




1.0 Introduction


In this course we will explore one of the most controversial questions of our times: the economics of the environment.  To do so we begin with radical definition of terms and key concepts.  By radical I mean root meaning.  Before doing so, however, it is appropriate to locate 'environmental economics' within Economics as a discipline.  I direct your attention to  Journal of Economic Literature (JEL) Classification System used by the American Economic Association for all economic literature.  It falls under category Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics.  Here is the recognized 'range' of thought (at the moment):


Q0 - General

 Q00 - General

Q01 - Sustainable Development

Q02 - Global Commodity Crises

Q1 - Agriculture

 Q10 - General

Q11 - Aggregate Supply and Demand Analysis; Prices

Q12 - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

Q13 - Agricultural Markets and Marketing; Cooperatives; Agribusiness

Q14 - Agricultural Finance

Q15 - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

Q16 - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

Q17 - Agriculture in International Trade

Q18 - Agricultural Policy; Food Policy

Q19 - Other

Q2 - Renewable Resources and Conservation

 Q20 - General

Q21 - Demand and Supply

Q22 - Fishery; Aquaculture

Q23 - Forestry

Q24 - Land

Q25 - Water

Q26 - Recreational Aspects of Natural Resources

Q27 - Renewable Resources and Conservation: Issues in International Trade

Q28 - Government Policy

Q29 - Other

Q3 - Nonrenewable Resources and Conservation

 Q30 - General

Q31 - Demand and Supply

Q32 - Exhaustible Resources and Economic Development

Q34 - Natural Resources and Domestic and International Conflicts

Q33 - Resource Booms

Q38 - Government Policy

Q39 - Other

Q4 - Energy

 Q40 - General

Q41 - Demand and Supply

Q42 - Alternative Energy Sources

Q43 - Energy and the Macroeconomy

Q47 - Energy Forecasting

Q48 - Government Policy

Q49 - Other

Q5 - Environmental Economics

 Q50 - General

Q51 - Valuation of Environmental Effects

Q52 - Pollution Control Adoption Costs; Distributional Effects; Employment Effects

Q53 - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

Q54 - Climate; Natural Disasters; Global Warming

Q55 - Technological Innovation

Q56 - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

Q57 - Ecological Economics: Ecosystem Services; Biodiversity Conservation; Bioeconomics; Industrial Ecology

Q58 - Government Policy

Q59 - Other


1.1 Definitions: Economics, Ecology & Environment

I begin with literal definition of the three titled terms and then expand them into their contemporary context.  Economics derives from the Greek meaning ‘management of the household’.  Ecology derives from the Greek meaning ‘life in and around the household’.  Environment derives from the old French meaning “the objects or the region surrounding anything” or, alternatively “the conditions under which any person or thing lives or is developed; the sum-total of influences which modify and determine the development of life or character”.



Economics as management of the household raises the question: What is the relevant household?  In its original sense it was the self-sufficient or autarkic rural estate.  Management, however, ascended to higher orders as the self-sufficient village, town, city and most recently the Nation-State.  A global society in which there is contiguous urban development separated only by natural barriers – mountains, oceans and deserts - has been called the Ecumenopolis – the World City - by urban planner Constantinius Doxiadis; its global reality is visible in a composite photograph of “The World at Night” published by NASA in the year 2000.  If seeing is believing then it provides visual evidence of humanity enframing its home planet.  We see a World City whose shimmering lights soar out into the infinite blackness of space.  However, there is no global economics, no generally accepted model for managing the planet.

As a modern discipline of thought Economics began with the French Physiocrats portraying the Nation as a giant estate in which the surplus required for growth and development came from agriculture – one planted seed yields 1000, that is productivity.  The Physiocrats, however, lost their heads to Madame Guillotine during the French Revolution and the locus of Economics shifted to England, to Adam Smith and to the surplus generated by the division and specialization of labour in manufacturing.  The paradigm shifted from biology to mechanics.  We will apply the resulting model - ‘X’ Marks the Spot - in Part 2.0 Environmental Economics.



With Ecology defined as the study of ‘life in and around the household’ we leave mechanics for biology.  The world according to theoretical biology is composed three spheres: (i) the geosphere, the world of physics and mechanics; (ii) the biosphere, the world of biology or life; and, (iii) the noösphere, the world of human thought.  To Aristotle, there were four causes: material, efficient, formal and final.  In this regard it is important to recall that Aristotle was a biologist, not a physicist.  Arguably, the geosphere is governed by material and efficient causes, i.e., when-then or billiard-ball causality.  In the biosphere, however, formal and final causes or ‘causality by purpose’ is at work while in the noösphere of human thought arguably all four are at play. 

There were three aspects of living things that demonstrated to the philosopher Immanuel Kant that teleological or final causes were involved.  I call these: ecology, metabolism and ontogeny.  First, he could see that the web of mutually supportive relationships between various species of plants and animals constituting an ecological community was so complex that linear ‘when-then’ causality was simply insufficient to explain its existence.  Second, in the metabolism of living things each part is reciprocally means and end to each other.  This involves a mutual dependence and simultaneity that is difficult to reconcile with ordinary causality.  Third, in ontogeny, or development of the individual, the future mature end-state guides successive stages of development.  This is a clear case of formal and final cause.

Ecology involves not just the web of mutually supportive relationships in a rain forest or the Arctic.  It involves you and I.  To drive the point home but to avoid the digestive example of ‘Montezuma’s revenge’ I ask those wearing short sleeves to take their thumb and touch the inside of their elbow. There you will find some 182 species of microbes.  In fact a whole new science is emerging: the human microbiome involving the study of all the microbes that live in and on people.  Given that human beings depend on their microbiome for essential functions including digestion, a person is really a superorganism consisting of one’s own cells and those of all associated symbiotic bacteria.  In fact, bacterial cells outnumber human cells by 10 to 1, meaning a person is, in a sense, a minority in one’s own body.

Following Marjorie Grene, mother of the modern philosophy of biology, every organism lives in an active environment consisting of: (i) invariants, e.g., the river, the ocean, the sky, the mountains, the seasons, etc., and, (ii) affordances presented by predator, prey, possible mates and/or symbionts.  Environmental invariants become subsidiary or ‘tacit’ to focal awareness of affordances.  In this view, ‘knowledge’ is orientation in an environment resulting from tacit integration of subsidiary and focal awareness into a gestalt whole called ‘knowing’.  While Darwin identified ‘survival of the fittest’ modern biology has identified coevolution as a dominant force at play.  Thus the humming bird’s bill evolved to perfectly match the orchid’s blossom. 



Environment as “the sum-total of influences which modify and determine the development of life…” is a much looser concept.  On the one hand it refers to all that surrounds us as individuals and as a society including the geosphere and biosphere as well as the human built environment of which more below under Technology.  On the other hand Environment often refers to Nature untouched by human hand.  This romantic view arguably dates back to Jean-Jacques Rousseau whose work heavily influenced the French Revolution of 1789 as well as Western art and literature ever after. 

Arguably the modern environmental movement was born with publication of Silent Spring by Rachel Carson in 1962.  Carson identified the unintended consequences of DDT.  Intended to control insect pests infesting agricultural crops and transmitting diseases like malaria and yellow fever, DDT unintentionally thinned the shells of bird’s eggs resulting in a dramatic decline in their population threatening a ‘silent spring’.  This highlights two critical aspects of environmental studies.  First, human actions can have unintended consequences on the environment that surrounds us.  Second, it is only with new knowledge that such consequences can be recognized.  Thus ‘ignorance’ defined as the absence of knowledge can be cured but as the old saying goes: Knowledge will set you free but first it will hurt you!


1.2 Concepts

Four critical concepts need to be established before exploring the economics of the environment.  These are Technology, Ideology, Price and Value Theory.



The word ‘technology’ derives from the Greek techne meaning Art and logos meaning Reason, i.e., reasoned art.  In its modern sense the term was introduced in 1859 by Sir Richard Francis Burton, Victorian explorer and translator of the Kama Sutra, the Arabian Nights and the Perfumed GardenTechne, however, dates back to the ancient Greeks for whom it signified all the Mechanical Arts except medicine and music.  As such, it was suitable only for the lower classes not for the upper class which practiced the Liberal Arts of ‘free’ men.  It was thus in ancient Greece that the English aphorism ‘gentlemen don’t work with their hands’ had its beginning.

Before 1859 there was art, craft and mechanics; afterwards, technology.  While early attempts were made to formulate philosophies of mechanics, they remain footnotes in history including Ernst Kapp who in 1877 coined the term ‘philosophy of technology’.  It was, however, Karl Marx who ten years earlier produced the first true philosophy of technology with his Das Kapital combining ‘the means of production’ with a critique of a rapidly industrializing society. 

Martin Heidegger, however, is in fact the father of the post-Marxist or modern philosophy of technology (1954).  Technology enframes and enables Nature to serve human purpose.  This is not just a technological imperative, it is also a biological one.  Organisms do not simply adapt to the environment.  Many actively adapt and modify it to satisfy their needs, e.g., the ant, bee and beaver. This involves constructing new environmental invariants, e.g., colonies, hives or lodges. 

Of all organisms on Earth, humanity has had the greatest success in re-structuring its environment.  Tools, specifically the tooled knowledge they contain, are the means by which we animate and re-organize Nature.  In effect, Technology constructs a distinct human ecology growing ever more distant from Nature as our knowledge grows.  Consider coming home from the office in a car, unlocking the door to the house, turning on the lights, microwaving  supper, watching television, checking one’s email then driving to the local mall to shop.  All is technology.  It enframes and enables Nature to serve human purpose. 



The word ‘ideology’ has many meanings today but was coined simply enough by Condillac, a contemporary of Adam Smith, to mean ‘the science of ideas’.  Separation of Church and State was critical to both American and French Republican Revolutions.  Creation of a secular ‘science of ideas’ to counter the awe and mystery of religious and metaphysical thought and ritual was part of a revolutionary agenda designed to overthrow an Ancient Regime of subordination by birth.  In short an Ideology explains how the world works without a god; with a god it becomes theology.  In this regard the word ‘theory’ literally means a god’s eye view. 

It is important to note, however, that Ideology involves, as will be seen below, ‘the sciences of the artificial’, the so-called human sciences which are subject to human, not natural laws. The natural, experimental, instrumental sciences are different. They are subject to the laws of Nature and rather than generating certainty or belief in fact generate doubt - no theory can be proven right but can be proven wrong.  The philosopher of science Michael Polanyi (1961) noted:

To hold knowledge is indeed always a commitment to indeterminate implications, for human knowledge is but an intimation of reality, and we can never quite tell in what new way reality may yet manifest itself. It is external to us; it is objective; and so its future manifestations can never be completely under our intellectual control.

In fact Descartes’ famous dictum ‘I think, therefore I am’ could more accurately be restated as ‘I doubt, therefore I am’. By contrast, a contemporary definition of Ideology is: A systematic scheme of ideas, usu. relating to politics or society… and maintained regardless of the course of events" (OED, 4).

If Technology cum Heidegger enframes and enables Nature to serve human purpose then Ideology enframes and enables our ideas, our thoughts.  An Ideology becomes subsidiary to our focal consciousness, it becomes an environment invariant for the affordances of our thoughts.  It becomes background to the figure of our ideas. 

With the collapse of Communism there is arguably only one Ideology still standing - Market Economics in which everything has a price – kidneys, children, the environment, everything.  It is, however, arguably split into two antagonistic schools of thought.  One, the Austrian School of the ‘vons’ - von Mises & von Hayek, believes in the supremacy of the market with limited if any public intervention.  With respect to the environmental problems discussed in  this course the Austrians would say: If consumers are willing to pay to fix such problems, the market will respond.  If not they still get the world they want.  On the other hand, the Keynesian School, believes in a regulated marketplace and public intervention to correct market failures and produce an appropriate level of public goods.  Both are ideologies, not natural science.


Price & Value Theory

The question of the value of goods and services is a perennial in Economics.  For Aristotle and St. Thomas Aquinas it was the problem of the ‘just price’.  Should it reflect: (i) usefulness; (ii) scarcity; (iii) the labour required to produce it; (iv) the combined cost of all inputs including capital, labour and natural resources; or, (v) whatever the market will bear?  Today one might added the environmental impact of its production and/or consumption.  This constitutes Value Theory.

Price Theory, on the other hand, accepts the market as the determining factor.  Price is established through interaction of supply and demand under different market structures including perfect competition, monopoly, monopolistic competition and oligopoly.  This constitutes the ‘X’ marks the spot model of market economics which will be examined in greater detail in 2.0 Environmental Economics.  In fact Price Theory is a subset of Value Theory in Economics.


1.3 Measurement: Natural vs. Sciences of the Artificial

In the 6th century before the common era Pythagoras discovered a cognate relationship between number and matter, e.g., pluck a string and get a whole tone, pluck a half string and get a half tone.  Since that time to count or measure a phenomenon in numbers has acquired the aura of truth especially in Western civilization – I have the numbers!  

Since the beginning of Western civilization, logic has been accepted as the preferred path to knowledge.  It distances us from our passions; it frees us from the distracting world of sensation and emotion.  In the hands of the Romans the Greek logos became ‘reason’ derived from the Latin ratio as in to calculate (OED, reason, n 1).  And from the Romans we derive Science from the Latin scire “to know” which, in turn, derives from scindere “to split” (MWO).  Natural science today is accepted as the epitome of reason deriving knowledge by splitting or reducing a question into smaller and smaller parts or elements until a fundamental unit or force is revealed.  Until innovation of the experimental instrumental scientific method, however, such splitting and reducing was restricted to words.

The unprecedented evolutionary ascent of our species to global dominion, achieved in some twenty-five generations, arguably resulted from the institutionalization of a new way of knowing, a new way of generating the numbers - the experimental method, or, as originally called, ‘experimental philosophy’.  Developed by craftsmen of the late or High Middle Ages of the Western European civilization, it was first fully articulated by a late Renaissance genius, Sir Francis Bacon in his Of the Proficience and Advancement of Learning Divine and Humane, published in 1605.

According to Bacon, human dominion was to be achieved by reducing Nature’s complexity through instrumentally controlled experimental conditions forcing her to reveal her secrets.  She did.  The question was first put using instruments developed in the craft workshops of the European Age of Discovery.  It was here that Bacon saw the prototype of his ‘House of Solomon’, the house of wisdom and of knowledge.  He called on scholars, practioners of the Liberal Arts, to come down from their ivory towers and test Nature in the workshops of the Mechanical Arts where, in his time, the necessary instruments were available.  He also called for a History of the Trades to provide scholars with an understanding of the findings about Nature made by the rapidly advancing Mechanical Arts, e.g., ballistics, metallurgy, navigation, ship construction, etc.  In this regard, Galileo’s research was in part funded by what today would be considered military contracts.

Reductionism has, however, a significant advantage.  It strips away secondary phenomena distinguishing cause from effect revealing, in the natural sciences underlying ‘laws of nature’.  Its metaphysical legitimacy rests on the testing of cause and effect, or when-then causality with Time’s Arrow moving out from the Past into the Present and then into the Future by way of prediction. 

Reductionism also has its limitations especially in questions of biology and environmental sudies.  In such cases it is not sufficient to take things apart but rather to discover how they work together.  Arguably this is one reason why things questions like climate change are so controversial.  It is the interaction many, many factors that drive climate.  Reducing them one by one does not explain how it works.  In fact we are the beginning of a new scientific revolution and out tools and understanding is at its beginning.

Experimental instrumental science is, in fact, an organized and routinized pattern of human behaviour, an institution that has been called ‘The Republic of Science’ (Polany 1962b).  This pattern, however, crystallized only very recently (about four hundred years) and remains fragile.  Nonetheless it has been incredibly productive in generating knowledge about the geosphere and biosphere, if less productive with respect to the noösphere.  Arguably, its success can be attributed to three factors. 

First is the Pythagorean Effect, i.e., exploitation of the cognate relationship between mathematics and the world of matter and energy.  Second is the Instrumentation Effect, i.e., scientific instruments generate evidence not requiring intermediation by a human subject and provide readings at, above and below the threshold of the native human senses.  Once calibrated and set in motion a clock – atomic or otherwise – ticks at a constant rate per unit time until its energy source is exhausted.  In effect, this lends metaphysical legitimacy.  Scientific instruments realize the Platonic “belief in a realm of entities, access to which requires mental powers that transcend sense perception” (Fuller 2000, 69).  Furthermore, the language of scientific sensors realizes another ancient Greek ideal, that of Pythagoras, by reporting nature by the numbers.  Third is the Puzzle-Solving Effect of paradigmatic ‘normal science’ (Kuhn 1996) which permits vertically deep insight into increasingly narrow questions, i.e., depth at the cost of breadth of vision. 

The Human Sciences or Humanities & Social Sciences (HSS) are called ‘sciences of the artificial’ by economist Herbert Simon.  The natural, experimental, instrumental sciences are subject to the laws of Nature.  The sciences of the artificial, on the other hand, are subject to human not natural laws.  In addition, objective instrument-generated evidence distinguishes the natural & engineering sciences (NES) from the sciences of the artificial in which human mediation contaminates every stage of the evidentiary trail.  Change one law and the profit maximizing formula must be re-calculated.

The limited success of the HSS in generating new knowledge compared to the NES can be attributed to the absence of the Pythagorean, Instrumentation and Puzzle-Solving Effects noted above.  First, while there may be some relationship, there is no apparent cognate relationship between mathematics and human behaviour.  Second, HSS evidence – in its collection, compilation and analysis - is subject to intermediation by human subjects all along the evidence trail, limiting objectivity.  Third, with the pedagogic exception of economics and its Standard Model, there is no generally accepted paradigm in any HSS discipline corresponding to ‘normal science’ that, according to Kuhn, is required for efficient puzzle-solving.  In short, numbers have parents.  In the Natural Sciences those parents are instruments; in the sciences of the artificial, they are people with their own prejudices and agenda.


1.4 How Did We Get Here? Harold Innis’ Staple Theory

The text speaks of dynamic and static efficiency but does so essentially outside of history, disembodied from context.  How did we get here?  Harold Innis is arguably the founder of the only indigenous school of Canadian economics based on his ‘staple theory’.  He studied Canada’s development - from cod to fur to timber to wheat.  Each staple, according to Innis, engenders a distinctive patterning to the economy.  Arguably manufacturing became the next staple in Canada’s development.  In turn it began and continues to be rooted in consumption of fossil fuels.  Near the end of his career, however, Innis moved on to ‘communications’ and its matrix concluding, in effect, that it is the ultimate staple commodity (Innis 1950, 1951).  His student and colleague, Marshall McLuhan extended Innis’ work formulating the saying: The Medium is the Message.

We are now in what is called a knowledge-based economy in which the staple is intellectual property rights including statutory property such as copyrights, patents, registered industrial designs and trademarks as well as contractual property such as ‘know-how’ and trade secrets.  It too demonstrates a distinctive patterning of the economy.  This includes an enhanced ability to identify unintended consequences of human actions including those with environmental impact.



1.5 Links