Peace, Justice and
Sustainability: the
Foundations for a New
Economy
Joshua Farley
Community Development and Applied Economics
Gund Institute for Ecological Economics
University of Vermont
Outline
 Why a new economy?
 Physical and ecological foundations of the economy
 Moral and social foundations
 The nature of the challenge
 Is cooperation possible?
 The foundations for a new economy
 Conclusions
Why a New
Economy?
Physical and Ecological
Foundations of the Economy
 Economy is sustained and
contained by global
ecosystem
 Relative scarcity has
changed dramatically
 Economy must adapt
Laws of Physics
 Can’t make something from
nothing or vice versa
 Can’t do work without energy
 Disorder increases
Laws of ecology
 Conversion of ecosystem structure into
economic products and waste degrades and
destroys ecosystem services
 Both economic products and ecosystem services
essential to civilization
 Unavoidable tradeoffs
Planetary boundaries
The Social and Ethical
Foundations of the Economy
 Economics is the allocation of scarce resources among
alternative ends
 How we use what we have to create what we want
 What ends should take priority?
 Sustainability
 Justice
 Peace
 Enduring well-being for humans and other species
 What ends do take priority?
 Maximization of monetary value; economic growth
Social foundations
Unsustainable Injustice
Growing Injustice
Growing Injustice
 “Recession is over in Europe”
 Since recession ‘ended’ in US,
121% of income growth has
gone to top 1%; bottom 99%
worse off
Total US debt
Systematic Redistribution Towards
the Rich and Unproductive
 Debt is 360% of GDP and growing faster than GDP
 Interest on total debt is likely to be 15% of GDP. Direct
transfer to lenders/wealthy
Credit market debt,
net of gov’t
Peace
 Threatened by resource scarcity and injustice
 Fundamental Principles of Energy: “Struggle for energy
causes violent conflict”
 Environmental refugees
 “Every gun that is made, every warship launched, every
rocket fired signifies, in the final sense, a theft from those
who hunger and are not fed, those who are cold and not
clothed. This world in arms is not spending money alone. It
is spending the sweat of its laborers, the genius of its
scientists, the hopes of its children…This is not a way of
life at all in any sense. “
The Nature of
the Challenge
The Challenge We Face
 Failure to respect planetary boundaries
threatens ecological catastrophe:
unacceptable costs
 Food systems and CO2 emissions are greatest
threats
 With current economy, reducing food supply
and CO2 emissions to fall within planetary
boundaries threatens social catastrophe:
unacceptable costs
Prisoner’s Dilemmas
 Global Climate Change and waste emissions
 Agricultural technologies and green
technologies in Internet age
 Natural resource depletion and biodiversity
loss (finite raw material sources, finite
services)
 Degradation of ecosystems
Market Solutions
 Competition, self-interest and choice
 Preference satisfaction
 Internalize externalities
 Make prices reflect full costs
 Creates incentives for innovation and substitution
 Preferences weighted by purchasing power
 Americans spend 6% of income on food for home consumption;
~1% on raw food
 Many Africans spend 75%; ~ 50% on raw food
 What happens when prices double?
 Prioritize preferences or physiological needs?
 “Efficiency” or justice?
Economics, Money and
Cooperation
 Studying economics makes people more selfish, less cooperative



Bauman Y, Rose E. Selection or indoctrination: Why do economics students donate less than the rest? Journal of
Economic Behavior & Organization. 2011;79(3):318-327
Frank RH, Gilovich T, Regan DT. Does Studying Economics Inhibit Cooperation? Journal of Economic
Perspectives. 1993;7(2):159-171
Kirchgässner G. (Why) are economists different? European Journal of Political Economy. 2005;21(3):543-562
 Thinking about money makes people more selfish, less cooperative


Vohs KD, Mead NL, Goode MR. The Psychological Consequences of Money. Science. 2006 November 17,
2006;314(5802):1154-1156
Caruso, Eugene M.; Vohs, Kathleen D.; Baxter, Brittani; Waytz, Adam. Mere exposure to money increases endorsement
of free-market systems and social inequality. Journal of Experimental Psychology: General, Vol 142(2), May 2013, 301-306
 Rich people are less empathic, more selfish, less ethical

Piff, P.K., Stancato, D.M., Cote, S., Mendoza-Denton, R., Keltner, D., 2012. Higher social class predicts increased
unethical behavior. Proceedings of the National Academy of Sciences of the United States of America 109, 40864091.
 Monetary payments ‘crowd out’ cooperative behavior

Gneezy, U., Rustichini, A., 2000. Pay Enough Or Don't Pay At All. The Quarterly Journal of Economics
115, 791-810.
Cooperative Solutions
 No market or technical solution is possible
 Cooperation is best solution to prisoner’s dilemma
 Evolution
 Anthropology
 Mathematical biology
 Behavioral economics
Is Cooperation
Possible?
Are people good or evil?
 Characteristics of an evil person
 Characteristics of a good person
Evolution of Cooperation
 Genetic
 Multi-level selection (e.g. Pseudomonas fluorescens)
 Distribution of pro-social behavior
 Bacteria, slime-molds, social insects, humans (super cooperators)
 Account for 50% of global biomass
 Oxytocin
 Detecting cheaters
 Cultural
 Reciprocity (direct and indirect)
 Altruistic punishment
 Punishing non-punishers
 Group identity
New Foundations
Institutions for Cooperation
 Institutions can make generous people act
selfishly, or selfish people act generously
 Reciprocity or payments?
 Social norms towards greed: glorification
or ostracism?
Economics for Post-carbon
Energy/ Green Techonology
 We compete for oil, not for sunshine
 Alternative energy requires better
technologies
 Information/technology improves through
use
 Value maximized at price of zero
 Markets create artificial scarcity
 Cooperation trumps competition
 Markets inherently inefficient
Economics of Sustainable Food
Systems
 Goal: Greatest food security with minimum ecological
degradation
 Americans spend 6.7% of income on food for home
consumption, ~1% on raw food
 How did you react when wheat prices tripled?
 Many poor countries spend >70% of income on food for
home consumption; 50% spent on raw food?
 How do poorer countries react when wheat prices triple?
 Markets allocate food to those who benefit the least
 Cooperative stewardship/ just distribution essential
Minimum Rules for Sustainability
 Cannot use renewables faster than they regenerate
 If stocks are shrinking, we must reduce consumption
 Cannot emit waste faster than ecosystems can absorb it
 If stocks are growing, we must reduce emissions
 Cannot use non-renewables faster than we develop
renewable substitutes
 Resource rent should be invested in renewable substitutes
 Neither resource extraction nor waste emissions can
threaten vital ecosystem functions
Minimum Rules for Economic
Justice
 Equal distribution of common assets
 Values created by nature or by society as a whole
 Land, water, atmosphere, natural resources
 Tax what you take, not what you make
 Tax in proportion to benefits received
 Greater equality promotes peace and prosperity
Marginal tax rates and income share
for top 0.1%
Cooperation for Justice and
Sustainability Brings Peace
 Reciprocity: generosity induces generosity;
snowball effect
 “Energy transitions produce cultural transitions”
 Myxococcus xanthus, Dictyostelium discoideum and the
human predicament
 “Struggle for energy causes violent conflict”
 Cooperation for energy ends violent conflict
 Cooperation is it’s own reward
 Oxytocin
 Greater equality
Conclusions
Conclusions
 Markets emerged simultaneously with fossil fuels
 Nature of scarcity has changed
 Prisoner’s dilemma requires cooperation
 Cannot transform physical characteristics of
resources to fit market model
 Must transform economic system to resource
characteristics, human behavior
 Prisoner’s dilemmas
 Physiological necessities
 Peace, Justice and Sustainability must be moral
foundations of new economy