Library Communiveristy
Open Learning Course
The Economy and Us: week 2
Overview
What is ‘capital’?
The ‘conventional’ view
An extended view
What are the ‘flows’ in an economy?
The ‘conventional’ view
An extended view – the basis of an ecological
economy
The implications of the ecological model
What is ‘capital’?
In broad terms:
A ‘stock’ of something which has the ability to produce a flow
of economically desirable outputs.
It depreciates over time, but can be renewed
For example:
A house: produces over time a ‘flow’ of ‘shelter services’.
A car: produces a ‘flow’ of transport services
Conventional economics …
Recognises two kinds of capital:
Fixed, ‘human made’ or physical capital – machinery, roads,
buildings, various kinds of equipment, …
Financial capital: The financial (monetary) counterpart of
‘physical’ capital; the title to ownership
This latter usage is rather misleading – ‘finance’ is a further
remove from practical use!
An extended definition recognises more
•
•
•
•
Natural capital
Human capital
Social capital
(plus – the ‘conventional’ physical capital)
Natural Capital …
• … the services of the environment around us –
for example:
– Trees and plants take in carbon dioxide and
produce oxygen
– Earthworms regenerate the soil
– Microbes break down our waste
– … [Your own examples?]
• Natural capital is a gift – and is easily
damaged!
Human capital …
• … ourselves! People:
– having skills
– ethical positions
– the ability to plan
– think ahead
– design and invent
– the ability to learn and adapt
Social capital
• The ability to work together, identify and meet
needs, settle disagreements/disputes
Physical/manufactured capital …
• As noted earlier – buildings, machines, roads,
…
Flows in the ‘conventional’
economy
Individual
welfare
Consumption
Manufactured capital
Labour
Land
Economic
production
processes
Goods and
services
Economic
policy
Investment
‘Fixed’ investment, training, land improvement
Comments on the ‘conventional’
• Output is of two types: ‘consumption’ and
investment. Split between the two
determined by ‘economic policy’
• No mention of ’waste’
• No mention of resource limits
• ‘Welfare’ solely a function of consumption
QUB P&SD 2011/2012
10
Words again: ‘ecological’ or
‘environmental’ ?
Ecological’ preferred; it suggests a powerful
concern to recognise and integrate
‘
Flows in an ecological economy
Well-being: individual and
community
Positive impact on human capital
Ecological
services
Consumption
Solar
Energy
Wastes
Economic
Productio
n
processe
s
Natural Capital
Human Capital
Social Capital
Policy and
Culture
Goods and Services
Investment
Manufactured capital
Negative impact on all forms of capital
Restoration/Conservation of natural capital; Education and training of human capital; developing mutuality and trust;
investment in manufactured capital
Waste heat
Much more to say …
• Four distinct kinds of capitals now explicit
• Investment – to maintain stocks of each – is a requirement
(including ourselves!)
• Waste – and waste energy (heat) is recognised
• “Well-being” is a function of several ‘outputs’, not just consumption
• Solar energy drives the whole system
QUB P&SD 2011/2012
13
Waste … what can we say about it?
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•
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What is it? How does it arise?
What waste streams can we identify?
Why is it a bad thing?
Can we do anything about it?
Synergy/symbiosis – spent grains in a
brewery
http://www.zeri.org/ZERI/Beer.html