I have seen the enemy,
and he is an economist
Economic lessons for the
ecologically literate
Jon D. Erickson
Rubenstein School of
Environment and Natural Resources
University of Vermont
Academic Autism
Autism, a disorder characterized by:
• Absorption in self-centered subjective
mental activity (such as daydreams,
fantasies, delusions, and hallucinations)
• Marked deficits in communication and
social interaction
• Marked withdrawal from reality
• Abnormal behavior, such as . . . excessive
attachment to certain objects
Pareto Efficiency
When no one can be made better
off without harming someone else
Fundamental Theorems of
Welfare Economics
1. Pareto Efficiency implied by:
a. Maximization of consumer preferences
under budget constraints.
b. Maximization of profits under technology
constraints.
2. Any Pareto Efficient outcome can be
supported with lump sum transfers.
Policy Implications
Theorem 1 Exhaust Pareto Improvements
Theorem 2 Exhaust Potential Pareto
Improvements
MB = MC
Organization of Society
Maximize individual well-being (utility)
Maximize per capita consumption
Maximize per capita GDP (production)
Maximize GDP
Specialization & exchange
Free market capitalism
World trade
Globalization
Maximize GWP
Pillars of the First Theorem
1. A theory of human behavior based on an
isolated, rational, self-maximizing
individual at a point in time
2. A theory of firm behavior based on
perfect competition, production as
allocating fixed resources, and
exogeneous technical change
The Efficiency Criterion requires we:
• Ignore interpersonal, intergenerational,
and interspecies comparisons
• Accept the rational actor model of human
behavior
• Accept perfect competition
• Accept an economic system devoted to
material production, free of social and
biophysical constraints
The Ecological Economics Umbrella
• Human economy as a social system
embedded in a biophysical universe
• Efficiency as a third-tier goal, behind
sustainable scale and equitable
distribution
• Allocation of scarce means among
alternative desirable ends
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