Neoclassical,institutional,andmarxistapproachesto theenvironmenteconomicrelationship

Published:January18,2008,1:12pm Edited:November21,2010,9:14am LeadAuthor:JacquelineMedalye Topics: Rate: 1 2 3 4 5 Average:5/5 ThisarticlehasbeenreviewedbythefollowingTopicEditor:CutlerCleveland

TableofContents

EnvironmentalEconomics,

EcologicalEconomics

1Introduction 2TheNeoclassicalapproach 2.1ImperfectMarketStructures 2.2PublicGoods 2.3Externalities 3TheInstitutionalApproach 3.1Societyandinstitutionalchange 3.2Fromexternalitytointerdependence 3.3Fromweaktostrongsustainability 3.4Distributionandjustice 3.5Expandingsocialpreferencesandvalues 3.6Power 4Marxianapproaches 4.1HistoricalMaterialism 4.2Productionandreproduction 4.3Value 4.4Capital 4.5Transformation 5Conclusion 6FurtherReading

Introduction
Thelonglistofecologicalcomplaintsplaguingtheworldtodayincludesmanyurgentproblems.Overpopulation,the destructionoftheozonelayer,globalwarming,theextinctionofspecies,lossofbiodiversity,acidrain,nuclear

contamination,tropicaldeforestation,wetlanddestruction,soilerosion,floods,famine,contaminationofgroundwater, pollutionofcoastalwaters,thedestructionofcoralreefs,overfishing,oilspills,expandinglandfills,toxicwastes,urban congestion,andthedepletionofnonrenewableresourcesareallcommonproblemsintheworldtoday.Policymakers hopedthatthe1990swouldbethecriticaldecadeforchangetosavetheEarth,yet10yearsaftertheRioEarthSummit theseproblemsarestillwithhumanity.Therearevariouspoliticaleconomicapproachesforunderstandingwhythis environmentaleconomicconflictexists.Withtheriseofenvironmentalawarenessinthe1970sthemainschoolsof thoughtwithinpoliticaleconomyrevisitedtheirtheorizations.TheNeoclassical,InstitutionalandMarxistschoolsof thoughthaveadjustedtheirtheoriestoaccountfortheenvironmentinvariousways.Thisarticlewillreviewhowthese approachesconceptualizetherelationshipoftheenvironmentandeconomics.Itwillbeshownthatdespitethe introductionoftheenvironmentasanewcategoryforanalysis,eachschoolmaintainstheepistemologicalstandpoint, analyticalapproach,operativecategories,andinstrumentsofinterventionpredicatedbytheirpredecessors.

TheNeoclassicalapproach
Traditionalneoclassicaltheoryrestsonseveralabstractions,theforemostbeingindividualisticutilitytheory,thetheoryof thefirm,andthetheoryofthemarket.Elaboratecriticismsoftheseabstractionshavebeendeveloped,oneofwhich discussesthemisplacedconcretenessofneoclassicaltheorizations.Somecriticsprotestagainsttheneoclassicalmethod ofabstractioninwhichallactivityisreducedtothepricemechanism,therebyabstractingfromthesocialand environmentalspheresinwhichtransactionsoperate.Moreover,criticsassertthattheneoclassicalreductionofhumansto rationalselfinterestedindividualsremovesallofthenonmarketabletraitsofrealpeoplesuchasbenevolenceor malevolence.Aswell,thetheoryofthemarketabstractsawayfromallnonmarketableobjectswhichexistinthereal world.Assuch,iftheenvironmentdoesnotentertheprocessofproductionorconsumption,inmonetaryterms,the neoclassicalmarketcannotaccountforitsuse.Forthebiophysicalworldpoliciesdirectedbytraditionalneoclassical thoughtcanbedisastroussincetheexplicitexclusionoftheenvironmentfromtheoryimpliesthatitwillbefreeand therebyoverconsumedinpractice. Neoclassicaleconomicsrecognizesthatdeficienciesintraditionaltheorizationsoccurwhentruesocialorecological valuesarenotadequatelyaccountedforbymarketprices.Inresponse,thefieldofenvironmentaleconomicswas developed,intheneoclassicaltradition,todealwiththeenvironmentalinadequaciesprevalentinmainstreamtheory. Unfortunately,theanalysisandsolutionsofferedbyenvironmentaleconomicsmaintainthesameepistemological standpoint,analyticalapproach,operativecategories,andinstrumentsofinterventionofthetraditionaltheory,thus renderingthetheoryincomplete,atbest. Neoclassicaltheorylocatestheeconomicexplanationofthedegradationofnatureinalackofmarketsforenvironmental goods.Thisdegradationisexpressedoperationallyastheoveruseofnaturalresourcesorwastedisposalabovean ecosystemsassimilativecapacity.Whenmarketpricesfailtoreflectthetruecostofanenvironmentalgoodordamage, theneoclassicalschoolcontendsthatmarketfailurehasoccurred.Marketfailureispossibleinthreeinstances:imperfect marketstructures,publicgoodsorexternalities.

ImperfectMarketStructures
AsDalyandCobbnote,imperfectmarketstructureisduetothetendencyofthemarkettoerodeitsownrequirements. Marketcompetitionamongfirmsleadstofewerfirmsandincreasedmonopolization,aspowerbecomescentralized. Neoclassicaleconomistshavedevelopedelaboratetheorizationsastowhythisisthesecondbestalternativetotheideal perfectcompetitionstructureutilizedinneoclassicalmarkettheory.Neoclassicaleconomistsarguethatimperfectmarket structuresareinfavorofthebiophysicalenvironmentsince,accordingtotheirmodel,productionwillbelowerinthese circumstancesthenintheperfectlycompetitivemodel.Byusingabstractionsofthefirmandimperfectmarketstructures todeducttheinputandoutputlevelsofindustry,neoclassicaleconomicsreacheserroneousconclusionsaboutthe environmentalrealityofimperfectmarkets.Inreality,oligopolosticstructuresusuallyleadtolargecompetitorsexploiting

resourcesinthepursuitoflargermarketsharesanevidentexampleisautomobilemanufacturing.Moreover,thereisno evidencetobelievethatmonopolisticmarketsconservetheenvironment.Hypothetically,outputlevelsdecreasein marketscharacterizedbymonopoly,evenifthisdeductionistakenastrue,thereisnoguaranteethatamonopolisticfirm wouldchooseaproductionstructureortechnologicalprocessthatisoptimalfortheenvironment.Theneoclassical argumentsthatanimperfectmarketstructureisaconservationistsbestfriend,arebasedonasimplisticviewofthefirm fromthesoleaspectofoutputandmarketstructure.Theargumentsdonotconsidertheinstitutionalvariableswhich determinethetypeofoutput,technologyorproductionprocesseschosen.Thesevariableshaveadirecteffectonthe environmentalimpactoffirmoperations,regardlessoftheprevailingmarketstructure.Moreover,theneoclassical argumentisnotreflectedinreality,wherefirmswithuncontestedmarketpowertendtoincreaseoutputattheexpenseof theenvironment.

PublicGoods
Anotherformofmarketfailureoccursinthecaseofpublicgoods,whichonceprovidedtoonepersonareprovidedto everyone,regardlessofeachindividualswillingnesstopay.Inmarkettheorythefirmhasnomotivetoprovidepublic goodsduetotheirnonprofitabilitycharacteristic,eventhoughsuchgoodsarebeneficialandwantedbyindividuals. Publicgoodsoftenhaveafreeriderproblematicandassuchthepricesystemcannotadequatelymeasurethevalueof thegoodinquestion.Withinthisframework,theoveruseofnaturalresourcesisseenastheconsequenceofalackof welldefinedpropertyrights.Withoutwelldefinedpropertyrights,readilyavailableresourcesarepricedcheaplyto currentusersaproblemHardinnamedthetragedyofcommons.AccordingtoHardin: "ruinisthedestinationtowardwhichallmenrush,eachpursuinghisownbestinterestinasocietythat believesinthefreedomofthecommons.Freedominacommonsbringsruintoall." Forneoclassicaltheorythefailureofthepricemechanism,inthecaseofpublicgoods,isafailureinthesensethat environmentaldegradationwilltranslateitselfintoalossofefficiencyasrapidextractionratesbringaboutadeparture fromtheoptimalallocationofresources.Thedestructionofintrinsicenvironmentalquality,orofanenvironmental elementwithanecologicalpurpose,arenotmarketfailures.Forneoclassicaltheorists,onlythemisallocationof resourcesandinefficienciesarefailures.Thus,torestoreefficiency,totheratethatwillmaximizethesocialcollective return,privatepropertymustbeintroduced.TheCoasetheoremassertsthatwhenpropertyrightsareclearlydefined, markettransactioncanoccurinwhichcompensationforenvironmentalusereflectsthevalueofthenaturalresourceto thepropertyholder,therebyensuringanefficientallocationofeconomicactivity.Thus,forneoclassicaleconomists everythingfromtheanimalexploitationduringtheearlyfurtradeinCanadatothecurrentlossofbiodiversityand geneticresourcesisblamedonlackofprivateproperty.AccordingtoCoase,assigningprivatepropertywillreturnthe systembacktotheoptimalsystemofexchange.Assuch,theneoclassicalsolutiontothepublicgoodproblemadvocates theassignmentofpropertyrightsinordertoplaceanenvironmentalgoodonthemarketasanyothertradablegood. Thus,theenvironmentcanentermarkettheory,besubjectedtothelawsofsupplyanddemand,andbeallocatedinan optimalway.Inopenaccesscases,whichcannotberesolvedwithprivateproperty,theresourcesinevitablyface inefficientallocationsincetheycannotbeassignedtoanownerwhocangiveasignaltothemarketthatwouldreflect theworthoftheopenaccessenvironmentalgoodrelativetoothergoods. Thesolutiontothepublicgoodproblem,presentedbyneoclassicaleconomists,remainswithintheconceptualizationof humansasselfinterestedrationalizingmaximizes.Intheory,theselfishindividualwillonlyhaveanincentivetoprotect theenvironmentwhenitishisorherownprivateproperty.Therefore,onlyprivatepropertyofenvironmentalresources willmotivateindividualsforitsprotection.However,byabstractingassuch,thetheorycannotaccountforthefactthat somepeoplegotoextremelengths,bywayoffundingorcampaigning,topreservespeciesorenvironmentswhichthey personallymayneverseeoruseastheirownprivateproperty.Moreover,inorderforthesolutiontoworkitrequiresthat propertyrightscanbewelldefined,enforced,distributed,andthatthereisacompetitivesystemsofinterestedparties whocancometogethertonegotiateoverpropertyrights.Inrealitynoneoftheseconditionsmaybemet.Forexample,

tribalpeopleoftheAmazoninterestedinpreservingbiodiversitymaynothavetheabilitytoenforcetheirpropertyrights duetoinstitutionalinadequacies.Aswell,theonlypartytonegotiatepropertyrightswithmaybeapowerfullogging companyinterestedinwoodoverbiodiversitywhoholdsanadvantageouspositioninthenegotiationprocess.Finally,it isquestionableiftheinterestedpartiescancometogetherandnegotiatethepropertyrightsduetosocial,cultural, language,andfinancialbarriers.Theneoclassicalsolution,insuchacase,wouldnotbepossibleorwouldnot necessarilyleadtoprotectionoftheresource. Moreover,privatepropertyasatheorizationandsolutiontoenvironmentalprotectionremainswhollyanthropocentric, andconsistentwiththetraditionalneoclassicalapproachinwhichhumansaretheonlyagentsinsociety.Aswell,evenif theneoclassicaltheorizationofpublicgoodsistakenasvalid,environmentalqualitymaystillnotbeprotected.For instance,ifthetransactioncostsofbargainingbetweenconcernedpartiesarehigherthantheefficiencygainsobtainedto restoretheoptimalcondition,theenvironmentwillnotbeworthprotecting.

Externalities
Thefinalmarketfailurewhichconcernsneoclassicaleconomistsaremarketexternalities.Externalitiesarebenefitsor costsgeneratedastheresultofeconomicactivitythatdonotaccruedirectlytothepartiesinvolvedinthetransaction. AlfredMarshallin1890introducedexternaleconomics,buthistheorizationwasonlyconcernedwithpositive externalitiesaccruingtothirdpartiesoutsideoftransactions.Inthe1920sPigourealizedthatexternalitiescontainednot onlybenefitsbutalsocosts.Negativeexternalitiesarisewhenthewelfareofonepartyisadverselyaffectedbythe actionsofanotherparty,andthelossinwelfareisuncompensatedduetoalackofliabilitytothirdpartieswhosuffered thedamages.Forneoclassicaleconomics,thedamagethatoccursfromnegativeexternalitieswilltranslateintoalossof efficiencyandisamarketfailure.Itisimportanttonoticethatforenvironmentaleconomicswhatisexternalisnot determinedbytherealworld,buttheabstractionsmadefromit,aftertheabstractionsaremadewhatdoesnotfitintothe modelisconsideredanexternality. Thetypicalexampleofanegativeexternalityisafactoryonariverwhoseeffluentisdisposedofintoacommunityriver andthewaterpollutionaffectstheneighboringcommunity.Theexternalityarisesbecausethequalityoftheriverwater doesnotenterthecostsofproductionforthefirmandisnotavailableforpurchaseonthemarketbythecommunity.As such,theenvironmentisundervaluedandunprotected,consequently,itispolluted.Insuchcases,neoclassical economicscallsforinternalizingtheexternalitysothattheoptimumamountofpollutioncanbereached,i.e.,wherethe economicgainofthelastunitofpollutionisequaltotheagreedeconomiccostofthelastunitactivity.Forneoclassical theorists,aregulatoryagencywhichsetstandardsandquotasonpollution,oranincentivesystemsuchaspollution taxes,oranemissionstradingregime,caninternalizetheexternalitytoamarketableform.Forexample,thecostofthe environmentaldamagecanenterthefirmsproductionfunctionviaaPigouviantaxortheassignmentoftradable emissionpropertyrightstothecommunity.Ineithercase,itisassumedthatthroughadjustmentstomarketasocial optimallevelofpollutioncanbeachieved.Todeterminethevalueoftheenvironmentalgoodinquestion,neoclassical economistswillusecomparativepricingmethodsordirectsurveystoevaluateacommunityswillingnesstopayfora certainlevelofenvironmentalqualityoritswillingnesstoacceptacertainlevelorenvironmentaldeterioration.With theseindirectvalues,publicpolicycanbedirectedatachievingcorrectpricingsothatthemarketmechanismisreturned toequilibriumandsocialoptimalityisachieved. Thetheoryaboveisthepinnacleofmisplacedconcretenessinneoclassicaleconomicswithrespecttotheenvironment. Tobeginwithexternalitiesareperipheraltomarkettheoryallneoclassicaleconomicconclusionsaboutperfect competition,socialoptimalityandefficiencyarepremisedontheabsenceofexternalities.Yet,intherealworlditis undeniablethatexternalitiesareoneofthemostimportantaspectsofeconomicactivity.Therealbiophysicalworldisthe placewherehumansandotherspeciesliveitistheonlyplacewherealllifecansurvive.Atheoreticalabstractionin whichthenegativeaffectsonthebiophysicalworldaremerediversions,andstudiedonlybyenvironmentaleconomists, leadstomodelswhicharecompletelyirrelevanttohumansoranyotherspeciesonEarth,fortheydonotdepictthereal

worldinwhichweliveandthereforecannotprescribesolutionstotheproblemsarisingwithinit.Conceptually,the theoryofnegativeexternalitiesprovidesadetailedpictureoftheenvironmentasacommodity,abstractingthe environmentsothatitcanbetreatedasanyothercommodity,regardlessofitscomplexityorthefactthatitisadynamic livingentity.Environmentaleconomicsisonlyconcernedwithabstractingtheenvironmentbackintothemarketrealm sothatitcanbeanalyzedwithinthealreadyexistingtheoreticalframework.Moreover,byrelyingonthesameabstract methodtodealwithenvironmentalmarketfailure,thetheoryadoptsallpreviousproblemspresentinneoclassical economicssuchastheassumptionsregardinghuman,firmandmarketbehavior. Moreover,theaboveabstractionandsolutionentailthatapricecanbeplacedoneverything,eventhoughpricingmay notbepossibleviathemarketmechanism.Themethodofdeductionemployed,forthevaluationofexternalitiesor publicgoods,ishighlyquestionable.Thetheoryassumesthatindividualsassignvaluestotheenvironmentandthat underlyingthesevaluesareindividualpreferences.Thetheoryacknowledgesthatmarketsdonotexistforenvironmental goodsandthatthesevalues,bydefinition,cannotbeobservedinthemarketplace.Therefore,thetheorycallsforthe estimationofthesevalues.Onecommontechniqueisthecontingentvaluationmethod,accordingtowhichindividuals whoareconsideredrelevantareaskedtorevealtheirmaximumwillingnesstopayforaprojectthatwillimprovethe qualityofaspecificenvironmentalgoodortheirminimumwillingnesstoacceptaprojectthatwilllowerthe environmentalqualityofaspecificgood.Individualsvaluationsarethenaggregatedtoestimatethevalueofaspecific environmentalgood.Thus,ahypotheticalmarketiscreated,amarketinwhichindividualsareinvitedtoplacea monetaryvalueonanenvironmentalgood.Oncevaluationisestablished,anaprioridiscountingfactorisappliedif damagesorgainsoccuroveraperiodofyears,andoptimalitycalculationsintheformofcostbenefitorcost effectivenessanalysesareconducted. Thisapproachishighlyproblematicforseveralreasons.First,willingnesstopayandwillingnesstoacceptvalues regardingenvironmentalqualityoftendiffer.Second,willingnesstopayrequirestheabilitytopay,butforcalculation purposestheincomecategoriesofparticipantsarenotconsideredrelevant.Third,thevaluationmethodassumesthat nonmarketentitiesaffectallpeopleequallyandthatpeopledonotdifferentiatebetweenvaluesexpressedinprivate transactionsandthoseexpressedinpublicpolicydecisions.Fourth,valuationcanbedistortedbyinformational imperfections.Humanitycannotadequatelyevaluatethevalueofenvironmentalquantitysincewedonoteven understandbiophysicalcomplexity.Assuch,itisalsooutlandishtoclaimthatasociallyoptimallevel,basedon individualpollutionpreference,canbefound.Fifth,theselectionofrelevantactorsmaybecompletelyarbitraryandwill dependonhowtheresearchersdefinerelevant.Whatisincludedasrelevant?Isitthecurrentgeneration?Future generations?Theentiresociety?Allspecies?Relevantislimitedtoanarrowdefinitionofthepresenthumangeneration, howevertheactorschosenmaynotbetheonlyentitiesaffectedbytheexternalityinshortorlongerterm.Inspecies valuation,themethodcannotescapeitsanthropocentrism,humanorientation,orhumanassignment.Valuationcannot accountforawhaleswillingnesstopayforthesurvivalofitsspecies,andtodosowouldbecompletelyabsurd,thusthe theorysimplyignoresthepresenceofthisactor,despitetherealpresenceofwhalesintheworld.However,inthismodel whetherornotanonhumancreaturehastherighttoexistineconomictermscompletelydependsonwhetherthe creatureiscapableofprovidingmorevaluetosocietythanitcostssocietytomaintain.Thus,likeitspredecessors, environmentaleconomicsfallsintothefallacyofmisplacedconcreteness. Whenjusticeorequityproblemsarise,thetheoryrevertstothehypotheticaldeductivemethodofneoclassical economics.Intergenerationalconcernsareincludedintheformofadiscountrate,whichisdeterminedbytheextentthat todaysgenerationacknowledgesanddecidestotakeresponsibilityforfuturegenerations.Technicallyspeaking,ifthe currentgenerationdoesnotgainutilityfromimaginingthewellbeingofthenextgeneration,onecanpredictwiththe applicationofahighdiscountrateandtheoverconsumptionofnaturalresourcesbythecurrentgeneration.If,onthe otherhand,thecurrentgenerationchoosestotakeconcern,thendiscountingmustbeapplieddespiteitsapparent inadequacies.Discountingentailsthatthefartherintothefutureacalculationmustgo,thelowerthepresentvalueofthe iteminquestion.Assuch,thevalueofcleanairordrinkablewaterisworthlessinthefuture,anerroneousconclusion derivedbythistechnique.Whentheproblematicissueofjusticeisraised,thetheorypreferstobypassitonthegrounds

thattheneoclassicaltheoryisvaluefree,whereasjusticeisavalueladenissue.But,neoclassicalenvironmental economicsisalreadyvalueladen,withtheethicsofselfinterestedindividuals. Inenvironmentaleconomicstheprescriptionsforresolvingeitherpublicgoodorexternalityissues,involvemarket correctionmechanismswhichassumeasocialguardianorgovernmentthatworksselflessly.However,ifthisbodyis madeofpeople,whichitmustbe,thetheorycontradictsitself,sinceinneoclassicaleconomicshumansareselfinterested rationalizingmaximizesandthusthesocialguardiancannotworkselflessly.Moreover,asinthecaseofopenaccess resources,suchabodymaynotexistandthustheHardinproblemsimplyreemerges.Evenifthesolutionsareaccepted, thetheoryassumesthatgovernmentsareimmunetofailures.However,thepossibilitiesforinterventionandexistence failuresareveryreal.Interventionfailureoccurswhenpublicinterventionmovesthemarketawayfromthesocalled socialoptimalposition,andworsenstheexistingsituation.Existencefailureoccurswhenmarketoptimalityisreached butisstillinconflictwiththebiophysicalworldsabilitytosustainhumanactivity.Insuchacase,scalehasbeenignored inthepursuitofoptimalallocation,whichislikelysincescaleisignoredinenvironmentaleconomics.Toexemplifythis probleminneoclassicalenvironmentaltheoryDalyusestheanalogyofloadingaboat: "thecriteriaofoptimalmarketallocationinsuresthattheboatitsloadedevenly,butsincenothingissaid aboutthesizeoftheload,itmayalsoassuretheboatsinksoptimally." Thatis,theassumptionofoptimalallocation,astheaimofinstitutionalcorrection,isinvalidfortheenvironmentsolong asscaleisexcludedfromthetheorization. Despiteitsinadequacies,neoclassicaltheoryisapowerfultoolfordescribingthemarketasaninstitution,andthetheory providesavaluableservicebysheddinglightonthesmallareaofexchange,whichisaninfluentialforceinsociety today.Perhapsbecauseofitstheoreticalstrengthintheareaofexchangeandtheinfluenceofexchangeincontemporary society,neoclassicaleconomistshavehopefullyappliedthesetheorizationstophenomenawhichrestoutsideofvery specificexchangeorientedmodels.However,neoclassicaltheorycontinuesonthepathofmisplacedconcretenesseven whenattemptingtoaccountfortheenvironmentbydefiningenvironmentaldegradationthroughautonomous individuals,eachofwhomisassumedtohaveapreferentialorderingofgoodsandservices,includingthosepertainingto theenvironment.Moreover,economicagentsremaindefinedinhumanterms,andassuchtheprescriptionsofcorrection fortheenvironmentaresolelyanthropocentricinabstractionandsolution.Intheneoclassicalmethodtheenvironment remainsasubstitutablecategorywhichactslikeanyothercommodityoncemarketpriceshavebeenhedonisticallyand anthropocentricallydetermined.Thepricemechanismwillnotprioritizeresourcesinanywayotherthentheprice derivedonanexchangevaluebasis.Thus,resourcesonlyhavevaluewhentheygenerateeconomicorcalculable environmentalbenefit.Consequently,uselessspecieshavenoeffectonoptimalallocationdecisionsinneoclassical theory.Neoclassicaltheoryexpectsthemarkettoplaceapriceoneveryindividualspecies,ecosystem,orbiological function.Thistaskisimpossiblegiventhatmanyofthesefeaturesareunknown.Moreover,assumingcommunity rationalityforthesecalculationsisflawedsincetherationalitytomakedecisionsregardingenvironmentalgoodsdepends onavailableinformation,andthelimitedknowledgehumanshaveregardingthebiophysicalenvironmentmakesit impossibleforconsumerstomakeinformedrationalchoicesregardingtheenvironment.Arationalchoiceovera finiteindividuallifetimeisnotnecessarilyarationalchoiceforallhumanandnonhumanspecies,butenvironmental economicscannotaccountforthesediscrepancies.Therefore,inenvironmentaleconomicsthefallacyofmisplaced concretenessremainsprevalent,despiteneoclassicattemptstoaccountforphenomenaoutsideoftraditionalmodels.The conflictbetweeneconomicactivityandenvironmentalqualityisnotmerelytheresultofmarketfailureasneoclassical economistswouldassert.Theeconomyenvironmentconflictultimatelyarisesfromtheimpossibilityofeconomic marketstoplaceecologicallymeaningfulvaluesonthefunctionsandattributesofthebiophysicalworld.But,for environmentaleconomicseveryrelevantenvironmentalaspectmustbecalculableandmathematicallyabstractedtostay consistentwiththeanalyticalapproachdevelopedintraditionalneoclassicaleconomics.ThisisperhapstheAchilles healofenvironmentaleconomics,forindoingsoitexcludesthecomplex,incalculableaspectsofthehuman environmenteconomicrelationshipandrenderstheenvironmentaltheory,liketheeconomictheoriesofitspredecessors,

vulnerabletoexternalcritiquesfromInstitutionalandMarxistsperspectives.

TheInstitutionalApproach
Thetraditionalinstitutionalschoolemphasizesorganizations,institutions,habits,values,normsandrulesasthecauses andconsequencesofexistingpowerstructuresandeconomicperformance.Intermsofpowerstructures,theseelements socializethebehaviorofindividualsandsubgroups.Intermsofeconomicperformance,theseelementsareexpressed throughresourceallocationdecisions,incomedistribution,growth,andthedivisionoflaboranditsrespective remuneration.Thetheoryapproacheseconomicstructureswithaholisticmethodbasedontheassumptionofan evolutionarypathtoeconomicstructuresbasedonsocialchangesandprocessesoccurringonanaggregatedlevel. Distributionalissues,socialrelations,conflictsandinequalitiesbetweenagentsincapitalisteconomiesarealsokey componentsofthetraditionalinstitutionalschool.Forinstitutionaltheorists,iftheeconomyisnotconceptualizedas embeddedwithinsociallife,itisimpossibletodeterminehowindividualpreferencesareformedandthereforehow conceptionsofmarketcostsandbenefitsarecreated.Therefore,theinstitutionalschoolrejectstheneoclassicalutilitarian frameworkandemphasizesthesocialandhistoricalcontextinwhicheconomicstructuresarise.Inaddressingthe productionsideofcapitalisticeconomicactivity,theinstitutionalschoolconsiderstheforceswhichpromote technologicalchange,theinteractionofproductionandexchange,thenetworkingamongfirmsandsocialinstitutions, andinternalorganizationalissues.Theholisticstandpointofinstitutionaltheoryalsoentailsaninterdisciplinaryapproach topoliticaleconomywhichincludesthedisciplinesofsociology,psychology,anthropology,politics,andhistory.The institutionalschoolrecognizesthattraditionallytheeconomyhasnotbeenviewedasembeddedwithintheenvironment. Assuch,theinstitutionalapproachhasnotedthatsocialandeconomiclifemustbeunderstoodwithintheecological system.Aswillbeshownbelow,theecoconsciousinstitutionalapproachparallelsinsignificantwaystothe epistemologicalstandpoint,analyticalapproach,operativecategories,andinstrumentsofinterventionofthetraditional institutionalschool. Beforediscussingtheinstitutionalapproachtotheenvironmenteconomyrelationship,itisimportanttonotethatthe differencebetweeninstitutionalthoughtandneoclassicalthoughtisnotblackorwhite.Rather,institutionalismtendsto acceptvarioussuppositionsoftheneoclassicalschoolandrejectsothers.Moreover,theinstitutionalapproachtothe environmentcanbeviewedasaspectrum.Ononeendtherearetheoristswhoaccepttheprescriptionsofneoclassical environmentaleconomics,andwithsomeadjustments,developtheorizationsontheinstitutionalrolerequiredto implementneoclassicalprescriptions.Ontheotherend,therearetheoristswhorejectmostelementsofenvironmental economicsandhavedevelopedaholisticinterdisciplinaryapproachtounderstandingtheenvironmenteconomic problem.Asexpected,therearealsotheoristswholieinbetweentheseextremes.Thispatternparallelssubstantiallywith thetraditionalintuitionalistapproach,wheresometheoristsacceptsomenotionssetoutbytheneoclassicalschool,such asMill,andotherswhoaremarkedlyopposedtoneoclassicalconceptions,suchasVeblen.Thesectionbelowwill outlinethekeyapproachesoftheinstitutionalapproachtotheenvironmenteconomyrelationship.

Societyandinstitutionalchange
Methodologically,theintuitionalistschooldiffersfromtheirneoclassicalcounterpartsinthatinstitutionaltheoristshavea holisticevolutionaryconceptionoftheeconomy,asopposedtothereductionistmechanisticconceptionofthe neoclassicalschool.Withrespecttotheenvironment,institutionalistsseektoprovideaplatformthatpromotes multidisciplinaryenvironmentalresearchbybringingtogetherthecontributingdisciplinesofeconomicsandecology. Thefieldofecologicaleconomicsisasubdisciplineoftheinstitutionalschool.Ecologicaleconomicsisapolicy orientedperspectivethataddressestheinterdependenceandcoevolutionbetweenhumaneconomiesandtheirnatural ecosystems.Likethetraditionalinstitutionalistapproach,itacknowledgesthatinteractivesocialprocessesare complementarytomarketstructuresandplayanimportantroleinachievingsocialconsensusonenvironmentalissues.In traditionalinstitutionaltheory,institutionalstructuresaretheoperativecategorywheresocialprocessestakeplaceandas

suchinstitutionsareimportantinthefacilitationofsocietalchange.Theschooltraditionallyattemptstounderstandhow institutionsevolveandemergeforinstitutionalandsocietalchange.Whenextendedtotheenvironment,institutional theoryappliestheconceptofcoevolution,intheecologicaleconomicsense. Thetheoryofcoevolutionhasbeendevelopedwithinecologicaleconomicsandisanalyticallyfoundedonevolutionary economics.Institutionaleconomistshaveapreferenceforevolutionarytheoriesofpoliticaleconomywhichfocuson howhistorical,habitual,normativeand/ortechnologicalchangesdriveinstitutionalchange.Assuch,changeisstudied overtime.Ecologicaleconomicsextendstheevolutionaryapproachofunderstandinginstitutionalchangetoaco evolutionarytheory,inwhichboththenaturalandsocietalworldsevolveinsynergisticorsymbioticways.Economic coevolutionreferstothemutualinfluenceofecologicalandeconomicsystemsininfluencinghistoricaldevelopments. Forecologicaleconomists,economicsystemsundergolearning,adaptation,andselectionprocessesbasedonthe constantlychangingresourcebasewhichisinturnaffectedbyhumanuse.Technologicalchangeisakeyforcein determiningtheeconomyecologyrelationship,sincethetypeoftechnologyutilizedineconomieswilldeterminethe conditionoftheecologicalbase.Thesocialsystemdevelopshistoricallyasareflectionthepeculiaritiesandconstraints imposedbytheresourcesonwhichaspecificsocietydepends.Thus,humaneconomiesareintricatelylinkedtothe ecologicalsystem,butinturnchangetheecologicalsystemthrougheconomicprocesses.Intheseprocessesinstitutions evolvetoadapttothevariouseconomicandsocietalchangeswhicharerelatedtoecologies.

Fromexternalitytointerdependence
Newinstitutionaltheorists,suchasPaavolaandAdger,claimthatCoaseandPigouarethefoundersoftheirapproach, havingtheorizedtheneoclassicalapproachtomarketfailurewhichcallsforinstitutionalintervention.However,thenew institutionalistsattempttoextendedneoclassicaltheorytoalevelwhichincludesinterdependenceonly,inthesensethan thechoiceofoneagentinfluencesthatofanother.Thus,interdependentagentscannotsimultaneouslyrealizetheir incompatibleinterestswithscarceenvironmentalresourcesandconflictmustberesolvedbyredefininginitial endowmentsthroughinstitutionalmechanisms.Aswell,thesetheoristswouldextendtheneoclassicalnotionof externalitiestoincludeagentsinterdependence.Interdependencethusexplainstheexistenceofinstitutionswhichare necessarytoresolveinterestconflicts.Asaninstitutionaltheory,thisapproachtoenvironmentalpolicyisonlyrootedin theoperativecategoryofinstitutionsanddoesnotdifferepistemologicallyfromtheneoclassicalapproachtothe environmenteconomicrelationship.However,thebranchofinstitutionalenvironmentalthinkingwhichdoesdiffer epistemologically,analyticallyandinstrumentallyfromneoclassicalenvironmentaleconomicsisecologicaleconomics. Ecologicaleconomists,wouldnotaccepttheabovenewintuitionalisteconomicdefinitionofinterdependence. Ecologicaleconomistsrejecttheneoclassicaltheorizationsoftheenvironmenteconomicproblemasanexternality. Rather,ecologicaleconomicscallsforapolicyorientedperspectiveinwhichtheinterdependenceofhumaneconomies andnaturalecosystemsareaddressed.Forecologicaleconomists,theeconomyandsocialactionsmustbeviewedas occurringwithinthelargerbiophysicalsystem.Thereisamaterialandenergybasisfortherelationsbetweenhuman economiesandtheirecosystems,aswellashumansocialstructuresandprocesses.Economiespossessgeneralecosystem properties,suchasdynamism,evolution,integrity,stabilityandresilience.Economiesareinextricablyembeddedin largernaturalecosystems,whereeconomiesexchangeflowsofmaterialsandenergywithnaturalsystems.Assuch,this approachisconcernedwiththeadverseimpacthumaneconomicgrowthhasonnaturalsystems,ratherthenon institutionallycorrectingmarketfailures.Moreover,theapproachseekstounderstandthetolerancesofecosystemsto humaninducedchanges,aswellasthetolerancesofeconomiestoecosystemchanges.Thus,theanalysisofthe economycannottakeplacewithoutananalysisofecologyorviceversa.Economies,societiesandecosystemsare processes,whichdynamicallyinteracttocontinuallyaffecteachotherandcausechange.Hence,theapproachseeksto understandhowcoevolutionbetweeneconomiesandecologiesoccur.Epistemologically,ecologicaleconomicsremains withintheinstitutionalschoolofthoughtsinceitadvocatesinstitutionalandaggregatebehavioralchangessothat sustainabilitycanbecomesocietalvalueandnorm.Moreover,theecologicaleconomicapproachrepresentsaholistic approachtostudyingtheenvironmenteconomysocietyrelationshipasopposedtotheneoclassicalreductionistview,

whichthenewinstitutionalistsreadilyaccept.

Fromweaktostrongsustainability
SincetheBrundtlandreport,theterm"sustainability"hasdominateddiscussionsofeconomicdevelopmentandgrowth. Thetermisattractiveanddubious,foritsambiguityentailsthateachschoolofthoughtcanfitthemeaningof sustainabilityintoitspreestablishedworldview.Forneoclassicaltheoriststhisentailsadefinitionofsustainable developmentintermsofeconomicgrowth.Neoclassicaleconomistsmaintainthatsolongasthetotalcapitalofasociety remainsintactsustainabilityisachieved.However,thisentailstheassumptionthatnaturalandhumanlycreatedcapitals areequalsubstitutes.Moreover,theneoclassicalapproachcontinuestomeasureaggregateeconomicperformancein termsofgrossdomesticproduct(GDP),despitethewidespreadevidencethatincreasingGDPdoesnotnecessarily improvesocialwelfare.Duetothismethodofanalysis,externalcriticsclaimthattheneoclassicalapproachremains overlyoptimisticregardingthepossibilitiesforeconomicgrowth.Assuch,theneoclassicalnotionofsustainabilityhas beendubbedweaksustainabilitybytheinstitutionalschool. Incontrast,institutionalapproachestosustainabilityrecognizetheimportanceofgrowth,butadvocateforstrong sustainability.Dalynotesthatstrongsustainabilityrequirestohumanlycreatedcapitalandnaturalcapitaltobe maintainedandkeptintactseparately.Thisapproachassumesthathumanlycreatedcapitalandnaturalcapitalare complimentsratherthansubstitutes.Ecoconsciousinstitutionaltheoristsseektoestablishtheconditionsofhuman economiesthatwouldallowforecologicalsustainabilityandgrowthinhumanwelfare.Forecologicaleconomists, growthmustbedefinedbythephysicallimitsoftheecologicalsystem.Thus,thenotionofeconomicscaleiscriticalto anunderstandingofenvironmenteconomyrelationship.Asnotedearlier,Dalyhascriticizedtheneoclassicalconception ofoptimalefficiency,andhasratheradvocatedanoptimalscaletogrowthapproach.TheanalogysetforthbyBoulding oftheCowboyversusSpaceshipeconomyisparticularlyrelevanttothestrongsustainabilityworldview.Boulding arguesthatwiththeinsurmountableriseinthehumanpopulationandtechnologicalexpansion,theperviousworldview oftheEarthasaninfinitereservoircannolongerbeadopted.ForBouldingtheEarthhasbecomeatinysphere,closed, limited,crowded,andhurtlingthroughspacetounknowndestinations.Earthhasbecomeaspaceship,anditisnow necessaryforhumanitytodeveloptechnologieswhichlowerentropyanduseproductionmethodswhichrecognizethe biophysicallawsoftheEarth.Forecologicaleconomists,ifmeasuresofchangeatasocietalandtechnologicallevelare nottakenquickly,theintrinsicqualitiesoftheEarthandhumanityseconomicandlivingbasewillbedestroyed.Ineco consciousinstitutionalthinking,theprotectionoftheenvironmentisbasedontheethicalpremisethatprotectionofthe environmentforfuturegenerationsisasocialgoalinandofitself.Ecologicaleconomicsassumesthatitisnaturalfor humanstocareabouttheenvironmentalcrisisandtowantahealthysurvivaloftheplanet.Inresponsetothesepremises, Dalyandhiscontemporarieshavearguedforasteadystateeconomywiththeobjectiveofminimizingtheuseof materialsandenergyconsumed,whilemaintainingaconstantstockofpeopleandcapitalflowingwithinthesystem. Thisapproachhasbeencriticisedasovertlypessimisticbyneoclassicaltheorists.Nevertheless,ecoconscious institutionalistscarefortheresilienceandstabilityofecosystemsandeconomies,ratherthenthepuremonetarygrowthof theeconomy. Consequently,institutionaleconomistswhocaretodevelopanecoconscioussustainableapproachtotheenvironment economicrelationshipmustalsodevelopacritiqueoftheneoclassicalmeasureofgrowth.Theneoclassicalmeasureof economicperformanceisGDP,acalculationwhichgrosslyfailstheenvironmentsinceincomederivedfromproduction andincomederivedfromdepletingnaturalcapitalarebothcountedaseconomicindicators.Failuretoidentifydefensive expenditures,suchasthecostofcleaninguppollution,entailsthatGDPdoublecountsthoseactivitieswhichaddto pollutionandinturncreatecleaningupactivities.Inthisway,GDPmayoverstatethewellbeingofaneconomy.Strong sustainabilitycallsformeasurementsofbiophysicalqualitiesaswellasmonetaryqualitieswhenevaluatingtheaggregate welfareofanecologicaleconomicsystem.Forecologicaleconomistsanymeasureofsustainabilitymustincludeboth ecologicalandeconomicindicators.TheHicksianIncomecalculation,isonesuchmeasure,andonlycountscurrent consumptionthatdoesnotreducefuturewelfarethroughthedepletionofassets.Itisimportanttonotethatalthoughthis

isanimprovementtotheGDPmeasureproposedbyneoclassicaleconomists,itisdifficulttoadhereto,forhuman knowledgeofecosystemsissolimitedthatsomeactivitieswhicharethoughttodepleteassetsminimally,mayexceedthe capacityoftheEarth.Subsequently,activitieswhichdohaveanegativeimpactmaybeincludedinthecalculation.The measurabilityofeachofthevariablesintheHicksianIncomecanbesubjective,unknown,orpronetomiscalculation. Thus,theHicksianIncomemayalsobeaninaccuratedepictionofwellbeing.Assuch,theinstitutionalapproachto sustainabilityoffersanalternativecalculationmethodwhichismultidimensionalinitsapproach,butstillreducesall identifiedfactorstothecommondenominatorofprice. Institutionaltheoristsalsoarguethatthegrowthorientedapproachofneoclassicaleconomicsisnotconcernedwithhow growthaffectscommunitiesorhowincomefromgrowthisdistributed.Assuch,institutionaleconomistsalsodefine strongsustainabilitywithrespecttohumancommunityresiliencewhichincludesfairdistribution.Pearcenotesthat sustainabilityisinherentlyconnectedwiththenotionofjusticewithinspecies,betweenthem,andbetweencurrentand futuregenerations.

Distributionandjustice
Liketheirtraditionalcounterparts,ecoconsciousinstitutionaltheoristsareconcernedaboutrelativeincomeandajust distributionofsocialwelfare.Institutionaltheoristsofthisbranchareconcernedwithintragenerationaland intergenerationalequity.Fromanintragenerationalperspective,theneoclassicalefficientallocationmodelofdistribution failstoaddresscommunitywellbeing,sinceithasnosenseofjustice.Moreover,intheneoclassicalmodelthehistorical conditionsofpropertyownershipdetermineincomedistributionratherthansocalledefficiencyasneoclassicaltheorists claim.Forinstitutionaltheorists,thefulfillmentofneedsbyequitableandjustdistributionismoreimportantthan efficiency.Thus,thegoalsofsocietyandpolicyevaluationarefoundedonbasicneeds.Inthissense,ecoconscious institutionalapproachesadvocateforastrongsustainabilityinwhichconsumptionislimitedtoabasicneedscriterion. Moreover,thetheoryisnotlimitedtothehumanspecies.Ecoconsciousinstitutionaltheoristsalsonotethatintra generationaldistributionmustbesensitivetotheneedsofecosystems,towhateverlimitedknowledgehumanshave. Evenwhenhumanshavenoknowledge,theapproachsupportstheapplicationoftheprecautionaryprinciple. Theprecautionaryprinciplestatesthatwhenmakingdecisionsthevalueoftheenvironmentaspotentialtosupplygoods andservicesshouldbeconsidered.Theprecautionaryprincipleiscloselyrelatedtoaconcernforthestabilityof ecosystems,premisedonethicalvalues.Fromanintragenerationalperspectivethemethodentailsprecautionwhen makingpolicydecisionseventhoughanenvironmentalaffectisunknown.Inaddition,intergenerationalwelfareisan importantcriterionfortheecoconsciousinstitutionalapproach.Fromanintergenerationalperspectivetheprecautionary principleentailsthatthevalueofholdingthefutureoptionofuseshouldbepreserved,andinthefaceofincreasing ecologicalknowledgeonlythencanfuturegenerationsdecidehowtouseanecologicalgood.Assuch,theeco consciousinstitutionalapproachrejectsdiscountingasamethodforinsuringintergenerationalequity.Thus,the precautionaryprincipleavoidsthesocialtrapofmakingshorttermdecisionswhichareincompatiblewiththeneedsof thefuturesociety,byaddingalongrundimensiontoenvironmentaldecisionmaking.Thus,theinstitutionalapproachis morerelevantthanthesimpleneoclassicalapproach,forthebiophysicalworldwithdynamicprocessesthatevolveover time.Inadditiontoapplyingtheprecautionaryprinciplefordistribution,theRawlsianprincipleofequityisappliedasan intergenerationaldecisioncriterion.IntheRawlsianprincipleofequity,oneisaskedtoadopttheoriginalpositionora veilofignoranceregardinghisorherpositioninafuturesociety.Thus,apersonwillnotknowwhetherheorshewillbe affectedadverselyorfavorablybytheenvironmentalconditionscreatedbypreviousgenerations.Thismethodof analysisisintendedtoassistthecurrentgenerationinconsideringfuturegenerations.Ecoconsciousinstitutionalists advocateanecocentricapproachtojusticewhereallspeciesareincludedintheprecautionaryandRawlsianprinciples. Thus,liketheirtraditionalcounterparts,ecoconsciousinstitutionalistscriticizethesocialobjectivesoftheneoclassical marginalapproachtojustice.Forinstitutionaltheorists,notonlyistheneoclassicalapproachinsufficient epistemologically,itisalsoinsufficientinitspolicyprescriptions.Theinstitutionalschoolnotestheimportanceof

establishinganeconomicsforthecommunity,whichhasbeenconsciouslyabstractedfrominthecompetitive individualistapproachofneoclassicaleconomics.Forinstitutionaltheorists,abstractionsfromthecommunityentailan approachwhichcannotimprovethesocialwelfareorwellbeingofasocietyfromsocialorecologicalperspectives.As Dalynotes,thecostsandbenefitsaccruingtothewholecommunity,ecologicalandsocial,notjustpartiesinvolvedin thetransaction,shouldbetheprimaryconsiderationineconomicthinking.Thefocusofstudyrequiresashiftfroma focusonunlimitedexchangevalues,toconcreteusevalueswithlimitedaccumulation.Forinstitutionaltheoristssucha shiftentailsasocietalshiftinmoralsandpreferences,instigatedviainstitutions.

Expandingsocialpreferencesandvalues
Forecoconsciousandtraditionalinstitutionaltheoriststheneoclassicalassumptionsregardingpreferencesandvaluesare problematic.Theneoclassicalselfcenteredwelfareseekingassumptionisrestrictivesinceitdoesnotadmitthat motivationsmaybedrivenbyaregardforthewelfareofothersorbyarespectforsocietalrules.Institutionaltheorists seektounderstandhowmotivationsaredrivenbythepreferencesandvaluesofagentsformedbysociety.Inorderto changepreferencesandvalues,institutionalinstigationisnecessary.Withrespecttotheecoconsciousinstitutional approach,sustainabilitynormsmustbeinstigatedintosocietythroughtheestablishmentofinstitutionalandbehavioral normscompatiblewithsustainability.Thisentailsanunderstandingofhowsocietyreproducesitselfthroughthe productiveactivitiesofitsmembers.Ininstitutionalapproachesitistheactorsinsocietywhoholdspecificworldviews anditisthepowerrelationshipsamongthoseactorswhichdeterminetheuseandcontrolofenvironmentalresources. Institutionaltheoristsdiscardtheconsumersovereigntyandindividualrationalityassumptionssetforthbyneoclassical economists.Aswell,theinstitutionalapproachrejectsthenotionthatmarketsselectoptimaltechnologiesforecofriendly production.Rather,ecoconsciousrationalityisboundedbyknowledgeandmotivesforprotectingtheenvironment whichcanbeinstitutionallypromptedbytheinternalizationofenvironmentalvaluesintothedecisionmakingof individualsandfirms.Faithintheabilityofinstitutionsandsocialforcestoaffectthebehaviorofeconomicactorsentails thatgrowingenvironmentalconsciousnessofconsumerswillleadto"green"consumptionchoicesforsustainablegoods andsociallyresponsiblefirmswhomodifytheirpracticestominimizeenvironmentalimpact.Moreover,social institutionscanfacilitatenegotiationstoattainconsensusamongtheholdersofdifferentenvironmentalviewsandinthe process,valuesarelearned.Thus,unliketheneoclassicalschoolwhichcontextualizestheenvironmentasacommodity forconsumptionbetweendifferenteconomicactors,theinstitutionalapproachisinterestedinexaminingtheriseof environmentalconcerninsociety. Ecoconsciousinstitutionaltheorynotesthathumandecisionsareguidedbysomeknowledgethevalueoftheiractions andvalueoftheirimpactonecosystems.Ifrationalchoicesaretobemade,someboundedrationalitywithrespecttothe naturalenvironmentmustexist.Privatevalues,regardingtheinstrumentalqualityoftheenvironmentforthehuman economyasausevalue,areconsidered,alongwiththepublicenvironmentvalueswhichincludeaesthetic,moral,and culturalconsideration.Theinteractionoftheseforcesleadstoadilemmawithinsociety,fortheenvironmentalchoices madeinthepresentwillinturnshapethepreferences,cultureandsocietalnormsofsocietyinthefuture.Thus, institutionaltheoristsadvocateapolicyapproachwhichasksthefollowingquestions: Whatdoessocietywishtobecome? Whatistherequisitehealthofanecosystemrelativetothatsocialobjective? Whatsetofhumaneconomicartefacts,structuresandprocessarefeasiblethatrequisitehealthyecosystems? Howcanweusetheadaptabilityandbehaviorsofhumaneconomiestoassurethattheymeettheirownwelfare needsaswellastheneedsforpreservationofahealthyecosystem? Theinstitutionaldilemmaistoorganizeamethodforestablishingwhatsocietywishestoseeitselfbecomeandthrough institutionalmethodsassistsocietytoreachthosedesires,withinthelimitsoftheecologicalsystem.Assuch,the institutionalapproachbelievesthatwithinmarketsociety,valuescanbemadecongruentwitheconomicandecological goals.However,ecoconsciousinstitutionalistsrecognizethatthemoralsystemsofsocietymaybeincompatiblewith

whatasocietywouldliketoseeitselfbecome.Therefore,forsocialmoralitytochange,theentiresetofinstitutions, socialrelationsandviewsofnaturalsystemmustalsochange.Toachievechangetheinstitutionalapproachadvocates thedevelopmentofthenecessaryregulatoryinstruments,lawsandassociatedinstitutionsthatassisthumaneconomiesin attainingsustainablewelfaredevelopmentgoals.However,theanalysisofhowsocietalpreferenceandvaluesareshaped mustalsoincludeananalysisofthepowerrelationshipsinsocietyandhowpowerimpactstheactionsofactors.

Power
Powerrelationshipsarealsoaconsiderationintheinstitutionalpursuitforanunderstandingofenvironmentalbehaviors, attitudes,valuesandnorms.Forinstitutionaltheorists,powerisconsideredontheonehandanindividualsocio economiccharacteristic,andontheother,thepoliticalframeworkinwhichsocioeconomicvariablesinteract.Veblens expositionofpowerrelationships,intermsofconsumptionchoices,hasbeenadoptedbyecoconsciousinstitutional theorists.Veblenpioneeredananalysisofcapitalistsocietyasoneinwhich: emulativeconsumptionispursuedforthevisibledisplayofwealthandasmeansofacquiringsocialstatus, despitethewastefuluseofnaturalresourcesitentails. Forinstitutionaltheorists,insocietalstructureswhereinsatiableconsumptionisanorm,powerfulcorporationswiththe rightsovernaturalresourceswillinevitablyexploitthoseresourcesinthepursuitofprofits.Thus,problemofresource scarcityisattachedtosocietalneedsandnorms,industrialshortcomingsandbusinessmanipulations.Also,the entitlementsoverresourceswilldeterminehowtheenvironmentistreatedbysociety.Whereenvironmentalconflicts occuritisnotonlyaconflictofvaluesbut,aboveall,aconflictforpoweroverresources.Forinstitutionaltheoristsan unequaldistributionofpowerinsocietyisusuallyconductivetoincreasedenvironmentaldegradation.Thestruggles overresourcesandthedogmaofthoseholdingpowerinsocietywilldeterminetheprevailingsocialpreferencesand valuesadoptedbythesocietyatlarge.ForGalbraith,thepowerofcorporationsinsociety,withtheirgrowthbased objectives,notonlyleadstoenvironmentalproblems,butunderminesthepublicservicesneededtoeasetheburdentheir operationscause.Therefore,Galbraithrecommendsinstitutionalimplementationthroughlegislation,tocontrolthe environmentallydestructivepracticesofpowerfulfirms.This,ofcourse,assumesthatsocialinstitutionsarefreefromthe poweroffirmsandareabletocontrolindependentactorsforthesakeofthecommongood. Theecoconsciousinstitutionalapproachlendsitselftoaholisticunderstandingoftheenvironmenteconomyrelationship andprovidesstructuralsolutionstoenvironmentalproblems.Inidentifyinghowthesocialpreferencesandvaluesof agentsaffecttheenvironmenteconomyapproach,theinstitutionalschooldevelopsanintricateandsensitiveapproachto understandingtheeconomyecologyrelationship.Itsmethodofunderstandingenvironmentaldegradationatasocietal anddistributionallevelalsoleadstoadynamicapproach.Moreover,therelianceonphysicalindicatorsfora comprehensivesystemanalysisrelatestotheconcreteworldratherthanhypotheticalreductionistabstractionsfromit. Despitetheseattributes,theapproachremainsvulnerabletocriticismfromoutsidetheorists.Firstly,theapproach assumesthatthenegativeattributesprevalentinmarketsocietycanbeinstitutionallycorrectedthroughawider understandingandthroughchangestosocialnorms.Secondly,althoughtheapproachhaselaboratedonthe environmentalissuesfacingsociety,ithasnotconsideredtheoperationofthesocioeconomicsystemasawhole. Thirdly,theapproachassumesthatstrongsustainabilityispossiblewithinacapitalistsocietywhichhasbeenwidely questionedbyMarxisttheorists.Tofullyunderstandtheinadequaciesofboththeneoclassicalandinstitutional approaches,anunderstandingoftheMarxistapproachtotheenvironmenteconomyrelationshipisconstructive.

Marxianapproaches
IdentifyingtherelationshipbetweenecologyandMarxhasbeenachallengingtaskforMarxists.However,theMarxian understandingoftheenvironmenteconomicrelationshipiscrucialforacompletediscussionoftheecologicaldestruction occurringinsocietytoday.Theneoclassicalandinstitutionalschoolsofthoughtdonotchallengethebasicpremisesof

capitalism,andassuchthesolutionsofferedbythesesapproachescannotamelioratetheecologicaleffectsofthesystem. ForMarxandhisfollowers,tounderstandthespecificityofecologicaldestructioninsociety,itisnecessarytoexamine thehistoricalmaterialistconditions,modesofproduction/reproduction,andthenatureofcapitalwithinsociety.Itwillbe shownbelowthattheepistemologicalstandpoint,analyticalapproach,operativecategoriesandinstrumentsof interventionalpredicatedbyMarxistsremainwithintheMarxianunderstandingoftheecologicaleconomicproblem. BeforebeginningthisexaminationoftheMarxianapproachitisimportanttonotethatwithintheMarxistschoolof thoughttherearethosetheoristswhoseconcernistolocateenvironmentalismwithinMarxandhisapproach,andonthe otherhandtherearecontemporarytheoristswhoseconcernistoapplytheMarxianmethodofanalysistothe environmenteconomicrelationship.BothapproachesarenecessaryforunderstandingtheMarxistconceptionofthe environmenteconomicrelationshipandassuchwillbeanalyzedinconjunctionforthepurposesofthispaper.

HistoricalMaterialism
FromtheoutsetMarxiananalysishadasenseofhumanityaspartofnature.Engelswasparticularlycriticalof anthropocentricunderstandingsofnatureandMarxwascriticalofanyanalysisofsocietywhichexcludedaco evolutionaryunderstandingofthehumannaturerelation. Inregardtoanthropocentrism,Engelswrote: "Letusnot,however,flatterourselvesovermuchonaccountofourhumanvictoriesovernature.Foreach suchvictorynaturetakeitsrevengeonusweareremindedthatwebynomeansruleovernature,like someonestandingoutsideofnature,butthatwebelongtonature,existinitsmidst,andthatallmastery ofitconsistsinthefactthatwehavetheadvantageoverallothercreaturesofbeingabletolearnthelaws andapplythem" RegardingcoevolutionMarxwrote: "ManopposeshimselftonatureasoneofherownforcesinordertoappropriateNaturesproductionina formadaptedtohisownwants.Byactingontheexternalworldandchangingit,heatthesametime changeshisownnature" IntheMarxiananalysisoftheenvironmenteconomicrelation,natureandsocietycannotbeviewedastwoindependent bodies.Rather,theymustbeviewedascoevolutionary,eachchangingtheotherinadynamicprocess.ForMarxand Marxists,thewayhumanitytreatstheenvironmentisformedthroughsocialandhistoricalforces.Marxsownwords clarifytheperspectiveofhistoricalmaterialisminapplicationtoeconomicrelations: "itisnottheconsciousnessofmenthatdeterminestheirexistence,but,onthecontrary,theirsocialexistence thatdeterminestheirconsciousness." Withrespecttotheenvironmenteconomicrelation,historicalmaterialismcontendsthatsocialandeconomiclifetakeson aspecificformbasedonthedynamicinterrelationofthecontextualconditions,resourcematerials,energysourcesand unintendedconsequencesintheenvironmentwheresocialeconomicformsdevelop.Thus,eachformofsocialand economiclifemustbeunderstoodintermsofitsownspecificconditionsandlimits.Whatdifferentiateshumansfrom otherspeciesisthathumansmasternaturethroughlabor,andlaborisappliedbyhumansinordertoproducetheir meansofsubsistence.ForMarx,thehumanrelationtonatureisrootedintheproductiverelationsthroughwhichhumans reproducetheirmeanofsubsistence: "Manbeginstodistinguishhimselffromanimalsassoonashebeginstoproducehismeansofsubsistence, astepwhichisconditionedbyphysicalorganization.Byproducingthemeansofsubsistencemenare

producingtheirmateriallife.Thewayinwhichmenproducetheirmeansofsubsistencedependsfirstofall onthenatureofthemeanofsubsistencetheyactuallyfindinexistenceandhavetoreproduce.Thismodeof productioncannotbeconsideredsimplyasbeingthereproductionofthephysicalexistenceofindividuals. Ratheritisadefiniteformofactivityoftheseindividuals,adefiniteformofexpressingtheirlife,adefinite oflifeontheirpart.Whattheyare,thereforecoincideswiththeirproduction,bothwithwhattheyproduce andhowtheyproduce.Hence,whatindividualsaredependsonthematerialconditionsoftheirproduction." Thus,humanscreatetheirowndistincthistoricalrelationandunderstandingofnaturethroughproduction.ForMarx, humansalsoactthroughthematerialpraxiscreatingadistincthumannaturerelationsothattheycantranscendthe alienationfromnaturetheyexperiencewhenproducingtheirmeansofsubsistence.ContemporaryMarxistshaveapplied Marxshistoricalmaterialismtotheecologicalcrisisandassertthatthecurrentstageofhistoryischaracterizedby structuralforcesthatsystematicallydegradeandexceedthecapacityofnature,thussettingintomotionecosystem breakdowns.ForMarxiststheecologicalcrisisisnotjustacrisisofnature,butalsoacrisisofsociety,createdbythe specificstructuresofproductionandreproductionappliedbycontemporarysociety.RelatingtoMarxscoevolutionary approach,contemporaryMarxistsarguethathumanityisnotjusttheperpetratorofthecrisisbutisalsoavictimofthe crisis,evidentininstancesofmalnutrition,socialalienation,andthesystematicpoisoningoftheveryenvironmenton whichhumansdepend.ForMarxandMarxists,capitalismwasandisaspecifichistoricalform.Moreover,antagonismto natureisaspecificityofcapitalismthatcanbedemonstratedbystudyingthespheresofproductionandreproduction, notionsofvalue,andthenatureofcapitalastheyoccurincapitalism.

Productionandreproduction
ForMarxandMarxists,productionispartoftheeconomicdynamicthatdevelopsunderspecifichistoricalforms. Capitalistproductionisspecificfromotherformsofproductionsinceitresetsuponaspecificstructureofexploitation andappropriation,madepossiblebyvarioushistoricalforces.Inparticular,capitalismreliesonasystemofprivate propertywhichincreasinglyremovestheagriculturalpopulationfromtheland.Theenclosureprocessofthe19th centurypreparedthewayforamoreintensiveexploitationofthehumanandnaturalsidesofproduction.Agrarian laborersseparatedfromthelandwereincreasinglyforcedintothefactorysystemfortheirmeansofsubsistence,and naturewasplacedinthehandsofprivatepropertyowners,whosemainpurposeofownershipswastopursueprofits. Thesystemofprivatepropertyalsoledtothedivisionoflaborwithinthenationastheindustrialandcommercialspheres oflifewereseparatedfromagriculturelabor.Thedivisioncreatedalastingantagonismbetweentownandcountryas thesubjectionmademanintoarestrictedtownanimalorcountryanimalandcreatedconflictbetweentheirinterests. ThesedivisionsinsocietywererootedinthedivisionofthepopulationfromtheEarth,andtheseparationoftownand countryalsoledtonewconditionsofproductioninboth.Fornature,thedisruptionwasmostconcerning,foritentailed theapplicationofindustrialtechniquestothelandwhichwouldinevitablydisrupttheecologicalbasisofhuman existence.ForMarx,thecapitalistmodeofproductionwhenappliedtoagriculturewoulddegradethesoilandrobits fertilitythroughrecklessexploitation. Moreover,aresultingeffectoftheseparationoftownandcountrywasalsotheincreasingalienationofhumanbeings fromnatureandaconsequentalienationoflabor.ForMarx,alienationfromtheland: "estrangesmanfromhisownbody,fromnatureasitexistsoutsideofhim,fromhisspiritualessence,his humanessence.Thisisalwaysasocialestrangement,everyselfestrangementofandfromhimselfand natureismanifestedintherelationshiphesetsupbetweenothermenandhimselfandnature" Incapitalisticsocialforms,thisalienationleadstothereductionofbothlaborandnaturetothestatusofacommodity, governedbythelawsofsupplyanddemand.ForMarx,thealienationwasexpressedthroughthefetishismofmoney, whichisthe"alienatedessence"andtheuniversalvalueofallthingsincapitalism.Buttheabstractionoflaborpower

andnaturetothemoneyformwouldallowfortheinevitableexploitationofbothandwouldmanifestintoclassstruggles betweentheworkerandthecapitalistsclass.Tounderstandtheprocessbywhichexploitationoccurs,itisnecessaryto understandthenotionofvaluespecifictocapitalism.

Value
ForMarxandhissupporters,everycommodityisaconjunctionofusevaluesandexchangevalues.Usevaluessignify thecommoditysplaceintheeverdevelopingmanifoldofhumanneedsandwants,whileexchangevaluerepresentsits commoditybeing,itsexchangeability,anabstractionthatisexpressedinquantitativetermsasmoney.Capitalismisa regimeinwhichexchangevaluepredominatesoverusevalue,andtheprobleminthisisthatonceexchangevalue dominatescapital,capitalmustperpetuallyexpand.Profitisderivedwhenthetotalcostofinputsusedinproductionare lowerthentheexchangevalueofthecommoditytheyconstitute.ForMarx,itwasthelowcostoflaborpowerwhich determinedthesourceofcapitalistprofitability.Thegreatertheexchangevalueofthecommodityproducedandthe lowerthecostofthelaborinput,thehigherwouldbethesurplusorprofitextractedbythecapitalists.Sinceincapitalism, productionisforprofit,sellingpricesmustbekeptashighaspossibleandcostsaslowaspossible.Thecoststobe loweredorkeptlowarethoseofanyinputwhichenterstheproductionofcommodities.Thisentailscombininginputs whichhavelittleornovalueintoproduction. Marxrecognizedthatnatureandlaborwerethesourcesofwealthinproductionandclaimedthat"workisthefatherof wealth,butearthisitsmother."Marxalsonotedthatincapitalistsociety"theearthisactiveasanagentoftheproduction orusevalue,butithasnothingtodowithexchangevalue"andhence,naturewasaccordednovalueincapitalismunless thelawrequiredthemarkettoplaceavalueonnature.Theascendancyofexchangevalueoverusevalueincapitalism entailsecologicalandsocialdegradationasnatureandhumanbeginsarecommodified: "Naturebecomesforthefirsttimesimplyanobjectformankind,purelyamatterofutilityitceasestobe recognizedasapowerinitsownrightandthetheoreticalknowledgeofitsindependentlawsappearsonly asastratagemdesignedtosubdueittohumanrequirements." Thecontradictionbetweenusevaluesandexchangevaluesincapitalismentailedthatthecontributionsofnatureand laborwouldbeneglectedbythesystem,orinotherwordsthatnatureandlaborwouldnotbeaccordedavaluerelatedto theiruse.Yet,separationoftheexchangevalueofnatureandlaborfromtheiruseentailedalowvaluationofthese inputs,andtherebyimpliedaperpetualandincreasingexploitationofthem.ForMarxandhisfollowers,thispattern wouldeventuallyleadtocrisisandtransformationwithinthesystem.ForMarxists,theincreasingexploitationofnature experiencedtodayundertheglobalsystemofcapitalismwillalsoleadtodifferentcrisisabiophysicalcrisisofthe Earthanditsecosystems.TofullappreciateMarxiannotionsofenvironmentalorlaborexploitation,andthecrisisand transformationprocess,itisnecessarytounderstandtheessenceofcapital,towhichthisanalysiswillnowturn.

Capital
ForMarxists,anunderstandingofcapitalismisincompletewithoutanunderstandingofthefundamentalnatureof capital.AlthoughthisareaofMarxismisextensiveandwellbeyondthescopeofthispaper,itisstillnecessarytoatleast touchthesurfaceofthisanalysisandutilizeitsinsightsforanenvironmenteconomicunderstanding.ForMarxand Marxists,capitalismdiffersfromothersocialformssinceincapitalism,theendandbeginningoftheproductioncycleare thesame,(MCM),expressedasmoneyorexchangevalue.Acyclestartswithmoney(M)andendswithmoney(M), butforthecapitalisttobemotivatedtoengageintheproductionprocess,themoneyattheendofthecyclemustbe greaterthenatthebeginning.Solongasthisincentiveexists,thecyclewillrepeatitself,withtheendingmoney(M) becomingthestartingpointofanewcycle.Duetothisnatureoftheproductioncycleincapitalism,thevalorizationof valuecanonlytakeplacethroughtheconstantrenewedmovementofcapital,whereMgrowstoMandMgrowsto M,andsoforthinalimitlesscycleofbuyingandselling,producingandreproducing.ForMarx,thispressurefor

growthincapitalismwasexponentialandbecameproportionaltothetotalmagnitudeofaccumulatedcapital(M+ M+M)pressingforrelease: "Thebarrierappearsanaccidentwhichhastobeconquered.Thisisapparentoneventhemostsuperficial inspection.Ifcapitalincreasesfrom100to1,000then1,000isnowthepointofdeparturefromwhichthe increasehastobeginthetenfoldmultiplicationprofitandinterestthemselvesbecomecapitalinturn.What appearedassurplusvaluenowappearsasasimplepresuppositionandisincludedinthissimple composition." Thus,intheregimeofcapitalanyoriginalprofitisonlyastartingpoint,asthecyclerepeats,anexpansionaryforcewill beobserved.Thisexpansionaryforcebreaksthepreviousboundariesofsurplusvalueorprofit,leadingtoanothercircuit inwhichtheboundariesmustbebrokenagain.Withrespecttothis,capitalregardsboundariesasbarrierstobesurpassed andreplacedwithnovelboundaries.Everyboundaryintherealworldisuselesstocapitalunlessitcanbemonetizedand placesintoanMCMcircuit,sothatfurtherboundariescanbebroken,attheendofwhichanothercircuitmustbegin. Thus,forcontemporaryMarxists,whencapitalisfacedwithecologicalboundaries,suchasaspecificcarryingcapacity oftheEarth,theprospectsofthecapitalistschangeandrequiretheinclusionofecologyintothecircuitofcapital.As such,marketsemergefortradingpollutioncreditsorsellinggreenspaceorproducingdrugstooffsettheharmful ecologicaleffectscreatedbycapitalinthefirstplace.Itisafundamentalelementofcapitalismtocreatenewanxieties andneedsduetotheconstantrequirementofcapitaltobefunnelledintonewcircuitsofaccumulation."Accumulate, accumulate,itisthecapitalistsMosesandprofits."Moreover,thefaster[[capital]canmovethroughtheproduction circuit,thegreatertherateofresourceextractionandenvironmentaldamage.ContemporaryMarxistsrecognizethat capitalcanproduce"green"commoditiessuchasantipollutiondevices,recycledgoods,ororganicproduce,butcapital willonlydosoifitcanreproduceitselfexponentiallythroughtheseavenues.However,beforeanythingelsecapitalmust sustainitself.Therateofprofitoraccumulationdeterminestheamountofcapitalenteringthecircuitofproduction.The highertheinitialcapitalthegreaterwillbetheresultingprofits.Anythingoranybodythatinterfereswithprofits,new investment,andexpandingmarketsthreatenstheeconomicsustainabilityofthesystem.Assuch,thereisastrongcase againsttheinstitutionalclaimthatecologicallysustainablecapitalismorsustainabledevelopmentispossible.For Marxists,capitalismrequireseconomicgrowth,theabsenceofwhichleadstogeneraleconomicdecline.Ecologically sustainabledevelopmentcancontinueuptoapoint,butifthereisanecologicallimittogrowth,thenthegrowthmust ceaseatsomepoint,aconditioncapitalwouldnotaccept.Theonlyescapewouldbeifcapitalismcouldshiftgrowthto economicactivitiesthatdonotinvolvetheconsumptionofmaterialsorenvironmentalgoods,butthenproductionwould beoffloadedintonewareaswithnomarketvaluesothatproductioncostsremainlowandprofitratesremainhigh. Recallthatinordertoexpand,capitalmustcontinuallyusemorenocostorlowcostinputssothatMcanconverttoM. ForMarxthismanifesteditselfthroughtheincreasingexploitationoflabor.ForcontemporaryecoMarxistsitalsomeans usingtheenvironmentwhichhaszeroorlowvalueonthemarkettothuslowerthecostofproductionandincreasethe rateofprofit.Yet,ifsustainabledevelopmentispursued,thentheenvironmenthastobevalued,andiflegislationexists toprotectworkersfromexploitation,capitalwillhavenowheretoturn.Thus,ecologicallysustainablecapitalismis impossibleinthelongtermforMarxists. Intheaboveanalysisitappearsthatcapitalhasalifeofitsown,apointwhichmustbeclarified.Capitalisnotaliving organismitisarelationshipsetupbysocialforcesandispersonifiedbypeoplewhoactforcapitalinthewaydescribed above.Inthespecificstructureofcapitalism,thecapitalistcannotrestcontentforheorshemustconstantlytrytoexpand theprofitboundary.Growthissimplyequatedwithsurvival,andanycapitalistwhofailstogrowandbreak,oratleast meet,thenewboundarywilldisappearfromapowerpositioninthesystem.Assuch,nomatterhowmuchonehasitis neverenough,moremustalwaysbepursued.Ironically,theintenserateofcompetitiontendstoleadtothe overproductionofgoodswhichcannotbesold:arealizationcrisis.Thus,thecapitalistpsychologywhichstrivesfor moreandmoregrowth,leadsthesystemintoinevitablebreakdown.ForMarx,thereasonforthebreakdownorcrisisin thesystemwasthatasoutputexpanded,workerswhowereincreasinglydeprivedoftheirsurplusvaluewould experiencealackofpurchasingpower.This,inturnwiththedriveforproductiononthepartofcapitalists,wouldleadto

arealizationcrisis.Thenproductionwouldbecutback,unemploymentwouldriseandpriceswouldeventuallydecline. Aftertheexcesscommoditieshadbeendisposedof,thesystemwouldrecover,productionwouldrise,andthesystem wouldfollowthesamecycle,untilthelongrunpatternsofboomandbustbecamemoresevereandunmanageable.For Marxinthelongrun,realizationcriseswouldbecomesevereandsocialtransformationwouldoccur.Thus,forMarx, capitalismseverexpandingfeatureinordertoexistwouldeventuallyleadtothedemiseofcapitalism. Marxalsonotedthattheinsatiablepursuittoexpandcapitalwouldalsoleadtocapitaldegradingtheconditionsof productionitreliedon.Thus,thepursuitofprofitswouldhaveacontradictoryeffectonprofitabilityitself,thereby leadingtocrisis.ContemporaryMarxistshaveappliedthisconceptiontosocialandenvironmentalconditions,notingthat capitaltendstoimpairordestroythoseconditionswhen,inordertoretrieveitselffromselfinducedcrises,itundertakes mechanismsandmeasureswhichcumulativelyworsenthedamage.Thecrisissituationinducescapital,inthepursuitof profit,toseeknewavenuesofappropriation,whichcanleadtoafurtherdegradationofsocialsystemsorecosystems, whichinturnonlydeepenthecrisisoverthelongterm.Forthisreasonaswell,forMarxandMarxists,capitalismcannot beecologicallysustainable,sinceitcreatescrisesthatrequirefurtherexploitationforshorttermrecovery,whichledto thelongrundemiseoftheveryelementbeingexploited.

Transformation
Ifcapitalismisnotsustainableecologically,itfollowsthattheinstrumentsofinterventionproposedbytheneoclassical schoolorinstitutionalschoolcannotridthesystemofitsecologicalperils.Ecologicaleconomics,althoughperhaps usefulintheshortrun,doesnotrecognizethefactthatinordertosignificantlyslowdowntherateofenvironmental deteriorationorhaltitcompletely,capitalistsocietywillhavetogiveprioritytoenvironmentalnecessityoverprofit. However,asdemonstratedabovethisisonlypossibleifenvironmentalnecessityiscongruentwithprofitability,ahighly unlikelycase.Byworkingwithintheexistingcapitalistsystem,bothinstitutionalandneoclassicalapproacheswillnot findthesolutionstotheecologicalcrisis,fortheyassumethatthesystemhastheabilitytoadapttocrises.Asshown above,forMarxists,whenthesystemadaptstocrisesitdoessoinwayswhichdeepenthecrisesinthelongterm. Moreover,forMarxists,theliberaldemocraticstateislimitedbecauseitrepresentsthegeneralinterestintheformofan externalityabovethepopulation.Beingexternalfromthecommunityentailsthatthestatecanbeappropriatedbya minority.Assuch,incapitalistsocietiesthestatewillinevitablybeskewedinfavorofbusinessbecausethegovernment needsbusinesscooperationtoimplementpoliciesandalsofearsunstableeconomicdownturns.Thus,thestatewill invariablyadapttotheneedsofbusiness.Asshownpreviously,businessisconcernedfirstandforemostwith profitabilityandassuchwilladvocateforpolicieswhichfavorprofitability.Thus,interventionistmeasureswillnotwork toprotecttheenvironment,ifthatprotectionconflictswithprofitability.Consequently,theinstitutionalandneoclassical approachesareinherentlyflawedintheirprescriptionsfortheydonotconsiderthepowerstructuresinsocietyfromthis perspective.Inaddition,Marxistspointtothefactthatmanyecologicalproblemsdatebacktopreindustrialtimes,and thustheinterventionisttendencytoblamethetechnologyofproductionorthesystemofvaluation,ignoresthecruxof theproblemwhichistheunderlyingsocialsystem. ForMarxiststhesolutiontotheexistingecologicalcrisisismarkedlydifferentfromthatoftheotherschoolsofpolitical economicthought.First,Marxistscondemntheassumptionthatcapitalismispartofhumannature.Marxistsassertthat capitalismisaspecifichistoricalandsocialformwhichrelatestoaspecificunderstandingofmaterialconditions.An understandingofhowsocietyconceivesandconnectstonatureisfundamentaltochangingtheprocessesbywhich ecologiesaredestroyed.Secondly,sincetheecologicalcrisisisrootedinthesocialspheresofexistence,thesolution mustinvolvethetransformationofthehistoricalrelationshipbetweenhumansandnaturetoarelationbetweennature andsocietywhichisecologicallysustainable.Thestruggleforecologicallyrationalproductionmustbepartofthe struggletoovercomecapitalistexploitationandthecapitalistexpressionofnatureandlaborinthecommodityform.Eco socialismistheexpressionforthisunderstanding,andseeksafundamentaltransformationofsociety.Ecosocialists contendthatecorevolutionwillbecomefeasibleonlywhenpeopledecidethattheirpresentsocialarrangementsare intolerable,whenpeoplebelieveabetteralternativeispossible,andwhenpeoplebelievethatthesystemcanbepointed

intheirfavor.Forecosocialists,ifsocietycontinuesonitsecodestructivepath,itisonlyamatteroftimeuntilecological concernsgainexplosiveurgencywhenthesystemcanbechangedthroughrevolutionaryform.Unfortunately,untilthe conditionsforecorevolutionexist,thosewhoareconcernedabouttheenvironmentwillhavelimitedavenuesfor protectingnatureotherthenpersonalcommitmentsto"green"formsofconsumption. Withrespecttotheenvironment,ecosocialism,Marxism,andMarx,haveallbeencriticisedfromexternaleconomic approaches.Thesecriticismsarelargelybasedontheevidentandobviousfailureofthecommuniststateswithrespectto theenvironment.Thesecriticsclaimthatthe70yearsocialistexperimentofRussiaandthe45yearexperimentof EasternEuropeweredisastrousfortheenvironment,leavingalegacyofexcessivelandandairpollutionand insurmountabledamagetowaterwayssuchasthedrainingAralSeaandnuclearpollutioninWhiteSea.Thus,critics claimthatMarx,byfocusingoncontradiction,wasledtoanoverlyoptimisticenvironmentalviewoftheclassless societyarisingoutofrevolution.TherearemanycounterargumentstopresentagainstthisnavecriticismofMarxism. OnecounterargumentisthatSovietUnionwasnotanunadulteratedapplicationofMarxistideology.TheSovietstates andthecommuniststateswhichexisttodayignoreafundamentalelementofMarxthatfreedevelopmentisanecessary conditionfortherealizationofaclasslesssociety.Noneofthecommuniststatestodatehadfreedomasacriterionof theirpoliticalsystems.Thus,theecologicaldestructionprevalentinthesestatesprobablyhaslesstodowithsocialism andmoretodowiththefactthatthegovernments,whoranandrunthesesstates,totallyneglecttheneedsoftheirsociety andplacesupplysideproductiontargetsaboveallelse. Also,MarxsmaterialismhadbeensuperficiallycriticizedforitsBaconiandominationofnaturethatfocuseson productionandexploitation.ThesecriticsoftenclaimthatMarxregarded"natureasafreegift"likehisneoclassical contemporaries,thushegavenovaluetotheenvironment.However,theseclaimsareasuperficialmisinterpretationof Marx.Asdiscussed,acloserreadingofMarxindicatesthathistheoriesarepremisedonasensitivityofnature,andan understandingofnatureashavingnovalueincapitalistsocieties,butthisdoesnotmeanthatnaturehasnousevalueor intrinsicvalueforMarxspecifically.Infact,andasshownabove,Marxandhisfollowershavemuchtoaddtoan understandingoftheenvironmenteconomicrelationship.Marxismhasadvantageovertheneoclassicalorinstitutional schoolspreciselybecausethetheoryresetsonanunderstandingofsociety.Marxneverlostsightofthenecessary relationofmaterialconditionstonaturalhistory.TheapplicationofMarxismprovidesaframeworkofquestioningwhich seekstounderstandtheessenceoftheecologicalcrisisinadditiontotheappearanceoftheecologicalproblem.

Conclusion
Inconclusion,withrespecttotheenvironmenteconomicrelationshiptheneoclassical,institutional,andMarxistsschools ofthoughtremainwithintheframeworksetoutbytheirpredecessors.Asdemonstrated,theneoclassicalapproach amountstoamarketbasedunderstandingoftheenvironmenteconomicrelationandfocusesonavaluebasedmethod whichassumestheethicallyunchallengeablepreferencesofseparateandautonomousindividualswhosecollective decisionsimpacttheenvironmentinaccordancewithhypotheticallyderivedutilities.Theinstitutionalperspectiverejects theindividualismandreductionismoftheneoclassicalapproach,andrecognizesthatthemarketisoneinstitutionamong manyinsociety.Forinstitutionaltheory,therealinterdependencebetweenecologicalsystemsandtheeconomycreatesa dynamicthroughwhichsocialvalues,culturalnormsandinstitutionsareformedandchange.Ingeneral,theinstitutional argumentseekstoimbedtheeconomywithintheenvironmentinordertomodifythemarketmechanismtowards ecologicalsustainabilityandequitablecommunitywellbeing.Finally,theMarxistapproachtakesmuchfromits founder,KarlMarx,intermsofanecologicalandsocialunderstandingoftheenvironmenteconomicrelationship. Marxismsubstantiallyenlargestheinvestigationoftherelationshiptooneinwhichthemarketisquestionedand analysedintermsofitsappearanceandessence.Moreover,aMarxianapproachrevealsthecontradictionbetween capitalismandecologicalsustainability,thusrejectingtheanalysesandsolutionsofferedbytheneoclassicaland institutionalschools.Alloftheseapproachesofferawayofunderstandingtheenvironmenteconomicrelationship,and anappreciationofeachoneisnecessaryforaholisticanalysisandanarticulatechallengetotheecologicalcrisispresent

intheworldtoday.

FurtherReading
Adaman,Fiket,andOzkaynak,Begum,TheEconomicEnvironmentRelationship:SomeCriticalRemarksonthe Neoclassical,InstitutionalandMarxistApproaches,.Copyright2000,DownloadedonNovember25,2003 AmosWeb,Glossary.Copyright2003,DateVisited:December20,2003. Avenell,SimonandThompson,Herb,CompetitiveMarketsandTheEnvironment:ACriticalExaminationof OrthodoxEconomics,DemocracyandNature,Vol.3,No.9,1997pgs.107128. Bradley,Dennis,andFarber,Stephen,EcologicalEconomics,(December2,2003) Brooks,Mick,HistoricalMaterialism(Copyright1998,DateVisited:December13,2003) Boulding,KennethE.,TheEconomicsofComingSpaceshipEarth(Copyright1966,DateVisited:December10, 2003) Baumgrtner,Stefen,InternetEncyclopaediaofEcologicalEconomics(Copyright2003) ChlorineOnlineInformationResource,Glossary(Copyright2002) Daly,HermanE.,Economics,EcologyandEthics:EssaysTowardaSteadyStateEconomy,SanFrancisco, California,1980. Daly,HermanE.andCobb,JohnB.Jr.,FortheCommonGood:RedirectingtheEconomytowardCommunity, theEnvironmentandaSustainableFuture,Boston,Massachusetts,1994. Davis,Mike,EcologyofFear:LosAngelesandtheImaginationofDisaster,NewYork,NewYork,1998. EnergyDevelopmentandResearch,Glossary(Copyright1999) Gilpin,AlanEnvironmentalEconomics:ACriticalOverview,WestSussex,England,2000. Gimenez,MarthaE.,DoesEcologyNeedMarx?,OrganizationandEnvironment,Vol.13,No.3,September 2000,pgs.292304. Field,BarryC.andOlewiler,NancyD.,EnvironmentalEconomics:FirstCanadianEdition,Toronto,Ontario, 1995. Foster,JohnBellamy,TheVulnerablePlanet:AShortEconomicHistoryoftheEnvironment,NewYork,New York,1999. Foster,JohnBellamy,MarxsEcology:MaterialismandNature,NewYork,NewYork,2000. Foster,JohnBellamy,MarxandtheEnvironment,MonthlyReview,Vol.47,No.3,JulyAugust1995,pgs.108 124. Gowdy,JohnandOHara,Sabine,EconomicTheoryforEnvironmentalists,DelrayBeach,Florida,1995. Keen,Steve,DebunkingEconomics:TheNakedEmperoroftheSocialSciences,NewYork,NewYork,2001. Kovel,Joel,TheEnemyofNature:TheEndofCapitalismorTheEndoftheWorld?,NewYork,NewYork, 2002. Krishnan,Rajarm,Harris,JonathanM.,andGoodwin,NevaR.,ASurveyofEcologicalEconomics,Washington, D.C.1995. Kula,E.,HistoryofEnvironmentalEconomicThought,NewYork,NewYork,1998. Leff,Enrique,GreenProduction:TowardsanEnvironmentalRationality,NewYork,NewYork,1995 Lipietz,Alain,GreenHopes:TheFutureofPoliticalEcology,Oxford,England,1995. Lipsey,RichardG.,RaganChristopherT.S.,andCourant,PaulN.Economics:NinthCanadianEdition,Don Mills,Ontario,1997. Mitchell,RossE.,ThorstienVeblen:PioneerinEnvironmentalSociology,OrganizationandEnvironment,Vol. 14,No.4,December2001,pgs.389408. Mulberg,Jon,SocialLimitstoEconomicTheory,NewYork,NewYork,1995. OConnor,Martin,IsCapitalismSustainable?PoliticalEconomyandthePoliticsofEcology,NewYork,New York,1994. Paavola,Jouni,andAdger,W.Neil,NewInstitutionalEconomicsandtheEnvironment:ConceptualFoundations

andPolicyImplications Redclift,Michael,DevelopmentandtheEnvironmentalCrisis:RedorGreenAlternatives?,NewYork,New York1991. ResourcesfortheFuture,Glossary SEDAC,Glossary(Copyright1996) Soderbaum,Peter,NeoclassicalandInstiutionalApproachestoDevelopmentandtheEnvironment,Ecological Economics,Vol.5,May1992pg.127144. UniversityofManchester,Lecture3:TheEconomicValueofEconomicResourcesandEnvironmentalDamage (Copyright2003) VandenBergh,Jeoron,CJM.,EcologicalEconomics:ThemesApproachesandDifferenceswithEnvironmental Economics(Copyright2000)

Citation
JacquelineMedalye(LeadAuthor)CutlerCleveland(TopicEditor)"Neoclassical,institutional,andmarxistapproaches totheenvironmenteconomicrelationship".In:EncyclopediaofEarth.Eds.CutlerJ.Cleveland(Washington,D.C.: EnvironmentalInformationCoalition,NationalCouncilforScienceandtheEnvironment).[Firstpublishedinthe EncyclopediaofEarthJanuary18,2008LastrevisedDateNovember21,2010RetrievedAugust20,2011 <http://www.eoearth.org/article/Neoclassical,_institutional,_and_marxist_approaches_to_the_environment economic_relationship>

TheAuthor

JacquelineisaPoliticalSciencePh.D.studentatYorkUniversity.SheholdsaBachelorofBusiness AdministrationandaMastersofArtsinPoliticalScience.Herresearchinterestsincludeglobalenvironmentalpolitics. Specifically,Iaminterestedinexaminingthepoliticalandsocialchallengesadaptationtoclimatechangewillpresentto theinternationalcommunity.OtherareasofstudythatJacquelinepursuesincludebusinessandsustainability,the internationalpoliticaleconomyofthe...(FullBio)

Comments
Therearenocomments.

NCSE BostonUniversity Trunity Unlessotherwisenoted,alltextisavailableunderthetermsoftheCreativeCommonsAttributionShareAlikelicense. PrivacyPolicy|NeutralityPolicy SupportedbytheEnvironmentalInformationCoalitionandtheNationalCouncilforScienceandtheEnvironment.