5 of 6 people found the following review helpful:
4.0 out of 5 stars
A Much Needed Critique of Mainstream Economics, July 3, 2008
This review is from: The Environmental Endgame: Mainstream Economics, Ecological Disaster, and Human Survival (Hardcover)
This slim book is a popularization of Nadeau's earlier, more scholarly work "The Wealth of Nature: How Mainstream Economics Failed the Environment". It's a solid and sorely needed critique of mainstream economics, based on up-to-date developments in physics and mathematics as well as environmental science.
For example, real-world economics is described as an `open system' with energy, resource, and regulatory inputs, operating under a regime that is frequently chaotic due to `feedback loops'. This is in sharp contrast to the `closed-system' axioms of neo-classical economics, focused on the mathematics of `equilibrium', with environmental issues relegated to `externalities'. And when Nadeau started listing the many false assumptions of neo-classical economics, such as limitless growth and perfectly rational economic actors, then I became eager to see this breath of fresh air blow away the `dismal science' of yore.
Nadeau characterizes the fundamental failure of neo-classical economics as an understanding of part-whole relationships based on out-of-date Newtonian thinking. Several illuminating chapters are devoted to analyzing the historical development of neo-classical economics. Yet I found the `part-whole' discussion rather opaque. It seems to be an unsuccessful attempt to popularize the difference between a modern open-system understanding informed by the mathematics of nonlinear dynamical systems and chaos theory, versus the classical closed-system understanding associated with the law of the conservation of energy and the linear differential equations of Newtonian physics.
In fact the part-whole critique comes off as somewhat ideological. It has the virtue of denouncing the false assumption that there is an `invisible hand', or `natural law' of economics, guiding economies toward perfect equilibrium if government, assumed to be external to the closed-system, would only keep its hands off. Yet I think that a more successful critique would be to just demonstrate that the neo-classical model is a very bad model for the real world, except in very specialized circumstances. I also found the opening gambit of the `Godgame', though well intentioned, to be somewhat offputting.
The larger task is to actually construct a new `ecological economics' based on the new mathematics and physics. Nadeau says that mainstream economists haven't been listening to the ecological economists, however correct they may be. Therefore he has launched a more direct attack on the foundations of neo-classical economics. But I think what is missing is the mathematical development of ecological economics, to the point where this new economics supplies much better quantitative tools, not just qualitative analysis, for economists to do there jobs.
A big obstacle here is the need to change the mindset of economists for prediction to scenarios. The neo-classical economics of equilibrium is ideally suited to prediction. And in very specialized or short term circumstances these predictions can be accurate, with customary statistical confidence intervals. But the real world of economics is more like the weather, a chaotic system.
So how are climate scientists now predicting climate change over the coming centuries? They use scenarios, to give people a sense of the range of possibilities, so that we may be prepared. Moreover, these scenarios put the focus squarely where it needs to be: On the validity of the assumptions that go into the scenarios. A global economy based on a wide range of scenarios will become adaptable and resilient, instead of highly optimized for one particular scenario, e.g., 'just-in-time' supply lines.
In economics this quantitative approach was actually pioneered decades ago by the "Limits to Growth" project, though it was neglected by mainstream economists. This celebrated and still worthy project was fully grounded in the nonlinear dynamics of feedback loops and scenarios based on just a few global variables, such as population, food, industry, and resources. This work needs not only its own axiomatic development, but a vast extension to deal with the ecological, political, and economic world at all levels, in both theory and practice.
An example is that control theory for chaotic systems teaches that very little energy, if properly applied over time, is needed to guide a system that is on the `edge of chaos'. Thus a democratically constituted economic authority could successfully guide the global economy with a gentle, not heavy, hand, if it has patience and the proper levers. Nadeau, to his credit, recognizes the need for democratic global governance to tackle the many global crises that are already becoming manifest.
Unfortunately Nadeau does not point us to who is actually doing this exciting development of post-Newtonian economics. I suspect the reason is that the real science of economics is still in its infancy and it is up to us to develop it. Thanks to Robert Nadeau for throwing down the gauntlet.
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4 of 5 people found the following review helpful:
3.0 out of 5 stars
Good, but not that good, September 6, 2008
This review is from: The Environmental Endgame: Mainstream Economics, Ecological Disaster, and Human Survival (Hardcover)
I found Mr. Burkhart's review to have said everything that I want to say about this book, except that I had a much stronger negative reaction to the discussions of Newton, Darwin, and linearity. The arguments Nadeau makes with regard to these topics expose a deep misunderstanding of them and that, for me, undermines his credibility. It also results in a misplaced blame for the fact that economists and politicians have misused the priniciples of physics and other natural sciences and applied them to social systems in which they do not belong.
Nadeau also fails to recognize that ecological economics makes the same error in attempting to apply yet another body of scientific knowledge to social systems. The last thing that economists need is to continue the myth that economic systems are natural. Nadeau must recognize that even an ecological application to a non-natural system will inevitably be forced into linear approximations of answers to the complex problems that arise in this non-natural system.
I do agree with Mr. Burkhart that Nadeau deserves some credit for throwing down the gauntlet, but as Mr. Burkhart points out, Nadeau has not provided any real solutions. Neither has he provided any original thought. Further, he has contributed to the perpetuation of a gross misunderstanding of mathematical and physical science principles and the appropriateness of their applications to the social world. Nevertheless, he has made the longstanding criticisms of neoclassical economics, and the need for something altogether different, more visible.
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4 of 6 people found the following review helpful:
5.0 out of 5 stars
An important tool, September 23, 2006
This review is from: The Environmental Endgame: Mainstream Economics, Ecological Disaster, and Human Survival (Hardcover)
THE ENVIRONMENTAL ENDGAME: MAINSTREAM ECONOMICS, ECOLOGICAL DISASTER, AND HUMAN SURVIVAL reiterates we've moved even closer to global environmental disaster - and maintains that distinctions must be abolished which consider environmental issues as outside the sphere of 'real' or everyday concerns. Scientists have long attempted to bring these issues to consumer attention: here perspectives from a range of disciplines connect environmental issues with the real worlds of people around the world. From government institutions to economic concerns, THE ENVIRONMENTAL ENDGAME is an important tool for linking environmental science with the rest of the world.
Diane C. Donovan
California Bookwatch
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