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SCHOOLS OF ECONOMIC THOUGHT ON ENVIRONMENTAL SUSTAINABILITY 43
John Stuart Mill published his chef d’oeuvre, The Principles of Political Economy,
in 1848. He enriched the classical economic tradition’s views on the natural
environment with several important elements. Compared to his predecessors, he
laid greater stress on technological developments which might extend the inevitable
final limits of natural resources. He expanded the concept of scarcity to the gradual
decrease of natural resources (e.g. minerals). This exposed a new difficulty even
without the Malthusian demographic problem caused by the insufficiency of crop
land, for Mill was the first to consider the potential alternative uses of land. Land
— apart from agricultural production — provides space for housing and has an
important role as a resource of human recreation (through the contemplation of
the beauty of a landscape, for instance). Crucially, Mill asserted that sooner or
later an economy must reach a stationary, non-growing state. He saw the value of
this alternative service by nature not as something to be determined by the market
but as an argument for the halting of economic growth, long before the compelling
necessity arose (Barbier 1989: 12-14).
The concept of nature in neoclassical economics
Classical economists usually focused on long-term economic problems, and
explained economic connections from the angle of production. In the 1870s, this
approach gave way to a static examination of the economy based on exchange.
The capitalist mode of production having been consolidated in developed countries,
the main task was no longer the elimination of the feudal institutional obstacles
hindering the forces of production. The focus narrowed to the individual, the
pursuer of business, and the central issue was how he could capitalize on the
advantages of capitalist production and the market as fully as possible (profit
maximization) (Christensen 1989: 22—23; Pearce — Turner 1990; 10).
This method presumes the independence of the factors of production from one
another. The increase of one factor causes the increase of returns at a decreasing
pace, while the other factors remain unchanged (ceteris paribus analytic technique).
You will have noticed that this is none other than Riccardo’s relative scarcity in
agriculture extended to the realm of labor and capital. However, one might argue
that while the classical thinkers failed to notice that more intensive agricultural
production (for example, by raising the input of capital and/or work on the given
crop land) caused the invisible matter and energy going through the land to
increase, the neoclassical economists extended this failure to labor and capital
(Christensen 1989: 23). A further problem with this extension is that industry
—as already realized by the classical theorists — is characterized by increasing rather
than diminishing returns (Christensen 1991: 82).
The new trend claims that the economic value of diverse goods and services is
primarily determined by the subjective taste and preferences of individual decision¬
makers (consumers). This statement runs counter to the views of the classical
thinkers who attempted to define value on the basis of used resources. The
neoclassical economists did not look into the formation of preferences or the
availability of resources, taking them simply for granted (Christensen 1989: 23).
In this way, the whole of society has become the aggregate of transactions between
individual actors, without any particular feedback on the individual (Christensen