Macroeconomics in ecological context.

Abstract

This book arose out of my efforts to take something resembling conventional macroeconomics and root it in physical reality. My path into economics had been unconventional, via Fritz Schumacher’s Small Is Beautiful and the essays of Vàclav Havel, which linked the economy, political system, and environmental situation of Czechoslovakia under communism. Then in the macroeconomics classes I took, there were labor, capital, and technology—and that was it. Resources and the environment were a specialized subdiscipline in economics, and they were essentially absent from macroeconomics. I gravitated toward ecological understandings of the economy, but the more I learned about the field, the more I came to see that an approach based solely on resources left too much unexplained. Havel’s view of the economy was inspiring, but he was, after all, not an economist, and there was a lot to learn from people who had actually made a career of studying the economy. When I started teaching macroeconomics regularly at Hartwick College in 2002, an additional consideration entered the picture. I wanted my students to understand the environmental context of the economy, but I knew they also needed to be able to work with standard macroeconomic tools so they’d be prepared for future coursework, graduate school, or work situations where their colleagues had learned “normal” macroeconomics. My classroom approach was initially an ad hoc discussion of resources tacked on at the end of a standard course, but eventually I figured out and developed the approach used here, this particular way of integrating resources into the production function. The connections between the environment and the economy show upmost clearly in Chaps. 1 and 2 and Parts II and IV. Part III is in some ways a more conventional approach to understanding business cycles, with aggregate demand, IS-LM, and the Phillips curve, but it is grounded in an understanding of money that is influenced by endogenous money, because I have found that approach to lend itself most readily to connecting the strange social phenomenon that is money to the physical world that money influences.