Economic Justice: The Key to the World’s Future Sustainability

Abstract

This chapter emphasizes the need for a fair and just economic system to achieve sustainability. It will demonstrate that climate change, ecological degradation, population growth, hunger, resource depletion, the issues of financial markets collapsing, and economic recession are all interconnected with the current economic system, which was responsible for transgressing the balance of nature. The chapter highlights that the existence of interest and discount rates in businesses, banking systems, and the world economy as a whole means that the future costs and benefits are less valuable than those in the present and is a clear case of intergenerational inequity and injustice. The chapter then reviews reforms and alternatives, proposed in the literature, to the present economic system to promote sustainability such as steady-state economics, environmental economics, ecological economics, restorative economics, and local self-reliance/alternative currency. The chapter points out that all the reforms or alternatives to the contemporary economic system proposed in the literature do not address the root cause of all the problems, which is the built-in interest-based system, made possible with the paper currency in the economy that creates the worst injustices. The chapter argues that science and technology solutions to ecological problems are constrained because of corporate greed and not fully comprehending the solutions’ environmental consequences. Finally, in the future directions, a broad framework of “fair and just” economic system is laid out, which, if realized, can lead to an ecologically sustainable future for the planet.

Glossary

Aerosols

Aerosols are minute suspended particles, containing both solid (dust, ashes, soot) and liquid components (sulfur and nitrogen oxides, ammonia as well as airborne hydrocarbons), with a diameter of 0.1 to hundreds of microns, that are typical atmospheric contaminants caused by industrial plants.

Biodiversity

The existence of a wide variety of plant and animal species in their natural environments.

Capitalism

An economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth are made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively owned or state-owned means of wealth.

Cartesian paradigm

The “Cartesian paradigm” is a world view in which man is totally independent of his environment, where both body and mind are perceived as distinct and separate and not part of a unified whole. The name Cartesian is derived from the French philosopher Rene Descartes.

Consumerism

The concept that an ever-expanding consumption of goods is advantageous to the economy.

Corporate capitalism

A capitalist marketplace – and society – characterized by the dominance of hierarchical, bureaucratic, large corporations, which are legally required to pursue profit without concern for the social welfare. Corporate capitalism has been criticized for the extent of power and influence corporations and large business interest groups have over government policy, including the policies of regulatory agencies and influencing political campaigns. Many social scientists have criticized corporations for failing to act in the interests of the people; they claim the existence of large corporations seems to circumvent the principles of democracy, which assumes equal power relations between all individuals in a society.

Cost-benefit analysis

A process by which you weigh expected costs against expected benefits to determine the best (or most profitable) course of action.

Discounting

It is a standard technique used for making intertemporal decisions in which the future costs and benefits are given less weight than the present. The process of converting monetary values backward in time to an equivalent amount is called discounting. The social discount rate is the rate at which society as a whole is willing to trade off present for future benefits.

Ecological economics

Ecological economics is a growing transdisciplinary field that aims to improve and expand economic theory to integrate the earth’s natural systems, human values, and human health and well-being.

Ecology

The study of the relationships between living organisms and their environment.

Economic growth

An increase in the capacity of an economy to produce goods and services, compared from one period of time to another.

Ecosystem

An ecosystem is a community of living organisms in conjunction with the nonliving components of their environment (things like air, water, and mineral soil), interacting as a system.

Environmental economics

Environmental and natural resource economics is a sub-discipline of economics and deals with the study of how environmental and natural resources are developed and managed.

Externalities

Externalities refer to situations when the effect of production or consumption of goods and services imposes costs or benefits on others which are not reflected in the prices charged for the goods and services being provided. Pollution is an obvious example of a negative externality.

Holistic thinking

See systems thinking.

IMF

International Monetary Fund.

Intergenerational equity/justice

Intergenerational equity in economic, psychological, and sociological contexts is the concept or idea of fairness or justice in relationships between children, youth, adults, and seniors, particularly in terms of treatment and interactions. It has been studied in environmental and sociological settings.

Natural capital

Natural capital can be defined as the world’s stocks of natural assets which include geology, soil, air, water, and all living things. It is from this natural capital that humans derive a wide range of services, often called ecosystem services, which make human life possible.

Opportunity cost

A benefit, profit, or value of something that must be given up to acquire or achieve something else. Since every resource (land, money, time, etc.) can be put to alternative uses, every action, choice, or decision has an associated opportunity cost.

Reductionism

Reductionism is an approach to understanding the nature of complex things by reducing them to the interactions of their parts or to simpler or more fundamental things. It can also be described as the philosophical position that a complex system is nothing but the sum of its parts and that an account of it can be reduced to accounts of individual constituents.

Social discount rate

See discounting.

Supertoxicants

Supertoxicants constitute a special category of pollutants that include dioxins, biphenyl, and furans and are quite stable in the environment and are not subject to easy chemical and biological decomposition. Less than seven drops of supertoxic chemical if given in a liquid form to a 70 kg human could be lethal.

Systems thinking

Systems thinking involves looking at the interconnections between parts of a whole rather than concentrating just on the parts. Systems thinking or holism acknowledges that complex systems are inherently irreducible and more than the sum of their parts and that a holistic approach is needed to understand them.