The Economic Imbalances of our Time and the Perspective of Circular Economy
Senior research fellow at the Italian National Institute of Statistics
Please cite the paper as:
Arturo Hermann, (2018), The Economic Imbalances of our Time and the Perspective of Circular Economy, World Economics Association (WEA) Conferences, No. 2 2018, The 2008 Economic Crisis Ten Years On, 15th October to 30th November, 2018
This paper has been included in the publication
“The 2008 Crisis Ten Years On: in Retrospect, Context and Prospect Paperback”
The main aim of this work is to make a step in identifying the theories more adequate to understand the economic imbalances of our time, and more conducive to realise the objectives of a “circular economy”. These objectives can be articulated in progress (scientific and social), sustainability and social justice (PSS).
One reason for this exercise lies in the circumstance that there seems to be little synergic employ of the theories that can help explain the imbalances of our economies and the possible ways to overcome them. This is a typical problem of economics and other social sciences, which often tend to be rather fragmented.
In this regard, we have tried to build a stronger bridge between environmental economics, and a number of heterodox theories of economic imbalances that can make headway to devise a more effective and coordinated policy strategy. In particular, we employ these theories for analysing how to render more and more compatible the objectives of (i) full employment (however defined) and decent work; (ii) sustainable use of resources in all its forms; (iii) substantial reduction of economic and social inequalities; (iv) human, scientific and technological progress.
In the first chapter we analyse the systemic tendency of effective demand to lag behind the supply of full employment. The analysis of these aspects, we believe, is pivotal also for a better integration between environmental and macroeconomic objectives.
In the second chapter we address the main strands of environmental economics. We consider in particular the perspective of bioeconomy, the theories of “commons” and of “appropriate technologies”, and the various forms of ecosocialism, with an eye to their policy implications.
In the third chapter we appraise the contribution of institutional economics to the clarification of (i) the institutional and evolutionary nature of economic action; (ii) the need of an interdisciplinary approach for a better understanding of these phenomena; (iii) the potential of democratic planning for overcoming the failures of the state and of the market; and (iv) the role of social valuing for promoting an effective policy action.
In the final part we consider how these theories can jointly be employed for addressing in theory and policy action the objectives indicate above.
We underscore that such theories, however different in many respects, present notable complementarities, in the sense that the aspects more overlooked by some are more completely considered by the others.
As observed by the famous sociologist Karl Mannheim, a landscape can be seen only from a determined perspective and without perspective there is no landscape. Hence, observing a landscape (or phenomenon) from different angles (or disciplines) can help to acquire a much clearer insight into the features of the various perspectives. Hence these theories, by helping identify the manifold aspects of economic system, can make headway towards a more effective policy coordination. This would involve a horizontal level, between policies: in particular macroeconomic (fiscal and monetary) and structural (in particular, environmental, industrial, research and innovation, social). And a vertical level, between institutions (supranational, national, sub-national, local).
Such coordination would be greatly fostered by a process of social valuation involving all the considered dimensions of policy action.