IDEAS home Printed from https://ideas.repec.org/p/wiw/wiwsre/sre-disc-2019_06.html
   My bibliography  Save this paper

Making Pollution into a Market Failure Rather Than a Cost-Shifting Success: The Suppression of Revolutionary Change in Economics

Author

Listed:
  • Clive L. Spash

Abstract

This paper explores core failures of environmental economics as a scientific attempt to understand the ecological crises. The case of environmental pollution is used to show how neoclassical externality theory evolved to establish commitment to, and dogmatic support for, an elitist ethics and liberal market ideology. The public policy response to pollution then recommended is to internalise externalities by correcting market prices based on monetary valuation of the social costs (i.e., damages). Pollution as a market failure is deemed a correctible error of the price system. This is contrast with an alternative theory of pollution based on a classic institutional economic theory of cost-shifting that instead requires a public policy response involving regulation and planning. Reflection on the history of thought related to these two theories of pollution reveals how environmental economics became a marginalised field supporting the neoclassical economic orthodoxy with full commitment to its core paradigms. Why the critical and realist institutional approach had to be suppressed is explained as denying the potential for a revolutionary paradigm shift in economic price theory.

Suggested Citation

  • Clive L. Spash, 2019. "Making Pollution into a Market Failure Rather Than a Cost-Shifting Success: The Suppression of Revolutionary Change in Economics," SRE-Disc sre-disc-2019_06, Institute for Multilevel Governance and Development, Department of Socioeconomics, Vienna University of Economics and Business.
    • Handle: RePEc:wiw:wiwsre:sre-disc-2019_06
    as

    Download full text from publisher

    File URL: https://www-sre.wu.ac.at/sre-disc/sre-disc-2019_06.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. K. William Kapp, 1970. "Environmental Disruption And Social Costs: A Challenge To Economics," Kyklos, Wiley Blackwell, vol. 23(4), pages 833-848, November.
    2. Herman E. Daly, 1972. "In Defense of a Steady-State Economy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(5), pages 945-954.
    3. Buch-Hansen, Hubert, 2018. "The Prerequisites for a Degrowth Paradigm Shift: Insights from Critical Political Economy," Ecological Economics, Elsevier, vol. 146(C), pages 157-163.
    4. Kapp, K William, 1969. "On the Nature and Significance of Social Costs," Kyklos, Wiley Blackwell, vol. 22(2), pages 334-347.
    5. Baumol, William J, 1972. "On Taxation and the Control of Externalities," American Economic Review, American Economic Association, vol. 62(3), pages 307-322, June.
    6. Emery N. Castle, 1965. "The Market Mechanism, Externalities, and Land Economics," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 47(3), pages 542-556.
    7. Kapp, K William, 1970. "Environmental Disruption and Social Costs: A Challenge to Economics," Kyklos, Wiley Blackwell, vol. 23(4), pages 833-848.
    8. Clive L. Spash, 2011. "Social Ecological Economics: Understanding the Past to See the Future," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(2), pages 340-375, April.
    9. Mishan, E J, 1971. "The Postwar Literature on Externalities: An Interpretative Essay," Journal of Economic Literature, American Economic Association, vol. 9(1), pages 1-28, March.
    10. Tibor Scitovsky, 1954. "Two Concepts of External Economies," Journal of Political Economy, University of Chicago Press, vol. 62, pages 143-143.
    11. Spash, Clive L., 2013. "The shallow or the deep ecological economics movement?," Ecological Economics, Elsevier, vol. 93(C), pages 351-362.
    12. Francis M. Bator, 1958. "The Anatomy of Market Failure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 72(3), pages 351-379.
    13. E. K. Hunt & Ralph C. d’Arge, 1973. "On Lemmings and Other Acquisitive Animals: Propositions on Consumption," Journal of Economic Issues, Taylor & Francis Journals, vol. 7(2), pages 337-353, June.
    14. Spash, Clive L., 2009. "The Brave New World of Carbon Trading," MPRA Paper 19114, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pueyo, Salvador, 2020. "Jevons' paradox and a tax on aviation to prevent the next pandemic," SocArXiv vb5q3, Center for Open Science.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Spash, Clive L., 2021. "The History of Pollution ‘Externalities’ in Economic Thought," SRE-Discussion Papers 2021/01, WU Vienna University of Economics and Business.
    2. Spash, Clive L., 2020. "A tale of three paradigms: Realising the revolutionary potential of ecological economics," Ecological Economics, Elsevier, vol. 169(C).
    3. Spash, Clive L., 2019. "Time for a Paradigm Shift: From Economic Growth andPrice-Making Markets to Social Ecological Economics," SRE-Discussion Papers 2019/07, WU Vienna University of Economics and Business.
    4. Ko, Il-Dong, 1988. "Issues in the control of stock externality problems with inflexible policy measures," ISU General Staff Papers 198801010800009859, Iowa State University, Department of Economics.
    5. Fisher, Anthony C & Peterson, Frederick M, 1976. "The Environment in Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 14(1), pages 1-33, March.
    6. Clive L. Spash, 2015. "The Future Post-Growth Society," Development and Change, International Institute of Social Studies, vol. 46(2), pages 366-380, March.
    7. Nathalie Berta, 2016. "On the definition of externality as a missing market," Post-Print halshs-01277990, HAL.
    8. Clive L Spash, 2009. "Social Ecological Economics," Socio-Economics and the Environment in Discussion (SEED) Working Paper Series 2009-08, CSIRO Sustainable Ecosystems.
    9. Brousseau, Eric & Dedeurwaerdere, Tom & Jouvet, Pierre-Andre & Willinger, Marc (ed.), 2012. "Global Environmental Commons: Analytical and Political Challenges in Building Governance Mechanisms," OUP Catalogue, Oxford University Press, number 9780199656202.
    10. Nathalie Berta, 2017. "On the definition of externality as a missing market," Post-Print hal-02095696, HAL.
    11. Nathalie Berta, 2016. "On the definition of externality as a missing market," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01277990, HAL.
    12. Remig, Moritz C., 2017. "Structured pluralism in ecological economics — A reply to Peter Söderbaum's commentary," Ecological Economics, Elsevier, vol. 131(C), pages 533-537.
    13. Clive Spash & Tone Smith, 2019. "Of Ecosystems and Economies: Re-connecting Economics with Reality," SRE-Disc sre-disc-2019_03, Institute for Multilevel Governance and Development, Department of Socioeconomics, Vienna University of Economics and Business.
    14. Nathalie Berta, 2016. "On the definition of externality as a missing market," Documents de travail du Centre d'Economie de la Sorbonne 16007, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    15. E.T. Verhoef, 1999. "Externalities," Chapters, in: Jeroen C.J.M. van den Bergh (ed.), Handbook of Environmental and Resource Economics, chapter 13, Edward Elgar Publishing.
    16. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.
    17. Antonio Garofalo & Rosalia Castellano & Massimiliano Agovino & Gennaro Punzo & Gaetano Musella, 2019. "How Far is Campania from the Best-Performing Region in Italy? A Territorial-Divide Analysis of Separate Waste Collection," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 142(2), pages 667-688, April.
    18. Hupfel, Simon & Missemer, Antoine, 2023. "Decommodifying wealth: Lauderdale and ecological economics beyond the Lauderdale paradox," Ecological Economics, Elsevier, vol. 207(C).
    19. Remig, Moritz C., 2015. "Unraveling the veil of fuzziness: A thick description of sustainability economics," Ecological Economics, Elsevier, vol. 109(C), pages 194-202.
    20. James Swaney, 1990. "The environmental imperative of socio-economics," Forum for Social Economics, Springer;The Association for Social Economics, vol. 20(1), pages 45-58, September.

    More about this item

    Keywords

    Environmental economics; externalities; cost-shifting; price theory; pollution; Arthur C Pigou; K William Kapp; paradigm shift; neoclassical economics; orthodoxy; institutional economics;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwsre:sre-disc-2019_06. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gunther Maier (email available below). General contact details of provider: http://www.wu-wien.ac.at/mlgd/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.