THE WEALTH OF NATURE

Of inputs, outputs, and invisible hands: a prolegomenon to a future economics that takes environmental costs fully into account.

A “green economics” is almost certainly impossible, writes Nadeau (Economics/George Mason Univ.), within the schema of existing neoclassical economic theory, whose assumptions derive from the union of classical economics with 19th-century physics. Those assumptions are metaphysical more than real, he continues; among them are the notions that “the market is a closed circular flow between production and consumption,” that market systems operate without reference to the external environment, that the free market will sort out whatever problems are thrown at it, and, worst of all, that “the external resources of nature are inexhaustible, or replaceable by other resources or by technologies that minimize the use of these resources or rely on other resources.” Strolling leisurely through the thickets of economic thought planted by the likes of Adam Smith, David Ricardo, Karl Marx, and other thinkers, Nadeau points to a host of contradictions and thorny problems, such as the essential unreality of the invisible hand (which “exists only in the minds of those who believe in its existence”), before setting about the harder work of concocting an economic theory that accounts fully for external inputs such as raw timber and hydroelectric power, all produced at fearful cost to the nonhuman environment. The details of this program will sometimes seem a little murky to the reader not well steeped in economic theory, and to those of a free-market bent, Nadeau’s proposals will smack of one-worldism: the absolute value, he argues, is a sustainable global environment, while one of his desiderata is the establishment of an international agency “that has the power and authority to ensure that . . . price mechanisms are universally applied in a fair and consistent manner throughout the global economic system.”

In short: Get thee behind us, Milton Friedman—there’s a new accountant in town, and he’s counting megawatts and felled forests.