During the first half of the twentieth century, agriculture and then resource economics developed as neoclassical approaches to describe the interactions between the environment and the economy. In the late 1960s and early 1970s, environmental economics was added as a specialized field that responds to the new awareness of the ubiquitous environmental pollution in industrialized economies. Within economic orthodoxy, however, criticism, innovation, and the ability to address environmental and social issues have remained significantly limited. Thus, ecological economics, which emerged as an academic association in the late 1980s, was partly motivated by the failure of environmental economics biased in orthodoxy.
Environmental economics had increasingly lost their potential through institutionalization in the economic mainstream. The development of a new and challenging research agenda that had inspired their work seemed to be stalled. This led to growing frustration over the way in which serious and substantial criticism was downplayed and tamed by the mainstream and its widespread use of mathematical formalism. A whole spectrum of more radical thinking and criticism seemed to be pushed aside.
Take the work of Karl William Kapp, who explains in detail why environmental pollution is an inherent feature of both the capitalist and socialist business enterprise. Kapp had destroyed the myth that such a widespread phenomenon could be treated as something external to modern production and consumption. The overall nature of environmental pollution has also been recognized by later environmental economists by integrating the first law of thermodynamics into economic models and
the related development of material balance theory. Nonetheless, the basic tenets of price theory, efficiency, market allocation and equilibrium remained unquestioned: the models of general equilibrium and optimal control used by environmental economists turned pollution into an abstract variable added to the mathematical sandbox games.
This was far removed from the interdisciplinary learning necessary for economics to develop a realism towards the environment and political relevance. Kapp advocated the integration of knowledge and identified the mutual ignorance of biology and social sciences as a fundamental shortcoming. His goal was an interdisciplinary synthesis and a new,
scientifically informed political economy. Thus, his approach was far too radical for the mainstream economists and was usually ignored; occasionally Kapp was also exposed to personal attacks. Kapp’s economics did not meet the expectations of the orthodox profession of economists, who are highly demanding theories that do not cast doubt on the actions of the economically powerful and that they are always at their service. Economics, however, is biased politically and socially if it is aware of certain developmental tendencies of the economic structure, e.g. the increasing power of corporations, denies scientific legitimacy. As Galbraith notes, economics has a story “to convince its parishioners to close their eyes to reality.”
A fundamental defect of the whole neoclassical approach, as well as its macroeconomic counterpart, is extreme dogmatism.
Even if the events of the real world refute and shatter any belief in their worldview, the mainstream economists continue as if nothing had happened. Macroeconomics, for example, maintains the seemingly absurd view that economics can be regarded as an isolated system without inputs and outputs to the environment. In a nutshell, this can be found in the circular flow diagrams, in which money flows forever and ever into the one, goods and services in the other direction. This model underlies the justifications of economic growth, so that its whole framework of theory is based on an illusion.
A crucial aspect of ecological economics was to confront this fantasy world of economists with a somewhat basic realism of the natural sciences. This involved the inclusion of physical laws in the analysis of the functioning and functioning of social and economic systems. Nicholas Georgescu- Roegen wrote an important work on the importance of entropy for the economy and concluded that economic growth would be impossible in the long run, which is why economic policy needed fundamental reform. This led to a questioning of our societies based on population size and systemic pressure to adapt to the pace of change of social systems and the time remaining for change. The analysis of economic systems was thus inextricably linked to value judgments, both in regard to all present-day species and to future generations. In contradiction to Georgescu-
Roegen, but with similar motives, Herman Daly concluded that the best option was an equilibrium economy, given the entropy laws and growth criticisms. The claim to do justice to the basic bio-physical reality is still at the center of ecological economics today and is currently being pursued in
Debates reflect how they are run under the titles “post-growth society”, “decroissance” or “degrowth”.
Ecological economics is interested in the political consequences of its arguments, offensively calls for ethical views instead of neutrality, accepts the controversy and incompatibility of values, recognizes distributional issues as essential, and understands the ecological idea of magnitude as growth-limiting. Some of their representatives would still add perceptions
such as Norgaard’s co-evolutionary paradigm as a potentially unifying theme. Evolutionary dynamics are indeed an important aspect of ecological economics. This emphasizes that social, economic and ecological systems interact with one another and often change unpredictably, with the consequence that instead of optimal paths to static equilibria, non-deterministic processes are analyzed. Nonetheless, the specific interpretative foil proposed by the co-evolutionary paradigm remains
controversial within ecological economics.
Mainstream thinking is resistant to the idea of economic systems as dynamically evolving structures, as developed long ago by Veblen. Physics and not biology is its dominant comparative film, even in the form of a narrow, mechanical physics. On the other hand, a methodology that goes beyond the simple idea that social interactions might be explained by mechanical cause-and-effect relationships, as Kapp and Georgescu-Roegen have already criticized, is needed. Interactions with the environment have thus revived interest in biological concepts and metaphors within ecological economics.
Despite this apparent openness, the founding of ecological economics as an international association was driven by the idea of bringing together two groups of female academics with a similar narrow methodological background. In the introduction to the first issue of the journal Ecological Economics, Bob Costanza, editor and chief executive of the association, predicted that the subject would broaden the intersection between neoclassical environmental economics and environmental impact
studies and spur new ways of thinking about the links between environmental and economic systems , This approach of improved coupling attracted those who shared a common methodological understanding, more specifically environmental researchers trained in scientific falsificationism and neoclassical economists whose training included an Anglo-American
version of “logical positivism.”
The methodological similarities between the two groups can be summarized as belief in the hypothetical-deductive scientific model – even though neither science nor economics follow their own sermons, and neither are they conceptualized, i. around a weak constructivism, get around. The crucial point, however, is, first of all, that similar beliefs prevailed on both sides as to how the desired scientific work should be carried out – assumptions that can be described as naive objectivism.
The excessive focus on “improved coupling” distracted from the search for and appropriation of a new paradigm, a new philosophy of science or new ways of thinking. Because the coupling approach was not able to challenge the disciplines that made it up. A weak transdisciplinarity was used as a rhetorical justification to ignore past basic insights, synthesizing achievements, and critical reflections. Similarly, the term methodological pluralism was used to justify a combination of irreconcilable epistemological positions and to reject the need for theoretical questions, such as ontology and epistemology of ecological economics. Hurriedly, fundamental philosophical problems were ignored in favor of everything that seemed opportune for the formation of strategic alliances.