the lauderdale paradox

Monthly Review | Today orthodox economics is reputedly being harnessed to an entirely new end: saving the planet from the ecological destruction wrought by capitalist expansion. It promises to accomplish this through the further expansion of capitalism itself, cleared of its excesses and excrescences. A growing army of self-styled “sustainable developers” argues that there is no contradiction between the unlimited accumulation of capital — the credo of economic liberalism from Adam Smith to the present — and the preservation of the earth. The system can continue to expand by creating a new “sustainable capitalism,” bringing the efficiency of the market to bear on nature and its reproduction. In reality, these visions amount to little more than a renewed strategy for profiting on planetary destruction.

Behind this tragedy-cum-farce is a distorted accounting deeply rooted in the workings of the system that sees wealth entirely in terms of value generated through exchange. In such a system, only commodities for sale on the market really count. External nature — water, air, living species — outside this system of exchange is viewed as a “free gift.” Once such blinders have been put on, it is possible to speak, as the leading U.S. climate economist William Nordhaus has, of the relatively unhindered growth of the economy a century or so from now, under conditions of business as usual — despite the fact that leading climate scientists see following the identical path over the same time span as absolutely catastrophic both for human civilization and life on the planet as a whole.1

Such widely disparate predictions from mainstream economists and natural scientists are due to the fact that, in the normal reckoning of the capitalist system, both nature’s contribution to wealth and the destruction of natural conditions are largely invisible. Insulated in their cocoon, orthodox economists either implicitly deny the existence of nature altogether or assume that it can be completely subordinated to narrow, acquisitive ends.

This fatal flaw of received economics can be traced back to its conceptual foundations. The rise of neoclassical economics in the late nineteenth and early twentieth centuries is commonly associated with the rejection of the labor theory of value of classical political economy and its replacement by notions of marginal utility/productivity. What is seldom recognized, however, is that another critical perspective was abandoned at the same time: the distinction between wealth and value (use value and exchange value). With this was lost the possibility of a broader ecological and social conception of wealth. These blinders of orthodox economics, shutting out the larger natural and human world, were challenged by figures inhabiting what John Maynard Keynes called the “underworlds” of economics. This included critics such as James Maitland (Earl of Lauderdale), Karl Marx, Henry George, Thorstein Veblen, and Frederick Soddy. Today, in a time of unlimited environmental destruction, such heterodox views are having a comeback.