Part 2 of Ecological Economist Philip Lawn's presentation on how Modern Monetary Theory can improve an ecologically sustainable economy. Recorded 1st August 2020 at The Joinery, Adelaide, South Australia.

The world economy is depleting the earth's natural resources, and economists cling to models that make no reference whatsoever to the biophysical basis that underpins the economy. That's why ecological economics is needed, says William Rees in this INET interview. http://ineteconomics.org/video/interview/william-rees-dangerous-disconnect-between-economics-and-ecology

What is money, and where does it come from? What does the monetary system have to do with sustainability? In this lecture, I explain what money is, and how it is created and destroyed by commercial banks. I look at some of the criticisms of our current monetary system, and discuss possible alternatives, such as Sovereign Money Creation and a Sovereign Money System. Lastly, I explore the links between money creation and environmental sustainability, including the tough question of whether our current monetary system creates a dangerous growth imperative.

There are many different schools of thought in economics, and they sometimes have quite fierce disagreements over big ideas. In this lecture, I discuss how three schools of thought (neoclassical economics, environmental economics, and ecological economics) think about the environment and sustainability.

What is sustainability, and why is it such a contested topic? What does it mean for development to be sustainable? In this lecture, I explore the two main views on sustainability within economics: Weak Sustainability and Strong Sustainability. In doing so, I also cover the Five Capitals framework (natural capital, built capital, human capital, social capital, and financial capital).

Economics is about choices, about trade-offs. In this lecture, I introduce three important concepts that underpin rational decision-making in neoclassical economics: opportunity costs, marginal benefits, and marginal costs. With these concepts, we can understand important ideas such as the Law of Diminishing Marginal Utility, the Law of Increasing Marginal Cost, and the concept of optimal scale (a.k.a. the “When to Stop” Rule).

Neoclassical economics and ecological economics have very different views on how to achieve sustainability. One of the reasons for this is that is that they start with different "preanalytic visions". The fundamental vision of neoclassical economics is the circular flow diagram, while the fundamental vision of ecological economics is the economy embedded within the biosphere. These differences are important, particularly given we have moved from an "empty world" to a "full world", as shown by our transgression of planetary boundaries.

What do the Laws of Thermodynamics have to do with the economy? A lot more than you might think! In this lecture, I explore the implications of the 1st and 2nd Laws of Thermodynamics for economic activity. I discuss the important concept of entropy, and introduce three different types of systems (open, closed, and isolated).

Economics has its fair share of obscure terminology, but there are some key concepts that are worth understanding. From ecological economics these include stock-flow and fund-service resources, and from neoclassical economics they include excludability and rivalness.

What is ecological economics, and how does it differ from mainstream (or neoclassical) economics? Ecological economics began in part as an attempt to bring together ecology and economics – to bridge the gap between a natural and social science. Today it a transdisciplinary field that covers topics from degrowth to the Doughnut of social and planetary boundaries. In this short lecture, I discuss the history, fundamental vision, and modern focus of ecological economics.

Many of the worst environmental and social problems that we currently face can be traced to root causes in our economic system — in particular to issues of unsustainable scale, unfair distribution, and inefficient allocation. Ecological economics is particularly concerned with sustainable scale and fair distribution, while mainstream (or neoclassical) economics is much more concerned with efficient allocation. In this lecture, I explain the difference between allocation, distribution, and scale, and the types of policies that are needed to address them.

Perhaps the greatest debate in sustainability is whether there are limits to growth. Is it possible to achieve sustainability while continuously growing the economy, or is there a fundamental trade-off between these two objectives? Ever since the publication of the book the “Limits to Growth” in the 1970s, this question has been fiercely debated. In this lecture, I explore the arguments both for and against the continued pursuit of economic growth in wealthy nations. I discuss topics including poverty eradication, the Environmental Kuznets Curve hypothesis, decoupling, planetary boundaries, happiness, GDP, and the rebound effect.

Energy is the ability to do work. Since economies do work, you’d figure that economics would be very concerned with energy. But you’d be wrong, at least for mainstream economics. The same is not true for ecological economics. In this lecture, I introduce two important concepts, namely exergy and EROI (energy return on energy invested), and discuss what they imply for the future of economic growth. Along the way, I discuss the important work of Bob Ayres, Benjamin Warr, and Charlie Hall. To help you understand the ideas covered, check out my previous video on the Laws of Thermodynamics and the Economy: https://youtu.be/h6Clz8DQvIk