Is Economy Enough in Examining Environment?

1. Is Economy Enough in Examining Environment? Kıvanç DÜZ 2003433014

2. OUTLINE Myth #1: Market solves all problems? • Karl Polanyi "The Great Transformation" • History, Economics, and Anthropology: The Work of Karl Polanyi Myth #2: When economists do see a marketproblem, theyalways recommend a market solution. • Kyoto Protocol • United Nations Environment Programme (UNEP) • World Trade Organization (WTO Former GATT) Myth #3: When non-market solutions are considered, economists still use only market prices to evaluate them. • Classical Liberalism versus Modern Liberalism • Sociologists’ Reply to Adam Smith • Sociological Paradigm on Environment

3. Myth #1: Market solves all problems? Karl Polanyi in his work.. His work in Great Transformation is “combining history, anthropology and sociology with economy.” Kinship system did not have important economic functions. Economic situations changes with roles, norms of behavior and motives.

4. Myth #2: When economists do see a market problem, they always recommend a market solution • KYOTO PROTOCOL Kyoto Protocol was set up in the end of COP3 (Conference of Parties) in 1997. Industrialized countries forced to decrease %5 an average of emission of greenhouse gases from 2008 to 2012. After US withdrawal from Protocol, protocol lost its power over its members.

5. KYOTO PROTOCOL Some states are willing to join the Protocol, but some of them not. States’ officials who do not accept the Protocol believe that Protocol will increase their costs. Kyoto Protocol aims to create more effective treaties and international cooperation.

6. KYOTO PROTOCOL Kyoto Protocol was accepted immediately by most countries in the world. But, its goals will be resulted in long-term. Also, its goals are unrealistic and inappropriate. Kyoto Protocol tried to solve climate change policy. Because, climate change is a dangerous environmental risk. It created fast, but its targets will be achieved in long-term.

7. Myth #2: When economists do see a market problem, they always recommend a market solution • UNITED NATIONS ENVIRONMENTPROGRAMME UNEP is the voice for the environment that takes the leadership of environment by protecting and informing people and nations. UNEP plays educator role in the use of planet’s natural sources.

8. UNITED NATIONS ENVIRONMENTPROGRAMME UNEP main purposes were “creating international agreements, making powerful institutions for management of environment, providing knowledge and technology for sustainable development, cooperating with new partners in civil society and private sector.

9. UNITED NATIONS ENVIRONMENTPROGRAMME UNEP provides governments important environmental data and information for planning sustainable development.UNEP builds an institutional and legal infrastructure for global environment. UNEP deals with the major environmental issues such as water scarcity, marine environment and pollution.

10. Myth #2: When economists do see a market problem, they always recommend a market solution • WORLD TRADE ORGANIZATION WTO or formerly GATT plays effective role in labor and environmental standards. Member countries wanted to broaden WTO agenda in order to include labor and environment. Developing countries did not generally apply WTO programmes which are about trade, economics and environment. Because, they use this WTO intervention such a limitation of their national sovereignty.

11. WORLD TRADE ORGANIZATION Main question is here “How labor and environment should be taken as issues in the WTO?” The answer is that tariff negotiations, determination of domestic standard and environment quality are necessary starting points. There are no international negotiations, sometimes market can not figure out the problems.

12. Myth #3: When non-market solutions are considered, economists still use only market prices to evaluate them • CLASSICAL LIBERALISM vs MODERN LIBERALISM • Classical Liberalism By getting government out of economy, letting the economy alone, state will have the best system. According to Smith, market itself will arrange the economy. Public will have best quality goods at the lowest prices. Supply and demand determine prices. Invisible hand or unseen hand regulates the economy. Society should be free as possible from government interference.

13. CLASSICAL LIBERALISM vs MODERNLIBERALISM • Modern Liberalism Thomas Green argued that free market was not as self-regulating system which solves all problems. Because, competition is not perfect. Manufacturers can create monopoly in market. Also, class positions play important role.Modern liberalism helps the establishment of the right to form unions, unemployment, health insurance, environment protection, educational opportunity, wage and hour laws.

14. Myth #3: When non-market solutions are considered, economists still use only market prices to evaluate them • SOCIOLOGISTS’ REPLY TO ADAM SMITH Many economists except Smith and sociologists focused on the education effect over earnings. Smith did not use education concept. Smith argues that prices are arranged by supply and demand segments, sectors and other structures of demand differences.But, Sociologists pointed out that the demand side of earnings determination process is ignored by economists.

15. SOCIOLOGISTS’ REPLY TO ADAM SMITH Smith made a mistake that if workers are paid less, the marginal productivity will be lower. But, it is a weak point of neoclassical theory. It maybe true but in long term we are all dead or at least retired. Smith does not solve life time in examining problems. Maybe, workers can be paid due to its ages. We should divide process in to two divisions which are youth and old. Smith gave too much credits to neoclassical economics, but he did not give enough credit to Sociologists.

16. Myth #3: When non-market solutions are considered, economists still use only market prices to evaluate them • SOCIOLOGICAL PARADIGM ON ENVIRONMENT Environment concern is not always figured out by the help of economics. Also, there are another social and demographic determinants such as age, sex, income, education, occupational prestige, residence, political party and political ideology.

17. SOCIOLOGICAL PARADIGM ONENVIRONMENT Age hypothesis, younger people takes care environment more than older people.In Social Class hypothesis, Environment is positively correlated with social class which includes education, income, and occupational prestige. People began to deal with environment after their basic life demands are met. Middle and upper classes deal with environment less effectively than lower classes. Lower classes shows much attention to the environment, because, they live in highly polluted areas about bad conditions in environment.

18. SOCIOLOGICAL PARADIGM ONENVIRONMENT Also, small towns do not concern aboutenvironment. They focus on economic growth rather than environment. In Political hypothesis, Democrats and liberals are more concerned about environmental quality rather than Republican. In Sex hypothesis, males are more active, more deal with public issues, have higher education than females. But, this is a subjective approach. There is no agreement about the relationship between sex and environmental concern.

19. In Conclusion, Researchers should not examine environment with any help of economics. They should look other sciences in solving environmental problems. Demographic variables such as private property rights, laisses-faire government and economic growth are strongly related to environment. Demographic variables are effective determinants in environmental protection.