An Institutional Approach to Sustainability: Historical Interplay of Worldviews, Institutions and Technology

Abstract

Although the capitalist economic system appears to be resilient to disturbances arising from its own dynamics (Matutinovic 2005; 2006) this might change substantially if its boundary conditions were altered significantly and abruptly like an energy or environmental crisis at the global scale. The possibility of such a critical change in boundary conditions is glooming out of many recent studies dealing with the health of the global environment. For example, there is mounting evidence of potentially irreversible deterioration of important ecosystems like oceans and tropical forests; an alarming rate of species facing extinction; and a change in global climate, all of which appear to be induced by anthropogenic activities (Scheffer et al. 2001; Mooney, Cropper and Reid 2005; Brook 2005; Hansen et al. 2006). The standard approach to these and other problems that concern human impact on the environment has been focusing, so far, on technological progress and market mechanisms: by using less polluting technologies and by letting prices mediate our relations with nature, mainstream economic theory and conventional wisdom wishes to preserve the natural environment and at the same time maintain economic growth. This was also the original goal behind the concept of sustainable development as it first appeared in the early 1970s (Adams 2006). There are, however, reasons to doubt that the standard approach will bring desired results. While markets are good at speeding up technological change and can effectively mediate between production of consumer goods and household demand, they are generally blind with respect to social and environmental consequences they help to create. This has long been recognized by heterodox economists: for example, William Kapp ([1977] 1991) warned that markets have an intrinsic and