Overcoming the Myths of Mainstream Economics to Enable a New Wellbeing Economy

Luca Coscieme,Ida Kubiszewski,Biagio F Giannetti,Paul Sutton,Lorenzo Fioramonti,Katherine Trebeck,Robert Costanza,Lars F Mortensen,Federico M Pulselli

doi:10.3390/su11164374

Abstract

Increasingly, empirical evidence refutes many of the theoretical pillars of mainstream economics. These theories have persisted despite the fact that they support unsustainable and undesirable environmental, social, and economic outcomes. Continuing to embrace them puts at risk the possibility of achieving the Sustainable Development Goals and overcoming other global challenges. We discuss a selection of paradoxes and delusions surrounding mainstream economic theories related to: (1) efficiency and resource use, (2) wealth and wellbeing, (3) economic growth, and (4) the distribution of wealth within and between rich and poor nations. We describe a wellbeing economy as an alternative for guiding policy development. In 2018, a network of Wellbeing Economy Governments (WEGo), (supported by, but distinct from, the larger Wellbeing Economy Alliance—WEAll) promoting new forms of governance that diverge from the ones on which the G7 and G20 are based, has been launched and is now a living project. Members of WEGo aim at advancing the three key principles of a wellbeing economy: Live within planetary ecological boundaries, ensure equitable distribution of wealth and opportunity, and efficiently allocate resources (including environmental and social public goods), bringing wellbeing to the heart of policymaking, and in particular economic policymaking. This network has potential to fundamentally re-shape current global leadership still anchored to old economic paradigms that give primacy to economic growth over environmental and social wealth and wellbeing.

Highlights

Throughout the history of economic thinking, a series of theoretical assumptions have been refuted by empirical evidence yet are still the subject of debates
When real world data and phenomena contradict what is expected by theory we refer to paradoxes; when desirable outcomes cannot be achieved using policy based on economic theory we refer to delusions
While the discipline of economics is equipped with theory and tools to describe, understand, and influence socio-ecological systems [1,2], the paradoxes and delusions described here contribute to a public perception, and a reality, that economic theory is not always coherent with what happens in the real world

Summary

Introduction

Throughout the history of economic thinking, a series of theoretical assumptions have been refuted by empirical evidence yet are still the subject of debates. By ignoring physical limits and planetary boundaries, mainstream economists have convinced politicians and the public that perpetual economic growth is a desirable goal [2,4,36] They have developed an influential mythology supporting ideas that economic growth addresses persistent poverty (“rising tides lift all boats”), improves human wellbeing (growth in GDP/capita determines increased human wellbeing), creates political and social stability (political stability and economic growth are mutually reinforcing), and reduces environmental degradation (environmental Kuznets curve). This implies that above a certain level of income per capita, basic needs are fulfilled and wellbeing is not improved at the same rate with higher levels of income [54] These works suggest that development policies should give increasing importance to non-economic aspects of life after a certain income level, rather than focusing almost exclusively on economic growth.

An Apostasy from Free-Market Fetishism

Discussion

A Modest Proposal to Reform the Logic of Economics

Findings

Reforming Global Economy’s Leadership

Conclusions