Methodological Overview - Economics and Ecology: United for a Sustainable World - page 4

supposed economic flexibility simply represents an attempt to intellectually
manipulate the degree of dependence among variables. Under any circum-
stance, this amounts to a linear cause-and-effect methodological approach.
There are many fundamentally important issues revolving around the
concept of economic efficiency. These will be explored further in Section II
of this topic.
Systemic Analysis
I have no doubt that it is possible to give a new direction to technologi-
cal development, a direction that shall lead it back to the real needs of
man, and that also means: to the actual size of man. Man is small, and,
therefore, small is beautiful. 2
—E. F. Schumacher
What is the alternative? If an overly scientific, linear, cause-and-effect
throughput-based approach to the organization and management of human
societies has led the modern world astray, what is the countervailing
approach that would be more appropriate? The answer begins with systems
theory and offers some first steps in how ecology can inform economics.
To begin with, the economic world must be viewed as a holistic, interactive
system. A change in any variable affects everything else. The quantitative,
statistically based approach, which has engulfed economic methodology in
recent decades, initially purports to account for this holism, but economic
practitioners in effect quickly despair of treating the bewildering complex-
ity. Nevertheless, the instinct to preserve the methodology is powerful. The
response, therefore, has become to engage in partial analysis (replete with the
use of calculus and partial derivatives), whereby many factors are assumed
constant—a physical impossibility in any relationship—while the dynam-
ics among a few others is studied. Moreover, the analysis is often between
just two variables, while the entire “rest of the world” is held constant. It
is becoming daily more apparent that the unintended effects of such false
assumptions are threatening our way of life.
Second, the real world operates cyclically, not linearly. Ecology can use-
fully inform economics in this regard. For example, populations of snowshoe
hares in the boreal forest of Alaska and Canada increase in numbers of indi-
viduals for roughly 7 years before they crash. Meanwhile, the population of
the lynx, which preys on the hares, increases as the hare population grows.
When, however, the hare population crashes, the lynx switches its diet to
grouse, which it rapidly depletes. During this time, however, the hare popu-
lation is rebuilding and will once again become the lynx's staple diet—that is
until the next crash, when the grouse takes over, and so on.