Lecture 05/Prompt 07: Policy and Economics


Take Away Points:

  • Define cost-benefit analysis
  • Understand the source of surplus value
  • Understand the difference between a consumer model and an ethical model

One of the main points of environmental ethics is that change of our relationship to the environment requires a change in our social systems.  As Magdoff and Foster point out, globally capitalism is the predominate background system in our lives: capitalism is so prevalent that we don’t notice it’s importance–it is merely a background hum that we take for granted (695).  So, any change in our attitude towards the environment will require some degree of systemic change–whether that is complete rejection of the capitalist system or severe alterations to the system as it exists now.

What is it that is problematic about capitalism in regards to the environment?  What impact does it have on us as individuals?

Consumer vs Citizen

Capitalism functions under two assumptions.  The first is that individuals make selfish decisions that ultimately promote the general good.  The second, as Mark Sagoff points out in the reading today, is the assumption that we make decisions  primarily as consumers–we value things by using limited economic resources.  The more economic resources we are willing to use towards something, the more valuable that thing is to us.  If the economic resources we are willing to spend on something are equal or less to the benefit it provides us, then we should spend those resources in that pursuit.  This is the heart of cost-benefit analysis.

The question is: Is this the only important way we value?  And, if not, why should we treat it as all that is important in making decisions about the environment?

Let’s look at an example that you should be familiar with: higher education.  A school sets tuition and the amount of tuition is it able to charge has to do with the amount the consumer (in this case the student and family) are willing to pay for the education the school provides.  Education is considered very important because it tends to set the amount of money you will earn over the course of your life (in other words, how much economic resources you will have to spend).

Now compare the original non-capitalist (frankly socialist) system of education that existed in the US into the late seventies/early eighties to the archly capitalist system that exists now:

  • Non-capitalist: The government pays resources directly into education.  Public schools focus primarily on educational resources.
  • Capitalist: The government pays resources to students and their families through the use of loans.  Students then choose the school.  As the last few decades have shown us, the decisions about what school to choose are not largely determined on educational strength, but  facilities (think about any college tour you took: here is the dining hall, here is the library, here is the student union, here is the fountain, and so on).  Schools now fight over resources by fighting over students.  And they do this largely by providing non-educational goods–taking resources away from educational goods.

If the current model tells us anything, it is that we generally do not value education for education, but for purely instrumental purposes.  Perhaps this is only right.  Perhaps not.  The point, however, is that a consumer model entails the prioritization of certain things.  Education is not one of them (except in a perfunctory sense).  Neither is the environmental.

Under capitalism, the environment is fundamentally a source of resources.  If, as consumers, we value things only instrumentally for our own comfort (pay attention to Sagoff’s examples), then what chance does the environment have.  Let’s be honest, the environment is not generally comfortable.  I certainly prefer my house to the ground.

Yet, focusing just on individuals as consumers–as the capitalist individual–reduces us quite a bit.  Is a consumer all we are?  And if it isn’t, then why should our consumer identity be all that matters in environmental debates (or plenty of other debates for that matter)?

What about the things that we say we value, but we rarely act on as an individual?  Does this mean we don’t truly value these things?  Or does it mean that our consumer identity is the strongest identity because it appeals to our base selfish pursuits?  If this is the case, is it what we want to prioritize in our ethical thinking?  In other words, if consumer behavior is exactly what we tend to oppose as ethical beings, should we change ethics to meet consumer behavior or should we try and reject or limit the realm of consumer behavior?

Foundations of Capitalism

The problem with rejecting the consumer point of view is that it is reinforced daily.  Surrounded by a capitalist system, a capitalist way of life, capitalist decision making, capitalist products, capitalist everything, how exactly do you change your individual behavior?  The basic (if not simply) answer is to change the system–to change the conditions around you to make other kinds of actions more automatic.  This is why Sagoff tries to support systemic change, while clearly failing to act on the system he wants at an individual level.

To better understand this, we need to understand the course of value.  To do that, we will look at the work of Karl Marx.

Until Marx’s critique of capitalism, it was generally accepted among economists that the source of all value (just another word for economic resources) was human labor (the work that an individual puts into creating or achieving something).  Profit (surplus value, extra value) is created by selling what is created or achieved at higher than the cost of creating or achieving it.   There are two ways of creating surplus value:

  1. paying the person creating the object less than their labor is worth and
  2. making the laborer’s work more efficient so that they can create more value in the same amount of time (and so be paid even less for their work).

Marx simply pointed out that this is exploitation.  And so Economics quickly changed its theory of the source of labor.  But Marx was basically right.  Where Marx went wrong was in supposing that capitalism would become more and more pure–in other words, tend away from external control of the market.  This is clearly false: you don’t get things like minimum wage (as inadequate as the law is) or child labor laws in a completely free market.

But what Marx revealed was that we have to understand a capitalist system that does (purportedly.  It doesn’t really) pay a worker what their labor is worth as always  aiming at greater and greater efficiency.  Since capitalism aims at continual growth (wealth can only be created through the creation of more profit) efficiency must become the primary goal of capitalism.  Individually, we now know that psychologically we compare our present circumstances to those around us.  So, as wealth increases for people in an area the drive to increase one’s own wealth increases.

There are many problems inherent in the foundations of capitalism (you are all familiar enough with outsourcing to understand how as a country as a whole moves up economically it does so on the backs of other countries), but what concerns us most in this course is, naturally, the environment.  Increased drive to more resources (after all, isn’t that all wealth is–a larger pool of resources?) means that other resources need to be consumed to produce them.  Money is value divorced from labor.

Another thing Marx’s critique fails to see is the possibility of inherent value in the material of production: i.e. natural resources.  The environment is ultimately at the very bottom of any capitalist system.  Further, while the labor pool is a finite resource, it can be overcome through mechanization (which increases efficiency).  Natural resources on the other hand can actually be completely finite–we use them up before they can be replenished.

Cost-benefit analysis is based on individual choices and the assumption that individual choices will ultimately favor the general good.  But reducing individual choice to a consumer model ignores other things that we might value in different ways.

Pause to Consider:

  • What is cost-benefit analysis?
  • What is a potential problem with using a consumer model of individual choice?
  • What does Marx claim is the source of surplus value?  Why is this a problem?

Writing Prompt


Purpose: Because capitalism is such a background condition to everyday life in America, those of us who have lived here all or most of our lives or have lived here (or in another capitalist country) for some time tend to think in terms of the consumer model of decision making.  In this assignment, you will review your work in the course to this point in order to examine your claims in relation to the consumer model of choice.

Word Count: The best posts will be around 500-600 words.

Before You Write

Today’s readings provide many good reasons to be doubtful that the consumer model of choice is the best (or even just only) way to make decisions about important issues.  You have now been writing in this course, dealing with environmental issues, for a week.  Choose your favorite post and read it thinking about these questions:

  • Are you thinking about the balance between the benefit to you versus the cost to the world?  If so, do you think this is the best way to think about decisions you need to make?
  • How much would you sacrifice to change the way humans interact with the environment?
  • If you are not using the consumer model, what do you value above your economic resources?   Do you actually act from these other values or do you tend to still act in line with the consumer model?

Write!

With these questions in mind, analyze your own post in terms of its relation to the consumer model.

  1. If your post uses the consumer model, do you now disagree with your own post or do you stand by the model?
    • If you disagree with your post, explain why and talk about what you think should be valued.
    • If you agree with your posts, explain why the consumer model is the right model for this situation.
  2. If your post appeals to some values independent of the consumer model, do you think you are justified in this or does the consumer model make more sense?
    • If you think you are justified, explain why and talk about why you think the values you use are better than those represented by the consumer model.
    • If you think the consumer model makes more sense, explain why and talk about how the consumer model is the right model for this situation,

Be sure to link to the post you are talking about at the top of this post.


To Do


  1. Read: Sagroff: At the Shrine of Our Lady of Fatima, or Why Political Questions are Not All Economic [669-677]; Magdoff and Foster: What Every Environmentalist Needs to Know About Capitalism [691-712]
  2. Post: Prompt 07 | Due 1:00 PM EST
  3. Comment: On at least 3 Group Member posts | 1st Due 8:00 PM EST | All Due Jan 18, 8:00 AM EST
  4. Comment: On Lecture 05 | Due Noon EST
  5. Take: Review Exam 02
  6. Join: Video Discussion abt Animal Rights and Liberation in the Virtual Classroom @ 8:00 PM EST
 

34 Responses to Lecture 05/Prompt 07: Policy and Economics

  1. avatar N.Marshall says:

    Cost-benefit analysis is comparing the cost consumers are willing to spend on economic resources to the actual value it provides. I understand that the environment is essentially a large resource that is utilized, and often abused by mankind. Often done for financial gain or profit, regardless of the repercussions left on the environmental side. However, I believe we are much more than just consumers. In fact, it is our duty to always remain ethical about preserving and providing for the next generation.
    In no way should ethics be shaped around consumer behavior. It is mandatory that consumer behavior and the overall practice of capitalistic society be based around a code of ethics that is not broken under any circumstances. Abiding by structured code of ethic will help ensure that individuals within a capitalistic market act accordingly.

  2. avatar Andrea says:

    I can’t help but first focus on the example given of higher education. I’m curious to know why did the government convert its policy from paying the school directly to giving loans to students? Also, outsourcing our jobs however profitable seems unethical to me.

    • avatar Brandon says:

      Honestly, I’m not certain. If I had to guess, I would say that it had to do with the increasing trend towards privatization and the running of the government like a business–the idea that the market should decide what is valuable. Of course, that is the very question–does the “free market” decide what should be valuable or just what is valuable now.

  3. avatar Emily says:

    Isn’t the environment also at the bottom of the totem pole when it comes to other forms of economies as well, not just capitalism? In communism, while people don’t necessarily stand to make profits from the environment as they would under capitalism, wouldn’t they have even less resources per person to put towards deliberate conservation? Or is it assumed since the economy wouldn’t grow at the ever-higher rates that capitalism drives it to that under other economic systems the environment would be better off?

    • avatar Brandon says:

      It’s a good question and one that’s difficult to answer. Since the communist countries that have existed arose prior to the shift to industrial production (what is supposed to be a precondition for capitalism), the forms of communism we’ve seen must actually take on capitalist behaviors in regards to the environment to survive.

      Probably your last suggestion would be right, but that doesn’t mean that the attitude towards the environment would actually be any better, only the ability to actually exploit.

  4. I agree that there are two ways of creating surplus value. The first is paying a person less than their labor is worth and the second is making laborer’s work more efficient so that they can produce more value in the same amount of time. Marx claims that both of these methods are exploitation. I acknowledge that paying someone less than what their labor is worth is truly exploitation but I do not necessarily agree that the second way of producing surplus value is exploitation. I have always been taught that no matter what you do, whether it’s a blue collar job or a white collar job, you must always work your hardest to benefit yourself, your financial situation and the greater good of where you work. Some may call this capitalist propaganda but I have seen through both my parents and my own employment that being efficient is not exploitation as Marx claims but more bettering yourself and your company.

    • avatar Brandon says:

      It’s actually a question of the source of efficiency. If people are being paid a fare wage and working overtime, this is different than if they are working the same amount of hours, being paid the same, but actually producing at a higher rate. The real introduction of efficiency was in mechanization and the assembly line model.

  5. avatar Asa says:

    Are economic resources required in cost-benefit analysis? Can something like time be used instead as the limited resource?

  6. avatar Kirsten T says:

    What came to my mind immediately after reading that “the drive for more resources requires other resources to be consumed to produce them” was that human beings are mooches. It seems like all we do is go after one resource and once that is gone we scramble to find a new one. The Oil and alternative energy search is a good example of this. For years humans have relied on oil to fuel pretty much everything, but now that we know that oil will eventually run out, we are trying to find more efficient energy sources. I didn’t really make the connection between the environment and capitalism, but it does make sense. And in a way it doesn’t really seem like we care all that much for the environment, other than the fact that we need a more efficient and renewable source of energy in order to make more money. Maybe Marx wasn’t as crazy as he seemed, he has a lot of valid points. Is it so wrong to all contribute to the overall wealth of the country rather than your own wallet? Being biased and raised in a capitalist society I would say yes. I always complained about the minimum wage system, putting in more work and not getting a pay check that reflected that work. But companies are out to make money, and if they can keep a worker’s salary low, then they get the labor they need for a cheaper price. To top it all off, no job is safe or irreplaceable, there’s always someone who can replace you, so I think that forces people to accept whatever they can get even if they aren’t treated exactly how they want to be treated.

    • avatar Brandon says:

      If we think about the current economy, we have to remember that one country is not a closed system–only the world is. So, if outsourcing can happen, then things can be made in countries with no or minimal labor laws to reduce prices in countries with strong labor laws (think: 16 year olds make iPhones, work 80 hours for $75 a week).

  7. avatar Cherieyw says:

    I feel the example of the school fight over resources explained a phenomenon that recent year many US colleges increased the acceptance rate of international students. Because internation students pay more tuition than domestic students, In this way, colleges would have more money to spend on building nice facilities inorder to attract more students come in. Would that be a case of people try to reach continual growth?

  8. avatar Cindy says:

    This lecture was pretty interesting. I have done a lot of research for some political science classes on the effect of industrialization and capitalism upon the environment of developing countries. My research has shown me that time and time again, these countries opt to develop in ways that are not environmentally friendly. They pollute the air and water with wastes from factories, and they use outdated and inefficient machines. Most of these developing countries also lack credible government structures to enforce any environmental law… police officers could be bribed.

    The reason why this is permissible is simply capitalism. They use the quickest means possible to create goods for us to consume. It isn’t until later when the country has prospered that they really look back and consider fixing the land they ruined. China is a prime example of this. I feel like capitalism is the root problem for environmental degradation but also the main force driving innovation. Can’t we find a balance between the two?

    • avatar Brandon says:

      I think a large part of finding a balance has to do with what innovation is important. Of course, innovation isn’t a good in itself, but for what it produces. And innovation is rewarded in economic payout. So, if an environmentally safe way of producing something is prohibitively expensive, then the more damaging process will be used–unless the more damaging process is made more expensive. One thing that you pick up in social movements is that if you can hurt the pocketbook of the controlling side you can get social change–because it’s the economics that really matter. Wow, that got cynical fast.

  9. avatar Kellyn says:

    I’m not sure I understand what the potential problem is by using individual choice–is it that we lose sight of other things we should value?

    What is a potential problem with using a consumer model of individual choice?
    o A potential problem with using a consumer model of individual choice is that it values behaviors and things that we would oppose in ethical thinking. This brings up the question of whether you change the behaviors of the individual or the system to change the values from the use of resources to the environment.

    • avatar Brandon says:

      It’s because individuals have developed evolutionarily to think at the immediate small scale. The problem with this is that environmental problems are at a large scale. Thus, without a system that makes the large scale problems small scale, individual decision making will be based on factors divorced from the actual problem.

  10. avatar Anonymous says:

    Although reducing individual choice to a consumer model ignores other things that individuals may value, one still may argue that an individuals values come through by the products one buys. You can’t put your philosophy on your receipt, but buying a piece of organic farm-raised beef opposed to non organic beef does say something about your values. The same can be said to the person who buys used clothing, a wood burning stove or adopts a pet from a shelter rather than buys one from a nursery. In essence, the choices we make in our capitalist are the easiest way to show your values. So yes, we cannot buy inherent values and thus cannot blatantly show they world that we care about it, but I believe that we can use the money we have to show the values we possess. Regardless of the model a society has, it wont work if people don’t spend money. The power is in the hands of the consumer.

    • avatar Brandon says:

      Yes and no. Yes because economic force built up at the individual level clearly can cause change at the higher level (think of the run of “green” cleaning products in the last few years). No because 1) choice is still dependent on the choices be offered and available in the first place and 2) choices being economically feasible. For example: living in an urban environment at a low income actually reduces your choices by a significant amount.

  11. avatar Allie says:

    For a resource to be considered scarce it has to be limited and desired. Maybe the fact that we’re not valuing education the way we once did is that there are so very many institutes of secondary education and people go to school not because they want to be better educated but because they feel they have to (or are forced into it by parents and other family)

    • avatar Preet says:

      I think I agree with some of the points made regarding the role of education and how the way we value it has changed. It truly has become a means to an end. One of the first things we learn about in economics is opportunity cost. When we’re pursuing a higher education, we’re givine up many other opportunities. However, most of us prefer to spend the time and money to receive an education, while foregoing a minimum wage job, in hopes of a higher paying salary.

      • avatar Brandon says:

        It’s interesting because the shift from college being something that was required for some jobs to basically becoming a requirement for all decent jobs coincided with the shift in funding from the government to the individual. It does make me wonder whether the move of schools towards a more economically motivated model promoted the idea that school was for earning a higher salary–it was an investment only.

  12. I guess giving money to the students through loans is more cost effective for governments comparing to giving it directly to the schools. In Europe many countries are considering changing their higher educational system and making it more US like because the governments are loosing too much money giving out free college education.

  13. avatar Sbranch says:

    I have recently contemplated the environmental impacts of capitalism and have realized how it is based on a concept of constant growth and I realize that this does not coincide with the world which contains a finite amount of resources. The push for wealth that is encouraged by wealth does nothing but expedite the speed by which deplete our resources. And as I have read recently about lifeboat ethics, there is no international moderator (Except for the UN which the article classifies as ‘toothless’) that can enforce how quickly we exploit these resources and as such with an increasing population and the increasing adoption of capitalist beliefs we see the world around us being devastated and this is seen as a positive because the metric used in capitalism is growth and wealth rather than our ability to preserve resources and pristine natural wonders.

  14. avatar Smalls says:

    In your discussion of the college decision, you stated that factors other than education were factoring into a college students decision. Do you feel that all of these things have no educational merit whatsoever? Could you say some of the education gained from college takes place outside the classroom? Furthermore if these other factors make a student more comfortable at a specific school couldnt it also be argued that they are there to foster a positive learning environment?

    • avatar Brandon says:

      Of course. This is a complex issue. One of my major conflicts is that it is problematic that education has shifted towards an economic model, but at the same time this has also helped make school more accessible (albeit more of a burden). It is wrong to return to the idea of ivory tower education, divorced from economic reality and available only to the “elite.” At the same time, connecting education explicitly to the market is damaging to larger more idealist goals of education.

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  16. avatar Dom says:

    I think that what we value versus what we opt to benefit from it is one of the downfalls of capitalism. We value things that we pay for not for any intrinsic value but for what it can do for us in order to attain more resources to continue the cycle. The relationship between citizen and consumer should be consistent if our values are going to coincide with our desired benefit.

  17. avatar Wilma Chen says:

    I’ve learned a bulk about the consumer vs the citizen in my envi101 class last semester. Professor Andrus constantly emphasized that our capitalist ways are blocking any real attempts to protect the environment. American politicians are always reassuring the public that their policies will not put our current lifestyle in danger. However, what IS dangerous is our current lifestyle. Our economy is run on constant growth which is backed by profits, consumption, and greed. These actions have are depleting many of the world’s natural resources and are putting every organism (including humans) in danger. If we are to create a plan that can preserve the environment (at least what is left of it), we must change our lifestyle. We must change our capitalist and consuming society.

  18. avatar Thomas M. says:

    I don’t think that the only source of environmental damage is capitalist societies. Any large country (including China and Russia), it going to have a huge demand for resources. I believe that the underlying problem is the population that must be supported by any society. The main issue is that the countries that are developing and prospering are far away from where all the resources are. There is a disconnect between the people and the sources of their products. All of the large economic powers in the world are far from the oil drilling in the middle east or timber production in the amazon. No matter what underlying economic principle, there needs to be a general education of the population of exactly what goes into the products that they consume

  19. Who is the most popular author that discusses systemic change represented in legislation?

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