Presentation on Economic Sustainability

1. The Essentials of Economic Sustainability
• Guiding Principles:
– Holism: Each session embodies whole class
– Spiral learning: Each session builds on others
– Collaborative Learning:
• Reality is not absolute but potentials – to be experiences and
to become
• Students and “teachers” must participate in a co-learning
process.
– Claim Your Truth: What you believe to be true
– Just in time learning/teaching: Address economic
concepts as questions arise

2. Spiral Learning: The Essence of Economic
Sustainability in Each Session

3. The Essentials of
Economic Sustainability
• The industrial era of economic development has resulted
in many material benefits.
– However, the benefits have not been equitably shared
inside or among the societies of the world.
– In addition, the natural and human resources that
have sustained industrial economic development are
being rapidly degraded and depleted.
• The modern model or paradigm of industrial economic
development is not sustainable.

4. #1-Essential Questions
of Economic Sustainability
• Change is normal and usual, but some
changes are truly revolutionary.
• Questions of sustainability are driving
revolutionary change – a great transition.
• How can we meet the economic needs of the
present without diminishing economic
opportunities for future? – the essential
question of economic sustainability.

5. Sources of Economic Value
• All economic value comes from nature by the means
of society.
• Sustainability is a question of energy.
• Anytime energy is used to do anything useful, some
of its usefulness is lost. Law of ENTROPY
• Economic productivity depends on people to make
things of nature useful to other people.
• Productivity depends on both physical energy and
social energy – on society.

6. Economic Relationships
• Economic relationships are individual,
instrumental, and impersonal.
• Social relationships are instrumental, personal,
and relational – non-economic.
• Social relationships evolve into ethical
relationships – into cultural values.
• Ethical relationships are non-instrumental,
impersonal, and communal.
• Cultures value the “common good” – not just
individuals – relationships matter.

7. Emergent Properties: A whole is
more than the sum of its parts
• Families, communities, and societies are more
than collections of individuals. Sustainability
is an emergent property of caring societies.
• Emergent properties of economies may
enhance the value of economic entities but
lack individual incentives – Tragedy of Commons
• Real people don’t make purely economic
decisions, publicly-traded corporations do.

8. Economic value is inadequate to ensure
economic sustainability.
• Economic value gives priority to the present.
• Interest is cost/return of delayed gratification.
• Well-being of future generations has too little
economic value to ensure sustainability.
• Economic value of social & ethical behavior is
insufficient for sustainability.
• Non-economic and economic investments are both
necessary for economic sustainability.

9. Social and ethical values are essential for
economic sustainability.
• Some social and ethical relationships also have
economic value – not enough for sustainability.
• Some relationships essential for economic
sustainability are purely social and ethical.
• Social and ethical values cannot be “internalized.”
• An economy motivated solely by economic value is
not sustainable.
• A society motivated solely by individual value is not
sustainable – fallacy of composition.
• Sustainability ultimately depends on a shared ethic.

10. Questions for Chapter 1
Please write your answer to one of the following questions:
• What is your definition of economic sustainability?
• Do you believe sustainable use of energy is essential to economic
sustainability? Why or why not?
• Do you believe economic value is fundamentally different from social and
ethical value? Why or why not?
• Do you believe decisions of large, publicly-traded corporate organizations
are different from decisions of real people? Why or why not?
• Do you believe government regulations are essential for economic
sustainability? Why or Why not?
Please write answers to both questions below:
• Why are your answers to these questions important to the people of your
nation, your community, and to you personally?
• After thinking about these questions, what might you do differently to
make life better, for others and for yourself?

11. Spiral Learning: The Essence of Economic
Sustainability in Each Session

12. Review of # 1:Essentials Questions
of Economic Sustainability
• Today’s industrial economy is not sustainable. It is depleting and
degrading the natural and human resources upon which the
economy ultimately depends.
• Sustainable economies must meet the needs of he present
without diminishing opportunities for the future.
• All economic value comes from the earth or from people – from
natural or human resources – ultimately from energy.
• Sustainable development must invest in nature and society even
when there are no economic incentives to do so.
• Sustainable development depends on social and ethical values,
which are different from economic values.

13. #2- The Hierarchies of Sustainability
• Most economists limit concerns to spheres of nature
and society that have economic value and assume…
– Social and ethical relationship that have no economic
value are irrelevant to economic sustainability.
– Humanity is separate from nature and can manipulate
nature to sustain economic growth.
• Questions of sustainability arise from a different
worldview – how the world works & where we fit.
– Social and ethical relationship that have no economic
value are essential to economic sustinability.
– Humanity is a part of nature and humans must live in
harmony with nature.

14. Economic Worldview

15. Nature
Economy
Society
Ecological Worldview
Human Needs
Human Needs

16. Nature
Economy
Society
Ecological Worldview
N
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N N
N
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ShN
EhN
ShN
EhN
ShN
N
N
EhN
EhN
ShN
Human Needs
Human Needs
ShN

17. Nature
Economy
Society
Ecological Worldview
N
ShN
EhN
N N
N
ShN
EhN
ShN
ShN
N
N
EhN
ShN
Human Needs
Human Needs

18. Nature
Economy
Society
Ecological Worldview of
Sustainability
N
EhN
EhN
N N
N
ShN
ShN
ShN
N
N
Human Needs
Human Needs

19. Nature
Economy
Society
Ecological Worldview of
Sustainability
N
ShN
EhN
N N
N
ShN
EhN
ShN
ShN
N
N
EhN
ShN
Human Needs
Human Needs
Solar Energy
Solar Energy

20. The Hierarchies of Sustainability
• Ecological Worldview: Society is a sub-set of part
of nature and thus the economy is a sub-set or part
of nature.
– The whole of the economy intersects with both
society and nature; every economic transaction has
social and ecological consequences.
– Everything is interconnected – everything matters.
– Everything of economic value must be derived from
nature, and beyond self-sufficiency, by way of society.
– Nature is at the highest hierarchal level, higher than
society, and society is at a higher level than the
economy.

21. Nested Hierarchies defined by
Purpose and Possibilities
• Purpose of society is derived from nature.
• Purpose of economy is derived from society.
• Possibilities of a society is affected by its economy.
• Possibilities of nature is affected by society.
• Higher levels change more slowly, are stronger.
• Higher levels set limits for lower levels.
• Higher levels define principles for lower levels.
• Society & economy function by laws of nature.

22. Hierarchy of Intentionality
• Humans are capable of intentional actions.
• Sustainability of humanity – the dominant species on
earth – depends on the intentions of humans.
• Ethical value is highest level of intentionality, social
value is next & individual value is lowest.
• Higher levels define purpose and principles.
• Lower level affect possibilities of higher level.
• Higher levels are slower and stronger.
• Higher levels set bounds & limits for lower levels.

23. Sustainability: alignment of hierarchies of
sustainability & intentionality
• Constitutions – with ethical values (laws of nature)
• Laws & regulation – with social values
• Economy – with individual values.
• Nature must be given priority over society.
• Society must be given priority over the economy.
• Ethical decisions require consent of people.
• Social decisions require citizen involvement
• Individual autonomy, within society & nature.

24. Questions for Chapter 2
Please write your answer to one of the following questions:
• What is your definition of world view?
• Do you believe respect for the hierarchy of sustainability is essential to
economic sustainability? Why or why not?
• Do you believe purposes and principles are always determined at higher
levels of organization? Why or why not?
• Do you believe economic sustainability is essential for social and ecological
sustainability? Why or why not?
• Do you believe respect for the hierarchy of intentionality is essential to
sustainability? Why or why not?
Please write answers to both of the questions below:
• Why are your answers to these questions important to the people of your
nation, your community, and to you personally?
• After thinking about these questions, what might you do differently to
make life better, for others and for yourself?

25. Spiral Learning: The Essence of Economic
Sustainability in Each Session

26. Review of # 2 -
The Hierarchies of Sustainability
• Human society is part of nature and the economy is a part of
society – nature is the highest hierarchal level.
• “Purpose and principles” are defined at higher levels but
“possibilities” are determined at lower levels.
• Principles of nature must take priority of over the preferences of
society and the needs society must take priority over economic
preferences of individuals.
• The hierarchy of human intentionality must be aligned with the
hierarchy of nature: ethical with nature, social with society,
economic with individual.

27. #3-Ecological Principles
of Economic Sustainability
• Sustainability is a human centered concept.
– Assumes that humanity is capable of choosing sustainably and
is worth sustaining
– Accepted as matter of faith; can’t be proven
• Sustainability recognizes that human well-being is interrelated
with well-being of nature.
• Humans & nature share the same elements & same energy;
both are biological and depend on solar energy.
• Purpose and principle of the sustainability of humanity are
purpose & principles of nature – the highest level.

28. Living things function according to
Ecological Principles.
• Holism: Everything is interconnected; wholes are
more than sums of parts; wholes have emergent
properties; relationships matter.
• Ignorance of holism has consequences:
– Human health
– Global climate change
– Economic exploitation of society & nature
– Inadequate government policies

29. Ecological Principles of Sustainability
• Diversity means having dissimilar or different parts or
aspects; necessary for resilience & reproduction; moves
away from entropy.
• Ignorance of diversity has consequences:
– Species extinction – consequences for humanity?
– Over-population/consumption; human extinction
• Diversity: Best single ecological indicator
– Industrialization – direct conflict with diversity
– How many more species can we afford to lose?

30. Ecological Principles of Sustainability
• Interdependence: Mutually-beneficial;
interconnected, decentralized, source of “something
more.”
– Relationships of choice among people; of intentionality in
relationships with nature.
– Humanity is losing the war with nature.
• Human consequences of ecological ignorance:
– Nature now dependent on human wisdom
– Failure to respect indigenous wisdom
– Lack of respect for life
– Lack of sustainability of humanity

31. Ecological Principles:
Also Relevant to Social Relationships
• Sustainable families, communities, and societies
must be see as more than collections of individuals –
relationships matter.
• Cultural and social diversity is necessary for
sustainable communities and societies.
• Mutually-beneficial, interdependent relationships of
choice are necessary for sustainable families,
communities, and societies.

32. Ecological Principles:
Relevant to Economic Relationships
• Sustainable economic organizations must be
managed as wholes, not divisions or parts.
• Sustainable economic organizations and
economies must be diverse, rather than
specialized and standardized.
• Economic relationships must be mutually
beneficial – not extractive or exploitative.
• Lost sense of connectedness has ecological and
economic consequences.

33. Questions for Chapter 3
Please write your answer to one of the following questions:
• Do you believe sustainability is anthropocentric or human-centered? Why
or why not?
• I what ways are living systems alike and different from nonliving systems?
• How would you define an “emergent property”?
• Do you believe diversity is the most important principle of ecology? Why
or why not?
• Do you believe nature has an interdependent relationship with humanity?
Why or why not?
Please write answers for both of the questions below:
• Why are your answers to these questions important to the people of your
nation, your community, and to you personally?
• After thinking about these questions, what might you do differently to
make life better, for others and for yourself?

34. Spiral Learning: The Essence of Economic
Sustainability in Each Session

35. Review of # 3
Ecological Principles of Economic Sustainability
• Holism: A whole is more than the sum of its parts: the
relationships among the parts are as important as the parts.
• Diversity: Differences among the parts give wholes the
resistance and resilience to withstand adversity and the ability to
renew, regenerate, and evolve.
• Interdependence: Mutually beneficial relationships among
interdependent parts of wholes make them “something more”
than the sum of their parts – emergent properties.
• Ecological principles must also be respected in social and
economic relationships; society and the economy are part of
nature.

36. #4-Social Principles of
Economic Sustainability
• Societies include all direct and indirect human
relationships – economic, social, and ethical.
• Human relationships are unique and special because we
know what it means to be human.
• Humans are not the only social species, but the only
“intentionally” social species.
• Humans relate not just for safety, security, and
reproduction but for companionship, affection.
• Cultural/ethical values evolve from social relationships.
• Societies share core values: honesty, fairness,
responsibility, respect, compassion.

37. Social Principles of Sustainability
Trust: Rule-based, universal; depends on core values of
honesty, fairness, responsibility.
• Ignorance/betrayal of trust has consequences.
– In business & politics: loss of public confidence
– In marriage & friendship: loss of companionship
• Sustainable relationships depend on trust.
– Demand honest and truthfulness
– Reject discrimination: race, gender, age…
– Expect and require responsibility

38. Social Principles of Sustainability
• Kindness: Care-based, situational; depends of core
values of empathy, respect, and compassion.
• Lack of kindness has consequences:
– Everyone makes mistakes, needs forgiveness,
needs mercy or charity rather than justice.
– Trust – being honest, fair, responsible – is
necessary but not sufficient to sustain
relationships.
• Conflicts among social values can be resolved
through internal consistency.

39. Social Principles of Sustainability
• Courage: Good intentions without action are of little
consequence; not just bravery; it takes moral courage to
be trusting and kind.
• Lack of courage has consequences:
– Courage to reject end-based ethic: utilitarianism
– Courage to reject labels of naivety and idealism
– Courage to be make the social investments necessary
for economic sustainability

40. Social Principles
also Relevant to Ecological Relationships
• Ecological principles cannot be in conflict with social
principles; truth cannot be in conflict with truth.
• Relationships with nature have positive and negative
consequences for other people.
• Sustainable relationships with nature must reflect
honesty, fairness, and responsibility.
• Use of resources and the environment must reflect
respect and compassion for others.
• People must have the courage to be trusting and kind in
their relationships with nature.

41. Social Principles
also Relevant to Economic Relationships
• Sustainable economic relationships must be based on
trust: honest, fair, responsible.
• Contracts may be necessary but not sufficient.
• Sustainable economic relationships must also be based
on kindness: respect, compassion.
• It takes courage to be trusting and kind in an economic
environment which considers such things to be idealistic
and naïve.
• Industrial development destroys social relationships,
threatens economic sustainability.

42. Questions for Chapter 4
Please write your answer to one of the following questions:
• Do you believe human relationships have purely personal and social value? Why or why not?
• How important do you believe a person’s relationships are to their personal development?
• Do you agree that essentially everyone believes the core values of honesty, fairness,
responsibility, respect, and compassion are essential for positive human relationships?
• How would you explain the difference between a rule-based and care-based principle?
• How would you define a trusting relationship? Can you sustain an economic relationship
without trust? If so, how? If not, why not?
• Does kindness affect your relationship with nature? If so, how? If not, why not?
• How is courage different from bravery? How in courage related to interdependence?
Please write answers for both of the questions below:
• Why are your answers to these questions important to the people of your nation, your
community, and to you personally?
• After thinking about these questions, what might you do differently to make your life better,
for others and for yourself?

43. Spiral Learning: The Essence of Economic
Sustainability in Each Session

44. Review #4
Social Principles of Economic Sustainability
• Trust: Results from honesty, fairness, and responsibility.
Validations of trust strengthen social relationships. Violations
of trust weaken and destroy social relationships.
• Kindness: Results from empathy, respect, and compassion.
Everyone makes mistakes at times and needs forgiveness.
• Courage: Requires commitment in spite of adversity. Good
intentions without action are of little consequences. It takes
moral courage to be trusting and kind.
• Social principles also must be respected in relationships with
nature and in sustainable economic relationships.

45. #5-Essential Economic Principles
of Sustainability
• Purpose of economy derived from society but
potential of society depends on the economy.
• Individuals must meet their own needs plus
contribute to needs of society and humanity.
• Respect for basic human need for individuality, of
thought and behavior, is essential for sustainability.
• Principles of economic sustainability are principles of
individual human behavior.

46. Economic Principles of Sustainability
• Scarcity: Not enough for everyone to have all they
need or want – source of economic value
• Economic value is different from intrinsic value.
• Contemporary conomic value is ‘exchange’ value.
• Law of diminishing returns: less scarcity or more
abundance, results in less economic value.
• Law of demand: greater quantity, less value
• Law of supply: greater quantity, more cost
• Market price: price where value equals cost

47. Market Supply and Demand

48. Total Economy Supply and Demand

49. Supply and Demand
for Labor or Employment

50. Reduction in Demand

51. Economic Principles of Sustainability
• Scarcity: Not enough for everyone to have all they need
or want – source of economic value
• Ignorance of scarcity & value has consequences.
– Economic value does not reflect societal need or
human necessity.
– Enployment depends on ability of workers to produce
economic value.
– Value of work depends on value to consumers.
– Economic value alone cannot ensure economic
sustainability; needs of future generations have little
economic value.

52. Economic Principles of Sustainability
Efficiency: Economic value relative to economic cost –
reflects ‘profit,’ net return over costs
• Comparative advantage: in areas of lower
opportunity costs: greater relative efficiency.
– Less education; lower opportunity cost in labor-
intensive relative to knowledge-intensive enterprises.
– More education: higher opportunity costs in labor-
intensive relative to knowledge-intensive enterprises.
• Everyone has a comparative advantage in something,
no matter how inefficient.

53. Economic Principles of Sustainability
Economic inefficiency has consequences.
• Waste of scarce natural resources;
– Water, Soil, Renewable Energy
• Depletion of non-renewable resources: fossil
energy, minerals
• Lack of opportunities for employment – waste of
human resources
• Employment in less-suitable occupations --
degradation of human resourses

54. Economic Principles of Sustainability
• Sovereignty: Freedom of choice; Economists
“assume” consumers have sovereignty; many do not
– advertising, coercion, deception
• Loss of sovereignty has consequences.
– Inability to make wise individual purchases
– Lack of employment opportunities
– Inability to benefit from international trade
• Must reclaim sovereignty for sustainability.

55. Sovereignty of Nations Essential for Global
Economic Sustainability
• Obstacles to mutually beneficial “free trade.”
– Excessive debt
– Military agreements
– Unfair trade agreements
• Free Trade requires freedom to “not trade.”
• Every nation has a right and must accept
responsibility to protect its people and its natural
resources from exploitative trade.

56. Economic Principles also Relevant to Ecological
and Social Relationships
• Natural resources become ecologically scarce before they
become economically valuable.
• Ecological efficiency: ecological benefits relative to
ecological costs – question of long-run efficiency
• Ecological Sovereignty: ability to restore ecological integrity
• As social relationships become more scarce or fewer, they
become more valuable.
• Societal efficiency: social benefit relative to social costs
• Social sovereignty: Ability to choose interdependent
relationships.

57. Questions for Chapter 5
Please write your answer to one of the following questions:
• Do you believe that individual independence, freedom, or sovereignty is essential
to sustainability? Why or why not? If yes, how much sovereignty is enough?
• How would define or explain the difference between economic value and intrinsic
value?
• How would you explain the “law of diminishing returns”? – With respect to
demanded by buyers? With respect to quantity supplied by sellers?
• How do you relate economic efficiency to profits? To opportunity costs?
• What do you think are the most important violations of consumer sovereignty?
• Do you think it’s appropriate to apply economic principles to social relationships?
To ecological relationships? Why or why not?
Please write your answers to both questions below.
• Why are your answers to these questions important to the people of your nation,
your community, and to you personally?
• After thinking about these questions, what might you do differently to make life
better, for others and for yourself?

58. Spiral Learning: The Essence of Economic
Sustainability in Each Session

59. Review #5
Essential Economic Principles of Sustainability
• Scarcity: Economic value is determined by scarcity, not by
human necessity. Some thing essential for economic
sustainability have little if any economic value.
• Efficiency: Economic value relative to economic costs.
Economic sustainability requires efficient use of natural and
human resources.
• Sovereignty: People must have freedom to make informed
economic choices, without coercion or persuasion.
• Economic principles must also be respected in social
relationships and in relationships with nature.

60. #6 Essential Characteristics of
Sustainable Economies
Economies are “living systems.”
• Systems: pattern, structure, and process
• Living systems: living processes continually renew
structure according to pattern (DNA).
• Industrial economies:
– Managed as non-living systems: fixed structure
– Industrial economic development: Incompatible with
economic sustainability
• Industrial economies are not sustainable

61. Economy: A Purposeful Organization
• Living economies are individualistic and dynamic.
• Specific purpose of an economy is determined by society.
• Purpose is encoded in principles, not in structure.
• Healthy living systems balance efficiency with
regeneration and resilience.
• Three R’s of Sustainability (Re: Latin for ‘again’)
– Resourcefulness (reduce, reuse, recycle)
– Regeneration (renew, reproduce, reorganize)
– Resilience (resistant, responsive, redundant)

62. Same characteristics are relevant to
organizations & lifestyles.
• Most sustainability initiatives focus on 3-Rs of
resourcefulness: reduce, reuse, recycle.
• Renewable energy is necessary but not sufficient;
renew society – must radically redesign, reorganize.
• Sustainability: social & ecological regeneration &
resilience, balanced with resource efficiency
• Natural tendency toward economic efficiency
threatens economic integrity – sustainability.

63. Authentic Sustainability:
Ecological Worldview; Systems Thinking
• Ecological world of complex systems:
– Selective or semi-permeable boundaries
– Continuous feedback loops – acceleration, decay
– Self-organizing , emergent properties, chaotic
• Collaborative/cooperative learning for sustainability:
– Co: Latin for ‘together’
– Co-learners, rather than teachers and students
– Beyond thinking alike to group co-intelligence
– Sharing of intellectual, social, and spiritual gifts

64. Questions for Chapter 6
Please write your answer to one of the following questions:
• Do you believe sustainable economies must function in the same ways as healthy living
systems? Why or why not?
• What do you think are the most important difference or distinctions between living and
nonliving systems?
• In your opinion, what are the most important risks of focusing sustainability initiatives on the
3Rs of ecological efficiency?
• Do you believe a solar powered economy is inherently sustainable? If not, why not?
• Why do you think resilience is so often overlooked and underappreciated in discussions of
economic sustainability?
• How would define collaborative learning? How is it different from traditional education?
Please write your answers to both questions below.
• Why are your answers to these questions important to the people of your nation,
your community, and to you personally?
• After thinking about these questions, what might you do differently to make life
better, for others and for yourself?

65. Spiral Learning: The Essence of Economic
Sustainability in Each Session

66. Review #6
Characteristics of Sustainable Economies
• Sustainable economies must be organized and managed as
living systems. Only living systems can capture and store
useful solar energy. Healthy living systems are:
• Resourceful or efficient: Ability to reduce resource use, reuse
manufactured products, and recycle waste materials.
• Resilient: Able to resist shocks, respond to threats, and have
build in redundancy to recover from adversity.
• Regenerative: Ability to renew themselves by relying on solar
energy, to reproduce their species, and redesign themselves
in response to changes in their environment.

67. #7 Essential Characteristics of Markets
Basic Functions of Markets: In both Market and
Planned Economies
• Markets facilitate choices among substitutes.
– Choices in consumption & in production
– Choices between natural & human resources
• Markets establish economic value.
– Scarcity: What? Where? When? Who?
• Markets ration products, reward producers, and allocate
resources among uses.
• Markets facilitate international trade.

68. Markets provide incentives for
Economic Innovation
• Economic value can be created through exchange,
processing, relocation, and timing – without using
more natural resources.
• Innovation involves risks & uncertainties
• Profit is the market’s reward for taking risks:
– Market, production, & financial risks
– “Necessary” profits reward ”necessary” risks.
• “Unnecessary” profits, resulting from lack of
competition, restrict economic development.

69. Essential Characteristics of Markets
in Sustainable Economies
• Market must be efficient and effective.
– Operation efficiency: efficient cost of production
– Allocative efficiency: effective use of resources
– Effectiveness depends on economic competition.
• Many buyers and sellers
• Freedom of entry and exit
• Accurate information
• Economic sovereignty
• Today’s global economy is not economically
competitive and thus is not effective.

70. Essential Characteristics
of Sustainable Global Markets
• Trade must reflect comparative advantages.
• True “free trade” is mutually-beneficial trade:
– Selective boundaries – competitiveness
– Resolution of internal conflicting interests
– Absence of distortions in currency values
– Relative immobility of capital & labor
• Today’s global economy does not ensure mutual
benefits or sustainable international trade.
• Today markets lack essential competitiveness.

71. Questions for Chapter 7
Please write your answer to one of the following questions:
• Do you believe that all current national economies are mixed economies that
include elements of both market and planned economies? What leads you to this
conclusion?
• What do you think are the most important functions of markets?
• Is the economic value created by trade among individuals real or an illusion?
Explain.
• Explain in your own words how markets determine economic value?
• Explain in your words the difference between operational and allocative
efficiency?
• Do you think “free trade” exists among nations anywhere in today’s global
economy? If so, where? If not, why not?
• Do you think some profits are necessary? Why or why not?
Please write your answers to both questions below:
• Why are your answers to these questions important to the people of your nation,
your community, and to you personally?
• After thinking about these questions, what might you do differently to make life
better, for others and for yourself?

72. Spiral Learning: The Essence of Economic
Sustainability in Each Session

73. Review of # 7
Essential Characteristics of Markets
• All economies are mixed: market and planned economies.
• Basic functions of markets:
– Establish economic value, ration products among consumers, and
reward producers.
– Allocate resource use through profits and losses.
– ‘Necessary profits’ provide incentives for economic innovation.
• Characteristics of markets in sustainable economies
– Balance of operational efficiency with allocative efficiency
– Economically competition in markets
• Many buyers and sellers, freedom of entry and exit, accurate
information, consumer sovereignty.
– Economic sovereignty in international markets – free to not trade

74. #8.Essential Functions of Government for
Economic Sustainability
• Purpose of government: To ensure both individual
and social autonomy and equity.
• Social values must take priority over individual
preferences – hierarchy of sustainability.
• Economic autonomy and equity are different from
social autonomy and equity.
• Economic autonomy and equity can be ensured
through economically competitive markets –
economic sovereignty.

75. Essential Economic
Functions of Government
• Maintaining competitive markets
– Market structure: large number of small firms
– Market conduct: absence of collusion, price fixing.
– Market performance:
• Operational efficiency: quantity, price, innovation
• Allocative efficiency: competitive market structure
– A competitive “market structure” is essential for
economic autonomy and equity.

76. Essential Economic
Functions of Government
• Creating and managing currency – money
– All forms of currency are actually loans.
– Governments create money by making loans to banks.
– Individuals & institutions also create money.
– Currencies can inflate or deflate in value – scarcity.
– Monetary policy: government regulation of money
• Reserve requirements
• Interest rates
– Fiscal policy: taxing and spending by government

77. Essential Economic
Functions of Government
• Creating & maintaining market infrastructure
– Market facilities, legal structure, information
• Internalizing economic costs and benefits
• Regulating international trade
– Ensuring rights and responsibilities to protect people
and resources from economic exploitation
– Economic autonomy and equity in international trade
cannot be allowed to take precedent over domestic
social autonomy and equity.

78. Essential Social
Functions of Government
• Government is an expression of culture.
– Reflects evolution of people in a particular place
– Reflects necessary restraints on individual actions
• Social equity protects culturally-defined values of
persons within society – non-economic.
• Economic value is indifferent to persons.
• Government is necessary to restrain economic
exploitation of society and nature.

79. Essential Social
Functions of Government
• Constitutions & Charters: define and embody
essential functions of government
• Sustainable governments must function with consent
of the governed – regardless of form.
• Constitutions must protect rights of people:
– Autonomy and equity within current generations
– Equal rights of future generations
• Individuals must provide economic means for
essential social functions of government.

80. Discretionary
Functions of Government
• Discretionary functions contribute to the good of
society whenever economic incentives are absent or
inadequate.
• Public goods and services: “collective goods”
– Non-excludable: accessible to all – not scarce
– Non-rival: enough for all – not scarce
• “Essential” functions of government must take
priority over “discretionary” functions.
• Ethical and social values of society must take
precedent over individual and collective economic
preferences.

81. Questions for Chapter 8
Please write your answer to one of the following questions:
• Do you believe autonomy or equity adequately define the essential functions of
government? Why or why not?
• Explain in your own words how maintaining competitive markets and regulation of currency
relate to economic autonomy and equity?
• Explain in your own words how money is created and destroyed.
• Do you believe loans by banks and individuals should be allowed to function as currency? If
so, why? If not, why not?
• Go you believe social autonomy and equity should take priority over economic autonomy and
equity? Why or why not?
• Why is the “consent of the governed” essential for economic sustainability?
• Do you believe in the concept of “universal human rights”? Why or why not?
• Explain in your own words how discretionary functions of government are different from
essential government functions?
Please write your answers to both questions below:
• Why are your answers to these questions important to the people of your nation, your
community, and to you personally?
• After thinking about these questions, what might you do differently to make life better, for
others and for yourself?

82. Spiral Learning: The Essence of Economic
Sustainability in Each Session

83. Review of # 8
Essential Functions of Governments
• Balance freedom of individuals with higher needs of society
• Essential economic functions of government:
– Maintain competitive markets – structure, conduct, performance
– Managing value of currency – regulation of lending
– Provide legal infrastructure for markets – contracts & regulations
– Internalize economic external costs – social and environmental
– Regulate international trade
• Essential social and ethical functions of government
– Ensure basic ethical or constitutional rights of individuals
– Establish and enforce laws and regulations that protect society and
nature from economic exploitation.
• Essentials must take priority over discretionary functions

84. #9 The Essential Mission
of Sustainable Economies
• The sustainability or lack of sustainability, of an
economy reflects a societal consensus.
• Economic growth in not sustainable.
• Growth during the industrial era was supported by
cheap fossil energy. Remaining energy will be less
abundant and more costly.
• Sustainable economy: “steady state” economy
• Balance throughput with capacity of nature
• Sustainable economy depends on solar energy
• Economic growth is not longer a logical mission.

85. Quality of Life:
Mission of Sustainable Economies
• Quality of life: individual, social, spiritual
• No limits to social or spiritual development
• Developed nations have enough “stuff.”
• Developing nations need “sustainable” economic
development, not exploitation.
• Population growth: result of lack of “security”
• Enough resources to meet “needs” of all.
• “Needs” are but one aspect of Quality of Life.

86. New Mission:
Prosperity without Growth
• Prosperity: social, psychological, economic
• Human progress does not require growth.
– More value from less economic throughput
– Individual progress within stable economy
• Cyclical unemployment: Share available work
• Increase long-term employment:
– Post-industrial technology to employ more people
– Policies that stress quality of employment

87. Government Tax Policies
for Economic Sustainability
Shift from tax incentives for economic growth to…
• Taxes on resource extraction & exploitation
• Tax public “bads,” to subsidize public “goods”
• Tax incentives for resilience & regeneration
• Taxes on solar energy: the ultimate potential source
of all government revenue
– The ultimate public good
– The ultimate source of all economic value

88. Economic Sustainability:
Not a Sacrifice… an Opportunity
• Not back to pre-industrial era – but forward
• Sustainable prosperity is a realistic possibility.
• Essentials for economic sustainability are the same
as essentials for happiness and QOL.
• Steady state economy does not limit QOL.
• Economic sustainability & happiness: same
ecological, social, economic principles.
• Economic Sustainability: Sustainable QOL

89. The Challenge
of Economic Sustainability
A sustainable economy must provide permanent
sustenance for the individual, social, and ethical
well-being of all, including those of present and
future generations.
It must enhance the physical and mental health of
individuals. It must promote the economic and social
health of families, communities, and societies. It
must sustain the productivity and ecological health
of nature. And, it must provide a means for each
generation to meet its needs while fulfilling its
ethical responsibilities for the future of humanity.

90. Questions for Chapter 9
Please write your answer to one of the following questions:
• Do you believe economic growth in sustainable? Why or why not?
• Do you believe happiness or quality of life is dependent on income or wealth?
Why or why not?
• Do you believe global population can be stabilized at a sustainable level? Who or
why not?
• In what ways to you think your government’s policies would need to be change to
address the mission of happiness rather than economic growth?
• Do you believe growth in human happiness or quality of life is sustainable? Why
or why not?
Please write your answers to both questions below:
• Why are your answers to these questions important to the people of your nation,
your community, and to you personally?
• After thinking about these questions, what might you do differently to make life
better, for others and for yourself?

91. Final Assignment
Using 800-1000 words, answer the following
questions:
• What are the most important ideas,
concepts, or principles you learned as a
result of being in this class?
• Why do you think these ideas are
important?
• How might these ideas make life better for
others and for yourself?