Chapter 3.6.

Chapter 3: The Relationship between the Environment and the Economy

3.6. Dialectic between Environment and Economy 　

Traditional environmental and economic theory has been based on the "compatibility of the environment and the economy" as a perspective when attempting to resolve the conflicting and contradictory relationship between the environment and the economy. This is a simple and safe motto that has been widely used, but it is in fact an empty theory. 　

The reason why it is an empty theory is that modern economic activities since the Industrial Revolution, which work on the natural environment and are promoted even if they sometimes destroy it, have to stand in constant conflict and tension with the natural environment. 　 

In the framework of classical economics, the environment is regarded as an external condition of the economy, and environmental destruction is regarded as an external diseconomical event. Then, policy technologies such as emissions trading and environmental taxes (carbon tax) are used to internalize the external diseconomies and alleviate the conflict between the economy and the environment. 　

Compared to the supremacy of economic theory, which underestimates external diseconomies and seeks to protect the superiority of economic activities, this direction is a conscientious attempt to dialectically sublate the economic-environmental antagonism. However, it is impossible to completely internalize the external condition of the environment, which is governed by natural laws, into an economy, and it must always remain an incomplete internalization, which is only partial as a dialectic. 　

Let us change the premise of separating the economy and the environment into an internal/external relationship and assume that human economic activity is just one of the activities carried out within the great condition of the environment. However, this assumption does not automatically eliminate the antagonistic relationship between the environment and the economy. 　

Economic activities motivated by human desires can easily go out beyond the environmental conditions. The destruction of the environment since the Industrial Revolution may be interpreted as such a "phenomenon of environmental externalization of the economy. To overcome such a situation, it is necessary to keep the economy inside the environment. 　

In this respect, economic activity before the industrial revolution was inefficient and undeveloped, relying on human power, and as a result economic activity was inevitably limited to environmental conditions. However, since the Industrial Revolution, the economy has surpassed the environment due to the rapid increase in productivity thanks to the expansionary technological development.

If it is neither possible nor appropriate to reverse the externalization of the economy to the pre-industrial stage of development, the only way to solve this problem is to introduce an environmentally planned economy. An environmentally planned economy, especially an "ecologically sustainable planned economy," is a technique for keeping economic activities within environmental standards, both quantitatively and qualitatively. 　

The environment and the economy are in a perfect dialectical relationship, and economic planning guided by rigorous environmental criteria is the guarantee of that perfection. Conversely, through economic planning, the opposition between the environment and the economy is completely sublated and resolved.

👉The papers published on this blog are meant to expand upon my On Communism.

Chapter 3.5.

Chapter 3: The Relationship between the Environment and the Economy

3.5. Environmental planned economy model

In order to overcome the limitations of classical environmental economics theory, we must move away from the adherence to the market economy assumed by classical environmental economics and shift to a planned economy. However, it is necessary to distinguish between three different models of planned economies: the equilibrium planned economy, the developmental planned economy, and the environmental planned economy. 　

The first model, the equilibrium planned economy, is a model in which economic activities are developed according to a supply-demand plan for the entire society, aiming to correct the structural distortions caused by the instability of business cycles, inequality in the distribution of goods, and uneven distribution of wealth resulting from the capitalist economy (broadly speaking, a market economy). It is also the most basic form of a planned economy. 　

Such a model is at the base of all planned economy models, but a model to which the objective of increasing productive capacity is added is the developmental planned economy model. This model is based on a precise economic development plan, and is the model consistently pursued by the former Soviet Union in its attempt to increase productive forces in opposition to capitalism. 　　

The planned economy model of development was similar to the capitalist market economy model in that it aimed to increase productive forces, a rival model if you will, but as is well known, it failed to last for 100 years in the former Soviet Union and allied countries that followed it. 　

This model, having forgotten the equilibrium planned economy model on which it was based, became obsessed with competitive economic development with the capitalist system, which resulted in environmental destruction that outstripped capitalism, and was also defeated in its ultimate goal of increasing productive capacity. 　

What should be newly constructed now as a planned economic model to guarantee ecological sustainability is not such an unsustainable planned economic model of development, but an environmental planned economic model. To divide the terminology here, an environmental planned economy is an "environmental planned-economy" and not an "environmentally-planned economy" model. 　　

This distinction may appear to be a play on words, but it represents a significant substantive difference. As will be discussed in the next section, the formal distinction is that the "environmental planned- economy" refers to a planned economic model that is combined with an environmental component and has environmental protection as its ultimate objective, not to an economy that is externally accompanied by an environmental protection plan. 　

The latter term, "environmentally-planned economy," refers to an economic system that externally incorporates environmental protection programs, as in the case of the United Nations Environment Programme, which is an international organization. Therefore, a market economy with environmental protection programs is also possible. 　

In fact, the current market economy system, which incorporates various environmental measures, can be said to be oriented toward such an "environmentally-programed economy," but it cannot truly guarantee ecological sustainability. 　　

This is where the "environmental planned economy" model comes in, which, while based on the equilibrium planned economy model is a model that has parted company with the developmental planned economy model of the former Soviet Union and has set environmental protection as its objective rather than economic development. 　

In more detail, the "sustainable planned economy," which is the title of this series, is not limited to the "environmentally conservative planned economy" in which individual environmental conservation measures are reflected in economic planning, but applies environmental criteria from an ecological standpoint to the entire economy.　

👉The papers published on this blog are meant to expand upon my On Communism.

Chapter 3.4.

Chapter 3: The Relationship between the Environment and the Economy

3.4. Limitations of Classical Environmental Economics 　

In recent years, ignoring the environmental forecasting perspective in classical economics could be seen as going against the times. If classical economics is to be progressive to any degree, it must go to an economic theory that incorporates environmental forecasting, namely classical environmental economics.　　

The most important characteristic of such a classical environmental economics theory is that it makes the market economy self-evident. Thus, for example, even in the case of regulatory measures for carbon dioxide, which is regarded as the main cause of climate change, it is left to random market principles such as emission trading.

However, recent environmental projections have called for specific numerical targets for global average temperatures to be set and measures to be taken. For example, the Paris Agreement, the latest climate change framework treaty, calls for limiting the global average temperature increase from pre-industrial times to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above levels. 

Emissions trading is an environmental version of the market economy approach, in which the adjustment of supply and demand is left to random market transactions, but this unplanned approach makes it impossible to achieve specific numerical targets and only creates a new commodity: emissions credits. 　

In the classical school of environmental economics, another more advanced theory tries to step into the introduction of indirect production regulations such as environmental taxes. However, as long as capitalism is assumed, it is impossible to impose such a high tax rate that would significantly reduce the profits of capital enterprises, and many capitalist enterprises will maintain the conventional production system even if they have to bear a lukewarm environmental tax.

In this respect, the Stern Review submitted in 2006 by British economist Nicholas Stern in response to a consultation by the British government advocates changes in the energy system and technology in general based on environmental forecasting models, which is a step beyond classical environmental economics theory.

Because of its in-depth content, the Stern Review has the influence of an international guiding document that goes beyond a government report. At the same time, it has been criticized by many traditional environmental economists, including William Nordhaus, the first person from the field of environmental economics to win the Nobel Prize in Economics (2018). From the point of view of our concern here, the Stern Review has at least three limitations due to its classical framework.

First, although unavoidable given the nature of the report as a response to a government consultation on climate change issues, it is limited to climate change and does not cover biodiversity, hazardous industrial waste, and other issues that cannot be reduced to climate change.

The very measures taken to combat climate change are limited to the transformation of energy systems and technologies, and do not go into the quantitative and qualitative management of production. This is an inevitable consequence of classical economics, which is based on a market economy and does not envision a planned economy. 　

Furthermore, there is the limitation of the cost-benefit-effect theory that it uses as its methodology. Cost-benefit effects, which is essentially a capitalist profit calculation technique, naturally excludes high-cost measures that reduce profits. It is also a logic that prioritizes economic calculation over environmental ethics, especially impact on GDP, the most important macroeconomic indicator in capitalism. 

The fact that even the Stern Review, which is quite progressive for a classical school, has these limitations is precisely a manifestation of the limitation of classical environmental economics itself. As long as the capitalist market economy is assumed, it is impossible to combine the economy and the environment in an intersectional manner.　

👉The papers published on this blog are meant to expand upon my On Communism.

Chapter 3.3.

Chapter 3: The Relationship between the Environment and the Economy

3.3. Role of environmental ethics 

Although scientific environmental forecasting is the foundation of a sustainable planned economy, there is, in fact, a fundamental driving factor that cannot be governed by pure science alone in the great transformation of the market economy, which seems to be more and more firmly entrenched on a global scale, into a planned economy. That is environmental ethics. 

There is no set theory as to what exactly should be included in an environmental ethic, but what is almost universally accepted is the principle of "intergenerational ethics," in which the present generation assumes responsibility to future generations with respect to the conservation of the global environment. This principle is also generally accepted in environmental conservation theories based on the market economy. 

However, as long as the market economy is assumed, such ethical principles must also end up in generalities. This is because a market economy is supremely concerned with "how much profit can be made in the here and now. This is symbolized by the instantaneous transactions in the securities and exchange markets, but the essence is the same in commercial transactions in the general industrial world.

It is the market economy that is thoroughly concerned with the present time axis, and this is the "logic" of capitalism, the ideological framework of the market economy. Unless such "logic" is abandoned, intergenerational ethics will end up as a subject. In fact, the source of skepticism, which is the antithesis of climate change theory, can be seen as a repugnance and repudiation of this environmental ethic, more than a scientific objection. 

On the contrary, in a sustainable planned economy, intergenerational ethics will be established as the ethical foundation, along with environmental prediction as the scientific foundation. In order to truly put intergenerational ethics into practice, rather than just talking about it as a topic, we need a major shift to a planned economy on a global scale. 　

That said, if everything has an end, the day will come when the planet Earth itself will come to an end. If that is the case, then it is even possible to have an ephemeral idea of making the best use of the global environment as much as possible right now, which we might call the "environmental feast theory."

Capitalism, which prioritizes the time axis of the present, has a strong affinity with this environmental feast theory. In particular, measures to deny the finite nature of natural resource extraction, or to consciously estimate the limit point over a long period of time in order to hasten the development of high-value natural resources, are representative examples of environmental feast theory. 　

However, as long as intergenerational ethics is emphasized, it follows that even if the death of the global environment or the earth itself from natural causes is inevitable, we should at least ensure that the earth does not die from anthropogenic causes. A sustainable planned economy is the most fundamental global environmental protection measure for this purpose.

👉The papers published on this blog are meant to expand upon my On Communism.

Chapter 3.2.

Chapter 3: The Relationship between the Environment and the Economy

3.2. Science and forecasting 　

The most fundamental foundation of a sustainable planned economy is environmental forecasting based on science, before any other economic theory. This is because a sustainable planned economy is an economic structural measure to essentially prevent possible future environmental degradation and environmental death of the earth. 　

The question in this regard is whether science can withstand the act of forecasting. Science consists of the accumulation of analytical intellectual activities, and analysis is usually an activity to analyze and clarify the causes and mechanisms of some event that has already occurred, not necessarily to foresee events that may occur in the future.

This is reflected, for example, in the fact that despite dedicated attempts to foresee disasters such as earthquakes, no methodology for accurate prediction has yet been established. Pessimism about disaster foreseeing also persists. While it is possible to analyze disasters that have occurred, it is impossible to foresee disasters that may occur. 　

It is true that it is extremely difficult to accurately "foresee" the occurrence of specific disasters, but disasters do not occur suddenly and unexpectedly, but rather, they are manifested as disasters at a certain point in time through a process of long-term natural change. Therefore, it is possible to recognize the natural changes that lead to disasters and to make long-term "forecasting."

In summary, scientific forecasting is possible, although scientific foreseeing is extremely difficult. The foundation of a sustainable planned economy is environmental forecasting as such scientific forecasting. In fact, scientific environmental forecasting has been actively conducted in recent years in relation to climate change, which is now an urgent issue. 　

However, these climate change forecasts are often rejected by skeptics. Moreover, skeptics, or politicians under their influence, often rise to deny or mitigate environmental measures based on climate change projections.

As is the fate of scientific forecasting, it is difficult to draw conclusions with absolute certainty. This is the difference from the case of analyzing an event that has already occurred. Forecasting an event that has not yet occurred, by its very nature, must be a probability theory that includes the possibility of modification. Therefore, the emergence of skepticism cannot be ruled out. 　

Therefore, scientific environmental forecasts should be built around short-term forecasts with high probability, while being aware of the existence of skepticism and open to the possibility of modification, and distinguishing between long-term and short-term forecasts, with long-term forecasts limited to those that represent merely one possibility.

Therefore, even if scientific environmental forecasts are used as the basis for specific economic planning, they should be reflected in relatively short-term economic plans (three-year plans) based on short-term forecasts. Long-term forecasts, on the other hand, are used as a reference material to determine the direction of the next and subsequent plans.

👉The papers published on this blog are meant to expand upon my On Communism.

Chapter 3.1.

Chapter 3: The Relationship between the Environment and the Economy

3.1. Environmental criteria and the planned economy

In contrast to the Soviet-style planned economy, which has many flaws as seen in the previous chapter, the new planned economy proposed here is carried out from a completely different perspective and with a completely different methodology.

First of all, in terms of perspective, the new planned economy places a focus on environmental sustainability. In other words, it is a planned economy that aims for the greatest possible sustainability of the global environment. In that sense, it is named a "sustainable planned economy."

A sustainable planned economy is not just a planned environmental policy, but an economy that is planned with indicators of environmental sustainability as normative standards, and is a type of planned economy. To put it simply, it is a planned economy based on environmental criteria as norms - an environmental planned economy.

A planned economy that is disciplined by such environmental indicators is out of the question in the Soviet-style planned economy, which placed an overwhelming emphasis on economic development - a developmental planned economy, so to speak - and as a result, the Soviet-style planned economy caused environmental destruction through the waste and consumption of resources caused by its development-priority policy.

In that sense, a sustainable planned economy should emerge as a new form of planned economy that matches the growing trend for global environmental protection that has emerged since the collapse of the Soviet Union, while taking the Soviet-style planned economy as a negative example.

Currently, there is no country (as far as the author knows) that has adopted such a sustainable planned economy as an actual policy, and even the Green Party and the environmental protection movement around it, which propose the most advanced environmental policies, do not go so far as to advocate a planned economy, but rather merely insist on promoting environmental policies that embrace a market economy.

This is in a parallel relationship with - and often overlaps with - social democracy as a modified capitalism that maintains the market economy while supplementing it with welfare policies, and is also an expression of the idea of ​​environmentalism as a modified capitalism, but its limitations are already clearly evident in the lack of significant progress in tackling international issues such as man-made climate change.

In order to fundamentally solve the various global environmental problems, it is necessary to systematically regulate production activities in terms of both quantity and quality based on environmental standards, and the planned economy that makes this possible is none other than the sustainable planned economy.

👉The table of contents so far is here.

👉The papers published on this blog are meant to expand upon my On Communism.

Chapter 2.4.

Chapter 2: Criticism of the Soviet-style Planned Economy

2.4. Policy deficiencies

The Soviet Union's economy achieved high economic growth during the Stalin administration after World War II. It can be said that the heyday of the Soviet-style planned economy was the era of dictator Stalin. The secret behind this policy was a policy that thoroughly focused on heavy industry and military industries.

In the Soviet Union, the industrial classification of the first sector for the production of producer goods and the second sector for the production of consumer goods, which Marx used to analyze capitalism in his Capital, was used as a basis for classifying production goods as Group A goods and consumer goods as Group B goods - a rough classification in itself-. Of these, the first priority was placed on the production of Group A goods. This, along with the military-first policy aimed at becoming a military superpower in opposition to the United States, led to the growth of the military industry.

This secret to early success has manifested itself in policy deficiencies in the later stages. The production of consumer goods, which had been placed in a subordinate position in the priority policy, was the most important sector in the lives of the masses and was supposed to be the key to achieving the affluence commensurate with economic growth, but the Soviet Union finally began to leverage it after Stalin's death in 1953.

However, even in these sectors, state-owned enterprises became the main producers, and as was often ridiculed in the West, even shoes were manufactured in state-run factories, and the quality was relatively poor. 

In addition, as mentioned in the previous section, the demand-supply imbalance caused by sloppy planning and corruption such as embezzlement of goods led to stagnation and confusion in distribution, resulting in a constant shortage of goods at the state-run stores at the end of the line, which has been dubbed an "economy of shortage" by critical commentators.

In the latter stages of the Soviet economy, the Soviet Union had no choice but to supplement high-quality consumer goods with imports from Western capitalist countries, using foreign currency obtained by taking advantage of the oil price hikes caused by the oil crisis.

On the other hand, for Group A goods, which should have been one of the strengths of the Soviet economy because of its priority policy, the planned economy focused mainly on quantitative expansion of production, so technological innovation did not progress, and aging factory equipment continued to be used without being renewed, resulting in deteriorating production efficiency.

As a result, although the Soviet economy as a whole did not fall into a capitalist state of overproduction, it did have built-in defects: an imbalance between industries due to a priority policy and a decline in productivity due to a policy of quantitative expansion that neglected qualitative innovation.

During the Cold War, the Soviet Union sought to catch up with and surpass its rival market economy, the United States, but in the end, it was only in the area of military industry, symbolized by nuclear development and space exploration, that it somehow managed to match the United States.

The "reforms" of the Gorbachev administration in the final years of the Soviet Union exacerbated the intrinsic deficiencies of the Soviet-style planned economy by introducing market economic principles in a half-hearted policy manner, further spurring the economy of shortages and accelerating the collapse of the system itself.

This was also the point of difference between Communist China, which began by imitating the Soviet-style planned economy and then ambitiously moved ahead of the Soviet Union in adopting a market economy, eventually effectively breaking with the planned economy.

👉The papers published on this blog are meant to expand upon my On Communism.