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Library Communiveristy Open Learning Course The Economy and Us: week 2 Overview

Library Communiveristy Open Learning Course The Economy and Us: week 2 Overview What is ‘capital’? The ‘conventional’ view An extended view What are the ‘flows’ in an economy? The ‘conventional’ view An extended view – the basis of an ecological economy

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Library Communiveristy Open Learning Course The Economy and Us: week 2 Overview

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  1. Library Communiveristy Open Learning Course The Economy and Us: week 2 Overview What is ‘capital’? The ‘conventional’ view An extended view What are the ‘flows’ in an economy? The ‘conventional’ view An extended view – the basis of an ecological economy The implications of the ecological model

  2. What is ‘capital’? In broad terms: A ‘stock’ of something which has the ability to produce a flow of economically desirable outputs. It depreciates over time, but can be renewed For example: A house: produces over time a ‘flow’ of ‘shelter services’. A car: produces a ‘flow’ of transport services

  3. Conventional economics … Recognises two kinds of capital: Fixed, ‘human made’ or physical capital – machinery, roads, buildings, various kinds of equipment, … Financial capital: The financial (monetary) counterpart of ‘physical’ capital; the title to ownership This latter usage is rather misleading – ‘finance’ is a further remove from practical use!

  4. An extended definition recognises more • Natural capital • Human capital • Social capital • (plus – the ‘conventional’ physical capital)

  5. Natural Capital … • … the services of the environment around us – for example: • Trees and plants take in carbon dioxide and produce oxygen • Earthworms regenerate the soil • Microbes break down our waste • … [Your own examples?] • Natural capital is a gift – and is easily damaged!

  6. Human capital … • … ourselves! People: • having skills • ethical positions • the ability to plan • think ahead • design and invent • the ability to learn and adapt

  7. Social capital • The ability to work together, identify and meet needs, settle disagreements/disputes

  8. Physical/manufactured capital … • As noted earlier – buildings, machines, roads, …

  9. Individual welfare Consumption Economic production processes Economic policy Manufactured capital Labour Land Goods and services Investment ‘Fixed’ investment, training, land improvement Flows in the ‘conventional’ economy

  10. Comments on the ‘conventional’ • Output is of two types: ‘consumption’ and investment. Split between the two determined by ‘economic policy’ • No mention of ’waste’ • No mention of resource limits • ‘Welfare’ solely a function of consumption QUB P&SD 2011/2012

  11. Words again: ‘ecological’ or ‘environmental’ ? ‘Ecological’ preferred; it suggests a powerful concern to recognise and integrate

  12. Well-being: individual and community Positive impact on human capital Ecological services Solar Energy Consumption Wastes Economic Production processes Policy and Culture Natural Capital Human Capital SocialCapital Manufactured capital Goods and Services Investment Negative impact on all forms of capital Restoration/Conservation of natural capital; Education and training of human capital; developing mutuality and trust; investment in manufactured capital Waste heat Flows in an ecological economy

  13. Much more to say … • Four distinct kinds of capitals now explicit • Investment – to maintain stocks of each – is a requirement (including ourselves!) • Waste – and waste energy (heat) is recognised • “Well-being” is a function of several ‘outputs’, not just consumption • Solar energy drives the whole system QUB P&SD 2011/2012

  14. Waste … what can we say about it? • What is it? How does it arise? • What waste streams can we identify? • Why is it a bad thing? • Can we do anything about it?

  15. Synergy/symbiosis – spent grains in a brewery http://www.zeri.org/ZERI/Beer.html

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