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

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

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!

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

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!

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

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

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

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

QUB P&SD 2011/ 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

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

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

QUB P&SD 2011/ 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

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?

Synergy/symbiosis – spent grains in a brewery