There are several possible explanations of why mainstream economists and thinkers from the UN level up and down have steered the solution to the environmental crisis away from green market, green growth, and green economies commitment they place on themselves in 2012 Rio +20, and leaning towards dwarf green markets like carbon pricing or low carbon…pushing economics towards the non-science domain in the process, and if the process continues or it is not corrected soon, then I believe economics cannot longer then be called a science as a field which do not follow the scientific method/the theory-practice consistency principle on purpose is not a science….it can be a business, but not a science….
One of the main explanation to the issue above can be constructed around two key words: manmade market distortions vrs market failures which get clouded under the paradigm shift knowledge gaps as in this case the green market paradigm shift knowledge gap; and the only inside solution to the paradigm shift those inside the box can see is to look at the issue, that once was assumed not to be an issue at all, as externality led market failure. And to treat an issue that in the new market is supposed to be endogenous issue as an externality led market failure adds more distortion to the already distorted market…..Thomas Kuhn/The structure of scientific revolutions suggested the inability of those inside the box to deal with paradigm shifts like the shift to green markets, those inside the box see only externality led market failures and those outside the box see the man made distortions that need to be corrected/closed to internalize the externality and create green markets…..I will show this in my next paper, but I am curious about whether others see what I can easily see so I am asking this question....
We know that Adam Smith assumed social and environmental externality neutrality to simplify reality and to create an economy only market making only economic issues endogenous issues and the only issues reflected in the pricing mechanism of the traditional market.
Therefore Adam Smith gave a model with two distortions in 1776, a social distortion(a) and an environmental(c) distortion and one dominant component, the economy(B), the structure below:
TM = aBc
TMP = P = ECM + i
Society(a) and environment(c) did not matter, they are there to meet economic goals....remember the thought?
Then the 1987 Bruntland Commission critique came in "Our Common Future'" and suddently social and environmental issues matter and need to be internalized...so they shifted to green markets, economy and environment partnership markets, with the structure below:
GM = aBC
GP = P + EM = ECM + i + EM
The structure of the shift is as follows as the environemental distortion is corrected (c---------->C) as now environmental issues matter and they are reflected in the price mechanism of the market as an externalty margin(EM):
TM = aBc-----------------------> GM = aBC
TMP = P = ECM + i -------------------> GP = P + EM = ECM + i + EM
Therefore, to correct Adam Smith model to reflect environmental concerns we only need to correct the distortion in his model as the environment matters and internalize the environmental cost in the pricing mechanism of the market....
GP - TMP = ECM + i + EM - (ECM + i ) = EM
So when Adam Smith assumed social and environmental externality neutrality he introduced those distortions as there has never been social and environmental externality neutrality....Therefore, to correct his model we only need to correct the distortion, not to treat the distortion as an externality led market failure which is what apparently those inside the box are doing in the case of the shift to green markets....
As Adam Smith created these social and environmental externality distortions as they have always been there I use the term man made market distortions....
So the question is, Are manmade market distortions market failures? I say no, what do you think?
“Yes and Why or No and why” answers or comments please to better exchange ideas.
Unforunately, I do not understand the whole text. Just considering your question "Are manmade market distortions market failures?"
Why does it matter? Markets are manmade. The economy is manmade.
I agree with Hendrik. I do not see the argument being made. You make it sound as if economists have abandoned the issues of environmental externalities, which by the way of course are man-made market failures. If this is correctly understood, what is the evidence for that?What is meant by "dwarf green markets"?
For instance, you mention carbon pricing (e.g., in the EU ETS) but this is a diect way of regulating an important externalitty arising from the emissions of CO2. One may argue that this has not been succesfeul and should be replaced by something else, but this is something else than arguing for a paradigm shift.
Dear Hendrik and Patrik, my apologies, I tried to add some background, but it was not enough.... I added a little bit more background at the end of the background of the question to highlight why I say man-made distoritions...
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Dear Hendrik that is the point, the economy is man made, the reality is not...environmental issues matter but they were assumed to not matter,,,,had Adam Smith felt that environmental issues matter he could have proposed a green economy:
GM = aBC
GP = P + EM
Then we would not have the environmental problem of today, but he was wrong and now because we know he was wrong in assuming environmental externality neuturality we are correcting it right now and we shifted in 2012 to green markets....
So now that we know the environment matter and we want to correct Adam Smith market to create green markets and send the right green signal to green consumers and green producers the only thing we need to do is to add an environmental margin to the traditional market price to internalize them as follows
TMP + EM = P + EM = ECM + I + EM = GM
No need of externality management a la carbon pricing if you internalize environmental cost as perfect green market theory requires...
Have a nice day
Patrik, I am not saying economists abandoned the issue of environmental externalities, what I am saying is that those economists and thinkers from the UN and down got right the prescriptions "green markets" in 2012, but got wrong the actual medicine "dwarf green markets"... Please take some time to think about the ideas above, then you can give your own view on the question....
As food for thoughts I will share here these 4 papers:
Complex and Man-made Markets: Are We Currently Approaching Sustainability in a Backward and More Chaotic Way in Terms of Economic Thinking?
https://www.researchgate.net/publication/281277199_Complex_and_Man-made_Markets_Are_We_Currently_Approaching_Sustainability_in_a_Backward_and_More_Chaotic_Way_in_Terms_of_Economic_Thinking
Beyond Traditional Market Thinking: What is the Structure of the Perfect Green market?
https://www.researchgate.net/publication/302025169_Beyond_Traditional_Market_Thinking_What_is_the_Structure_of_the_Perfect_Green_market
Perfect Green Markets vrs Dwarf Green Markets: Did We Start Trying to Solve the Environmental Crisis in 2012 With the Wrong Green Foot? If Yes, How Can This Situation Be Corrected?
https://www.researchgate.net/publication/305994500_Perfect_Green_Markets_vrs_Dwarf_Green_Markets_Did_We_Start_Trying_to_Solve_the_Environmental_Crisis_in_2012_With_the_Wrong_Green_Foot_If_Yes_How_Can_This_Situation_Be_Corrected
Did Adam Smith Miss the Chance to State the Goal and Structure of Sustainability Markets in His Time? If Yes, Which Could Be Some of the Possible Reasons Behind That?
https://www.researchgate.net/publication/298476400_Did_Adam_Smith_Miss_the_Chance_to_State_the_Goal_and_Structure_of_Sustainability_Markets_in_His_Time_If_Yes_Which_Could_Be_Some_of_the_Possible_Reasons_Behind_That
Article Complex and Man-made Markets: Are We Currently Approaching S...
Article Beyond Traditional Market Thinking: What is the Structure of...
Article Perfect Green Markets vrs Dwarf Green Markets: Did We Start ...
Data Did Adam Smith Miss the Chance to State the Goal and Structu...
Stupid questions should not be permitted.The problem with research gate is always the same.
Children often ask stupid questions and they often lead to illuminating answers and laughs. The beauty of the free world children still can ask stupid questions and laugh.
Good day everyone!
Dear Patrik, dwarf markets and dwarf market zones are defined in the text, the terminology; and the graphical representations in one of the articles shared above....I am sharing it below again......Keep in mind Patrik, there can be different types of dwarf markets(eg red dwarf markets, green dwarf markets, sustainability based dwarf markets,,,any market placed below perfect market prices.....
Perfect Green Markets vrs Dwarf Green Markets: Did We Start Trying to Solve the Environmental Crisis in 2012 With the Wrong Green Foot? If Yes, How Can This Situation Be Corrected?
https://www.researchgate.net/publication/305994500_Perfect_Green_Markets_vrs_Dwarf_Green_Markets_Did_We_Start_Trying_to_Solve_the_Environmental_Crisis_in_2012_With_the_Wrong_Green_Foot_If_Yes_How_Can_This_Situation_Be_Corrected
Have a nice day
Article Perfect Green Markets vrs Dwarf Green Markets: Did We Start ...
Good day everyone
I am sharing here this article unpublished and you can use it as food for thoughts:
Is Environmental Externality Management a Correction of Adam Smith’s Model to Make It Environmentally Friendly and Shift it Towards Green Markets or Is It a Distortion on Top of Another Distortion?
https://www.researchgate.net/publication/309463581_Is_Environmental_Externality_Management_a_Correction_of_Adam_Smith%27s_Model_to_Make_It_Environmentally_Friendly_and_Shift_it_Towards_Green_Markets_or_Is_It_a_Distortion_on_Top_of_Another_Distortion
Have a nice day
Article Is Environmental Externality Management a Correction of Adam...
Dear friends, here sharing my most recent article which I trust you may find interesting in terms of food for thoughts:
If Going From Free Markets to Non-Free Markets is the Way to Go: Does This Means the End of Rational Decision Making Thinking or Is This Just a Temporary Block of a Perfect Paradigm Shift to Green Markets?
https://www.researchgate.net/publication/312092336_If_Going_From_Free_Markets_to_Non-Free_Markets_is_the_Way_to_Go_Does_This_Means_the_End_of_Rational_Decision_Making_Thinking_or_Is_This_Just_a_Temporary_Block_of_a_Perfect_Paradigm_Shift_to_Green_Mark
Article If Going From Free Markets to Non-Free Markets is the Way to...
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.461.8373&rep=rep1&type=pdf
https://www.colorado.edu/economics/morey/4545/introductory/marketfailures.pdf
https://web.stanford.edu/group/peec/cgi-bin/docs/policy/research/Market%20Failure%20and%20the%20Structure%20of%20Externalities.pdf
Those interested in green market thinking may find the following article full of food for thoughts
From Traditional Markets to Green Markets: A Look at Markets Under Perfect Green Market Competition
https://www.researchgate.net/publication/330617155_From_Traditional_Markets_to_Green_Markets_A_Look_at_Markets_Under_Perfect_Green_Market_Competition
https://www.researchgate.net/publication/330701187_From_Traditional_Markets_to_Green_Markets_A_Look_at_Markets_Under_Perfect_Green_Market_Competition
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