Neo classical economics

Neo classical economics is compatible with the core concepts of sustainability. Sustainability is a broad term that is difficult to define. However, some scholars have tried to develop definition of the term sustainability. Sustainability is a way of ensuring longevity and support of an activity[1]. Sustainability ensures that there are renewable efforts that support an activity. This allows implementation of strategies that support development. Sustainability help support economic growth of a country. In economics the term sustainability means supporting consumer welfare through time. This is done by maintaining the economic output that is measured by Net National Product. Consumer satisfaction is maintained forever. Neo classical economics focuses on determination of prices, output and income distribution in the market to ensure maximum utility. Neoclassical economics is characterized by efficient allocation of scarce resources[2]. Neoclassical economics is also characterized by emphasis on rationality and utility maximization.  It emphasize on equilibrium. Orthodox economics is represented by neoclassical economics.

There are core pillars of sustainable development. These include environmental, economic and social well-being of people in the current and future generations. This involves ecological sustainability which requires far distribution of scarce resources. Neo-classical economics is compatible with the concepts of sustainability because both focus on equitable distribution of scarce resources[3]. Neo-classical economics represents the 20th century. It is evident that most economies in the world are working towards ensuring equitable distribution of resources. The economies are no longer focusing on one group of people. In the past generation, most men owned means of production because they were educated than women. In the current generation, both men and women have access to education. They both contribute to economic development. Other services such as health, transport and infrastructure are distributed fairly in a neo-classical economics and sustainable economy. Consumers have right of choice and their preferences determine their demand[4].

In a sustainable and neo classical economy, consumers are given rights of production and consumption of goods and services. The government does not have to control everything[5]. This is an effective way of ensuring sustainability. When people have freedom of production, they can utilize their ideas use resources effectively. They run their own businesses that contribute to economic growth. Economic growth is achieved through the taxes that owners of resources contribute to the government. Capitalists ensure that there is competition that helps consumers get variety of products that they demand in the market.

In another instance, neoclassical economics is compatible with sustainability because it is applied in environmental issues. Sustainability ensures that people are responsible and act in a way that makes the world a better place. This involves conservation of the scarce natural resources such as land. Neo classical economics also ensure that natural resources are used efficiently. This ensures efficient and proper use of natural resources[6]. Land is priced and should be used in an efficient manner that contributes to economic growth. For instance, an industry can be built on a land that is not used in other ways. This provides jobs for the current generation. This is also a plan to help future generations. Neoclassical economics ensure profit maximization. This will ensure that they use resources to the maximum to ensure that there are maximized profits. Sustainability on the other hand advocate for economic growth[7]. Economic growth can be achieved when there is maximization of profits. This will ensure that incomes are distributed to people in the current generation. The method of distribution can also be adopted for future generations.

Neo-classical economics ensure social development, a key concept of sustainability. This ensures that strategies are enhanced to ensure that people are socially developed. This is by ensuring access to social services in the economy. Equitable distribution of resources help people have access to social services that lead to improved standards of living. Sustainability ensures improving quality of life[8]. This can be done by ensuring resources are distributed to all. Neo classical economics also ensure there is perfect competition in the market. People have choices and they work hand to improve their social well being. This is characterized by capitalism[9]. The wealthy people may open up businesses create employment opportunities for others. When employment level is high, the economic development can be sustained.  Individuals are able to make decisions with little government interference. People being rational being are able to choose effective means of production. The profits they make help them develop economically and socially. They are able to save their profits for future use. This will ensure sustainability of the current and future generation.

In conclusion, neo classical economics and sustainability are key concepts that ensure economic growth of a country. This involves ensuring sustainable means of production. There is equitable allocation of resources, and no one is discriminated. The government provides services such as free or subsidized education. There is also provision of effective transport and infrastructure. People are also allowed to make economic decisions.

Bibliography

Alvey, James. A Short History of Economics As a Moral Science”. Journal of Markets and

Morality, Vol 2 (1), (1999): 53-73

Daly, Herman. Ecological Economics and Sustainable Development. (New York: Edward Elgar

Publishing , 2007)

Ikerd, John. The Essentials of economic sustainability. (Sterling: Kumarian Press, 2012)

Jackson, Tim. Prosperity without Growth: Economics for a Finite Planet. (New York: Earthscan,

2009)

Mulder, Peter & Bergh, Jeroen. Evolutionary Economic Theories of Sustainable Development

(2001): Vol.32. 110-134

Pezzey, John & Toman, Michael. The Economics of Sustainability: A Review of Journals

Articles (2002), 1-36

Soderbaum, Peter. Understanding Sustainability Economics: Towards Pluralism in Economics.

(New York: EarthScan, 2008

Tietenberg, T. Valuing the Environment: Concepts in Environmental Economics and Policy.

(Boston: Pearson Addison Wesley, 2007)

Quiggin, John. Zombie Economics: How Dead Ideas Still Walk Among Us. (New York:

Princeton University Press, 2010)

[1] Herman Daly. Ecological Economics and Sustainable Development.( New York: Edward Elgar

Publishing , 2007), 38

[2]John, Ikerd. The Essentials of economic sustainability. (Sterling: Kumarian Press, 2012), 35

[3] Peter ,Soderbaum. Understanding Sustainability Economics: Towards Pluralism in Economics.

(New York: EarthScan, 2008), 13

[4]  Peter ,Mulder & Jeroen, Bergh. Evolutionary Economic Theories of Sustainable

Development (2001): Vol.32. 110-134

[5] James ,Alvey. A Short History of Economics As a Moral Science”. Journal of Markets and

Morality, Vol 2 (1), (1999): 53-73

 

[6] John ,Quiggin. Zombie Economics: How Dead Ideas Still Walk Among Us. (New York:

Princeton University Press, 2010), 177

[7] John ,Pezzey & Michael ,Toman. The Economics of Sustainability: A Review of Journals

Articles (2002), 1-36

[8] Tim, Jackson. Prosperity without Growth: Economics for a Finite Planet. (New York:

Earthscan, 2009)

[9] Tietenberg, T. Valuing the Environment: Concepts in Environmental Economics and Policy.

(Boston: Pearson Addison Wesley, 2007)