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How the shift from traditional markets to green markets would have looked like had the 1987 Brundtland Commission recommended then an environmental sustainability fix?, Figure 2
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Abstract
It can be said that the traditional market is a free market that brings together traditional producers(K) and traditional consumers(L) under the assumption of full social and environmental externality neutrality. And this create a circular traditional economy illusion, the idea that production activity can take without generating producti...
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Citations
... However, instead of moving towards perfect green market thinking to fully fix the environmental sustainability problem highlighted in 1987(WCED 1987) development stakeholders concerned about environmental impacts have moved towards patching the problem through externality management frameworks instead. How green markets would have looked like if the World Commission on Environment and Development(WCED) would have recommended a full fix has been recently highlighted (Muñoz 2020c) as well as the idea that perfect markets shift to higher level perfect markets when fully fixed such as the shift from the perfect traditional market to the perfect green market (Muñoz 2021b). ...
Abstract
When markets are created, sustainability gap pressures associated to cost externalization dynamics embedded in them are also created. At the beginning, sustainability gap pressures are minimal, which seems to be one of the reasons why Adam Smith provided us with a traditional perfect market model in 1776 that works under externality neutrality assumptions; and therefore, there are no limits to economic growth. As the market expands its related sustainability gaps expands too, and it begins to affect the sustainability of that market. When markets have expanded to a point that their associated sustainability gaps may bring them down, then dealing with those sustainability gaps pressures becomes binding too in order for those paradigms to persist or avoid collapse. Now business as usual is no longer possible as if business as usual continues the market will collapse as the externalities previously assumed irrelevant are relevant. Moreover, the inability to fix or patch or the unwillingness to fix or patch binding sustainability gaps affecting the market can also brings along other paradigm evolution pressures such as flips towards authoritarianism or flips towards inverse opposite competing development paradigms, as then these paradigm evolution routes become more likely to take place as ways of addressing the same sustainability issues. Therefore, in response to binding sustainability gap pressures the market can subjected to calls for action by stakeholders such as the following: a) calls for implementing full cost internalization policies to fix fully the sustainability gap problem affecting the model; b) calls for implementing externality management programs to patch the sustainability gap problem; c) calls for flipping the model towards an inversely opposite market model, perfectly or imperfectly, to deal with the sustainability gap problem; and d) calls for flipping to a dictatorship based market model as a better way to address the same sustainability gap problem.
Understanding which response route markets such as the traditional market, the socialism market, the environmental market, the red socialism market and so on would take when dealing with their associated sustainability gap pressures is important, but this understanding is currently unclear. Hence, there is a need to develop a general model that captures all the possible response routes mentioned above that any market can take when facing binding sustainability gap pressures, which raises the question: How can a general paradigm evolution model aimed at capturing all possible market evolution routes in response to binding sustainability gap pressures be stated step by step?. Among the goals of this paper is to provide an answer to that question.
Key concepts
Sustainability, perfect markets, imperfect markets, sustainability markets, externality management markets, sustainability gap, paradigm fix, paradigm patch, paradigm shift, perfect paradigm flip, imperfect paradigm flip, dominant paradigm
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Resúmen
Cuando se crean mercados, también se crean presiones de brecha de sostenibilidad asociadas a las dinámicas de externalización de costos incrustadas en ellos. Al principio, las presiones de la brecha de sostenibilidad son mínimas, lo que parece ser una de las razones por las que Adam Smith nos proporcionó un modelo de mercado perfecto tradicional en 1776 que funciona bajo supuestos de neutralidad de externalidades; y por lo tanto, no hay límites para el crecimiento económico. A medida que el mercado se expande, sus brechas de sostenibilidad asociadas también se expanden y comienzan a afectar la sostenibilidad de ese mercado. Cuando los mercados se han expandido hasta un punto en que las brechas de sostenibilidad asociadas a ellos los pueden destruir, entonces la necesidad enfrentar esas brechas de sostenibilidad se vuelve relevante para que esos paradigmas persistan o eviten el colapso. Ahora, el negocio como de costumbre ya no es posible, ya que si el negocio continúa como de costumbre, el mercado colapsará ya que las externalidades que antes se asumían como irrelevantes son relevantes. Además, la incapacidad corregir o parchear o la falta de voluntad para corregir o parchear las brechas de sostenibilidad relevantes que afectan al mercado también puede traer consigo otras presiones de evolución de paradigmas, como giros hacia el autoritarismo o giros hacia paradigmas de desarrollo inversamente opuestos, ya que estas rutas de evolución de paradigmas se hacen más probables si se miran come mejores alternativas para abordar los mismos problemas de sostenibilidad. Por lo tanto, en respuesta a las presiones relevantes de la brecha de sostenibilidad, el mercado puede estar sujeto a llamadas de acción por parte de las partidos o grupos sociales interesados, como las siguientes: a) llamadas a implementar políticas de internalización de costos totales para solucionar completamente el problema de la brecha de sostenibilidad que afecta al modelo; b) pedidos de la implementación de programas de gestión de externalidades para solucionar el problema de la brecha de sostenibilidad; c) llamadas de un cambio de modelo hacia un modelo de mercado inversamente opuesto, perfecto o imperfecto, para abordar el problema de la brecha de sostenibilidad; y d) llamadas a cambiar a un modelo de mercado basado en la dictadura como una mejor manera de abordar el mismo problema de brecha de sostenibilidad.
Es importante comprender qué ruta de respuesta tomarían los mercados, como el mercado tradicional, el mercado del socialismo, el mercado ambiental, el mercado del socialismo rojo, etc., cuando enfrentan las presiones ligadas a la brecha de sostenibilidad, pero esta comprensión no está clara actualmente. Por lo tanto, existe la necesidad de conceptualizar un modelo general que capture todas las posibles rutas de respuesta mencionadas anteriormente que cualquier mercado puede tomar al enfrentar presiones relevantes de brecha de sostenibilidad, lo que plantea la pregunta: ¿Cómo se puede conceptualizar paso a paso un modelo de evolución de paradigma general destinado a capturar todas las posibles rutas de evolución del mercado en respuesta a las presiones de brechas de sostenibilidad? Uno de los objetivos de este documento es dar una respuesta a esa pregunta.
... In other words, if we analyze an environmental externality management point in that gap between the two production frontiers, we can see that it falls outside the green production frontier and it falls below the pareto optimal consumption and production point "e"; therefore, it is a less preferred bundle than point "e", but production and consumption takes place or would take place there at the outlier point anyway as it is or it would be an externally set bundle under environmental externality management market forces. The existence of this environmental sustainability gap affecting the sustainability of the traditional market and the need to fix it (Muñoz 2020b), not to patch it (Muñoz 2020c) has been pointed out recently. ...
Pareto optimality in perfect traditional markets can be affected by cost internalization and by government intervention. For example, environmental cost internalization shifts pareto optimality in perfect traditional markets towards green pareto optimality in perfect green markets while government intervention in environmental markets transforms pareto optimality in traditional markets into environmental externality management markets, which are not perfect markets. Pareto optimality and green pareto optimality are linked by an environmental sustainability gap, which can be seen as an environmental externality management market zone as government intervention can create an environmental externality market at any point within that gap. If we analyze an environmental externality management point in that gap, we can see that it falls outside the green production frontier and it falls below the pareto optimal consumption and production point; therefore, it is a less preferred bundle, but production and consumption takes place there anyway. Hence, there is a link between green pareto optimality, pareto optimality, and environmental externality management markets and its structure through the environmental sustainability gap, but to my knowledge nothing is written about how the environmental sustainability gap is linked to optimal and non-optimal markets such as pareto optimal markets, green pareto optimal markets and environmental externality management based markets. Therefore, there is a need to understand the nature of this environmental externality link so as to be able to address questions such as Are environmental externality management based production and consumption bundles inconsistent with green pareto efficiency and with pareto efficiency principles at the same time? If yes, why? What is the structure of the environmental externality management market? Among the goals of this paper is to provide answers to these questions.
Resúmen
La optimalidad de Pareto en los mercados tradicionales perfectos puede verse afectada por la internalización de costos y por la intervención del gobierno. Por ejemplo, la internalización del costo ambiental cambia la optimalidad de pareto en mercados tradicionales perfectos hacia la optimalidad de pareto verde en mercados verdes perfectos, mientras que la intervención del gobierno en los mercados ambientales transforma la optimalidad de pareto en los mercados tradicionales en mercados de manejo de externalidades ambientales, los cuales no son mercados perfectos. El óptimo de Pareto tradicional y el óptimo de pareto verde están vinculados por una brecha de sostenibilidad ambiental, que puede verse como una zona de mercado de gestión de externalidades ambientales, ya que la intervención del gobierno puede crear un mercado de externalidades ambientales en cualquier punto dentro de esa zona. Si analizamos un punto de manejo de externalidades ambientales en esa zona, podemos ver que cae fuera de la frontera de producción verde y cae por debajo del punto óptimo de consumo y producción del Pareto tradicional; por lo tanto, es un paquete menos preferido, pero la producción y el consumo tienen lugar allí de todos modos. Por lo tanto, existe un vínculo entre la optimalidad de pareto verde, la optimalidad de pareto tradicional, los mercados de gestión ambiental y su estructura a través de la brecha de sostenibilidad ambiental, pero que yo sepa, no hay nada escrito sobre cómo la brecha de sostenibilidad ambiental está vinculada a mercados óptimos y mercados no óptimos, como los mercados óptimos de pareto tradicional, los mercados óptimos de pareto verde y los mercados basados en la gestión de las externalidades ambientales. Por lo tanto, es necesario comprender la naturaleza de este vínculo de externalidad ambiental para poder abordar preguntas como: ¿Son los paquetes de producción y consumo basados en la gestión de las externalidades ambientales inconsistentes con la eficiencia de pareto verde y con los principios de eficiencia de pareto tradicional al mismo tiempo? ¿Si es así, por qué? ¿Cuál es la estructura del mercado de gestión de externalidades ambientales? Entre los objetivos de este documento esta proporcionar respuestas a estas preguntas.
... There is an environmentac externacity probcem affecting the sustainabicity of the traditionac market that arises when we must account for the environmentac externacities associated with business as usuac, and the structure of this sustainabicity probcem has been recentcy shared (Muñoz 2020) as described in Figure 1 becow: ...
There is an environmental externality problem affecting the sustainability of the traditional market. This sustainability problem has a root cause and it has consequences. Dealing with the root cause requires an environmental sustainability fix, which corrects the cost distortion while taking hold of the consequences. A move far away from business as usual and within perfect green market thinking. Dealing with the consequences requires a sustainable development patch that addresses some of the consequences while leaving the root cause of the environmental externality generation problem untouched. A move within business as usual, but with an environmental face that falls outside perfect green market thinking. The 2012 United Nations Conference on Sustainable development Rio + 20 apparently had chosen the environmental sustainability fix as the way to go in the face of an environmental sustainability problem, but somehow today we see the world using sustainable development tools like environmental externality management. The reasons why before and soon after 2012 United Nations Conference on Sustainable Development Rio + 20 we were pro green markets and pro green economies and pro green growth, and then soon after we are pro non-green market solutions is beyond this paper. Understanding the nature of the green market fix to the environmental externality problem had they continued with it and understanding the nature of environmental externality management market patch being used right now are relevant to this paper and to the academic and policy community as a whole. The discussion above raises the questions; can we solve an environmental sustainability problem by managing the consequences of that problem? If not, why not? Among the goals of this paper is to provide an answer to those questions analytically and graphically.
Resúmen
Existe un problema de externalidad ambiental que afecta la sostenibilidad del mercado tradicional. Este problema de sostenibilidad tiene una causa raíz y tiene consecuencias. Atacando la causa raíz requiere una solución de sostenibilidad ambiental, la cual corrige la distorsión de costos al mismo tiempo que toma control de las consecuencias. Una movida lejos del pensamiento de los negocios usuales y dentro del pensamiento perfecto del mercado verde. Enfrentar las consecuencias requiere un parche de desarrollo sostenible que aborde algunas de las consecuencias mientras deja intacta la causa raíz del problema de generación de externalidad ambiental. Un movimiento dentro de negocios como de costumbre, pero con una cara ambiental que cae fuera del pensamiento perfecto del mercado verde. La Conferencia de las Naciones Unidas sobre el Desarrollo Sostenible de 2012 Río + 20 aparentemente había elegido una corrección de sostenibilidad ambiental como solución a un problema de sostenibilidad ambiental, pero de alguna manera han cambiado de dirección y hoy vemos a un mundo usando herramientas de desarrollo sostenible como el manejo de externalidad ambiental. Las razones por las cuales antes y poco después de la Conferencia de las Naciones Unidas sobre el Desarrollo Sostenible de 2012 Río + 20 fuimos pro-mercados verdes, pro-economías verdes, y pro-crecimiento verde, y luego, poco después de la conferencia nos fuimos pro-no mercados verdes, está más allá del foco de este documento. Entender la naturaleza de la corrección de mercado verde al problema de externalidad ambiental si hubieran continuado con ella y entender la naturaleza del parche de mercado de manejo de externalidad ambiental que se está utilizando en este momento son aspectos relevantes para este documento y para la comunidad académica y política en general. La discusión anterior plantea las preguntas; ¿Podemos resolver un problema de sostenibilidad ambiental atreves del manejo de las consecuencias de ese problema? ¿Y si no, porque no? Entre los objetivos de este documento está proporcionar una respuesta a esas preguntas analíticamente y gráficamente.
... The discussion above raises some interesting questions depending of the type of fix that is recommended. With respect to the first possibility, the sustainability fix recommendation; and with the second possibility, an environmental sustainability fix recommendation, the answers of how they would have looked like were recently pointed out in detail graphically and analytically (Muñoz 2020b;Muñoz 2020c). With respect to the third possibility, the question is how the shift from the traditional market model of Adam Smith towards red markets would have looked like had the 1987 Brundtland Commission recommended then a social sustainability fix? ...
It can be said that the traditional market is a free market that brings together traditional producers(K) and traditional consumers(L) under the assumption of full social and environmental externality neutrality. And this create a circular traditional economy illusion, the idea that production activity can take without generating production and consumption externalities. The fact that the social and environmental externalities associated with the traditional market are real leads to a disconnect between social and environmental externalities and traditional market pricing. In order to correct this disconnect, the 1987 Brundtland Commission recommended the use of sustainable development thinking, which was the wrong recommendation since the externality problem affecting the traditional market was and is a sustainability issue, not a sustainable development issue. There were 3 possible corrections to this sustainability problem: i) a full social and environmental externality correction or sustainability fix; ii) a partial correction through green markets or an environmental sustainability fix; and iii) a partial correction through red markets or a social sustainability fix. The discussion above raises some interesting questions depending of the type of fix that is recommended. With respect to the first possibility, the sustainability fix recommendation; and with the second possibility, an environmental sustainability fix recommendation, the answers of how they would have looked like were recently pointed out in detail graphically and analytically(Muñoz 2020b; Muñoz 2020c). With respect to the third possibility, the question is how the shift from the traditional market model of Adam Smith towards red markets would have looked like had the 1987 Brundtland Commission recommended then a social sustainability fix? The main goal of this paper is to provide an answer to this question.
Perfect green market theory stipulates that when we correct the traditional market pricing mechanism of the traditional market to reflect environmental externalities we shift it to a green market model as we are then closing the environmental sustainability gap, creating in the process a model with a closed circular green economy. As the traditional market price shifts to the green market price we shift from a model with broken circular economy under binding environmental externalities to a model with unbroken circular economy. In other words, the price shift goes one to one with changes in circular economy structures. Hence, there is a need to understand the link between the nature of market prices and the nature of related circular economies when environmental externality accountings becomes binding. For example, what is the nature of the circular traditional economy under no environmental externality neutrality assumption? What is nature of the circular green market economy under social externality neutrality assumption? What is different between those two circular economies in terms of environmental sustainability gaps? Among the goals of this paper is to give answers to these questions.
Resúmen
La teoría del mercado verde perfecto estipula que cuando corregimos el mecanismo tradicional de precios del mercado tradicional para reflejar así las externalidades ambientales lo cambiamos a un modelo de mercado verde, ya que la corrección elimina la brecha de sostenibilidad ambiental, creando en el proceso un modelo de economía verde circular cerrado. Cuando el precio del mercado tradicional cambia al precio del mercado verde pasamos de un modelo con economía circular rota bajo externalidades ambientales asociadas a un modelo con economía circular ininterrumpida. En otras palabras, el cambio de precios va uno a uno con los cambios en las estructuras de las economías circulares. Por lo tanto, es necesario comprender el vínculo entre la naturaleza de los precios de mercado y la naturaleza de las economías circulares relacionadas cuando la contabilidad de las externalidades ambientales se vuelve relevante. Por ejemplo, ¿cuál es la naturaleza de la economía circular tradicional bajo ningún supuesto de neutralidad de externalidades ambientales? ¿Cuál es la naturaleza de la economía de mercado verde circular bajo el supuesto de neutralidad de las externalidades sociales? ¿Qué es diferente entre esas dos economías circulares en términos de brechas de sostenibilidad ambiental? Entre los objetivos de este trabajo se encuentra dar respuesta a estas preguntas.
There is an environmental sustainability gap embedded in the circular traditional market economy illusion, which comes to life when accounting for environmental externalities in the traditional market becomes binding. Dealing with this environmental sustainability gap was at the heart of the 2012 United Nations Conference on Sustainable Development Rio +20. The 2012 UNCSD conference had two choices at that time to address that environmental sustainability gap: a) paradigm fixing through green markets to end the disconnect between the traditional market price in the traditional market and the associated environmental externality cost or b) paradigm patching through environmental externality management based markets aimed at managing the environmental sustainability gap. In other words we can address the environmental sustainability gap issue in two ways: a) we can fix the environmental sustainability gap by addressing the root cause of the externality problem, the disconnect between the traditional price in the traditional market and the relevant environmental externality; or b) we can patch the environmental sustainability gap by managing the consequences of the traditional price-environmental cost disconnection problem. Notice, that paradigm fixing through green markets leads to something beyond business as usual as the Brundtland Commission had called for in 1987 while paradigm patching leads simply to providing an environmental cover to business as usual.
When the 2012 UNCSD Rio + 20 conference called for the world to go green markets, green economies and green growth it seemed like it had chosen the option of fixing the traditional market model in a way that flips it towards perfect circular green market thinking to fully close that environmental sustainability gap, and go that way beyond business as usual. That meant that the 2012 UNCSD Rio + 20 conference had seen a sustainability problem to be fixed through environmental sustainability means or green markets, it did not see a sustainable development issue as the Brundtland commission did in 1987. Hence, the 2012 UNCSD Rio + 20 conference called for the use of perfect green market thinking and green economy thinking to address the environmental sustainability gap affecting the sustainability of the traditional market, a sustainability issue. However, since that 2012 UNCSD Rio + 20 conference the world community has rapidly moved towards the option of patching the business as usual model through the use of circular environmental externality management based markets. In other words, the world community has slowly moved away from green market solutions to green market problems since 2012 and it has moved rapidly towards the use of non-green market solutions to green market problems, a clear violation of the theory-practice consistency principle, which requires the theory to match the practice or vis a vis.
At this moment it is not clear what the 2012 United Nations Conference on Sustainable Development Rio +20 thinking was in terms of what the nature of both the circular green economy and the circular environmental externality management based economy is to compare them and to determine that way which one of them is the proper solution to the environmental sustainability gap problem or to justify its use. The discussion above raises important questions such as how the structure of the circular green economy would have looked like had Rio + 20 conference envisioned one? How the structure of the circular environmental externality management based economy would have looked like had Rio +20 conference proposed one? Which are the main differences between the circular green economy and the circular environmental management based economy and what are the market implications of this? Among the goals of this paper is to provide answers to these questions.
Resúmen
Existe una fisura de sostenibilidad ambiental incrustada en la ilusión circular de la economía de mercado tradicional, que cobra vida cuando la inclusión de las externalidades ambientales en el mercado tradicional se vuelve indispensable. Enfrentar esta fisura de sostenibilidad ambiental en forma directa fue el corazón de la Conferencia de las Naciones Unidas sobre el Desarrollo Sostenible 2012 Río +20. La conferencia de la UNCSD de 2012 tenía dos opciones en ese momento para abordar esa fisura de sostenibilidad ambiental: a) corrección de paradigma a través de mercados verdes para poner fin a la desconexión entre el precio de mercado tradicional en el mercado tradicional y el asociado costo de externalidad ambiental o b) parcheo de paradigma a través de mercados basados en el manejo de externalidades ambientales dirigidos a gestionar la fisura de sostenibilidad ambiental. En otras palabras, podemos abordar el problema de la fisura de sostenibilidad ambiental de dos maneras: a) podemos solucionar la fisura de sostenibilidad ambiental atacando la causa raíz del problema de externalidad, la desconexión entre el precio tradicional en el mercado tradicional y la externalidad ambiental relevante o b) podemos parchar la fisura de sostenibilidad ambiental mediante el manejo de las consecuencias del problema de desconexión precio de mercado tradicional-costo de externalidad ambiental. Tenga en cuenta que la corrección de paradigma a través de los mercados verdes conduce a algo más allá del pensamiento de las economías tradicionales, como lo había pedido la Comisión Brundtland en 1987, mientras que el parcheo de paradigma conduce simplemente a proporcionar una cobertura ambiental a las economías tradicionales.
Cuando la conferencia UNCSD Rio + 20 de 2012 convocó al mundo a ir a mercados verdes, economías verdes y crecimiento verde, parecía que había elegido la opción de corregir el modelo de mercado tradicional de una manera que lo voltee hacia un pensamiento de mercado verde circular perfecto y así completamente cerrar esa la fisura de sostenibilidad ambiental e ir más allá de las economías como de costumbre. Eso significaba que la conferencia UNCSD Rio + 20 de 2012 había visto un problema de sostenibilidad que se solucionaría a través de medios de sostenibilidad ambiental o mercados verdes, no vio un problema de desarrollo sostenible como lo hizo la comisión Brundtland en 1987. Por lo tanto, la UNCSD Rio + 20 2012 conferencia pidió el uso del pensamiento perfecto del mercado verde y el pensamiento de la economía verde para abordar la fisura de sostenibilidad ambiental que afecta la sostenibilidad del mercado tradicional, un problema de sostenibilidad. Sin embargo, desde esa conferencia UNCSD Rio + 20 de 2012, la comunidad mundial se ha movido rápidamente hacia la opción de parchear el modelo de marcado tradicional mediante el uso de mercados circulares basados en el manejo de las externalidades ambientales. En otras palabras, la comunidad mundial se ha alejado lentamente de las soluciones del mercado verde a los problemas del mercado verde desde 2012 y se ha movido rápidamente hacia el uso mercados que no son verdes para solucionar problemas del mercado verde, una clara violación del principio de consistencia teoría-práctica, que requiere que la teoría coincida con la práctica o vis a vis.
En este momento, no está claro qué pensaba la Conferencia de las Naciones Unidas sobre el Desarrollo Sostenible de Río +20 de 2012 en términos de cuál es la naturaleza de la economía verde circular y de la economía basada en la gestión de externalidad ambiental circular para compararlos y determinar de esa manera cuál de ellos es la solución adecuada al problema de la fisura de sostenibilidad ambiental o para justificar su uso. La discusión anterior plantea preguntas importantes como ¿cómo se habría visto la estructura de la economía verde circular si la conferencia de Río + 20 hubiera previsto una? ¿Cómo se habría visto la estructura de la economía basada en la gestión de la externalidad ambiental circular si la conferencia de Río +20 hubiera propuesto una? ¿Cuáles son las principales diferencias entre la economía verde circular y la economía basada en la gestión ambiental circular y cuáles son las implicaciones de mercado de esto? Entre los objetivos de este documento está proporcionar respuestas a estas preguntas.
