Six economic myths that wellbeing economies seek to address

Denver (US), Jun 5 (360info) The failures of free market fundamentalism and neoliberalism are based on a series of flawed economic assumptions. There is another way.

Free market fundamentalism is failing us ecologically, economically, socially, and politically.

Free markets do not clean up oil spills, address climate change, or create public goods like libraries, lighthouses, and weather satellites. Rather this is recognised as the remit of government.

But, countries around the world are experiencing dangerous levels of government failure in these areas due to the conflation of an economic system capitalism with a system of governance democracy that is unworkable.

Neoliberalism is the cause of this tragedy.

The academic discipline of economics that is used to promote neoliberalism, embraces a flawed world view loaded with false assumptions and is built on theories that fail to be corroborated by real world empirical evidence.

The guiding principle with respect to the economy should be one of creating a wellbeing economy in service to life rather than increasing GDP.

A wellbeing economy recognises that the economy is embedded in society and the rest of nature, and that true freedom and success depend on creating a world where we all prosper and flourish.

Here are six examples where mainstream economic theory gets it wrong.

Increasing efficiency might lead to increasing consumption of resources
Known as the Jevons paradox after economist William Stanley Jevons, who observed in 1865 that increasing efficiency in coal use did not correspond to a diminished consumption of coal.

Instead, the opposite was true. Today, this is also referred to as the rebound effect.

A more modern example is global carbon dioxide emissions. Despite the carbon dioxide emitted per unit of energy use decreasing from 1960 to 2013, total emissions of carbon dioxide and emissions per capita have increased over the same period.