So, this is a critique of this book's 10th edition. Specifically, we will be talking about the chapter titled "Ecological Economics" and the problems with that. Now, maybe the authors fixed this with their later editions, but this one is just terrible. Let's get broken.

Right out of the gate, we have this...

"This statement [a quote from The Wealth of Nations] often is taken as justification for the capitalist system, in which market competition between willing sellers and buyers is believed to bring about the greatest efficiency of resource use, the optimum balance between price and quality, and to be critical for preserving individual liberty. As we will discuss later in this chapter, however, laissez faire market systems rarely incorporate factors such as social or environmental costs."

Does it though? Coase (1960) shows that a system of well defined property rights with no transaction costs eliminates any externalities. Any pure system of Laissez Faire (if such a thing exists) simply wouldn't have this problem. Therefore, shouldn't we be trying to define property rights as well as we can before anything else? Yes, but Cunningham & Cunningham don't talk about this; they even go as far as to argue that well defined property rights do not actually solve the Tragedy of the Commons, but then cite examples of well defined property rights to help their case. More on that later.

"In real life, prices are not determined strictly by total supply and demand as much as what economists called marginal costs and benefits. Sellers ask themselves 'What would it cost to produce one or more unit of this product or service? Suppose I add one more worker or buy an extra supply of raw materials, how much profit could I make?' Buyers ask themselves similar questions 'How much would I benefit and what would it cost if I bought one more widget?" If both buyer and seller find the marginal costs and benefits attractive, a sale is made."

Oh. My. God.

Did it ever occur to the authors that MB and MC are the determinants of the Supply and Demand curves? If, as the authors suggest, MB and MC are separate from these curves, what in the actual fuck is determining S&D? Animal Spirits? The whole damn point of the Supply and Demand curves is to show where agents believe that MB > MC. Christ almighty, this is dumb. Even if one tries to read this as a comment on markup pricing in the real world, it still makes no damn sense.

But wait, there's more!

Toward the end of the nineteenth century, the field of economics divided into two broad camps. Political Economy continued the tradition of moral philosophy and concerned itself with social structures, value systems, and relationships amongst the classes... The other camp, called Neoclassical Economics, adapted principles of modern science to economic analysis. The late Milton Friedman was a leader in free-market, neoclassical economics. This approach strives to be mathematically rigorous, noncontexual, abstract, and predictive.

This continues into the authors saying that resources don't matter in the Neoclassical approach and that growth is seen as good (they don't think that's true).

So, this is terrible.

Firstly, this has never been a thing and still isn't. Currently, as Michael Woodford covers here, Macroeconomics has converged into a new synthesis. Even before that, economics wasn't "Neoclassical" versus "Political Economy". Political Economy is one of two things; legitimate work on the interaction of political elements with the economy that overlaps with Public Economics or weird bullshit from people who shouldn't be allowed to interact with the outside world.

Secondly, if we define "Neoclassical Economics" in the same way that the book does, then Milton Friedman shouldn't be called "a leader" of it (even if such a thing existed). Milton Friedman didn't really use complex, mathematical, general equilibrium models like that of Lucas and (with the exception of his work on the consumption function) he didn't even work much with the massive econometric models of the Neoclassical synthesis. His Monetary History just interpreted statistics, unlike the other work of the day. He still saw room for private sector failure; just look at his debate at the end of episode 2 of Free to Choose, where he mentions that there is some room for government to correct errors (yes, that is the Donald Rumsfeld in that debate).

"Classical and neoclassical economics have usually focused on human resources, such as buildings, roads or labor. Natural systems are essential for economic productivity; rivers absorb waste-water, bacteria decompose waste, and winds carry away smoke that would otherwise debilitate workers, but classical and neoclassical economics treat these services as external to the costs of production... these have been external costs, or costs outside the accounting system. Internal costs, in contrast, are expenses considered to be the normal cost of doing business."

How cute, they think they invented externalities. No one tell them that Pigou, who Keynes refers to in the General Theory as a classical economist, beat them to the punch. Seriously, they don't even give credit to him for the idea. They just pull it out of thin air and pretend that its the latest in economic theory. Not only is this bad economics, it even borders on bad citation.

Now, there's a really long and shitty bit on the Tragedy of the Commons. I don't feel like typing out the whole thing, so I'll just type out the worst bits and just summarize the rest.

Hardin [in the article "The Tragedy of the Commons"] concluded that the only solution would be either to give coercive power to the government or to privatize the resource. Hardin intended this dilemma... to warn about human overpopulation and resource availability... What Hardin was really describing, however, was an open access system in which there are no rules to manage resource use. In fact, many communal resources have been successfully managed for centuries by cooperative arrangements among users... Some examples include [lots of examples that actually use cap-and-trade style systems that get ignored here]... rather than being the only workable solution to problems in common pool resources, privatization and increasing external costs often prove to be disastrous.

Oh dear.

Firstly, the examples the authors gave were areas where privatization happened; they adopted systems where private parties bought and sold permits that granted limited access to previously open resources. This falls exactly under the authors prescription for areas like this, but they just ignore this and continue to argue against privatization. Never mind that its proven to help in a lot of cases.

There is even more, but I've covered enough for now. I turned the page and saw a graph of GDP compared to the Human Development Index and I just gave up. If you want to read some actually decent stuff on this topic that isn't hard to read, try Free Market Enviormentalism.