Economy and ecology

Econ-o-my: noun [from Greek oikonomos, household manager] (1) archaic: the management of household affairs, especially expenses (2) thrifty and efficient use of resources; frugality in expenditures (3) the structure of economic life in an area or a period; an economic system.

Ecol-o-gy: noun [from German ökologie, study of habitat] (1) a branch of science concerned with the interrelationship of organisms and their environment (2) the totality or pattern of relations between organisms and their environment.

"Economy" and "ecology": the two words share a common etymological root just as the Miriam Webster Dictionary’s definitions suggest, but why do they point to perspectives that rarely seem to connect?

Economy speaks of "use" where ecology harbours "relationships".

Ecology evokes thoughts of energy, diverse re-creation, green landscapes, and research done in lightweight hiking boots, whereas economy tends to get associated with money, mass production, grey industry, and a dismal science conducted in polished black shoes.

These are certainly caricatures, and few would deny that there is a lot of border traffic under names like "human ecology" and "environmental economics." Yet the dichotomy persists. Even the conventional histories of these two keywords make them look distinct.

In English, the word "economy" is usually traced to a sense of household management from the 16th century. It is then routed through a literature called political economy in the 18th century (Adam Smith, Malthus, etc.), later to be associated with the new field of economics.

Most histories trace the word "ecology" to 1866, when a biologist named Ernst Haeckel coined the word ökologie in German. It was translated as "ecology" in the 1870s, but outside academic contexts, the word remained uncommon in English until the 1960s.

If we accept these histories, the reason for the conceptual differences between the words would seem straightforward. Conceptually, "economy" draws from older traditions and contexts whereas "ecology" shows up as the clever new challenger.

That, however, is a very selective history. In effect, it obscures how thoroughly entangled the conceptual development of these two words has been. The entanglement is worth elaboration. We wonder about the health of the economy, experts measure the growth of the economy, and we hear political candidates complain about the economy.

In the 1930s however, "the economy" was a new concept. Adam Smith never used it. Through the 19th century press, "economy" was a measure of virtue, a quality that could be exercised. The word was synonymous with industriousness, efficiency, or frugality. It was only in the 20th century that a definite article began to appear regularly in front of the word: the economy of a nation, as if each country had a certain human ecosystem all to itself.

How could we trace this conceptual development? Start perhaps with Benjamin Franklin. In 1751, he wrote an essay titled Observations concerning the Increase of Mankind, Peopling of Countries, & c. He argued that the chance to "subsist on free land" in America resulted in larger families and much faster rural population growth than what cities and the "settled countries" of Europe allowed. The essay became his only analysis of population, and it is not coincidental that it came just two years after he began to correspond with Carl Linnaeus.

If the Swedish botanist influenced Franklin’s thoughts about the “planting” and growth of a colonial population, his essay would soon influence Thomas Malthus, who in 1798 wrote about the overall limits to human population growth. It would then take the dark visions of Malthus to inspire Charles Darwin’s theory of natural selection. Thus, before they were labelled as such, ecological and economic thought intermixed.

Remarkably, the term "economy" is missing from Franklin’s thirteen page essay. Instead we see other vocabularies – employment, labour, subsistence, diligence, frugality, industry – that Franklin used to diagnose rapid population growth in rural America.

For him, it was not unhealthy city conditions nor country promiscuity, but personal industry, frugality, and free land that caused the rural population growth rates to be higher, because these things allowed American settlers to choose to support larger families.

Such calculative reasoning then got harnessed to an educational project in the 1830s, when numerous writers began to compose books for a “plainer class” of readers, books that drew on principles outlined by Malthus and Adam Smith and, in simpler terms, extolled the virtues of an industrious attitude and simple economy in one’s everyday conduct. "Economy" thereby became a household word, and by the time that the first textbooks in economics per se started to appear in the 1890s, their primary emphasis was marginal utility analysis; that is, how first-year college students could make the most from their efforts and resources.

The textbooks said very little about "the economy", that ubiquitous abstraction and obsession of the late 20th century. While there were 19th century precursors, the conceptual development of "the economy" came forward at the beginning of the 20th century.

Two changes were instrumental. First were changes in the field of economics at the start of the century. Conventional economists were smitten by Darwin’s ideas of competition, applying it to markets and business. But a number of critical economists looked instead to the new science of ecology for inspiration.

Their leading thinker was Thorstein Veblen. Based at Chicago, Veblen began his career with a claim in 1898 that economics should be "an evolutionary science". He believed economists should account for "the sequence of change in the methods of doing things" as part of "an unfolding process". His premise was that "all economic change is a change in the economic community, a change in the community’s methods of turning material things to account. The change is always in the last resort a change in habits of thought."

Prevalent habits of thought and action were what he termed "economic institutions". One such institution is the frame of mind that understands every encounter as part of a competitive battle.

Veblen suggested that, if economics were to be an evolutionary science, it should not launch its analysis from that particular institution. Like the new ecologists, economists should ask how these institutions change over time so as to create novel forms of association in a community.

With that, some economists started to think in terms of the evolving structure of relationships in the countries where they worked, a totality that Veblen had called "the economic community".

Along with other developments in the field, institutional economics offered a framework for analysis, but this was hardly what propelled the widespread adoption of the concept of the national economy. That resulted from another change: the collapse of colonial empires into "independent" nations in the 20th century.

It seemed of little use, for instance, to write about a separate Irish or Iraqi economy when both were part of the British Empire. But as issues of national autonomy and independence became pressing, economists began to think about how the flow of money and goods could be measured in each separate new country: Iceland, India, Israel.

At first they used awkward phrases like "the general economics of a country" for what we would now simply call the national economy.

As economists struggled with language and methods of analysis for these new entities, the 1929 stock market crash and worries about unemployment brought their new measures of a total "national income" into popular media. The concept of a national economy thus gained currency, often abbreviated in political sound-bites: the economy was out of sorts. So as an integrated system in the dictionary’s last sense of the word, "economy" is a recent invention. Not so old, maybe not so outdated.

It emerged at the same time that American and British biologists began to explore the dynamics of what they called "plant societies" using a new title, "ecology". These interdependent and dynamic communities of vegetation were first described as a single living organism, later as a system of energy flows. But one voice led in another direction.

At Chicago in 1895, Henry Cowles initiated a study of "plant sociology". Where others ecologists soon saw dynamic plant societies driven by competition, Veblen’s colleague saw daring experiments in cooperation and adaptation, experiments that built new associations and reciprocal relationships between plants. Perhaps this would also make for a better vision of the economy.

To see it less as an organic totality, an integrated human ecosystem in which we compete to keep our niche. Rather, as a fluid community built upon diverse forms of association, forms that require experiments in institutional change.

Matthew Kurtz is Post Doctoral Fellow in Geography at the Open University.

This article was used to support the OU / New Economics Foundation event - Interdependence Day - held in July 2006.