The Eco-Connection: Economy, Ecology

IN the Greek language, the words "economy" and "ecology" have the same root: "oikos," meaning house or habitat. Increasingly, this eco-connection is being seen as relevant to the questioning of economic theory and policy.

Futurist Hazel Henderson, essayist Wendell Berry, ecologist Garrett Hardin, and World Bank economist Herman Daly are among the most insightful and provocative thinkers and writers on the subject and have been for years. But many others are adding their analyses and critiques of an economic system that seems askew as it relates to resources and a clean environment.

Robert Repetto at the World Resources Institute examines methods of national accounting that count resource depletion as economic growth. Alan Durning of the Worldwatch Institute probes overconsumption that is obviously not sustainable. Frances Cairncross of The Economist magazine questions current market policy in her book "Costing the Earth: The Challenge for Governments, the Opportunities for Business" (Harvard Business School Press).

Similar questions are being raised within the United States government, and they were even before the election of an administration generally perceived as being "greener" than its predecessor.

Just before leaving office, the Bush administration issued the annual report of the Council on Environmental Quality (CEQ), which acknowledged up front that "accounting systems used to estimate GDP [Gross Domestic Product] do not reflect depletion or degradation of the natural resources used to produce goods and services."

The CEQ report also cites efforts by government agencies - the Bureau of Economic Analysis at the Commerce Department, the Environmental Protection Agency, and the National Oceanic and Atmospheric Administration - to integrate economic and environmental policies with the goal of "harnessing market forces" and "making the polluter pay."

Such a philosophical shift is implicit in many business-based decisions as well, such as the recent contest run by 24 utilities to promote a refrigerator design that is more energy-efficient and produces no ozone-depleting gases. (Whirlpool won.)

But such efforts may not go far enough. Building, buying, and consuming more stuff and keeping better track of its environmental costs is still building, buying, and consuming more stuff.

Harvard researcher Andrew Bard Schmookler gets at the essence of the problem in his new book, "The Illusion of Choice: How the Market Economy Shapes Our Destiny" (State University of New York Press). He examines the so-called free-market system underlying the US economy (and that of other countries) and concludes that - at best - it is an incomplete affair, which "is simultaneously exquisitely sensitive to some categories of our needs and wants and is virtually blind and deaf to others."

"Many of the blessings of life in America are the fruits of our market economy. But many of [the] afflictions and burdens are also products of the market system," Schmookler writes. "The ideology of the market economy is quite willing to take credit for the abundance the system produces. But the idea that the market system creates evils is, for the most part, emphatically denied."

Over time, the author warns, the market becomes just as much master as servant. And in the process, he writes, we become "profligate heirs, counting only the costs of writing the checks and disregarding the value of the account from nature we are rapidly drawing down."

Seen in this light, some key indicators of national economic well-being - say, "consumer confidence" - are open to challenge. Are spending and buying real indicators of confidence? Or should true satisfaction be measured in terms of saving and making do? The latter, of course, would mean reduced demand for things now produced by people who earn an income as a result.

There are no easy answers. That's why President Clinton's solution for Northwest forests has few ardent supporters. Or why something as precedent-setting as NAFTA (the North American Free Trade Agreement) can get hung up over a controversial court order for greater environmental accounting.

But the balance between economy and ecology will be found, and a book like Schmookler's helps point the way.