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Leontief Prize

"Reconciling the Economics of Social and Environmental Sustainability"
Remarks by Neva Goodwin
to introduce the 2001 Leontief Prize recipients
at Tufts University, on November 13, 2001

The Global Development And Environment Institute instituted The Leontief Prize for Advancing the Frontiers of Economic Thought in March, 2000, when it was presented to Amartya Sen and John Kenneth Galbraith. The prize is established in honor of Wassily Leontief who was a member of GDAE's advisory board from 1993 until his death in 1999. Its purpose is to recognize outstanding contributions to economic theory that address contemporary realities and support just and sustainable societies.

I will say just a little about the great economist after whom this award is named.

A paper written by Alice Amsden, as a tribute to Leontief on his 90th birthday, begins by quoting the following letter:

Dear Keynes,

I want to apologize for Leontief. He has indeed produced what I consider to be a most original and interesting piece of work. But then, instead of finishing the article, he got married, in spite of my disapproval of the step. This explains the delay.

Yours very sincerely, Joseph A. Schumpeter

All of us have had occasion to apologize for a late paper. Some of us have been fortunate enough to have someone else write the apology for us. Few others could have had the apology written by Joseph Schumpeter to John Maynard Keynes.

Amsden's paper continues by saying: "Wassily Leontief not only disobeyed Schumpeter in getting married, but also bucked the conventional wisdom of the economics profession in striving towards inductive theory, based on input-output analysis, about how economies work."

That description touches on the essence of why we are honoring Leontief, and doing so by honoring Herman Daly and Paul Streeten. What all three have in common is a dedication to looking at the real world first, and putting it into theory second. They also have in common the fact that they have done this superbly well in very different ways, but each with a very wide field of concern.

I want to note two other thing that Streeten and Daly happen to have in common. One is that they both have had important associations with the World Bank. Daly was senior economist for its Environment Department, from 1988 to 1994. Streeten has been associated with the Bank in a variety of ways, including his strong influence in getting Robert McNamara to focus on poverty and basic needs, and later efforts to get the Bank's Economic Development Institute to return to these basics.

This speaks very well for the World Bank that it was able to value, and listen to, two such people, who have always been outspoken in their disagreements with mainstream thinking, and their conviction against the stream that the point of economics is to make the world a better place.

The other fact which has brought their names together arose out of a long project at the Global Development And Environment Institute, which produced six books on Frontier Issues in Economic Thought.

The capstone volume in the series is called A Survey of Sustainable Development: Social and Environmental Dimensions.

It was obvious to all of us who were involved with this that there were two people who have been most influential in moving the world's thinking about development towards an understanding of sustainability, in social and environmental terms. We dedicated the book

to Paul Streeten, whose work has been central to the field of human development, and

to Herman Daly, who has led the way on issues of environmental sustainability.

Introduction to Paul Streeten
I
had the great good fortune of having Paul Streeten as a teacher and dissertation director. I sometimes forget how much of my thinking I owe to him, but had the humbling experience, recently, of reviewing the first chapter of a textbook I have been writing, with colleagues here and in Russia, and in the same day re-reading several articles by and about Paul. This review produced, on the one hand, a touch of chagrin - I had thought some of those ideas were my own - but the larger feeling was relief, to discover that I really have kept to the path that he had marked out.

It isn't usual in an introduction to offer a biography that goes back to the speaker's birth - but I can't resist a good story, and Paul Streeten's life is full of extraordinary stories. I'll touch on only a few of them.

He was born in 1917, and grew up in Vienna between the two World Wars. In his accounts we encounter some of the great names of the era, such as Karl Popper, with whom Paul played handball on Sundays in the Vienna woods, and Wilhelm Reich, who advised the family on the children's sexual education.

In that environment it seemed natural to Paul to become politically active, starting at the age of ten, but he had an internal compass that steered him away from extreme ideologies - though always finding more attraction on the left than the right. After 1933 his political activities went underground, with continual threat of arrest or imprisonment.

The Anschluss in 1938 forced the family to flee Austria. Saved by friends and by luck, the family scattered around the globe; Paul saw none of them again for 9 years. He landed in England, in a kind home, but in 1940 was interned as an enemy alien. He was moved from one site to another, but in each one was at the center of efforts to set up lecture groups, study groups, a camp university. After two years of more or less prisoner status, he was able to join a commando group which, in 1943, was sent on the invasion of Sicily. While waiting for the action to begin, he organized a drama group among the local children. He was landed behind enemy lines, and after a few weeks of intense, heroic activity, was severely wounded.

The professional life which produced Streeten's extraordinary output of writing and influence could be said to have begun formally in 1944, when he went to Baliol, Oxford. He stayed there to teach from 1948 to '64. Other institutional affiliations have included the Development Studies unit at the University of Sussex, which he helped to found; and the UNDP group that creates the annual Human Development Report. These widely influential reports, authored by a collaborative group that also includes Amartya Sen, exemplify the continuing impact of Paul's thinking, and of his seminal book, First Things First: Meeting Basic Human Needs in Developing Countries.

I first knew Paul Streeten during the 1980s and early 90's at Boston University, where he was a professor and director of the World Development Institute. In between the institutional attachments I have mentioned he did an astonishing number of other things. An ILO mission on Basic Needs to Tanzania, and the Advisory Committee of the Arab Planning Institute in Kuwait are just two samples. Even leaving aside entirely his numerous articles - he has published an average of 15.36 articles per year over the last 11 years - I have only time left to mention a very small number of his books. But you should be aware of titles such as The Frontiers of Development Studies,Trade Strategies for Development, Strategies for Human Development, Global Poverty and Unemployment, and the most recent one of which I'm aware Globalization; Threat or Opportunity?

He states his current interests as social capital, human development, globalization, NGOs and participation, inequality, culture and poverty.

As usual, he doesn't leave much out.

Introduction to Herman Daly
Daly I first met Herman Daly in the early 1980s, at a meeting at Wingspread, Wisconsin, bringing together people who were interested in shifting the emphasis of economics theory and policy, to pay more attention to some difficult issues that had largely been laid aside for much of a century, while the discipline focussed on the issues that were most tractable to available analytic techniques.

Even in those early days, before the field of ecological economics took off publicly, it was easy to recognize Herman as one of the leaders in bringing important new ideas into economics. It has been said that great ideas are, at root, simple ideas, and Herman is one of those outstanding individuals in intellectual history who have been able to use an idea that seems simple after it has been explained to you to revolutionize a field of thought.

In this case, the seemingly simple idea is that the scale of economic activity matters. Processes of economic production and consumption, which are quite sustainable in a world of ample natural resources, become unsustainable when carried out on a scale that overloads the capacity of natural systems to supply raw materials and to absorb wastes. Now that this idea has been widely disseminated, it does indeed seem to be obvious. It is borne out every day by new stories in the papers, of environmental damage and degradation, and of the uphill struggle to preserve the ecological functions which support our economies, and our lives.

But in standard macroeconomics, as Herman has eloquently pointed out, there are no limits to economic scale, and virtually no consideration of the environment. Models of economic growth show a continuous upward path with no apparent endpoint. The goal of macroeconomic policy is seen as avoiding recessions or growth slowdowns, but no problems are seen with ever-increasing economic production for a growing global population.

Herman's intellectual influence has been immense, both among those economists who are willing to consider new approaches, and among scholars, in many disciplines, who see how essential his perspective is to devising a global economic system that can offer a livable world for our children and grandchildren and for ourselves, since the environmental threats we face are not in the far future but here and now. The thriving International Society for Ecological Economics is evidence of the continuing ferment, and of a deepening process of intellectual discovery, as thousands of scholars from a wide range of disciplines pursue the implications of the fundamental ideas that Herman has set out. His essential books include: Steady State Economics, Valuing the Earth: Economics, Ecology, Ethics (coedited with Kenneth Townsend); For the Common Good: Redirecting the Economy Towards Community, the Environment, and a Sustainable Future (co-authored with theologian John Cobb); Beyond Growth: The Economics of Sustainable Development; and Ecological Economics and the Ecology of Economics.

In addition to these books, and over a hundred professional articles, Herman has received the Grawemeyer Award for Ideas for Improving World Order, Sweden's Honorary Right Livelihood Award, the Heineken Prize for Environmental Science awarded by the Royal Netherlands Academy of Arts and Sciences, and Norway's Sophie Prize for contributions in the area of Environment and Development.

For those of us whose efforts to think about economics, the environment, and community have been inspired and illuminated by Herman Daly's ideas, the best tributes to his work are not awards not even the Leontief award but the indelible impression he has made on the thinking of several generations of economists, social and natural scientists, and scholars and students in many fields and indeed, of anyone who takes seriously the future of our society and our world.

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