[devmacrile]

Yeah - this is a very good point. At a certain point, the scale of economic activity has to bump up against the finite scale of ecological dynamics upon which it is dependent. As long as negative externalities are treated as such - something "external" - markets cannot be expected to efficiently allocate resources w.r.t. human welfare.

The idea of and faith in economic adaptation as described in the parent (price/demand dynamics) is greatly dependent on the assumption of underlying ecological stability (from which sufficient timeframes for adaption and resource alternatives are provided).

[marcus_holmes]

no, that's the point - that economic thinking is all about adaptation to circumstances, and makes no assumptions about the stability of anything.

"enough time to adapt" is always present, if you stop thinking about stability being present at all. The system is in a constant state of adaptation to current circumstances, and those circumstances are constantly changing. As those circumstances change, so the system adapts to them. It doesn't need "time to adapt", it is constantly adapting.

Ecological thinking emphasises the brittleness of a particular system, and talks about ecological collapse when the situation changes too fast for the system to cope with. Economic thinking emphasises the adaptability of the system, and how it flows from one state to another depending on circumstances.

What we have now is not a "stable system" that has a finite tolerance for change, relying on an underlying stability provided by a fixed set of parameters. It's an adaptive system that has an infinite tolerance for change, underpinned by nothing stable.

If the externalities of that system become apparent, then the system will change to cope with it. There's a good argument that the current "climate emergency" is exactly this: that the system has previously treated the atmosphere (and ocean) as infinitely-large dumping grounds for waste products, and that it is now adapting to the fact that that's not true.

Of course, if anything inside this adaptive system relies on a particular aspect of it to remain stable, then that is a challenge for that entity. On a grand scale, you could view this as humanity depending on a livable biosphere. On a smaller scale, this could be your country depending on oil revenues. On a smaller scale, this could be your family depending on the housing market always rising.

I've recently been reading AntiFragile, and that talks about the same thing. Relying on stability is fragile. Adapting to (and benefiting from) change is antifragile.