of concepts and models, which explores reality from different angles and in a variety of contexts, has emerged in recent years in response to the inability of normal disciplinary science to deal with complexity and systems – the challenges of sustainability. The outlines of this new framework, known under the loose term of ‘Systems Thinking’, are, by their very nature, transdisciplinary and synthetic (Kay and Foster, 1999). An international group of ecologists, economists, social scientists and mathematicians has laid the principles and basis of an integrative theory of systems change (Holling 2001). This new theory is based on the idea that systems of nature and human systems, as well as combined human and nature systems and social-ecological systems, are interlinked in never-ending adaptive cycles of growth, accumulation, restructuring, and renewal within hierarchical structures (Holling et al., 2002).
A core element in the economic literature on SD is the focus on growth and the use of man-made, natural, and social capital. The fact that there are three different types of capital that can contribute to economic growth has led to a distinction between weak and strong sustainability, as discussed by Pearce and Turner (1990), and Rennings and Wiggering (1997). Weak sustainability describes a situation where it is assumed that the total capital is maintained and that the three different elements of the capital stock can, to some extent, be used to substitute each other in a sustainable solution. On the other hand, strong sustainability requires each of the three types of capital to be maintained in its own right, at least at some minimum level. An example of an application of the strong sustainability concept is Herman Daly’s criteria, which state that renewable resources must be harvested at (or below) some predetermined stock level, and renewable substitutes must be developed to offset the use of exhaustible resources (Daly, 1990). Furthermore, pollution emissions should be limited to the assimilative capacity of the environment.
Arrow et al., 2004, in a joint authorship between leading economists and ecologists, present an approach for evaluating alternative criteria for consumption, seen over time in a sustainable development perspective. Inter-temporal consumption and utility are introduced here as measurement points for sustainable development. One of the determinants of consumption and utility is the productive base of society, which consists of capital assets such as manufactured capital, human capital, and natural capital. The productive base also includes the knowledge base of society and institutions.
Although institutions are often understood as part of the capital assets, Arrow et al. (2004) only consider institutions in their capacity as guiding the allocation of resources, including capital assets. Institutions in this context include the legal structure, formal and informal markets, various government agencies, inter-personal networks, and the rules and norms that guide their behaviour. Seen from an SD perspective, the issue is then: how, and to what extent, can policies and institutional frameworks for these influence the productive basis of society and thereby make development patterns more sustainable.
The literature includes other views of capital assets that will consider institutions and sustainable development policies as being part of the social capital element in society’s productive base. Lehtonen (2004) provides an overview of the discussion on social capital and other assets. He concludes that despite capabilities and social capital concepts not yet being at the practical application stage, the concepts can be used as useful metaphors, which can help to structure thoughts across different disciplines. Lehtonen refers to analysis of social-environmental dimensions by the OECD (1998) that addresses aspects such as demography, health, employment, equity, information, training, and a number of governance issues, as an example of a pragmatic approach to including social elements in sustainability st