Or how we learned to stop worrying and cook the books.
An analogical polemic. Tony Dickson May 2010 (The latest iteration of an essay written over thirty years ago)
“If the earth must lose that great portion of its pleasantness which it owes to things that the unlimited increase of wealth and population would extirpate from it, for the mere purpose of enabling it to support a larger, but not a better or a happier population, I sincerely hope, for the sake of posterity, that they will be content to be stationary, long before necessity compel them to it” John Stuart Mill “Principles of Political Economy” – Book IV, Chapter VI (1848)
To whom it may concern,
Our society is much given to regarding our technological and economic prowess with great complacency. We now live, so we are told, in a post-industrial age. An age where the primal concerns that engaged the attention of humanity throughout the millennia have been left far behind. We are after all, no longer hunters and gatherers, but economic sophisticates with mobile phones and central locking, who regard the few remaining primitives with implacable condescension. This perception is of course, both a monumental conceit and a profound delusion, because those primitive economies achieved something that quite eludes us: an approximation of stasis and thereby, sustainability. Economists tell us that if our economy does not grow it will…it will…well, they’re not sure…. perhaps hold its breath until it turns blue. There is simply no long-term model for a static industrial economy; although we may do well to consider the Japanese as potential canaries.
I have been a “greenie,” man and boy, for forty years. At school, my best subjects were geography and economics. It occurred to me that there was an apparent conflict between these disciplines. On the one hand I was taught that we live on a small, blue-green planet, supporting an incredibly diverse biosphere, which is in-turn dependant on a set of finely calibrated interrelationships of even greater complexity. At the same time, I was asked to accept that our society, past, present and future, was absolutely identified with the economic philosophy of perpetual growth. Now, I am only a simple farmer and maths was never my long suit, which may explain why I could never quite grasp how an economic system based on the equation: finite resources divided by infinite demand could equal anything but ultimate disappointment. It would seem merely a question of carrying capacity.
Of course, being green, I am pretty much used to being denigrated. A common insult is that I am having it off with the tooth fairy because I question the religion of economic growth. I admit to committing this heresy, but in forty years I have never been blessed with a cogent answer to the apparent paradox of endless growth in a finite world.
One conversation I had many years ago with a senior economics lecturer at Adelaide University, is notable. He was glib and patronising when I asked him whether, given the impact of ever increasing human activity, was anyone working on an alternative economic model. He replied that the laws of supply and demand would solve such problems because eventually, when resources became sufficiently valuable and technology sufficiently sophisticated, it would become viable to extract them from the seabed, or the Moon, or Mars. When I asked him whether this analysis included arable land, biodiversity, stable climate, clean air and water, or for that matter standing room, he hung up. He probably remembered an appointment with Father Christmas.
While our economic philosophy remains hostage to this over-arching assumption: that the Earth is a magic pudding, it is not and never can be sustainable. Even if we totally embrace best environmental practice in every facet of our culture; even if we rely totally on renewable energy and recycle 100 % of our resources, we must reach a limit to the Earth’s ability to cope with our economic expansion. This is closely related to population growth, but is by no means synonymous with it.
If the logic of this assertion is accepted and an end to growth is inevitable, then the question arises as to when enough is enough. Given that we are a country mile short of best practise, and that we are facing an imminent ecological crisis, at what point do we start to consider the limits to growth. Do we attempt to change direction while (hopefully) there is still time, or do we maintain full steam ahead, in arrogant disregard of the warnings, until we hit the iceberg?
I am well aware of the economic and social implications of such a prospect; they would be difficult to overstate. I am suggesting no less, that we deny one of humanity’s most fundamental drives. We may not be capable of such a change of course, in which case it will eventually and dramatically, be made for us. What is obvious is that adapting to not only a much lower level of resource consumption, but of even greater difficulty, static or lower material expectations, would require a fundamental change of values and culture; particularly political culture. [i]
But what would we do if we no longer had the same material ambitions? What could we strive for? Hmm, let me see, … how about survival! Should not that be, ultimately, our highest ambition and crowning achievement? Else, all our other victories are at best pyrrhic ones.
Such a dramatic change in consciousness, if at all possible, can only be achieved slowly and incrementally. Currently, this society, far from embarking on this process, is actually exhorting its citizens to do just the opposite, through the relentless social engineering of the commercial media and the encouragement of government policies.
Unfortunately, it seems that economic growth is an idea of religious immutability, less subject to subversion than dedication to any mere deity. This is an idea to which not just deluded individuals are prepared to martyr themselves, but an entire culture, if not a species.
Whilst the definition of this economic conundrum is, I believe, axiomatic; like many seemingly simple issues it contains many strands of complexity, which are generally historical in origin and irrational by nature. The two strands that come most readily to mind are our use of technology and the convenient, but ultimately pathological assumptions underpinning accounting conventions.
The first of these needs little said about it in this essay. Quite clearly, we have failed to develop cultural tools of sufficient sophistication to manage the tsunami that is our technological inventiveness. We are like a teenage boy, barely in control of a hot car; intoxicated by power and freedom and a denial of all but the moment.
None of our social institutions can keep up with the current rate of technological change, which continues to accelerate; legal and regulatory frameworks, political institutions and culture, educational practises, cultural conventions, social relationships and economic theory; all struggle to accommodate the stresses of adaptation.
The dramatic increase in productivity spawned by new technologies creates a perceived imperative to promote economic growth through consumption, in order to absorb the otherwise unemployed. We have so far failed the challenge to culturally reinterpret the benefits of innovation in a manner compatible with our long term habitation of this planet, let alone our psychological and metaphysical health.
One of the most whimsical of fantasies is that we can solve our problems with technological magic bullets. In reality, our problems are primarily cultural. This is best illustrated by the dilemma posed by the promise of nuclear fusion and a plethora of renewable energy sources. These potential solutions to carbon dioxide emissions would give us limitless energy and thereby the potential to keep expanding our destructive hegemony over this planet, until we completely destroy its ecological integrity. Is that really how we define human progress? One thing is certain, once we have arrived at this destiny; there will be no going back.
The more accessible problem is that of book keeping.
It is my view that economics is not so much a dismal science, as a Clayton’s one, in that like the Law, it is an entirely human construct. Current economic theory and practise gives every appearance of being wholly preoccupied with human affairs, to the exclusion of the “real world”. By “real world” I mean the biosphere upon which we are totally dependent, but which does not need us at all.
This economic tunnel vision renders many assumptions and much analysis and modelling, quite arbitrary and subjective. Only by embracing the complex realities of the whole planet can economic methodology achieve a bona fide objectivity. This failure of process goes to the very core of our dissociation from the ecological systems that sustain us.[ii]
Many years ago this economic self possession inspired me to appropriate the term “homocentric”. The usual definition of this word borrows from the Greek “homo” to provide the meaning of a common centre. Substituting the Latin meaning of “homo” gives an entirely different, but very apt description of the disciplines of both economics and law. Indeed, our increasingly urban society has become almost entirely homocentric.
[It should be recognised however, that unlike economics, legal innovation has made significant contributions in environmental law, as well as the nascent conceptual development of animal rights.]
While on the subject of linguistics, it is worth considering another comparison between the Law and economics, the second part of which derives from the Greek nomos, meaning “law”. It is a tenet of legal wisdom that the essence of the Law is experience (i.e. custom) and not logic. Contrast this with the alternative to economics: ecology, the essence of which, as its name suggests, is the same as other “real” sciences. My point is metaphorical and admittedly somewhat laboured, but its main purpose is to introduce the idea of ecology as the new economics.
Those 18th C heroes of the Enlightenment, the vanguard exponents of our notions of reason and empiricism, the natural philosophers, spoke of the “economy” of the various species they observed and recorded. Whether this habit reflected a deep understanding of the workings of nature or was just a quaint turn of phrase, it remains an entirely appropriate perspective of the natural world.
Nature is the quintessential free market economy. The survival of the fittest is no metaphor. There are no distortions created by accumulated capital, no welfare safety net and certainly no Federal Reserve to rescue the inept and corrupt from their folly. Failure and even modest underperformance can have only one result. If Humanity Inc. continues to rely on the Enron / Lehman Bros. business model, there will be no bail-out. Nature does not subscribe to the “too big to fail” argument because it’s pure, objective, market economics (ecology) remains uncorrupted by either capitalism, politics, social justice, or indeed any of the concerns that occupy humanity.
Like its pale human imitations, the real-world market economy transacts its business with a variety of currencies.
Its universal gold standard is of course energy, as prescribed by the first Law of Thermodynamics, but other more terrestrial currencies are also vital for running a biospherical enterprise. Water, air in the right proportions, carbon and intellectual property (biodiversity, alias DNA) are all necessary components for successful management.
Nature is the ultimate economic rationalist. It is wholly unsentimental and ruthless in its rigorous execution of the principles of market economics. Unlike the human dilettantes who practice their pseudo science, nature does not cherry pick what it wants to include in its calculations of efficiency and cost benefit. Its algorithms are all embracing; its computational power virtually unlimited. Determining the effect of the flap of an Amazonian butterfly wing on the futures market for Australasian sea-turtle eggs is nothing to Nature. It literally has a brain the size of a planet.
By contrast, human economists (with some laudable exceptions) have chosen to ignore the rather obvious fact that an economic system that cannot distinguish real-world capital from income, environmental overhead from current expenditure and ecological profit from loss, is badly in need of some training and development.
The prospect of global heating has at long last provoked a debate about pricing the environmental costs of green house gas emissions into the economic equation. It is a small first step towards an awareness that sooner or later we must account for the environmental costs of everything we consume and have consumed, these past several centuries. These costs are liabilities that industrial economies have habitually externalised and conveniently kept off balance sheet as SEPs, or someone else’s problem. The GFC provides an elegant metaphor for the way our economic system has been less than transparent in it’s costing of our rampant consumerism.
Ecologically as well as economically, we have been living beyond our means for a long time. Our ecological tab in particular, is rapidly growing beyond reasonable expectations of our ability to repay it, giving literal clarity to the notion of toxic debt.
High rates of growth since the industrial revolution has fuelled runaway inflation of the only currencies that truly matter and they have become so debased that they are in imminent danger of collapsing.
What can we do about this? The simplest solution is to do nothing and let nature’s economics run its course. After all, life on earth has seen plenty of booms and busts. Perhaps we should resign ourselves to the bio-business cycle and follow the dinosaurs to that great dole queue in the sky.
Alternatively, we could take on the role of a central bank or treasury and devise an interventionist approach. But what sort of economic policy would be most appropriate? Monetarism has never been much good at dealing with this sort of terminal stagflation, nor conventional fiscal policy, which tends to result in the difficult political process of picking winners and losers.
Maybe an economic philosophy totally predicated on the assumption of perpetual economic growth is just not the best muse for inspiring solutions to our problems. Perhaps we should look for inspiration to an economic system with a rather better track record; one with a computer the size of a planet at its disposal.
This is not a recommendation for a survival of the fittest competition policy, but rather a plea for ecological fiscal responsibility and the other, conveniently forgotten half of the law of the jungle: interspecies symbiosis. In other words, we need a genuine economic conservatism that would necessarily embrace the precautionary principle, which surely underpins the fiscal conservative’s instinctive horror of debt.[iii]
Nor is this essay a rejection of market economics.
Whilst the market is undoubtedly a valuable servant, it can also be a dangerous master and should not be allowed to usurp the role of democratic governance; as is increasingly the case as free enterprise succumbs to the power of global corporations. However, I am also confident that the market is our best hope of ultimately resolving this singular problem of nihilistic growth and in the interim, encouraging more sustainable economic activity. Neither of these goals can be achieved unless the environment (as well as many cultural and social intangibles) is valued as an asset on the balance sheet and recognized as an input cost in the profit and loss statement. Only when this is done can the market apply its inventive genius to seeking better ways to do things and impose a more stringent regime of cost benefit analysis; a regime that would consign great swaths of our current economic activity to the receivers, deemed unviable.
One of the reasons ecological accounting has not been embraced of course, is that it is a task of mind boggling complexity. Thus it has ended up at the bottom of the too hard basket. We are left with the simple choice of making the effort, or to continue to just not bother. Did I mention icebergs and dinosaurs?
However, the market place will not spontaneously impose such a cost on itself because ultimately the market is merely an abacus. It does not have values, or a sense of destiny. Only governments can make collective value judgments about the sort of society we wish to leave to our children and ascribe aesthetic and moral value to the natural world.
Ecological catastrophe and its political ramifications are the biggest medium and long term security threats we face. This is the judgment of strategic planners in the Pentagon. The weight of evidence would indicate that climatic instability is the direst threat, but it remains only a symptom of the underlying problem: our escalating consumption of resources and its ecological consequences. The most persistent misapprehension under which policy makers labour, is that there is a clear distinction between economic and environmental priorities.
The only difference between an ecological problem and an economic one, is time; and time is rapidly becoming another very finite resource.
The original inhabitants of this continent had, arguably, evolved the most successful economic system in human history. It provided for the modest needs of its practitioners for tens of millennia. By contrast, our idea of economic management has brought the whole planet to the brink of disaster in just a few short centuries.
The degree of providence enjoyed by aboriginal society seems very meagre to our bloated appetites, but there was a sufficiency that supported a cultural and spiritual life of astounding richness and complexity. Whilst these people were undoubtedly subject to many vicissitudes, their cultural achievements indicate a bounty of leisure time that we may well be envious of.
They took their cultural life seriously. This was not trite entertainment, but the very fabric of their knowledge base and the glue for their social ecology. It bound them absolutely to the landscape, so that every nuance of their lives reflected the complexities of the very real- world economy they managed.
It is our challenge and probably our only chance of survival as a civilised society, to achieve an equivalent nexus with what is left of the natural world. Science may replace lore, (or Law) but it will not save us unless we rediscover a more empathic relationship with this very lonely planet.
The unresolved question remains why, to my knowledge, the issue of economic growth has not been part of any serious public conversation since Jerry Brown was elected Governor of California in 1975. The short answer would seem to be self interest, moral cowardice and severe myopia among those charged with the responsibility of developing public policy. The silence has been eloquent, deafening and unforgivable.
[i] I suppose that I should pre-empt one of the more spurious but predictable objections to the idea that we should make some attempt to curb our appetites. The reasoning runs as follows: it is all very well this chardonnay, sack cloth talk of limits to growth and self righteous frugality, but what about the aspirations of billions of people in the developing world?
Yes indeed, what about those billions of people who currently teeter on the crumbling edge of the precarious state of global food security, while we die of obesity. The answer is twofold. First, is the reality that the threat to climatic stability and a plethora of other ecological problems, affect the poor, first and foremost.
Secondly, because there is no possibility that another four or five (or ten) billion people can ever replicate our decadent and wasteful lifestyles, we must find a way to use our surfeit to provide the have nots with, at the very least, a modest sufficiency. This will require significant sacrifice of our own level of consumption. However, we need not be concerned lest this might be seen as benevolence; it can easily be rationalised as enlightened self interest.
[ii] It is my understanding that Malthus has been largely discredited for two reasons.
The first of these was his failure to perceive the extent to which technological advances would increase efficiencies in food production and distribution. These innovations not only dramatically increased production of tradable food, but created a global market which could mitigate or abolish localised shortages
The second problem with Malthus’ theory of population was that he mistakenly extrapolated directly from the behaviour of biological systems to human behaviour. Human intellect and collective experience allow for a degree of adaptability to environmental constraints that has put us beyond many of the determinants that govern other species; to a point. Malthus was even wrong in generalising about these other species, many of which regulate their fecundity according to food supply.
We now take as accepted wisdom that the key to reducing population growth in developing economies is to increase standards of living and education, particularly of women. In this respect Malthus could not have been more wrong. And yet; and yet, in essence, he was right. If we think in terms of ecological impact and resources rather than simply population; and globally rather than parochially, his basic insight is sound, technology notwithstanding.
However, for me, the real wisdom to be teased from the work of Malthus is the nature of its shortcomings. His basic error was applying the laws of nature directly to human society, which clearly plays by different rules. In other words, he was making the same mistake as contemporary economists, but in reverse. Today, economists don’t ensnare humanity in the laws of nature; they do not even acknowledge the existence of those laws.
Yes, we are different, but we share the same world as our fellow species and we need them infinitely more than they need us.
[iii] Cost Benefit Analysis
The argument in favour of adopting the precautionary principle is really a simple cost benefit analysis. If you are living in a state of absolute poverty, a very modest improvement in your standard of living is likely to pay huge dividends in terms of happiness, whereas insurance policies will not. Having a full stomach and a roof over your head may seem like utopia. Seeing your children survive infancy because they have clean drinking water and perhaps going to school will undoubtedly make your spirits soar with thanksgiving. Having a sense of making economic progress and attaining some buffer against the inevitable hard times, makes you sanguine and inclined to benevolence. However, the wealthier you become, the less cost efficient is the acquisition of happiness.
The best analogy is that of addictive behaviour, which of course, is exactly what excessive materialism is. There is even a name for this pathological syndrome: affluenza. Eventually, wealth is not about increasing happiness, but about warding off the unhappiness that attends the prospect of a decline in prosperity, or any of the other forms of malaise abroad in our increasingly fey society. A variation of affluenza is what might be called Murdochulosis, where the sufferer becomes obsessed with wealth, not for its promised pleasures, but for the power it gives over those people who are less ill.
If we were to take out some insurance against climate change and the multitude of other pending ecological disasters, even though it cost us a significant amount of economic growth, would it really matter very much if we never had to make a claim? After all, the saved opportunity cost of the premiums is only making us sick and the unused resources are not going anywhere. Perhaps buying some peace of mind would bring us more happiness than that plasma TV.
The global economy spent many billions of dollars attempting to forestall the possible consequences of the millennium bug, which proved to be largely illusory. Why was the precautionary principle appropriate to invoke to keep our computers alive, but not appropriate to potentially save a sizeable percentage of the earth’s species, including possibly, our own?
The cost of dealing with Y2K would have been nominal had we not adopted the same approach as we have with global warming: that is, the ostrich strategy. It is worth noting that research has repeatedly indicated that our society wastes in the order of sixty percent of the energy that we consume. By an odd coincidence that is the same percentage, it is estimated, that we need to reduce green house emissions.
The calls for an enquiry into this country’s population policy recently inspired the federal treasurer to offer statements supporting the current extraordinary rate of Australia’s population growth, and the projection that it would grow to 35 million by 2050. The justification he gave was that the ageing of the population would, in the near future, become an impediment to the “sustainability” of our economic growth, due to an imbalance between the productive and dependant sectors of the population.
These statements, apart from providing a luminous illustration of the homocentric mindset, also highlight two other deficiencies in the reasoning underpinning our economic culture.
The first of these is the very short term thinking that would incline someone to conclude that growing the population will solve the problem of an aging demographic. The other insight into our economic perspective is the assumption that the employment of large numbers of people to look after the needs of tourists sitting around swimming pools is productive economic activity, whereas employing people to look after the needs of the frail and sick, is an economic burden.
It is a traditional measure of a mature and successful economy that it has progressed from a commodity base, through manufacturing, to be a provider of services. This transition is largely the consequence of the same technological progress and financial sophistication that creates unemployment. Surely an ageing population can just as easily be seen as mitigating the consequences of the technologically sponsored increases in productivity that fuels the churning imperatives of endless growth.