The current stampede to deal with our collapsing economic structures and institutions is not new. History repeats itself on a predictable basis. Even the rise of a “green economy” is nothing new. Virtually the entire calamity facing world economies was predictable. So why was everyone caught with their proverbial pants around their ankles? That’s what this section will explore by focusing in on what most environmental groups, economists, and eco-sites fail to address, i.e., the direct relationship between ecology and economy.
Creating A Truly Green Economy: The Ecology of Economics
Ask a carpenter to cut you and inch of wood, and anywhere in the world you will receive an inch of wood, or the equivalent in millimeters. Request a gram or ounce of some commodity, and you can weigh the results which comport with standardized weights and measures world-wide. Imagine a trillion dollars produced out of thin air, and then just as quickly vanishing! Poof! Magic! What is that trillion worth? Whatever we all agree on is what it comes down to, or from something to nothing.
So how does money, a nations official measure of value, its medium of exchange, escape the certainty which any standardized system of weights and measures provides?
How does magic money correspond to anything of real value, like food, shelter, health, or those other trillions of creatures that literally make Homo sapiens lives possible? How does money measure up? It appears to correspond to reality the same way it corresponds to an economic system based on a multitude of abstractions which appear to benefit only the magicians. There is no correlation or correspondence between our magical money machine with its mysterious Madoffs and the natural world in which we all move and breathe and have our being. So how on earth can we ever expect anything other than what we are experiencing with our fabricated and febrile financial system?
We cant. All actions proposed by public servant Obama and the assorted lesser servants will fail, because foundational money issues (first principles) are not being addressed by those who manipulate our money system, by those who allegedly possess some fundamental knowledge of what money is. Naturally everything depends on what we mean by knowledge. I shall adhere to the classic proposition that there is no knowledge at the level of sensation, that therefore knowledge is of universals, and that whatever we know as a truth enables us to predict. The process of learning involves interpretation, and the fewer particulars we require in order to arrive at our generalization, the more apt pupils we are in the school of wisdom. *
A geophysicist, knowing the truth of gravity, can predict certain outcomes over and over again. As can a biologist, a metallurgist, a chemist, and so on. Each practioner of a scientific discipline knows the truths of their particulars. Absent a viable metric of value (the particular), current economists will never be able to come to the generalization of measuring exchanges of value in any predictable and constant fashion. And everywhere we look today in our political economy, we see a growing cacophony of particulars pointing in a myriad of directions incapable of predicting anything with any certainty except for chaos and confusion.
In the final analysis this society is like the spoiled child in its incapacity to think. Anyone can observe in the pampered children of the rich a kind of irresponsibility of the mental process. It occurs simply because they do not have to think to survive. They never feel that definition must be clear and deduction correct if they are to escape the sharp penalties of deprivation. Therefore the typical thinking of such people is fragmentary, discursive, and expressive of a sort of contempt for realities. Their conclusions are not earned in the sense of being logically valid but are seized in the face of facts. The young scion knows that, if he falls, there is a net below to catch him. Hardness of condition is wanting. Without work to do, especially without work that is related to our dearest aims, the mental sinews atrophy, as do the physical. There is evidence that the masses, spoiled by like conditions, incur a similar flabbiness and in crises will prove unable to think straight enough to save themselves.*
One of the simple and obvious failures of the mental processes in the financial game is with the definition of profit. In natures world of commodity markets (everything is measured by caloric and nutritional value) all exchanges yield profit measured by the concept of time. If you run negative profits for too long, you die. Every creature which manages to eke out a living gains value measured in precious seconds, minutes, months, years and centuries, while adapting to and modifying its environment. Every successful market transaction and adaptation allows a specific single or multi-cellular market participant to get closer to reproducing and casting progeny into the future, i.e., to gain more time.
The Universal Bank of Genetic Savings holds those deposits and invests them into creating a living planet. The only return on the investment at this bank is more time flowing through the system, and an elaboration of species keeping time, i.e., the quadrillions of visible hands of evolution. By design or default no species can ever know how much time it gets, and you cannot take the time youve captured and receive compound interest or a rental fee on it by lending your time to others. This compounded magic only occurs in our existing abstract and fanciful world of money, engendering the entire fiction of something for nothing.
Capturing and expressing time is both a competitive and cooperative process. Winners in this transactional dance weave their genetic threads into the warp and woof of the fabric of time. The most successful market agents can trace their threads of profit for millions of years, through generations of families whose tapestry yields an elaboration of fantastic complexity, creatures if you will, of incredible diversity and design. And the units of exchange, which measure the value of this natural economy, never change. They cannot be manipulated by speculators, inflated by central banks, or shorted on Wall Street. They live or die by their inherent natural value measured in constants of time. The invisible hand wields visible threads, not some gilded shimmering yarn spinning out the emperors finery. A squirrel will work to store up nuts for the coming winter, but that store of nuts will not grow at a 5% annual rate. Only Homo sapiens operate under such nutty delusions, which maybe why modern humans can only trace their species back for less than half a million years.
None of us ever know how much time we will earn, and the fact of your birth does not mean you deserve time, as many politicians would have us believe. You must earn your time. Yet, not one of us can ever put those minutes into a savings bank, and with the magical confidence game of compound interest can anyone gain additional hours, days, years or even minutes of profit, i.e., extra time which does not correspond directly with labor. When we die, our progeny has none of our time left to inherit. In fact, our progeny will have inherited at least some of their parents genetic limits on their time. However, if they earned anything which we call knowledge, then those offspring might gain more time by surpassing the limits their parents encountered. The latter is evidenced by increasing life-spans and life qualities in many westernized cultures.
When compared in this manner the economics of humans has a short and highly unstable bubbling history. The golden yarn still blinds Homo economicus to the realization of what constitutes profit in the natural world. Humans, like many other species, are a status seeking creature. This status comes in many forms. In early tribal cultures it revolved around hunters, warriors, and the ubiquitous priests or shaman. Within those designations status still manifests in modern man, although the accoutrements of status have been elaborated through the growth of technology. And what better way to gain status than by benefiting from the manipulations of an elite monetary cadre constantly producing something from nothing as they spin and whirl and deliver mountains of profit for their acolytes? In this esoteric world the level of status is almost infinite.
While the world of nature has a real capital market economy, our magical world of abstract measures of dollars and yen, pounds and pence, is based on nothing but intellectual incantations, emotions, and manipulations or slights of hand. It is the economy of the mob, manipulated by the desires of the elite priests in the money temples and glib politicians in the marbled halls of power. The latter promise something for nothing and excite the mob, while the former add fuel to the desires of the mob and yoke that energy into serving themselves and their political masters by convincing the mob that they can truly spin gold out of thin air. This is the science of perpetual motion mechanics.
Until this basic accounting falsity is addressed, our economic future will proceed in a very predictable manner. It is time that the work of Frederick Soddy was re-visited. Although dismissed as a Technocrat, this Nobel winning chemist (1921) should not be cast aside so cavalierly. His seminal economics text published in 1933 Wealth, Virtual Wealth and Debt looked into the world of money and suggested an answer to the rot we regularly see in our economic past and present. By the way, Soddy does not suggest going back to a gold standard. One of the important distinctions he observed is the simple understanding that what most people refer to as economics is actually chrematistics. And our contemporary crop of chrematistic technicians believes their own magic, because they truly think they are something more than just ordinary confidence men.
Could a guild of elite carpenters get together in secret and make a trillion inches vanish, thereby stopping all construction projects? This is what our chrematistic technicians will have you believe has happened in their magical, mysterious world of economics. It is a lie, which is possibly why they call their practice, the dismal science. They know their machinations are merely elaborate fabrications, and they have convinced themselves that their time must be spent in perpetuating and elaborating this shimmering hoax on the less intelligent.
It is time we re-acquaint ourselves with the shared meaning between ecology and economics. Frederick Soddy knew this relationship as only a truly competent scientist could. It is time we learned something from his thoughts, and put most of our dismal scientists into a wax museum as curiosity pieces. Read the following excerpt from Soddys book for just a few clues as to how we may create an economy based on sound metrics instead of worshiping the golden calf and its progeny.
The definition of wealth has always been the touchstone of clear thinking in economic matters, and after centuries of effort that definition still eludes us. Aristotle tried to cut the Gordian knot by defining wealth as all things whose value can be measured in money, and the Roman jurists, in their practical fashion, followed suit in defining wealth as what can be bought and sold.
Money, however, is merely a claim to wealth, and to define wealth as that which can be claimed by claims to wealth, or can be measured by the numerical legal claims to wealth called money, is merely like defining a fluid as that which can fill and be measured by an empty hole, capable of holding the fluid, called a fluid measure. Such logic has always exerted, and will probably always exert, a powerful attraction to the ruling and legal type of mind, more concerned with the ownership of wealth than the processes which bring it into existence and which it, in turn, brings into existence. To the economist, on the other hand, their fascination was fatal. It solved many little difficulties and apparent inconsistencies regarding the real nature of wealth entirely to ignore it, and to base it, as the Roman jurists did, upon the principle of exchangeability as the sole criterion. That alone is wealth which can be exchanged for money. Still it might have been apparent that a weight, although it is measured by what it will pull up, is nevertheless a pull down. The whole idea of balancing one thing against another in order to measure its quantity involves equating the quantity measured against an equal and opposite quantity. Wealth is the positive quantity to be measured and money as the claim to wealth is a debt, a quantity of wealth owed to but not owned by the owner of the money. But the ability to measure the exchange-value of wealth by money was deemed the one thing necessary to reduce economics to a quantitative science fit to rank with the great mathematico-physical group of exact sciences. Unfortunately, owing to the initial confusion of sign, it reduced it to the utter futility everywhere apparent to-day, whereby Society is administered not by and for those who create wealth and health, but by and for those create want, and every scientific advance seems to be countered by a retrogression in the science of government.
Compound interest and other financial instruments are a marvelous fiction providing the person who has captured some % of what is conventionally called profit the means to consume real wealth without work. This begins the delusion which many humans chase forever, that something of value can be gained without any exertion or work. That fiction has been institutionalized behind the edifice called Economics. It should more accurately be called chrematistics. Today, most of our illustrious economists are a tribute to the fallacy of confusing numbers or symbols with reality. They all worship at the same temple and conjure up billions and trillions of monetary units with their mystical incantations. The results are schemes that would put Charles Ponzi to shame. If promoted by the private sector, government officials brand such schemes crimes and imprison the perpetrators. Why is it then, that when the same schemes are promoted by government entities and officials they arent just as criminal?
A truly green economy would start by clearing out the tangle of weeds from existing economic practices. It would get rid of the incompetent officials pushing Ponzi panaceas, and such an economy would create a standardized measure of value. All real scientific disciplines work out whatever formulae, theories, or models by which they interpret the natural world based on observations of the natural world. The failure of virtually all economic theories to reflect natural principles in the metrics of value and the motion of market exchanges leaves this quasi-science open to the whims of fashion and the tyranny of the power elite who control the creation of money.
But that will not happen. The elites do not want a transparent system of monetary measures. They want a system they can game to get something for nothing. They will continue to plunder the public purse, and the public will continue to be mesmerized by the chants and prayers of the sober looking men in their grey suits.
One day, however, the chants and prayers of these hollow men in grey suits will be discovered for what they are. That is when the public will finally get up of its knees, and set the table for the next tea party.
copyright, February 2009
*Richard M. Weaver, Ideas Have Consequences
More postings to come-stay tuned….
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Last revised February 01, 2010