Guilding the Lilly

Guild coat of arms of a smith

Executive Peer-to-Peer Summary:

This essay is partially in response to Whither government regulation in a highly complex age? which questions the ability of a hollowed-out, privatized government to effectively cope with the increasing complexity of social and environmental crises such as global warming. What follows assumes some prior familiarity with the basic ideas of p2p culture.

Guild coat of arms of a shoemaker

I agree that the failure of government regulation to curb the destructive activity of large corporations is only likely to worsen with the increasing privatization of government and the increasing complexity of global problems. So what can p2p culture do about this?

1. Establish powerful, confederated P2P Guilds and Leagues based on various global commons of knowledge and expertise so that mitigations, adaptations, and other interventions can be crowd-sourced by massively distributed, parallel, and open networks of peers.

2. Establish many strong, self-reliant economies at the local geopolitical (or Eco-political) level by forming partnerships between the P2P guilds and progressive local communities. These partnerships would maximize economies of scope via peer production and  would also be strongly confederated with their peers bio-regionally, nationally, and globally.

3. One more maneuver that may be necessary to assist this process I will dub “castling”, a term borrowed from the game of chess. What I mean by this is a shifting of local populations between adjacent local geopolitical jurisdictions (such as cities and counties in the US) so as to create political, social, and economic majorities of p2p culture in the targeted locations. Those locations that are simultaneously abandoned by p2p culture are essentially “sacrificed” to the corporate predators. (Half a loaf saved is better than none.)

Guild coat of arms of a fisherman

The resulting strongly confederated p2p cultural strongholds might stand the best chance of competing with the large corporate entities, excluding them from the “castled” commons, and limiting the scope of their environmental destruction.

How P2P Culture Might Save the Day

1. P2P Guilds and Leagues

Various authors have suggested the concept of “phyles” or “tribes” for characterizing horizontal organizational structures in p2p culture. See for example the Las Indias cooperative movement. (p2pfoundation.net)

I am not opposed to these , and in the end it is important for peer groups to self-identify with the descriptions they

Guild coat of arms of a tanner

prefer; but I think I prefer the idea of confederated GUILDS and LEAGUES, and perhaps I can make an argument for these terms that will be persuasive to some.

A guild can function just as envisioned for a phyle (from Greek phulē — tribe, clan) but does not carry the same connotation as a tribe, clan, or phyle of having a primary basis in familial kinship, nor the historical reputation (in certain cases) of rebellion against central authority. The subtle but important difference is that a guild is all about practical know-how and about taking care of business– not about ideology or revolution (eh, at least on the surface…).

The Syndics of the Drapers’ Guild by Rembrandt, 1662.

Typically a guild (German: Gilde) is an association of craftsmen in a particular trade. In the most general sense a guild is simply an organization of persons (peers) with related interests, goals, etc., especially one formed for mutual aid or protection. Historically guilds were any of various medieval associations, as of merchants or artisans, organized to maintain standards and to protect the interests of their members.

The Guildhall, London (engraving, ca 1805)

“The earliest types of guild were formed as confraternities of workers. They were organized in a manner something between a trade union, a cartel, and a secret society. They often depended on grants of letters patent by a monarch or other authority to enforce the flow of trade to their self-employed members, and to retain ownership of tools and the supply of materials. A lasting legacy of traditional guilds are the guildhalls constructed and used as meeting places.

“An important result of the guild framework was the emergence of universities at Bologna, Paris, and Oxford around the year 1200; they originated as guilds of students as at

Guild coat of arms of a mason

Bologna, or of masters as at Paris.” (Wikipedia)

One point on which I think guilds differ from Las Indias’ conception of phyles (“In Phyles, Community precedes Enterprise” -David Uguarte) is that for guilds, community and enterprise are two sides of one coin. I think this fits well with p2p culture while also being relatively non-confrontational with mainstream corporate/capitalist norms. The ability of guilds and leagues (such as the League of Women Voters) to present a relatively “normal” outward face, may have occasional tactical advantages.

According to Phil Jones,

“One issue people have with the traditional Guild is that Guilds are demarcated by profession. They aren’t a grouping that implies a multidisciplinary team. Guilds are great for teaching, accrediting and providing a retirement policy but aren’t self-sufficient or “closed” economic loops.”

Guilds, phyles, tribes, etc. . . .each has extensive variation and we can pick and choose features of one or all and remix to

Guild coat of arms of a taylor

suit our purposes.  However, I think that overall, p2p relations have more to do with behavior and knowledge than with kinship. Guilds in the form of trade unions and academic institutions also have a rich history of confederation across multiple disciplines and locations, making the guild, IMO, a more appropriate basic raw material to further hack, improvise, and remix.

Michel Bauwens notes that “for lasindias, guilds can be phyles and are in fact the historical example for it .. the Venetian and Florentine guild councils, who originally ruled the cities, had international structures to support themselves, with halfway houses etc … The Hanseatic League is an interesting example. It never did have a constitution or formal membership as far as I know. Cities, guilds and towns just identified with it and co-operated in respect of matters of common interest, like suppressing piracy.”

Another interesting example is the Iroquois League:

“The Iroquois League, historically the Iroquois Confederacy, is a group of Native Americans (in what is now the United States) and First Nations (in what is now Canada) that consists of six nations: the Mohawk, the Oneida, the Onondaga, the Cayuga, the Seneca and the Tuscarora. The Iroquois (also known as the Haudenosaunee or the “People of the Longhouse) have a representative government known as the Grand Council. The Grand Council is the oldest governmental institution still maintaining its original form in North America. The League has been functioning since prior to major European contact. Each tribe sends chiefs to act as representatives and make decisions for the whole nation.” (Wikipedia)

Guild coat of arms of a carpenter

Anyway, I like many (if not all) of the characteristics of leagues and guilds, and I like the anachronistic romance of the words. The League of Extraordinary Gentlemen, The Justice League of America. . . these could become the League of Extraordinary Peers and the P2P Justice League. Steal This Film is a film series documenting the movement against intellectual property that was produced by The League of Noble Peers.

We could also have P2P Makers Guilds, P2P Designers Guilds, P2P Programmers Guilds, and P2P Privacy Guilds. Such guilds would not be organizational stovepipes. Peers could affirm their interests and expertise by membership in as many guilds as they may qualify for.

Interestingly, many players of computer and video games have become familiar with guilds and their popularity continues to increase. “In computer and video gaming, a … guild is an organized group of players that regularly play together in a particular (or various) multiplayer games. These games range from groups of a few friends to 1000-person organizations, with a broad range of structures, goals and members… Numerous [guilds] exist for nearly every online game available today” (Wikipedia) In some cases the guilds are internal to the game play and sometimes they are external. Some gaming guilds have their own web sites. I don’t know if these gaming guilders are learning good guilding habits or bad ones from the perspective of p2p culture. My distance from the gaming community has obscured this information from me.

In any case, such guilds and leagues as may be created in the service of p2p culture will be able to confederate in any number of flexible ways. So too can those peer groups who, despite my valiant efforts of persuasion, prefer to call themselves phyles, tribes, clans, pods, schools, gaggles, or ganfaloons…

In many cases peers will be able to join multiple guilds, leagues, phyles, etc. as appropriate to their interests and skills. In p2p culture most such groups, despite their other characteristics, will tend to be the peers of each other and will tend to practice the same cooperative individualism or cooperative autonomy that pertains amongst individual people peers. This will make a flexible and resilient network of peers and peer groups spanning local, regional, national and global topologies.

Occupy Wall Street Guilds

Numerous guilds have worked with OWS, including

• National Lawyers Guild
• Progressive Librarians Guild
• Writers Guilds
• The newspaper guild
• Citizens Media Guild

The OWS NY City General Assembly (NYCGA.net) has the following guilds in its Arts and Culture Network:

• Architecture and Urbanism
• Dance
• Filmmaking
• Graphic Arts/Design
• Multi-Disciplinary Arts
• Music
• Painting and Drawing
• Performance & Theater
• Photography/Video
• Poetry
• Puppetry
• Screen Printing Guild
• Sculpture
• Short Stories
• Videogame

OWS General Assemblies (GAs) in each city already have committees or working groups with common themes. OWS guilds could be formed to help connect working groups in cities across nations and the world into networks of common skills and bodies of knowledge, such as:

• Information and Communications Technology
• Software Engineering
• Banking and Finance
• Education
• Construction
• Food and Agriculture
• Transportation

2. Partnerships between P2P groups and local, regional, national, and international geopolitical (evolving into Eco-political) and non-state sovereign entities.

P2P culture will help to establish many strong, self-reliant economies at the local geopolitical (or Eco-political) level by forming partnerships between the P2P guilds, leagues, etc. and progressive local communities. These partnerships will maximize economies of scope via open, peer processes such as peer production and crowd-sourcing.  These p2p/geopolitical or p2p/eco-political  partners would also become increasingly confederated with their counterparts bio-regionally, nationally, and globally.

There may be cases where such partnerships fuse into indivisible p2p entities and cases where they do not. Regardless of that, the objective is to weave the influence of p2p culture into the geopolitical fabric of the planet, concentrating first at the  the local level, at the most receptive local geopolitical “nodes,” and then spreading outwards. The levers which p2p culture will employ in this effort will be open knowledge, expertise, and methodology that will enhance the comparative advantages and capabilities of the geopolitical partners in contrast with those geopolitical entities which do not embrace the p2p partnership. In effect, p2p culture will come to the rescue of local entities that give us access. At the same time, we will redirect the public policies and practices of our geopolitical partners towards open and sustainable operations.

This follows the axiom that the only way to save ourselves is by saving others.

3. The “Castling” Maneuver

This is a shifting of local populations between adjacent geopolitical jurisdictions (such as cities and counties in the US) so as to create political, social, and economic majorities of p2p culture in the targeted locations. Those locations that are simultaneously abandoned by p2p culture are essentially “sacrificed” to the corporate predators. (Half a loaf saved is better than none.)

This kind of effort will involve brokering a lot of property on favorable terms for all involved. It will involve massive relocation of homes, small and medium businesses, farms, and  personal revenue streams. We will need the ability to concentrate the efforts of our global human and financial resources on as many concurrent locales as possible.

Our ability to accomplish such maneuvers will depend heavily on the quality of the organizations and networks we build and our technology toolkit. Our social networks, alternative financial systems, and complementary currencies will need to operate very well and very securely at scale. We will need the ability to perform large volumes of complex social organizing activity and complex economic activity in a highly secure and efficient manner.

As Elinor Ostrom wrote in Green from the Grassroots, the last post before her death on June 12:

“The goal now must be to build sustainability into the DNA of our globally interconnected society. Time is the natural resource in shortest supply…“

We don’t have forever. Hopefully we have a decade or two. But we may not have even another decade to prevent unprecedented suffering and practically irreversible ecosystem collapse.

Poor Richard

Related

• The New Guilded Age (New Yorker Magazine)  “From roughly the turn of the first millennium to the French Revolution, guilds operated as associations of independent craftspeople, setting standards for their lines of work and cultivating subcultures around their labor.”

• Wage Labor and Guilds in Medieval Europe (amazon.com)

• Guilds, Innovation, and the European Economy, 1400–1800 – by S. R. Epstein, Maarten Prak

 

WTF is the Hex Model?

Exegesis on Poor Richards’s Hex Model

Systems thinking about the society (Photo credit: Wikipedia)

In the “Ownership of the Commons” and a few previous comments in the P2P Group on Facebook I introduced the “Hex Model” framework:

people-places-things — relations-rules-results

The hex model was inspired by an essay by Helene Finidori, Systems Thinking and ‘Commons-Sense’ for a Sustainable World . There are probably other things like it out there, because it is practically a self-evident concept. It applies retroactively to everything I’ve written and read in the past few years on the commons, property, ecological economics, and similar topics. I would like to continue developing this concept through dialog here or in the P2P group.

Basically the hex model applies to all topics that consider relations between people in which any kind of resource is important. If something pertains to people and to resources at the same time, the hex model applies.

The hex model is an analytical tool that is intended to help draw out and organize the key particulars of any resource use case. Widespread use of such a model might potentially standardize the way we collect and organize data across many research projects and fields of study. It also provides a semantic sub-ontology that could be added to many existing ontologies (e.g. classification systems, taxonomies, schema, vocabularies, folksonomies, etc.) for thinking about and discussing the interactions of people, places, and things.

A six-pointed star formed by extending each of the sides of a regular hexagon into equilateral triangles.

The first triangle of the hex model hexagram are “objects”: people-places-things. These are variables that can be given concrete values taken from in vivo and in situ cases.

The second triangle combines two sets of algorithms and a set of results. The relations-rules-results are also taken from the same specific cases as the people-places-things.

Taken together, these elements and their arrangement may be used to model actual cases of socioeconomic activity. These elements can be arranged  like an equation in which the object variables are represented along with some arrangement of relations and rules. Any of the elements might appear on either side of the equation, but the expression on the left of the ” = ” would generally be the “inputs” and the expression on the right of the ” = ” would typically be the “output” or results.

I am trying to develop a common, generic scaffolding for organizing key particulars and metrics for the analysis of human-resource relations that will work across a variety of ontologies or idioms. Possession, access, ownership, authority, governance, control, and management might be thought of as similar things expressed in different idioms or seen from different perspectives. Control of property or resources (and commensurate responsibilities), is often distributed across various levels from state to community to group to individual. In most cases we find some degree of subsidiarity in these relations. But without appropriate and consistent models and data structures it can be difficult to compare, contrast, or quantify these things in any rigorous way, especially across different researchers, writers, activists, and domains.

In this particular formulation, as first framed, I did not see the hex model as prescriptive of practice except for analytical and rhetorical practice. The original aim was to capture particularities in commoning practice or any other in vivo and in situ socioeconomic practice and then analyze, contrast, compare, and discuss these particularities in a more rigorous way than is usually found in colloquial discourse and perhaps in some academic discourse. At  least we can aim at some terminology that might remain relatively coherent across multiple communities of interest.

But this just in…

Helene Finidori has suggested some adaptations of the hex model that might make it more applicable to “‘seeding’ or ‘domesticating’ emerging change,” or in other words to commoning practice rather than simply to analysis and rhetoric. Her suggestion consists of renaming and rearranging  the elements of the hex model as follows:

Feedback loop (Photo credit: Wikipedia)

People-Domain (environment)-Interactions: This would form the first triangle and would “cater for virtual operations (think specification of boundaries of the commons or the system)”. (HF) Helen argues that “this is the relational context in which the emergent behavior arises, that can be ‘seeded’.”

Things (objects/assets)-Rules(culture)-Results: This forms the second triangle of elements that “make up the commons (as I described them), as outputs that can be measured, what is ‘produced’ by the emergent behavior of the system and become inputs as medium for interaction in the relational context in a feedback loop.” (HF)

I admit to some reluctance to abandon the “people, places, and things” triad precisely because it is a preexisting, familiar meme; but Helene’s suggestions have compelling force. I especially like the feedback loop or spiral perspective in which inputs become outputs and then feed back as new inputs.

At least it remains a HEX model, thank goodness, as I was quite attached to that. 🙂

But no worries for Poor Richard. Michael Maranda pulls all my old chestnuts (and perhaps some future ones) out of the fire with this compact gem:

“Interesting to consider the original triad groupings and the [Finidori] alternate that resulted from the discussion. As triads go, we don’t lose anything, because taking one triad or a different combination will be a matter of what facets are relevant for a given approach or in making particular points.” ~Michael Maranda

Nice save.

The hex model is really just a little high-level template for data. We have established that it can be permutated and instantiated in different ways to suit various ontologies or purposes. Of course when you actually get down to particulars at a level of granularity (a unit of land with various appurtenances, or an adequate functional description of a person, for example) many additional sub-categories and data structures would be required and many additional standards and specifications would be needed.

And now this is thrown open to the nascent commons community, to its critics, and even to the maddening crowd for comments, questions, and collaboration–a consummation devoutly to be wished.

Poor Richard

A view of the Hex Model in DebateGraph

Related PRA 2.0 Posts:

• Science of the Commons?
• Ownership of the Commons

Also Related

Resources, events, agents (REA) is a model of how an accounting system can be re-engineered for the computer age. REA is an ontology. The real objects included in the REA model are:

• goods, services or money, i.e., resources
• business transactions or agreements that affect resources, i.e., events
• people or other human agencies (other companies, etc.), i.e., agents

Science of the Commons?

ARDX – Arduino Experimentation Kit (Inside the box) (Photo credit: Wikipedia)

We progressives and activists often do a better job at describing problems than crafting solutions. The best way to get at solutions is a rigorous program of empirical experimentation. The contemporary dialog on the commons gives us some hypotheses to work with (although they are mostly old fare), but that’s about as far as it goes. Even when people act together and implement various ideas (collectives, coops, ecovillages, etc), a decade or two later that group or project may be gone, leaving very little for us to analyze as to the reasons for its failure. Or it may still be going strong but we may have little real understanding of why.

Does it replicate?

Throwing down the gauntlet

Throwing spaghetti at the wall is an experiment, but what we need are longitudinal studies and comprehensive programs of progressive, coherent, controlled experimentation.

I also suggest the discourse on the commons should center on in vivo and in situ cases rather than on theories or principles. When we look at cases we see things we like and dislike, even if we may not know why. Theories and principles can help us explain what we like and don’t like, but seldom help us recognize it. The problem with reinventing the wheel ex nihilo is that you might end up with a better wheel or a worse one. A better approach is to start with a sample of existing wheels and try to understand the advantages and flaws of each.

If the current commons movement really represents something new, it should philosophize less and say more about how it is going to create a scientific framework for its program.

Information Technology

One step in that direction involves information technology. I am imagining an information system of commons practice and research. The P2P collaborative economy, free culture, and new commons movements are creating a lot of digital content. Most is in discursive and narrative form that is time consuming to read. Among this volume of content are case studies in a variety of formats (many very informal), business plans, proposals, and presumably many legal documents (charters, agreements, etc.).

I am imagining a semantic ontology according to which the key ideas and data of this content could be parsed and tagged to form a distributed database using open linked-data structures. This would help transition the collective knowledge base of the research, activist, and social entrepreneur communities into a machine-readable, semantically linked, searchable form.

Much of the digital content of interest is already in “wiki” form. The P2P Foundation Wiki is an excellent searchable resource, and perhaps the semantic wiki extensions for the wiki engine could eventually be applied. “A semantic wiki is a wiki that has an underlying model of the knowledge described in its pages. Regular, or syntactic, wikis have structured text and untyped hyperlinks. Semantic wikis, on the other hand, provide the ability to capture or identify information about the data within pages, and the relationships between pages, in ways that can be queried or exported like a database.” (Wikipedia/Semantic_wiki)

A fringe benefit of creating such data structures for existing content would be to provide common templates for future content creation and data collection.

Moving Forward

The “old ways” often had utility, but as a result of eons of trial and error which seldom had much more than temporal correlation with the prevailing philosophies, ideologies, myths, and intellectual fashions of the times. “Creating those attractors authentic to a population’s readiness” (Bruce Kunkle) is a good idea as well as a well-turned phrase. So I don’t mean to dismiss the importance of rhetoric and public relations, but if we are to have something truly worthy of communicating we need for the science and engineering (R&D) to keep pace with the philosophy and rhetoric.

A new science of the commons needs to go beyond the old narratives of economics, sociology, and even traditional ecology. I highly recommend the following topics:

• cognitive neuroscience
• ecological economics
• neuroeconomics
• behavioral economics
• neurosociology
• neuropsychology

We don’t have eons to muck around any more. I say this respectfully as a commoner, communitarian, conservationist, and all-around activist who has been mucking around for decades.

Poor Richard

Related PRA 2.0 Posts

• WTF is the Hex Model?
• The Origins of Human Nature
• Escaping Economyland
• Framing the Market
• General Utility 2.0
• Analyzing mixed socio-economic systems

Related articles

• Barry Commoner: scientist, activist, radical ecologist (climateandcapitalism.com)
• Experiments in Social Computation (cacm.acm.org)
• How Your Brain Computes Value (chronicle.com)
• The Triumph of Fantasy over Science, Part 2 (greenconduct.com)

Framing the Market

Market failure diagram showing deadweight loss (Photo credit: Wikipedia)

I’m tired of  the market hype from the right and the left. The 1% relentlessly pushes a free market (invisible hand) mythology without defining what they mean by it, all the while lobying for regulations that favor their own interests. And the Left has begun pushing a post-market (new-age invisible hand) mythology. Each form of market/anti-market fundamentalism will fail for the same reason: denial and wishful thinking (two sides of the same coin).

Is the market guilty as charged, or has it been falsely framed by both sides?

MYTH: The Free market.

FACT: There is no such thing as a free lunch or a free market. Every market is manipulated by the strongest players. The private sector cheats, steals, lies, and bullies. The state regulates according to a mixed set of public and private interests. If those interests get out of balance, either the public or private sector (or both) will suffer.

“Markets are not provided by nature. They are constructed — by laws, rules, and institutions. All of these have moral bases of one sort or another. Hence, all markets are moral, according to someone’s sense of morality. The only question is, Whose morality? In contemporary America, it is conservative versus progressive morality that governs forms of economic policy. The systems of morality behind economic policies need to be discussed.”    AlterNet / By George Lakoff and Elisabeth Wehling

MYTH: The Invisible Hand.

FACT: There is no such thing. There are only real, material “hands” that we either cannot or will not look at.

MYTH: Government is the problem, not the solution.

FACT: The solution is maximizing utility through appropriate checks and balances. Government has a role in 1) providing regulatory counter-balance to private concentrations of power which amplify the cheating, stealing, lying, and bullying; and 2) socializing some of the costs of education, R&D, infrastructure, public safety, national defense, etc.

MYTH: Markets are the problem, not the solution.

FACT: Ecosystems behave like economies with markets. Natural markets tolerate large amounts of power asymmetry (aggression) and information asymmetry (deception). What is not found in a natural ecosystem is an externality. They do not exist there. Externality in human economics is an entirely abstract fiction. An externality is where someone gets something for nothing and gets away with it indefinitely. That doesn’t happen in an ecological economy. If it did, all life would probably be extinct.  Instead, nature is stubbornly resisting and postponing its extermination at our hands. It actually doesn’t happen in the real human economy, either. It only happens in human economics, which is riddled with a variety of naive or intentional accounting errors which are generally explained by economists as externalities or market failures. Naturally, externalities and other accounting errors inevitably produce market failures.

Post-market theology

I won’t dwell on the myths of “economics as if only the 1%  mattered,” because they are now fairly well understood by many. We have given the invisible hand a very long trial. It’s had some episodic success but it is now failing badly. But there is lately a “new age” invisible hand that some are appealing to as an alternative.

I recently published a piece with the alternate title of  “Escape from the Planet of the Economists.” In that piece I made a case for “economics as if people mattered” and “economics as if the biosphere mattered.” I drew from writers like E. F. Schumacher who argue that the human economy is part of the ecosystem, not vice versa. This is currently being called sustainable or ecological economics. I completely agree with the particular arguments of the particular authors I cited. But some economic pundits are embracing this general framework without adequate understanding of what the ecosystem is or how it works, and without adequate understanding of what markets are or how they work. They seem fairly sure that you can’t shoehorn nature into a marketplace, and fairly sure that that one idea explains everything.

The premise seems to be that since the market has not historically conserved and enhanced the biosphere, the biosphere must work on non-market principles. The problem is that the second conclusion doesn’t necessarily follow from the first. It is a non sequitur. First, the nebulous thing we often call “THE market” doesn’t exist. Instead, the economy is an aggregate of many markets. Because many (or nearly all) of these markets are distorted or flat-out broken, it appears that markets per se are unworkable. Its as if someone in the middle of a vast junkyard of broken cars concluded that all cars were inoperable. In fact, with the right knowledge and tools, many of those cars could be fixed. But my imaginary character doesn’t have that knowledge. He doesn’t have the right tools, either.

If the first error is a false analysis of the problem, a second error inevitably follows–a false solution. The reason all the old cars (and old markets) in the economic junkyard are broken is that they were not maintained in a responsible fashion because they were only on temporary lease to their operators. Lets say all those irresponsible operators were just following the example, and sometimes the advice, or direction, of their betters, the 1%.

And now this two-faced 1% is getting caught in the act of green-washing their activities. They are pulling the strings of their politician manikins, sending them to international summits on hunger or the environment or global warming, campaigning for austerity or resource management schemes full of tricks and loopholes big enough to drive a fleet of deep-water drilling platforms through.

Many conclude that these amoral capitalists have nothing to offer but more waste, fraud, exploitation and abuse. Which is pretty much the case. So its only natural for a movement to gravitate around respect for the 99% and for the environment, and then go looking for post-market methods for shaping society and finding harmony with nature. They turn to gift economies and sacred economics drawn from mankind’s romanticized past, or imagine societies that function on harmony and good will instead of greed and accounting. They may be inclined to imagine bountiful commons that manage themselves the way nature manages itself. I’m sympathetic to the sentiments and the philosophy, but that doesn’t satisfy me. I want the skills and the tools to get broken markets and broken ecosystems back on the road to thriving.

GB.MEX.10.0143 (Photo credit: balazsgardi)

Of course what goes by the name green often isn’t (including some versions of “green economics“), and the only solution for that  is eternal vigilance against green-washing. “Big Green™” would be dumb not to appropriate certain language from Natural Capitalism, for example–its just so easy.

“When plunder becomes a way of life for a group of men, they create for themselves, in the course of time, a legal system that authorizes it, and a moral code that glorifies it.” – Political economist Frederic Bastiat, The Law [1850]

We are well-advised to be wary of giant green snakes and wolves in green clothing sneaking into the people’s garden; but not to be prejudiced against all applications of  market thinking in ecological economics. Is there any reason the 99% cannot “occupy” and democratize markets?

I can believe that the United Nations Environment Programme (UNEP) and the Reducing Emissions from Deforestation and Forest Degradation (REDD) projects are (or are not) clever tricks to disguise continued exploitation. Either way, the effort to scientifically quantify natural systems, as in  approaches to sustainable or Natural Capitalism, is not in itself a sinister scheme. It is required for good management of any system, whether fishery, forest or farm. No doubt the language of pending high-level agreements may be obfuscating some ulterior motives. I’m very skeptical of trading permission-to-pollute credits. But what is often proposed as the alternative is not exactly transparent, either.

Here is a fairly typical example from a writer who rejects Natural Capitalism and similar approaches because he fears a slippery slope to green-washing. He proposes an economic system based on:

• peace, harmony and balance among all and with all things;
• complementarity, solidarity, equality and social and environmental justice;
• collective well-being and the satisfaction of the basic necessities of all;
• recognition of human beings for what they are, not what they own;
• elimination of all forms of colonialism, imperialism and interventionism

There are lots of ambiguities there. Such ambiguities can easily morph into obscurities and obfuscations which can provide cover for abuse and exploitation of people or natural capital or both. Not even the ban on colonialism and interventionism really holds up to analysis unless we go back to being hunter-gatherers and stop colonizing or intervening in nature. As one of my peers pointed out to me recently, appeals to optimality are really arguments that we’re living (or will be)  in the best of all possible worlds; or would be if only we’d regulate or deregulate or something.

Inquisition 2.0?

How will we draw the lines between good-faith green economics and green-washing? No simple answer, but that’s the kind of thing that empirical science, at its best, can be good at. The alternative to science may be a kind of post-market fundamentalism whose dogma demands belief in a new-age invisible hand. I am already seeing omens of an Inquisition 2.0 which will torture disciples of sustainable capitalism until they confess to sins of  green-washing and recant their faith in science.

An ecological moral philosophy is useful, but a new version of the invisible hand (even a spiritual one) is not. A real science of sustainable economics is needed regardless. Such a science won’t be achieved just by good will and wishful thinking. It will require deep observation, painstaking metrics, statistics, and very complex accounting.

Confusion of tongues

The original Green Revolution was guilty of so many sins it may have cast a permanent cloud over the word “green”. Modern corporate and political green-washing darkens that cloud even more.

The battle for the soul of the word green reminds me of the confusion of tongues (confusio linguarum), the fragmentation of human languages described in the Book of Genesis 11:1–9, as a result of the construction of the Tower of Babel.  And George Orwell charicatured the authoritarian appropriation of language with  Newspeak in the novel Nineteen Eighty-Four. In the novel, it refers to the deliberately impoverished language promoted by the state. (Wikipedia)

I’m not convinced that the left is not impoverishing the conversation on sustainability in another way with its glittering generalities about sacred economics and effortless abundance.

In a nutshell, without the rhetoric, the  moral or spiritual approach to economics boils down to:

• reducing the scale and scope of markets
• expanding the scale and scope of the commons
• putting more emphasis on the public sphere

All that really means to me is there is no unitary, all-encompassing market and certain things aren’t on the auction block. Markets shall have circumscribed scope or boundaries, including appropriate regulation and no more archaic, grandfathered externalities. But the notion that everything should evolve from markets toward something else is pure speculation. Well-regulated, democratically-managed markets might be natural and desirable even within many local commons. An agricultural land trust might want a big, bustling produce market, and why not?

What we must add to the moral philosophy is an ability to mimic the balance between steady-state and development in living systems.

We need to start seeing markets, commons, and ecosystems alike as complex adaptive systems requiring appropriate (e.g. transparent, dynamic, and democratic) constraints and regulatory mechanisms both internal and external. We need to see them as layered, overlapping, recursive, and locally differentiated by environemntal niches.

These systems are almost unfathomably complex and I wager that all our current models and subjective interpretations barely begin to scratch the surface of the objective reality. Any notion that we can re-engineer the whole market ecosystem from the top down is the height of hubris. Instead it will take a great deal of inspired trial and error from the bottom up and from the inside out.

In our efforts to upgrade our economic consciousness, plenty of kumbaya will be essential, but it won’t be sufficient. Humanity cannot live on love and peanut butter alone.  I think many of the innovators  who will fertilize the science and technology of sustainable markets may come from the highly experimental (and less theoretical) hacker, re-mix, peer-to-peer (p2p), and open source cultures.

Ecological economics can also be thought of as integral economics, a framework that includes but transcends existing fundamentalist market frameworks, integrating local econo-diversity with global interdependence–i.e. “reinventing economics for people and place.”

Neither markets nor economic anarchy seem to scale well by themselves. But I think they might scale indefinitely in balanced proportions.

Poor Richard

Related articles

• Escaping Economyland (PRA 2010)
• Disenclosure of the commons (PRA 2010)
• General Utility 2.0 (PRA 2010)
• Green Governance: Ecological Survival, Human Rights, and the Commons, (Commons Law Project)
• “Recalibrating the Law of Humans with the Laws of Nature:  Climate Change, Human Rights and Intergenerational Justice”  by Burns H. Weston and Tracy Bach (Vermont Law School & University of Iowa: Climate Legacy Initiative, 2009).
• The Finance Innovation Lab
• Adam Smith would have hated market fundamentalism (betternature.wordpress.com)
• The UN’s ‘Green Economy’ plan is a destructive illusion (climateandcapitalism.com)
• Elinor Ostrom (Wikipedia) “Ostrom is considered one of the leading scholars in the study of common pool resources (CPR). In particular, Ostrom’s work emphasizes how humans interact with ecosystems to maintain long-term sustainable resource yields.
• Valuing Nature: Democracy or economics? Paul Anderson, May 2012 (opendemocracy.net)

• Integral Economics: A Manifesto, by Christian Arnsperger (kenwilber.com)
• The Centre for Integral Economics promotes innovative economic tools and policies that redirect the powerful influence of the marketplace toward sustainability.
• Abundance, utopia and degrowth in popular history
• The Land Ethic by Aldo Leopold, from A Sand County Almanac, 1948
• Charting the Course of Socioeconomic Evolution (onthespiral.com) “Lorenz thought that the world is knowable, but it is knowable through the categories of the knower, which were shaped by evolution. So evolutionary adaptation by natural selection results in a partial correspondence, a kind of isomorphism between the structure of the world and the organization of the knower. On that account, organisms do not make theories of the world, they are theories of the world.”
  – Sam Bowlesparaphrasing Conrad Lorenz

• On economics as a science of prosperity (eco-transitions.blogspot.com)
• 2012, the year of Ecological Economics? Exploring the mad rationale for asset price bubbles (eco-transitions.blogspot.com)
• The Rise of The New Economy Movement (Alternet.org) The broad goal is democratized ownership of the economy for the “99 percent” in an ecologically sustainable and participatory community-building fashion. The name of the game is practical work in the here and now—and a hands-on process that is also informed by big picture theory and in-depth knowledge.

• RSA Animate – The Power of Networks (YouTube)

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“They want us to believe the choice is the “free market” or government, when in fact it’s one system because government sets the rules of the market. And the real choice is between a system that works for the many or the few.

They want us to think people are paid what they’re “worth,” when in fact people are paid according to how the moneyed interests have organized the market — to their benefit and against most of the rest of us.

They don’t want us to see the upward pre-distributions hidden inside the market that give them a big chunk of our paychecks, as we pay more than we should for everything from drugs to Internet service to food.

They don’t want us to know how much their pollution is sickening us, their devastation of our lands is imperiling us, their sacking of our communities is ruining us, and their takeover of our democracy is robbing us of our capacity to set things right.” 

~Robert Reich

ADDENDUM

Robert Ryan is a Graduate Student Assistant at the University of Pittsburgh. Class of 2013 · PhD · Structures and Foundations · Business Environment, Ethics, and Public Policy · Strategic Management

This is my online interview with Robert Ryan on 5/22/2012:

Poor Richard: Robert, I’m curious what you think of my very unscholarly take on markets and green economics in “Framing the Market.”

Robert Ryan: The simplest way to summarize this problem is “optimization under constraint”. In the same way that engineers perform constrained optimization problems, it is generally assumed in markets that individuals do the same, each using the same rationale as an engineer of their own personal consumption functions. Markets (here we are referring to idealized, perfect ones) are non-coordinated mechanisms for spot transactions to optimize utility under budget constraint. What this generally means is that the only two important variables are individual level preferences and budgets. As you have mentioned, this doesn’t hold true if you have more important variables like information, time, transaction costs, bargaining power, etc. Simply put, there is no “environment” in traditional market models, period, which is what separates them from evolutionary ecosystems. Ecosystems aren’t just individuals. There are group level dynamics where individuals interact with “BOUNDARIES” of the system. For example, consider how tides in a sandbar ecosystem is a boundary condition for the survival of a population of sandbar-dwelling animals. The very existence of tides shapes behavior. The list of natural system boundaries for markets include, but are not limited to: Rationality (what Herbert Simon called bounded rationality)…environmental entropy and finality (in the sense that some resources tend to be not only scarce, but decaying and non-renewable, and that some resources have critical inflection points where they pass between sustainable in supply and not……power (which is delineated by human institutions, including knowledge, law, etc.)…technology (which is the level of possible combinations of resources to create final goods)….etc…..notice that all of these constraints can be put into the economic system, but economists struggle to do so because of the complexity problem causing indeterminacy (the mathematics of chaos takes over, essentially, when everything ids dependent on everything else recursively). The simplest way to escape the problem of chaos is to hold some things constant over time. So, this is what people do to solve problems- hold things constant that may or may not BE constant. Their biggest error in the modern age occurs when hey hold constant essential SUPPLY SIDE problems, such as pollution externalities being ignored. An externality as you defined it is not quite right. An externality really is when one individual’s action that maximizes THEIR preferences impacts the entire economy negatively. For example, if a polluter pollutes, everyone else picks up the tab. The simple way to deal with externalities is to regulate against them, but that requires common agreement among everyone in the regulation.

Poor Richard: Robert. I appreciate and agree. Could I add your remarks as a comment to my blog post? (I was being a little flip with my definition of externalities. Maybe I should tweak it.)

Robert Ryan: Many people don’t know that economists indeed do solve such problems. The most popular field of economics for dealing with this problem is the economics of contracts. A market is a special case of contracts where all tricky bits are held constant. However, contract economics is generally specified so that you can account for ANYTHING. But, the math is really tricky for even the simplest of contracts. Contract economics presumes a bunch of agents are trying to negotiate a solution to an economic problem, and at least one of them is a principal. This is basically the mathematical representation of social contract problems: “we all get together before birth, or before the veil of ignorance, and devise a social contract to solve problems” – is how my professor Lawrence Ales puts it. For example, there may be some golden ratio of consumption of farmland that if you pass beyond you begin destroying future farm output. In order to prevent this, the principal is granted the ability to distribute to farmland (forming your constraint) and then the agents can auction for their slice of production. In this fashion you cap the use of farmland. Easier said than done, because it is hard to know exactly how this problem works in the real world–the chaotic inter-dependencies of the precise use of farmland and the precise use of other kinds of resources (water, air, etc…what technical combinations are employed in production, etc. ) are hard to know, and the equations of their interdependency are recursive. Carbon caps are an attempt to do exactly this, and the logic for it comes from contract economics, not market economics. To summarize again, you can solve these problems one at a time by holding other problems constant, but you get the “law of unintended consequences” even in contract economics in a complex world. Solving one problem can often pass the problem into another domain. Solving carbon problems can, for example, pass the problem on to other kinds of supply issues, rent-seeking behavior, arbitrage, etc. However, we can still do some of this with economic engineering (combinations of market and contract rules) if we use a kind of Pareto efficiency rule– start with the biggest problems first and work backward– permit the little inefficiencies to exist and simply engineer human solutions to the tough problems. When the problems of the world are explained thusly, then it becomes obvious that ethical solutions to market economic problems are certainly obtainable, and only ignorance or immoral behavior can explain why we don’t engineer problems of public goods of such nature. This means our real problem is NOT economic but political/social. Ironically, everyone keeps blaming economists when the real blame lies in the power structures of political reality.

AS a general rule, one would say that markets should only be the appropriate mechanism where externalities and supply side inter-dependencies are trivial. When they are major problems, markets will inevitably destroy whatever environment you are dealing with. They eat themselves. They are cancerous. However, if you can contain and isolate markets from the ecosystem so that they are in “remission” essentially, then they are optimal. Ecosystems do suffer from cancerous market-like problems, too. The main reason why ecosystems tend to survive in the long run is that the entire system adapts to starve the cancer. Human markets aren’t designed to adapt to starve the cancer efficiently. They will in the long run, but in the long run we’re all dead. A troublesome species like humans can simply write themselves out of existence. Well, if that’s not an acceptable endgame solution, then we have to constrain our own cancers before we eat ourselves. This is why we need social contracts, and if we cannot make adequate ones, we need to break into subspecies (tribes, etc.) and exterminate the cancerous subspecies that are indigenous to the problem in order to save the species. That sounds awful, but true.

Poor Richard: I agree with you about the difficulty of the math. Fortunately massive data collection and pattern detection may soon give us a new way of doing science, and replace a lot of difficult mathematical modeling. I think we should take about 10% of all scientists and mathematicians and put them on that critical path.

Robert Ryan: We are reaching a state of the world that definitely calls for a technocracy in the similar sense that Plato wanted us to have philosopher kings. Truly the smart people of this world could be put to work solving our problems in a fashion far superior than is currently being done, and this is a big part of my political platform I advance. I call it the Pragmatist party (or New Bull Moose).

Poor Richard: I like the sound of the Pragmatist party. How would it handle the 1%?

Robert Ryan: By appealing to the top 20% instead. One of the big fallacies is that the 1% can out-bully the entire middle class. They can’t. No middle class and there is no economy, no military, no institutions to exploit. The middle class has not really shrunk. Its the lower middle, or working class, that has been getting worse off and shrinking as more people are falling to the lower class. The real middle class is really the professionals, intellectuals, entrepreneurs, petite bourgeoisie. There is no political party designed to appeal to them directly. In fact, both American parties preserve power by going around them completely. Most of the real middle class are independent and non-extremists. The pragmatist party basically says: enough is enough. These are the real job creators, the innovators, the creatives of society. Without them there would be no economic growth. So, let’s appeal to them pragmatically and say they can deflate the 1%, and in exchange for gaining more representation, they must take better care of the lower classes than the 1% has. Our target audience is thus the people who truly dominate campaign donations, charity donations, and our communities, but have been so fractionalized and “suburbanized” so as to think of themselves as independent instead of a class. If they were to think of themselves as a class again of sane people of balanced reasoning, then the middle class could save us.

Poor Richard: How can you appeal to such a class without insulting or alienating the rest of the 99%? And isn’t there a good reason that the middle class doesn’t make waves?

Robert Ryan: Yeah– I’ve had this discussion many times before. Well, we are reaching a point where, for the first time in American history, their prospects are not looking to get better, and they all mostly know that their nation is crumbling slowly, and that there is no good reason for this to happen. There are already plenty of instances of these people getting together to get the job done on a smaller scale. Typically you see this in university/business/local govt. cooperation. Various entities have gotten together to plan to save Detroit, for example. And they’re already on the right track. These sorts of cooperative efforts to socially contract new, smarter solutions do happen, and when they do, they tend to be more localized. This is part of the sensibility of the authors out there writing about the urgent need to revitalize our cities– cities are the places where, historically, the top 20% collaborate to make great places to live for everyone. The 1% typically help finance everything and provide resources flowing into these cities. But the very history of the city is the history of the yeoman specialists and master tradespeople getting together and making economies tick. The role of the larger federal system is to provide resources to these self-organizing activities on a more local level– such as infrastructure banking, research grants, development money, etc…but the activities have to be more local and less centrally planned. There seems to be an optimal scale efficiency of central planning, and it is when you have diverse interests willing to throw their hat into a common state interest– in the US, this has never been the federal level because of a lack of common identity. Regions and states are more apropos. Richard Florida is one man who understands this and would be an ideal candidate for such a party.

Richard Florida | Creative Class Group

How Detroit Is Rising

You’ve heard the story of the city’s downfall. This is the story of its comeback.

Multimedia showcase | Creative Class Group

mimicking the balance between steady-state and development in living systems

Escaping Economyland

(Alternate title: Escape from the Planet of the Economists)

Economyland is a place on the flat world of  Reductio Ad Absurdum where the Economical Bestiary’s mythical beasts run wild in a free state of nature. Economyland is the true center of the universe around which the sun, planets, stars, and all the rest of the universe revolves. Economyland was created by God and placed under the dominion of man,  a sort of Disney-esque theme park for economists of all species. In ancient times Economyland was known as Economia:

In the Eastern Orthodox, Greek-Catholic Churches, Latin Catholic Church,and in the teaching of the Church Fathers which undergirds the theology of those Churches, economy or oeconomy (Greek: οἰκονομία, oikonomia) has several meanings. The basic meaning of the word is “handling” or “disposition” or “management” or more literally “housekeeping” of a thing, usually assuming or implying good or prudent handling (as opposed to poor handling) of the matter at hand.  (Wikipedia)

War of the World-views

Pius conservatives are fond of accusing science of being reductionist, of reducing the divinely-wrought human being and the world of nature to an oversimplified, materialistic machine.  This is, as always, the conservative pot calling the kettle black.

Liberal economists don’t do much better. Most economists share a model of the economic world that is simplistic, reductionist, and naively anthropocentric.

<– click on the image for a closer view of Economia

Capitalism defines the economic system in terms of the dynamics of capital and labor; production, distribution, and consumption;  or as it is often framed, the supply and demand of goods and services. The natural world is seen only as a supply depot for raw materials. The production and consumption of goods and services of and by the biosphere , is treated as a giant externality. And that view is a giant existential blunder.

Of course, it is a conveniently self-serving (if short-sighted) blunder in some quarters; and we need not wonder too hard about how and why this oversight has persisted for so long.

In contrast, “economics as if people mattered” (see below) has to begin with economics as if the biosphere mattered. The biosphere can not be treated as a free supply depot and waste dump. The ecosystem cannot simply be seen as a magical black box that God put here to provide for all human wants and dispose of all human garbage. You’d have to be either a moron or a person with serious conflicts of interest skewing your judgment (or both) to hold such a view. Yet that is just the view of most economists, for whom nature is simply a part of the human economy rather than vice versa.

One of the first widely respected economists to correct this misapprehension was E. F. Schumacher who published Small is Beautiful in 1973, which placed the study of economics where it belongs, inside the study of the ecology of the biosphere. His ideas were of course treated with contempt by most conservative economists and they are generally still ignored by or unknown to most liberal economists.

Small Is Beautiful: Economics As If People Mattered by E. F. Schumacher.

Schumacher was a respected economist who worked with John Maynard Keynes and John Kenneth Galbraith. For twenty years he was the Chief Economic Advisor to the National Coal Board in the United Kingdom, opposed the neo-classical economics by declaring that single-minded concentration on output and technology was dehumanizing. He held that one’s workplace should be dignified and meaningful first, efficient second, and that nature (and the world’s natural resources) is priceless.

Schumacher proposed the idea of “smallness within bigness”: a specific form of decentralization. For a large organization to work, according to Schumacher, it must behave like a related group of small organizations. Schumacher’s work coincided with the growth of ecological concerns and with the birth of environmentalism and he became a hero to many in the environmental movement.  (Wikipedia)

The Happiness Index (E.F. Schumacher Society/New Economics Institute)

The E.F. Schumacher YouTube Channel

Another writer, Richard Heinberg, a Senior Fellow of the Post Carbon Institute, is making an effort to put the study of economics into a modern scientific perspective. Following are a few excerpts from a pre-publication version of his book “The End of Growth:”

The classical [economic] theorists gradually adopted the math and some of the terminology of science. Unfortunately, however, they were unable to incorporate into economics the basic self-correcting methodology that is science’s defining characteristic. Economic theory required no falsifiable hypotheses and demanded no repeatable controlled experiments. Economists began to think of themselves as scientists, while in fact their discipline remained a branch of moral philosophy—as it largely does to this day.

…For help, we can look to the ecological and biophysical economists, whose ideas have been thoroughly marginalized by the high priests and gatekeepers of mainstream economics…

The ideological clash between Keynesians and neoliberals (represented to a certain degree in the escalating all-out warfare between the U.S. Democratic and Republican political parties) will no doubt continue and even intensify. But the ensuing heat of battle will yield little light if both philosophies conceal the same fundamental errors. One such error is of course the belief that economies can and should perpetually grow.

But that error rests on another that is deeper and subtler. The subsuming of land within the category of capital by nearly all post-classical economists had amounted to a declaration that Nature is merely a subset of the human economy—an endless pile of resources to be transformed into wealth. It also meant that natural resources could always be substituted with some other form of capital—money or technology. The reality, of course, is that the human economy exists within, and entirely depends upon Nature, and many natural resources have no realistic substitutes. This fundamental logical and philosophical mistake, embedded at the very heart of modern mainstream economic philosophies, set society directly upon a course toward the current era of climate change and resource depletion, and its persistence makes conventional economic theories—of both Keynesian and neoliberal varieties—utterly incapable of dealing with the economic and environmental survival threats to civilization in the 21^st century.

Another giant of economic empiricism and innovation, though not an economist per se, was W. E. Deming.

William Edwards Deming (October 14, 1900 – December 20, 1993) was an American statistician, professor, author, lecturer, and consultant. He is perhaps best known for his work in Japan. There, from 1950 onward he taught top management how to improve design (and thus service), product quality, testing and sales (the last through global markets, through various methods, including the application of statistical methods.

Deming made a significant contribution to Japan’s later reputation for innovative high-quality products and its economic power. He is regarded as having had more impact upon Japanese manufacturing and business than any other individual not of Japanese heritage. Despite being considered something of a hero in Japan, he was only just beginning to win widespread recognition in the U.S. at the time of his death. (Wikipedia)

Though still virtually unknown and unappreciated in the US, Deming was almost solely responsible for the transformation of Japanese industry from having, in my childhood, a reputation for manufacturing cheap junk goods to, by the mid-70′s, a reputation as the maker of the world’s highest quality and highest value automobiles, electronics , and many other consumer goods. Though his ideas of continuous improvement were originally widely rejected in the US until recently because they did not fit with autocratic US corporate culture, in the 80′s and 90′s US industry imported many Japanese manufacturing consultants  due to the reputation for quality and efficiency that Japan had gained, ironically, as a direct result of adopting Deming’s ideas.

Demings methods, rejected by US captains of industry for decades, swept through the entire Asian world and are largely responsible for the fact that Asian manufacturers are still kicking US industry’s ass today in markets as diverse as cars, cell phones, personal computers, and solar cells.

Where would American workers be without such enlightened and visionary corporate management? Perhaps still in the middle class instead of in unemployment lines or among the the ranks of the working poor. The story of W. E. Deming proves yet again that a profit is without honor in his own land.

The US Is Becoming an “Underdeveloping Nation”

While President Obama tapped former corporate executives to become his top economic team, many economists question the path the United States is on. Amy Goodman of Democracy Now speaks to the acclaimed Chilean economist Manfred Max-Neef. He won the Right Livelihood Award in 1983, two years after the publication of his book Outside Looking In: Experiences in Barefoot Economics.

“We are simply, dramatically stupid. We act systematically against the evidences we have. We know everything that should not be done. There’s nobody that doesn’t know that. Particularly the big politicians know exactly what should not be done. Yet they do it. After what happened since October 2008, I mean, elementally, you would think what? That now they’re going to change. I mean, they see that the model is not working. The model is even poisonous, you know? Dramatically poisonous. And what is the result, and what happened in the last meeting of the European Union? They are more fundamentalist now than before. So, the only thing you know that you can be sure of, that the next crisis is coming, and it will be twice as much as this one. And for that one, there won’t be enough money anymore. So that will be it. And that is the consequence of systematical human stupidity.”

“First of all, we need cultured economists again, who know the history, where they come from, how the ideas originated, who did what, and so on and so on; second, an economics now that understands itself very clearly as a subsystem of a larger system that is finite, the biosphere, hence economic growth as an impossibility; and third, a system that understands that it cannot function without the seriousness of ecosystems. And economists know nothing about ecosystems. They know nothing about thermodynamics, you know, nothing about biodiversity or anything. I mean, they are totally ignorant in that respect. And I don’t see what harm it would do, you know, to an economist to know that if the beasts would disappear, he would disappear as well, because there wouldn’t be food anymore. But he doesn’t know that, you know, that we depend absolutely from nature. But for these economists we have, nature is a subsystem of the economy. I mean, it’s absolutely crazy.”

“The principles of economics should be based in five postulates and one fundamental value principle.

• One, the economy is to serve the people and not the people to serve the economy.
• Two, development is about people and not about objects.
• Three, growth is not the same as development, and development does not necessarily require growth.
• Four, no economy is possible in the absence of ecosystem services.
• Five, the economy is a subsystem of a larger finite system, the biosphere, hence permanent growth is impossible.
• And the fundamental value to sustain a new economy should be that no economic interest, under any circumstance, can be above the reverence of life.”

View the entire interview with Amy Goodman and Manfred Max-Neef.

Keeping It Real

Modern economists need to get over their hair-splitting theories, self-serving technical jargon, and their detached, ivory-tower naïveté, and get real.

As E. B. White once aptly advised, “Bend down, Librarians, and taste the page.” I think it was also he who said “All their biology is Latin names.”

That is the message of the Economical Bestiary, which ridicules the brand of economics which persists to this day as little more than, as Richard Heiberg calls it, moral philosophy. The moral hazard for economists is succumbing to the personal, financial, and academic conflicts of interest between the cognitive corruption of their profession and the objective imperatives of reality.

Poor Richard

Framing the Market (PRA 2010)

Ecological economics (Wikipedia)

Ecological economics is a transdisciplinary field of academic research that aims to address the interdependence and coevolution of human economies and natural ecosystems over time and space. It is distinguished from environmental economics, which is the mainstream economic analysis of the environment, by its treatment of the economy as a subsystem of the ecosystem and its emphasis upon preserving natural capital. One survey of German economists found that ecological and environmental economics are different schools of economic thought, with ecological economists emphasizing “strong” sustainability and rejecting the proposition that natural capital can be substituted by human-made capital.

(Wikipedia)

Natural Capitalism: Creating the Next Industrial Revolution is a 1999 book co-authored by Paul Hawken, Amory Lovins and Hunter Lovins. It has been translated into a dozen languages and was the subject of a Harvard Business Review summary.

Their fundamental questions are: What would an economy look like if it fully valued all forms of capital? What if an economy were organized not around the abstractions of neoclassical economics and accountancy but around the biological realities of nature? What if Generally Accepted Accounting Principles recognized natural and human capital not as a free amenity in inexhaustible supply but as a finite and integrally valuable factor of production? What if in the absence of a rigorous way to practice such accounting, companies started to act as if such principles were in force. (Wikipedia)

The principles used by Natural Capitalism Solutions are:

1. Buy time by using resources dramatically more productively.

This slows resource depletion, lessens pollution, and increases employment in meaningful jobs. It lowers costs for business and society, halts the degradation of the biosphere, makes it more profitable to employ people, and preserves vital living systems and social cohesion.

2. Redesign industrial processes and the delivery of products and services to do business as nature does, using such approaches as biomimicry and cradle to cradle.

This approach enables a wide array of materials to be produced with low energy flows, in processes that run on sunlight, emulating nature’s genius.  It shifts to circular economies in which materials are reused, remanufactured and waste is eliminated.

3. Manage all institutions to be restorative of natural and human capital.

Such approaches enhance human well-being and enable the biosphere to produce more wealth from its intact communities and abundant ecosystem services and natural resources.(Natural Capitalism Solutions)

Related articles

• Framing the Market (PRA 2010)
• General Utility 2.0 (PRA 2010)
• Unconventional Thinking: Small is Beautiful! (rightways.wordpress.com)
• How Economies Relate to Wild Nature (betternature.wordpress.com)
• Elinor Ostrom (Wikipedia) “Ostrom is considered one of the leading scholars in the study of common pool resources (CPR). In particular, Ostrom’s work emphasizes how humans interact with ecosystems to maintain long-term sustainable resource yields
• On economics as a science of prosperity (eco-transitions.blogspot.com)
• 2012, the year of Ecological Economics? Exploring the mad rationale for asset price bubbles (eco-transitions.blogspot.com)
• The Rise of The New Economy Movement (Alternet.org) The broad goal is democratized ownership of the economy for the “99 percent” in an ecologically sustainable and participatory community-building fashion. The name of the game is practical work in the here and now—and a hands-on process that is also informed by big picture theory and in-depth knowledge.

• RSA Animate – The Power of Networks (YouTube) Existing markets are crippled by over-simplification and externalities. This video gives a context for the kind of sophistication and complexity our markets must develop.