The Real Economy

modern_environment_by_mozzila_111-d5cgv3z

By Enrique Lescure

Introduction

Right now, the air is buzzing with the rumours of the next financial crash. This is starting to become an autumn tradition in the more conspiracist camp. The Petrodollar is going down, it is time to invest in gold, weapons or canned food. This time, however, even mainstream newspapers are warning for an impeding financial meltdown – which everyone with the slightest understanding of the current system and of Fiat currencies know is inevitable.

At the same time, we must bear in mind that a Fiat system can theoretically be rebooted by the addition of credits which are pumped into the finance industry. When these credits are not corresponding to what increased growth rates are needed, another financial crash will happen, a recovery occurs and the economy stabilises for shorter and shorter intervals with higher and higher structural unemployment as a result.

As long as there is reason for faith in economic activities, the system can be rebooted again and again, despite its glaring similarities with a pyramid scheme. There is a relationship between the Fiat economy and the Real economy, though it is often vague and the two systems are standing on different foundations. While one rests on human estimations, gut feelings, optimism and wishful thinking, the other simply is.

This entry will be about what the Real Economy is, and what consequences it will have running it to the ground. Sadly, one of the aspects of the Fiat system is to incentivise economic behaviour that is serving to run the Real Economy into the ground.

TL;DR notes (because I like lists)

  • Since the Cambrian explosion, the Earth has formed complex multi-agent biospheres that are built around Earth’s natural cycles (sunlight, perspiration, rainfall, seasons), but which also are building themselves by slow but mostly continuous increases in complexity.
  • For all what matters, to have a human economy demands interaction with the Earth’s biosphere, and human activities will affect the biosphere.
  • Thus, the human economy cannot be seen as something separate from the biosphere in itself, but is essentially a part of what builds this planet.
  • This also means that the biosphere will affect human well-being, and that this well-being depends very much on how we treat the systems on the planet that are making the biosphere possible.
  • Ultimately, what we need now is to unlearn the cosmology of Individualistic Consumerism, and to approach the issue of what the economy is by looking at total resource flows and not just focus on the human activities.

biosphere-as-life-support

On the Real Economy

The Real Economy is not linear but a multi-agent system, meaning that each species and each individual is both on the receiving and returning end of the system, and the purpose – rather than growth – is for individuals and species to survive and improve their survival skills within this context of existence. The system is interdependent with the soils it has created, with the groundwater and rainfall and with the climate it is engineering.

The cycle of ice ages and warm periods are partially affected by the amounts of trees, binding greenhouse gasses. Colder periods lead to a drier climate which in turns lead to forest fires that are releasing carbon dioxide into the atmosphere, increasing the average temperature. This leads to a moistlier climate that grows forests and bind carbon dioxide, slowing down the increase in temperatures.

A growth in the amount of vegetation increases the number of herbivore species, which creates a good opportunity for carnivores to increase their numbers as well, until the collapse of the herbivore population allows the flora to recuperate. As the carnivores are decreasing in number, herbivores can return to the fray.

This is the real economy. It has existed since time immemorial. As it gradually grew, it has transformed itself from a few one-celled organisms stewing in a primordial soup, into a vibrant dynamic equilibrium that can recuperate from mass extinction events such as the Cretaceous-Tertiary Meteorite that wiped away the dinosaurs. This economy is characterised by a slow, gradual increase of biomass and of complexity, off-set periodically by extinction events which could have destroyed complex life on Earth.

We can imagine a countless, countless number of Earths out there, tens of thousands of light years from us, where life has been wiped out by meteorite impacts, volcanoes, supernovae or climate change. There is perhaps an even greater number of worlds where life has never evolved beyond single-cell or even sub-cell organisms.

It is truly a miracle that our Earth has survived five mass extinction events and has built six biosphere regimes.

And this Earth is what allows you to live, to breathe and to aim for your objectives.

The economies of human civilizations, no matter how they look like, have all been dependent on the Real Economy, the Biosphere, and are thus – no matter if they want it or not – a part of it.

By Stella McCartney on Prezi

By Stella McCartney on Prezi

The Real Deficit

Often, we hear that many western economies are suffering under public and private debt, which can either be solved – within the framework of Fiat currencies – through either stimulus (to create growth that can allow us to grow the economy) or through austerity (cutting back the provision systems for the weakest members of society to save money). Often, these two policies are following one another, first a stimulus to the financial institutions taken from the tax payers, and then a punishment of the tax payers and the poor by tax increases and welfare cuts.

In the long-term however, only one deficit matters.

That deficit is marked by the Earth overshoot day, the day when our resource usage exceeds the ability of the planet to provide for our demands without the global biomass and biodiversity shrinking. This means that we have a global ecological deficit, which has grown above the limit since the 1970’s.

Five of nine vital life-supporting systems underpinning the biosphere are today being ravaged by the need for infinite exponential growth caused by the credit-based fiat system. The climate is being disturbed, the soils and the freshwater reserves depleted of nutrients, the land-based eco-systems are being outcrowded by artificial, linear production areas, and the oceans are being outright sexually molested.

All of this means that we are heading for a sixth mass extinction event, caused by our current civilization, within the next 100 years.

The-Coming-Currency-Conundrum-Too-Much-Fiat-Money-622x415

The root cause

The root cause for this is actually what we think of as our “economic system”. The creation of “money” is – through fractional reserve banking – preceding the actual creation of capital. That means that our current system is reliant on credits, meaning that for the system to survive, money must be used to increase economic production, by creating demand for products and satiating said demand.

A reduction in growth rates is not enough, since the growth must at least follow the increase of the amount of debt in the system, otherwise interest rates will go up and the social stability of the system will be threatened. Thus, the system in itself incentivizes economic activities that are destroying the Biosphere, and is rewarding behaviour that strives to minimise costs in terms of investment and maximises outcome.

Environmental Economics of the type where the needs of the Biosphere (i.e the needs of Life on Earth) is placed below the needs of maximising economic growth, are a consequence of the perverse idea that an economic system which has developed for around 200 years is more essential that an economic system that has existed for 65 million years.

Economic growth has one good effect, and that is an increase in living standards. The only good argument left by growth proponents is that within the next 50 years, a person earning €1,25 today would earn €5 instead (and afford a car). That is however offset by the fact that economists generally have little knowledge of how much damage our environmental destruction would do on our eco-systems in the long run, and that the system will invariably collapse.

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Energy Accounting as an alternative

Energy Accounting is described in more detail in the article linked herein. We do not know how it will work out in real conditions yet, which is why we must test it. There are potential drawbacks and bottlenecks as well. The goal with Energy Accounting is however not just to install itself, but to fulfill three criteria which we need to fulfill to have a sustainable civilization.

Thus, Energy Accounting is designed as a tracking system, to keep an overview of the resource flows of the planet. It is designed as a post-monetary currency which aims to create a better balance between demand and supply – through creating a system where things do not have to be produced before there are willing users. It is also designed as a system which factors in the demand and supply curves of the Biosphere itself, thus incentivizing economic actions that are either neutral or beneficial to the well-being of the planet, while penalizing actions that are damaging to it.

Within the Earth Organisation for Sustainability, we are aiming for the testing of Energy Accounting, to see how aspects of it can work and how we can improve our Design.

diversity

Summary: A strategy to claim the problem formulation initiative

We must – as a movement – always strive towards focusing on the Real Economy. While we must accept the existence of the crumbling Fiat system for now, we must work towards a transition away from it, by transitioning away from looking at the world through the lenses of the City of London and Wall Street.

The Fiat System ultimately relies on faith in its regulations. It will crumble, probably faster than the Biosphere itself. The challenge is to transcend the worldview where the greatest potential disaster is a stock market crash and a massive hike in unemployment.

How we do that is not primarily by questioning or accusing or being obsessed by the injustice of the current system, but by instead laying our focus on the Real Economy, and how we as a species are embedded in it and how most of us for the foreseeable future will be dependent on it.

That does not mean that we should not focus on social issues, but that we must find a way to integrate social issues into the narrative of the Real Economy.

The Earth Organisation of Sustainability does not deal with the binary world-view of eco-systems contra humanity. Instead, we view Life in itself as the most valued and cherished concept. Thus, what is good for the Biosphere is good for you, as an individual, and for us collectively as a species.

We must as a civilization make a conscious choice to accept the truth – that we are a part of the Biosphere and that we need to model our civilization in a manner that integrates it into the Biosphere and integrates the Biosphere into the infrastructure. This also means a life-positive outlook, where we have an obligation to design our societies so they allow individuals the freedom to express themselves, create, form their lives and achieve safety, meaning and liberty.

After all, as a system, the Biosphere strives towards more and more diversity and abundance. We should definetly try to mimic the beauty and splendour of nature.

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Human utility

prekariat.org

prekariat.org

By Enrique Lescure

Introduction

There can be said to be two internal structural crises regarding the transformation of the labour market brought by new technologies and the rationalization of the market structure itself. These two crises can be said to be ideological/existential and social. Of these two crises, I will devote this entry to the first, and often overlooked version.

The transformation of labour has meant not only a different environment, but that people – most often from the younger generation – have been forced by the external circumstances to readjust their behaviour, while many of the expectations regarding rights, social obligations, the personal future and the social role of the individual remain the same – which creates a foundation for increased mental fragility and a heightened risk for psycho-social problems.

This problem is mostly prevalent in the developed nations in Europe, North America, Oceania and East Asia, though similar trends can be seen amongst the middle class in the Arab World and the less developed nations of East Asia.

TL;DR summary

  • During the latter half of the 20th century, most western states developed social welfare models that gave broader protection to the people.
  • This was coupled by a period of sustained growth until the 1970’s when the majority of the population attained higher living standards, guaranteed employment and expanded social safety nets.
  • This created room for individualization and for the expansion of lifestyles and subcultures. In a very literal sense, people became liberated from the constraints of survival values.
  • Three generations have grown up under these conditions, and been acclimatised to them.
  • This presents a challenge now when the system is rupturing, and expectations both amongst the political leaders and the various groups of society is not aligned with this rupture.
  • This increases the volatility of the system.
  • It is unlikely a new stable equilibrium within the current socio-economic system can be established, due to exponential and ecological factors.
  • This volatility brings risks but also opportunities.

The age of the Middle Class

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After the Second World War, something happened – which we have come to take for granted now in the western world, but which was unfathomable to the generations who had gone through the two world wars and the Great Depression, namely a period of sustained growth from the late 1940’s until the oil recession of 1973.

This sustained growth happened basically every western country, and transformed the structural composition of the population. Production of consumer goods exploded, farming industrialization led to a sweeping wave of urbanization and sub-urbanization. From economies were only every tenth person had a car, we moved towards economies were one in two adult individuals possessed one.1950s-300x210

Soon, basically everyone owned a car, refrigerator, TV, radio, lawn-mower, stereos, and could afford vacation trips to other parts of the country and even abroad. Of course, in many countries – like for example in large parts of southern Europe and in the United States – there were large swathes of poverty, and stagnating communities as well. For the majority however, things looked increasingly brighter.

And jobs were readily available to anyone willing to have one. Though it was not easy to study at university everywhere, there was no necessity of it, since regular jobs paid enough to sustain a household and generally allow money for other expenditures. Thus, due to the abundance, the culture in western countries was slowly transformed – away from the values of traditional societies.

The new lifestyle market emerged due to and with part-conscious support from the marketing industry, and soon fashion in terms of musical preferences, clothing, brands, experiences and even diets came to be readily applied by the industry, transforming both the economy and the behavioural patterns of the people in the process. While this process can be seen as both emergenet and intentional (to some degree), it is not the focus of our post. The focus rather lies on the fact that three generations of westerners have been individualized.

Individualization

Culture-Map_WVS5

As you can see on this map, the countries seen as building up the core of the western world are all in the upper right corner, and while some (like Ireland and the United States) are more traditional in terms of their values, they too value self-expression above survival. Cultural essentialists love to claim that these values to some extent always have separated the West from other civilizations (not entirely true, they generally sport the origin of western exceptionalism to the Renaissance, the Reformation, the Scientific Revolution or the Enlightenment).

However, several distinct transformations happened relatively recent, during the middle to late part of last century.

  • The choice of a romantic partner is moved to a later part in life, and parents and relatives do not any longer generally expect to have a say in the matter. Property and income is less pronounced in the choosing of a partner, though it still indirectly plays a role.
  • Sex is now a recreationary habit, while it before primarily was seen as a way to form a family. Children are no longer seen as an economic investment, but primarily as a way to cement a bonding between two adult individuals (children are also largely seen as an economic burden).
  • The social role of the individual in society is primarily defined by the individual theirself, and that is seen as the legitimate manner in which people define their roles in society.
  • Youths are acclimatised into this thinking through education, where a large part is played (unintentionally perhaps) by the social mores and fashions, and the pecking order organically established on the schoolyard.

I would argue that most of these transformations have been positive, and have served as a liberating force for the individual, who by theirself can make life-decisions that were previously either decided directly or at least largely affected by the expectations of the community. It is however quite easy to see how the struggle for survival creates the foundation for collectivistic values and social mores, while the lack of a need to struggle for survival creates the opportunity for the individual to blossom.

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There are however expectations which individuals in western societies generally are expected to achieve, and are expecting themselves to achieve. In a pre-industrial agrarian society, you are successful if you manage to hold on to what your forebears managed to build. In an early industrial society, you are successful if you manage to build savings to let your children have a better life. In today’s society, however, young people have been accustomed to, are expected to and are expecting themselves to:

  • Earn more than their parents did and receive better-paying jobs.
  • Make good for themselves by having a job and contributing to the economy.
  • Experiencing life and travelling at an early age.
  • Expressing their individuality and attain a sense of “uniqueness”.

These are all laudable life objectives, but the problem is that they are increasingly untenable for young people to achieve, especially in a situation where class differences are becoming more marked, the middle class is stagnating, low-skill jobs are less available due to automatization and the increasing competition of the developing world, high-skill jobs are not increasing in the numbers needed to absorb the increased number of youths with hundreds of thousands in student debt and degrees that lend them jobs on McDonalds.

Not surprisingly, this will cause protracted anger, especially as the system is crumbling more and more under its own self-contradictions.

The existential crisis of the Western Civilization

jeslacasse.com

jeslacasse.com

The social contracts of modern western societies generally entail that people have a right to housing, to food, to water, to electricity (apart from the rights from being exposed to conditions imposed by other humans which are less than desirable). However, these rights have de-facto not needed to be guarded that much since the truth has been that the vast majority of the people in western industrialized societies have been able to guarantee them for themselves due to employment – and those not able to gain access to these life-necessities have most often been caught up by social safety nets that have provided them with what is considered the minimum that an individual could expect from society.

I am not denying the fact that there are those who are destitute and truly homeless, but these are still – luckily – a comparably small group.

In general, the social welfare systems have been dependent on – no matter what country we are talking about – a full employment state, where the revenues are collected through income taxes, and a part of those revenues are redistributed to the part of the adult population that is unable to find work, either permanently or through structural or temporary unemployment. When revenues are not increasing in the same amount as expenditures, then the government must either raise taxes or shrink its obligations. Raising taxes generally reduces the availability for consumption. The prevailing orthodoxy since the 1970’s has generally been tax reductions, since these are presupposed to stimulate the economy by increasing consumption, thereby increasing the amount of readily available jobs.

viewsoftheworld.net

viewsoftheworld.net

Since the population pyramid in most western societies is skewed to the middle, with the largest population share being the bulk of middle-aged citizens and a flattening peak of old people, it is difficult for youths to affect the division of resources with this dwindling resource base, since it is likely that older and more well-connected population segments can negotiate to keep a larger share of the pie, while inexperienced youths find themselves with less and elss opportunities for jobs, housing and education as time passes on.

This has also largely happened, starting already during the 1980’s, and resuming during the 2010’s. Youths are gradually, but at an accelerating pace, thrown into a world that is more ruthless and predatory than that of their parents – of whom many have little understanding or patience for the sense of uncertainty today, instead meaning that youths have become soft like jelly and less prone to work hard and shut up – not realising that it is difficult to even gain a job interview when jobs are scarce and every job has several hundred applicants.

What is problematic is not that youths cannot fulfil their own ambitions, or the ambitions of their parents. It is doubtful if it can be said to be a human right to be successful within the paradigms of consumeristic individualism, and even if it was a right, it is evidently very much on a lower priority than the things that billions of people in the developing world are going through. What is problematic however is when people are living in lives of uncertainty and never know how the next month is going to look like. if they would have to move to another side of the country or if they are getting as many work hours as the previous month.

This is however problematic on a deeper level. If society cannot guarantee housing, income, safety and electricity to all its members, things which are pre-assumed by human rights definitions and national laws, it is putting the democratic concepts of the inclusionary nation-state in conflict with the values of capitalism.

In short, are human beings having an inherent value because of their humanity, or is their worth determined by their economic performance (and them being allowed to performed economically) inside society? Is it human rights that determine human value, or is it human utility, or some combination thereof – and how can we adjust internally in regards to this self-contradiction?

Short-term solutions

basicincome2013.eu

basicincome2013.eu

There are several ways to adjust to this crisis, and at least be able to prolong the social fabric of our societies some more decades than otherwise possible.

  • The shifting of the tax burden to other productive factors, such as capital, land, technology, or to consumption and production, which would mean that the expenses won’t increase (through social welfare) the same way when unemployment rises and revenues are decreasing.
  • The transformation of the social safety net into a simpler model that means that all human beings get money for necessities, without as many control systems to check if they are eligible.

Culturally, there must be changes as well. The awareness that we live in a different society than 1970 has not dawned upon decision-makers in politics, industry and media, especially as the majority of them have not experienced this transformation and what it entails for new-comers on the labour market.

Youths must also adjust their expectations and try to develop their survival skills and understanding of the current system. That does not entail acceptance, and youths must be better to understand the system in order to be able to properly channel their anxiety into the anger necessary to form a movement with political demands. These demands must however not be attached to just changes in how the redistribution patterns are working, but into systemic changes related to the establishment of the post-industrial service economy in the Western world.

However, while the biosphere is slowly collapsed by the joined efforts of humanity, technological development is

A protester carries a petrol bomb during a protest at the northern port city of Thessaloniki, Greece, Tuesday, Dec. 6, 2011. Protesting high school students hurled rocks and bottles during a rally to mark the third anniversary of the fatal police shooting of a teenager in central Athens. (AP Photo/Nikolas Giakoumidis)

accelerating, leading to less and less labour hours needed to sustain the same production, meaning that new jobs are not created in the same pace as old jobs are vanishing. Those economies worst affected are those that entered the “High Industrial Age” (1946 – 1973) phase later than the early adopters.

One example is being Greece, which today is in a state of perpetual crisis, that only will deepen as the adherence to the flawed Euro currency system is basically leading to the country relenting what independence it has left in economic matters, and accepting probably this century’s largest redistribution of wealth from the people into the hands of financial capital. This also shows that the current political establishment and the current political paradigm is directed towards protecting the interests of the system before the interests of the people.

Summary

In the western world, technology – which was a liberating force during the previous eras of the Industrial Age – has turned into a factor that greatly upsets the social order and is forcing a change of the expectations that we have been accustomed to have. This does not mean that technological development should be stopped, in fact, technological development must necessarily be consciously utilised in the process of creating an integrated civilization that can monitor the environmental factors of the Earth and allow us to reduce our impact in as intelligent a manner as possible.

However, technology is a destructive force in regards to how it affects both the ways in which social safety nets operate and how the labour market is shrinking of available hours, leading to more competition horizontally and more strained relations both vertically and between generations.

The first thing that youths must realise is this relationship between technological development and the difficulty to land one-self a full-time employment today. Internalization of emotions of guilt, worthlessness and a sense of being meaningless is leading to the collapse of the self and is a certain path to becoming depressed and losing all the will to struggle. However, that it isn’t your guilt does not mean that you do not need to adapt to changed circumstances.

Finally, the Earth Organisation of Sustainability must talk about these issues and try to establish why our alternative is plausible and why it is essential to struggle, not only for the future of individuals, or or humanity, but of the future of our very planet.

Push and Pull

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Photo by Sporkist

By Enrique Lescure

Introduction

A surprising move by the French government has seen the ban of food waste in supermarkets. While this undoubtly are positive news, which are putting the focus on the practices of food management within the retail industries, there are also problematic aspects with this approach. I will take the opportunity to use this post to discuss some of the problems with punitive policies, and also to offer the contures of a more holistic approach.

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Moralism & Practical repercussions

The concept of morality has been an integral part of human social interactions for all of recorded history, and probably during the entire period of human sapience. Morality affects both laws, but also the institutions forming around our legal systems. It affects unwritten rules and etiquette, and provides a common cultural framework within which a culture is developing its values.

You may already have understood that there is a difference between morality and moralism as concepts. A moralist view of the world is defining the world from an antropocentric perspective in which actions generally are defined as good or evil, and where good actions should be rewarded and evil actions punished (moralists tend to weigh on punishments). Thus, the important thing is not the consequences for the greater good, but the intention of policies. For example, strict anti-drug policies may not work, but they send a signal that society does not accept “aberrant behaviour”.

Often, we imagine that moralism is the realm of political and cultural conservatives, who hold to social views where for example inner city neighbourhoods fraught with crime, poverty and violence are seen as entirely a result of bad upbringing, absent fathers and a lack of faith in scripture. I would not make any statements on where moralism is most usual, but it tends to varies between periods in time. For example, during the 1980’s and 1990’s, we have had “moral panics” regarding metal music, veganism and role-playing games (from evangelical fundamentalists), while during the first decade of the 2000’s and increasingly during the 2010’s, we’ve seen more moral panics regarding gender issues, racial issues and the issue of immigration.

When an issue has become a moralist issue, it is difficult to hold an adverse opinion on a matter, since the one opposing the “good” position is suspected of being tainted by evil.

That’s not saying that moralists cannot have good points, for in most cases, they strive towards a better society and they are putting the focus on for example social ills. But the discussion that is created around the subject tend to become increasingly shrill and symbols-focused, which reduces the ability to access the practical situation on the ground and build the foundation for an inclusionary discussion. This kind of dialogue – which really is a monologue from one party – can turn into a moral panic, especially if there is one “offending group” which is seen as representatives of evil. This can lead to a witch hunt, in which people’s personal lives and integrity are harmed. If the moral panic occurs from more than one direction, the results can be catastrophic.

However, to return to the retail policies of Valls’ cabinet, it seems to me at least as symbolic measures that are hitting on a seemingly random point in the linear resource chain. Firstly, a lot of food is thrown away or destroyed during the production phase, which is incredibly wasteful in its own right, especially as the food industry is more and more reliant on mono-cultures for every passing year. As you can see on the image below, every staple has an own linear chain like this, and at every stage, you can be sure that resources are wasted.

Food-Supply-Chain

If the French government has not anchored this new policy in the retail industry, the results will be that the retail industry maybe will buy in less food (as the best possible result), but that will affect other parts of the food production chain, and transport the waste there. Sadly, farmers are often in developed countries subsidized to discard food. The retail industry can also adapt by for example giving away excess food as aid to developing countries or to homeless people. But giving away the food as aid would probably hurt farmers in the Third World, outcompeting small family farms and inevitably replacing them with cattle ranches or mono-cultures (producing grain mostly used to feed cattle and sheep), contributing heavily to both freshwater waste, soil erosion, dependency on fertilizers and climate change.

So while this policy probably has both pragmatic and moralist foundations, it seems at the moment to be a random swing aimed at an industry which has immoral practices.

A holistic approach

energy-sustainability21056

The Human Civilization can be defined both as an integrated network of eco-systems and as a super-organism. Our cities are visible as crimson and greyish spots from space, our monocultures have transformed Europe, China, North America and the Amazon Basin. To understand human activity on Earth and how profoundly it has transformed our planet, we must move away from an individualistic approach where we view the society as a fixed entity and the one with the choice how to act – the conscient agent – is always an individual.

We must understand that society is more than our consumer choices, more than our political or lifestyle choices, and even more than the culture we were born and raised in. Human civilization is – from a physical perspective – an intricate web of resource flows, and the infrastructure which both makes these flows possible and also is a result of their current. Civilization is an emergent meta-organism. Now, I am not saying that civilization is “evil”, nor that all civilizations (both real and imagined) are the same.

However, without a realization that food waste is a part of a civilization based on a destructive way of utilizing the environment, rather than an aberrant outlier in an otherwise “good” civilization, we would just continue to create new ecological crises until we’ve exhausted the ability of the planet to maintain an advanced human civilization. One central problem is of course that governments – as one of the commanding tops of what can be called the consciously organized part of Civilization – must base their existence and legitimacy around the idea that our current civilization is ultimately good and at least better than any conceivable alternatives. Cultural memes are also largely centered around reinforcement of norms and values that will support the existence of the civilization and its structures (given that, western civilization has undercurrents that allow for criticism in certain directions, this criticism can later be applied and included into the process through democratic and academic means, thus creating a greater degree of adaptability than in other cultures).

To return to the main point, policy-makers must realize that ecological issues (avoid the term environmental issues) are not just a policy area amongst others, but the base on which civilization rests. Therefore, a thorough set of ecological policies must be arranged in such a manner that they have a profound effect on all activities inside the Civilization, and with a good overview over not only resource flows, but also financial flows and population flows.

The goal of such an approach would be a long-term transition towards a sustainable circular economy which can exist within the limits of nature.

Push and pull policies

graphicdesign.stackexchange.com

graphicdesign.stackexchange.com

Governments can not alone form or lead the transition. It requires an integrated approach from political leaders, financial leaders, community leaders, civil society, non-governmental organisations, economic actors, grassroot groups and individuals and families. What governments can do is however to install the legal framework to affect behaviour amongst different segments of society.

Such frameworks can be designed  to punish bad habits or rewarding good habits. Punishing bad habits can for example be to increase taxes on fossil fuels, or on companies selling fossil fuels, or to outright ban certain practices (another example would be to reduce or take away all parking spaces in city centres). Rewards can be to install subsidies for green energy solutions, or to reward car owners for swapping into eco-friendly cars. It can also be to for example create free public transit.

Given this, we need to discuss how an effective transitional approach would work – and that is depending on two factors. Firstly, how grave is the ecological situation right now within the area you want to affect positively (I advice you to look into the article about the Three Criteria for an elaboration on information-gathering). Secondly, exactly what kind of transition do we want to foster?

The direction of for example subsidies or taxes, or more legalistic measures like outright bans would shape the outcome in some way, and the question is how large ripple effects one could get.

What is certain is that both push and pull methodologies are necessary within the framework of today’s financial system in order to make effective transformations possible. In general, bans are not advisable, especially not of processing aspects of industrial systems (of which the retail industry is an example). Rather, it would be more effective to tax unsustainable food management practices and make additional fines if the industry is not compliant.

Then it is of course a matter of how large taxes there should be. Ideally, for example the meat industry should be taxed with so high – even punitive – tax rates, that it ceases to be able to operate. That will sadly have adverse effects on everyone from butchers to Argentinian gauchos and Fast Food employees, but unemployment is ultimately an insignificant problem in comparison with the future of the Planet.

There does however also need to exist rewards, and investments into alternative ways of managing resource flows. Instead of just focusing on aspects of production, we must analyse the energy weight of entire production chains, and policies should be shaped after the realization that our civilization is an integrated physical system. Therefore, revenue taken from the processes that are damaging the planet could be invested into projects that facilitate processes that are either neutral towards or would improve the long-term well-being of the biosphere.

Ultimately

The Earth Organisation for Sustainability has come to the conclusion that to create a sustainable civilization on Earth, we need a way of managing resources that is profoundly different than today’s. We need to know how much resources we can take from the Earth, we need to arrange these resources within a circular economy, and we need to provide basic sustenance to all human beings.

But to reach that point, to go from here to there, we must employ the available tools of the current system, both to create new tools, to manage and reverse ecological decay, and to transition our socio-economic system. Only by employing a holistic approach can we reach constructive results for the future of our planet.

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Why the US Economy is in serious trouble

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By Mark Ciotola

How we arrived here

As EOS and Technocracy have long pointed out, our lassez-faire economic system is inherently unstable. Profits tend to accumulate out of the hands of consumers and concentrate into the hands of a few wealthy people. When the people who spend run out of money, then the people who save can’t get any more profits, and the whole system collapses. Ironically, during economic downfalls, many of the savers lose a lot of money, too, and even go bankrupt.

Upon the advent of earlier economic crises such the Great Depression, means were taken to prevent excessive concentration and control of wealth by the few. The founding fathers of the USA invoked an aggressive estate tax to prevent the emergence of an aristocracy and power that was was obtained by mere luck of birth. Antitrust laws were created to prevent monopolies. Labor unions were finally allowed to protect wages and the consumer spending so vital to the endurance of an economy. Banking legislation prevented the formation of banks that were too large to fail, and Glass-Steagall prevented banks from problematic conflicts of interest. Progressive tax rates diluted money out of the hands of the wealthy and some of it back in the hands of consumers, reducing dangerous build-ups and improving economic activity.

However, once the shock of the Great Depression ended, and memory of the social debt owed to the veterans of World War II receded, big business interests began to dismantle these economic protections. Progressive tax rates were significantly rolled back. Manufacturing was transferred on a near emergency basis to Japan and elsewhere to bypass North American unions. China was given most favored nation status by the USA that greatly accelerated this process. Banking “games” lead to the destruction and theft of the previously consumer-owned savings and loan associations. Glass-Steagall was revoked, allowing consumer banks to engage in especially risky investment banking operations. Such banks could now issue fraudulent consumer mortgages and package them into instruments for unsuspecting investors.

As consumers ran out of money, we increasingly became a “debt” economy. With domestic wages falling or frozen due to often subsidized foreign competition, consumers turned to home equity loans, student loans and credit cards to maintain their former standard of living. U.S. Federal Reserve chair Allan Greenspan called lenders heroes of the economy. As consumers could not afford to take on more debt, banks whipped up profits by doubling, tripling, etc. consumer loan interest rates. Rates exceeding 50% were common.

Finally, the wealthy couldn’t make enough money by actually producing anything or even lending to consumers at what were once legally usurious rates. They began buying and selling exotic financial instruments known by cryptic names such as butterfly options, derivatives, puts and calls. A particularly devastating was the “naked short”. It allowed a party to make large amount of money by selling millions of shares of nonexistent stock, flooding the market with this bogus stock until the market price of that stock collapsed and drove the underlying company out of business. The naked short sellers made fortunes, the newly unemployed executives received their $10 million golden parachutes, the laid-off employees received a few months of unemployment aid, and the pension funds/mom-and-pop investors received shallowly apologetic letters (if even that).

The only thing that saved the global economy from total melt-down was unprecedented government financial injections into banks, companies and certain national budgets (e.g. USA, China), and other stimulus measures.

An Economy on Life-Support

Supposedly, we learned our lessons after the Global Financial Crisis of 2008 nearly melted down the entire global economy. A few consumer protections were enacted. Banks were slightly more regulated, and given FDIC protection for their high-risk investment banking operations (this latter should really terrify you). Lending was tightened up for consumers. Pensions were cut. European economies adopted severe austerity measures. Numerous automobile manufacturers were sold off to China. Indeed, the global economy has regained some semblance of order.

Yet, DO NOT be deceived! This is clearly an economy on life support. The Global Financial Crisis has resulted in tremendously-increased concentration of wealth and consequentially has produced long-term damage to consumer spending. Once the stimulus ends, the economy will return to chaos. It may even do so with continued stimulus.

The following graph shows how ill the economy has become since 2008. This Sizzle Index is an indicator of US economic “heat”. (It was developed by a member of Technocracy). Notice the peak at the year 2000 due to the dot com bubble. A second peak during 2005-2006 represents the housing bubble. Then in 2008 and 2009, the US economy literally fell off a cliff during the Global Financial Crisis. The Sizzle Index decline was about triple the magnitude of the dot com/9-11 crash of 2001. This was an unprecedented drop in recent times. This you already know.

What you may not know is what happened next. Despite some improvement of the US economy, the Sizzle Index is not only highly negative, but it is still declining despite massive quantitative easing (a more polite term for stimulus). The life energy is literally draining out of the economy despite massive. The deflationary pressures on Japan and Europe show similar declines globally.

By Mark Ciotola

Figure by Mark Ciotola

Nowhere to go

Interest rates earned by large investors are at historic lows, due to ongoing stimulus. Meanwhile, these near-zero interest rates are devastating to retirees, and pension funds are in serious trouble. The Federal Reserve has been hoping to bring interest rates back up slightly, but the markets have been extremely resistant.

Federal Reserve must be terrified about recently increased volatility in stock markets. If the economy tanks again, there is nothing left of interest rates to cut!

Technocracy predicted this!

One may ask why we are trapped in such a doomed economic system? Technocracy pointed out these problems, but people have tended to turn to illusory Libertarian-sounding gimmicks. When wealth becomes too concentrated, lobbyist- driven legislatures cut taxes to allow money to “trickle down” to consumers. When wages fall, they open up more foreign competition to reduce living expenses. When consumers can’t borrow enough to make up for those lost wages, banks get deregulated and numerous consumer bankruptcy protections end. Do you see the pattern?

Endgame

The world probably won’t end due to this economic dead end we are racing towards. However, the situation may get so bad that many of us will wish we were dead: children we can’t support, the slavery of endless debt, and the environmental destruction of unrestrained economics. We either have to change our way to doing things or face a future conceivable only from the worst science fiction films.

Mark Ciotola is an academic researcher on the San Francisco State University. His interests are spanning a wide area, from Fast Entrope and the e th Law to Physical history and economics, Intellectual property issues, Carbon Labeling, Energy Accounting and Brown Dwarf and Exoplanet Atmospheres.

Anti-capitalism vs Post-capitalism

"Caging Humanity" by Don Davis

“Caging Humanity” by Don Davis

Enrique Lescure

Introduction

I would like to use this article as a continuation of my previous article, Reality? What Reality?

The subject however would be what differentiates an organisation that is moving towards a post-capitalist discourse, such as EOS, with organisations based around anti-capitalist views, to which we can count everything from Marxism-Leninism to the Alt-Globalization Movement and #Occupy.

Or put more eloquent: What is the difference between an outlook based on science and one rooted in emotional resentment.

What do we mean by Capitalism?

Capitalism, like all words that evoke emotions, has as many definitions as there are proponents or discontents. These definitions are not singular ideas framed around the concept, but are drawn from competing cosmologies which often are mutually hostile.

To take two extremes, we can look at the Market Libertarian position vs the Marxist definition.

The Market Libertarian definition, to which we can also count the Objectivist definition, is that capitalism is productive human action, free individuals that agree on whether they want to buy or sell products and services on a free market. Ideally, all markets should be free and unregulated, and this would produce – per the theories of Adam Smith and David Ricardo – the highest possible level of human well-being. Capitalism in short is individuals making free decisions. All cases of repression and poverty do not stem from inherent flaws in the market, but either from individual weakness (something which proponents of this worldview tend to be quiet about since that position would alienate potential followers), or (more usually) from regulations of the market.

The Marxist definition is that capitalism is a specific system of production, based around a hierarchical concentration of wealth and power. This system has succeeded similar systems in the past, such as Slavery and Feudalism. What separates Capitalism from Feudalism is that while Feudalism is centered around Land, Capitalism is centered around Capital – the concentration of possessions. The Capitalists are providing capital to start up companies, and strive to pay as little money as possible to the Labourers, who are those who are producing the actual value (see the Labour Theory of Value). Thus, the profit of the owner(s) represent (according to Marx) a theft of the productive potential of the labour force.

Capitalism will eventually, according to Marx and Engels, have so many contradictions that it will lead to an inevitable worker’s revolution and a system based on the dictatorship of the proletariat, which will develop into a classless society where all the means of production are owned collectively by the people.

It says itself that two so wildly divergent cosmologies would appear as monstrous before one another.

The Cosmology of the EOS

What is Capitalism, according to the EOS?

It is a form of socio-economic system built on the intrinsic need for exponential growth.

The goal is to maximise profits for capital owners, and is made possible by fractional reserve banking (sorry Austrians), which allows credit for investments and production that can grow the size of the economy. This leads to increased standards of living for most people, even though those who already have the most access to capital are those who benefit the most.

The problems with this system is that it relies on maximising exponential growth in a mostly closed economy, the planet Earth. This will eventually exhaust the planet’s ecology, unless the system invents ways to create abundance (which ironically also would make Capitalism obsolete). However, given how stark the situation currently looks, with the energy crisis, climate change, soil depletion, freshwater depletion and a mass extinction looming on the horizon, our best hope is to actively pursue ways to move away from exponential growth.

Why Post-capitalism is inevitable

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Everything is transitionary, and even if society today does not develop much in a year, you can safely be sure that society has changed dramatically during your life-time in comparison to how it looked when you were born, no matter what decade on the 20th or 21st centuries you were born in.

Moreover, humanity has existed as a species for 200.000 years. Agriculture was invented 12.000 years ago, and industrialism and modern capitalism co-evolved a little bit over 200 years ago, which is 0,1% of the course of the entire human history on Earth. To claim that Capitalism is a universal truth much like gravity and never will be replaced by another system is rather an emotional than a fact-based statement.

In fact, what we can say for certain is that Capitalism will be replaced within the next two centuries, and that there are three possible scenarios for how it can evolve into something else.

What is Post-capitalism?

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Post-capitalism is not a vague concept like Communism. In fact, it is even simpler.

Post-capitalism is whatever system of production and distribution that succeeds Capitalism. It is not intrinsically better than Capitalism, nor intrinsically worse. It is simply put a society which do not longer fulfill the criterion for Capitalism, namely exponential growth, either because it has found other ways to generate wealth and well-being, or because it has exhausted itself to the point that only survivalism is an option.

Since we – as a planetary organism – have followed the general trajectory of Limits to Growth, we can be sure that a lot of us would experience Post-capitalism firsthand during our lifetimes, which may – if we fail to take action – be an experience we would like to avoid.

There are three alternatives for the future, I would line them up with the least likely first, and then proceeding down to two feasible alternatives.

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I. Fusion power, asteroid mining and space colonisation solves all our problems, thanks to American and Chinese governments and mega-corporations. This leads to such an abundance that Capitalism is gradually replaced with Post-capitalism, either through institution of basic income and cooperation from progressive elites, or through a struggle from the masses to achieve that future. Eventually, this will lead to a post-monetary society.

Unlikely, not because we lack the capability to initiate those changes, but because the inherent unsustainability of the current system is so large, and these new techs are so underdeveloped that we would probably reach a collapse before they are profitable. When that happens, resources will be moved towards security rather than innovation, and we would end up in…

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II. A global ecological collapse, that will lead to a global socio-economic collapse and a collapse of living standards across the planet. This will lead to such a collapse that there will be a massive loss of complexity in society, as more people will have to focus on survival rather than producing economic, cultural, institutional or scientific value. In short, there will be a new dark age.

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III. A conscious transition towards a post-growth society. This would mean that we on all levels, as human beings, strive to establish sustainable relationships with our surroundings. On the micro-level, it could mean urban farming, recycling, seasteding and rewilding. These acts would however not be enough to counter the second scenario if we do not reverse monocultures, the dependency on fossil fuels and the institutions which exist today which are built upon the idea of limitless exponential growth. Eventually and if successful, these grassroot networks of conscious individuals and groups can form a global civilization of human creativity, which can achieve the first scenario.

So… when we in the Earth Organisation for Sustainability are evaluating the future, we can see three different types of Post-capitalism take hold. What is important for us is not the labels of a socio-economic system, but that the system in question fulfills the criteria of being able to create and distribute wealth while not destroying the foundations of that wealth, our beautiful planet.

Post-capitalism vs Anti-capitalism

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While protests and direct action oftentimes are necessary in order to create the foundations for political change, we cannot let primitive emotional responses take over our approach. Anti-capitalism is per definition such a primitive emotional response, and oftentimes built not only on noble emotions such as compassion and solidarity with disenfranchised groups in society, but also on ressentiment and puritan moralism.

Ressentiment and puritan moralism are gateways to absolutism and totalitarianism, and are unacceptable deviations for a movement such as the EOS.

Of course, it is true as anti-capitalists claim that Capitalism in itself bears a responsibility for the situation we are in, as the current ecological crisis wouldn’t exist if not for the exponential growth system. But it is also true, as pro-capitalists say, that without Capitalism and Industrialism, we would live in feudal societies with very low standard of life and probably worse social conditions.

However, we don’t owe Capitalism to let it continue to exist only because it allowed an unprecedented standard of life in the western world during the 20th century.

Anti-capitalist attitudes are unproductive for a movement like the EOS, since we cannot preoccupy ourselves with real or perceived injustices. Instead we must move on to discussing how the transition to the unavoidable post-capitalistic society should work out, and how we all humans would want that society to provide for, and what it can provide for.

Ultimately, a large role will have to be played by progressive-minded capitalists who have realised that we are moving towards an abyss. These brave individuals, who have realised that we are moving towards an ecological collapse, are a huge asset for the future, because their influence can be used to a great extent to assist with the transition.

Summary

Post-capitalism is inevitable, but it is up to us all to steer the process in such a manner that we don’t end up in a situation that no one in their right mind would want.

What does post-monetaryism mean?

By Enrique Lescure

Introduction

Since 2008, the terms “post-monetary future” and “resource-based economy” have been floating around the web, appearing on comments to articles, youtube videos and blog entries. I am writing this entry partially to – as we say on Swedish – “bone out” what should be meant with post-monetaryism. I do not write this to define Energy Accounting as the only or ultimate formed of proposed post-monetaryism, but rather to create some broad basic definitions of what a post-monetary system, as opposed to a pre-monetary or monetary system could be defined, so a flexible agreement on the definitions can finally be reached.

I have meant to write this article for a long time, and the reason why is that I have observed on Facebook and on other places of the Internet a lot of individuals who are either putting forward new age and conspiracy-related proposals on how a post-monetary system would look like, or people who in the 00’s would have defined themselves as “anarcho-primitivists”/”green anarchists” and claim that we can establish a post-monetary system through gift economics, passive technology or “upgrading” to a hunter-gatherer society.

This post is not meant as a critique of anyone else than those individuals.

Pre-monetary systems

Pre-monetary systems have been the dominant systems for most of the existence of sedentary human civilization, and also dominated during the pre-civilizational era. Even until the 19th century, most of the economy of advanced civilizations such as Europe, China and the Middle East existed on a pre-monetary level – the farm, the village, the local town. Most people consumed what they produced, and could not trade their surplus because there was no surplus. Prior to industrialization, most people simply had to use most of their energy (in terms of their physical energy) to endure.

The local village economies were most often built on gifts, sharing or barter. We should note that most goods produced – tools, clothes, herbs, food – was goods that could easily be entirely assembled in their raw components and produced by one individual or a small group of individuals. The materials were most often collected from the immediate surroundings, and there was not much trade with the wider world.

Monetary systems

With arising cities, division of labour came into being. For comparative benefits, different trades started to arise 5000 years ago in the Fertile Crescent and the Nile Valley. This led to a gradual increase in the amount and number of goods, and thus to an increasing complexity in the systems. Since humans are adaptable, gradually one good, no matter if it was beer, salt or any form of metal (whatever there was more of than needed in the system) arose to become a sort of interim good for individuals to obtain what they desired. In 13th century Sweden for example, inter-county trade was conducted with salt as the dominant currency. Thus, even without money, currency regimes arose naturally.

Money as legal tender is a method of institutionalising a currency and centralising the control of the issuing, minting and/or printing, to secure the pre-dominance of institutions. Such institutions have often arisen a long time after the currency system in itself has been established.

The two characteristics of monetary systems, which can be summed up here, is that money allows for increased trade and for market economies to establish themselves, and that money allows the accumulation of wealth. This later aspect has led to a massive divergence in wealth between different social groups in most developed and developing nations. However, the establishment of national and international trade and national currency regimes can also be said to have contributed in a greatly positive manner in the matter of technological development and increasing access to water, housing, food and medication (though the increasing inequality also contributes vastly to destroying the conditions of life for perhaps a majority of the human population).

Eventually, monetary systems reaches a point in economic growth where human labour is increasingly replaced with automated labour, and where the exponential growth moves over a tipping point where the planetary eco-systems are starting to become exhausted. We are living at precisely this juncture in time at this point in 2014 CE.

Post-monetary theories

The truth is, there are probably countless theories floating around since at least the 19th century on how post-monetary systems could or should be arranged. Most of these proposals are stemming from convictions, opinions and aesthetic tastes amongst philosophers and pseudo-philosophers alike.

What I would like to offer is a definition of a post-monetary system which can – in a broad way – set it apart from a monetary system. The first marker is that a post-monetary system does not exclude accounting. On the contrary, it must rely on accounting.

Even the RBE concepts of Jacque Fresco must (theoretically) rely on a type of accounting. The main difference is not the non-existence of accounting or calculations, but the idea that these functions should be relegated to AI’s, which work within a cybernated planned economy. While some RBE followers will disagree on this, it shows more that they should read more about the theories which they are proselytizing.

As for myself, what I would like to offer to this discourse is a simple definition which can be read like this: A post-monetary system is an advanced system of economic calculation where the unit of exchange has transformed into a unit that cannot be accumulated over longer periods of time, and/or where other functions of the thing which we used to define as “money” has transformed beyond recognition. It is not moving back to barter or pre-monetary/pre-civilizational models. It exists within the context of a society that advances towards automation, and is based on the needs of such a society.

This definition is in my opinion more beautiful, broad and inclusive than either the both vague and sectarian RBE definitions, as it is including concepts from time-banking, ParEcon, RBE, to Energy Accounting and Labour Accounting. It also purposely excludes the New Age and Anarcho-primitivist definitions.

Post-Monetary