A Question of Economics


Note 2 . A question of Economics

(some adaption from OilDrum.com)

“Ecologist Charles Hall, among many others, has argued that the discipline of economics, as currently practiced, does not constitute a science, since it proceeds primarily on the basis of correlative logic rather than through the building of knowledge by a continuous, rigorous process of proposing and testing hypotheses. While economics uses complex terminology and mathematics, as science does, its basic assertions about the world—such as the principle of infinite substitutability, which holds that for any resource that becomes scarce, the market will find a substitute—are not subjected to careful experimental examination. (It is worth noting that Hall and others have made the effort to lay the conceptual foundations for a new economics based on scientific principles and methods, which they call “biophysical economics.”

Moreover, mainstream economists failed on the whole to foresee the current (2007/2008) crash. There was no consistent or concerted effort on the part of Secretaries of the Treasury, Federal Reserve Chairmen, or “Nobel” prize-winning economists to warn policy makers or the general public that, sometime in the early 21st century, the global economy would begin to come apart at the seams. One might think that this predictive failure—the inability to foresee so historically significant an event as the rapid contraction of nearly the entire global economy, entailing the failure of some of the world’s largest banks and manufacturing companies—would cause mainstream economists to stop and re-examine their fundamental premises. But there is little evidence to suggest that this is occurring.

According to the special inspector general of the U.S. government’s Troubled Asset Relief Program (TARP), in remarks submitted to the House Committee on Oversight and Government Reform on July 21, $23.7 trillion have been committed in “total potential federal government support.” This is expensive medicine indeed. It takes a moment to even begin to comprehend the enormity of the figure. It represents about half of annual world GDP

In using up non-renewable resources like metals, minerals, and fossil fuels, we have stolen from future generations. Now in effect we are stealing from those generations the financial wherewithal that could have been used to build a bridge to a sustainable economy. The construction of a renewable energy infrastructure (including not only generating capacity, but distribution and storage systems, as well as post-petroleum transport and agriculture systems) will require enormous investments and decades of work. Where will the investment capital come from if governments are already buried in debt? If we have committed nearly $24 trillion to propping up an old economy with no real survival prospects, what’s left with which to finance the new one?”

What is required but is still utterly lacking is a fundamental recognition that circumstances have changed: what worked decades ago will not work now.

We are certainly in an age of consequences. It is my opinion that we need to move economics so that decisions made by ordinary men and women serve a dual purpose of improving their own economic position and at the same time becoming part of technological expansion that favours the environment.

People will normally demand stability and preditability. What we need is an ability to foster innovation and trade in what we need for the future as an engine for our economy. Preparing to and actually practising “living with less” (P.Cr.) is an essential first step. Reducing waste to negligible amounts, mostly by re-use is another.

Supporting each others indeavors in a co-operative fashion, re-igniting the real meaning of communities, even those consisting of groups of people separated by distance is another.

And it is essential that our communications systems stay free of any information control,and allow cheap reliable information flow.