This guest post from Veritas Curat provides a valuable look at how the science of economics drives answers that undermine humanity’s prospects.
Economics is so fundamentally disconnected from the real world it is destructive.
If you take an introductory course in economics, the professor, in the first lecture, will show a slide of the economy, and it looks very impressive, you know, raw materials, extraction process, manufacturer, wholesale, retail, with arrows going back and forth…
But if you ask the economist: in that equation, where do you put the ozone layer, where do you put the deep underground aquifer as fossil water, where do you put topsoil, or biodiversity? Their answer is, ‘Oh, those are externalities’.
Well, then you might as well be on Mars: that economy is not based in anything like the real world.
-David Suzuki (from the film surviving progress))
If this is true of economics, as David Suzuki says, and if “The Economy” is “not based in anything like the real world” – as in the planet we live on, the air we breathe, the water we drink; basically the web of life that sustains us – then, there must be some disturbing conclusions drawn regarding “The Economy.”In human psychology a “fundamental disconnection from the real world” is a good description of the deep states of suffering that psychologists and psychiatrists call by names such as “psychosis” or “schizophrenia.” It is difficult to heal from such conditions.
To apply these terms to “The Economy” is not acceptable within current political discourse. But that admission then suggests that current political discourse is fundamentally disconnected from the real world. If so, then how are the changes that our planet is telling us need to be made going to be made? The more we learn about the physical and chemical changes that “The Economy” is making to our planet the more frightened we should be about this fundamental disconnect.
To be clear, I’m not talking about problems with basic first-year economics theory (I don’t believe that’s David Suzuki’s intention either). I’m talking about a mass psychosis that must be healed for us to survive. It is a kind of radical healing that seems beyond the capabilities of our present system of oligarchical economics. It’s going to have to happen with a grassroots community-based revolution if it is to happen at all.
To call our economy “psychotic” or “schizophrenic” is, without a doubt, ambitious criticism. Without this economy, which I criticize so ambitiously, we believe we would be left without the things that make life worth living – and without basic necessities for survival for billions of people who don’t deserve to live in the kind of suffering that the destruction of the economy would cause.
But this is not about eliminating this thing we call “The Economy.” Not at all. It is about fundamental, paradigmatic changes that must turn it into something completely different from the psychotic failure it is now. Something along the lines of a fundamental shift in what we mean by value and what we measure and quantify to determine economic success. Something that includes Bhutan’s focus upon Gross National Happiness rather than Gross National Product.
To the extent that economic thinking is based on the market, it takes the sacredness out of life, because there can be nothing sacred in something that has a price. Not surprisingly, therefore, if economic thinking pervades the whole of society, even simple non-economic values like beauty, health, or cleanliness can survive only if they prove to be economic.–E. F. Schumacher (Small Is Beautiful)
What would it take to heal this disconnect The Economy has suffered, severing it from a planet that gives it life and upon which it depends utterly and entirely? How could we change it to a system that values completely and wholly that planet in it’s most basic equations – the ones it teaches to first year economics students?
Instead of “assuming away” the natural world it would begin with the natural world and place those considerations at the heart of its calculations. It would banish the economic concept of “externality.” For an “externality” is actually an impossibility. There is nothing external to the planetary system we reside within. To base a system of thought upon an impossible belief is to disconnect it from the real world.
Our present economy, the one we live within like fish in water, operates under this delusion. It creates an infinity out of a limited system: growth can continue forever because garbage and CO2 go to that fantasy kingdom where externalities reside and are magically made irrelevant to our present orgy of shopping.
And that is another way to get where we must go to survive. End our orgy of shopping.
If we went into stores only when we needed to buy something, and if once there we bought only what we needed, the economy would collapse, boom.Fortunately, the economic party that has been the second half of the twentieth century has fostered more shopping than anyone would have predicted, more shopping than has ever taken place anywhere at any time.
(Paco Underhill Why We Buy: the Science of Shopping)
The manufacture of wedding rings is illustrative. Producing that tiny gold band requires the generation of something like 20 tons of mine waste (often laced with cyanide and other toxics), the burning of large quantities of fossil fuels to generate energy to create that mine waste and to refine and transport the raw materials, and similar processes to manufacture the box and packaging which contain that tiny piece of gold. It is clear that the main “product” of wedding ring manufacture is mine waste and CO2. The actual ring is a miniscule by-product of all that waste production.If you look at general economic activities you will find similar stories – vast amounts of garbage and CO2 “externalized” to produce a tiny amount of “goods.” The only things that figure into the calculations of marginal cost, marginal revenue, demand and supply, price incentives, etc… are the teeny-tiny little by-products of that vast machine of waste production which are of temporary use to us. What is essential to life becomes inconsequential. It is magically sent “Away” in order to focus upon those miniscule parts of the planet that can be commodified and bought and sold in the “free market” for profit.
It’s the fishbowl defining the ocean as irrelevant.
Looking at it in a different way:
“Warm Families Inc” is dedicated to “bringing warmth and comfort to those who matter most to you.” Coupled with pictures of cozy children wrapped in the loving arms of their parents this company advertises their services of burning down houses to generate heat. They charge by the btu and profits are up. Their services include incendiary devices, trained experts in combustion technology and a friendly and helpful billing department that can work out payment plans for those who might be struggling financially. Your burned-down house is an “externality” - the price/ btu is what matters.
The word “economy” has Greek roots: “oikos” and “nemein” The oikos was the most basic and fundamental unit of classical Greek civilization; a civilization which arose gradually from the dark ages following the fall of Mycenae. An oikos was a human survival unit consisting of a small landholding (often in the ballpark of 10 acres or so) worked by the family living on it and one or more slaves they may have possessed. “Nemein” means “appropriating” or “distributing” (or even “feeding”).“Oikonomos” is then the process of production and distribution of the resources of a family farm among all the participants.
If you take the biologically productive land and sea areas of the earth and divide them by the human population you get 1.8 hectares – about 4.5 acres – per person. But this is if the entire earth were a human family farm – no wilderness whatsoever and no place for species that aren’t of use to humans. I think, therefore, it would probably be a good idea to have some biologically productive land and sea set aside for the other millions of species that aren’t consumed by humans.
But, for even those whose Eden is a global human family farm with no value assigned to species we can’t consume, we are screwing up. Humanity is presently using the earth’s “ecological services” faster than they can be renewed; our farm is failing.
And we’re burning ever increasing amounts of fossil fuels and creating ever more enormous piles of garbage in order to accelerate that failure. We do this because economists tell us fossil fuel burning and garbage dumping are the “cheapest” ways to “Grow The Economy.”
What they don’t tell us is that the reason these things are so “cheap” is that they’ve sent all reckonings of the costs of the primary products of “The Economy” - garbage and CO2 - off into that magical kingdom of “Away” and tell us we won’t ever have to pay those costs.
The US consumes 18.8 million barrels per day of oil. Of this 2.7 million bpd comes from Canada (as of 2011). Canada has the 3rd largest proven reserves in the world, after only Saudi Arabia and Venezuela (because of large deposits in the Orinoco tar sands in the Orinoco river basin – imagine the kind of wholesale ecological destruction that is taking place in Alberta transported to this tropical, forested river system.)
Ninety-nine percent of Canada’s oil goes to US refineries. Almost all of this travels through pipelines. And more than 50% of this piped oil comes from the tar sands in Alberta. (Another 32% comes from the West Canadian Sedimentary Basin and the rest from offshore production, mainly off Newfoundland and Labrador). So, right now about a million and a half barrels per day come into the US from Canadian tar sands.
So, many ask, why is Keystone XL such a big deal then; especially since we already bring in more than 12% of our daily consumption from the tar sands right now? If it is true, as James Hansen says, burning the Alberta tar sands will be “game over” for climate change, then when do we cross the line from our present rate of burn to “game over?”
Keystone XL will add another 830 thousand bpd to that million and a half barrels from tar sands – that makes about 2.3 million bpd, or 15%. Is that crossing the line to “game over?” Does “game over” lie somewhere between 12% and 15% of our daily oil consumption?
See what happened there?
Concern over Keystone XL gets diluted by playing a game of numbers. What needs to be noted is that building Keystone XL moves us in the direction of greater collective suicidal insanity. We need to stop burning fossil fuels now. And we need to stop digging coal out of the Powder River Basin - much less trying to build a mega-port in the Puget Sound to ship that coal to China.
Working our asses off to burn more carbon is foolish, insane - complete and total lunacy – it’s that psychotic thing called “The Economy” - which we have become convinced must only be allowed to move in one direction. Towards complete and utter destruction of our own precious selves and our planet – what economists call “economic growth.” Only one direction allowed. Burning our house down so we can shop.
And in the Kabuki theater over in the other Washington the actors prance on stage while the theater they perform in, their homes and their town, are burning down. “Pay no attention to that smell of smoke!” they say, “Look, at the drama! Look at the shiny masks we wear! Look at us fabricate this shiny, growing Economy! Pay no attention to that smoke –it’s just an externality.”
Everything we do, everything we say, all politics, all economics - all global “issues” depend entirely and completely upon this planet we inhabit. There is no other planet - there is no debate: as in “do we have a planet” or “do we not have a planet”
Washington DC is not some exempt little Village that is somehow “in charge” of “environmental issues.” It is a tiny little place residing upon the same planet everyone else inhabits. It rains there just like anywhere else. It gets hot there. It snows. The inhabitants eat food grown somewhere in soil that needs water and nutrients to produce that food. They breathe air. They drink water.
And that little fishbowl claims its source of water is irrelevant - an “externality.”