Thursday, October 29, 2009

Schools are economic madness!

"Building schools is not the answer when the cost of education is too high already. Building a school creates jobs one time. Everyone has to pay through the nose for it for years to come in staffing and administration costs in addition to paying back the bondholders with interest for the upfront money to build the schools.

Such proposals are economic madness." Michael Shedlock


This struck an emotional nerve. I respect Mike Shedlock as someone who calmly analyses the data, and perhaps I am over-reading this statement, but to argue that building schools is economic madness says to me that economics is madness. If there is a need for better education in Utah (I take that as a given -- everywhere on Earth needs a better education system by the way) the good people of Utah cannot afford not to invest in education. If they wait -- and it could be the best part of a generation if things are as bad as Mike Shedlock suggests -- and thereby hope to save money, that uneducated or poorly educated generation won't know shit from shynola, will probably be bad parents with a negative attitude to education generally, will not be able to compete in the increasingly global market place, and will reduce chances of building a better future considerably. Utah will have more money (maybe) and fewer properly educated people. Doesn't sound like a win win to me.

How can money be so very important that everything takes second place to it!? To think so is insanity. I hope I am misreading the man...

Anyway, I had to get that off my chest. In my opinion there is nothing more important than education (apart from the ecosystem). That money-glasses can see it otherwise tells its own story.

Employment to population ratio by region (10 years)



Here is a chart I derived from ILO figures. While my earlier post shows global employment to population ratio slowly declining, the detail view (by region) of this is quite a messy picture. I am unable to read very much into this at all, except that it does not really show increasing production efficiencies percolating through to increasing employment. Nor does it clearly show the opposite.

The star performer appears to be Latin America. I suspect this is not a result of outsourcing, but rather the result of the sort of trajectory witnessed when a region escapes some economic quagmire (the only way is up). Otherwise the surprise poor performance is East Asia, which would be predominantly China and Japan. As China is often thought of as a growth success story, and a recipient of much outsourcing, this is an odd result. Overall, the main story I get from the chart is one of flat performance with some clear rises and falls standing out from an otherwise dull crowd.

On the whole inconclusive I feel, not supportive of either one theory or the other(technological unemployment versus increasing efficiencies leading to rising employment). Rhetorically I could argue that because globally jobs are required to keep the economy healthy, which is a strong pressure to create jobs in whatever way possible, and because production efficiencies have been improving over the last decade thanks to the Internet and advances in robotics etc., the relatively flat performance of the world's regions would tend to suggest that classical theory (increasing production efficiencies lead to increasing employment) is not born out by the data.

I want to end this post with a US chart showing growth in public compared with private sector employment. I wonder to what degree this is a global phenomenon. Is the public sector taking up as much slack as it can?

Wednesday, October 28, 2009

Some thoughts for the day

Thought 1: If we don't have enough money to protect the ecosystem from our destruction of it, yet we do have the resources and know-how, money is in the way.

Thought 2: A resource-based economy is a way of making an elite redundant, by automating what they do. It is the only socio-economic model where everyone must become their own master. Daunting but good.

Here is a video ("Overpopulation is a Myth") which is I think highly relevant for the resource-based economy idea. I notice the usual knee-jerk reactions in the comments on YouTube. What the video clearly tells me is that there is abundant space on planet Earth for all us humans and then some. The only thing that is causing us to threaten our continued existence on Earth is our socio-economic model. It does not seem to have any capacity to take the environment sufficiently into account. It is predicated upon scarcity, which encourages hoarding, greed and differential advantage. Change the system, change our relationship to each other, and to the planet.

Infinite wants are not possible

I hope in the following post to show infinite wants are impossible. Humans can be satisfied with what they have, at least to a degree sufficient to upend economic theory. Without infinite wants there is no scarcity of the sort economics requires, without scarcity there is no need for a medium of exchange. Infinite wants are an essential, if not the essential component of economic theory. Without it, I suspect economics collapses. My general question to people who believe infinite wants are possible is this: can you prove it?

Economics believes wants are infinite. On top of this belief comes the concept of scarcity, which is the result of the clash between those infinite wants and pesky finite resources. Believing wants are infinite, you can, for example, go on to believe increasing efficiencies leads to increasing employment; produce it more cheaply and they will buy, so to speak. A simplification I know, and yet the very idea that increasing production efficiencies lead to increasing demand for labour implies this.

So, the economy produces more and more stuff with fewer and fewer humans involved in production, but because there are infinite wants out there, this stuff is purchased, and these purchases then filter through to “increasing need for human labour.” There are two problems with this. One is wants cannot be infinite; there is only a finite amount of people on the planet, and not one of them can consume anything in infinite amounts, nor can the finite total of demand of all people on Earth be brought to bear simultaneously. Wants are, quite simply, not infinite. The second problem is highly visible in The Spirit Level (Wilkinson and Pickett), in particular in a chart showing happiness levels flattening out after an income level of roughly $40,000 annually. It seems that people can indeed have enough stuff. We don't want an infinite number of DVD players, or hifi equipment etc., and we recognise too, in that we self-report our happiness level in this way, that money can't buy you happiness, to paraphrase the Beatles. Demand is elastic, but not infinitely so. (On a side note, we tend to buy more DVD players than we might want to because they break – do they really have to break so often?) Seemingly, once a certain level of material comfort has been reached, if this is secure, all sorts of tricks must be deployed via advertising to get people to buy things. Artificial demand has to be generated to keep the economy ticking. Bush II implored Americans to shop after 9/11. This should tell us something. Why would any of this be necessary if wants were infinite?

So there are two fallacies which spring from the poor definition of scarcity which lies at the root of economics. One is this faith consumers will keep on buying and buying, certainly that they'll keep on demanding, the other is that increasing production efficiencies can only lead to increasing levels of employment.

Let's think about the second. What is the ratio here, exactly? How much does employment rise by, when efficiencies rise by say 10%? I doubt very much there can be a fixed ratio, since demand is unpredictable. A company can over-produce, or a product that was selling well can go out of fashion for any number of reasons. But there must be some basic principle discernible here, some fundamental process.

The world is an economy made up of national economies, viewing things from the point of view of money. There is some fluid number of employable people and some fluid number of consumers on the planet. If manufacturing a car once required a 50:50 human to machine ratio, but now requires a 1:10 human to machine ratio, this is true all over the world, not only in the country where the invention took place. If the 10% of human labour needed to manufacture this car in the US is outsourced to India, the ratio is maintained. Sure, more people are employed in India, but not the same as would have been employed prior to the invention. The need for less people in the production of that car is instantly a global phenomenon. Other companies not capable of the newly attained production efficiencies will suffer, and have to retool as fast as possible. Once the invention has been made, less people are needed to produce that thing globally and forever. Humans are expensive, need holidays, food, housing and sleep, and get sick. Getting rid of them in the production process makes financial sense, globally, because machines require less maintenance, generally speaking.

If increasing demand for this cheaper car means more paper work is generated, then more humans are employed in accounts or HR maybe, and perhaps more car salesmen are needed down the line. Until, that is, software can replicate much of what accountants and HR employees do, or the way we buy cars changes. This then globally too. Outsourcing does not mean a fixed amount of labour being employed where labour is cheaper. There is also the decreasing need for humans in the workplace over time, right down from extraction through to manufacture and to retail.

Each invention that replicates (mostly betters) what a human can do, takes one job type away from humans. How many new job types can we create for ourselves? Which of our abilities will remain beyond the reach of machines and AI forever? And if there are any, will they be enough to power a global economy in terms of job creation and purchasing power? And for how long can we collectively fail to notice that buying and buying stuff does not make us happy? The data showing this is there, it's just a matter of getting it noticed. Finally, when will economics recognise that demand is not infinitely elastic, that is, that wants are in fact finite?

Tuesday, October 27, 2009

Tech unemployment is sooo unhip!

One of the internet's more intelligent economics bloggers posted this yesterday. I read in high hopes for some mention of technological unemployment, believing, as I have done for some time now, the term must surely gain new traction soon, but found none. Micheal Shedlock, a writer I respect, lists twelve reasons why the "recovery" might turn out to be a job loss affair (i.e. recovery with rising unemployment), and not one of them mentions technology.

It seems well educated economists truly believe technological developments that replicate what humans can do for the economy can only lead to rising employment. Unemployment is caused by other things, like over-capacity, over-consumption, outsourcing, consumers economizing, etc. I am not in a position to argue against each of Mr Shedlock's 12 points, but do wonder at this general and stubborn refusal to take an open and honest look at the role of technology in this process of rising unemployment.

This is my take, for what it's worth:

1. humans are biological entities with a limited range of abilities;
2. humans are unstoppably inventive, and getting better and better at replicating these human abilities, even improving on them;
3. as we invent more and more hardware and software that can replicate more and more of the finite range of our "natural" abilities, there is less and less need to employ humans to produce what we want to consume;
4. as less and less humans are needed in the work place, there is less and less purchasing power, which leads, in a heavily consumerist world, to increasing levels of debt, or over-consumption; and
5. the debt burden can only increase for so long until it pops, leading to the situation we have today -- a job loss recovery.

Now maybe my 5 step process is too simple, I don't know (I do like to keep things simple though), but doesn't it make sense? Why do we see, globally, falling labour participation over a ten year period of positive GDP, and certainly over a decade of increasing production efficiencies? This inquiring mind wants to know.

If technological developments which improve productive efficiencies lead to higher employment levels generally, why then is there rising unemployment anywhere? Why rising natural employment? Surely it would only take a few years for humans to retrain to take on the new work? Not generations surely? I'm going to take a look at employment levels in India, China and South East Asia, beneficiaries of outsourcing. Just what exactly is going on here?

Monday, October 26, 2009

Our old friend and foe, Human Nature

"Lenin’s ideas fell apart in practice, due in no small part by the human tendency of greed for posession [sic] and power." From a comment at Naked Capitalism

The comment is in response to an important posting by George Washington discussing which socioeconomic system currently best describes the US. It is well worth a read, if only for the fact that it encourages thinking about the question, but that is not what I want to comment on.

The person behind the above quote goes by the name of tgmac and seems to know what he is talking about, expresses what he wants to say eloquently, and all in all seems like an intelligent human being. And yet, there is an assumption in his post that human nature is fixed and tends towards greed for material possessions and power. Typically one has this opinion because history demonstrates that this is the case. Look at all that warring, raping, pillaging, cheating, blackmail, fraud and downright psychopathic tomfoolery that litters the pages of virtually any history book you care to open. Of course we can say with a high degree of confidence that human nature is bad. Just look around you.

What is very seldom considered is that recorded history began at a time when scarcity was not, at least in the economic sense, a solvable problem, and when our knowledge of ourselves, psychologically and biologically, was very poor. Organically and in some ignorance, and under pressure of particular environmental conditions -- like harsh winters and poor agricultural skill -- we have fashioned into our languages and philosophies a very hard to shake relationship with scarcity that is, at least technically, no longer helpful. We also have inherited a rather lazy understanding of ourselves as biological entities characterised by greed and ambition, at least at the popular level. Economists and historians are seldom also zoologists and biologists, neither are they anthropologists or child psychologists etc. Economists in particular have a particularly narrow and shallow view of the human being, assuming it to be rational, selfish and greedy.

Without blathering on for pages let me finish with a couple of questions and a couple of links. Question 1: What exactly are the pathways from genetics to behaviour? Question 2: Why did the islanders of St. Kilda display no laziness until, after 2,000 years without it as incentive, they were introduced to money in the mid nineteenth century?

The links:
My paper on human nature
Peter Joseph's orientation guide, pp 69-77

Scarcity: foundational economic assumption

Infinite wants versus finite resources” is the definition of scarcity that underpins economic theory. Because of this fundamental law a medium of exchange – money – will always be necessary. To suggest otherwise is to fail to face reality as it is. Sure it’s fun to dream and speculate a rainy Sunday away with such imaginings as the end of scarcity, but well-trained, hard-nosed economists know better: scarcity is a fact of life.

They know and accept the exceptions though; air for example. There is a finite amount of it, we humans need it to live, indeed we can’t do without out it for more than a few seconds, and yet we don’t have to pay for it. We need no medium of exchange to distribute this most essential resource.

So is it just air’s relative abundance that makes it free? Only partly. It also has qualities that make, say, “owning” it difficult; it’s everywhere and ignores all national borders. It is also so desperately vital to life, withholding it from customers to raise price above zero results in their death. Not good for business. (I have the feeling though, that if someone could work out how, it would be turned into a tradable commodity. Let’s not go there.) But whatever the reasons, we don’t have to part with money to breath air, even though it meets the scarcity definition above.

Friendship cannot be distributed via a medium of exchange, not because it is scarce or abundant, but because to do so would destroy it. Money and friendship don’t mix in terms of trade. Ditto love and trust. The best business can do is associate such things with their products via cunning advertising, and sell it to us that way – sell us what we already have. Of course that’s fake, but it does happen, and does shift product. Nevertheless, friendship itself cannot be sold, despite its relative scarcity and desirability.

So there are exceptions to the rule which fully meet the definition of “scarce.” And yet hardly anyone in their right mind believes high culture can run without a medium of exchange. My question to unbelievers is this: What proportion of resources needs to stay scarce to keep a medium of exchange unavoidably necessary? For example, suppose a redesign of cities, transport and energy use made shelter, transportation and energy abundantly available. Would we still need a medium of exchange? What if the system for transporting goods and services were fully automated and redesigned to use only clean, renewable energy? What if hydroponics, permaculture and desalination plants, plus other water-purification processes, made food and water abundantly available for everyone, everywhere? Would we still need money? Are all these “ifs” pipe-dreams, beyond the technical wit of man? The Venus Project suggests not.

What if the only things that need remain scarce – if we really went at scarcity as if it were a design challenge, if we challenged our best minds to produce things in abundance – were things like the top flat of an apartment building, or the love of a good woman? Would we need money then? Just how unavoidable is scarcity, scientifically speaking? Shouldn’t we try to find out, scientifically, and not rely forever and ever on a weird definition (what the hell are infinite wants!?) written a few centuries ago by a Brit working for the East India Company?

I think we should. I think we should test all assumptions. Scarcity is one of them.

Sunday, October 25, 2009

Impressive stuff from the experts...

"Office for National Statistics said yesterday gross domestic product unexpectedly shrank 0.4 percent in the third quarter. None of the 33 economists surveyed by Bloomberg predicted a contraction." Bloomberg

Nuff said.

Two charts on technological unemployment


Source: Washington's Blog

I find this chart very interesting, because it shows how low unemployment was in the early 1900s. I suspect most people don't know this. It also hints at, therefore, a possible trending of unemployment upwards, which somewhat disagrees with the classical economic thesis that increasing production efficiencies lead to lower unemployment; if there's one thing we can all agree on about the last century or so, it is that technological developments have increased production efficiencies.

Here is a chart I put together from ILO data which suggests that even the proportion of the global workforce in work can fall during periods of global GDP growth:



And as I have posted elsewhere, the natural level of unemployment, which is a measure of the supposed healthy amount of unemployment in an economy, has been climbing over the last 100 years too. Economists seem to think that the current level of healthy unemployment is about 7 to 7.5%. The pre-war level (if I'm not mistaken) was around 3-3.5%. That unemployment was under 2% in the early 1900s tells its own story. So even though I accept, to a limited degree (see post below) that technological developments lead to new work and new jobs, the idea that it leads to more work being done by humans is not born out by the actual facts.

Food for thought I hope.

Saturday, October 24, 2009

Technological unemployment as left wing technophobia

I stumbled across this article the other day, and wanted to address it as well as I am able. The article basically attacks those on the left (I do not consider myself left wing) who claim technological unemployment exists, is bad, and must be stopped. I agree with the article that technological unemployment is misunderstood and misdiagnosed, but not that it does not exist in an ongoing and "threatening" way. I put "threatening" in speech marks because it is only a lack of creative thought that turns what should be a much needed emancipation process for all people, into an evil.

Two things leaped out at me on initial reading. One was the palpable certainty emanating from the article that the author (Gerard Jackson) was right, while those he dismisses are hopelessly wrong. The other was the fire and brimstone hatred for the left wing and liberal party. I'm always suspicious of the content of tribal bickering, doubly so when the bickering parties are 100% convinced of their rightness, but nevertheless, one should always look at the arguments, not whence they come, nor how they are couched. So, let's look at the arguments.

"Any assertion that technology destroys jobs is based on the fallacy that capital is a substitute for labour and not a complementary factor. This belief in turn springs from the fallacy of composition, confusing the part with the whole. This is not to deny that machines do not destroy jobs — they do. But the process by which this is done expands real purchasing power, lifts living standards and raises the demand for labour in general. Therefore observers have confused the destruction of certain jobs with the destruction of employment, thinking they are the same thing."

I assert that technology destroys jobs, while the pressure to find waged labour creates new ones. Employment levels rise and fall in response to many factors, one of them being technological developments introducing machinery that can do better some job-role than any human can. As technology expands the area of labour it can perform, so human labour increasingly migrates to services, where human soft skills reign supreme. In other words, the destruction of job-types forces human labour increasingly onto the "dry land" of the services sector. ILO charts show this quite clearly, and while the pattern is slower in developing countries where even agriculture still employs sizable proportions of the working population, the technology to replace them exists. The speed with which agricultural (and manufacturing) labourers are replaced is slowed by financial considerations.

"based on the fallacy that capital is a substitute for labour and not a complementary factor."

This is somewhat vague. It is true that machinery which improves production efficiency tends to increase demand and thereby improve employment prospects, but only as an unintended consequence. The machinery was not invented to improve employment prospects, which is fine, nor was it designed to employ more people to run it than it replaces. The employment "slack" is taken up in another sector, typically services.

"Rather than being a substitute for labour capital is a means of economising labour, because it is the least specific factor, and making it more efficient."

This strikes me as casuistry. What is the real difference between substituting and economising? Either way there is displacement. Either way people lose their jobs. In time efficiency gains filter through to increased demand somewhere else (perhaps in another country, most likely in another city) where demand for jobs (perhaps in retail) increases. How often are the very people who are displaced by technological developments the very ones who find new work where they live as a direct consequence of that particular technology?

Mr Jackson mentions x-ray machines and jet flight. These are good examples of technology that directly creates new work (even though air travel is competition for railways there is still a choice), or at least principally. But what happens when stewards and stewardesses, pilots and co-pilots are replaced by software and robots? What happens when x-ray machines are no longer operated by humans, but by AI or other computer software?

"Technology can only be applied through capital. It would be pointless having the best programmers in the world if you cannot supply them with computers. Technology, including so-called information technology, is always applied through capital which in turn is fuelled by savings. It therefore follows that savings limit the extent to which investments in technology, no matter how highly advanced or desirable, can be made."

Yes, programmers need computers, but computers are manufactured largely without human hand. Skills such as programming and computer design are still in demand, but this is hardly the point. The point is the proportion of human ability that can be replicated by machines. As to capital being funded by savings, that sounds naive considering the indebtedness of virtually the entire planet to banks, the indebtedness of the banks to one another, and leverage ratios above 30:1. Investment is funded by the extension of credit, which has only a tenuous link with savings in modern (seemingly 100%) high risk banking (which will stay high risk until the tax payer can no longer afford to clean up the bankers' mess). However, that money is an impediment to technological development generally I accept.

There is then some high blown castigation of simple-monded left-wing technophobes, then this:

"These views overlook the fact that machinery is primarily employed to raise output per unit of input, i.e., productivity, not to displace labour."

Nevertheless, regardless of intent, a machine designed to do what humans had done displaces labour. Weapons designed to keep peace can be used to kill. It's not the intent that matters, its the consequences.

There follows a long description of the way increasing efficiencies of production lead to higher levels of employment, which is indeed born out by economic history up till now, a point I do not seek to gainsay. Indeed, the article I am criticizing is not aimed at me. I am not left wing, and I am most certainly no technophobe. I seek the emancipation of waged-labour generally, via an economic system that does not need a medium of exchange; a resource-based economy. In such an economy technology is purposefully deployed so that humans no longer have to do tedious, repetitive and mind-numbing work. This position is neither left nor right wing, it is fringe, it is unorthodox, and I doubt Mr Jackson has even heard of it, and I can't blame him for that.

The article then talks at great length about demand for new goods and services made cheaper by technological developments. However, there are some assumptions inherent in this well-known thesis. One is that demand for goods and services will always increase just because the price falls, regardless of how the environment copes with our rapacious appetites, and regardless of how clued up the buying population becomes (see The Story of Stuff for a hint of how attitudes to consumption might be changing). The other is that consumerism will always reign supreme. The Spirit Level was published in February 2009, after the article was written, and shows very clearly indeed that happiness is not owning more and more shiny things, nor is it earning more and more money. Gerard Jackson, being -- based on his article's content -- an orthodox economist, would probably assume that it is, or, at least that rational people are invariably motivated to acquire more and more wealth. But maybe even economics' troublesome "rational market actor" is capable of change. Maybe those rational buyers and sellers are starting to put two and two together. Maybe they are slowly becoming insensitive to the allure of conspicuous consumption.

"Without labour-economising technology the American telephone system would collapse. In 1972 it was estimated that using 1900 technology 20 million operators would have been needed to handle the volume of calls. (Taken at face value technology has destroyed more than 20 million jobs in this sector alone). In 1998 it was estimated that American telephone traffic uses so much computer power that if it were done manually the number of operators would exceed the numbers generating the traffic. So where did all the operators go? To other jobs, every one. That’s where."

This is a very important and well made point. Humans are becoming incapable of coping with the volume of work that needs to be done to run the global economy. We often just don't make the grade. As Mr Jackson rightly points out new jobs have been created to find work for the displaced workers, if not specifically then generally, but for how long can this pattern persist? In that we sleepy, hungry, sweaty creatures can't compete with our machine counterparts in areas A, B, C and D, how long until machines, computers and AI take over right up to P, or V? What biological evidence is there showing we will always be necessary in the work place, that we are infinitely capable of staying ahead of our ability to replace what we do in the workplace?

"Seeing the economy as integrated stages of production, as we should, rather than isolated sectors, as is frequently the case, helps put things like information technology in their proper perspective because it forces us to seek out economic linkages."

Again true, but as I have written elsewhere, technological unemployment should be seen as the ever improving ability of humans to replicate via machines, computers and software what they do physically. Seen in this light, the economic linkages of agriculture down to supermarkets, restaurants, cookery books and cookery TV shows become largely irrelevant. That the economy can be notional divided up into interlinking sectors does not alter the fact that humans have a particular skeleton, musculature and brain, yielding a particular, limited and replicable range of abilities.

So while it is true that increasing efficiencies can be seen to have led to higher demand for labour (although flat real wages in America over the last few decades suggests otherwise, even after factoring in globalisation -- why aren't the low-skilled skilling up and getting those luscious high-pad jobs?), the pattern created by technological unemployment and re-employment is one of incremental encroachment on the skill set humans have, and therefore predicts that this pattern of increasing efficiencies leading to higher employment will eventually break down. That may well be happening right now. Technically we can replace agricultural workers worldwide should we agree to do so, and remove humans from the factory floor in huge numbers (Jeremy Rifkin predicts 2% of global workforce working in factories by 2020). Now we are replicating our soft skills increasingly adroitly. Soon we will have hardly any skills left to replicate. Cashpoint machines, automated restaurants, the Eureka Machine, accountancy software, self-healing hardware, automated monitoring, AI generally, nanotechnology, are developments in their infancy, and I have not mentioned by far all that are out there.

As wonderful as we are, our abilities are largely replicable in the workplace. There will always be things that humans can do better than technology (although that is actually quite a bold statement), like friendship, society, courage, creativity, but these skills will not, I believe, be able to generate money sufficiently to run the current system. How can friendship or trust be paid for? Can you pay people to be courageous or creative in numbers sufficient to keep a global economy going? Will we pay each other to watch each other's films, or read each other's literature, or buy each other's art? I doubt it very much.

We need therefore to draw up plans that lay out a direction towards emancipating humanity from unwanted, forced labour via technological development and ingenuity. We need to give The Venus Project much more of our time and energy.

Thursday, October 22, 2009

Radical is the new normal – why money must go

Some like it radical, and are quickly attracted to the strange and the extreme. Most don’t. Typically radical change sounds alien, unsettling, silly, ill-conceived, and so receives little close attention. Therefore, the idea that money itself is the problem, that we should be drawing up tentative plans on how to ween ourselves off it, seldom makes sense to bewildered victims of those passionately attached to the proposal. This little missive is my attempt at making the idea seem sensible, and though fringe in terms of numbers of supporters, mainstream in that it actually adheres to logic and sound science. It is my attempt at making something radical seem ordinary.

Progress and change are always taking place. Instead of looking at the current financial crisis as being a couple of years old, or 30 years old, or maybe as old as America in its making, look at human cultural development over the millennia, starting with the emergence of homo sapiens sapiens. Track the (painfully slow) changes from hunter-gatherers to farmers, from villages to tribes, from tribes to clans and so up to nation states and international trade. Note also that our ability to care about those not like us; non-family members, non-tribe, foreigners etc., is improving. We are getting better at understanding one another. Ethical evolution is palpable and growing. The popularity of Lennon’s Imagine is evidence of this, as are animal rights. Seen over the great stretch of our time on Earth, change is clearly taking place now at an incredible pace. Radical is indeed the new normal. In that light, please consider the following list:
1. Money is just a tool, a tool designed by us do deal with two phenomena: scarcity and ownership. Money is a fantastic means for trading widely differing goods and services, and transferring ownership from person to person. But scarcity is as much perception as reality (see below) and can now be, thanks to technological development, largely removed if we organize society along RBE lines. Ownership is merely a particular cultural relationship with stuff. This relationship is changing (very slowly) to the idea of “access.” Access can be lifelong (it certainly need be no longer than that!), and does not need money and complex property law to organize and stabilize. Witness Zip cars in New York, and Google. No one “buys” access to Google, which is, along with other search engines, a preposterously powerful search tool. Scarcity and ownership could be designed out of society. Without them money becomes superfluous.

2. Money may well be a powerful tool for economic activity, but it also comes with costs. You can indeed “solve” the problem of distributing scarce goods and services with money, but at the cost of inhibiting true abundance, while creating wealth, health and education divisions, and motivating corruption. Money necessarily perpetuates competition over scarce resources, applying little to no pressure to resolve scarcity problems cooperatively and fairly. It means, necessarily, rich and poor. The rich of course protect their interests. This means ideas that might introduce a more egalitarian distribution of resources get little attention, and have little hope of being implemented. Money means increasingly entrenched divisions, both nationally and internationally. The West is rich because other parts of the world are (kept) poor. This is unnecessarily unfair, and yet a seemingly unavoidable cost of money.

3. Humans are not greedy and selfish, they can be greedy and selfish. Read “The Original Affluent Society” and “St. Kilda, Island at the Edge of the World” for examples of systems that do not inspire humans to greed and selfishness. Competition is also merely one tactic (a poor one) for survival, not THE tactic. Cooperation is more effective. See “Mutual Aid” by Kropotkin for more on this. Money inspires competitive behaviours, which tend to atomize society, break it down into warring factions. We are a social animal. We are not wolverines.

4. With money you must have enough to survive. You must exchange your labour for a wage to buy shelter, energy, transport and sustenance. In short you need a job. As many people as possible need a job. Technological developments that reduce the need for humans in the work place are seen as threatening. They ought to be welcomed. In a resource-based economy all technologies that take more of the load from our shoulders would mean more freedom to pursue our interests. Right now such technological advances that effect human labour are most often disruptive.

5. GDP growth is a must with money. We must consume as much as possible to feed our need for money, profit and “growth.” This is not good for the ecosystem. A resource-based economy can effortlessly place the ecosystem (and human dignity too) front and center. This is obviously a necessity, since money is only possible with humans around to use it, and humans are only possible in an ecosystem that can support them. Where money reigns, it reigns supreme. By design it has to make most decisions and steer culture where it wants culture to go. Things have to make financial sense before they get done.

6. Cheap low-quality goods are an inefficient use of resources. You only need low-quality goods where you have poor people. You only have poor people with money at the helm.

7. Built-in obsolescence is a curse only money can have inspired. Products are designed to have short lives to keep people spending. This is insanity. We only have the one planet.

8. Money tends to make us think of success as being related to owning lots of shiny and big things, as if that meant happiness. We all know it doesn’t and yet, like programmed machines, we all insist that money is essential to survival. It isn’t. It is only essential to monetary systems and the status quos that benefit from them.

9. We don’t do things just because we hope money lies on the other side of our effort. Humans are not “lazy by nature.” The people of St. Kilda lived for over 2,000 years on a very inhospitable island off the north coast of Scotland without money “forcing” them to do what had to be done. They wrote poetry and philosophy too. Only when money arrived in the pockets of tourists from the mainland did the island’s inhabitants become lazy and dependent on charity.

This list is not exhaustive. I have kept it short to make it (hopefully) more readable. If you spend enough time analyzing the connotations of a resource-based economy, you realize it is an idea worthy of testing. The evidence we have available to us now suggests strongly it would work. We ought to find out.

Wednesday, October 21, 2009

Don't get mad, get organised!

Organised greed trumps disorganised (and even angry) democracy every time. Not only are political parties funded predominantly by financial firms, the mainstream media depends for its very life on corporate advertising. Politics and altering politics via MSM outlets are dead-ends when it comes to radical change. Genuine and lasting change cannot be accomplished from within the status quo. So, once you have satisfied yourself that radical change is necessary, you have to step out of the system in some way, and get organised.

I love the speech from the film Network, where the desperate newsreader incites a dulled populace to turn off their TVs and scream out of their windows that they’re “mad as hell.” His call to anger is moving, eloquent, exciting, yet had it proved effective, if people were inspired to turn off their boxes and scream their rage out, what next? Turn the TVs back on ten minutes later after the cathartic screaming session? Most likely.

There’s so much for us to fix, a healing but quick burst of rage is just not going to cut it. We need to develop a very long-term plan after a long process of self-education, while steadily improving our ability to be organised and cohesive in our objectives. We must calmly establish facts, build an argument, and constantly test all assumptions. This while constructing and carrying out scientific tests of those proposals sound enough to commit resources to.

So:
1. Learn calmly what needs to be learned

2. Build database of facts and arguments

3. Become increasingly organised and cohesive, globally

4. Identify assumptions

5. Test assumptions

6. Establish verifiable proposals

7. Continually test proposals as scientifically as possible to strengthen long term plan

I hate ten-point plans. Seven is a far nicer number. There is an order to the list, but this order is principally of visual, not practical use. Flexibility and cohesion are key. We seek to initiate, organise and sustain a non-violent, idea-driven, leaderless revolution whose sole function is to establish a socioeconomic model designed from the ground up to benefit equally all people everywhere. It’s certainly ambitious, but not impossible. It’s just a matter of harnessing desire with the right objective in the right manner.

We are all sick and need to heal ourselves and each other. This process is one of decoupling from the system philosophically, and carefully establishing a new global paradigm capable of allowing wide diversity of opinion and yet fostering cooperation and a sense of common purpose.

“To constantly maximise existing and future technology with the sole purpose of enhancing all life everywhere while protecting the environment.”

What’s not to like?

Monday, October 19, 2009

The Fisher King

In the legend of the Fisher King, the King is dying and no one can save him. His apothecaries scratch their heads and try all the tricks they know, his knights roam the land in search of a miracle, the land which is dying too; blight, pestilence, famine and disease greet them wherever they go. The King is the Land. The Land is the King. Both are ailing, and none know anything except that which they have always done.

Insanity is repeatedly doing the same thing while hoping for a different result. On this measure, is our culture insane? The methodologies and philosophies that have led us into the weird dead-zone the financial world now is, are still seized with both hands and deployed with increasing concentration. We insist that money makes the world go round while watching it grind to a halt, as top-soil erodes, water becomes poisoned, happiness shrivels, and society atomizes. All around us is evidence that nature ticks along quite happily without a medium of exchange to motivate it, and yet we think ourselves somehow different, somehow supernatural, somehow living in a different air, as if culture were not as much a part of nature as the sun.

It took a fool to save the Fisher King. Unaware of the accepted methods for healing sickness, he notices a cup of water on the King’s bedside table, and gives the thirsty man a well needed drink. Asked afterwards by the baffled experts how he knew what to do, he says:

“I saw only that the King was thirsty, and gave him a drink.”

We need this “foolish” view of things now to find our way out of the crazy maze through which we aimlessly wander. Just because the machine we have built has become complex beyond all hope of comprehension, does not mean the core problem is not to be found in the initial and simple base design.

Big things have little beginnings.

It's not working. We must keep doing it.

“The world has witnessed a proliferation of financial bubbles and extreme economic instability that cannot be explained by any of the established macroeconomic models. Minsky is about all we have.”
Financial Times

Above yet another example of the degree to which economic orthodoxy fails to be able either to explain or accurately predict events. After decades of preening self-confidence bordering on insanity, we have a state of affairs described by increasing numbers of well-versed commentators as “out of control” and highly unstable.

“Minsky is about all we have.” To paraphrase Minsky; capitalism is doomed to self-destruct, and yet it’s the only way open to us, the only system that “works.”

Even now, with the previously faithful scratching their heads or wringing their hands, there seems no willingness to look at the cumulatively corrupting influence of money and its insoluble link with scarcity, nor at the effects of technological unemployment. Instead of studying these things over two decades or so, we need to be parsing centuries of data to determine the relevant patterns. Why is nobody doing this?

“For all we know, there may not be a safe way down.”

There is, but the vast majority of people see it as preposterous even to contemplate producing an abundance, to draw up plans to get us off our systemic addiction to economic scarcity. A resource-based economy offers the only lasting and comprehensive solution to the quandary we are in. Not only has money become too powerful an influence in our global cultural development (a cyclical occurrence), but the economic value of human labour has sunk to an unsustainable low. Our labour is simply too replaceable, too unwanted by the economy, and this situation is only going to get worse. There’s no stopping technological development; it’s what humans do. As highly intelligent and highly social animals we seem compelled to tinker and improve, to experiment and develop. It therefore makes perfect sense to construct a socioeconomic model capable of using this aspect of our nature to maximise benefit to all, not just a few. Technology, which is nothing more than human ingenuity made real, needs a new harness: a resource-based economy.

Sunday, October 18, 2009

Resource-based economies in history?

Classless, moneyless, and greed-less. But what really marks RBEs out is their members' ability to perceive abundance where we might see scarcity. I have argued before that scarcity is a kind of invention, a consequence of the decision to begin farming, to settle down and cut up land into portions owned by individuals, and would like to elaborate on that idea here. Farming, though a simple thing to us now, was a radical departure from nomadic hunter-gathering, and had profound long-term consequences unknowable to our ancestors.

When you start having to defend your stuff against the have-nots and the “not-like-yous” you start to see things as problematically scarce, or rather to sense that scarcity is an insoluble problem. Whereas before, as hunter-gatherers, the guiding motif for humans was sharing amongst all members whatever was to be shared, even if it meant hunger and suffering until a more plentiful supply was found, after farming the fact of having a static home-base made hoarding possible. You don't have to drag your accumulated goods around with you on your nomadic wanderings. Furthermore, hoarding against the ravages of winter, against poor crop yield, pestilence etc., becomes a sensible thing to do, and led to population expansion, villages, cities, and eventually nation states. Scarcity was born, scarcity, that is, in the economic sense we know it today; infinite wants versus finite resources. It had a direct effect on our behaviours, rewarding those that were, prior to farming, unhelpful. For more on this see Marshall Sahlins (The Original Affluent Society).

So this classical definition of scarcity – ignoring for a moment the impossibility of infinite wants – is a direct consequence of a particular societal design, not some incontrovertible law of nature or physics. Scarcity in the sense we experience it today is the consequence of a decision our forebears made thousands of years ago. A resource-based economy is a model that takes this into account. It posits the idea that redesigning societal infrastructure – from cities, streets and transport to education, law and politics – to deliver goods and services in abundance, would change the way humans behave. The idea predicts the end of greed, of poverty, of hoarding, of ownership, of most crime, and of war. These seem like lofty, even hopelessly idealistic goals, but the ambition is not without precedent.

In “St. Kilda, Island on the Edge of the World,” (MacLean, 1972) the reader is taken through a thorough and intelligent account of a people who lived without money on a very harsh island off the north-west coast of Scotland for over 2,000 years. They seem to have displayed no greedy behaviours, shared what resources they had, and experienced no crime except that visited upon them by outsiders. Only when they were exposed to money and the "outside world" did they slowly become strangely dependent on charity, lazy, unmotivated and broken. In “Mutual Aid,” (Kropotkin, 1902) we learn of the Aleoute, an Eskimo people enjoying a crime rate of one murder in 100 years in a population of 60,000, of one common law offence in 40 years. I'm not sure if the Aleoute model was a RBE, but free market capitalism it was not. On the island chain of Atua Motu, Jacque Fresco – the chief proponent of transitioning to a RBE – met a people who shared everything, had no crime, an abundance of the basics, endless curiosity and inventiveness, and no medium of exchange.

The question we can only answer by addressing it scientifically, is whether a medium of exchange and complex trade are necessary preconditions for high culture. In that St. Kildans wrote poetry and philosophy, considering the hunter-gatherer traps so complex anthropologists could not re-construct them for museum display, considering the observations of Thomas Huxley, early indications are that high culture would progress and flourish once we have done away with material problems and scarcity, and no longer need a medium of exchange.

As I have said elsewhere, a RBE can only come about globally, and willingly too. I seek no bloody revolution, want to inspire no righteous anger, no rage, no war on the streets. Only an open and unprejudiced willingness to test the concept and its assumptions will yield any chance of lasting success. We don't know what level of success such a scientific approach to designing a socioeconomic model can have, but trying is the only way to find out. We need to divert sufficient material and intellectual resources to this effort for its proper testing, for if it works, it would be a wonderful thing, and a stable solution to much of what ails us. The Venus Project have plans for how we can do just that.

Saturday, October 17, 2009

Happiness, value and waged labour

One of the most common mistakes made when considering a resource-based economy is to think of value monetarily, and then dismiss the idea as valueless. This conflation of value and money, of money as store of value (it's actually an abstraction of value) leads to the conflation of waged-labour with value. This has a completely understandable and even noble historical context, but our need for human labour for the production of goods and services is steadily diminishing as we get better and better at replacing our skills – all of them – with technological inventions.

We need to unlearn this association of waged-labour with value, because it is an association running out of usefulness. Humans are losing value in the market place because our technology is getting better and better at doing what we traditionally have done for a wage, or can ever do. This drop in economic value equates with tragedy IF we continue to believe money is the only way of distributing resources, and therefore the best way of measuring value. Of course we know not all valuable things can be measured monetarily – air and trust spring to mind – and yet we do so often see success and failure in the size of our house, car and pay check etc.

Only a very few people would claim to want to be the last person on Earth, surrounded by technology that served her or his every whim. Humans need humans more than they need machines. We are a social animal. We each have value in that we need other humans around us to be human ourselves. Being involved in the process of human society is what being human is. That ongoing process has value in and of itself because we need it to be healthily us, to be happily human. The material side of things is merely the foundation upon which the chance for happiness rests. We are strangely glued to the idea that material comfort is itself happiness. It is only the beginning of happiness. A resource-based economy solves the age old problem of giving everyone access the materials they need for a happy life. The rest would be up to us.

A better world?

Friday, October 16, 2009

Divisions, divisions, and widening gaps

"Today, the top one percent now takes in 16 percent of national income, up from eight percent in 1980. The top 20 percent receive over 50 percent of all income.”
dailyfinance.com

This is a statistic which demonstrates well the predictable concentration, over time, of money to itself, to the already rich. Because poverty is horrible and being rich is wonderful, the tendency is for the rich to defend their positions, and get better and better at doing so as time goes on. They thus unwittingly guarantee that being poor becomes, in turn, ever more horrible, as the gap between them grows and grows. This further motivates the rich to consolidate their position, further widening the gap.

The pattern is a logical consequence of a system which has at its base the building blocks of Private Ownership and Scarcity. Both seem revered as unalterable facts of nature, the former as God Given Right, the latter as Necessary Incentive. Without scarcity no one would do anything except live; culture would wither and die. Without private property, no one would care about anything; all would fall into disarray.

But these are untested assumptions, aside from observing that history seems to confirm them. As a record of human progress, history can be seen as the tracing of a developmental journey powered by the fight over scarce resources, where highly ambitious and talented people go head to head for control of as much scarce stuff as possible. That there are upheavals, bloodshed and suffering is a regrettable side-effect of these endless struggles, but that is "how things are." It is nature writ large.

My corollary to this is “so far.” History repeats, but not like a broken record. The tune is always changing, albeit subtly, and often indiscernably, but it is changing. Is it unreasonable to think we might solve the core problems that give rise to poverty and war? Is ridding our culture of scarcity and private property beyond us? Or are they “natural” elements of life on Earth, like the Sun which warms and causes plants to grow, but also causes skin cancer and turns parts of the planet to arid desert?

There are of course incentives other than scarcity/money, status/victory, there is indeed progress not directly dependent upon money, itself dependent on scarcity and ownership. There are biological, geological, meteorological developments, and all have unknowable long-term outcomes; there is the development of ideas, philosophy, science, culture and technology that have their own unseeable consequences; in short change is always working at all systems that make up our life on Earth. To expect the pattern we discern in studying a written history but two to three millennia old, that study distorted by the shifting filter of changing paradigms we must look through, to expect history to carry on as before is to put too much faith in the well know dictum, plus ca change, plus c’est la meme chose.

If we go back far enough, we can suggest there was once no real perception of scarcity. Farming – that enormous transition from hunter-gathering – introduced the concept to human experience. It did not take money to motivate humans to take the decision to farm; there was no money, nor even the idea of it. The change took place for a whole host of reasons, one of which being, I am sure, the basic intelligence of homo sapiens sapiens, always extrapolating, imagining, tinkering some new way of doing things into existence; solving old problems, creating new ones.

Humans will always tinker and improve things, forever perceive problems and thereby create new ones by solving the old. This is the “incentive” which gave rise to private property and scarcity. It was not the other way around. How can it have been the other way around? How can scarcity and private property have given rise to incentive? How can it be that progress stops if they are removed from culture? We created both, thereby generating their unforseen consequences (capitalism being but one). Where there are humans in an imperfect environment – imperfect, that is, for their ever changing desires – there will be incentive, money or not, private property or not, material scarcity or not.

Most probably, many will strongly disagree with the idea that humans created scarcity, and not without some justification. And yet the very notion of scarcity – which is just a word in our lexicon – has a particular history, depends on a perception of conditions on the ground, conditions we have shaped with our incremental and unconsciously directed changes to those conditions, each change part pro-action, part reaction. We “created” scarcity by deciding to deal with certain environmental challenges (such as finding food and shelter) by dividing land up into owned sections; i.e. the beginning of farms. Squabbles over a good resting spot, or a perfect bit of shade under a tree, or out of the rain, or the best meat from a kill, or the best mate, are not really examples of scarcity as we perceive it today. Scarcity as understood today is infinite desire versus finite resources. Infinite desire is impossible, finite resources recyclable. Finite can mean more than enough; there is a finite amount of air, and human desire for it as unending as humans, yet it is not scarce. There is more than enough. There is no greed for it either. Who lusts for more air than they need?

So, can we break the cycle history has revealed to us thus far? Can we culturally generate an attitude to all goods and services that we have towards air? Is that a reasonable design challenge? Is that something we should test? I think so. The Venus Project.

Wednesday, October 14, 2009

Interesting how unreal interest is

Interest on money is a conjuring trick, a presentational slight of hand to promote a service that seems to benefit the many, but in fact benefits predominantly the money men.

Question: If all bank customers on the planet only had savings accounts earning interest, where would the money come from to pay that interest?

Money can’t grow. It’s not an organic biological entity capable of imbibing other organic matter and transmuting it into growth. Interest rates applied to money are mechanisms for accruing more money to the institution that offers the service of taking care of money; banks. Debt represents earnings for the banks. If what banks owed depositors were more than they earned via their loans, banks would go bust. Interest is an ongoing, changeable fee for services rendered, comparable to an architect constantly changing his hourly rate while working for you.

The complex mechanisms of money movements plus interest rates are a process of money transfer to the banks over time, via debt. It is not some great conspiracy, but rather a predictable and natural consequence of a monetary system in which money is the best lever for accruing wealth and power. Therefore, logically, those who control money establish mechanisms which siphon as much of it as possible to them – that this happens at the cost of others is irrelevant. Preventing this unhealthy imbalance from causing systemic crises is a never-ending and fitful struggle conducted over centuries by us malleable humans with short-memories and immediate survival needs. The battle – perhaps uncontroversially described as a battle for fairness – cannot be “won” while money decides what makes societal sense, and what doesn’t. Where there is money, money can only be too powerful. Money is a jealous god.

Some believe money can be redesigned. Ideal would be a money created or destroyed in perfect harmony with the dynamically changing amount of labour-based value in an economy. Money is a representation of the value generated by the labour expended in bringing some good or service to market. Could there be a money designed which directly and "ungreedily" represented this value? A money which discourages hoarding, cannot itself be a commodity, deployed in a socioeconomic system designed to protect those incapable of adding value to the economy? An attractive idea, but I doubt such a money can exist. If it could, I would be for it. I think money is logically bound to scarcity, which encourages hoarding and corruption, transforming it, over time, to a destructive, not creative force. What do you think?

For now, the tedious fiddling with ever newer and complexer laws, which may or may not bring temporary relief, is simply playing the game on the assumption that only money makes culture go around. A lasting solution needs to properly and carefully question this assumption. The Venus Project have done this, and propose the testing of a resource-based economy. Fundamental is the question of whether or not we have now arrived technologically at a point where material concerns such as nutrition, shelter, energy, education, health and transport are deliverable to all in abundance. Abundance is anathema to money, as money is anathema to fairness (it inspires corruption).

Please consider carefully and openly what transitioning to a resource-based economy would mean and how it might be handled. I believe it represents our best hope of building a path to a future in which no one need suffer the ravages of poverty and war. That this sounds Utopian is a damning indictment of the current system, not the proposal put forward by The Venus Project. Is our amazing species really incapable of solving, everywhere and for everyone, material problems such as energy, food and shelter?

Surely not.

Monday, October 12, 2009

Lump of labour revisited

The comment I posted below in response to a Financial Times article was apparently deleted. The article is here. (I have re-written my post from memory, so the original, should it ever re-appear, will be slightly different.)

"Not mentioned in the article is technological unemployment. Typically the concept is dismissed by economists as a lump of labour fallacy, but I humbly beg to differ.

The observation that the abilities, of which the human “machine” is capable, are replicable by technological developments (such as the printing press), and that human labour can therefore be displaced by mechanical, is not a claim that the amount of work in an economy is fixed, either implicitly or explicitly.

As biological organisms made of skeleton, muscle, and brain, collectively affording them a certain manual and mental dexterity and physical strength, humans are able to perform a limited range of tasks to a limited level of skill, to be exchanged as labour in an economy. One of the things we are getting better and better at is replicating, via technological means, our own abilities in the workplace. This process began in agriculture, progressed to manufacturing, and is working its magic in services.

Machines can do more or less work as the economy demands, and can perform more and more complicated tasks, as the economy demands. The range of labour that can be performed by humans is limited, though the amount of work to be done in an economy is not (at least theoretically). As the types of labour performable only by humans diminishes, so the demand for human labour will decline. This is evidenced in stagnating wages, diminishing union power, and the stealthily climbing amount of unemployment considered by economists as “natural.” I think it was 3% in the sixties. Recent estimates suggest 7% is healthy. Soon we will be at 10%.

Technological unemployment, though uneven and fitful in its effect, is a serious issue whose connotations must be openly and bravely discussed. Trying to solve it by slowing development down only delays the inevitable, and prevents us from transitioning more smoothly to the model which must follow waged labour."

Saturday, October 10, 2009

Progress to a resource-based economy

Progression from capitalism to what follows it is a multi-generational process and global in scope.

Continuing progress is impossible unless people personally engaged in the transition understand calmly what is transpiring, and thereby inspire others to similar dedication. This dedication cannot be forced, it can only spread by a personal choice to engage in the lifelong process of slow change. Only deep understanding of all pertinent issues can lead to behaviours that will lead to a resource-based economy. A sound and durable transition can only be multi-generational and freely chosen.

Neither can it happen unless it is global. No one nation can successfully operate a resource-based economy; planetary resource distribution is too wide. The challenge nations face – which arises from this uneven distribution – is how to cooperate so effectively that nation states become unnecessary. War has been instrumental thus far in the ongoing process we call civilization, but now that technology has delivered into our hands the power to destroy ourselves completely, war is no longer a safe option. From here on in, this uneven distribution of planetary bounty is the irritant in global interactions that can become a cultural pearl. I believe that pearl to be a resource-based economy.

We have two outcomes ahead of us: we make it or we don't. No one can be forced to want a positive outcome, to choose cooperation over competition, to choose shared benefit over defending hard won differential advantage. Understanding must necessarily precede freely making such a choice. Otherwise it is nothing but a fashion statement; a knee-jerk, group-think, emotional attachment to something “different;” an addiction to kool-aid; a passing phase.

These things take time. The journey is the destination.

Money makes the world go around

Can any monetary system be steered by anything other than money? While we have money, will the borrowed title of this short piece always ring true?

How insane is it that keeping water scarce is good for business, that the financial incentive is not to keep water clean for the general health of the species, but to hoard the increasingly scarce clean stuff, then sell it for more bucks? How insane is it, that it makes financial sense to destroy the planet’s top-soil by selling nitrate fertilizers? How crazy is it to make money turning forests to sand, so we can wipe our bums with four-ply, and own expensive looking furniture? How insane is a system that would charge customers per breath of good clean air if it could?

What on earth are we doing to ourselves!? It is we who are doing this, not someone else.

With money, money has to be the big boss and call all the shots. Things like trust, dignity and health take a distant back seat. With money, value itself becomes monetary. If solving a problem makes no financial sense, getting it solved is highly unlikely. With money, when something makes financial sense, it makes sense, regardless of non-monetary costs, e.g. creating toxic waste then dumping it into the environment. A species can get away with this for a while, some of its members even thrive on it, but for us humans the combination of globalisation and growing population have made money and its insane incentives the most dangerous tool we now wield. The complexity of the financial world is blinding us to this simple fact, as are schoolyard notions about monetary incentives and the "facts" of human nature.

We might well be proud of our couple of millenia as "masters of the universe," but to claim that money makes the world go around is the height of hubristic ignorance. Neither our ecosystem, nor gravity, nor nature itself needs money to function. Indeed, the ecosystem is being adversely altered – from our point of view! – because of money. What money does make is rich and poor. It inspires greed, crime, and war. It enables complex trade, yes, but over time entrenches fixed divisions; health gaps, wealth gaps, and education gaps. The questions we need to ask ourselves are these: Is complex trade, and therefore money, a precondition for high culture? Does money make our culture go around at the cost of the ecosystem?

There is a way to answer them. Give The Venus Project some of your time, and think for yourself.

Wednesday, October 7, 2009

Technological unemployment and lump of labour

“Technology doesn't destroy jobs. What technology does is make possible and make necessary either increased consumption, increased leisure or both. Unemployment results not from a quantity of jobs deficit but from an adjustment deficit. Unemployment results, that is to say, from a failure to establish a new income, consumption and work time regime commensurate with the new production potential offered by the technological advance.”
econospeak.blogspot.com

The above prompted me to write the following.

I find this to be a semantic argument. To say that technological unemployment is the result of an inability to adjust to the new realities created by some technological advance sounds mighty similar to saying technological advance destroys jobs to me. If I fail to adjust to the new reality of a mountain falling on my head, am I not destroyed by the crushing weight of rock?

The proportion of people working in agriculture is way down on where it was a century or so ago. Where are those jobs if not destroyed (assuming for the sake of this discussion that a job is at all a destroyable thing)? Manufacturing is undergoing a similar transformation in terms of how much human labour is needed to produce more and more goods. Services is at the beginning of its decline. Also, the phrasing heavily implies it should always be possible to make these adjustments no matter what. And yet the pattern is clear; jobs disappear. They are “destroyed,” then, hopefully, new ones are created elsewhere.

“Destroyed” is an emotive word, as if violently done. The truth is less colourful. When jobs disappear from the human world because, for example, robots do them better, historically new jobs have been created to take up the unemployment slack. Whether or not this process is destructive is a semantic issue. Important to note is that the desperate need to exchange labour for a wage is a massive pressure on human creativity to create new waged work. That new work needs to be created suggests old work is gone. Destroyed if you like. After agriculture came manufacturing, after manufacturing came services, after services comes mystery sector X that saves the model again. This is adjustment as reaction to the destruction of jobs.

However, the author rightly identifies the problem of weekly hours worked and amount consumed. This is in part a supply and demand problem, with advertising feverishly deployed to keep up demand as purchasing power falls – with built-in and perceived obsolescence attempting the same thing – while the other is a more philosophical problem, where there is a cultural block regarding value and self-worth as defined by how successfully you can exchange your labour for a wage. The more money your labour commands, the more successful you are. This measure of a human’s value is arbitrary – as are all measures by the way – albeit rooted deeply in almost all cultures. Not to work is to be lazy, and idle hands, as we all know, make the devil’s work. These combined truisms equate working less hours per week with failure, at some deep cultural level.

The real adjustment that needs to be made, I therefore humbly suggest, is to recognise that waged labour itself is becoming redundant. Surely work will always be with us, but exchanging it for a wage is now a serious problem. In the economic sphere of human existence, our technological dexterity has trumped our manual. With the advent of AI this will soon apply to our computational and processing abilities too.

Logically, the “doing more with less” arc of technological development means, inescapably, that we need less and less human labour – labour being one of the components of production – to produce more and more goods and services. How this does not inevitably lead to lowering demand for human labour escapes me. That human labour has less power in the market place is evidenced in no real wage growth in America for three decades, diminishing union power, and falling hours worked per week. Increasing domestic debt is also a sign, as the success of advertising to stoke demand, combined with built-in obsolescence, prods consumers to spend beyond their means.

As to the author's referencing the lump of labour fallacy, I don’t see how it applies to technological unemployment. The idea that the economy needs less and less human labour due to technological advances does not rest on the assumption that the amount of labour (or work) to be done in an economy is fixed. It states quite simply that machines, automation and AI are steadily replacing the need for humans in the work place. Just because there is no human doing work does not mean there is no work being done, or that technology cannot be improved to take on more and more work. To suggest human labour can be replaced is not to suggest there is a fixed amount of work. The more helpful question is not about fixed or dynamic amounts of work in the economy, but whether human usefulness to the economy can stay sufficiently high for waged labour to remain a viable model.

The human being is, from the economy’s point of view, a fixed item, which has a range of potential utility. It has a certain skeleton capable of bearing certain loads, comes with hands with opposable thumbs capable of a certain dexterity, a highly intelligent brain, and has a complex of requirements for healthy operation. Our ability to replicate technically, at a higher level and lower energy cost, what the human “machine” can conceivably do in the economy as waged labour, is steadily improving over time. Therefore, technological unemployment as an ongoing and fitful process refers to the need to deploy the human machine less and less pervasively, and not in any way to the amount of work to be done per se.

As an aside, since the advent of the steam and internal combustion engines labour for horses has diminished considerably. In that there has been little social pressure to bring them back, we can safely say that they have been rendered technologically unemployed as means of transportation. Their jobs were destroyed. But who cares?

The fallacy lies, I feel, in a misinterpretation of the process. Machines will do more and more work, humans less and less waged work. If less and less humans are able to exchange their abilities for a wage, that is if less and less human abilities are technically irreplaceable, purchasing power will correspondingly diminish. This has only a little to do with lump of labour, and everything to do with our collective technical ability to replace humans in the work place. The stagnation of wage growth and subsequent increasing consumer debt mentioned above could well be signs of human labour’s diminishing appeal.

Tuesday, October 6, 2009

Paradigm City

A paradigm is rather like a city.

To get from one place to another you are guided down streets, may take one of a few forms of transportation that fit with the city design, and can visit people, shops, or other establishments that make up the city. A city is a series of ways down which its inhabitants are directed as they travel to their destinations. These pathways of walls, buildings, parks etc. are created in space as if from nothing.

Should a bomb fall and totally destroy the structure, but not the inhabitants, one's sense of location, of orientation, would be obliterated. The structure that previously made sense of one's movements is gone. The guiding streets, the tall buildings that once gave a sense of enclosure, of shape, of purpose, are no longer there to guide us.

So it is with paradigms. We get so used to them we mistake them for reality itself. So when a new paradigm is explained by a visionary or an artist, it is most often met with incredulity and incomprehension. The only way we have of understanding “the way things are” is the current paradigm. Contemplating the way things might be takes effort and patience, not to mention a willingness to try, if we are to make a good fist of it. It isn't easy, can even feel as disturbing as seeing a destroyed city, but when a paradigm has run out of steam, when all around us we see evidence of decay and corruption, when the experts shrug their shoulders and scratch their heads, that is when we are all obliged to put in the effort.

Now would be a good time... The Venus Project

If then

If money then rich and poor
If rich and poor then (rich=good) and (poor=bad)
If poor=bad then some do anything become rich
If some do anything become rich then corruption
If corruption then law
If money then law
If money then corruption

If scarcity then money
If abundance then no money
If no money then no corruption
If no corruption then no law
If no law then cooperation

Scarcity<=>corruption
Abundance<=>cooperation

Idiot Wind

“You didn’t know it, you didn’t think it could be done, in the final end he won the war
After losin’ every battle”

Idiot Wind, Bob Dylan.

The line never made much sense to me until the financial crisis unfolded. For the first time I saw a situation where winning every battle can snuff out your oxygen, stop the fires of your accumulated success from burning on. Are not the financial institutions winning every battle at such costs to the economy upon which they feast, that they are bound to destroy themselves? If they further insist on winning every battle, they will lose the war. If they insist on winning, they will lose. They depend on the economy. The economy does not depend on them.

Idiot Wind is the perfect song for the financial crisis.

Friday, October 2, 2009

Echo chamber group-think beasties

For a long time now – a very long time mind you – we’ve been in a cave, a dark cave. Even though the cave has seemed to be growing, even though more of us have peopled it, it has stayed dark. Not your horror movie dark, not that pitch in which only primal fears hold sway, but an eerie mono-light dark, a snow-blinding dark.

Recently some have been leaving the cave, walking out into a richer light, blinking as prisoners leaving the long isolation of a dark cell. The new hurts the eyes, but the whiff of fresh air, the sense of leaving something stale behind, intoxicates.

In the cave discordance is evened out by the shrill dissonance it sets loose – shrillness is unwanted. All caves are echo chambers, and people prefer harmony to discordance. Dissent tends to be ugly from the point of view of hard-won consensus, the harmony set up by the lead singers upset by it, the upset an encouragement to re-establish harmony with renewed vigour. Those who have left, maybe out of a mixture of boredom and frustration, call back into the cave to come out and have a look, shout descriptions, early impressions deep into the old song as best they can. In time they will change the old tune and one day the old cave will be deserted -- but for a few crazies.

In time it will turn out that the old cave was left for a newer, larger cave, lit by a different light. It too will eventually be too small, too dark, and an exit will be found somewhere. And so on, and on.

Anti-disinflationary inflation spiral to deflate global economic balloon, soon

Is this brutal?

I have taken it that economics is a science in the eyes of its high priests. Since science is the process of testing hypotheses by way of making falsifiable predictions, economics should be reluctant to show its face in public.

A debate rages about inflation and deflation. What is coming, which will it be? How high, how low? How quick, how slow? No one seems to know, and a deep ideological divide separates the opposed camps. Even within the camps agreement on the details bedevils the fragile harmony. How can this uncertainty be? How can there be so much opinion about something as fundamental as price?

I shall be cruel. Economics is not a science. It is a jargon factory whose sole purpose is to squirt the black ink of complex mathematical equations into the eyes of inquiring minds, so as to keep the Oz wizard hidden from view for as long as possible. Economics is the art of obfuscation.

Any other discipline incapable of predicting direction would be laughed from the room. It is only money’s central role in society that keeps economics central. Demote money, demote economics, demote the high priests.

Or am I brutally ignorant?

I am. And I therefore want to see the base tenets of economics proven:

1. Rational market actors
2. Perfect information
3. Perfect competition
4. Scarcity (infinite wants versus finite resources)
5. Greed and selfishness as primary motivators of market participants

Anyone?

Thursday, October 1, 2009

Econosophy, my desired baby

Philosophy and economics need to get it on and have a baby. The baby would be called Econosophy. It would grow up dedicating itself to the study of value and wealth. Only after it had made a sensible and sound pronouncement, one upon which we all agreed, would economics finally have a serious chance of being anything other than smoke, mirrors and obfuscation.

Do not contemporary elites have two preferred tools for perpetuating their status quo? One would be standing armies (force), the other economics (jargon). In this regard, economics could be said to have replaced religion as a choice tool of the elite.

Just my two cents. Or three. Depends on the value of the Euro today. And on what value you place on my pondering.

Global control for you

Successful control of the world requires control merely of the direction people look culturally, and the way in which they do so. To achieve this, sufficient Will and skill need to be deployed by a sufficient number of “leaders,” be they politicians, media mouth-pieces, respected thinkers and academics etc. If enough of them are more or less singing from the same hymn sheet they steer society generally. And doing this generally is all that is needed; who wants to tell people when to brush their teeth or wipe their arse or get out of bed? That level of control would be too annoying for all concerned and doomed to breakdown very quickly. No, to want to control is to want to gently guide events to your advantage, not chisel them down to some precise, wished-for form at the finest level of detail.

The ingredients for success are (in no particular order):

High ambition
Sociopathic tendencies (calm and aloof attitude to others’ suffering as well as immunity to the stress of being in the driving seat)
A Powerful Will™
Skill and intelligence
A compliant media
A compliant academia
An education system that discourages freedom of thought and emotional maturity
A central bank (control of money)
Scarcity (infinite wants versus finite resources)
Private property (cut-up land) as societal atomizer

That’s about it. It’s not easy, and only a few of we homo sapiens sapiens can scale such dizzy heights, but if you’ve got the right juice, this prize is there for your taking. Just please don’t forget the little guy, heh.

And you can tell the elite are doing a fine job by the way. A number of the ingredients in my list are considered unalterable facts of human existence, and most would consider my musing here the outpouring of a paranoid conspiracy theorist.

In the end, the question we have to ask ourselves is this: do we need really an elite? Are humans sheep doomed to wander blindly till they fall off a cliff unless a shepherd directs them otherwise, or can they self-organise? In brief: is society Hobbesian/Darwinian or Kropotkinian/Frescoan?