Friday, January 18, 2013

Money Talks, Bullshit Walks (or, Scarcity: a New Look at an Old Devil)

In Aztec, the notion of deference is regarded as crucial. Consequently, according to Nida, ‘it is impossible to say anything to anyone without indicating the relative degree of respect to which the hearer and speaker are entitled in the community’ (1964:95).
Mona Baker, In Other Words (2011:95)
A friend of mine used the expression that is this post’s title a little while ago, and it struck me as a true statement. As someone concerned with the resource-based economy direction (demoting money and promoting wealth), I recognise that this simple truism deserves my attention, which it has had these last few months. In what follows, I’m going to try and associate the validity of this truism with both capitalism (which is in a state of advanced breakdown in my opinion), and the change of direction humanity is stumblingly bringing about.

When we commit to something, we invest in it. If that investment is to mean something, both to ourselves and those around us, losing what we’ve invested must be painful. Because of money’s importance, when we risk our money investing in something, people recognise that we believe in that something (unless we are compulsive gamblers or otherwise of unsound mind). Thus the risk of losing something valuable causes us to carefully appraise what of our scarce resources we invest in which projects and endeavours. For believers in a resource-based economy, this begs the question: does abundance mean we won’t take anything seriously? Put another way, must things be scarce to be valued?

The most obvious example to help us look at this is air. It is abundantly available and has a price of zero. Accordingly, we might argue, we have treated it rather cavalierly. Only as we have started to notice that its delicate ability to sustain life on earth is threatened by our reckless treatment of it have we begun to try and figure out how to look after it. In other words, as the abundance we earlier perceived doesn’t seem to be the whole truth about air, as scarcity enters the picture, so we treat the item with increasing respect and wisdom. The same, it could be argued, goes for planet earth.

The economy

There is a curious paradox here. Economics presents nature as a subset of the economy (concealed in "other inputs"), as an inexhaustible supply of idle resources to be converted, via labour and machines, into goods and services, then sold as scarce commodities via supply and demand (price discovery) processes. (If this assumption were dropped, perpetual economic growth could not be held to be both desirable and possible.) We might express this as follows: abundance + labour & capital = scarcity. For this to hold, labour and machines must be limiting in some way, a sort of conduit through which idle resources must pass to become goods and services. We might look at this conduit as partly consisting of time; even if we could work 24/7, we have to go to market and have time to consume what we buy there. That is, we can’t only earn and produce, we have to spend and consume too. Society needs time to demand/consume what it supplies/produces, as it were.

Demand is an area of economics which is also abundant, or insatiable. Indeed, economics is the study of how best to distribute scarce goods and services to an infinitely greedy humanity, goods and services which are scarce precisely because humans are insatiably greedy. To expand on the earlier equation then: abundance + labour & capital = scarcity (because of demand abundance). Scarcity is thus inescapable, if we accept this sort of thinking. Scarcity appears to emerge within the pincers of posited abundance. In other words, scarcity and abundance happily coexist in economic theory. They are not mutually exclusive.

Of course, the other reason for scarcity in the price system is that if supply exceeds demand (which might be a definition of economic abundance), price falls to zero (‘I couldn’t give it away!’). Suppliers must limit the amount of stuff they bring to market to keep price/profit as high as possible. In other words, for there to be prices above zero, demand must exceed supply, generally speaking. (Let’s not forget the advertising industry that manufactures artificial demand.) In short, the picture is somewhat clouded, although the simple mechanics sketched above make the necessity of scarcity to the market system very clear.

I have come to think of abundance and scarcity as matters of perception and organisation (again, we mustn’t forget advertising). For example, the question, ‘How much is enough?’ cannot reasonably be answered. There is no specific enough. Against what yardstick of what phenomenon? Happiness (immeasurable)? Health (immeasurable)? Security (immeasurable)? So when dealing with the problems of scarcity and abundance, we are not dealing with absolutes. To draw on the preceding paragraph, abundance need not be about infinite amounts, only amounts that consistently exceed demand. I don’t think economics has quite mastered scarcity and abundance, and by logical extension, value. There is much for us to learn and discover here.

And yet the truth of “money talks, bullshit walks” remains. Should we seek to initiate a resource-based economy at all? How would humans value things if there were more than enough of everything? Look how we’re treating the earth. The Perpetual Growth paradigm says nature can keep on providing idle resources to be turned into ever expanding amounts of goods and services forever, that planet earth can take everything we throw at it (or throw away on it). I’m with those who believe infinite growth (of the economic realm) in a finite system is impossible. Unless we treat the ecosystems which engender and support us with intelligence, wisdom and respect, we have it in our power to destroy ourselves. A better model for envisioning economic activity might look something like this:

Let’s recap the conundrum. On the one hand, we have the current economic paradigm which sees abundance on the input side and scarcity on the output side. On the other, we have a possible future system which sees scarcity on the input side and abundance on the output side. If the reason we are trashing earth’s ecosystems is because of the flawed assumption of input abundance, does it not follow that we will trash ‘goods and services’ if they are abundant? Not necessarily. It all depends on how we raise our kids, how we educate ourselves, and what we see as the function of ‘goods and services’ in a resource-based economy.

In a RBE, there are no goods and services. There is no market. Things like housing, clothing, computing, communication, energy, travel and education would be available with no price tag and are therefore not goods and services. There can be no consumerism, no ‘I want the latest iGadget’, no keeping up with the Joneses (as we experience them today; there will always be the pursuit of novelty and excitement). A full-on, global RBE is only possible if people really understand the benefit of treating, with wisdom and respect, the systems that make their prosperity possible. That’s the idea, at least. In the way we learned to perceive air as a scarce resource, that treating the air with respect is good for humanity generally, so too can people learn to treat housing, transportation, gadgets etc. with respect, even if there is no private property. As in the current paradigm, there would be no binary choice between absolute scarcity or abundance; humanity would deal with scarcity and abundance from a different mindset.

So what happens to money? I think something like it will still be around, albeit in a vastly different form and with a vastly different role, perhaps unrecognisable to our eyes, perhaps something equivalent to kudos or deference (as in the quote that opens this post). “Money (or some related equivalent) talks, bullshit walks” will still apply. There will be respect, accomplishment, social standing (though not as class-based as today’s), expertise, reputation, and other ‘rewards’ for social contribution. Only, the ‘price’ for losing one or all of them won’t be starvation on the streets.

We might argue that these immeasurable social phenomena will be the new money, the only remaining social currency. They are of course with us today, so are nothing new. They will be scarce and require hard work to build up and earn. People in an RBE will not lightly risk this new money, just as we don’t lightly risk contemporary money. Because we are social animals with strong preferences and dislikes as well as very varied ambitions, this aspect of value and scarcity will never leave us. But the abundance the RBE idea references is a more sensible abundance than that assumed of nature today, and is certainly not some absolute, infinite abundance.

As I have repeatedly stated, an RBE is a direction, not a destination. This article is thus somewhat out of keeping with recent posts. I wanted to return to RBE proper, as it were, because I still believe the direction, which is essentially the prioritizing of human concern and environment in the context of reasonable sustainability, is the only game in town that makes lasting sense. It deserves more attention from more people than it is getting, not because it is a finished idea we can implement tomorrow, but because it is an open idea that is both wise and intelligent, if still in its infancy.


Debra said...

On scarcity...
You know, Toby, we have come to a common conclusion that we can create, and have created, no social system which is outside nature, and what governs nature, despite our repeated promotion of things artificial and synthetic.
I think that the value of scarcity derives from the very nature of our perception : if you walk down a crowded street during rush hour, you will not see the same things/people as what you see at a time when there are much fewer people.
Much fewer people (scarcity) offers you the opportunity to direct your conscious attention to the object of your attention, which thus acquires.. value, you might say.
What doesn't attract your attention has a harder time acquiring value in your eyes, I think.
In the same way that what you don't possess, what you desire, has more appeal for you than what has already come under your dominion, one might say.
I think that these constructs apply to us to the extent that we are indeed animals, and they determine our perception(s).
We are... determined by this state of affairs.
Which is why I am not optimistic that in a state of.. positivism, we will break out of this kind of determinism.
Funnily enough, if you look at the world outside of what appears of it through the mainstream media, there are plenty of hidden, individual attempts to circumvent the exchanging of filthy lucre.
As you say.. Babel is breaking up before our eyes...

Toby said...

I agree, perception is key, and we do value what is scarce rather than what is abundant (though I am trying to argue that this is not about absolutes, nor binary opposites). But I think there are further subtleties to this truism that are, in a way, being revelaed to us now. I suspect we shall learn to value, e.g. the preciousness of abundance, if we can write a broader, more human paradigm that permits or fosters this. I don't see that as impossible. But Babel has to collapse first, I fear.

As to what we 'possess' having less value than that which we don't, there are exceptions: e.g. one's own children. Also, my youngest, Isabella, has one particular teddy bear (Puff Puff), a little thing that fits in the palm of her hand. She values him more highly than all the teddy bears she does not possess. This is friendship, or 'taming' as developed by Antoine de Saint-Exupery in "The Little Prince", in the beautiful section about the fox and love. If our paradigm were more centrered around love, compassion and fellowship (not exclusively; we don't want to idolize!), I suspect the dynamic you highlight would lose somewhat in intensity. Consumerism is mighty influencial to our thinking, as separation from 'nature' generates a large hole in us we must feed with endless and meaningless consumption.

And yes, alternative trading and currencies are springing up. I see that as a sign of hope. Necessity is the mother of invention...

Debra said...

Please explain "money talks, bullshit walks" for me. I don't understand... It sounds like idolatry of filthy lucre on a grand scale.
I'm trying to figure out how to be less.. tamed in my world, and how to allow others to be less tamed, too, right now.

Toby said...

I'm not sure the expression is idolotry of money per se, more a kind of folk wisdom. It means, if you're serious about something, you don't back out when the going gets tough. You commit, even money, you stay in the process, you don't walk away. In a sense there's a contradiction between this expression and "You can talk the talk, but can you walk the walk?" Here, talk is cheap and doing (walking the walk) far harder. Different lexical uses of walk and talk, but similar meanings. Amazing how language and culture do that.

I suspect being less tamed requires courage. The costs may well be exclusion, being ostracized, that sort of thing. But by the very same token, the reward would be a more genuine life, richer and truer. What's the point of fake friends, fake social contacts, etc? Security, perhaps, but that too has its price. What doesn't? And I know how you feel. I want to drop a lot of the pretense I carry around with me. Almost all my social contacts and friends are financially secure and don't ask deep questions. I hide my intensity and philosophies from them. Lately, I see that pretense as practically entirely negative. But it's a hard habit to break. I've been at it for a lifetime.

Tao Jonesing said...

I think it is good that you are returning to focus on RBE, which you claim to be the focus of this blog. Frankly, I had no idea that this blog was about "RBE" because I started reading it some time after your last RBE post (at least based on your tags). I've been reading what you've been saying because I find your thinking clear and interesting (even when I disagree with the particulars).

There is a problem with including the E in RBE, however, which is that the discipline of economics is based upon what Polanyi properly describes as three false commodities: land, labor and money. As a result, you have built into your vision of the future the seeds of its destruction.

I'd argue that RBE is really a vector (magnitude and direction) as opposed to being direction alone. To make RBE a true vector, you need to filter economic theory to emphasize those aspects that free it of the inherent bias towards the present system. The only way that RBE is possible is if labor, land and money (and other finite resources, real or imagined) are not accepted as commodities.

Toby said...

Hi Tao,

I actually tried to post a response to your comment a few days ago, but the damned vagaries of Universe conspired to trash my beautiful elegance and it got lost. I've recovered from the affront enough to respond a second time. Curse imperfection!

You're right, the E must be changed fundamentally, but that's what the RB does. Money is necessarily demoted by virtue of the RB, which focuses the 'discipline' on the truly important area of nature, and away from the ivory tower of equilibrium, price discovery, market mechanisms, etc. If economics' reputation is terrible, it only has itself to blame, but this does not mean outsiders cannot reclaim the term and bring the important aspects back to the fore. That's not to say that the task is easy -- there's a (meta)paradigm to overturn here -- but not trying is impermissible. In my humble opinion.

As to vector and direction, I suppose you're right. I'll stick with direction for a while though, because the sound of the word is more familiar to me. Maybe, in time, vector will appeal more. Thanks for pointing that out.