Alchemical economics

Dr Manhattan’s crystal lunar city, from The Watchmen by Alan Moore and Dave Gibbon

From the exchange, the poison will out. In the absence of exchange – the absence of relationship – nothing can happen; neither poison nor joy can come.

Imagine a wholly impervious being. It has not one need. It cannot be harmed, or indeed changed, in any way. It experiences no boredom, no curiosity, no appetite, no desire. What sort of being would it be? One incapable of exchange, one that could have no conception of risk. It could have no conception of anything. Perception changes the perceiver because perception entails exchange: the transmission of information from ‘object’ to ‘subject’, from perceived to perceiver. Is anything more fundamental?

Humans, and indeed all other things, are vulnerable. Our deeply experienced vulnerability is our womb of fear. Is the ‘solution’ absolute imperviousness? Is the desire for great wealth a misguided ambition that reduces down to a need to be safe from all harm? Is the desire for nirvana, for total peace, for freedom from all desire, a similarly misguided ambition?

Because we are not impervious, we can engage in exchange. From exchange the poison will out. 

What, then, is poison? Perhaps it is the exposure to that which is ‘weak’ in us, which means untested, which means immature. Perhaps exposure to these untested facets of our being is painful because our relationship with our vulnerability is shadowy, unexamined, buried. Perhaps pain is the consequence of the tightness and tension that grow from this unexamined relationship. Perhaps the poisons exposed by exchange are nothing more than the contents of our Maturation Todo List.

To avoid maturation is to seek the void of total imperviousness. There are many ways of being addicted to seeking the void, from materialistic to spiritual to emotional, and on. None of them are in themselves healthy, but the sickness they produce teaches us what health (wisdom, love) is. Sickness is kindling for soul growth.

Economics calls itself “the dismal science”. It studies exchange, which entails risk, which begets cost. Economics studies where the rubber meets the road. Life must be vulnerable to permit change. Without change there is nothingness, which is impossible. Economics embraces this ‘dismal’ truth. But it is only ‘dismal’ if the void of imperviousness is viable, or could have any value at all.

I have spent the last 15 years trying to understand a foundational assumption of economics – scarcity – as it pertains to the ‘problem’ of technological unemployment. The latter is, in my eyes, the progressive erosion of the economic value of human labour. What I am beginning to intuit is that economics has not dared deeply enough, that where it has dared to go it has travelled too cleanly, overly needy of the neatness it perceives in academic rigour. Has it wanted too much to stay true to certain unchanging fundamentals, not to be infected by nor to cross-infect with other aspects of exchange? I suspect so. Exchange, the process by which relationship happens, is a foundational feature of reality. Perhaps economics should concern itself more fluidly with this truth.

Does scarcity govern exchange? I argue for curiosity-driven expansion. I suspect technological unemployment is unearthing this poison, this ‘flaw’, this untested thing within economics, within modern thought.

We have a poor relationship with fear because it hurts; it costs us too much to tackle it. We have more profitable values to accumulate: measurable values that secure our position in a cruel and capricious world. This is our ‘dismal’ reality. 

We now confront the wasteland this perspective yields. The only way through is to reassess our understanding of exchange itself, which requires a reassessment of value – and thus cost – which will then lead to a reevaluation of everything else; what we value determines what we choose.

The prospect of this radical transformation terrifies us. But the alternative – an impervious void – is becoming more terrifying still.

The money-convenience trap

 Introduction

One of civilisation’s objectives is to minimise the level of danger its people are exposed to. The degree to which it succeeds in this determines its longevity. In other words, one of civilisation’s primary attractions is its promise of a safe, predictable environment in which its people may flourish. 

But, as we grow accustomed to civilisation’s low-risk environment – relative to what we ‘civilised’ like to think of as The Wild – we culturally forget survival and self-sufficiency skills as time passes (understandably enough). Consequently, our cultural need for a safer environment exacerbates itself in a positive feedback loop from generation to generation. 

We could argue that moderns have now become almost hysterically allergic to any indication, however slight, that Danger Approacheth, Danger Might Possibly Approacheth!! Our danger-sensitivity dials seem permanently set to 11 in a world where no meaningful day-to-day danger exists. Things like distant wars and variously lethal viruses don’t count. Indeed, assuming virology is correct and what it calls viruses are pathogenic, what is the probability you might die of, say, ebola? Even squalor and poverty don’t fulfil the same function as organic danger in the sense adopted in this article; they grind away at us relentlessly, too abstract to attack or run from, holding us forever at one crushing remove from the respect from others we need. (And if you are unlucky enough to be in one of those distant wars, their danger levels far exceed what humans are biologically constituted to healthily process.)

Nevertheless, our long-disregarded instincts have a powerful say in how we behave. Distracted by other concerns, we fail to interact with our instincts consciously, manage them unwisely if at all, misunderstand them, demonise them. Consequently, they are now like psychotic, hyperactive infants running the show from the shadows, fractiously incoherent, desperately ignored.

In light of this observation, is it reasonable to suggest we’ve become too accustomed to manufactured convenience as a palliative for the constant anxiety we suffer in our ‘tamed’ world? Is there a tension between that palliative convenience on the one hand, and our reflexive allergy to danger on the other, a tension that, among other things, sustains money beyond its natural life?

I’m beginning to suspect this is so, that this article’s subject matter – money’s apparent resistance to changing circumstances – might not, as I once suspected, be anchored in the false dichotomy of abundance and scarcity, but primarily in one of spiralling convenience, the habituated effects of that spiralling on cultural expectations, and in our worsening allergic relationship with reality’s correcting, but healthy, vicissitudes.

We’ll examine whether money – scarcity’s perpetuator –  is now civilisation’s endemic surrogate for the dispatched dangers of The Wild, note that it doesn’t make a very good fist of it, and learn that we appear to be, thanks to money’s overly aggressive performance in this regard, culturally incapable of transcending it. 

The ouroboros of money and scarcity → convenience addiction

A few millennia ago, money formally entered the scene. Not in any way as a response to any detected lopsidedness regarding danger and survival instincts, of course, but as a needed tool of societal control and civilisational expansion. As money increasingly became a creature of market-based price discovery, however, it slowly began to plug the hole created by our over-sterilised, over-tamed environment of diminishing biodiversity in which the full, magnificent range our biologically attuned senses and abilities became far too underemployed. Ignored and undervalued, our biology has more influence on proceedings than we want to know, including addicting us to stuff we neither need nor want.

We all Just Know™ that Life’s Not Fair, that There’s Not Enough To Go Around. But these pat truisms in which ego loves to wallow – and all others like them – are not the organic fruit of our intimate, day-to-day experience of what we might call “natural forces”. Rather, they are ego-cultural surrogates born of man-made laws dressed up as natural forces, e.g. “The Law of Supply and Demand”. 

Peering through the lens of money, we intellectually perceive a seemingly organic transition from The Wild to Civilisation. There are scarcity, exchange, preference and risk in rain forests, we astutely observe, just as there are in free markets. So it looks for all the world as if money functions as both conduit and bridge between the two worlds by enabling ‘progress’ from the former to the latter while efficiently keeping civilisation’s feet on the ground by holding its lofty, cerebral ambitions in check. 

My argument, however, is that money makes life artificially hard because it requires scarcity; only when products are scarce do we need money, as price, to distribute them efficiently. I say “artificially”, because humans spent the vast majority of their existence in conditions of abundance. It is thus not a species-level need that life be hard in the particular sense of scarcity and perpetual competition, but hard somehow (if at all). 

Furthermore, while it is true, no doubt, that the abundance ‘primitive’ peoples know has nothing to do with consumerism and keeping up with the Joneses, and while it is also no doubt true that this basic abundance is punctuated by bouts of scarcity, it is clearly abundance nevertheless, much the same as that enjoyed by, say, bonobos. To be clear, not excessive abundance of everything, nor an infinite amount of anything, but more than enough of most things most of the time; what I think of as organic, homeostatic abundance. A biosphere that functioned otherwise would be dysfunctional, I suspect, in much the same way the human body becomes dysfunctional when there are insufficient nutrients and calories to sustain its health.

In pithier form: We moderns have somehow come to Just Know™ that life is very hard and very unfair. But this reflex is a cultural phenomenon coincidentally anchored in money. It is a perversion of an organic, species-wide knowing rooted in our biology via intimate day-to-day experience of a richly biodiverse wild over great tracts of time.

There is thus a profound difference between hunter-gatherer and civilised social modalities across this very axis: the gulf carved between us by money. Systems shaped by structural scarcity from their fundament up promote socially corrosive competition over resources, and are also institutionally constituted to require perpetual growth, the kind that takes larger and larger bites out of The Wild and manufactures them into the conveniences we insatiably demand. “Insatiably” because we are highly manipulatable, via advertising and propaganda, precisely on account of our underdeveloped relationship with and awareness of our instincts, our bodies, our biology.

Modernity’s ‘need’ for what it misunderstands as a Hard Life is thus unlearnable rather than hardwired, albeit, I suspect, only after deep system shock.

All that said, it is true enough that Life Is Hard from the ego’s perspective. Ego is self-oriented and fear-based, obsessed with control, and paranoid. The question we should put to our egos is: To what extent and in what quality should life be hard? Must a hard life be squalor for most of the planet’s human population, prison ships, endless profit-seeking wars, holding down three jobs for the ‘fortunate’ poor, violent crime, continual state malfeasance, corrupted justice systems, perpetual anxiety and cynicism, etc.? That kind of hard? Or perhaps acquiring wisdom through courageous risk taking, weathering the ups and downs of life, painful friendship disputes, broken romances, love and loss, the challenges of parenthood, etc? What’s wrong with that kind of hard?

Convenience eats its young

We’ve lived with systemic scarcity – and its temporary palliative Convenience – for longer than we can remember. It’s a struggle to imagine anything else. Star Trek once touched on the idea of a moneyless future, but has since dropped that ‘dream’. Most of what now passes for future-oriented fantasy depicts reality just like today, only with fancier clothes and vehicles. That said, technological convenience is catching up so fast, there’s now little to distinguish between fiction and normality. Drenched in scarcity and mass-produced plenty, we’ve become cynical and uninspired. We’re dimly aware there were once dreams of doing things very differently, but, well, they all fell painfully on their noses, I seem to recall, and anyway, I don’t want to talk about it. I’ve got better things to do with my scarce spare time, like watch videos of cats falling into fish tanks.

But look at how we are. Look at what we’re doing to each other, to our own children. How many of us want to raise our young by making life as hard for them as we can? Does grinding hardship make children wise, happy, healthy? How about a grey, Kafka-esque future governed by ever watchful bureaucratic machinery reaching into every sphere of their lives? How about a culture of endless pornographic spectacle as far as the eye can see?

Consider the other living beings we share this planet with: Do their young require endless hardship to flourish? Or do they perhaps need Just The Right Conditions for their flourishing? 

We know bitterly that Life Out There is tough. We are obliged to prepare our children for it, toughen them up, make them attractive to future employers, raise them high enough above their competitors (their fellow travellers). This process, we believe, requires routine discipline and rote learning of sterile lakes of information that spill from dull text books about this, that, and other unrelated things. I know it’s boring, darling, but you need it to get X, and you need X to get Y. Maybe after Y you’ll start to enjoy life. I know, I’m not a particularly happy adult, and none of my ‘friends’ are either, but you could be if you work hard enough! Besides, the alternative is far, far worse. Now, do your homework like a good girl!

Bizarrely, we are surprised and confused when our children don’t thrive, when we see them suffering, dull and listless, uninspired by life.

The future we prepare our children for is increasingly doom laden precisely because money requires scarcity, intensifies competition, and makes for ever busier lives of ever diminishing meaning. It also straitjackets our imagination via its command of the value system, and hijacks our desires down narrowing channels loudly daubed with nothing more than garish bling. As a result of all this, we end up devouring our young in hot, collective pursuit of an easy life: aka convenience addiction.

We sense, don’t we, somewhere deep down, that these status carrots we dangle in front of our children’s open faces don’t really make anyone happy. They’re just a lot better than the stick of grinding poverty. Or maybe a little better. I’m honestly not sure anymore.

Conclusion

So exactly what amount of hardship do we need? Well, I think that’s the very wrong question. Such thinking makes us want to architect our lives down to the last detail, map out our futures with masterful precision, direct ourselves inexorably towards something certain, only to go crazy failing in that task, even when we ‘succeed’. 

We think too little too much, in the wrong way. We feel too little too much, in the wrong way. We are wan images of what we could have been, if only … if only something else were discernible. 

But I’m confident you can feel it. I don’t mean have emotional reactions to the horrible choices the future forces us to make, but feel, intuit, sense some Other Way where happiness and health are inside each other like exquisite Russian Dolls, equally sized, equally mysterious, different and the same and you can hardly tell which is which. Sadly – happily – this Other Way can only be hinted at. It is not clear, not easy to find, not easy to stay on. It is not mapped out. It is not just around the corner. It is nascent, untried, untrod. Each of us must develop the courage to want it. We have to dare to try with absolutely no guarantee of success. Except, of course, you are absolutely guaranteed to succeed if you really try. I know this is so because “success” is not what we think it is. Which is where the courage comes in, precisely that courage that terrifies the ego.

An easy life, an automated ‘paradise’ free of work, free of risk, clear-cut of the wild, tamed entirely, replete with glittering conveniences and consumer choice is not what I am talking about. Nor is it what we want. It is what we are conditioned to want; a fantasy utopia we have lost ourselves to, what our imagination has been curtailed by. It is money’s honey-trap dream, civilisation’s featureless finale.

I envision a life of meaningful risks and challenges, of rich interconnections and interdependencies, of living villages raising their young in love and openness and play, of boundaries blurred, dichotomies differently lived, a wild-wise mix of karma and dharma. 

I see money between us and it, money, that is, as a structuring design wiring our cultural reflexes to mechanical competition over scarce petty things of no real value, things we cannot take with us when we die. 

What we take with us is what we are: that quality we earn by living how we live. This quality, being quality, is immeasurable. Being made of numbers, money measures, quantifies. It is thus fake-karma machinery of oscillating, market-based rebalancing and sweeping rich-poor judgements that must forever remain incapable of directly advancing human wisdom beyond the narrow domain governed by quantity. Money conjures the very antithesis of ‘rich’ because it steadily strips reality of quality as the sun would turn the planet to desert – left to reign alone. It stripmines diversity in blinkered pursuit of efficiency. It mechanises the organic. It smells of ego, stinks of control. And, unsurprisingly, it is hotly defended, just as ego will always hotly defend its stuff.

The need (or function) I have here argued that money fulfils – a surrogate for organic danger and risk – is no triviality, though. Money has obviously been a fundamentally important societal glue given civilisation’s vector; its reign spans millennia. But it is nevertheless of its time, of its context. I cannot tell how long its reign has left; that sort of thing is far above my pay grade. I’m confident, however, we want it to end – “want” in the manner I suggest above. As convenience spirals out of control, as societal dysfunction lurches into allergic hysteria, we face the sorts of choices this article presents. As globalists install their desired technotopia of smart cities and AI control of human behaviour, as their programme unleashes more and more brutal, violent outputs and unintended consequences, as its freakish malfunctions become increasingly apparent, so the pressure to acknowledge these choices increases. Many will refuse to face them, come what may. Those of a pioneering spirit, on the other hand, will find the courage to take this challenge on, and indeed are doing just that. It is to them I speak in hope that they might listen, assuming my analysis accords with reality well.

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:

  Source: Positive Money/David A Jones

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.

Banking, scarcity, greed and change!

Fractional reserve banking is a given in most discussions on the topic of money, lending, and Central Banks. Central Banks are lenders of last resort, “designed” by their architects to stabilize the financial system. The oft quoted ratio is 10:1, which means banks can lend out to customers ten times the amount of money they hold in reserve. The money lent out is of course not taken directly from their safes -- how could it be? you can’t lend out 10x more than you have! -- but created “out of thin air.” That this happens is non-controversial and neither good nor bad in and of itself. The system “works” in the way all games work; people agree to play along. Should there be a flaw in the design, the game will become unplayable at some point, and people will take a fresh look at the “rules of the game.” I think that’s where we’re at right now.

The dry theory is that commercial banks are fed money by Central Banks, and then lend on that money at a 10:1 ratio. Money is first created by the Central Banks, then pumped through the economy’s veins at a speed of 10:1 by the commercial banks we all know and love. Please read Steve Keen’s analysis of this process, which shows, contrary to the dry theory, that in fact the reverse is true. Commercial banks lend to customers first, creating money as debt into the system, then the Central Bank reacts later on, feeding money to the commercial banks as they see fit. This is a very important piece of analysis which tells us a lot about the system, which is nowhere near as neat and tidy as theory suggests (quite a shock!).

Of course, I’m looking at this through the eyes of someone who believes a resource-based economy is now the only logical direction to follow for humanity. That’s my agenda, which I make no attempt to hide. For me therefore, the most vibrant and bright aspect of the nature of money is it’s insoluble bond with scarcity. This fact has unavoidable consequences, one of which is hoarding, otherwise known as greed. This dynamic explains how it is that the dry theory of money creation is at odds with the dirty, messy, day-to-day reality of life on the ground. There is demand for money, commercial banks are where one gets this money, commercial banks must make increasing profits, they have a quasi-legal right to create money, hence they do so, even advertising to encourage customers to borrow more and more.

So the pressure in any socioeconomic system built atop the presumption of permanent and unavoidable scarcity -- which engenders money -- is towards debt-fueled growth, as people compete to “succeed” demonstrably in material terms, always seeking to outdo each other. Money cannot be other than a symbol of success, and must be scarce, therefore the inescapable pressure within monetary systems tends strongly to unsustainable “growth,” and cyclical boom and bust. Fractional reserve banking's history is littered with this pattern.

Again, I see this as neither good nor bad. Nature is cyclical. There are seasons, forest fires, extinctions, and other longer cycles, which need not be regular or predictable to be cyclical. However, there is are two unnecessary negatives in money cyclicality (if I may call it that), and they are entrenched divisions along rich and poor lines, and too much fear. In other areas of nature, change is freer in its scope, and no sticky divisions seem to arise. Humans can “artificially” maintain a particular, preferred balance, via law and governmental institutions, and solidify a status quo in such a way that change is slowed down and impeded, dangerously so. This system-calcification is enabled by many things, in my view though, scarcity is chief among them.

As I have argued elsewhere, scarcity is part perception, part fact. Hunter-gatherers confirm this, as did the islanders of St. Kilda. In perceiving abundance, one is prompted to share and cooperate, and deal with hard times with cooperative tactics, not competitive. Bernard Lietaer is very good on this point. Money exists as a tool to deal with scarcity, to enable complex trading of scarce goods and services, and by design encourages competitive and hoarding behaviours, fearful behaviours, inspires fear of want, of material poverty, etc. This dynamic leads to calcification of whatever status quo emerges out of the struggle to find balance -- all systems, human or otherwise, constantly seek balance (though never achieve it). This scarcity based, calcifying dynamic impedes change.

Change, however, is unstoppable, is the only constant. Everything is in a constant state of dynamic flux, never achieving a settled equilibrium. The less able we are, culturally and societally, to appreciate this, the more damaging and disruptive change becomes, and this is magnified further still as our culture becomes global. Part of the thesis which argues a resource-based economy is the best way forward for us all, is that it copes better with change. In that the direction seeks to end material divisions and make all mediums of exchange redundant, in that it calls for cooperative, not competitive behaviours, calcified divisions are less likely to emerge. Money is a tool, a lever for enforcing fixed divisions, and is therefore deployed by the “successful” against the “unsuccessful.” A resource-based economy is absent such a lever by design.

Meanwhile, change -- in the form of technological development -- continues apace even within the calcifying status quo, but our many, similar, worldwide Central Bank Fractional Reserve systems fail to adapt to it, seem incapable of understanding the consequences, refusing to look openly at the data, the technology, the mood, the slowly shifting paradigm. Technically speaking, how hard would it be to keep drinking water clean and abundant for everyone? Certainly not impossible. Sadly, in financial terms it makes next to no sense to do so -- the more scarce a resource is, the more money can be made from it, assuming demand. Is it technically impossible to prevent the further erosion of top soil? Not at all, but financially speaking, chemical fertilizers make sense, regardless of the consequences. Permaculture, hydroponics, organic farming techniques combined could provide sufficient food for all of us, in abundance, but, of course, this makes no financial sense. The solutions to the energy crisis are a concerted effort away from being ours, yet the resultant clean energy abundance makes little financial sense. Saving the ecosystem which supports us makes little financial sense, or at the very least threatens the current status quo.

We have unwittingly forced ourselves into a corner. Money and scarcity are locking us in. The solution is abundance and the cooperation this necessarily inspires. We are our own enemies here, because we have been socialized for centuries, maybe millennia, with a world view based on scarcity. If an uneducated schmuck like me can take a fresh look, we should all be able to. But that’s up to us, no one else. We are each of us obliged to make the effort to take on new and challenging ideas openly and unprejudicedly, if we want to minimize the damage the coming collapse will cause.

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?

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.