Scarcity vs abundance II

Last weekend I looked at issues of scarcity and abundance, and how that really needs two economic theories for late stage capitalism, or post-capitalist societies, as Peter Drucker described it. One for what is scarce, using “laws” of supply and demand. The other for what is not scarce (the “knowledge economy”, for instance) which is not as limited and needs to be subject to different types of thinking. Based on the responses, it looks like that may take a bit longer than a couple of weeks.

Capitalism is in transition, if not trouble, and economic thinking needs to adjust. An episode of FutureTense on the ABC considered the challenges this week: the impossibility of Asia replicating the West’s consumption model, the illusion of wealth creation created by the finance sector, the slowing of developed economies because of a sharp decline in genuine innovation.

I want to go through some of the responses to last weekend’s blog; they were most instructive. What seemed to be at issue for the respondents is what is “real”. Wedding planning, for many, is not real (a position that sounds intuitively about right). By contrast, physical resources, and especially energy, are “real”.

3d1k said this. Intangibles, services, are a sort of accretion on top of what is real:

The proliferation of services occurs within the broader success of industrial application and innovation. Furthermore, a services economy can only grow significantly in times of economic prosperity. Economic stagnation or decline will result in a corresponding decline in the services sector.

In reality, in this modern world, these sectors are intertwined, but in my view, the industrial sector is paramount, industrial growth in effect giving rise to the services sector.

Alex Hayworth was more persuaded by the reality of intangibles:

As society becomes more and more service oriented, more and more of our “consumption” becomes the consumption of services, rather than material objects. This is not saying that the consumption of material objects declines – clearly service economies tend to be the most affluent and therefore the biggest consumers of stuff in the world. What I am arguing is that the consumption of “stuff” becomes a smaller and smaller proportion of what we value; even when we consume stuff, we are prepared to pay high prices for the elaborate preparation of it – dinner at a three Michelin star restaurant, anyone? As a result, less and less of economic growth represents an increase in the stuff consumed, more and more of it represents either straight out services or services that enhance our enjoyment of stuff we already consume on a regular basis.

Q Continuum, who had had a few whiskies, perhaps even a few too many, was in the anti-wedding planner camp. He put his finger on something important: that the best economic growth (i.e. increase in the rate of transactions) will come from transactions that REDUCE consumption of finite resources :

But having a wedding planner pay their dog trainer with money they earned by supplying services to the young personal trainers is not a real economy. No one in that little transaction merry-go round is making something better, more efficiently, with less energy, materials or human labour. And I believe that is the essence of improving the living standards of humans – increased productivity.

And so on. I believe the debate demonstrated what I am talking about. That we need different ways of interpreting what is scarce and what need not be scarce, such as wedding planning (although, happily, not films about wedding planning starring Jennifer Lopez, which surely is something that can only happen once).

So let’s start with a consideration of what is definitely “real” in what we call economics:

1. Transactions are real. They are a social artefact that defines the rules of value and obligation. They definitely exist and for society to work they must exist. However, they are a SECOND ORDER reality. Money is a symbol of something else. The weakness of economics is that there is tendency to assume that transactions are more real than what they represent — getting the cart before the horse, as it were. Still, transactions are real.

2. Scarce resources, such as food, energy, water etc. These are definitely real, we cannot live without them and they are finite.

Now here is a list of things whose reality is less certain:

1. Wedding planning. Yes, it exists, but we can almost certainly do without it.

2. Derivatives. Yes, they exist, but as an exercise of making money from money, the more they accumulate, the less real they get. At best, they become a kind of meta-money, which is less real than “normal” money: bank lending, equities, bonds etc.

3. Brands.

4. Social media.

5. Intellectual property.

6. Barry Manilow songs.

Now if we agree that transactions and scarce resources are, definitely, real, then we see the beginnings of my dual track economic theory, one subject to rules of scarcity (resources etc.) and the other subject to social rules about what is healthy for the system and the people within it (transactions).

Transactions, which are based on agreements (to transact) can continue to grow sustainably. They are unlimited, or at least not subject to the kinds of obvious scarcity that applies with physical resources. Their unlimited character is surely one lesson of the explosion of derivatives over the last decade, which in my view caused the GFC.

Resources are of course finite and in many areas fast running out.

Economic growth, or transactions, can continue to expand. Resource use cannot. The best bet, therefore, for the future of the global economy, is to encourage transactions that reduce the consumption of resources. I refer readers again to the Sixth Wave which is about the post-industrial shift towards technologies (and, more importantly, new urban systems) that reduce the use of resources. The shift towards services rather than goods is also a part of it; many of the drops in resource usage occur when businesses stop thinking they are selling a good, like energy, and start to think they are selling a service, like heating or lighting. If an energy supplier is selling energy, then they want to sell as much of it as possible, to rip off the consumer. If an energy supplier sells heating, then they want to provide the heating for as little energy use as possible because it is cheaper. The interests of the consumer and supplier are aligned.

So here is my cunning plan. Economists need to stop thinking that the discipline is a science, which is obvious enough, but the fiction continues. The claim that economics is a science encourages static thinking. If you think you have discovered a scientific rule of markets, then you are reluctant to notice how markets are changing in ways that are new. And markets are changing in ways that are new; the economic theories are from last century and they are failing. It is my contention that to track it and understand it we need two models; one for what is scarce, one for what is not.

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Comments

  1. I’d add a very important scarce resource to your list: labour supply/human capital. It is subject to the rules of scarcity and we cannot live without it. As you say, the best economic growth comes from transactions that reduce our use of scarce resources. Wedding planners, personal trainers, house painters etc build their human capital in a service specialty and thus can perform a specific task more efficiently (in terms of physical resources and labour supply for a given output) than the average person. That’s why people hire them. A wedding planner would take fewer person-hours to plan a grand wedding for me than I could plan an equivalent wedding, because she has experience, creativity, contacts that I do not have. Hence, the scarce resource of labour is saved by hiring a wedding planner.

    I know we all like to think of wedding planners as frivolous rather than an expert service. But isn’t specialisation a path to more efficient use of scarce labour resources?

    • Marcia, just for a chuckle, from The Simpsons, last week:

      Bart needs counselling, Marge seeks out Homer’s therapist – professional offices derelict, eventually finds him near an underpass with other homeless types.

      Marge
      Dr Zander??? What are you doing here?

      Dr Zander
      Oh…it’s the damn economy. When it went south the first thing people stopped spending money on was expensive therapists. So, we all live here now – along with the other unemployed luxury professionals: wedding planners, personal shoppers, aromatherapists, high end caterers ….

      Always a bit of truth in the Simpsons. Cheers.

      • *like*

        Highly specialised labour, as with other highly specialised resources, is subject to fluctuations in demand…

  2. I need to think a lot about this post as I find myself having a fundamental disagreement with the whole premise even though its both beautifully written and argued.

    For instance, coal or iron may be scarce resources but energy, food and even water are not. These things are made infinite by the application of intellectual property and demand which means that those esoteric things are indeed real.

    Still its too deep an issue for only an off the cuff response

    • Do you mean scarce, or non-renewable?

      Also in the discussion of whether a thing is scarce or not, one must consider the economist’s eternal question: “Relative to what?”

    • Iron ore certainly isn’t scarce (5% of the Earth’s crust) and coal is one of the most abundant fossil fuels.

      Energy isn’t scarce, but cheap energy is. And by “cheap” I don’t mean its cost in dollars, I mean how much energy is required to extract the resource.

      The only thing that can deliver the energy return humanity will demand in the long term is nukes, especially fusion (if we can ever make it happen). The theoretical energy return for nuclear energy is simply spectacular, many orders of magnitude better than any fossil fuel. The potential for near infinite cheap energy is real, but I worry what we’d do with that if it happened. Concrete the planet probably.

    • Lighter Fluid

      Energy, overall, in the universe is finite. The Earth however is not a closed system – there is a constant input of energy from the sun. Fossil fuels are simply a stored source of this energy accumulated through millennia of plant life.

      Food too is stored energy derived ultimately from the sun. Some foods are more efficient stores of energy than others – grains vs meats for instance.

      Water is more like coal/iron/copper etc, it is a finite resource. If anything, over time the planet is loosing water (although this is a very slow process). Water use is cycled, and in a dynamic sense, there are processes that create more of a water sink than others. I think may people understand this – we get taught about the water cycle (rain, evaporation etc) quite early on.

      In my opinion, I can’t see why we can’t have a united thought process of economics. As argued in the Sixth Wave, if we think about cycles of consumption and resource conversion rather than consumption and disposal of a primary source, one can overcome the problems of scarcity and ‘peak everything’. This would require economics moving beyond the equilibrium supply-demand religion, dealing instead with flows and dynamics – conversion of resources, inputs, processes and outputs etc.

      Cognitive and human capital (IP, wedding planners, social media and brands all fit into this), are all part of the ‘processes’ part of this system. Derivatives and finance too would play a role here. In my opinion it’s just a matter of taming them into doing their job as enablers of the ‘real’ economy (allocation and conversion of resources).

      The whole thing requires a more holistic view of the economy and the roles of each of the sectors. When one part of the system runs too hot, thinks it is superior, or becomes what everyone wants to do, then you have problems. Either you need a big stick and an omniscient overseer, or a spirit of co-operation and understanding for all participants.

      Overall, I’m optimistic that the latter will unfold, but I expect some crises before we get there – mistakes are the best way to learn.

  3. Look forward to hearing what you have to say, Deep T. Mind you, I think water from conventional sources may soon be in short supply. But the technology exists to make it other ways, at a price. The Sixth Wave book argues that China’s demand for water will tip the global balance.

  4. The services economy has developed as people have become time-poor eg. cooking, cleaning, laundry, financial management.

    Once the greatest depression hits, people may very quickly pull back their spending on these ‘making life easier’ spending treats, to be able to maintain the payments on the house.

    I would argue that the service economy is more vulnerable than the industrial sector. So I guess I agree with 3d1k in that without a real wealth-creating economy (actually making stuff) you don’t have anything.

  5. Information is that other “real thing”.

    However, it can’t be pinned down to “things”, as it only has its origins in a sufficiently intelligent mind.

    Hence, the human mind is capable of producing new “stuff”, though it is not tangible, but allows different arrangement of tangible stuff.

    This might help you clarify your thoughts.

    Thanks again,
    Stewart

  6. Scarcity of commodities can be artificially fabricated – eg oil. Controlling supply affects economic prosperity. Monopolistic practices, by enlarge, suppress/crush REAL competitive alternatives.

    Scarcity in innovative thinking can also be artificially fabricated – eg such as thinking ‘within a box’ methodology adopted and promoted by some of our education institutions. To think ‘outside of a box’ can effectively leprosies an individual destroying career aspirations. To be a free thinker can label one as a “nutter”.

    Clean free energy (or near to free) appears to be emerging. Once this becomes a commercial reality, the fabric of society will change forever.

    http://www.washingtontimes.com/news/2011/mar/17/nuclear-future-beyond-japan/
    The comments posted in the above link are also worth reading.

    I remain hopeful of the claims purported by Mr Rossi because once this product is released, it will be the catalyst that will change our current view of physics and open a doorway to new discoveries and prosperity.

  7. Thanks, SON. We have just left economics and headed into philosophy and metaphysics. Morals, ethics and believe systems.
    Please allow me to blunder on.

    Beauty is in the eye of the beholder.

    I’ll gladly pay you Tuesday for a hamburger today.(Wimpy, Popeye Cartoons).

    Needs are finite, wants are infinite.
    Needs are real, wants are notional.
    See Maslow’s ‘Hierarchy of Needs’.

    “Prices impose the most effective kind of rationing – self-rationing. Why is rationing necessary? Because what everybody wants always adds up to more than there is. It doesn’t matter whether you are talking about a capitalist economy, a socialist economy, a feudal economy or whatever. Resources are limited but desires are not. That is the basic and defining problem of economics.” Thomas Sowell

    Intangible concepts:
    Scarce: common sense, trust, honesty.
    Abundant: Stupidity, ignorance, apathy.

    The knowledge economy: What we are really talking about here is, in an economical sense, is actionable knowledge and that implies time preferences from concept to action.

    The knowledge economy: There is an abundance of knowledge but a scarcity in wisdom.

    The knowledgeable contradict each other, the wise contradict themselves.
    Science is organized knowledge. Wisdom is organized life. Immanuel Kant

    Referring to above article: money is something else. It is conceptual. A transaction is between two parties based on mutual trust and beneficial satisfaction in the agreement of exchange.
    Not all humans are either honest or trustworthy. Nor do we all have the time to discover this. A person’s character is in reality, unknowable and indefinable. No one really knows what goes on inside anyone else’s head. Uncertainty. We are measuring/judging an indefinable concept with a concept of measurement that is in itself fluid and dynamic. We have an intrinsic need to have somewhere to hang our skyhooks- anchor our concepts that is acceptable to the individual and collective alike and in the same agreed time space.
    This is why we had “commodity money”. It removes uncertainty (some not all), thus enabling third, fourth, etc.parties in multiple transactions. It performs the duty of some missing requirements.

    That is if humans cannot trust each other (unknown strangers in the personal/distance) then an agreed substitute is brought in, e.g. gold. Cultural belief systems.

    Fiat is not agreed, it is coercive and forced by power. It is not mutually beneficial. It embodies the same flaws of character as its issuers and defenders. It is the embodiment of purported honesty by the dishonest. A fatal flaw. Trust my money (ruling elite) because I refuse to be bound in the trust of yours.

    Who are you going to trust, me or your own lying eyes? W.C. Fields.

    Late stage capitalism, or post capitalism, per Drucker. What is your proposition? This time it is different?

    Fascism is capitalism in decay. Lenin.

    .See also Authoritarian Free Enterprise, Corporatism, Mussolini Fascist Business Model.

    “Capitalism means free enterprise, sovereignty of the consumers in economic matters, and sovereignty of the voters in political matters. Socialism means full government control of every sphere of the individual’s life and the unrestricted supremacy of the government in its capacity as central board of production management. There is no compromise possible between these two systems. Contrary to a popular fallacy there is no middle way, no third system possible as a pattern of a permanent social order. The citizens must choose between capitalism and socialism.” Ludwig von Mises

    “The characteristic feature of capitalism that distinguishes it from pre-capitalist methods of production was its new principle of marketing. Capitalism is not simply mass production, but mass production to satisfy the needs of the masses.”Ludwig von Mises
    “Under capitalism everybody is the architect of his own fortune.” Ludwig von Mises

    “What transformed the world of horse-drawn carriages, sailing ships, and windmills step by step into a world of airplanes and electronics was the laissez-faire principle.” Ludwig von Mises
    “Laissez faire means: Let the common man choose and act; do not force him to yield to a dictator.” Ludwig von Mises
    “If one rejects laissez faire on account of man’s fallibility and moral weakness, one must for the same reason also reject every kind of government action.” Ludwig von Mises

    “Liberty is always freedom from the government.” Ludwig von Mises
    “All judgments of value are personal and subjective. There are no judgments of value other than those asserting, I prefer, I like better, I wish.” Ludwig von Mises

    “Inflation is the fiscal complement of statism and arbitrary government. It is a cog in the complex of policies and institutions which gradually lead toward totalitarianism.” Ludwig von Mises

    “Inflationism, however, is not an isolated phenomenon. It is only one piece in the total framework of politico-economic and socio-philosophical ideas of our time. Just as the sound money policy of gold standard advocates went hand in hand with [classical] liberalism, free trade, capitalism and peace, so is inflationism part and parcel of imperialism, militarism, protectionism, statism and socialism.” Ludwig von Mises

    Liberty is the prevention of control by others. Lord Acton

    The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks. Lord Acton

    It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder. Frédéric Bastiat

    Banking was conceived in iniquity and born in sin… Bankers own the Earth. Take it away from them but leave them the power to create money, and, with the flick of a pen, they will create enough money to buy it back again… Take this great power away from them and all the great fortunes like mine will disappear and they ought to disappear, for then this would be a better and happier world to live in… But, if you want to continue to be a slave of the bankers and pay the cost of your own slavery, then let the bankers continue to create money and control credit. – Sir Josiah Stamp, Governor of the Bank of England

    “Among a people generally corrupt liberty cannot long exist.” Edmund Burke

    “Why don’t you reform yourselves? That task would be sufficient enough.”
    – Frédéric Bastiat

    “All the perplexities, confusion and distress in America arise not from defects in their Constitution or Confederation, nor from want of honour or virtue, so much as downright ignorance of the nature of coin, credit and circulation. John Adams

    A man’s mind is so formed that it is far more susceptible to falsehood than to truth. Erasmus

    “Losing an illusion makes you wiser than finding a truth.” Ludwig Borne

    Goodnight to the guppies in the Anglo fishbowl of unanchored debt based fiat money and Anglo reserve fractional banking. The Anglo Empire is hyperventilating as it enters the elephant’s graveyard. Delusions of Anglo financial opiates. Mad as hatters and exceedingly violent.

    Should be renamed the Quisling Empire. Swindlers paradise selling their fellow man into debt slavery.

    • Seanm,

      nice quotes, the one from Sir Josiah Stamp is apocryphal though. I discovered it after searching for a reputable site that referenced it.

      This was the only quote that I checked.

      see:

      “A Bogus Quotation from Sir Josiah Stamp on the Evils of Central Banking”
      http://www.garynorth.com/public/6871.cfm

  8. Sorry capitalism we havent had, dont go talking bullshit…in a free market there wouldnt be central banks and state monies backed by lies. Your either a propaganda agent or your a fool, maybe both.

    Enjoy your post capitalism when the army has to come in to clean the poo.

    On with the bailouts, “capitalism bailouts” thats a new 1. If i go broke can i have one 2????

  9. The Gov tells me i cant smoke in the pub a private property, capitalism at fault again.

    Fuck all you M Fkers I hope the army shoots yu all in the head, ill help if they let me.

    • Your right to smoke does not supersede my right to NOT be harmed by your smoking. Simple as that.

      And who are you talking to with such vitriol? The OP or the government?

      If you’re going to get all “eff you mother effers” (which adds sweet FA to an otherwise enlightening & engaging thread) at least be a little more explicit as to who the mother effers are.

  10. Thank you Dr Bob. So good of you to quote Dr Gary, he is one of my favourites.

    Ponzimania, hate the act not the man.

    Heres’ a morality tale that says it all.

    The story of the two wolves.

    Native Wisdom

    A Grandfather from the Cherokee Nation was talking with his grandson.

    “A fight is going on inside me,” he said to the boy.

    “It is a terrible fight between two wolves.”

    The young grandson listened intently.

    “One wolf is evil, unhappy, and ugly: He is anger, envy, war, greed, selfishness, sorrow, regret, guilt, resentment, inferiority/superiority, false pride, coarseness, and arrogance. He spreads lies, deceit, fear, hatred, blame, scarcity, poverty, and divisiveness.”

    “The other wolf is beautiful and good: He is friendly, joyful, loving, worthy, serene, humble, kind, benevolent, just, fair, empathetic, generous, honest, compassionate, grateful, brave, and inspiring resting wholeheartedly in deep vision beyond ordinary wisdom.”

    The grandson paused in deep reflection of what his grandfather had just said. Then he exclaimed; “Oyee! (in recognition).

    Grandfather continued; “This same fight is going on inside you, and inside all human beings as well.”

    The grandson paused in deep reflection and recognition of what his grandfather had just said. Then he finally cried out deeply; “Oyee! Grandfather, which wolf will win this horrific war?”

    The elder Cherokee replied, “The wolf that you feed. That wolf will surely win!

    “http://www.rainbowbody.net/Ongwhehonwhe/cherokee.htm

  11. I think ideas like sell heat/lighting instead of energy very important. Don’t know exactly how that service Go Get Car works, but maybe step in similar direction – sell kilometers instead of petrol.

  12. The jumble of thoughts and quotes by those who replied above, pretty well reflect my thoughts on the matter.

    Western governments have managed to twist the concept of capitalism to support vested interests to get themselves and keep themselves in power. What do you call this?

    Its bad regulation that caused the GFC, not lack of regulation and all we’re getting is more of the bad.

    95% of the working population of these so called capitalist democracies will be condemned to a life of servitude unless we remove government support without cost or consequences from the financial system.

    It is up to each of us to decide what is real or not to us and for others to respect that

  13. Another top notch, thought provoking post – nice work SoN.

    I’m flattered I was quoted, but would just like to clear up I actually like having wedding planners around. To have them in your society says a lot about the success of your production methods. I just wanted to highlight that they are a luxury profession, not a necessity.

    With regards to today’s topic, I’ll avoid the philosophy and take a hard-nosed, pragmatic approach. I see transactions in terms of their orders. First order transactions involve the actually exchange of a good or service – coal, wood, paper, coffee or even patents – for another good or a store of value (money, gold). Second order transactions are derivatives of the first e.g. futures. Third order would be the derivatives of second order transactions and so on.

    I believe humans are great at handling the first order and ok at handling the second order transactions. But the higher order derivatives (what you term the meta-money) have proven to be rather damaging. They can indeed be limitless and may in most cases be unnecessary for the functioning of the economy. If this is the case, then maybe we need to look at better (not more) regulation around these higher order transactions to ensure they do not proliferate infinitely or become a systemic risk.

    Allow markets to take care of the first and second orders (governments get the hell out of the way), and watch very closely the higher orders (governments set tightly-controlled rules).

    • That’s an interesting way of looking at it QC – and even by the mere fact of suggesting these “third order” systems can be dangerous beasts, alerts people generally to them being a “wolf on sheep’s clothing”, and should be treated with caution & trepidation.

      Or avoided altogether.

      But yes, in the meantime some sort of preventative regulation that then doesn’t get diluted or completely nullified by ridiculous government guarantees is required.

  14. Some great links were posted there by Whacked.

    One of the links is concerning IP and the fact that patents create a scarcity that only exists because of Statutory Law.

    “It is a peculiarity of property rights in patents (and copyrights) that they do not arise out of the scarcity of the objects which become appropriated. They are not a consequence of scarcity. They are the deliberate creation of statute law, and, whereas in general the institution of private property makes for the preservation of scarce goods, tending . . . to lead us “to make the most of them,” property rights in patents and copyrights make possible the creation of a scarcity of the products appropriated which could not otherwise be maintained.”

  15. A bit convoluted but here we go. After doing a little Sixth Wave reading (which felt like reading a long article of the kind preferred by The Drum – ‘ambient ABC’) and listening to Future Vision, I was again reminded that little 70s classic Small is Beautiful: Economics has if People Mattered. Written prior to recent accelerated industrial and financial globalisation and dominance of the needs of international finance markets over both governments and ordinary people. The world was a simpler place and the vision had heart.

    Chandra Nair argues that the five billion or so in the developing world cannot consume like the developed world, primarily due to the degradation of resources. These governments must abandon the consumption-led model of prosperity because, if they don’t, up to 50% of these populations will live in very poor conditions. (Surely an improvement on the 90% living in poor conditions right now.) He believes that economies must be subservient to maintaining the vitality of natural resources – therein lies the crux.

    We in the developed world have built our economic wealth by exploiting natural resources and developing industrial capacity utilising those resources. The new economic paradigm requires citizens of developing economies to forgo the consumer rewards offered by a developed economy, the very rewards which we have embraced! Expecting five billion or so people to agree not to participate in, nor desire, an improved standard of living and increased consumption of material goods developed countries have enjoyed is a tad hypocritical and reflects poor understanding of human nature.

    Nair argues that the notion that technology and human creativity will solve these problems is a fallacy and Cowan the opposite. A higher standard of living can be achieved by becoming ‘science obsessed’ – that is the future. Cowan recommends emulating Singapore in terms of respect for the scientific enterprise. So perhaps The Nod’s nod to Rossi cold fusion success is the future in terms of cheap plentiful energy.

    The globalisation story as promoted and understood: Prosperous developed economies outsource (to developing countries) their industrial capacities and progress to the preferred (and future) model, the services sector. Developing countries become industrial manufacturing powerhouses (China, Mexico, Taiwan) – growing their economy’s and servicing the consumption needs of the developed countries. They in turn develop a stronger middle-class with consumption needs of their own and an aspirational worker class. In time, these developing countries transform into developed economies and so the spiral of globalisation continues – they will move ‘undesirable’ industrial sectors to countries along the economic chain.

    In developed economies the services sector expands to a position of prominence, workers having been largely ‘freed’ from direct industrial activity. The services sector is better divided into (a) straight forward service oriented occupations like the ubiquitous wedding planner; the investment adviser; the personal trainer; the therapist; etc and (b) the knowledge transmission sector.

    As I’ve said before, whilst being interconnected, fundamentally the services sector is reliant on the success of the industrial sector.(But now in developed countries the industrial sector is largely out of sight…and out of mind. How often do we criticise levels of pollution in China – as we watch the documentary on the flatscreen manufactured in some Chinese Dickensian dystopia.)

    In reality, all sectors have been reliant on the unprecedented expansion of credit.

    Supporters of ideas like The Sixth Wave are sometimes blind to reality other than their own. They have the opportunity and time to theorise on these matters. They are employed, well-educated and come from the perspective of a privileged group. A group that has benefited economically from any environmental degradation involved in the industrial process. They may not be inclined to alter economic benefits of their lifestyle in significant ways – owning a car, international flights, iphones, Mac’s etc – but seem to believe that millions of the poorest of people never should even have such opportunity. They probably do recycle their rubbish.

    The world has embarked on a great experiment, one of the most accelerated periods of economic globalisation in history. This, together with the power of international finance markets, holds us all captive. Never has “money makes the world go around” been more true. It would seem that what international finance wants, international finance gets. Sovereign states are their playthings. There is no turning back. Globalisation is a dual-edged sword, the dangers not noticed it in times of financial prosperity. There’s no jumping ship when economic conditions decline! We are all in this together, whether we like it, or not – it is going to play out before us because we do not control it.

    The Sixth Wave – take it for what is, a little green manifesto – minimise excessive consumption, buy fuel efficient vehicles, change your fonts, recycle, limit energy consumption, all achievable and virtuous practices in the developed world. Fund serious green technology development. I suspect achieving a new paradigm as discussed in The Sixth Wave and Future Tense is impossible in the current global economy. As other commentators here have written, far more eloquently than I could, at heart it would require philosophical transformation of the kind Schumacher alludes and that which has been addressed by philosophers for centuries, what constitutes the Good Life. And I suspect it would require economic upheaval and the end of globalisation as we have come to know it.

    Economics has limited itself to that which can be measured monetarily. It ignores that which cannot. Economics may require an ethical dimension – but whose ethics!

    As SeanM said, there is a lot of knowledge, little wisdom.

  16. A man used to trade his 8 hours per day of labour for physical goods used to survive.

    As time goes by, with technological advancement and innovation, he only needs to trade 2 hours of labour per day to achieve the same result.

    What happens to the other 6 hours? We can now trade those hours of labour for such service related goods such as gym training and guitar lessons, or discretionary physical items such as Plasma TV’s.

    As time goes by we need less and less labour to achieve the means of survival. Yes, it does seem to create speculative bubbles in subjective services that only exist in the mind, but better to be in this position than tilling the field for tonights dinner.

  17. These links are via Naked Capitalism.

    This first Paul Krugman, a little cautious rejoicing that the US is again making things, he hopes a small but tentative sign of rebuilding. This reflects my great concern with the whole service sector pre-eminence argument. A country destroys its domestic manufacturing capability at its peril. Mostly, services are just too unimportant and easily interchangeable to warrant being at the top of the new economic paradigm, particularly at the expense of the ability to ‘make things’. Same goes with agricultural activity – a nation should endeavour to be as self-sufficient in food production as possible. Regardless of high falutin’ service ideas, the two ugly sisters of the new economic paradigm have real tangible value. (This is something Japan has always been cognizant of.)

    http://www.nytimes.com/2011/05/20/opinion/20krugman.html?_r=1&ref=opinion

    The second link was h/t to NakedCap by Crocodile Chuck (I see him comment at MB from time to time). An interesting rant in the minor key about the truth of the relationship between finance markets, governments and the unwitting plebs, us.
    http://golemxiv-credo.blogspot.com/2011/05/new-normal.html

    Cheers.

  18. Looking at these interesting responses one thought that occurs is that there really is no common language to talk about finance from outside finance. So I guess I will have to abandon my idea of a two speed economic theory. What I also notice/suspect is that people who are expecting the end of fiat money, tend to look back to the past (to bartering, or a gold standard or whatever) not forward. Yet whether we like it or not, we are going forward. As we do enter these new territories, I suspect there will be no language, or at least commonly agreed language, that will allow us to talk about it. Instead, we will persist with an economic nomenclature whose biases do not suit the emerging events.

  19. To Sell on news 4.16 p.m.

    “Nothing links men more closely together than a community of language, and nothing segregates them more effectively than a difference of language.” Ludwig von Mises

    You are either part of the problem or part of the solution.

    We hard money people who understand power also know that we are not expecting the end of fiat money. Western fiat intrusions are going to be resisted and contained.

    In order to know what is going to happen, one must know what has happened. Nicolo Machiavelli. Author of “The Prince.”

    Nations do not have friends, they have agendas.

    Bretton Woods was exclusive. The next major events will be inclusive.

    Fiat money has no place to go, but gold.Alan Greenspan.

    Now for a bit of cheeky fun.

    Gold makes the world go round. Currency greases the wheels.

    Now for a bit of cheeky fun.

    Why take wealth advice of any sort from a grease monkey, whose only claim is to take your money and make bets in the hallowed halls of casino capitalism.

    Financial/banking Grease monkeys have the mentality of rogue macqaque temple monkeys.

    About Rebel Monkeys

    They’re a diabolical nuisance, yet considered sacred. But for a gang of monkeys making their home at the Galta Temple in the Indian city of Jaipur, it’s an easy life — lounge by the sacred pool, groom your friends and accept handouts from worshippers paying respect to the Hindu Monkey God Hanuman. But their happy days may be numbered. When a lingering drought threatens local food supplies, the monkeys face an end to their easy gravy train.

    Join this charismatic fuzzy-haired crew as they search for food and find trouble on the chaotic streets. When their quest for an easy meal goes awry, the temple troop finds life is harder away from home as they encounter monkey catchers, livid locals and bigger, badder monkeys. See how people cope with an army of troublemakers even as the monkeys contend with the official monkey catcher and rival bands of monkeys.

    Throughout the series, Rebel Monkeys highlights the group’s ever-widening antics and the threats they encounter at their sacred temple home and across the big city. Watch a battle of wits and reflexes play out as the local monkey catcher attempts to apprehend any macaque that crosses the line, to be carted out to the countryside miles from their urban paradise.
    Read more: http://animals.nationalgeographic.com/wild/shows-rebel-monkeys#ixzz1N4fFXUOI

    They expropiate without retribution under religious decree.

    Financial grease maqaques exist under royal charter/decree, modern government decree.

    The real monkeys are sacred. Human maqaques are not. Just another cult-delusional at that.

    Pay a grease monkey what? Tell him he’s dreamin’.

  20. Oh dear. You think I have a commie bitch, anti-socialist “azz”? I’m not sure how that even works?!?

    So while you smoke I’ll shit i your drink, is that OK? The govt has no right to ban that either.

    I want civil uprising as much as you do, but I don’t want cancer. If you knew anything about me at all.

    TIme to face up to the fact you’re part of the problem.