Wednesday, May 4, 2011

Economics


Economics is the system by which we allocate, distribute and exchange resources. The “triple bottom line” of sustainable development is usually conceptualised as a “venn diagram” of the three overlapping and interacting spheres of ecology, society and economics.

This is, however a misleading representation of the true nature of the triple bottom line, because ecology, society and economics do not in reality interact as equals at the same level of systemic organisation. A more accurate conceptualisation of the interactions between ecology, society and economics is a “nested hierarchy” or “holarchy”. Human society is  “nested within” ecology, because we fundamentally depend on ecosystem services in order to form our society. Economy is depicted “nested within” human society, because economies fundamentally depend on functioning human societies.
A sustainable economy works within such a contextual framework, where the economy is a tool used by the society on which it depends, and societies adapt to care for the environment on which they depend.
Markets as we know them routinely “fail” by failing to appropriately value such super-valuable things as “ecosystem services” like breathable air, drinkable water and fertile soil, and  “in kind work” such as caring for children. Corporations, the main structural players in “Market” economies,  have impunity and a lack of social and environmental responsibility built into their structure, and can even legally profiteer from war and disaster. “Command” economies, or state controlled economies, can produce very efficient economic growth and rapid increases in material living standards (for example the rapid growth in Eastern Europe after world war two, and the current rapid growth in China) but the social and environmental side effects are just as devastating (often more so) than the failures of market economies.
Many economies have a state bureaucracy that to various degrees can regulate the social and environmental excesses of irresponsible, failure-prone markets.  This arrangement has achieved some reasonable outcomes, but has two fundamental problems.
One is that “democratic” institutions intended to make the state answerable to its population can be corrupted by corporate power, particularly when centralised political power concentrates into a small number (usually two) of major political parties or coalitions. A common scenario is that working people have limited access to political processes, often limited to an “either or” vote every few years, while corporate players have the resources to continually and constantly lobby for their interests.
At the other end, state power can become overly stifling and interferes excessively in people’s day-to-day lives. This is a particular problem for small business people including family farmers. Big business, with a lot more potential to cause social and ecological harm than small business, can use its influence on the state to circumvent or minimise state interference, and worse, influence the nature of state interference to further big business interests.
The way to a free economy that is sustainable and democratic, bypasses both corporate and government power and vested interests. Instead of the slave economy characteristics of hierarchy-advantage, self-interest and competition, a free economy is based on mutual respect, responsibility and co-operation. It is based on real physical, ecological and human resources, and conscious, co-operative, convivial means of utilising and sharing these resources. Examples of practical solutions to build such an economy within the shell of the “old” economy are based on grassroots organising for a truly free, socially and ecologically embedded market. Visions for a sustainable, convivial modern global industrial economy include Participatory Economics, and Resource Based Economics.

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