A Planetary Economy

Fraser Murison Smith

• Publisher: Palgrave Macmillan
• Year: 2020
• ISBN:
  9783030492960
• Topic: Economics
• Subtopic: Environmental Economics
• Index: Economics

This book asks, how would a stable, prosperous economy of the future look if one started with a blank sheet of paper? Given that the world's economy is locked into a coevolution with nature, the urgency of this question is brought into stark relief by the 2020 coronavirus pandemic and ongoing climate change.

While physical technologies to build such an economy mostly exist, the social technologies, in the form of institutions, governance and policies, do not.The development of these social technologies will necessitate a reconsideration of economic norms: in particular, what is the economy for, and what are we, as actors within it, striving for?This book integrates normative, institutional, political and economic requirements into a systematic framework to drive our present growth economy toward a future planetarian one. It outlines a suite of interrelated policies to increase the economy's material efficiency, establish a basic living standard, and reform the money system, while along the way eliminating economic debt and balancing government budgets.

The framework and policies together form a paradigm of market planetarianism: the idea that the power of markets may be used to steer the economy toward a desired long-term goal. The methodological aspects of this paradigm are covered in the companion volume, Economics of a Crowded Planet.

Part I

An Economy on a Crowded Planet

Chapter 1 describes the economy’s coevolution with nature as a form of structural coupling at multiple scales of organization, a concept covered in technical detail in Economics of a Crowded Planet. It provides an overview of the human enterprise, seen over ecological timescales of hundreds to thousands of years, placing the economy’s exponential growth into its biophysical context. It examines the role played by the economy’s internal flows of money in magnifying the exchanges of material between the economy and nature. The perspective is explicitly from outside the economy looking in, as distinct from the conventional economic one, inside the economy, occasionally looking out.

Chapter 2 addresses the origins of this growth, focusing particularly upon changes in people’s attitudes toward nature over the centuries and, in turn, toward their roles as economic agents. Even though the present economy is a product of Western modernity, alternate worldviews have persisted within Western society, and alternate futures imagined. Chapter 2 evaluates some of these as templates for a future worldview in which individual action would be generative rather than exploitative, and the economy managed as a stable planetary subsystem.

© The Author(s) 2020

F. Murison SmithA Planetary Economyhttps://doi.org/10.1007/978-3-030-49296-0_1

Begin Abstract

1. The Economy’s Coevolution with Nature

Fraser Murison Smith¹

(1)

Economist, San Rafael, CA, USA

End Abstract

Much has been written over the past 50 years about the growing effects of people upon natural systems. A consensus about these effects exists to a much greater degree early in the twenty-first century than in the 1960s when the debate about ‘the environment’ first permeated into the modern public consciousness. The measurable effects of the economy on the planet’s natural systems feed back into influences of nature upon the economy, so that the two have become embroiled in a global coevolution. On the timescales of natural systems, the global economy appeared suddenly, as if out of nowhere, even though on human timescales its emergence was brought about by internal forces operating over many hundreds of years. Prior to this state-change in Earth’s systems, the economy was materially small relative to natural processes. There was no ‘global’ economy in the sense we know it today, but rather a collection of local and regional economies, many of which had local or regional effects upon nature, and were affected by those changes in turn, all of which, however, being characterized by relatively low material intensity.

A wide range of laws, policies and, more recently, markets have been created to try to reduce the effects of economic activity upon nature. Yet the effects continue to accelerate. Few during the twentieth century asked whether the whole economic and financial system—indeed, the Western modernist paradigm that underpins them—should be re-examined and reconfigured for a new state of the world in which the human enterprise is large relative to its planetary container. Those who did were largely marginalized by the economic mainstream.¹ Yet in the first years of the twenty-first century a small but increasing number of writers has begun to tackle this question head-on.²

Our historical reluctance to tackle the question might have as much to do with its daunting size as with its perceived relevance. One way to make a start is to construct a hypothetical future state, based on the current understanding of natural systems, in which an economy would be relatively stable, both in its exchanges with nature and internally. Then, if the assumptions underlying such a model were sufficiently robust, the question could be asked, how to go from here to there.

It’s an Economy, Jim, But Not as We Know It

So might Mr. Spock say to Captain Kirk as the starship Free Enterprise glides into orbit around a planet crowded with inhabitants.

On this planet, the economy is stable, the inhabitants enjoying high living standards and a good quality of life. The reason for this state, in spite of the large population, is because the economy exists in a form of dynamic balance with the planet’s natural systems. For these economic conditions to prevail, the economy’s material efficiency must be very high.

Such a state, writes the captain in his log, suggests that this society, at some time in its past, confronted its growing material size and concluded that, in the interest of long-term stability, its economic activity had to be reconfigured to minimize its effects on nature. The society must also have been forced to accept the thermodynamic reality of their planet being a materially closed system. Its only external input was free energy from the star around which it orbited. There was only so much material to go around.

Such a conclusion may have represented a fundamental alteration in perspectives on economic activity. The society on this planet would have recognized, perhaps for the first time, the prime importance of a long-term view, a shift that came about because of a growing recognition that there was nowhere else to go. Consequently, the inhabitants of the planet re-examined the way they thought about their economic activity, how they measured it, studied it and managed it. Their economics evolved as a result, from a field concerned with individual ‘choices’ to one oriented toward alignment with nature.

On the planet in question, writes the captain, evolution in the society’s study of their economy stimulated a variety of fundamental changes in their management of it. A prime directive—to borrow another Star Trek phrase—became established to steer economic policy toward long-term stability. The economy underwent significant structural and dynamic changes away from a materially intense mode toward the materially efficient mode in which the Free Enterprise finds it. The inhabitants tell of certain difficult adjustments made along the way, even hardships; yet the society that the ship’s crew encounters is prosperous, vibrant and largely peaceful.

So much is written in this day and age—either of the gloomy future that awaits society here on Earth if it keeps ‘messing up the environment’ or, in equal measure, of the complete denial of an ‘environmental’ problem in the first place—that there has been missing a narrative of the opportunity in attaining a life like the one our fictional captain described in his log.

Nature and the Economy as Complex, Hierarchical systems

The human economy is a complex system of trade among people, representing themselves as individuals or the institutions to which they belong. It is also a complex system of trade with nature, the exchange of material with natural systems. Internally, the economy circulates two kinds of flow: material and currency. Money is a convenient proxy for valuing material goods against one another; also for services rendered by people to one another.

The economy exists within a biophysical context because it extracts material from nature and expels effluents back to it. On a crowded planet such as ours, the economy must work in concert with its natural support systems if it is to persist. This necessitates understanding those systems in depth and operating the global economy according to their requirements. Ever since human economies emerged, they have engaged in local coevolutions with nature. The difference today is that the coevolution is global and there is nowhere to escape to if it goes wrong.

The natural world does not lend itself to description using the mechanical tools of conventional economics. Mechanical analysis assumes reversibility: it is ahistorical. The concept of elapsed time does not exist. Natural systems are inherently nonlinear, evolutionary and unpredictable, lending themselves to historic...

Table of contents

• Cover
• Front Matter
• Part I
• Part II
• Part III
• Back Matter