Triolis by Al Swanson
For quite understandable reasons, economics is a subject whose time to strut on the stage of public attention has come. We have become far more wonkish than we ever thought we wanted to be about Keynesian theory, Say’s law, accelerator and multiplier effects, TARP, and the lot. Professors Stiglitz, Krugman, Myerson, and Mankiw, along with Obama administration inner circlists Romer and Summers, have become household names and Sunday morning television staples. Pundits and talking heads run rampant.
As our superficial knowledge of terminology and arguments leaves us, in the event, rather glassy-eyed, it seems reasonable to take comfort in the vision of High Priests ascending to that windowless upper chamber to solve all the problems for us mere Joes. Ascend they have; why, then, do I feel a profound disquiet? Partly, of course, it is that the mavens’ arbitrations seem more theoretical than empirical, with their heaviest artillery most often aimed at the other academic side instead of directly at the problems themselves. But my bigger concern is that all the discussions of, for instance, fiscal vs. monetary policies and government spending vs. tax reduction, appear to be oblique and peripheral to my conception of what “the economy”—or any economy—is all about.
There is much I do not understand about economics and economists. What is perhaps the hardest thing to figure is the house-of-cards flavor. I get the sense that the discipline’s apparent alchemical approach makes it seem more akin to academic theology than to science. That is, it seems to be more about words and sophistries than openly asking the tough questions of nature. And, therefore, “success” or “failure” is bound to be a crap shoot of ideology at best (or, as the case may be, at worst). Before placing my bets, I would prefer much stronger odds.
To be sure, it may be that the great hieratic ones do equip their postulatory buses already with the wheels I have been laboring to invent, but have determined amongst themselves to spare (so to speak) us mere mortals in order to defer panic. Howbeit, regardless of the inconvenience and risk and possible futility, I feel obliged to attempt an understanding of the workings of the “colossal muddle”, to develop and present my own formularization. On the other hand, as I have come to realize that the full program is at least book-length, I am instead posting an “abstract” of what I would like to say but despair of ever getting around to providing the detail the subject deserves.
Economies are self-organized criticalities (SOCs), to borrow (in fact, like some non-mainstream economists) a term from complexity theory. Like all SOCs, economies are emergent phenomena in slowly driven non-equilibrium systems that have many degrees of freedom and are highly non-linear. And, like all SOCs, economies obey the laws of thermodynamics. Most importantly for the present discussion, they will run down (at some point exhibiting a catastrophic “phase transition”), ending in a kind of “heat death” in any closed system. The implication of this is that all economies that achieve homeostasis (or that grow) necessarily have a source of power from outside the local system, regardless of how “local” the “system” in question is. (Another characteristic of SOCs, by the way, is their self-similarity, by which I mean here that the same descriptive metaphors are applicable regardless of the scale being used. In terms of their metaphors, economic systems are, in fact, not only scalable, but they are nested, complex, and complexly nested!) Thus, they can be viewed with any desired level of abstractional magnification.
In general, any system that takes in more energy than it is compelled to shed into the cold void of the universe (but not too much more) will, given enough time, allow a complex chain of life (or “life”) to emerge, thus giving credence to the biologists’ contention that wherever there is a reservoir of exploitable energy and resources, some life form will evolve to exploit it. However, it is important to note that, in my conception, “life forms” can be biological, social, or both; more generally, they can evolve on many different levels, and that they evolve in (and are optimized for) a given “economic” milieu, “local” in both geographic and temporal senses. (This, by the way, is a generalized description of the workings of natural selection, though specific Darwinian mechanisms are, of course, different.) A modern economy as we know it could not, for instance, exist without coal and oil. (Indeed, neither could it exist, the staunchest capitalists among us notwithstanding, without a strong, government.) Any change in exploitable energy or resources will favor new forms at the expense of the old; there will be winners and there will be losers, and when it comes to life and death struggles, it is unlikely that the losers will be prepared to be good sports.
Because I am a human with my own parochial interests, all of the above is, of course, a prelude to what we do to remain winners rather than losers. How to choose a path? One direction is advocated by libertine “do-nothings” who believe that “the economy” is already too big and needs to take an ice bath for its own good, though, as this situation is necessarily fatal for many of the individual bathers, the plan has something of a sacrificial virgin lottery feel to it. The realization of such a weeding out may be a “natural” curative (and, as such, will surely come into play at some time in history, but…oh, God, please, not yet), but see the earlier note about sore losers. The road more likely to be taken involves increasing “demand” or “supply” in some combination. This approach is palpably gentler and kinder (to some, anyway), at least in the short term. Yet it says not a word about my worry that the economy just might, in fact, be too large for the power supply now available and in use. Indeed, I would argue that even though the current power supply may not be entirely out of gas, it is hard to be optimistic, in the sense that one finds it difficult to believe in investing today, given the increasingly obvious deficiencies of today’s framework. These deficiencies include the facts that fossil and nuclear fuels are increasingly expensive (and by “expensive” I mean the kCal out/kCal in ratio; then, too, there is the heavy cost of replacing what we presently rely on) and dirty (the true cost of clean-up is prohibitive).
Are there alternatives? For reasons above and beyond “national security” and other geo-political concerns, I truly hope so. And I believe that any approach that doesn’t give the maximum emphasis on discovering and developing a new (and, we might insist, relatively sustainable) power complex is doomed, and—more importantly—dooming. A “supply-side” answer is not feasible for many reasons, but chief among them is that it posts our remaining resources into the hands of the wrong people. A “fiscal” solution is better-aimed, but it is all about “borrowing” (aka “investing”); such a strategy demands a hope that the future economy will be larger than the present one. If this doesn’t happen, and there is no guarantee that it will (especially when it is fueled by sheer faith, that hope is tragically misplaced. The Second World War, for all its cruelties and atrocities visited upon the participants, was, in fact, a successful investment in the nation’s (and the world’s) immediate future. It was made possible by the massive funding provided by the prodigious burning of fossil fuels. Fortunately, these were available within the country; unfortunately, this is no longer true. Also, a fallback for a large number of citizens during and coming out of the Great Depression was in agriculture, practiced either on working farms or in family gardens. Unfortunately, very few have the knowledge or capability of exploiting this way out nowadays.
We need not only a new hope, but a new and believable reason for hope.
We need to be optimistic, but optimism without shovels, and shovels without a mother-lode, are futile. Our human tendencies to team up, to join one ideological camp instead of another may have a basis in survival, but when we’re all in the same boat, competition based on arbitrary theory doesn’t buy much for anyone. Rather than take the word of those Orange County folks who insist that government cannot “create wealth”; only The Market can; we need to sort exactly what we mean by “wealth” and its alleged creation, then decide, on evidentiary grounds, what the various participants can and cannot do. And, of course, what, based on our conception of a sustainable future, we should and what we shouldn’t do.
For related musings, see:
http://www.triolis.com/Site/Blog/Entries/2007/6/23_The_Politics_of_Falling_Tides.html
http://www.triolis.com/Site/Blog/Entries/2006/10/19_Oatmeal_and_Economies.html
Nothing Stimulates the Mind Like the Prospect of an Imminent Demise
January 30, 2009
