How improving productivity always reliably made thing cheaper and easier to do, is ending. It naturally ends as any direction of progress does, if taken to its limit. Now we see our “productivities” coming into costly conflict with each other and the environment, making everything more costly and complicated, the exact opposite of what we expect.
It reverses an expectation humans have had for how to solve problems that appears to be much older than recorded history, as all of human evolution is a record of great leaps of increasing productivity, using less to get more. Becoming productive in cooperating with our environment rather than conquering it, no longer “productive”, is a very big change in thinking for us.
Musical chairs for earth as a whole - the natural limit of productivity
There is a recent discovery of just how much of our real economic impacts are not traceable from the information we can find. The problem is caused by the nature of self-managing systems, that in working by themselves they also don’t “report” or leave traceable information about how they do it. It’s recently been shown to cause a major undercount for the energy demand of business products and services, and would seem to apply to all business impact assessment methods.(1)
There’s a very “fat tail” to the distribution of physical impacts of business, usually much larger than what is traceable, and that changes the rules of impact accounting .
The great financial crises of the past have occurred once or twice a lifetime in every banking society throughout history. Solutions to fix the problems that each crisis of the past exposed have all been like recent ones in one extremely important way. They’ve always provided temporary fixes that set the stage for still greater financial crises to come. That’s a sign that people have been asking for the impossible.
It allows the appearance that earnings from finance can keep growing in proportion to past earnings, without any goods and services involved.
A simple but seemingly valid overview is that our ever failing “fixes”, for our ever greater financial panics, all come from not realizing that our information models of finance are not the economy’s source of value. Models and promises to follow them can indeed extrapolate to infinity. That is not possible for the physical work of the economy that is the only real source of economic value, that the promises of finance eventually need to rely on.
When the economy grows from physically “small” to “big” relative to its resources or its own technologies or social organization, it becomes a trap for our financial system. The financial markets are designed to search for any escape from financial constraints. Investing for rapidly growing returns, when delivering goods and services is running into more complications, draws fast money into self-fulfilling speculative manias. They promise limitless profits, by exploiting gaps between the rules of money and the reality of a changing economy.
Rembrandt's Christ Drives Money-Changers from the Temple, 1626
Money has real value only when it corresponds to credit for deliverable physical goods and services. The actual physical connection between goods and services and money, and our responsibility for the physical resource uses and impacts caused, are the same. It’s that our “use” of money constitutes our way of communicating our instructions for delivering physical goods and services from exploiting those resources.
How’s this, for cracking “the mind wall”…??
(the supreme arrogance of treating knowledge as reality)
I’ve been showing people interesting ways to make use the difference between our mental and physical worlds for many years. Here’s another. If it hits an important principle, or suggests any way you might use it, I’d be glad to know and to see if I can adjust my language to fit your idea.
The natural end of “low hanging fruit” is “falling off the ladder”, a universal trap at the natural limits of reach, where rising risks meet declining energy to respond to them (if your plan is to keep climbing).
(as increasing your control of the unknown exposes environmental hazards naturally first omitted from any model)
The natural limit of "low hanging fruit", meeting the rising risks at the limits of reach, with declining ability to respond to them
Intellectuals in particular, have had difficulty accepting we can be quite certain of finding some things in the unknown, like the dual reality confronted in any observer’s mind, as it finds its world works differently than they think.
2. Marc Calabria is a researcher at the CATO Institute who emphasizes as discussed on the PBS Newshour 11/24, the importance of addressing the stubborn structural causes (being widely ignored) of the growing inequity and instability, that are no one’s fault.
I quite agree with where each starts, and then draw the picture showing how our situation displays a direct conflict with nature, and a puzzle for how to apply the universal solution for ourselves.
Recognizing the natural mechanics of growth economies that would give us leverage and choice in the outcome.
Putting it together "From Scratch" from two different starting points.
It has to do with society asking the banks to permanently stabilize a system for multiplying financial returns.
So when the economy can’t generate growing earnings the banks multiply its debt instead, creating “a debt bubble” and promises that won’t be fulfilled. The promises that won’t be fulfilled grow without limit until there’s a collapse of confidence (‘pricking the bubble’), unless 1) the economy finds totally new ways to expand ever more rapidly, 2) a “Jubilee” is declared to write down the debt, or 3) investors start spending their profits to create earnings rather than lending them to create debt (‘bleeding the bubble’) to relieve the pressure so the economy can return to health.
The Jubilee idea, to write down all the debt (something like a global bankruptcy) is much more disruptive than needed, and is just a temporary fix. How natural economies solve the same problem, so they can smoothly pause their growth when needed, will also cure the problem for all time and give us a healthy free market economy in the end.
JS 11/20/11 – All of this is really interesting. However, isn’t there another fundamental point being lost, the core attractor of the whole system? It is all well and true to understand the interconnectedness, if the core aim of the game is all about making ever more money by whatever means, the system network will exactly do that. It may be dumb to have an exponential growth attractor, but if you have one a necessary outcome of the workings of systems is unsustainable exponential growth with all its consequences. 11/20/1
The solution is a change of attractor, and “common sense” would suggest that sustainable economic development would be a better attractor than greed – thinks a non-economist.
Let the bubble inflate till something pricks it, or relieve the pressure??
PH 11/20/11 – Well, yes of course. That’s why I termed my first paper on the subject “The Infinite Society, growth induced collapse”. I don’t think that’s an “attractor” you’re talking about though, but a “procedure”. Procedures can be changed. Keynes and Boulding also came to the same conclusion, that at the limits of productive investment it was necessary to have investors stop adding as much of their earnings to their savings, to spend more of them instead. Continue reading Prick or Bleed, drain the bubble or burst?→
Living by a social construct of reality at wide divergence from the physical one is a good working definition of “societal madness”. Of course no social network will admit to that, but evidence of communities not getting along because they live by starkly different realities does develop.
In America today we seem to have a wide variety of mad social realities to choose from. It might even be a perennial human condition… Now they’ve come to clearly interfere with our adapting to changes in the physical world confronting us.
Over the past 50+ years there have been regular announcements of limitless affordable energy soon becoming available, such as Paul Krugman’s recent article “Here comes Solar”, with the consequences of that happening never getting discussed. The following is as posted to the more cautions Washington Post article yesterday 11/12/11.
One of the most overlooked drawbacks of creating affordable and plentiful solar energy, or ANY other form of energy, is what we’d do with it, the consequences of mankind having access to continually doubling amounts of energy. What if the improbable “cheap energy” solution were actually discovered?
Would cheap energy eliminate or worsen our other impact problems?
Energy is far from our only constraint on economic growth. Energy is actually what let us do the destruction of our environment as we have already done, none of which yet result from the CO2 and other GHG’s. Because we are already at the destructive threshold of many other environmental impact pressures we could expect growing energy use to cause even faster growing impact repercussions than we’ve experienced. They will not come with a neat technological fixes, either.
The core unrecognized problem is that growth is a construction process. It’s a mechanism for using the profits of a system to build a bigger and bigger system. That involves our using our (limited imagination) to take ever expanding control of our environment to do ever more things to our environment. Continue reading The problem with plentiful solar energy.. or any other→
Uroboros is the symbol of a system that consumes itself, either literally or symbolically. There are many kinds of feedback processes you could liken to a serpent eating its own tail. The compost from one generation of plants nourishes the next, for example, so the new generation is partly consuming the decay of the last generation, the “tail” of the cycle of growth and decay.
You definitely would not call plants growing in their own compost “self-cannibalistic”. Consuming ones’ own living parts, however, is quite an apt description of what happens at the natural limits of a growth system that ends its growth only because it exhausts its free resources. In economies the more competitive parts may then find nothing more interesting left to consume other than their own system’s weaker or less familiar living parts… (discussion contued at end)
The authors of “The Story of Stuff” published a nice little update called “The Story of Broke”, about the vast sums of money the government spends on subsidizing private business…. This sequel “Part II (the end of broke)” was first posted in a comment, on how the still bigger story of broke, debt piling on top of debt, both was missing from the list of now overwhelming government costs, and has a … very natural end. Government debt provides guaranteed growing returns, whether the economy grows or not. Lenders take government interest payments and add them to what they lend back, multiplying their lending and returns. It builds up, slowly at first then explosively, as the world’s debt burden
grows on little but the good faith and credit of government guarantees.
You’ve heard of government debt called a “safe haven”. It’s where investors put money to be “safely assured of ever multiplying returns” when they can’t find even better growing returns elsewhere. Where that debt spiral comes from and goes to has been a subject of many have tried to explain. The view Keynes came to, that I think is the most clear headed of all, outlines the necessities for surviving a debt spiral for a market economy. Nature would surely not shape her facts of life on earth for our approval, but most people react to the facts of life for surviving debt spirals as if to reject nature’s requirements as “socially unacceptable”, … apparently not seeing Keynes’ elegantly clear logic. So this is written in the story telling style of Free Range Studio in their Story of Stuff. —
The End of Broke, the True Whole Story of Debt!
The BIGGER “Story of Broke” is one that starts quite small, but is designed to actually keep growing ever bigger. As it does so it also casts its own vote in the story of business influence in government and demand for subsidies and preferential services, persuading government that’s the way to get money to pay its ever growing debt! It’s the story of how a small amount of debt naturally grows relentlessly big, with no natural end other than either creditors spending it or both government finance and economic collapse.
Drowning in the spiral of dreams
The whole story of debt is a very very simple little thing. It’s that some of us earn by $units and others by $%’s… and by providing guaranteed returns to lenders, in an economy you can actually earn by $%’s till the economy collapses. What seems like a totally innocent “little difference” in measurement, between units and ratios, makes AN INFINITE DIFFERENCE over time in life. Some people have called it “our misunderstanding of the exponential curve”, others simply call it “greed”. The problem with this kind of greed is how very addictive it is and that it grows explosively, making a “little greed” become SO.. GREEDY, with its promise to multiply the rewards of greed forever. Continue reading the Story of Broke – Part II (the end of broke)→
New systems science, how to care for natural uncontrolled systems in context
