The whole story of growth and money. The players in a simple resource using natural trade economy.

As in a four person market economy, shown with two resource providing and two resource consuming trades, people create wealth by exchanging complementary goods in exchange for money. Growth comes as each learns how to do things better and the resources hold out. For price stability the banker prints money to keep up with growth.

The banker also provides safe keeping for the money saved by people with more than they presently need, and gives it out in exchange for a promise of money growth in return.

At the limits of the earth that tells people to make money taking big risks to avoid limits, when that’s more of what’s left with high returns, so to avoid being responsible for growing risks, people with savings should just spend their returns instead of expecting them to multiply. It’s the natural thing to do to make peace with limits.

Andy Revkin had asked the question on Twitter:

Revkin
Thomas Edison, with energy breakthroughs, “invented the 20th century.” Who’ll invent the 21st? http://shar.es/m8ziQ #energy #innovation

The way nature engineers her highly dramatic smooth changes in complex systems, her“punctuated equilibria”, is to begin with explosive reorganization and energy flows.

The “catch” is that initial spurt is also their end, producing nothing lasting… *unless* the reverse cycle leading toward the resolution of all those multiplying loose endskicks in, called “maturation”.

So, if Edison invented the 20th century, the author of our explosion as it were, “Who will invent the 21st century”? It’s already quite clear, and already done. It just hasn’t taken hold yet. It was Keynes, actually, in more or less a footnote that was widely misinterpreted. He called it “the widow’s cruse”, defining the crystal clear and necessary steps a market economy must take to avoid destroying itself financially when approaching the operating limits of the earth.

Everyone who first considers doing what is quite physically necessary finds it “unthinkable” is one reason we’re in danger of not carefully looking into it, and failing as a global system. It would be unquestionably a huge relief, and assure our future comfort and security…two very positive things we could get to like,… IF we could just get over the shock of dealing with physical realities we hoped we’d never have to!

Blog entries linking Keynes’ ideas about general systems ecology with current issues. fyi http://synapse9.com/blog/category/natural-economy/

Susan Witt, director of BurkShares community currency system presented on theFinance Lab Webinar today and I got to ask her to clarify how it eliminated the excess growth of debt. Then I thought of how the macro-economic solution Keynes first proposed could be usefully built into the design of local currencies to make them more popular and test the larger solution too.
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Susan,
Thanks for presenting on the Finance Lab today, and refreshing my understanding of how the BurkShares currency solves the debt growth problem. I actually attended a daylong seminar with Schumacher in the early 80’s but I seem to recall his director of the project, which I guess would have been you, was not there that day.

I remember trying to talk with him about one of the other strategies for keeping money and debt from growing unsustainably.  At that time I don’t think I even knew that Keynes and Boulding had seen the same option for allowing investment markets to stabilize at their natural healthy limits to growth. Continue reading A “Small but Beautiful” addition to the plan →