Words That Change

Take this seriously

In Uncategorized on 15 October, 2010 at 10:27

Allow your octopus to take a detour to economics. Oekonimia is the Greek word for home – economics is the study of how we look after ourselves, our households and the planet on which they stand (see Mark Anielski for a stellar survey of this topic).

Ego-nomics, however, is the closeting of people and material goods into a series of short-sighted principles. Chief of these is gain, and this marshal is backed up by an army of mathematical formulae that tend to infinity when they should stop well short. This form of nomics was very handy in the days of empire, when scarcity could be obliterated by some hot foot diplomacy in Brussels (how history repeats…), a red-coated campaign in the Sudan or axe-wielding helmets in Nicaragua (mind your boots on that monkey, Ivo, they might think it’s a man in a few centuries!).

It was even a handy form of nomics when wizards magicked value out of thin air by putting prices on hitherto unpriced activities. This occurred progressively from land, money, people and then services.  The sandwiches that were once made at home are now bought at Pret à Manger. The ego-nomy wins at the cost of some fundamental values (except in the case of crayfish and rocket with hollandaise and pine nuts, which has been known to lighten a million mid-day Fridays). Nevertheless the quality of sandwiches, fruit juices and coffee did go up but only to service the slaves that had to go out and earn them and serve their irreconcilably demanding children (projected demand to outshine your peers – teenage depression, pregnancy and alcoholism somehow increased!!).

It was again a handy form of nomics when innovation in credit in the eighties  (cards)and then the noughties (CDOs) magicked money again out of thin air and made it available to everyone without cost. Although we now know that it did. Thank God we can still feed ourselves while the planet creaks.

Every phase of growth that has brought unimagined material prosperity to very many of us has been the result of an innovation that re-worked how money was created, spent and therefore valued.  And we have enjoyed the proceeds, have we not!

In this very short span of our existence – 400 years or so, we have sought to escape natural laws and did a very good job until now. Numbers have risen even as empires have fallen, cultures defused and large parts of the work force look depressed as they head for the morning commute. The rise in numbers has not been by accident. It has been a remarkable result of successive waves of ingenuity along a single track. Huge tracts of expansion were based on a single mindset – that growth is good and our spawn should be thankful for it.

They became successively less thankful since the sixties and we’re coming to a stage where trying as hard as we can to avoid it, that thinking is coming back. The track itself is moving, our mindsets in conjunction with it.

The numbers may move up and down but from now on, they will be irrelevant. People have undergone a fundamental shift in the way in which they value goods, themselves and economic activity. The evidence is all around and sits thick over most of what we do, creeping into institutions and collapsing them from underneath.

Schumpeter and Polanyi

Two remarkable and beautiful thinkers published at the time of the atomic bomb were Joseph A. Schumpeter and Karl Polanyi, an Austrian and a Hungarian. Both formed a conscience in Vienna. Both delivered insights relevant to the current times.

For Schumpeter, the economy was re-imagined as a circuit that would change and have to re-connect itself as a result of people’s actions. His theory of creative destruction has been a carrier pigeon for capitalism’s worst excesses but it was really a very nice idea that told how things become obsolete when the ideas that unerpin them change.

Institutions – manifestations of politics, values and ideas – collapse when they fall out of use. New ones grow and are created due to human innovation. There is a middle way, that institutions evolve and adapt, but in doing so they must remain useful to prevailing sets of ideas that keep them afloat. If the ideas change, so must they.

Polanyi, meanwhile, spoke of a double movement. This was a comment on the industrialists and financiers of the 19th century whose market-oriented reforms caused so much social pain. Though even as they did, people began to react. The response was so diffuse and widespread that it was almost indetectable though Polanyi chronicles the widespread health and safety laws drawn up, the sudden emergence of sanitation, and the rise of trades unions. While people were beng punished they variously – through collectives, legislation and the combined response of millions of injured wills – responded to make their lives better. The ground shifted and socially-activated improvements began.

Both concepts are at work in full force now. People have been punished by the capitalist pro-growth dogma that has done little to improve well-being whilst improving headline prosperity (Anielski’s book is excellent at outlining this). The punishment has drawn a response. Instead of a plastic commodification of how we live our lives, people are striving for authenticity.

The lines are being re-drawn. Budgets are spent to genuinely improve well-being, not on the limitless enthusiasm of product innovation.

We’re talking about a trickle that is about to become a flood. Like Polanyi’s observation of the 19th century reforms we’re seeing the effects in fair trade and organic movements, a rising tide of social entrepeneurialism, career decisions trimmed of ambition and based more on genuine concern for what improves our lives. Correlations with the health of the planet and local communities naturally ensue. The barriers to these occurring swept away or adjusted.

The trend is a re-alignment of value. People are re-considering in manifold and fundamental ways what makes them tick – and acting on it. The ideas that underpin our actions are changing and we can bring in Schumpeter now to comment that when that happens, rapid readjustments in social, political and economic institutions need to take place.

Whoops – they already did!

Banks

The banks have been the prime example and effect so far of this shift. You simply cannot continue to be the hub of a value system when the values that underpin it are moving on.

Banks rely on gain. They rely – were created for – the limitless supply of credit which could then in turn be used for investment and profit. The more profit and the desire for it the greater the banks hold on us became. They made a lot of us very wealthy, and all of us dependent on them.

What happens with the shift occuring now is that banks are moving from the hub to the outer perimeter of use. They will survive but their use will change. People and businesses need credit and safe places to store their money, but they are demanding responsibility that makes the previous avarice hard to sustain. Vested interests are fighting hard for this not to be the case but, as we observe, the changes taking place are so diffuse and of such a subtle quality, the era of control and money manipulation is running out of steam.

Banks are being relegated to the status of schools and hospitals. Hopefully our armed forces will be doing the same.

There is an interaction problem when money created from one motive is being spent in quite a different way. Take a moment to consider this as it underpins all the arguments pre-ceding this. A dollar is only meaningful in a certain set of ideas that surround it. If the ideas change, as we are suggesting that they have, the dollar itself is changed irrevtrievably. It cannot be the same again. Earned for profit and spent with self-interest (however enlightened), its status hardly changes. Earned for material growth and spent on a genuine concern for well-being and the properties of money, of value and everything it touches has to change. That dollar will seek to house itself under a different regime. An accumulation of well-intended dollars is therefore enough to bring about a collapse.

Re-alignment

What we’ve found so far is not a collapse but a realignment – one that is causing the current structures to wheeze with pain, and causing the people to do so as well.

We are unable to say whether this realignment will give way – if resources of ingenuity and physics can withstand the transition. The growth of resource use is very steep, with developing countries accepting a standard of living as rightfully theirs, one that is already-existing in the West.

To take the case of oil – its substitution would require a revolution in transport, construction, agriculture (petro-fertilisers are poured on the vast majority of the world’s grain). Economies don’t re-align so quickly when resources that are threaded through them are taken away.

It is difficult to see how finite can be replaced without something of a population collapse, ecological disaster or both.

Ecology

The response of social structures such as Polanyi described and we are seeing now – in essence a realignment with our vital selves – also takes place in nature. We find it hard to see but the same force that is damaged by mining and de-forestation also strikes back with earth quakes hurricanes, famine and climate shifts. The locations where this happen are not without coincidence nor are the responses that cause an oil slick – from which eco-systems can quickly recover – to expose malpractice in entire industries and fundamentally change common practice. Neither are low grade viral pandemics which focus attention on the ill-treatment of livestock. Financial panics – eruptions of collective sentiment almost out of nowhere that cause re-orientations of fiscal, financial and social policy are also not without coincidence. They are of a scale that only allows for conspiracy theory or “higher forces” to be employed. The forces are not higher. They are basic and fundamental mechanisms of change.  It is more intrinsic and fundamental than Polanyi could describe though he did so eloquently. It is the engine of evolution that is based in the human cell, the DNA of all life.

Growth

So where does this leave growth? It is still something that will be measured and mused upon, desired and be baffled about. The mechanisms of measurement will be in place but the things they are measuring have undergone a radical and non-reversible shift. Growth will still occur – ie GDP figures may move up, but only tangentally to the daily trends. GDP is becoming irrelevant. It is a great bafflement that the current economic crisis is causing less stress and anxiety than many remembered before it. Perhaps people are taking over with something more fundamental by which to judge their life. It has been the purpose of this essay to suggest, that this is the case  and this shift is re-imagining the way we live our lives.

Value

The value may have altered but it seems to be returning to more ancient, tribal lines. In his book Mark Anielski outlines the conceptual shift that is required of a new economy. He presents a basket of ideas that move from gain to softer modes of stewardship. Gifts and reciprocity take over from exchange housed in complex conceptual systems (markets – Polanyi again).

What is beautiful about the approach is that he does not deny much of what is desirable about capitalism, as the political Left is wont to do. Finance is required as are stable systems of exchange, as are systems of credit, and sustainable employment. But the quality of each of these is re-aligned. He requests that we all take responsibility for what we value. Simply, what is important right now – and live that. Along the way he constructs new systems of measurement – a well-being index – that brings a deliberately moral tone to how we measure progress.

A new economy – household management system, let us not forget – looks more community based. Its values are human ones and are not mis-aligned by the distortions of the market – essentially those that have market power. In a sense it is re-housing these market forces along humanly desirable lines, allowing their ability to organise complex systems of information into remarkably simple forms. Something Polanyi – who described the market economy as one being disembedded from human value – would applaud.

It is moral, it is responsible, it is flexible and creative. It is not without technology but again this is used to serve more human ends, not make humans the servants of it.

Responsibility means an acknowledgement of the ground on which we live. The Athabascar tar sands and other abominations must become a thing of the past. Eco solutions will be rewarded. It is my long-felt, irrational conviction that the best task to restore the British economy, not to mention national self-esteem, is for a vast national re-forestation project to restore the depleted and underused agricultural lands.

This alignment between community and environment has to be synthetic (in the classic term of working in synthesis/harmony). Only by expanding awareness of the real values of people will a concomitant consideration of the environment take place.

This need not need a civilisation collapse. Cities of hundreds of thousands of the Kogi people used to exist in what is now Colombia, constructed with a complexity that allowed erosion to be kept away, the rainforest to continue to flourish and livelihoods maintained. We’re lucky to see much of this tribal, land-based wisdom re-emerge today. Let’s hope we can re-integrate its thinking as quickly as we can.

In the words of the Maori Wisdom Keeper Dr Rangimarie Turuki Rose Pere: “We have got to get back to the land.”

*Institutions is used in the conventional sense of banks and systems of law and governance, also cultural norms. They are ideas that have public reality. They cannot exist without more than one person agreeing they exist. Their rules and structures determine the activities that take place within them. Without them the activities would not exist to take place, or would be radically re-understood. Think of banking without a bank. It would be barter and subject to a very different system of rules and obligations. John Searle wrote about this in issue 1 of the Journal of Institutional Economics [no – you go find the link].

Must-be-reads:

Karl Polanyi – The Great Transformation – the political and economics orgins of our times

Joseph Alois Schumpeter – Capitalism, Socialism and Democracy

Mark Anielski – The Economics of Happiness

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  1. Hi Arjuna,

    You know I can speak for longtime about mandrins .., about whatever…

    About your article:
    In the beginning it was difficult to follow your article, to understand (almost blowing up my mind), so much words and constructions. OEPS THE OCTOPUS was there, with all arms!!!Once you mentioned the purpose(suggestion)of the article, your choosen words have more impact. So, the section Value is very powerful.

    And you know ,I take you seriously.

    greetings from the heart
    Gérard

  2. Hey Gérard! Thanks so much for reading and for these thoughtful comments. The blowing mind I guess is deliberate – there’s a shake out before the real message gets through. And also, I am having trouble treating these matters with the tone they require. Great you followed it to the end, and wonderful that you got it.

    I’ll have a mandarin in your honour. Octopus x

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