Laws of Nature and “Laws” of Economics

Most people believe that the laws of physics and the laws of chemistry are real and the legitimate facts resulting from scientific investigation over the past few centuries. Most people also believe that economics is a science. Well, it’s not quite that simple. Human behavior often follows consistent patterns – not quite “laws” – but as we all know people “break the law” frequently enough. In fact, people are partly rational, partly irrational, and partly non-rational. Neither economics nor sociology/anthropology, neither political science nor psychology, are entirely scientific.

Recent debates between conventional and behavioral economists testify to the limits of trying to force economics into a purely scientific model of knowledge. The purely “rational actor” conventional economics imagines, demonstrates those limits. The person who always seeks only the most monetarily profitable outcome does not exist. People choose their actions on any of numerous criteria, not just economic rationality. Besides, it’s often not all that easy to make the most economically rational choice.

Even the laws of natural science operate within limited parameters. We observe the laws of Newtonian physics to be entirely consistent within their limits. But they do not explain much in the post-Einstein world of quantum mechanics. The far less reliable “laws” of “free market economics” do not apply when markets are not free – which is most of the time. Yet, a great deal of effort is expended trying to convince government policy makers and the public otherwise. Corporate lobbyists want us all to believe that the corporatist economy must be retained because it is an expression of the laws of free markets – which it is not.

“Laws” of Convenience
In conventional economics, the underlying factual problem is that markets dominated by a few corporations are not free at all. In fact, the influence of the ‘free market’ ideology results in a lot of federal laws that have given more and more power to corporations. But that process is part of a package of claims that help sustain an oligarchy of corporate convenience, in part by perpetuating the fiction of free markets.

Another key ingredient supporting corporatocracy is the ideology of economic growth. The claim that well-being of the population depends on continued growth of the economy serves the economic elites quite well, if nobody else. The bankers get their compound interest; the corporate executives get their bonuses based on increased stock prices; the congressmen get their corporate campaign contributions and ‘dark money’ electoral support. Nature knows no political laws of economic convenience.

We ordinary actors in the economy are anything but free. But our willing participation in the consumerism that enables economic growth increasingly depends on debt. Corporate control and suppression of labor participation in the fruits of production require increased consumer indebtedness to keep consumption and growth going. The increasing concentration of power, income, and wealth in the economic elites, can only continue through debt-based consumerism.

Experiencing the Laws of Nature
In the debt-driven economy, we are constantly bombarded with incentives to consume more and more questionable products. That is what keeps the economy of growth going. But the so-called convenience of the many superfluous but cleverly distracting products ultimately becomes a burden, both physically and economically. Look at all the storage units spread across the suburban landscape. Too much stuff.

The consumerism of the endless growth economy drives continual demand for more energy to drive the factories and factory farms, and run the vehicles, appliances, and various toys of the consumer culture. The result is unequivocally clear. Massive carbon emissions over the 200 years of the industrial era have come home to roost. Drastic reductions in the burning of fossil fuels are necessary for survival. So are reductions in energy consumption. Both are needed to reduce carbon emissions.

Some energy production can be converted from fossil-fuel to renewable sources such as solar and wind. But every energy production technology requires energy to manufacture and install. We must also reduce the wasteful use of energy; that means reduce consumption. As Ozzie Zehner put it, “…the united states doesn’t have an energy crisis. It has a consumption crisis.”*

Most talk of reducing emissions involves replacing fossil-fuel energy production with renewable sources of energy production: solar, wind, and the highly counterproductive nuclear and biomass strategies. But far more efficient and economical strategies are readily available now. Retro-fitting existing buildings and factories to reduce energy consumption would create many jobs and require no new technology research. Local production for local consumption should become the norm. Just doing it is necessary. But whatever the mix of strategies, none of it will work until the consumerist culture recognizes that we will always experience the fruits of our labors in the laws of nature.
__________
* Ozzie Zehner, Green Illusions: The Dirty Secrets of Clean Energy and the Future of Environmentalism. Lincoln, NE: University of Nebraska Press, 2012.

The Next Great Transformation

Most of us tend to see the world in fairly stable terms.  Our own daily routines, as well as those of the world around us have a consistency that is predictable and thus comfortable.  Yet over extended periods of time, human history has been punctuated by many major upheavals, revolutions, and transformations of the way we live.  In a book by that name, Karl Polanyi characterized the massive changes of the late Nineteenth Century expansion of the industrial revolution and its impacts on the early twentieth century as The Great Transformation.  Today, we sit at the cusp of the Next Great Transformation, and in some ways perhaps the last, as the accelerating climate disruption, resource depletion, financial, water and food crises, and the end of the era of the limitless-growth economy, all converge as the single greatest crisis to ever confront humanity.

The Next Great Transformation is undoubtedly in its initial stages now.  It is likely accelerating beyond expectations, just like climate chaos has.  But its character and direction are not easy to predict, since they will rely on the human response as well as on biophysical trends already in play.  Some of the key factors in determining its shape and trajectory include:  1) whether sufficient massive social mobilization will occur to reduce carbon emissions to a degree that will slow the headlong rush into ever more devastating climate disruptions; 2) the degree of resiliency of human populations in responding to radically changed environments, and in creating massive changes in the way we live; and 3) the extent to which the fossil-industrial and financial world political economy can be dismantled and transformed into a ‘planet-friendly’ localized ecological economy.  These factors will determine whether the Next Great Transformation will be of a kind that will sustain human life on the planet through the end of this century and beyond, or will extend beyond human intervention toward mass extinction.

In The Great Transformation, Polanyi analyzed the “free-market” economic ideology of nineteenth century unfettered capitalist development as the cause of the economic crises of the Great Depression and two world wars.   Revolutionary changes in technology and geographic expansion had been initiated in an era of great economic growth, but the ensuing crises resulted from distortions brought on by what Polanyi saw as a utopian image of a self-correcting market.  The nineteenth century civilization based on classical economic doctrine had collapsed, as evidenced by the Great Depression and the world wars, but the society was subsequently rescued by the expansive growth of World War II and the booming consumer economy that followed.

After FDR failed to follow through with his New Deal reforms, the massive economic and social mobilization of World War II ended the economic crisis of the 1930s.  A similar but much larger crisis complex is playing itself out today with much the same utopian economic “free-market” images being used to justify unsustainable growth to feed an ever-greater concentration of wealth and unprecedented corporate power over both economy and politics.  The emergent corporate state still pays little heed to the resultant burgeoning planetary crisis that knows no political boundaries.  The headlong clash of this political economy with the physics and chemistry of the biosphere will either be averted by rapid social mobilization to transform society, or it will result in a massive extinction of many species due to inability to adapt to changing ecologies, including the human species.  Elizabeth Kolbert describes these processes vividly in her new book, The Sexth Extinction: An Unnatural History.  Five great extinctions have occurred in earth’s history, including the greatest, the Permian-Triassic extinction event of 252 million years ago, likely caused by an asteroid-impact and killing seventy percent of terrestrial vertebrates.

The Next Great Transformation will likely involve a catastrophic plunge into the sixth mass extinction, if total mobilization to curtail climate chaos is not achieved rapidly.  Or, if we create new modes of collective survival – most likely based on building local resilience and international cooperation – they must involve a huge reduction in fossil-fuel driven economic activities, which have for over two centuries focused on growth but which now must massively reduce activities that emit carbon into the atmosphere.  Here’s where human creativity and innovation come in.  To achieve a workable, livable Great Transformation will require us to come up with a full range of new economic forms, locally, regionally, and nationally.  But this time, we will have the advantage of drawing upon all the [appropriate] knowledge and technology from both our history and our latest innovations.  For this, we will have to start making decisions on the basis of science, not magical thinking.

To achieve all this will require total mobilization toward converting carbon-based activities to carbon neutral activities.  That will require the populations of the “advanced” fossil-fuel economies of the world to drastically change the way we live.  Remember, the per capita emission of carbon is vastly greater in the first-world nations than in third-world nations.  And, of course, most of the emissions so far have come from the fully industrialized nations.

Either path of the New Great Transformation will entail huge human displacements and comprehensive reorganization of human life – it cannot be otherwise.  Nor can I imagine how this will be easy, either way.  But one path will lead to species extinction [or near extinction] for humans as well as many other species; the other path will lead to some new level of survival as a result of humans re-organizing their relations to the biosphere and each other in ways that will dampen the plunge into further climate chaos.  The right path, if chosen, will be the one previously less traveled.