The Economic System

It is not our intention here to get into a long discussion about what economics is all about, merely to make passing comments about the similarities between our economic system and natural systems, and about where the two are incompatible.

Economics could perhaps be defined as the set of common behaviors that string together our interactions for survival. It is about the application of resources to needs. Economics drives both the techno-process its physical interface and activity by plants and animals in the bio-sphere – both are based on survival but there are some fundamental differences between our techno-process and natural systems. Nature uniquely embraces integration and balance, seen as desirable by economists but unfortunately missing from the techno-process. Economists should study ecology for a few clues about where we are going wrong.

The cataclysmic event in our evolution has been the development of machines energized by fossil fuels. The physical interface of the economic system that we call the techno-process became simple, linear, non-integrated and arguably non-climax. Linear systems cannot be balanced because they cannot possibly contribute as much as they take. Climax eco-systems in the biosphere are on the other hand are characterized by complex integration and balance.

Efficiency is important for profit which drives the allocation of resources. Unfortunately we only seem to understand efficiency in a linear sense, not an integrated one. The greatest proponent of efficiency, Henry Ford developed a linear production line to which resources were delivered. There was no concern for resource issues beyond the factory gate – that was somebody else’s problem or nature would provide. Enterprise based efficiency espoused by Henry Ford neglects the value of the natural capital or the planet as a whole.

Climax ecologies are characterized by extremely efficient natural systems in which all processes are integrated. For example a leaf is technically designed to minimize water loss and maximize photosynthetic production. When the leaf falls to the ground it is eaten by bugs, grubs and bacteria and eventually it provides nutrients for the trees above it in what is a highly efficient process that retains embodied energy from the sun and recycles materials indefinitely.

Liquid and gaseous fossil fuels are now running out and the techno-process cannot continue the way it has in the past. The planet is in crisis. It is time for change so the total net consumption of energy and materials is much less and the underlying moleconomic flows more balanced. Can the intelligence of the computer chip provide the connections to close the loops in our linear techno-process., can we invent new materials that do not have such an impact on the planet. Can we live in harmony with the planet? These are the big questions.

The only driving force humans and living organisms answer to on a large scale is economics, but like a mirror, economics is really only a measurable reflection of how we all really are, how we act and in the case of animals including us, act. Economics is the driver of the techno-process which itself is the technical interface of deeper conomic forces. Technology however defines what moves through it and how. In this simple understanding lies the clue. Maybe we can redefine materials so economics drives more sustainable processes? Can we re-invent our physical world? In my view we are going to have to if we want to survive. This kind of bottom up change is required.

Natural climax eco-systems involve conservation of energy and materials, integration and thus recycling and provide the example as to how this could be done. How can we mimic nature and yet still obey the rules of economics?

Can we harness economic forces to bring about change in what is a linear, substantially un-integrated techno-process and develop a more sustainable global industrial ecology which conserves materials and energy in the system as a whole, to a desirable extent complements nature and that is highly integrated with much more recycling and re-use.

Technology, which primitively used created the industrial revolution and the linear techno-process can be turned to the greater cause of producing an industrial ecology which is integrated and efficient and which has minimal impact on the planet. The need is obvious. Pilzers first law states that technology defines physical resources. Technology is the means. Linked with the will we may yet reduce our footprint on the planet until it is hardly noticeable. As part of this a paradigm shift in the technology underlying materials is required. We call these shifts Pilzer first law substitutions

The opportunity for change is greatest in the built environment which after all encompasses the greatest materials flows on the planet with the largest take and waste impacts. Taking into account infrastructure governments are uniquely the largest constructors on the planet and have the opportunity, if not the responsibility to encourage and implement new technologies that will make the difference.

Economics drives life in the earth system and actions in the economic system that relate to the physical world through the techno-process. Both systems are homeostatic, perhaps the earth system more than the economic one. It could be argued that this techno-process and thus the earth system , because of basic incompatabilities are on a collision course.

Because the whole system cannot be changed at once, yet the change is urgent we have developed the concept of a tececology, i.e a sport or counter techno-process that balances flows.

James Lovelock [1] was one of the first to enunciate at length the remarkable similarity of the earth system as a whole to life in his various books about Gaia Engineering. We are not sure who first drew similarities between ecological and economic systems.

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[1] Lovelock, J. E. (1979). Gaia: A New Look at Life on Earth, Oxford University Press.