Collapse Scenarios - Satrie or Vision of the Future, Part Three - Guest Post Anthony Harrington, QFINANCE

by: EJ on 08/26/2011
Posted in: Peak Oil

In this blog post, Anthony Harrington reviews John Michael Greer's The Wealth of Nature: Economics as Survival Mattered.


John Michael Greer’s The Wealth of Nature: Economics as if Survival Mattered, castigates what Greer perceives as the failure of modern economic thinking and suggests an alternative approach based on the thinking of Ernest Friedrich Schumacher, author of the 1970s bestseller, Small Is Beautiful: Economics as if People Mattered. The echo in the title is clever and is meant to show how far down the road to destruction Greer thinks we have wandered since the 1970s.

Where Dimitry Orlov paints his collapse theory with big, broad, impressionistic brush strokes (see Part One and Part Two of this blog series), making some clearly astounding and somewhat preposterous claims along the way in the finest tradition of satirical authors (such as “the purpose of the American education system is not to educate but to institutionalise children”), Greer reasons in a much more deliberate fashion. The failure of classical economics is that it fails completely to grasp Schumacher’s distinction between primary and secondary goods. In Schumacher’s thinking, the distinction has to do with the fact that the resources provided by nature come first, and secondary goods are whatever is made by humans with natural processes as an inevitable and unavoidable input.

If you are armed with Schumacher’s distinction as your starting point, then the notion of sustainability or the lack of it is front-and-centre in your thinking. Use up nature’s bounty and that’s the end of your secondary production process. Conserve it and you get to stay in business, just as a firm that conserves its capital gets to stay in the game while one that runs through its capital goes bust. If we’d been smart, we would have used the oil discoveries of the 1970s to buy time to shift advanced economies to a sustainable platform. We weren’t smart and we ran through that part of nature’s bounty at a goodly clip.

Learning from History

As an instance of the blindness that afflicts modern economic thinking, Greer picks up on the claim of David Ricardo, one of the founding fathers of modern economics, that land retains its “original and indestructible” economic value no matter what economic use is made of it.

“This is an odd claim. Even in the early nineteenth century, when Ricardo originally made it, plenty of people could have set him straight; the fact that bad farming practices could make soil useless for farming was well-known in Ricardo’s time, and so was the impact of industrial pollution – though, of course, we have gained a great deal more bitter experience with both since then.”

Nor was Ricardo alone in this error. Marx, too, Greer points out, “explicitly rejected the idea that the 'free gifts of Nature' could have any value at all – a view that led the Soviet system to leave a truly astounding legacy of industrial pollution behind it. Greer’s point is that “fertile land suitable for growing crops does not simply happen. Like anything else of value, it must be made, and once made, it must be maintained.”

This line of thinking takes Greer and Orlov in the same direction.

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