Fixing Economics – Accepting Reality

We humans are a clever lot. We figured out long ago how to bring automatic control to machines and systems of all kinds, and we used this control to change the world.

The rapid growth of industrial civilisation was driven in a very large part by steam engine technology, and central to this new technology was a simple device that brought automatic control. The pressure regulator for steam boilers prevented the pressure from rising to the point where the engine would inevitably explode, without a human engineer working the valves. It was simple, and it was genius, and it helped to drive the transformation of the world’s economy.

We need another transformation of the world’s economy. We need to make a transition from a system that depends on infinite energy, infinite growth and infinite resources, to one that can operate effectively in a world without abundant cheap energy and with a set of unavoidable limits on economic expansion.

To make this transition we will need to take control of certain economic outcomes, but we humans have never truly figured out how to control outcomes delivered by the global economy, the most powerful machine ever constructed. That is, until now.

We have a solution, and just like the pressure regulator, it is a fairly simple but ingenious control mechanism. The pressure regulator was a control system that allowed us to better harness the energy in the very abundant coal resources at the time, and we exploited it to power the Industrial Revolution.

A control system for the global economy will allow us to better preserve what remains of our natural resource base for as long as we choose. It will harness the inherently innovative and competitive engine of profit-seeking markets, and exploit them to grant us the power to make the transition we need.

A control system for the economy would also grant us the freedom to decide what economic outcomes we want, above and beyond the simple goal of the sustainability of human civilisation, and give us the power to make markets rush to deliver those goals.

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Fixing Finance

We humans are a clever lot. We are curious about the world, and we are natural problem solvers within it. When we are free from ideologies and other delusions, we have a strong affinity for the natural world, and a genuine wish to live within its means and to protect it from harm.

But we humans are now chained to an economic system that is currently a planet destroying machine. So if we want to break free, and gain the power to save the planet and the human societies it nurtures, we need to understand the nature of the problems that make the economic system so destructive, and then decide on the best solutions to correct those underlying causes of dysfunction, and set some transition plans and put them into action.

As we start to look at what makes the economic system so destructive, we immediately come to realise that finance is at the heart of the problem. The system that creates the money on which the economy operates is driving the perpetual expansion of the volume of economic activities that deplete the planet’s finite resources and natural systems.

Already, armed just with the concept that finance is the problem, we gain enormous power. The way that finance works is subject to our political institutions, which are in turn subject to our collective political will. So finance is not some independent force of nature, it is something that we can control, should we be willing and able to gather the necessary political will to do so.

In this article we will come to see that fixing finance actually comes with enormous social and ecological benefits, along with dramatic improvements to the efficiency and stability of the economic system.

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Nicole Foss on Money and Financial Crises

Building resilience in an era of limits to growth

We are approaching many limits to growth over the next decades: Economic contraction, peak energy and geopolitical stress. Nicole Foss explains how the deflationary dynamics that always follow finance and property bubbles will rapidly impact individuals and communities, while the longer acting forces of peak oil and climate change will determine and limit the nature of any economic recovery. So how can we adapt?

This talk offers a profound understanding from the systems perspective of the current realities of finance and economics, and the  serious predicament we are in. Here is the full audio recording of the talk, originally posted here, and it might be all that some readers need in order to absorb the excellent analysis in full:

For others, including me, the Foss talk has simply too many good arguments in such a rapid-fire stream of great points, with each requiring some considered reflection, that it is impossible to keep up with.

Each of the following sections of this article contains a far more digestible snippet of the audio, and a transcript to go with it. Together these should make it much easier to navigate, contemplate and absorb this great argument, piece by piece.

Good luck, and if you can manage to comprehend most of this rather sobering truth, you will be fully armed to engage in debate about the best way forward from here.  Continue reading “Nicole Foss on Money and Financial Crises”