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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Location: Northwest Arkansas, United States

Friday, March 10, 2006

Economy and Ecosystem

Daniel O'Connor has an interesting post at Catallaxis on Herman Daly and the treatment of the economy as "as an open sub-system of the world's ecosystem...."

He then asked [Chief World Bank Lawrence] Summers if, given this picture, it might make sense to start thinking about the growth of the economy in relation to the natural limits of the ecosystem. Dodging the question, Summers responded dismissively, "that's not the right way to look at it." End of discussion.

Although Summers no doubt took the right position for the wrong reason, I have to admit my own inclination is also to disagree with Daly.

I certainly agree with Daly and O'Connor that the economy is a subsystem that can have major effects on the larger ecosystem of which it is a part. But it doesn't matter all that much how big the economic subsystem is compared to the larger ecosystem, or what its rate of throughput is. All that matters, in determining sustainability, is its net intake from and output into the larger ecosystem. If all the resources that go into the economy are renewable, there is no net loss, and the economy doesn't use the ecosystem as a heat-sink, it doesn't matter at what rate the economy processes resources into goods, so long as they are replaced as fast as they are used. Efficiency, not scale, is what matters in determining the economy's effect on the ecosystem.

I tend to agree with those Georgists who downplay issues of population overgrowth. So long as we put back into the land everything we extract from it, and don't use the environment as a heat or pollution sink, the only effective limit on population is how small a parcel of land can be used efficiently to feed each person. I don't doubt that there is an ultimate carrying capacity, but it's a long way from where we are now, and its boundary is very blurry.

My sympathies are very much with the Green camp. I do believe the economy is presently doing a great deal of harm to the ecosystem. But that's because of huge inefficiencies in the way energy and other inputs are consumed in the production of goods and services, and carelessness in the generation of pollution, not because of the absolute magnitude of the standard of living.

O'Connor, in addition, has some interesting considerations on the mental dimension of the economy, whose growth (unlike the physical dimension) is not limited by the larger ecosystem.


Anonymous Anonymous said...

While I'm in agreement with you about the ultimate carrying capacity being the only real limit to how the economy relates to the ecosystem, I think I may have to disagree with you that it's a long way from where we are now. You focus a lot on how the efficiency of the system is waht matters. Looking back on human history it seemed that the fixed amount of energy that can be extracted from the ecosystem pre-Industrial Revolution was a strong limit on humanity and I didn't see any strong trends to maximize efficiency in the long term. Humanity just seemed stuck at a certain level of efficiency.

With fossil fuels and the Industrial Revolution we broke out from that limitation. But if we were to suddenly move away from this source of energy back to a more 'organic' energy system I'm not sure how well we'd manage it. It seems that we should be able to improve efficiency, but we may well miss our chance and simply have a collapse of modern civilization. Not fun at all.

March 10, 2006 9:53 PM  
Blogger Kevin Carson said...


I should have been clearer. I meant we weren't near that point in terms of population numbers; in terms of the irrational consumption of resources is currently takes to produce their existing standard of living, we're obviously well past it.


I'll have to check out that Hawken book.

March 12, 2006 10:21 AM  

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