Economics in a Nutshell; a Natural View

Let’s look at social groups for a moment (families, companies, cities, nations…) from a natural perspective… and then a simple, natural view of economics will emerge.

A social group is just an association of people and the products they use, period… just as a bee colony is an association of bees and their products (honeycombs, royal jelly, honey)… and just as a biosystem (a dog, a tree, a human being…) is an association of body cells and their products (hormones, enzymes, vitamins…). So, cells and cell products are the basic building blocks of the body, bees and bee products are the basic building blocks of a bee colony… and people and products are the basic building blocks of society.

A family, then, includes the parents and kids, their home with all of its furnishings and appliances, their vehicles, their personal items, their pets…. A nation includes all of its citizens and their highway systems, industries, schools, hospitals, farms, and so on….

So people and their products are the basic building blocks of any social group. Very simple. Very neat. Very natural.

On Earth, every living system has to consume part of its environment to survive. A person eats food, a bee colony consumes nectar from flowers, a family buys groceries, and a nation consumes natural resources (ocean fish, lumber, metals, minerals in farmland….

So there we have it—a simple, natural view of nations. A nation is an association of people and products that consumes natural resources, period. We’ve stripped away all of the abstract clutter (borders, citizenship, interest rates, money, territorial claims, ownership, entrepreneurship…) that make social studies and economics much more complicated than they need to be.

With this natural view of nations, then, we can boil down economics to its core and summarize it in a simple formula that I call the Vitality Ratio: V = R:N

A nation’s economic vitality (V) is determined primarily the nation’s needs (N) in relation to the resources (R) available to satisfy those needs.

Whoa, can economics really be that simple? Yes, it can be… and it should be. Why? Because with today’s technologies we could write a simple computer program that could plug those three variables into a network like the Internet in order to guarantee a stable economy forever.

Meanwhile, economists and the leaders of government and industry all ignore the three variables and get themselves into all sorts of problems. Poor countries are ravaged by overpopulation (too many people competing for too few resources), and rich countries are shaken by overconsumption (people wanting more-more-more  products, overstressing the available resources).

Before my spiritual quest (when I was trying to heal the world before I’d healed myself!) I spent several years collaborating with bright minds from various countries to try to identify and solve the biggest problems plaguing our world. Several of them talked about unbridled growth.

  • Ahmad Abubakar of Tanzania referred to Jan Tinbergen’s “Report to the Club of Rome,” which pointed out that industrialized countries consume 20 times more per-capita resources than do poor countries. Mr Abubakar warned that we humans—as individuals, as nations, and as a species on Earth—need to reexamine consumption levels to eliminate waste, to divert wealth away from military research and redirect it toward tackling global problems such as disease, hunger, and natural disasters. That change of direction can’t be achieved by a group of distrustful, inequable nations, says Ahmad Abubakar; it can only be done by turning the UN into a world government so that nationalism takes a back seat to globalism.
  • The notion that ever-increasing wants should be continually satisfied by ever-increasing production is leading to the suicide of civilization, warns J.S. Mathur of India.
  • Howard Richards warns that our purchases of more, more, more provide a short-term “fix”—a momentary jolt that makes things seem better—but offer little long-term satisfaction. They just offer short-term relief from the cravings. In other words, money and growth can become an addiction.

So nations in the future will have to focus on economic sustainability rather than economic growth. The only way I know to ensure sustainability is to maintain a balanced Vitality Ratio.

When the ratio goes negative—when needs exceed resources—all sorts of economic problems can develop, some simple and short-lived, others devastating and long-term. So, here are some of the symptoms of bad economics as viewed from this new perspective that I call E-conometrics (emphasis on the E to suggest computerization).

Fewer products per capita. Needs for particular resources exceed supplies. As a result, there are fewer products made from those resources—fewer products to go around.

Rising prices. Carnivores during a drought fight more aggressively over a carcass, trees in a dense forest grow as tall as possible to compete for sunlight, and social systems facing a shortage of a particular resource pay more money to get it and its related products. Freezing or flooding or drought can ruin thousands of acres of raw farmland in any given year, resulting in shortages of wheat or rice or soybeans or oranges. Like the toughest carnivores and the tallest trees, the highest-paying social systems (stores, processors, etc.) get the goods. When resources (in this case, fertile farmland) are insufficient to satisfy needs, expensive products spread through society, and prices rise.

Inflation. Often called “too much money chasing too few goods,” this symptom could more aptly be called “too many needs chasing too few resources.” As people and groups pay higher prices for the scarce resources and related goods, they demand more compensation for their own goods and services, and prices spiral upward.

Recession. As inflation spirals and things grow scarcer and get more and more expensive, it gets harder for social systems like companies to keep doing what they do, so things start to slow down. They cut jobs and maybe close their doors. This is recession, which often follows on the heels of unchecked inflation. And again, recession can usually be traced back in time through the inflation, to a negative ratio in which needs exceed resources. Recession is an unwitting effort by social systems to reduce their needs.

Depression. If recession doesn’t adequately reduce needs, depression follows. As the unemployment lines grow and more commercial-industrial organs die within a nation, the surviving social subsystems and the nation as a whole begin to weaken dramatically, like an old man on his deathbed. As more businesses fold and the nation’s physical structure continues to decay, products are being manufactured and distributed in inade­quate numbers. Resources may be growing plentiful, but the nation has no way to digest them, so they are not really resources anymore…just as food is no longer really food to a dying man. The nation is on the verge of depression. It is dying. Fortunately, nations are not yet mature living systems. When nations “die” during a severe depression, they can rebuild, hopefully having learned from their mistakes.

The preceding symptoms of a low ratio are usually experienced by more advanced nations with a growth economy and can usually be traced back to needs outstripping resource availability. They could be eliminated by E-conometrics, which would raise a red flag as soon as needs begin to exceed resources, and a series of options (cutting back on particular products for awhile, finding replacement products or resources, or acquiring more resources from specific sources, for example) would be offered to help restore the balance.  

Those symptoms are most debilitating to advanced nations whose physical structures of people and products have grown fairly complex. Poor nations are not as vulnerable to sophisticated symptoms. Their needs are different. The usual cause of a low ratio in poor countries is overpopulation, as mentioned earlier, and these are among the most common symptoms:

Famine. Primitive cultures and other poorly integrated societies don’t have a diversity of products. They need a steady supply of resources to feed the people, but only a modest amount to sustain the humble infrastructure. So, the usual cause of a severe resource shortage in a poor nation is overpopulation, and the chief symp­tom is famine. While the elaborate infrastructure of the advanced nation crumbles, poor nations are riddled by starvation and disease when their needs outstrip resources through overpopulation.

Mass execution. When resources are in serious short supply, envy and desperation often lead to gross inhumanity. Mass execution is an unconscious, desperate effort by factions in a nation to solve economic problems by reducing needs. Just as a man whose family is starving might steal or even kill to feed them, a nation suffering a severe imbalance between resources and needs often vents its frustrations in cruel and unjust ways. The targeted victims of mass execution might constitute a group within society that is unwilling or unable to conform to national objectives or regulations for such reasons as religious belief, ignorance, intertribal contentions, or geographic isolation. Through mass execution some nations attempt to solve two problems—reduce needs and dissect an incompatible segment from the national structure.

Mass emigration. Occasionally there is an outpouring of people and products from a particular nation. Whether the group is exiled or feels pressured to flee for political or economic or religious reasons, it usually happens when the nation is suffering economic hardships—or, more specifically, when resources are in short supply. In the last half of the 20th Century, Africa had 5 million homeless, 125,000 Cubans fled to America in a “freedom flotilla,” 800,000 Afghans fled to Pakistan, 500,000 Vietnamese fled to Thailand, tens of thousands of Jews fled from the Soviet Union, and hundreds of thousands of Mex­icans poured into the United States. When mass emigration occurs, needs are reduced in the nations left behind, and the receiving nations take on the economic strains of rising needs.

Those three economic syndromes of poor countries could also be eliminated by E-conometrics, whose aim, again, is to sustain a balance between needs and resources. In a country prone to overpopulation, needs would be kept in check largely by a multi-level family planning program like the one that transformed China from a peasant economy to an industrial leader in the closing decades of the Twentieth Century. A family-planning program, along with education (and, of course, an infrastructure of transportation, communication, and electricity), would be the backbone of E-conometrics in poor countries.

The last two symptoms mentioned here, below, can afflict any nation, rich or poor, when needs outstrip its resources. 

War. Like mass execution, war is often a desperate attempt by a nation to bring needs into line with resources. It’s often waged to steal resources from another country, such as oil in today’s world. War also reduces needs by removing many people from the equation—military and civilian casualties.

Ecological destruction. When needs exceed resources, nations often become desperate enough to exploit the environment ruthlessly for more resources. When a nation becomes desperate, environmental concerns often take second seat to keeping the bloated structure well-fed, especially when leadership is weak or misguided. Land is ravag­ed, water and air are poisoned, and life cycles in the ecosystem are upset or devastated.

E-conometrics would eliminate war and environmental destruction along with the other symptoms by making sure needs did not exceed resources. I know it will work.

(adapted from my latest book, The Project.)

Advertisements

About Mark Macy

Main interests are other-worldly matters (www.macyafterlife.com) and worldly matters (www.noblesavageworld.com)
This entry was posted in About Mark Macy, Politics and Economics, Worldly matters. Bookmark the permalink.

2 Responses to Economics in a Nutshell; a Natural View

  1. Les Harris says:

    And the elephant in the room is…….over-population.

  2. Les, thanks for the great analogy. It is indeed like the elephant that’s obvious to everyone, and they all pretend it’s not there…
    Therer’s also a hippo in the room, then, and that would be growth economics…
    M

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s