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Thank you!
I used the term “antitrust” in a specific sense that what is needed is a planned control and suppression of the size of industries and corporations, which I think enables and exacerbates the increasing complexity of mass production that seems to be related to the increasing energy and resource consumption! (Again, this is not the exact sense antitrust law of regulations of M&A have been talked about.)
In terms of the dissemination of industrial know-hows and skill sharing that may contribute to the dissolution of the global industrial value change and the localization of production, I wholly agree that, as I wrote above, the current intellectual property regime is unjustifiable and should be weakened.
Of course, an important question the current crises pose to us, is to what extent can we afford the elaboration and complexity of industry? Or, if we have to forsake some of the “stuffs” that we enjoy now, what should we prioritize?
For instance, it seems unimaginable that cutting-edge vaccines (that the world desperately need at the moment) can be produced from facilities without elaborate machinery. Some may argue that in that sense a kind of centralization is necessary. Of course, eliminating the IP regime and with some genuine public research institutions that lead vaccine developments may help reduce it.
But, take semiconductors, which now the media say there are in shortage. Due to the shortage, articles suggest, now productions of “smart” cars, “smart” washing machines, and every other cutting-edge product are all in halt. I think here’s an important question: why do we need them from the beginning? Or, at least, what are the odds that all these “shortages” of semiconductors might have been mitigated had companies been mandated to design and produce products in a way that can be disassembled, repaired, and recycled as easily and effectively as possible?
My feeling is that the”conspicuous consumption” or “dependence effect” aspect is stronger than ever.
Thank you for responding to my question!
I have a question about the possibility of monetary/banking regulation regarding ecology.
Right now, the most prominent (in a sense that it’s been supported by progressive/heterodox economists) proposal for financial regulation regarding climate change is “greening the monetary system”: for instance, by establishing a public taxonomy of what constitutes “sustainable” and incorporating it into monetary policy. (The European Union has been creating EU Taxonomy but it’s been mainly about disclosure of risks).
Yet, it seems that even this approach fails to account for the fundamental disconnection between money and energy(entropy).
Based on Soddy’s view, figures like Buckminster Fuller called for tying money to energy so as to fundamentally limit money (and debt) creation and consumption of energy and resources. There have been various small local projects and conceptual suggestion of it, but obvious doing this would mean going beyond the current institutional structure of capitalism.
For some detail, check this report “Energizing Money” by economist Josh Ryan-Collins published in 2013.
https://neweconomics.org/2013/02/energising-money
Do you think, for instance, tying money to renewable/low-carbon energy, would be pursuable?
Another Question to Blair Fix and others (feel free to join us!):
As the issue of climate-related financial instability has gained more attention, there are attempts to incorporate climate issues into monetary policy.
Mark Carney, former governor of Bank of England, said in a famous speech in 2015 that climate change will induce “Minsky moment” in that it will lead to sudden changes in asset values (he was mainly talking about the so-called “transition risks”).
Yet it seems that, besides the now frequently quoted “Minsky moment”, he did not fully understand Minsky’s financial instability hypothesis, in that it’s more about an inherent development of financial capitalism that leads to more fragility over time in a cyclical manner, than a single point of collapse, as you have extensively dealt with.
While it might be appropriate to use Minsky to explain climate change-induced financial stability, obviously Minsky (just like most economists) did not take biosphere into account, let alone climate change, in his model. So, I think, I might be able to argue that, in the similar sense that he talked about “lender’s risk” and “borrower’s risk” that increase as the indebtedness of entities increase, as we emit more greenhouse gases and other pollutants, we are piling up “ecological debt.” But ultimately his FIH was about the endogenous dynamic of monetary economy, not about the relationship between nature and economy.
In this sense, I think what would be more appropriate lens is that of Frederick Soddy, who arguably started the field of ecological economics. The problem of modern economy, Soddy argued, is that Wealth is bound to the laws of thermodynamics, money and debt are our mental/legal construct, and it grows mathematically (exponentially) – so that the banking sector and capitalists can always extract value from the rest of the economy, making them always relatively affluent them others. this endless imperative for growth of Wealth (so as to meet debt obligations) leads to endless financial crises.
So I wonder whether it would be possible to connect the post-keynesian monetary dynamics with the dyanmics between nature and economy. Would be possible to connect Minsky’s FIH with Frederick Soddy’s debt dynamics in a consistent way (perhaps modeling it)?
“…I am very in favor of your approach (please correct me if I’m wrong) that the only meaningful measure of human society is throughput of energy and low-entropy matters – a point first raised by Jevons (who was in fact the godfather of neoclassical economics! check his book The Coal Question) and then Soddy and later revisited by Georgescu-roegen and Daly.
Yet, I also think a model that tries to account for the social organization and the way it operates – in other words, I think theory of money is important.
Ultimately, I think the important question is this: what does money really buy? Or what do we really “consume” when we buy something with money?
I guess this is the theory of value question. As we both know, while neoclassical economics suggest utility is the ulterior source of value, there’s no way we can actually explain anything with that. Marxist and Keynes endorsed labor theory of value, and I am somewhat sympathetic to this view, in that I think in our society what money mainly purchases is labor or someone else’s effort. Even if all manual labors can be substituted with robots, I think, there should be a, say, “prime mover” that direct the usage of energy and resources to something. While Keynes himself essentially endorsed LTV, post-Keynesians mostly did not care much about theory of value.
Yet I agree that, as Herman Daly pointed out, any theory of value that does not account for the laws of thermodynamics is immaterial. So in that sense I think what we consume mostly is energy and low-entropy matter, plus someone’s labor (or “effort”, to be more precise). People say consumers buy “services”, but it seems they ignore the energy and resources required to actually perform said services.
But what the existence of money suggests is that (regardless of whether it recognizes thermodynamics or not) it’s the governing rule and mechanism of human society. We don’t live in a barter economy, money is debt (IOU), and most importantly, money is backed by law and its execution is guaranteed by the legal system. Behind every human activity, it can be argued, lies contract law, commercial law, consumer law, and tort law, and so on, and these statutes contain and regulate the aggregate of those activities to a certain direction (which is not 100% and there are leaks here and there, of course).
And if these systems – which can well be just regarded as a mental construct – are intact, I think the conventional heterodox economics and their theories, such as Marx/Keynes’ M-C-M’ (monetary theory of production) or endogenous money have more or less well explained these social organizations and operations.
Frederick Soddy, for instance, called for a “Cartesian economics” in that human society is comparable to the mind-body dualism of Descartes and suggested that we should deal with both the mind and the body. He criticized that economics entirely abandoned any efforts to have bearing for reality and ignoring laws of thermodynamics. Wealth, Soddy argued, is the flow of energy (sunlight) that we can collect with our capital (machines, too, are the accumulated outcome of our energy usage) and actually use. But Soddy did not stop analyzing the issue of the mind: he explained how money is debt and, contrary to the real wealth, it can growth mathematically and infinitely, and capitalist always be “relatively” richer than everyone else by endlessly raising debts and collecting rents and interests.
I am not trying to suggest that we have to do something to achieve a certain kind of goal. But there is seemingly a disconnection between money and throughput.
And I think we need to account for both – and perhaps their relationship – to understand the world better.
So my question would be: is there any way to deal with this seeming disconnection between money and throughput (energy/entropy)?”
