Climate, technology and chaos Blog

A kind of sequel to the previous post about free markets and politics.

A realistic economic theory needs to recognize that:

Politics

• ‘The Market’ is never separate from politics. Riches gives power so, to survive as a free and open market, the economy needs power relations to be equalized (especially across generations) and equitable access to power available to all.
• It is standard for the rich to team up to protect and increase their riches. The rich want power and buying it is easy in a society that values ‘The Market’ beyond anything else, as everything is up for sale. It would be seem to be immoral not to make a profit when its offered. Standard market theory recognizes that poorer people can team up against the rich, and does everything it can to stop it, but does nothing to stop the rich teaming up against the poorer – or even hails it as good business practice.
• The rich tend to pollute more, and often attempt to make sure that pollution gets dumped on poorer and less powerful people. This is the real meaning of the trickle down economy.

Psychology and information

• People are co-operative as well as competitive. Market theory needs to recognize that actually functioning markets involve co-operation, collaboration and competition, and that models based on entirely ‘selfish’ individual actions are unreal. Social psychologies are complex.
• Price systems are not perfect information processors, because market practice includes distorting information, PR, advertising, faking prices, collusion, internal trading, wiping out small competitors by price cutting, becoming monopolies or oligopolies, profit gouging, overriding local information, and so on – all of which distort the price system, until it is too late and a crash of some kind occurs. Markets operate in unreal and fantasy spaces as much as in real spaces.
• Markets are reflexive. What people believe about the market and how the market works, may change their behaviour and therefore change the market. Economists are much more likely to be driven by ‘selfishness’ than non-economists who have a more complicated view of human nature. The same is likely to be true of business people, who believe this idea. Hence control over information is important to market activity.
• Maximal profit seeking does not conserve traditions, stability or anything else (it is anti-conservative), and does not encourage ‘virtue’. It even invents religions who proclaim that God allocates wealth to good people, and that if you are not rich, you are not virtuous. The market is likely to continually undermine its moral legitimacy. More importantly, encouraging only the one value, motivation and form of organisation, can lead to lack of variety in response and hence lack of resilience.
• In current riches-structured markets, corporate power can ignore information about say climate change, with the apparent exception of insurance corps who recognize the growing problem that past data on disasters is no longer of use to calculate their risks. In this market bent by power and propaganda, it seems really good strategy for fossil fuel companies to continue to sell their products and massively profit, while they still can, despite the harms it will bring for others or for the market in general. They hope that riches will protect them as other people die. And its profitable for politicians to go along with this, and to fear what the corporations will do to them, if they act. Ideologues can even dismiss business concerns about survival as being woke capitalism.

Complexity

• Economies are complex systems that interact with complex social, psychological, ecological, energy, and technological systems, amongst other systems. As such, markets are inherently unstable subject to unpredictable changes – equilibrium may be rare. Markets crashes occur even if all actors are perfectly selfish and rational because markets require actors to make predictions in an unpredictable situation with bad information.
• Complex systems have patterns which arise despite the intentions or workings of the participants. Thus market workings cannot be completely derived from ‘economic man’ even if it was an accurate idea. ‘Economic man’ is as likely to arise from the system as vice versa.

Ecology

• A functional market requires a functional ecology. Markets operate within ecologies. Ecologies are not completely submissive to market demands. Ecologies can change because markets alter or destroy them.
• Markets and manufacture involve waste, pollution and extraction. These necessary processes to particular forms of market organisation, can be harmful to the market as they can destroy the ecology the market depends upon. Markets are systems of destruction as much as they are systems of production.
• Markets cannot expand forever on a finite planet. We are already over consuming our resources faster than they regenerate, which will lead to a crash, because of lack of water or other essential supplies. We cannot assume useful innovation will certainly happen.

Innovation

• Markets like other complex systems have emergent properties and they can be considered creative.
• Innovations and product substitutions may not be possible, no matter how useful, or how much the price system signals that it would be a good idea.
• Innovations may not arrive in time, in a form which is useable, at a price which makes them useable, in a form which is acceptable to both the dominant elites or the economic system, and they may have destructive effects which undermine their use.
• Markets cannot solve every problem or challenge that can arise, because some problems may be wholly or partly generated by markets, such as climate change.
• Emergence does not have to harmonise with what the market would like. Emergent processes can destroy essential properties of the market.

Energy

• Markets require energy and energy sources. With declining energy, then in general, but not always, less can be done. Systems will likely collapse without a change in organisation or organisers. With more energy more can be done and more can be disrupted or destroyed.
• Energy availability is usually structured by riches. The rich use more energy not only in their work lives but in their personal lives.
• The basic form of energy for markets is human labour, or labour power. However, this can eventually become far less important than other sources of energy, and these other sources can become directed by machines. The economy can destroy the need for much human labour. A question is whether labour providers then starve or not.
• The main sources of effectively unlimited energy are the Sun, nuclear forces, earth processes (such as wind, tidal power, and thermal gradients).
• The presence of entropy (energy dispersion) and physical entropy (pollution and costs of maintenance and repair), cannot be ignored in a real economic model..

All of this may be difficult, but having easy but fundamentally inaccurate theories, which leave out vital parts of economic dynamics, will not give useful results, and may hinder necessary transformation.

Finally

Non-revolutionary approaches to the free market, are basically plans to reinforce power and wealth inequalities and stop most people from improving their lives. Forty plus years of neoliberal talk and legislation for ‘free markets’, should show the truth of this.

Tags: complexity, Disinformation, economics, neoliberalism

This entry was posted on March 6, 2024 at 6:53 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.