Reading Shawn’s post about Natural Capitalism, recalled to me where I first met the ideas that he and I have discussed at length, among them the bad accounting that lies at the heart of the current crisis of capitalism. A crisis that we both believe did not have to be, and certainly not to be as bad.
We will talk more of accounting and systems of survival, of how growth in debt requires that we pursue infinite growth on a finite planet (and even through the universe [and, yes, the answer of cornucopians]). Oh, tales of energy and entropy will we weave, of economic and social capital and their waxing and waning. But for now, I wanted to point out where I first and best met the ideas that Shawn highlighted so well.
That was in the work of an economist and early backer of organic farming, E. F. Schumacher, author of the 70s-tech book Small is Beautiful. I would offer quotes from the book myself, but I don’t have it scanned. Instead, allow me to cop, copiously, from John W. Greer’s description or outline of it over at The Archdruid Report.
Schumacher: Capitalist; Ecologist
Ernst Friedrich Schumacher was born in Bonn in 1911 and attended universities there and in Berlin before going to Oxford in 1930 as a Rhodes Scholar, (note: um, wow) and then to Columbia University in New York, where he graduated with a doctorate in economics. When the Second World War broke out he was living in Britain, and was interned for a time as an enemy alien, until fellow economist John Maynard Keynes arranged for his release. After the war, he worked for the British Control Commission, helping to rebuild the West German economy, and then began a twenty-year stint as chief economist and head of planning for the British National Coal Board, at the time one of the world’s largest energy firms.
…Recognizing that attempts to import the industrial model into nonindustrial countries usually failed due to shortages of infrastructure and resources, he pioneered the concept of intermediate technology – an approach to development that focuses on finding and using the technology best suited to the resources available – and founded the Intermediate Technology Development Group in 1966. His interest in resource issues also led to an involvement in the organic agriculture movement, and he served for many years as a director of the Soil Association, Britain’s largest organic farming group.
Schumacher is thus an interesting character, and perhaps the “patron saint” of natural capitalism. Of course, we haven’t said much about what earned him that status. Anon.
Primary and Secondary goods
Schumacher drew a hard distinction between primary goods and secondary goods. The latter of these includes everything dealt with by conventional economics: the goods and services produced by human labor and exchanged among human beings. The former includes all those things necessary for human life and economic activity that are produced not by human beings, but by nature. Schumacher pointed out that primary goods, as the phrase implies, need to come first in any economic analysis because they supply the preconditions for the production of secondary goods. Renewable resources, he proposed, form the equivalent of income in the primary economy, while nonrenewable resources are the equivalent of capital; to insist that an economic system is sound when it is burning through nonrenewable resources at a rate that will lead to rapid depletion is thus as silly as claiming that a business is breaking even if it’s covering up huge losses by drawing down its bank accounts.
Sounds like bad accounting, huh?
Schumacher stressed the central role of energy among primary goods. He argued that energy cannot be treated as one commodity among many; rather, it is the gateway resource that allows all other resources to be accessed. Given enough energy, shortages of any other resource can be made good one way or another; if energy runs short, though, abundant supplies of other resources won’t make up the difference, because energy is needed to bring those resources into the realm of secondary goods and make them available for human needs. Thus the amount of energy available per person puts an upper limit on the level of economic development possible in a society, though other forms of development – social, intellectual, spiritual – can still be pursued in a setting where hard limits on energy restrict economic life.
Note that economics means “the law of the home.” It should, perhaps, chiefly be concerned with the nurturing and growth first of the home economy and the family, but has somehow been given over to large-scale, five-year-plan fantasies. But, back to Small is Beautiful.
The Cost of Capital in building workplaces
Schumacher stressed the importance of a variable left out of most economic analyses – the cost per worker of establishing and maintaining a workplace. Only the abundant capital, ample energy supplies, and established infrastructure of the world’s industrial nations, he argued, made it functional for businesses in those nations to concentrate on replacing human labor with technology. In the nonindustrial world, where the most urgent economic task was not the production of specialty goods for global markets but the provision of paid employment and basic necessities to the local population, attempts at industrialization far more often than not proved to be costly mistakes. Schumacher’s involvement in intermediate technology unfolded from this realization; he pointed out that in a great many situations, a relatively simple technology that relied on human hands and minds to meet local needs with local resources was the most viable response to the economic needs of nonindustrial nations.
Indeed, building local supply chains and a rich, diverse economy where citizens are not viewed as “consumers,” visualizing perhaps the uncomfortable term “useless eaters,” but are viewed as ends in themselves and intrinsically worthy is tied up with the designed for life philosophy. We would argue that this applies also in developed economies no less than developing, and will propound this point further.
We will not get out of this with math, alone
Schumacher pointed out that the failures of contemporary economics could not be solved by improved mathematical models or more detailed statistics, because they were hardwired into the assumptions underlying economics itself. Every way of thinking about the world rests ultimately on presuppositions that are, strictly speaking, metaphysical in nature: that is, they deal with fundamental questions about what exists and what has value. Trying to ignore the metaphysical dimension does not make it go away, but rather simply insures that those who make this attempt will be blindsided whenever the real world fails to behave according to their unexamined assumptions. Contemporary economics fails so consistently to predict the behavior of the economy because it has lost the capacity, or the willingness, to criticize its own underlying metaphysics…
Designed for life means precisely this: reconnecting with the metaphysical underpinning of an economy and an ecology designed for living. We do not promise heaven on earth, but maybe a heavenly sofa made with thought of seven generations. Striking about the organic movement in which Schumacher was a major player is the notion that there is really no biological product that is truly waste. Designed for life, paired with the ideas of McDonough and Braungart, aims to replicate that understanding throughout the economy.