EcoSystem-Nomics

ECOSYSTEM-NOMICS For centuries we lived in small groups and had little tangible material passed on from generation to generation other than our genes and cultural artifacts (stories, traditions, behaviors and knowledge). We are all born with our genetic endowment and therefore our intellectual and physical capacities / talents; these are leveraged by our cultural milieu (via education and institutional tools) so as to help the group survive. Food production, protection from the elements, carnivores, disease, other social groups, etc., were the main thrust of our efforts or labors during most of our 150,000 year history as homo sapiens. Shamans and lead hunter / warriors were all the leaders we had for our social groups but rarely had anything 'extra' in terms of accumulated possessions until the advent of the agricultural revolution. Thus we find as did Marx, that Labor is the primary resource that we bring to any economic endeavor. To the extent our society generates surpluses of tangible items of value to used for future times and society's members and can establish effective control over the other resources in its environment (agrable land, water sources, energy sources, mineral sources, etc.) then these can be heritable by some or all the members of the society in accordance with institutions and customs that have developed. Historically we can note the Biblical story of Joseph who arranges for the Pharoah to become the sole landowner in Egypt in return for surplus grain (accumulated from taxes on previous labor of the original owners!). So had these individuals saved enough for themselves in their own little granaries they would have remained free and not have to support the Pharonic regime! But it was Pharoah who had the vision and Joseph the keen intelligence to implement a plan and so they got the great return on the 'investment' in centralized granaries. The risk of failure and the cost of communications and control in those days to accomplish this on an individual basis was just too high relative to going with a centralized model. This shift toward consolidation of control and ownership speaks to the need for larger societies to effectively manage temporal needs on a planned basis and thereby generate a hierarchy and associated concentration of control over resources and individual behaviors. It is only in the last century that communication costs have plummeted to the extent it will allow us to reconsider the hierarchial model versus a peer-to-peer network one. The old adage in business, '20% of customers generate 80% of business' is that 20% of the population owns/controls 80% of resources. If one looks at the energy partitioning in thermodynamics of a gas in a constrained environment we find a small percentage of particles have on average much higher energies than the rest (MaxwellBoltzmann distribution curve) and thus the 1% phenomenon is not an 'unnatural' result but consistent with the fact that economics obeys thermodynamic principles regarding conservation of energy (wealth) and entropy. One can still engineer differing distributions requiring greater efforts to enforce but the 'lowest-cost' social system will default to Maxwell-Boltzmann. The short period during post WWII era when the US dominated the world economy allowing much higher wages plus having a sharply redistributive tax regime on the high end of the earnings scale enforcing an egalitarian social compact shifted this natural state of affairs temporarily. When things returned to a more competitive situation with the US reduced in its share of overall planetary resources and the underlying technologies shifted in terms of where labor could be acquired, we find ourselves back to the true 'normal' of pre-1939 society (1). (1) T. Picketty ' Capital in the 21st Century' The 'wealth' or 'energy' needed by both individuals and social systems to survive cannot be 'created'. We can 'extract' energy or 'value' ( i.e., 'wealth' ) from our environment by our labors as leveraged by our technology and organizational capacities to satisfy our 'needs'. Those 'needs' reflect the basics of survival (safety, sufficiency, selfhood) without regard to comparative keeping up of 'appearances'. Satisfaction of true needs leads to 'contentment' (2), dissatisfaction of true needs leads to a requirement for change. Sometimes that change may occur violently if some members of the society impede others. It can also lead to violence between neighboring social groups if the

resources needed by one to satisfy their needs are in control of another society. (2) Mind of the Market; Mike Shermer, p 150 It has been the thesis of economists that 'wealth' can be created and accumulated. As we see, the true equation suggests that overall effort by society's members expended in providing for its needs over any temporal period exceeds the total net value delivered to meet individual survival of its members. The wastefulness of the processes from a technological perspective, the maintenance of the social systems of education and enforcement are true measure of 'wealth' consumed by a social system during a time period. Moreover, during our individual lifetimes we will have periods where we consume but do not produce, we are either too young or too old. While rearing the young is an investment in the future survival of the group, the wealth consumed by the aged and infirm is a 'cost' related to the social liability created by the implied social contract whereby we contribute during our 'working lives' to the group's success. Temporally there can (and must) be some accumulations of resources (also known as 'capital') and these typically are 'owned' under social rules provided by those who provide the direction for the society and the proceeds of the wealth generated during the period of control is distributed according to custodial rules. Modern institutions such as banks, insurers, investment funds represent institutional mechanisms for managing these temporary wealth accumulations. To the extent the overall economy they are invest in 'grows' because of population growth and technological progress and covers the expense of running these institutions we are ahead of the game for awhile. Periodically however for some time period that will not be the case and one will see contractions in the earnings of such employed capital as well as actual shrinkage of total corpus. While by dint of genius, talent or effort one may accumulate some resources for awhile; such accumulations rarely last very long. Consider how many 'successful companies' in the US during 1850-1950 period are no longer in business, their accumulated 'wealth' having been dispersed in exchange transactions. Parents may leave something for their children or even grandchildren but rarely beyond. Even in the Soviet Union which undertook to 'redistribute' capital from the elite resource owners under the guise of a global corporate entity that everyone had an 'equal share' of in fact degenerated quickly into a new elite clique of director/managers (commissars) that had effective control. This further mutated into current oligarchic system that replaced the ostensible Soviet model but in fact represents the low-cost management model of any socio-economic system. As individuals we must accumulate some 'wealth' during our working lives to cover our costs of old age and infirmity. While such 'savings' may be invested in various financial instruments (insurance, annuities, stocks and bonds) that offer 'growth'; these are merely means of facilitating intertemporal transfers and reallocating capital. Growth in the assets can only come from underlying value of the enterprises utilizing those funds through enhanced technological efficiency and prowess thereby generating the extra revenues to pay for the capital's cost (interest/dividends) as well as repay the principal. Not all bets will work; overall ecosystem characteristics in terms of population health as well as growth/decline; climatic conditions, soil fertility, accessibility of geologic resources, etc., must factor in beyond capabilities of a given organization's staff. While the overall societal compact will stipulate some redistributive mechanism to provide a minimal sustenance for those who cannot do it on their own, there will in fact be a limit to the ability of any social system to do so effectively if the period of non-productivity is extensive. The Biblical 'gleaning' opportunities were an example, however, if a major famine hit, that wouldn't cut it. The arguments regarding what the minimum is, who deserves it, and for how long, etc., become political arguments in face of the societal norms. So, if economics is about satisfying needs related to our survival then what is politics? Politics is the decision-making process related to the distribution or allocation of the economic resources (raw or 'finished') to members of the society as a whole or to organizational subgroups therein (hence office politics!). While cultural norms may establish salient principles that must be observed, the practical politics of the temporal situations define the necessary day-to-day mechanisms that scope

the freedom of action of group members. Every organization has four major elements: 1. points of presence (where are they) 2. lines of authority (who can do or decide what) 3. rules of engagement (when and how we do things, how one treats in-group, outgroup members and why) 4. distributive network architecture (how all the elements are joined; decisions communicated, the skeleton of the organization) These are analogous to an organisms' body, to its skin or membrane, nervous system, muscular system and skeletal framework respectively. Remember G. W. Bush defining himself as 'decider in chief'? Well the scope of actual impact of our decisions and how they are implemented is a function of the four elements above. Making a decision is one thing, being able to mobilize resources and bring them to bear where they are needed in a fashion consistent with the goal of the decision is the rest of the story. Our organizations metabolize (consume) resources while catalytically using labor and capital (in form of technological tools and equipment). This is true for GM, the US Army, or a hospital. These organizations produce other resources in a different more usable or valuable form (like bees taking pollen and making honey). We also produce 'waste' or secondary products which in some cases can and should be used in other production processes to maximize value. Other such products might in fact be inimical to human and other life and therefore needs to be mitigated in some fashion. Ameliorative processes have their own economic structure as well and have the same issues for capitalizing and staffing and own metabolism. Historically human groups could easily move from place to place should an area cease to be safe or provide sufficient raw resources to survive. These days, the density of human population limits this as an activity available only to small groups and also the volume of inimal material our economies produce has become a detriment to the overall biosphere. We need to recognize this and minimize this if we are not imperil our ultimate survival. Raw resources and labor also require interim acquisition costs until finished products and services can be exchanged to replenish. The cycle time from 'order to payment' can vary from days to months or even years (nuclear plants, buildings, jumbo jets). This tends to be known as 'working capital' to distinguish from long term investment in equipment and plant. New organizations need both to start while existing organizations can typically to a greater or lesser degree get to the point where they can meet their routine operating needs in terms of salaries and paying for materials and services consumed in the production from ongoing sales activity. Understanding the interlocking nature of various cycles amongst linked organizations and groups is another key element to managing the overall economic-political environment. Our history of being members of a small, homogeneous group living in a well defined ecosystem now needs to be reengineered as we are members of or proximate to multiple, even overlapping groups. We are a network of intelligent autonomous beings and dominate the planetary ecosystem as no other species ever has. No one individual or even small group has the intellectual bandwidth to make and monitor all decisions and actions needed. Therefore we need to think on a species level if we are to survive and thrive, else the era of homo sapiens will pass as the equivalent of a algal bloom and the planet will continue to evolve without us. We may further posit that limiting our impact on the planetary ecosystem by maximizing productive efficiency of our technologies and effectively countering their negative side effects is crucial. Providing guaranteed levels of satisfaction of all core needs (food, shelter, safety, health, education, accessibility) for all humans during their lives should be the main goal of our economic-political organizations so we may be a thriving species on a thriving planet. Then we might go forth to other worlds and not create future wastelands. Myron S. Karasik; Global Vision Inc., © 2014