Commentary
Are we making the right investments?
By James Keye
Online Journal Contributing Writer


Aug 4, 2008, 00:26

The idea of investment is simple; the extended consequences are not. With 99.99 percent of attention and thought devoted to the machinations of increasing the value of the invested valuables, effectively no consideration is given to the wide, spreading and deep running influences of this way of acting in the economic and social space.

Is investment -- “money” investment especially -- an appropriate and acceptable activity for humans to engage in in the biosphere? Such a question has trouble entering our normal reality. Large numbers of otherwise competent people would not even be able to comprehend what it means, so completely would they be aligned with the “magnetic field” of present economic understanding.

The essence of investment is that out of certain activities excess may be accumulated. The excess can be stored in some fashion, but many useful materials lose value in storage through spoilage, increase their “costs” by having to be guarded or otherwise end up being less valuable with time rather than more valuable. It is axiomatic of biologically useful materials that they are best fresh!

However, if an excess can be converted while ‘fresh’ into some form that doesn’t lose value, then the excess is no longer excess in one sense, but is stored value. Humans have been using this principle for hundreds of thousands of years. Excess food shared, environmental knowledge shared, the sharing of discovered materials all increased group cohesion, strengthened them physically, decreased death rates and decreased the amount of time required for basic maintenance. This last especially increased the time available for innovation and the effective use of the shared material and knowledge “stored” in the group.

If the group is looked at as the functional unit, the picture changes somewhat. Excess created by one individual is distributed and is absorbed into the group system through the group’s various flexibilities of number, time use and space use. The group was the interactive environmental unit that maintained a homeostatic relationship with the ecosystem within which it lived. Our present alignment of thinking gives us more sympathy for the description in the preceding paragraph than in this one. Yet, this one is the more ecologically and biologically sound understanding.

This model was characteristic of human functioning until groups began to create excess as agriculture became institutional. The excess created by agriculture motivated two directions of change, within communities and between communities. Excess produced new forms and patterns of distribution of value within the community. Various representations of tradable excess were devised and the holding of these representations took on social and economic significance.

The group could no longer absorb the stored value of excess production in reciprocity systems, group knowledge base and time use patterns. Numbers increased, and, rather than simply absorbing the increased value, tended to add a new motive force for the redesign of social systems and the ultimate creation of increasingly defined economic systems.

Up to this point, I suspect that most readers would agree with the general outline suggested. This is not necessarily true for what follows. And the following is presented without evidence as a developing hypothesis of social philosophy.

The history of humanity is a history of how the excess generated by human activity is valued, how value is assigned and stored, how excess and value are traded and how value is attached to persons and groups. There are many ways to do these things, but human numbers, communication (including transport) technologies and a variety of other factors tend to favor certain patterns over others. In other words, there is no correct economic system for humans to be searching for, but rather different economic systems have different degrees of fit with different ambient conditions. And, ultimately, an economic system is an artifice laid over layers of artifice like a sedimentary sequence finally underlain by native human biological behaviors in an originating environment.

An early and consistent “economic” product of what I am calling the inflationary stage -- from the beginning of institutional agriculture to just a few years in advance of our time -- is the notion of investment: that is, that stored value could (then should) increase by being applied to creating more excess. From a narrow perspective -- most economics makes sense only from a narrow perspective -- this is a very exciting idea and process. From a broad perspective, the idea is clearly poisonous. The outcome of this dilemma was to maintain a narrow perspective and benefit from investment until there was some form of system failure. Many human lives have been dominated by chasing after the “investment opportunities” that bubble up and getting out of them before they burst. (So that there is no misunderstanding of my views, I think of such behaviors as an institutional Madness that has come to define much of the human condition.)

In the inflationary stage, the storing of value and its application to the creation of excess (investment) drives population, technological and energy use expansion until such expansion runs headlong into biophysical reality (which has happened locally many times). A broad perspective would see the collision coming, but inflationary economics denies the broad perspective, actually militates against it: ‘there is so much money to be made by investing “wisely.”’

The paradigm is simplicity itself: value (all its various forms of storage) “spoils” unless applied to the creation of more value. The creation of increasingly more value requires increasingly more options (of opportunity and objects) and increasingly more demand. More value, more options and more demand are short-term processes on the evolutionary and geological time scales -- only one arm of the homeostatic curve -- and will change direction into a deflationary stage. The transition, since there is no structural design for it in the biology or social biology of humans, might not be a transition at all, but rather a devastation.

I don’t intend the argument to be ‘doom and gloom.’ It is presented in the hope that the enforced narrowness of our present inflationary, investment-based, economics can be defeated in time to weaken the devastation of the coming transition -- which will come on strongly, even as it is beginning right now, almost certainly in the lifetimes of most of the world’s present population; it is fixed in the earth’s biophysical limits. Moreover, a plethora of our greatest challenges are intimately tied to the “more, more and more” design of investment economics.

What we will do and how we will do it is unimaginable from the narrow perspective of our present (completely Mad) understanding of economics. Supply and demand curves, statistical outcomes from game theory, price pressures and unemployment numbers are all artifacts of the accumulated economic structures that organize our patterns of excess production and use. These will go away. Real wisdom will be shown by attempting see beyond the present limits. If the present economic models are what organize the coming transitions, new words and concepts will be created to extend the meanings of devastation and terror.