The real political debate raging through the world is this:
Should we concern ourselves primarily with the monetary units (dollars, euros, pounds, yen, etc.) circulating through (or disappearing from) networks of financial institutions, including our personal bank accounts?
Or should we focus more on the quanta of energy (photons of sunlight) circulating though (or disappearing from) networks of living organisms, including ourselves?
In other words:
Do we just need to get this financial crisis resolved — and then maybe some day we can resume global negotiations about carbon credits, and resume writing personal checks to help groups fighting pollution and hunger?
Or is this the time when we need to step back and take another look at how economic and ecological systems operate, and how they conflict, and finally address the question of how to resolve that conflict?
The answer, in a nutshell:
If we don’t start keeping track of photon-pathways, we're fucked.
Our indoctrination, our habits of thoughts, and our figures of speech, tell us money comes first.
If a teacher yells, "Get out of your dreamworld! Get back to reality!" it generally means "Stop looking out the window at the sunbeams pouring through those shapely clouds, illuminating the wind-tossed foliage of the oak grove over yonder! Forget about that flock of songbirds wheeling around above the schoolyard!" Nature is a dreamworld. "Be realistic!" means "Think in terms of government, business, laws, and money" — especially money. "What's the bottom line?" means how much money will we gain or lose if we do this thing, and sound decision-making is always firmly based on that bottom line. "Dollars-and-cents logic" tells us how "the real world" operates, and tells us how we should think and behave during our time in it. Money makes the world go round. Anyone who suggests otherwise is living in a dreamworld.
A couple of days back, Walkshills was offended by my seemingly glib remark that money is essentially "make-believe":
To say [money] is make-believe is not just silly, it's ignorant... Look around at the world today, especially this day, and see how ridiculous you sound.
to which I replied:
By "especially this day" I guess you mean the day when Lehmann Brothers went pfft, now you see it now you don't, when the lights came on, the magic show ended, and all its billions, so real last week, were nowhere to be found? I guess you mean the day after Merrill Lynch, despite decades of beautifully crafted, horn-tossing, steam-snorting ad campaigns, stayed up all night wondering "where's the beef?" and was gone by morning?
I went on to tell a story about a real estate investment trust's initial stock offering, underwritten by both Merrill Lynch and Lehman Brothers. Here's the short version: I tried phoning Merrill Lynch to warn them of this company's Mafia connections; they hung up almost before I could finish my first sentence. Then I re-read the developer's SEC forms. He swore his investors could expect $10 million annual revenues from a project he claimed had completed the years of hearings required to win the town planners' approval. In fact neither the town nor the developer's own planners had ever heard of the project, not even as an idea about what to put on that parcel of land. Yet the $10 million annual revenues from this imaginary project were as good as in the bank, in the view of the underwriters' "due diligence" teams. After the fraud came to light, that IPO was called off — but how many similar deals went through?
Walkshills wrote back to say that of course some money is make-believe. My original point, though, was that all money, not just some money, is at best a useful fiction:
Money is make-believe — useful yes, but not true. Nature is truth.
UltimatelyRippd refined and qualified that notion:
...when we pool our acknowledged credit/debt into one gigantic ocean, and permit a handful of plutocrats (and their functionaries) to spend their days waving their arms and mystically expanding that ocean without expanding the real economic capacity that supposedly undergirds the debt, then we are indeed prisoners of the unreal.
But look again at the key words in UltimatelyRippd's comment —
...real economic capacity...
True, finance is meaningless without "the real economy" — but those farms and factories, coal mines and shopping malls aren't floating in empty space out beyond Pluto. They too must rest on solid foundations.
The managers of "the real economy" base decisions on their financial bottom life. But of course there's another bottom line that is not an abstract invention; it's the surface of the earth.
Economics is supposed to be about "the production, distribution, and consumption of wealth" Any economist knows that wealth is not money; money only represents wealth. Wealth is made of goods and services, which in turn are made of mass and energy taken from the earth. Because the first law of thermodynamics doesn't allow mass-energy to be created or destroyed (at least not in our neighborhood of space-time), "the real economy" just changes and moves things, and redirects energy. And the Second Law tells us that all such transformations involve some entropy; when one system develops, another deteriorates, with a net loss of order. An exquisite ounce of jewelry in a Fifth Avenue shop may involve a ton of toxic tailings in Brazil and ten dead miners in South Africa. Our decisions about how we spend or invest money determine, directly or indirectly, whether the surface of the earth is occupied by thriving living systems, and whether it can support life. (Economics textbooks call all that an "externality" — it's a factor in the financial bottom line only if some out-of-control regulatory agency or grassroots protest movement gets in the way of "productive" economic activity.) It's not just "creative accounting" that hides losses. All accounting hides losses, because the entropy in natural systems and human lives is usually not accounted for all at all, and when does show up, the accounts do not reflect its full value. The decision-makers of "the real economy" live out the fairy-tale story-line of financial fiction, and regard the external consequences of their decisions as an annoying distraction. This is not because they're bad people, it's because their decision-making criteria are imposed on them by the rules of business and government.
So the debate is about whether the bottom line we use in decision-making should just tell us about money, or should tell us about real life. And if the answer is life, what sort of "accounting reform" is needed? What kind of record-keeping can give us the useful information we need for rational decision-making?
The most objective and quantifiable standard of value, the gold standard of nature, is sunlight — that is, photons generated in the solar core's nuclear fusion, beaming out into space, sometimes arriving at the earth's surface, and then continuing their journey in one way or another. If that journey is a long, interesting and colorful one, some of those photons eventually become our thoughts, feelings, dreams; you may doubt that this is significant, but your doubts are mad of sunlight too.
(Biological evolution, like all development, is fueled by entropy elsewhere; in this case it's the sun fusing hydrogen into helium, with photons as a by-product. The entropy is spread out over billions of earth-years, and so is evolution resulting from the earth taking in and storing that energy via photosynthesis, building up complex molecules and hence complex organisms. In the "photonomy" of life, that's pure profit; a growing pool of genetic information is capital accumulation. But value assigned to complex organisms and complex ecosystems is negligible or negative in the financial bottom line.)
Economics literally means "the management of the household" — ecology is the study, or the logic, of the household. Both are global systems. Unless you choose to believe (as many do) that we simultaneously inhabit two different planets or two different dimensions, this indicates they refer to the same household, the surface of a single planet. So, to restate the original question yet again: Should the management of a household be informed and guided by the study of the household?
If the answer is yes, we need to recognize that our real role as the dominant species on earth is to manage its photon-pathways. Indeed, that's exactly what we've been doing all along, but usually doing it blindly, and usually doing it badly.
The management of light could be called photonomics. The whole realm of the earthly materials animated by sunlight (i.e., living systems) could be called "the photonomy" — but of course that's just another way of saying "the biosphere", so its use in the title here is probably its first and last use ever. (Oops, wrong — plenty of Google results — but they seem to be for photography studios.)
If you've read to this point, you'll probably want to have a look at the photons-versus-dollars debate as it's been framed by a couple of more authoritative writers than me. I attempted a brief summary of what Herman Daly and Howard Odom had to offer, in attempting to answer the many readers who were baffled and offended by my previous diary. See the comment titled: "What is he on about? ... Where to begin?" By the time I'd posted it, everyone had moved on, so you'll find it way down near the end of all this.
How "the photonomy" might be recognized as real, in practice, via tax and credit policies forcing life into the financial bottom line, will be the subject of some future ramblings. In fact, this is already happening, but haphazardly. It needs to be done more thoroughly and rationally if billions of people are going to live well, and share the planet with a lot of other species that are also living well. Too late? Perhaps, but any effort is better late than never.
To end this on a practical note: Science progresses by exploring and understanding nature, but decisions about how to apply science are generally made by business (or by business-dominated government) with financial results in mind. Since technological efficiency is often the result of profit-driven applied science, that can be a very good thing, reducing the environmental cost of production. But only when financial systems are forced to directly (not just indirectly) recognize nature in the bottom line can science operate scientifically and lead reliably to improvements in our lives, and in the life of the planet.