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What grasslands and barnacles can teach us about regulation, deregulation, and the meaning of free markets.
Since the advent of our catastrophic economic troubles, there has been a spate of diaries recognizing the necessity of regulation to the maintenance of free markets: Smintheus, David Frenkel, and many others have all weighed in on the subject.

There are tremendous parallels between economics and the science of ecology.... understandably since they are both systems sciences that attempt to comprehend the workings of dynamic systems: the flow of money in the case of economics and the flow of energy and materials in the case of ecology.  They share a fundamental similarity in mathematics and methods, moreover the similarities go much deeper.

Background: Ecological Economics

Observations about this crucial relationship between economics and ecology are not by any means original to me.  Howard T. Odum pointed this out in a groundbreaking body of work, of which the 1974 landmark paper Energy, Ecology, and Economics is a prime representative.  

His ideas are part of an intellectual stream known as Ecological Economics, which has its own national and international academic societies and which is represented in academia by all the usual trappings: academic departments (example), scholarly conferences, and peer reviewed journals.

I'm a lowly biology teacher in southern Alabama.  I'm acutely aware that DailyKos is read by eminent experts in all fields including my own.  All that follows is my own understanding of Odum and others.  Any misconceptions are mine and not those of the giants upon whose shoulders I'm standing.  Any specialists reading this are begged for tolerance and are welcome to make correcting comments.

From the perspective of ecologists, as system scientists, the economists have taken too narrow a view of their profession and its scope.  The economic system is not self-contained.  It is a (rather small but highly significant) subsystem within the larger ecological system of the earth.  If you persistently burrow down through the layers of meaning, you can discover that money represents the flow of energy.  The cycling of money in the economic system can be shown to be driven by the cycling of energy and materials in the larger ecological system.  

The purpose of the above is to lay a foundation for the claim that specific ecological relationships can be used to throw light on the functioning of economics, and that the connections are hardly metaphorical, but rather in many cases direct and practical.   Biologists/ecologists who seek to understand complex systems have a tremendous advantage in the diversity of nature.  If you are interested in confirming or shedding light on the results of theorizing or modeling, seemingly every possible relationship within or between species can be found somewhere in the diversity of life on earth.

Consider competition.

Remember the powerful and attractive picture evoked by the phrase (originally disparaging but often used  today with approbation): "a nation of shopkeepers." This evokes the picture of a million thriving entrepeneurial units giving life and vitality to the fabric of the national scene.  In such a situation the reality of the economic system might in many ways accurately mirror the idealized fantasy of the invisible hand.  In this situation of maximum diversity the relationships between supply and demand, competition and price, and consumer choice might be fairly likely to play out in ways predicted by the free-market ideologs (i.e. libertarians).  

What do we find over and over again in the real world?  A superior competitor (Big Box Mart) enters a thriving local market.  Gradually, or sometimes suddenly, the lesser competitiors fall by the wayside.  

The end result of a simple competitive system without regulating interactions is that there are winners and losers and the end of competition.

We end up with a market dominated by monopolies, wielding power so absolute as to be a de-facto political system.  This is what we see historically in the oligarchies of Latin America.  A tiny ownership class dominating a massive peasantry held in grinding economic and political servitude.  This is what we recall from memories of the Gilded Age.  This the future we see depicted in the cyberpunk fantasies of William Gibson and others.

So, let's restate the problem from the perspective of the systems scientist.  How do we take a competitive system existing in some dynamic transformative state on the continuum between "a nation of shopkeepers" and global corporate fascism and cause it to move in the direction of maximum competition and maximum diversity?  How can we bring about and maintain this happy system state?  Since economic systems and ecological systems operate in arguably similar ways, are there actual living communities whose interactions shed light on the problems of markets?

Any biologists/ecologists reading this will instantly know the punchline of this tale I'm winding as soon as they see the subject of the next section:

The Rocky Intertidal Community of the Pacific Coast.

Originally posted to bmcphail on Sat Nov 01, 2008 at 07:29 PM PDT.

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Comment Preferences

  •  Cooperation trumps competition.. (5+ / 0-)

    Most times, its a good thing, sometimes it isn't.

  •  Keep going. (3+ / 0-)

    Most fruitful line, don't stop now.

    What's so hard about Peace, Love, and Truth and Progress?

    by melvin on Sat Nov 01, 2008 at 07:32:08 PM PDT

    •  Thanks. (4+ / 0-)

      Tomorrow, I hope.

      Baz

      •  Here I am (1+ / 0-)
        Recommended by:
        bmcphail

        Ready to get comfortable reading about a real word system, and  get hung over a cliff.

        I really want to see the next segment.

        My systems knowledge is all computer networking, so I have little idea what the lessions are, but I want to know.

        Obama, the RIGHT man, at the RIGHT time!

        by Mr Tek on Sat Nov 01, 2008 at 07:44:10 PM PDT

        [ Parent ]

        •  Sorry... (1+ / 0-)
          Recommended by:
          Gooserock

          I wanted to get what I've already written out here while I work on the rest.
          I'll post again, ASAP

          thanks for your interest.

          baz

          •  this is useful stuff and should be re-posted (1+ / 0-)
            Recommended by:
            bmcphail

            after the election.

            Right now most of us are wound up tighter than clock-springs over what's about to happen in three more days, to the point where non-election stuff isn't getting the attention it deserves.

            After Tuesday, assuming the Rs don't steal another one and set off Civil War II, we'll have more time to start thinking long-term about wider issues.  

            So I'd say re-post your series (this diary plus the next one) about a week after election day, and more people will tune in.  

            BTW, ecological economics is of major interest to me.   I'm writing some lengthy stuff on the subject that isn't ready to post yet.  

            •  3 cheers for ecological economics (3+ / 0-)
              Recommended by:
              G2geek, melvin, bmcphail

              The field is still suspect among mainstream economists, but it's day is coming....

              So I offer two key quotations from two Wisconsin heroes.

              Aldo Leopold;  "We fancy that industry suppors us, forgetting what supports industry."

              Gaylord Nelson:  "The economy is a wholly own subsidiary of the environment, not the other way around."

              Keep writing!    

            •  Thanks for the advice.... (1+ / 0-)
              Recommended by:
              Gooserock

              That's most likely what I will do.  

              All my fingers are crossed into knots over this election, not to mention my stomach.

              I look forward to your diaries on the subject.  I'm mostly doing it b/c it's a hobby horse of mine and no one else seemed to be bringing these ideas forward, not because of any special expertise besides a bunch of reading and thinking.

              Baz

              •  I was thinking as I read this, (0+ / 0-)

                If it runs into multiple parts like it looks like you intend, eventually distilling it down into a PDF that can be posted here and possibly academic places as well if appropriate, might be a good thing.

                I for one am known to track down such articles when they come to my attention.

                Especial;ly a new economic theory, when I have known since the 80s, that free market and supply side theory was crap.

                I would like to see a theory that might actually be accurate.

                Obama, the RIGHT man, at the RIGHT time!

                by Mr Tek on Sun Nov 02, 2008 at 02:08:27 AM PST

                [ Parent ]

  •  I'll be back for the next one, interested in (1+ / 0-)
    Recommended by:
    bmcphail

    human social and biological/ecological systems.

    Love = Awareness of mutually beneficial exchange across semi-permeable boundaries. Political and economic systems either amplify or inhibit Love.

    by Bob Guyer on Sat Nov 01, 2008 at 08:09:06 PM PDT

  •  hmm (0+ / 0-)

    ok, i am not sure where you were going with this, i will add that there are unknowns to the evolution of humanity, this thing we call consciousness has never been here in any of the systems before. Also the science of altruism has no place in nature. In this i project that we are evolving towards something more than has ever been before. A collective working together for some purpose only speculated by thinkers.

    •  does too (0+ / 0-)

      Altruism does have a place in nature. It helps increase (or at least helps keep other things from decreasing) genetic diversity.

      While it can be useful to a species to slough off dna that is dangerous enough to keep a member from surviving, it can be dangerous to a species to get rid off too much diversity. You never know what you're going to need next and you never know what gems there are in the dna of the weakest.

  •  hello (1+ / 0-)
    Recommended by:
    bmcphail

    How do we take a competitive system existing in some dynamic transformative state on the continuum between "a nation of shopkeepers" and global corporate fascism and cause it to move in the direction of maximum competition and maximum diversity?  How can we bring about and maintain this happy system state?

    My answer in this question is simple

    encourage conscious evolution
    evolution is acceptance of diversity
    and movement towards unity

    in our culture i would encourage religions that accept diversity and non-judgment of others and teach unconditional love of others

    repressing any religion that teaches divisiveness and hatred of others

    will you honor me with the flaws in my argument? it seems i am generally ignored here

    i am also from alabama

    you wouldnt happen to be from dothan would you,

    •  Restore Steep Top End Taxation (2+ / 0-)
      Recommended by:
      Terri, bmcphail

      Our system can't function sustainably if the greatest rewards go beyond a certain amount and speed.

      There's no way to "encourage" social behavior when sociopathic business management for a 3-4 years gambling project will win you lifetime security.

      Take away the ability to cash-out of the system, and a whole slew of antisocial behavior drops out the market en masse.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Sat Nov 01, 2008 at 08:28:56 PM PDT

      [ Parent ]

      •  agreed (0+ / 0-)

        i wasnt sure where u were going with it, i agree

      •  Interesting.. (0+ / 0-)

        there might be insight to be gained from a branch of ecology called optimal foraging theory.  Your scenario might be likened to a forager faced with a massively rich source of food.  The rational response in that circumstance might be to dominate that source as effectively as you can.      Fight off any competitors and lay your eggs all through it.  (eewww).  (-;   It also brings to mind a list of characteristics that  folks in the biology biz call r-selected: quantity in place of quality, quick-and-dirty instead of slow and careful.

        Baz

    •  I'm from Mobile... (0+ / 0-)

      I'm not at all averse to listening respectfully about the possibilities of moral/societal advancement, but I do have to say that in this case I'm taking a rather narrow and technical approach...more nuts and bolts ecology.  The question I'm trying to advance here in my roundabout way is: what is the proper role of regulation in a free market system?  and can we discover parallels in the world of nature that give us hints about how much regulation and what kind might give us the best results?

      Baz

  •  Wow, I've Deduced Almost the Identical Principle (2+ / 0-)
    Recommended by:
    Terri, bmcphail

    as a complete layman in all the ostensibly applicable disciplines.

    My way of putting it is "Market Competition vs Competitive Markets." I say that a regulated, specifically monopoly-proof market is necessary to maintain competitive markets.

    If the competition is allowed to be for THE market, someone --as you say-- will eventually win.

    And by definition, once a contest is won, the contest is over. In markets it often means there's no practical chance of much competition until the winner somehow breaks down.

    By contrast, if the competitors are prevented from winning the MARKET, then the market remains permanently competitive. Competition naturally shifts to a competition of goods and services. And that drives the innovation and progress in quality we need, without the chance of turning the whole society into a prize that can be won by a negligible number of competitors.

    ====

    There is a second problem that is intensely biology-based, and that is the problem of the scale of rewards capable of being generated by industrial and later economies compared to the needs and appetites of the human beings who own and run them.

    The family farms and microbusinesses known to the framers were at most an order or two of magnitude beyond the powers of a single individual to accumulate for himself, in both amounts and in speed.

    But industrial economies can transform a worker and his entire family into lifetime economic peers-of-the-realm for barely months of work, at the highest levels of the economy. It can be done in a few years by thousands and thousands of top end managers.

    With such a chance, it is madness and frankly irresponsible for a manager to run their business for the long-term interests of the business and for society. You literally must manage it for the quick jackpot rewards that will let you cash-out and become free from want forever, no matter how much damage it does to the business, your country and the world in the longer term.

    For this reason, steep progressive taxation of all ability to accumulate is needed to kick in at some point beyond median incomes, to keep all human actors dependent on their societies long-term. You board of directors will not promise me a 10 million dollar income if you need to give me 100 million so that I can pay the tax. It just isn't worth it. So you'll offer me 2-3 million and reinvest the 95 or so into the business, employee wages and benefits, and some local charities.

    This is the fundamental purpose of progressive taxation, to block the threat of destruction of society itself from the irresistible temptations the top of the economy creates.

    Literally, for national security.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sat Nov 01, 2008 at 08:26:47 PM PDT

  •  toe in the water, gingerly (1+ / 0-)
    Recommended by:
    bmcphail

    I have no background in this at all, but I'm very excited to see your series.

    I've been looking at, for example, artistic creativity, and practical ways to create sustainable lives and careers in those fields. The artistic ecology, if you will. What kind of system builds in opportunities for sustainable creativity?

    I'd be willing to bet that such a system would naturally overcome some of the unfairness of the way things work now...

    I've also just begun to re-read Small is Beautiful and one of the early 'eureka' moments is when Friz says that:

    The way in which we experience and interpret the world obviously depends very much indeed on the kind of ideas that fill our minds. If they are mainly small, weak, superficial, and incoherent, life will appear insipid, uninteresting, petty, and chaotic. It is difficult to bear the resultant feeling of emptiness, and the vacuum of our minds may only too easily be filled by some big, fantastic notion – political or otherwise – which suddenly seems to illumine everything and to give meaning and purpose to our existence. It needs no emphasis that herein lies one of the great dangers of our time.

    I am not educated in this area, and trying to learn as much as I can. But, I admit to a bias: that any system that emerges from our travails in America has to focus on a vision of the end result. In other words, what outcome does a system lead to?

    Please keep writing, I'm looking forward to it!

    www.fightingliberals.com/ in honor of Gilly

    by Terri on Sat Nov 01, 2008 at 08:51:55 PM PDT

  •  One of my favorites... (0+ / 0-)

    I've also just begun to re-read Small is Beautiful and one of the early 'eureka' moments is when Friz says that:

    Thanks for bringing up Small is Beautiful.  I derived a lot of sustinence from that in years gone by.  At this point it's an old book and some might think that it's time has gone by, but it's as relevant today as the day he published it.

  •  Where is part 2??????????/ (0+ / 0-)

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