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New economy

15/02/2015

Answer to Patrice Aymes article

https://patriceayme.wordpress.com/2015/02/13/picking-piketty-peeks/

 

The major economic problem the humanity faces at the beginning of the 21 century, is the limited capacity of world resources to sustain the existing trend of world population growth together with increasing demand for ever growing consumerism, that is spreading gradually to most parts of the world. When speaking about limited resources, usually people tend to think about limited energy resources or other row materials. But the technological development trend showed us, that when such a problem occurred, the science and technology found its way to solve this problem within reasonable period of time. So when I speak about limited resources I mean the world itself, as a living organ, where interlocked ecological processes created a certain balance that enabled life on earth to evolve, until reaching todays point, when human consciousness and cognitive processes gave to humanity tools to thrive and farther develop toward higher level of consciousness. On the other hand the same development gave to humanity tools to destroy the delicate balance on earth that enabled all this to happen.

The other very important economic problem is the uneven distribution of the wealth between different regions and cultures. The uneven distribution of the wealth is not only a problem of participation in the welfare the modern states are capable to create, but also diversion of the population growth from the developed rich world, with developed education systems, to poor countries, with very limited education system, or education system that opposes the modern values, of openness to diversity in cultural, ideological, and belief values. Your article about Pickett’s book is focused on the uneven distribution of the wealth in the modern developed world. I would say this is a local problem and less a global one, but still an important one, since we all live in this local region 🙂. The unequal income distribution of the wealth is a direct result of capitalistic system, that tends by its nature to prefers the yield income upon the income out of work. This phenomena of “yield economy”, gets positive impulses when there are no events to interrupt it, like, war, revolution, dramatic change of leading elites, etc. Without these only public political intervention that interrupts the natural flow of the capitalistic system, like progressive taxation, social security, well focused public spending can make some difference in the natural trend towards growing uneven distribution of the wealth.

I have difficulty to believe, that any major change can be done within the existing economic system, so much focused on ever growing need to increases the yield on capital. To me seems almost inevitable that we are heading towards a new economics paradigm change, its nature is unpredictable. The phenomena of global unrestrained money printing, called “Quantitative Easing”, has to have at the end of day some major consequences on the global economy. No one, (not even Krugman) knows what consequences will have this economic policy to the world monetary system. I don’t want to be the new Roubini, (the doom day economist), but see my statement above as a prediction to some kind of catastrophic event in the future.

Back to the issue of yield driven economy, this system has to be changed and better in some organized way than as result of some catastrophic event, like world war, revolution, world ecologic collapse etc. I personally focus most my spare time to come out with some idea of an economic-political system, not based on yield and not on centrally managed economy, that potentially could cope with these major problems.

2 Comments
  1. I agree that two major points you raise will have unforeseeable consequences in the future. There first is limited resources. It is not only oil, and oil itself is replaceable if we really devote our attention to the matter. However, there are number of elements that are being depleted (in terms of easily accessible resources) at an increasing rate, for example the finger driven tablets have consumed about half the world’s easily accessible indium already. There are a number of elements in a similar situation. What is perhaps a bigger problem is the limited land supply, and an increasing population. Soil quality is difficult to maintain at the rate we are harvesting from it, and the world supply of easily accessible phosphate will run into difficulty in a few decades.

    All of this could probably be dealt with through clever science and engineering, but the second problem is the consequences of quantitative easing, and the huge debts and uneven distribution of money. I have no idea how this will resolve itself, but it is unlikely to be pleasant or fair for many.

    • Ian, thanks for your comment. The problem of limited resources is apparently the next major economic problem the humanity will have to face. You emphasised the limits of some elements and other natural resources like indium and the phosphates plus the land supply. I personally don’t see this as a major problem, since these limitations if reached still can be either overcome or a new social political system can solve them. What I am speaking about as a major limitation to the yield based economic system, is the economic trend endangering the world as a living organ system. The trend of continuous economic growth, caused by need for ever growing yield on investments in one side and the desire of underdeveloped world to catch up with the developed world causing relatively high world economic growth (even in bust periodes) can bring the world to a system collapse, that there are no tools to predict or solve. The prediction tools are quite good at times when the things behave as usual, but are entirely useless at times of system collapse.
      If to speak about the mainstream economic ideology, accepted by whole spectrum of economists is, that healthy economy is a growing economy, in which everybody, the capital owner rent earners, the employed wage earners and also the government can be satisfied. Yet the world is limited, not just as a resource supplier, but as a stable ecologic system.

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