An obsolete model – and yet no one knows it -by Scott Andrew (27 oct 2012)
It’s great to finally see some discussion in the media regarding changing the way our money works – well done Stuff.co.nz.
Yes, the problem with our economy is structural, however the issues go much deeper than most people realise or care to admit.
The current economic paradigm is inherently unsustainable at its core, due to the very nature of the underlying mechanics of the system itself. Very rarely are these mechanics discussed.
The definition of economy in Greek means ‘management of a household’. A reduction of waste and maximised efficiency is inherent in this premise. Is this the way our current model of economics is operating?
Well, let’s take a step back: What drives the global economy? Consumption. And the more the better. More consumption means more jobs, better GDP and hence enabling more consumption through purchasing power. Is that efficient? Shouldn’t preservation and reducing waste be the basis of an economy on a finite planet by definition? How can an economy based on the need for constant growth and turnover (and even an economy based on the constant need for employment) be economising anything at all?
Then there’s this thing called ‘cost efficiency’. Cost efficiency demands cutting expenses to remain competitive in the marketplace. The result: Every single product created by any corporation today (without exception) is immediately inferior by design: for the market requirement to cut creation costs in favour of lowering the output purchasing price to maintain a competitive edge automatically reduces the quality of any given item by default. It is impossible to create the strategically best, long-lasting anything in this model. And this translates into outrageous amounts of wasted resources.
Likewise, the same mechanism is also reinforcing environmental disregard, depletion and pollution – everyone is trying to save money – why do we assume people are really going to care about the environment? The logic is against it. We see this constant in the world today. If you take a moment to really step back and think about this, not only is this inefficiency a characteristic of the market model – it’s actually the fundamental driver.
Having clean, unpolluted water in your home might seem like a nice thing in gesture but the fact that money is not being exchanged for that is anathema to the economic sustainability that we’ve come to understand. So more pollution means more profit. More disease means more jobs. Ad infinitum. The bottom line is that sustainability, efficiency and preservation are the enemies of our economic system. We actually live in an anti-economy.
Then there’s the labour issue. It’s a fact that human labour is being replaced by mechanisation across the world. Quite simply, mechanisation is more productive, efficient and sustainable than human labour in virtually every sector of the economy. Machines do not need vacations, breaks, insurance, pensions, and they can work 24 hours a day, everyday. The output potential and accuracy compared to human labour, is unmatched. The bottom line: repetitive human labour is becoming obsolete and impractical across the world. And the unemployment you see around you today is fundamentally the result of this evolution of efficiency in technology.
For years, market economists have dismissed this growing pattern which could be called technological unemployment, because of the fact that new sectors always seemed to emerge to re-absorb the displaced workers. Today, the service sector is the only real hub left. However, this sector is now being challenged increasingly by automated kiosks, automated restaurants, and even automated stores.
Some economists today are finally acknowledging what they had been denying for years: not only is technological unemployment exacerbating the current labour crisis we see across the world due to the global economic downturn, but the more the recession deepens the faster the industries are mechanising.
The catch, which is not realised, is that the faster they mechanise to save money – the more they displace people – the more they reduce public purchasing power. This means that, while the corporation can produce everything more cheaply, fewer and fewer people will actually have money to buy anything regardless of how cheap they become. The bottom line is that the labour for income game is slowly coming to an end.
Unfortunately there is currently no discussion of these issues happening in the mainstream media or in the political spectrum – the underlying mechanics of the system are ignored. Continuing to ignore the effects of these mechanics is pure ecocidal insanity.
So how do we fix it? Monetary reform is a good first step in transitioning to a sustainable economic model, however certainly not a viable long-term solution for our evolutionary fitness and hence the species survival.
In the broad view, we need to move from a consumption-growth model to a steady-state economy. We need to move from a competitive system to a collaborative one. And we need a technical approach based on resource management rather than a model based on the mere mechanics of the movement of money. Humanity needs to share a new common value set based on natural law and agree to a new social contract.
New Zealand is known for innovation and could be leading the world in this transition – if only the general public were educated enough to understand the true underlying problem and the ecological urgency at hand. Society today is suffering from a widespread value system disorder.
I imagine our grandchildren will look back at us with total disbelief, saying “What were you thinking? Isn’t it obvious?”