Sacking the Temple of Ego-Nomics
As practically every bit of media is speculating how the macroeconomic tumult will slosh down into our day-to-day lives, it's hard not to wonder whether we are seeing the first cracks in the citadel of "Ego-nomics."
On a more macro scale, it's hard not to wonder whether we are seeing the first cracks in the citadel of "Ego-nomics." Ego-nomics is a term I've coined for the 18th century construct typically described as Adam Smith's "invisible hand." Under ego-nomics the only things that are truly invisible are the non-economic impacts of a transaction (pollution, exploitation, extinction), which are aptly described as "externalities."
When Mr. Smith was alive there were barely 700 million people on the planet, and for all intents and purposes there WAS no discernible impact on people and the planet from economic transactions. However, now that we have nearly 10 times that number, the burden of human consumption and waste has taxed natural systems to their breaking point.
Unfortunately, ego-nomics will never be able to solve our disharmony with the planet because no matter how many "externality adders" (pollution taxes, carbon prices, etc.) you add, at the end of the day the disconnect between the economic transaction and its impacts remains.
"Eco-nomics," on the other hand, is a 21st century concept that actually embraces the REAL laws of the planet-the ones that apply to ALL species, not just one: chemistry, biology and physics.
Under eco-nomics, money has no time value so that costs and benefits do not disappear in 20 years and future generations are not harmed at the expense of the present one. Rather than rewarding companies for depleting finite resources (e.g. depletion allowances), extraction is priced according to how much the final product can be reused or recycled. Fossil fuels or other energy sources that deplete finite stocks would be the resource of last choice compared to renewable energy sources (the fact that solar and other renewables are more expensive than coal is prima facie evidence that ego-nomics is an outdated paradigm). Materials and processes that generate persistent toxins would be nearly infinitely expensive or illegal.
The concept of "externality" has no meaning in eco-nomics; just as there is no waste in nature, eco-nomics accounts for the lifetime chemical, biological and physical impacts of the economic transaction.
So how do we transition from Ego-nomics to Eco-nomics? An excellent question, but one that is ultimately not knowable. Three things are needed for change: 1. Dissatisfaction with the status quo, 2. A clear vision of the solution to the problems of the status quo, and 3. A clear path from problem to solution.
While dissatisfaction with the status quo is growing, it definitely is not at the point where wholesale clamoring for a change is occurring. Sadly, I don't think this will happen until it is too late, by which I mean the environmental problems we have set in motion will be too far along to mitigate or adapt to, which only leaves suffering.
Developing the Eco-nomic solution to Ego-nomics involves more than just modifying a few equations, it really will take an entire paradigm/consciousness shift. If history is any indicator, a mental leap of this magnitude could take 200 years to fully manifest.
This shift would need to be on the order of the shift from the Ptolemaic geocentric model of the universe to the Copernican heliocentric model. In 1543, the year of his death, Copernicus posited that the earth in fact circled the sun and not vice versa. Given how controversial this was to the theology at the time that the sun revolved around the earth, it's little surprise that Tycho Brahe tried to use Copernicus' math to prove that it was indeed the earth that was fixed and immutable. These ultimately futile mathematical gymnastics remind me of the tortuous economic "fixes" being proposed to curb the most egregious impacts of human activity on the future well-being of the species.
In the early 1600s, Galileo's telescopic observations confirmed Copernicus' "inconvenient truth" and his aggressive promotion of heliocentrism caused him to be condemned as a heretic in 1633. Although the heliocentric model continued to gain among the scientific community, the Ptolemaic and Tychonic systems were predominant through the 17th century. Indeed, it wasn't until nearly 100 years later that heliocentrism was accepted by theologians and the public at large.
My guess is that the Temple of Ego-nomics will crumble long before 200 years passes, mostly because the physical evidence of the failure of conventional and modified ego-nomics — first popularly noted by Rachel Carson in 1962 — will become overwhelming by 2050. How quickly and effectively we can define and move to Eco-nomics will determine the kind of lives our children and grandchildren will live.
Rob Watson is the executive editor of GreenerBuildings.com as well as a globally renowned figure in the green building movement.