[p2p-research] Scientific American: Does Economics Violate the Laws of Physics?

[Paul D. Fernhout]

Ryan Lanham wrote:
> There are three "big" questions in these discussions as I see them.
> 
> If Paul is even remotely correct, and I do not dismiss his ideas at all, he
> is onto the biggest one...which Michel is also nipping at and I am starting
> to blog...which is, what will be done with all the people?  This really is
> fundamental.  I fear the worst.  Others see great futures.  I see
> holocausts.

Both possibilities are suggested here:
   "Manna"
   http://www.marshallbrain.com/manna1.htm

But Marshall Brain's story leaves out other possibilities (embedded links on 
that page which I wrote):
http://www.beyondajoblessrecovery.org/2009/10/03/why-limited-demand-means-joblessness/
"""
These are some ways to deal with increasing joblessness, even if our economy 
recovers for those who still have jobs or money, which will be explored in 
more depth over time:
     * temporary measures like unemployment insurance and retraining funds, 
and when those fail, letting people live with relatives who still have jobs 
or be homeless (the USA now has one million homeless schoolchildren, an 
amount that has doubled in the last two years);
     * government public works like in the 1930s (infrastructure, arts, 
research, medicine, etc.);
     * a “basic income” for everyone, essentially Social Security and 
Medicaid for all with no means testing;
     * improved local subsistence like with 3D printing and organic gardening;
     * a p2p gift economy (like Wikipedia and Debian GNU/Linux);
     * a shorter work week (like tried in France);
     * rethinking work to be more fun so it is done as play;
     * alternative currencies or other forms of exchange like barter or more 
formal rationing;
     * increasing advertising to entice people into more debt (one cause of 
the current economic crisis as the debt bubble burst);
     * intentionally producing shoddy merchandise or things with planned 
obsolescence, perhaps encouraged by promoting faddism in the culture;
     * more prisons (employs guards and keeps people out of the labor pool);
     * more schooling (employs guards/teachers and keeps people out of the 
labor pool) while suppressing true education; and
     * more war (employs guards/soldiers, blows up and wastes abundance, and 
kills or disables workers to keep them out of the labor pool).
"""

> Like the newspaper trends, the moves toward robotic replacement of labor is
> simply undeniable.  It is happening...economists call it "productivity."
> That is, doing more with fewer people.  And yet we have more people.  So
> that means more "doing."

Which is great, as long as everyone has access to the basics they need to 
live and do. But, our system is not set up that way, with a few holding most 
of the wealth, and with income for most people supplying the cash they need 
to buy food. So, without redistribution of wealth, most people without 
access to land will starve, and those who can live in subsistence from 
gardens will be materially poor in other ways. Redistribution of wealth is 
ongoing through taxes, but is often, in the USA, redistributed in 
questionable ways (upwards to the rich, or wasted in the military, or 
diverted to expanding proprietary business rather than underwrite 
FOSS/FreeContent/FreePatents).

> That begs the second big question...Can growth, real growth, continue?  If
> not, why not?  That is the question where neoclassical economics comes into
> doubt.  I think the idea of simple models like the Solow Growth differential
> equations I struggled with 25 years ago as an undergraduate in Hugh Rose's
> class on them is rapidly passing.  

Looking up your reference:
   "The Solow Growth Model"
   http://www.econmodel.com/classic/growth/index.htm
"Production is given by the production function Y = K^a(AL)^1-a, where Y is 
output, K is capital, L is labor, and A is a labor-augmenting technology 
factor.  The capital stock increases in a given period by the amount sY - 
dK, where s is the savings rate and d is the depreciation rate.  The labor 
force grows at rate n, and the technology factor A grows at rate g. "

See, there's your problem. :-) K for capital mixes imaginary fiat dollars 
and real physical land and real physical machinery. That is madness. :-)

We need to distinguish between physical growth and renewal, and the movement 
of fiat dollars. The two are not the same thing. It would be like confusing 
hardware and software.  Even as our expectations about software tend to 
shape the hardware we make. Really, it's even worse, since software is a 
real thing. It's like confusing the hardware of a supercomputer and the 
current voltage on a databus in the computer somewhere. Lunacy.

As hyperinflation shows, the value of paper or digital money is entirely in 
the human imagination. Unfortunately, as WWII shows, a disturbed human 
imagination can have big effect on the real world.

> We know that the earth is, for producible
> resources, a closed system.  Energy from the sun is real, but transforming
> it to useful work is something different...and quite possibly a closed
> system as well.  

I've got a solar panel. It works. :-) Trust me on this. :-) Honest. :-)
(Well, you shouldn't trust me on that; I never tested it; I bought a big 
panel before the Iraq war started just in case to run a laptop, as I thought 
biological retaliation was possible inside the USA. Thankfully, I was wrong.)

Still, I doubt all these people are lying:
   http://en.wikipedia.org/wiki/Solar_thermal_energy
   http://en.wikipedia.org/wiki/Photovoltaics
   http://en.wikipedia.org/wiki/Renewable_energy

We're seeing exponential growth of renewables, reaching near 100% in twenty 
to thirty years. It's a non-issue as far as I'm concerned. Even with lots of 
work to be done. And even as not understanding that this is a non-issue may 
lead to war.

> The jury is out, but for now, no one has advanced a
> realistic plan for movement to a post market, energy abundant world that is
> desirable to most people or most decision makers.

Well, that may be true. Maybe we need some simualations?

I keep getting back to needing to dust off this work that got shelved when I 
had a kid:
  http://savannah.nongnu.org/projects/simulchaord
"This project is mainly to develop simulations of chaordic organizations, 
processes, and systems under the GPL license, with "chaordic" used as 
defined by Dee Hock at http://www.chaordic.org and in his book "Birth of the 
Chaordic Age"."

And I've ended up writing more since.

I think some good simulations could help a lot in understanding this, and 
forging a better economics of abundance, so people can play with the ideas 
and assumptions.

> That begs the third big question which is, I think, the fundamental one of
> this Foundation:  Can people find a path away from competitive,
> property-based systems to something that is productive and desirable?

Again, simulations using individual based models of economic actors might help.

> Again, the jury is out.  Most of us, I think it is fair to say, hope so.
> Some (perhaps most obviously Stan and myself) have grave doubts.  If we
> cannot, I think my dystopian future is highly likely.

It remains to be seen. One bioengineerd plague is all it takes to wipe us 
all out.

Maybe even maybe just one GMO produced for other reasons:
   "Klebsiella planticola"
   http://www.saynotogmos.org/klebsiella.html
"In the early 1990s a European genetic engineering company was preparing to 
field test and then commercialize on a major scale a genetically engineered 
soil bacteria called Klebsiella planticola. The bacteria had been tested--as 
it turns out in a careless and very unscientific mannner--by scientists 
working for the biotech industry and was believed to be safe for the 
environment. Fortunately a team of independent scientists, headed by Dr. 
Elaine Ingham of Oregon State University, decided to run their own tests on 
the gene-altered Klebsiella planticola. What they discovered was not only 
startling, but terrifying--the biotech industry had created a biological 
monster--a genetically engineered microorganism that would kill all 
terrestrial plants. After Ingham's expose, of course the gene-altered 
Klebsiella planticola was never commercialized. But as Ingham points out, 
the lack of pre-market safety testing of other genetically altered organisms 
virtually guarantees that future biological monsters will be released into 
the environment."

> This third question circles back into the first in an Oroborus style.
> 
> What seems clear is that nearly all major world philosophies are predicting
> varying levels of crisis for the next 20-50 years.  

Well, to be fair, and skeptical, that is usually a fairly profitable thing 
to say. :-)

> So far, those crises are
> not hitting home to most people.  

How about ten million (or whatever) unemployed US Americans with next to no 
prospect for ever having a job again? How is the US economy going to create 
ten or twenty million "good" jobs?

"U.S. Suffering Permanent Destruction of Jobs"
http://www.beyondajoblessrecovery.org/2009/10/05/u-s-suffering-permanent-destruction-of-jobs/

Or from:
http://www.beyondajoblessrecovery.org/2009/10/18/obama-looking-at-all-options-for-creating-jobs/
"The deepest issue is that the US economy has essentially created no net new 
“good” jobs for decades. Sure, some good jobs have been created, but far 
more have been lost. By 1950s standards of “good”, think about jobs that are 
not too hazardous to physical or mental health, pay enough to raise a family 
on just one income while owning a house, and have health benefits and 
retirement benefits. Or, essentially, pay enough to be solidly middle class 
on one job. By those standards, there are very few “good jobs” in the USA. 
Granted, some of this is also about rising consumer expectations in the USA. 
But not all. The US economy has been unable to create any net increase in 
good jobs for decades, and instead has been overall shedding “good jobs”, 
like through offshoring, through increased automation, and through better 
designs that are longer lasting or easier to produce. So, what is different 
about now that we should suddenly see lots of good jobs created?"

 > Change is not in the air except amongst
> futurists...and change is always in the air for them.

:-)

> Great questions...lots of attempts at answers.  None is so far compelling to
> me.

What would make an answer compelling for you? Would a good computer 
simulation help? One where you could play with the assumptions and see what 
happened?

I just posted something about this in regards to the OM list,
http://groups.google.com/group/openmanufacturing/msg/42a8661a69ce16f7
but maybe the issue is better discussed here? In terms of a much more basic 
simulation?

As I said there:
"""
So, for example, let's say someone put in a simulation of interacting agents
that formed some sort of simulated economy making simulated things in
relation to some simulated demand. With a simple GUI. Maybe even something
not much more complex that the Clojure ant simulation at the start.
    "Clojure Ant Simulation links"
    http://www.lisptoronto.org/past-meetings/2009-05-clojure-ants-demo
    http://blip.tv/file/812787
    http://groups.google.com/group/comp.lang.lisp/msg/a86c91091ae16970
"""

??? :-)

This relates also back to this discussion we had:
"[p2p-research] FOSS modeling tools (was Re: Earth's carrying capacity and 
Catton)"
http://listcultures.org/pipermail/p2presearch_listcultures.org/2009-August/004130.html

Does the P2P Foundation wiki have a section on computer simulation of 
various economic networks and analysis of such models?

> Ryan
> 

--Paul Fernhout
http://www.pdfernhout.net/