Deep Economy 1

When talking about economics the word “market” often connotes a box like structure, not a bazaar with lively dealings. This may be attributed to the rigid constructs of supply and demand and the always assumed willingness to pay less for a good or service holding all things constant -however much I think it is true I cannot deny that this seems formulaic. In truth, however, the economic assumption of ceteris paribus or “all else constant” is rarely the case. Economics is far from formulaic and that boxy word “market” actually is quite fluid.

Late economist Frederick Von Hayek noted that within any market the price of a good contains all kinds of information such as the cost of transportation, the cost of labor, the cost of input prices, and last but not least consumer demands. That's right, the market reflects the preferences of the people operating within the market. Moreover, not just their preferences for corn chips versus potato chips but their moral and ethical outlooks. In many ways this is similar to my previous post on Truth in Love. This post is about a book that I've read recently called "Deep Economy" by Bill McKibben. The premise of the book follows,

“For most of human history, the two birds “More” and “Better” roosted on the same branch. You could toss one stone and hope to hit them both . . . Better has flown a few trees over to make her nest. That changes everything. Now if you've got the stone of your own life, or your own society, gripped in your hand, you've got to choose between them.”

McKibben's main assertion is simply that we have deified and bowed down to growth in the GDP. Meanwhile, there are all kinds of questions to answer such as whether the distribution of wealth is equitable and whether the environmental impact is sustainable. Now, he claims there is a serious trade-off between growth and a better life for Americans (he does note later that growth has significant meaning for the poorest countries in the world but claims that for Americans this is no longer true). Like past decades of ecologists who coined the phrase “deep ecology” McKibben is offering up his readers a deep economy: one that places people and the environment before profit.

Fundamentally, I agree that there are other outcomes to take into account when we are considering the way we ought to behave in a market. Also, I believe that for the market to reflect preferences for locally grown food and more renewable energy sources (like McKibben says we ought to prefer) there will need to be a large scale change in preferences or some legislation that coerces people or changes the rules.

The odd thing with the environment is that I do not know how much more I should pay for good stewardship. Markets work really well when there is information present. Prices incorporate many different costs of production, but, how do you value the cost to the environment? Scientists may be able to tell you how much it would cost them to clean up a cubic meter of pollution, but, does that tell you how much it is worth? And, if I spend my money on a more environmentally friendly good how will I change my other consumption patterns?

I'm reminded of what one professor said when he raised his hand at one of our environmental luncheons, "Can somebody please just tell me what to do? I'll do it." The more I study the environment the more I think of how difficult good stewardship really is. There are very easy ways to be a good steward but then there are larger trickier questions. Most of these trickier questions are on the large scale that McKibben is writing about.