Bluetooth or Bluejay?

Recently my boss wanted to be nice to some of her new staff members as so she thought kindly and offered us an iPad each. This threw me into a real quandry, because I am concerned about the energy embodied in such gadgetry, obviously, but also because I object to the way more and more areas of my life are mediated through an electronic machine. I have recently tried to identify birdsong and constellations with the assistance of an iPhone (not my own). I suggested some campus chickens instead but nobody thought I was serious.

The day I received my iPad I was carrying it across our admittedly rather leafy campus when I was accosted by a jay, which stood in my path and eyeballed me. I was arrested and charmed and we spent a good five minutes in a strange sort of mutual fascination. Other students came and went but both the bird and myself were undisturbed. Reading later on the web that these are shy creatures I was even more charmed.

Relearning this sort of direct relationship with our animals cousins is surely a better way to protect their habitats than reading endless dire statistics about the loss of rainforests and species. I hope this is the flavour of a conference organised at London Zoo where I'll be speaking on 25th of this month. Called, Economist as if Life Mattered, the publicity for the conference runs like this:

'What does the global economy have to do with orangutans, polar bears, spotted owls, elephants and cod? Along with countless other species, these animals are on the verge of extinction and our current unsustainable economic system is the main driving force behind the global extinction crisis. On the 25th of May, join conservation and economic experts to explore these links and outline strategies for prioritising wildlife conservation in the new economy.'

You can find the full programme here and it would be great to be joined by others who are, like me, resisting the costing and commodification of nature.

As for my relationship with my new iPad things are not going well, in spite of my request for a green cover - a lurid, vapid green, as it turns out. I notice that I was almost immediately conveyed to the 'App store' and so the spending of money is a crucial part of being an iPad owner - so much for the 'free' gift. I am also fighting the desire to download the Tetris App, which for me is rather like having 'just that one drink'. By some route I cannot understand, and perhaps with subliminal intention, my Mail function is stuck. I am not hurrying to seek assistance to unstick it.
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Resilience Hierarchy

I was delighted to spend Wednesday morning this week at a conference on the subject of Peak Money organised by the Transition Network. Economics has been a key theme of Transition since the beginning. Useful outcomes have been the book on Local Money by Pete North and the economics content of the Transition Timeline book by Shaun Chamberlain. Both are available from Green Books.

I tried to fit into the 'transition culture', although that isn't always easy for me, since my motivation is for political action as much as local practice, and the discomfort some of the transitioners feel for this sort of critique is difficult for me at times. I seem to become cast in the role of angry politico, always taking a critical position. While I like to reframe myself as the grit in the oyster, it doesn't always make for an enjoyable exchange.

I used my time on Wednesday to share some of the political-economy background to the question of how Transition Towns should deal with the economic crisis, focusing on the question 'Why waste a good crisis?' I feel that we are wasting this crisis. The reality is that only the 2008 Recession managed to successfully reduce UK CO2 emissions, which makes our point that tackling the growth imperative of the capitalist economy is vital to ensuring an adequate response to climate change.

I also felt bound to question the idea of 'peak money', which I find unhelpful in spite of the slide in Tony Greenham's presentation which was fairly suggestive of a peak curve for net lending by UK banks. My concern about the concept is that it draws a parallel between a natural, non-renewable resource, whose exhaustion is inevitable, with a socially constructed tool that we can change at will. Since much of the business of economics is precisely about creating abstractions, imbuing them with power, and then using them to acquire resources, it seems to me vital that those of us building a sustainable economy should be very clear about what is real and what is subject to social or political control.

Instead of the idea of 'peak money' I suggested the idea of a resilience hierachy, moving from the least to the most abstract. In this way of framing the economy, money comes at the bottom of the hierarchy, because it is highly abstract and (as somebody once said) you cannot eat it. Fossil fuels might be somewhere in the middle: real but enhaustible. At the top of my hierarchy will always be land, the sole and eternal source of our support. To place land back at the heart of economics must be the most important task of a green economist.
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Keen as Mustard

I spent some time last week at a very interesting conference in Edinburgh called
Just Banking. The conference was addressed by Adam Posen, of the Monetary Policy Committee of the Bank of England, who joked that he had been aware that, in our company, he would rapidly metamorphose into Margaret Thatcher, which was a relief since he was more used to being seen as a dangerous radical. His presentation was workmanlike and gave us useful information. But his proposals were typical of those who cling to market ideology even in the face of its utter discrediting. His most powerful proposal was a counter-cyclical, inversely proportional property tax, to counteract property booms, which he rightly identified as a key factor in this crash. The much more efficient solution of informal political control of housing finance, as prevailed Before Thatcher, could not be countenanced. Disappointingly, Posen failed to answer questions about quantitative easing, even though they were factual and could have no possible impact on market sentiment.

More cheeringly, I was lucky enough to have dinner with Steve Keen, a key critique of the dominance of neoclassical methods in economics. Keen is most famous for his book Debunking Economics and it became clear during our chat that his revulsion against neoclassical methods and theories goes back a long way, all the way to his students days, in fact. He is now involved in a bitter battle with the powerful neoclassical orthodoxy, for which I pay tribute to him. He has gone beyond being ignored and laughed at and has reached the stage of being fought, bitterly, personally and viciously.

In spite of his utter rejection of the nonsense of neoclassical models and assumptions, Steve Keen is still committed to the importance of maths in economics, and his own presentation in Edinburgh was mostly taken up with the high-speed presentation of a mathematical model. At the point where the whizzing models, which were calculating in real time on his slides, began to make me feel physically sick, I stopped trying to understand. Because I believe that the 'political' is just as important as the 'economy', this sort of methodological exclusion makes me nervous, so later during dinner I questioned Keen about this reliance on maths.

His response was an interesting one. Economies, he argued, are complex systems and our minds cannot encompass the complex and dynamic relationships between the different variables that comprise them. In Keen's opinion only Schumpeter was smart enough to be able to correctly work out all the complex feedback loops and interactions that are present in economic systems without the use of maths. Others such as Marx and Keynes tried, but it led to mistakes in their theory. Mathemetical modelling of systems enable us to avoid these mistakes.

I must say that I enjoyed this argument, but am not convinced by it. In my view, an understanding of the spiritual value of life and the ability to mediate between humans and the natural world are far more useful qualities for an economist than complex maths, hence my paper 'The Economist as Shaman'. This is not to rule maths out: in many cases it is, as Steve argued, efficient and useful. But maths should also be the servant of thoughtful, philosophical economists; it should never be the master of human social or political motivation.
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Three Cheeks for Democracy

By my reckoning the Dutch government is the fifth European government to fall as a direct result of the financial crisis, the other five being governments in Iceland, Ireland, Greece, and Italy. Prime Minister Mark Rutte led a coalition government and relied on the support of the charismatic leader of the populist and nationalist Freedom Party Geert Wilders. The latter refused to accept the latest round of austerity cuts and so withdrew support.

Politicians in the Netherlands are caught between two impossible and contradictory forces. On the one hand they are one of the few governments for which it is still realistic, and whose economy still makes it possible, to meet the strict deficit rules of the European Commission. The Netherlands Central Planning Bureau estimates that the deficit will rise to 4.7%, well above the 3% rule, and so further cuts are required. Meanwhile, unlike in the UK, voters in Holland have the ability to choose politicians who will resist these cuts, no matter how unsavoury their other policies, and hence the austerity necessary to meet EU rules cannot be forced through.

I am reminded of George Galloway's coarse yet appealing comparison of British politics to a 'three-cheeked backside'. It is precisely the point of our first-past-the-post electoral system to prevent the sort of fracturing of politics we are seeing now in many European countries, where voters lose faith in the orthodox, consensual politicians of the centre, leading to polarisation and growing support for charismatic politicians from the extremes. In Britain we are lucky that we only have the relatively harmless Galloway: across Europe we can witness a worrying pattern of electorates turning to demagogues of right and left to avoid the harshness of the consensus.

If the Netherlands is in economic trouble it is clear that no European country is safe. This, I assume, is why we are finally hearing some serious debate about whether cutting, cutting and cutting again is the best way to deal with an economic crisis. Even those in the financial markets, who lobbied for the deficit rules and bid up the cost of government borrowing in one European country after another, are beginning to feel nervous. After all, stable legal and political systems are essential to their profit-making activities. But whether their short-termist destabilisation of whole national economies and a whole currency area can be reversed once they see its risks to their own positions remains to be seen.
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Inside Job II

Following up on Charles Ferguson's 2010 film about the role of academic economists in propagating and protecting a financial system that was and is socially and environmentally destructive, a paper was published in the Cambridge Journal of Economics earlier this year that explored the links between academics and financial interests.

In the paper the authors focus on the conflicts of interest faced by a group of prominent financial economists. They assess 'the links among academic economists, private financial firms such as banks and hedge funds, and public financial institutions like central banks and the International Monetary Fund for a sample of 19 prestigious academic economists.' They review the statements and opinions given by these economists in newspapers and other media to assess their dual role as 'independent' experts and advocates for finance. They explore the frequency of conflicts of interest and whether the academics made these conflicts public.

Of the financial economists they chose to study, the authors found that nearly 80%, or 15 of the 19, worked with private financial institutions in some capacity. Of these 15, 13 did not disclose these connections in their academic publications. The paper deals with the situation in the US, and makes the surprising discovery that there are no standards of disclosure required of economists when they give testimony to political inquiries into banking and finance.

The authors conclude that there is 'cognitive capture' amongst a profession which is intended to offer neutral and objective commentary on economic matters. One might also call this a system of groupthink: the inability of economists who trained together and work together on what are assumed to be opposite sides of the public-private debate to challenge the hegemonic view of how banking and finance should operate. The authors propose a code of ethics for academic economists, and end with the swingeing statement:

'These same economists who mostly failed to warn of the increasing financial fragility and impending crisis also have developed a basic consensus view that favours more marketbased reforms and relatively less government regulation as a way of preventing future financial meltdowns. . . It was this crisis and similar ‘neoliberal’ understandings of economic theory, combined, in all likelihood, with
continuing material conflicts of interest for some economists, that led to loud, destructive voices for austerity. The voices of the rentier interests can be heard loud and clear in this call.'
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Argentina Claims Resource Sovereignty

The business world is reacting with horror to news that Argentinian President Cristina Fernandez de Kirchner has made a decision to take control of her nation's oil resources, by taking a 51% controlling stake in the country's largest oil company YPF. As she reasonably argues, these resources belong to the people of Argentina, and she defies the right of Spanish oil corporation Repsol to profit from the patrimony of her country.

This is another positive challenge to the neoliberal world order which we too often take for granted. YPF was a state-controlled company for 70 years, before Argentina was forced to sell it in the 1990s in order to pay off its foreign debts. Reclaiming it seems a natural part of the progression of the Latin American countries towards a new economic model that is neither capitalism nor communism but something new. While the new model will accept markets operating for the social benefit, it claims the need to exercise political control over key sectors, of which energy is surely the most significant.

From the perpsective of a bioregional economy, the desire that resources should belong to land, and that the people who live in that land should claim ownership of them seems natural. How else can people act in a responsible way towards their local environment? How else can we have a sense of economic, social and political justice?

The Argentinian move comes on the same day that, in Britain, a report has been published that paves the way for a decision to allow private companies to create environmental mayhem by extracting shale gas in the process known as fracking. According to a colleague of mine who is involved in opposing the fracking operations in South Wales, the concession to exploit these resources in the whole South Wales area was sold for a mere £1m. by the central government.

While we should, of course, fight fracking because of its risk to public health, its ability to destabilise underground rock systems, the distraction from the need for rapid energy reductions, and the likelihood that the chemicals used in the high-pressure extraction process will contaminate ground-water supplies, we should also challenge the right of our government to sell the resources of our country to a private company which faces no public accountability. In a bioregional economy, we could expect to profit from the resources we own, but we would also have an incentive to act responsibly, since the consequences of the extraction would be felt by those who benefited from them. In the global economy, by contrast, local people pay the price whether in Latin America or South Wales, while the global elite reap the rewards.
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Do Not Structurally Adjust Your Mindset

I notice that I've been averting my gaze for a while from the disaster that is political economy in 2012. I think perhaps I have just said everything I can say and become depressed at the supine nature of 'public opinion'. How can it be that the majority of populations in countries across the well-educated, sophisticated world of Western Europe are accepting the trashing of the public sectors their parents and grandparents fought so hard for? How have the financiers and their pet politicians managed to pull off this amazing coup? If you still have the energy for convince your austerity-loving friends about the Big Lie, then you will find the deficit-myth website a helpful ally.

I find something ironic in the fact that the leadership of the World Bank was contested between Nigerian finance expert Ngozi Okonjo-Iweala and Jim Yong Kim, who looks like he might be from some country other than the US but actually isn't, just at the time when the focus of the Bank's attention is shifting from the traditional majority-world victims, to a new range of suckers in the more temperate parts of the globe. With Obama's backing Kim was always going to be laughing all the way to the Bank.

The purpose of a structural adjustment programme and an austerity programme is essentially the same. Both grow out of debts taken on by governments without the conscious consent of their peoples for reasons that benefit a tiny minority. Both result in cuts to public services or social programmes that the vulnerable depend on. Both ensure that, through high levels of public debt, the wealth of nations is extracted by corporate financiers. The policy that was invented in Africa and tested in Latin America is now being imposed in Europe.

The Bretton Woods project reminds us that the BRICS are forging a new path to an economic future that rejects the elite, neoliberal, expropriative economy of the 20th century. The battle is taking place between the global institutions, with the IMF and World Bank sticking to the Washington consensus, while UNCTAD and UNESCO take the part of the poor. Obama may have kept control of the World Bank, but the world's peoples need to find solidarity in rejecting its destructive policies. The similarities between austerity for the rich and structural adjustment for the poor should help us to build this solidarity.
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