Credit Crunch or Debt Swamp?

The much-discussed interview with the Chancellor published in this morning's Guardian is intriguing. It is so unusual for a politician to be this honest, or for anybody involved in the neurotic world of finance to say anything even slightly negative, that his assertion that this may be the worst economic crisis for 60 years is very unusual indeed.

The first question is, why on earth did he say that? Rapidly followed by the second: why choose the post-war period to compare with, when the economy was on its knees because of over-exploitation and exhaustion rather than a long debt-fuelled binge. A devastated economy is not a problem, so long as you have able and active people and sufficient resources to rebuild what has been destroyed. An over-indulged, greedy, wasted economy, still leeching off a munificent but abused planet is another matter entirely.

Honing our skills for reading between the news might help to explain what the Chancellor is up to here. Is this the first step towards a 'we're all in this together' approach to economic management, which will involve us all tightening belts, accepting a reduced standard of living, and co-operating rather than competing for once?

This is just the sort of approach a Green chancellor might have to adopt. However, it will never work unless the Chancellor has the courage to reclaim the power of economic management, and especially the finance sector. This power was ceded by the Thatcherites, with New Labour joining in to prove to the City that they were no threat. In the austerity scenario Darling may have in mind, the reduced standard of living would also have to take us to a future of equality--so no good the ordinary employee living on less while the elite can still sup champagne and enjoy foreign holidays.

Most interesting of all, perhaps, is the Chancellor's admission that he did not expect the bubble to burst, or, in his words, 'No, no one did. No one had any idea'. Well that isn't strictly true. In the circles I move in the crash had long been predicted. Could it be that what the Chancellor had not understood is how money is made as debt and how insecure this makes us all? Has he learned that lesson now? Is there any prospect, then, of not only banking reform but even monetary reform?

For those who have been wondering where I have been for the past month, I can let you know that I have been enjoying an enforced absence from cyberspace, thanks to the utter inadequacy of BT, the telecommunications monopolist. While I don't use them for either phone or internet services, they can still manage to make it impossible for my ISP to restore my Broadband. This post has been made via a dial-up connection--hence no pictures. Normal service will be resumed whenever BT can be persuaded to wander to the local exchange with a screwdriver. Tweet

The Richness of Life

I've just had the pleasure of reading Cider with Rosie for the first time. Like everybody else I'm amazed I never had the opportunity before - it was a school favourite everywhere except my school, it appears. The explanation must be to do with my Victorian schoolmistresses fears about the possibile influence on tender minds of the scene under the hay wagon. They clearly felt that the face-slashing reality of Brighton Rock was more suitable for pre-pubescent girls.

For whatever reason I'm glad that this gem has been saved for my middle years and now comes to me at around the same age Laurie Lee was when he wrote the book - and very nearly in the same place as well. The village of Slad is only a couple of miles up the road from where I'm writing this. And I have been spared the stifling, smelly, repressive atmosphere of school as a permanent association with the book.

Everything about Lee's writing is rich, as is the childhood he describes. People who live around here and who knew the author and still know his widow tell you that it isn't realistic. That he has rose-tinted spectacles on. The major criticism is that he doesn't portray the family as poor enough. The spendthrift single mother and her frequently bootless, snotty-nosed children as seen from the outside do not match the wealth that Laurie Lee clearly found in the Gloucestershire countryside.

I was listening to Haydn's Creation recently and for the first time - I think because it was sung rather than spoken - thought about the second sentence of the bible: 'The Earth was without form - and void'. This is how death feels to those who live close to the earth: an absence of the teeming, messy variety of life at this time of year. As we have used technology to gain mastery over nature so we have strangled and stifled this life.

The UK economy is based on financial services - 73% of our economy is now in the services sector, and most of this is financial services. What could be more alien to life than this 'industry' which lures us through life with the attraction of money, especially money via pensions (by which time we are really too old to enjoy it and life has passed us by) and persuades us (the insurance 'industry') that we can use money to prevent the accidental disasters that are an inevitable part of life. A paltry attempt to use the meaningless and worthless construct of money to keep life at bay. Tweet

Just Use It!

As the recession deepens, businesses will fold. They will no longer be needing the resources over which they have exerted control in an era when money determined what happened in the economy. We need to shift towards an economy that responds more to energy - and the energy of local people rather than fossil fuel energy.

The recession will offer many opportunities. As car-sales operations fold, forecourts and salesrooms will be unused; the failure of shops will make lots of premises available on the streets of our towns and cities; paddock-owners will have no use for their fields without the profits earned by businesspeople being spent on children's riding lessons. There are opportunities here for using these resources to rebuild the local economy. But how will we deal with the money issue?

Money is the one resources that will be less plentiful - but that offers no problem once you step outside the capitalist economic paradigm. Within a capitalist economy you can't do anything unless you have money; in a sustainable economy money is merely a means to facilitate transactions. Other resources should be not left idle and useful economic activity should not be prevented just because of a historical anomaly.

Several years ago, when I still lived in Aberystwyth, a jaunty anarchist named Bob Maycock led a group that 'liberated' a local defunct night-club and turned it into the People's Palace. For six months we did as we pleased there - and did not need to pay anybody for the privilege. After that, the long arm of the law ensured that, as before the people's arrival, the premises were boarded up and left useless once more.

This clearly identified the law as on the side of the owners and of property. If not, it would permit the use of unused resources by those with genuine need - whether for homes or premises to reskill themselves and provide their own food and clothing. This was not always the case: under Roman Law if land had been left idle for a certain number of years, landless peasants were permitted to make use of it. A similar law applies in Brazil today. In Europe we pay farmers to leave their land idle.

During Argentina's disastrous economic collapse in 2001, empty factories were 'reclaimed' by their workers. They could not tolerate the illogicality of productive resources sitting around, while people were unemployed, and others wanted to buy the goods the factories had produced. This setting right the inefficiencies caused by an economy where money dominated has been documented by Avi Lewis and Naomi Klein. It should provide inspiration for the next steps we will take to use our own recession to the advantage of local communities. Tweet

Time to Get Growing

There is a lot of noise these days about the importance of food security - even the government have jumped on this bandwaggon, following after Jamie Oliver and the legion TV chefs. Suddenly, everybody is growing their own. Most of the chat in the media around the importance of locally grown food focuses on the climate impact of food shipments and transshipments - of the absurd, global conveyor belt of food that ensures we can have strawberries at Christmas and rambutan with our cheesecake.

I recently had the pleasure of hearing Paul Mobbs give his Less is a Four Letter Word presentation, which makes clear that eating from our local soil could eliminate getting on for one-third of all our carbon dioxide emissions. Growing your own food can make a more significant impact on climate change than any decisions you make about personal transport, assuming you have already given up flying.

And if you're wondering what to grow, it might be best to avoid the exotic salads and weirdly coloured beets and go for the humble potato. 2008 is the year of the potato and in an era of concern for food security I can really see why. The humble tuber is the vegetable equivalent of the downtrodden housewife - year after year it can keep us alive, healthy and happy and yet is never accorded love or respect. It is also uncomplaining about soil, although we have not been wise about breeding to deter blight.

While researching FAO statistics yesterday (the UN Food and Agriculture Organisation) I realised just how serious our food deficit really is. The difference between food imports and exports in this country is around the same, in terms of magnitude, as that in China. Both France and the USA - countries that we have harangued at trade negotiations for protecting their farmers - still have healthy trade surpluses in food. The map shows that some of our fellow EU members are just as vulnerable, although few have the density of population that we do.

As the global food market grows more competitive what do we have to trade in return for the staples of our existence? Those famous 'services' that now make up 73% of our economy. I wonder how many customers we will have for our financial services over the next year or two. Will we soon be asking how many investment analysts it takes to grow a carrot, rather than to change a light bulb? Tweet

What is Green Economics?

I recently consulted the wikipedia entry on Green Economics to discover that it has been eliminated. Somebody has translated it into a forwarder to 'ecological economics'. Whether this occurred through ignorance or political manipulation is not clear to me. What is clear is that we need to rebuild a decent entry on green economics. I'm going to start the process and would appreciate your support.

A rather glib phrase we often use as a short-hand for what green economics is about is 'Economics for People and the Planet' - what does this mean? For me a key difference between environmental, ecological and green branches of economics is that, while all three take the environment seriously (in contrast to neoclassical economics), green economics puts social justice at the heart of the discussion.

The typescript for my book which is also called Green Economics (imagination failure here I'm afraid!) is now with Earthscan and due for publication later this year. Producing it has made me think long and hard about what green economics might be, and I'm going to offer some tasters of the content of the book in this blog over the next couple of months.

So, to begin at the beginning, we need a definition. One that establishes why it is worth having green economics in the first place, and what distinguishes it from other branches of the subject. Here are some of the key pointers so far as I am concerned:

Green economics broadens the perspective of ‘economics’ beyond the concerns of the ‘rational economic man’. It seeks to include the perspectives of those who are marginalized within the present economic structure — primarily women and the poor of the world—as well as taking seriously the needs of the planet itself.

Green economics has not grown up as an academic discipline but from the grassroots. It is distinct from environmental economics, which uses conventional economics but brings the environment into the equation; and ecological economics, which is still a measurement-based and academically focused discipline. Green economics is rather about people and the planet.

Green economics seeks to move the target of our economy away from economic growth and towards flourishing, convivial human communities which do not threaten other species or the planet itself. In place of economic growth we should move towards a steady-state economy.

Green economics is the first significant alternative to capitalism that is not communism. It offers a different economic paradigm to challenge neoliberalism. Tweet

When do we want it? Now!

The Joseph Rowntree Trust have produced some new research to attempt to determine how much money we need to live in a way acceptable to ourselves and our society. The outcome of months of number-crunching and a large investment of dosh is £6.38. That is apparently what the minimum wage should be raised to in order to prevent lowly paid Smiths falling behind Joneses next door.

This is a simplistic and frankly disppointing conclusion from a Trust who can usually be expected to ask deeper questions. It's years now since I published my paper 'Sen and the Art of Market-Cycle Maintenance' and yet those with a properly placed concern for the psychological well-being of the less well-off segments of society are still following their relative definition pf poverty.

Where does this definition come from? Who decides that we are deprived if we don't have a DVD player today? How long will it be before we need an i-player or foreign holiday in order not to be deprived? Surely it doesn't take much nous to work out that the constant increase in our 'needs' is determined by marketeers who are driving the relentless economic growth that is rapidly eroding the planet we rely on just to survive.

How did this research fail to take note of Richard Layard's work showing that it is not more stuff that makes us happy but better quality relationships?
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Designing Nature's Way

What would it mean to design products and processes the way Nature does? This is a question posed by the industrial ecology movement. According to their website:

Industrial ecology provides a powerful prism through which to examine the impact of industry and technology and associated changes in society and the economy on the biophysical environment. It examines local, regional and global uses and flows of materials and energy in products, processes, industrial sectors and economies and focuses on the potential role of industry in reducing environmental burdens throughout the product life cycle.

Jonathan Porritt argues the importance of encouraging businesses to ‘match the metabolism of the natural world’. By taking ecology into account when they create production systems designers can gear them to nature’s metabolism. An example might be making sure that all the unwanted by-products from production can decompose in a way that aids soil fertility. Or creating 'buildings that, like trees, produce more energy than they consume and purify their own waste water'.

Biomimicry - or deriving specific design ideas directly from nature - is another aspect of industrial ecology. The most famous product 'invented' in this way is Velcro, which was famously derived from the Burdock's 'burrs' which its inventor found in his dog's fur after a country walk.

A more interesting example is the tunnelling machine invented by Marc Brunel - the father with the bizarre choice in names - needed for his ill-fated project to tunnel under the Thames between Rotherhithe and Wapping between 1825 and 1843. He was impressed by the tunnelling properties of the wood-boring beatle that destroyed naval ships, the Teredo navalis:

He examined the perforations, and subsequently the animal. He found it armed with a pair of strong shelly valves which envelops its anterior integuments, and that, with its foot as a fulcrum a rotary motion was given by powerful muscles to the valves, which, acting on the wood like an auger, penetrated gradually but surely, and that as the particles were removed, they were passed through a longitudinal fissure in the foot, which formed a canal to the mouth, and so were engorged. To imitate the action of this animal became Brunel's study.

His explorations inspired the design of a machine based on this animal - a curse to the British naval fleet - which set the standard for burrowing, tunnelling machines. Brunel pere is also a fine argument for being liberal about accepting refugees. He arrived here fleeing from revolutionary France and invented machines to mass-produce pulley-blocks and soldiers' boots that were the unglamorous explanations for British victories in the Napoleonic Wars. Tweet