Note: We’ll be gradually uploading chapters of the book for online reading. Those already uploaded are underlined below and can be accessed by clicking on their titles.
How this book came about.
Part One – The Evolution of the “theory”
Chapter 1 On faith, keeping it and losing it
This book opens with an explanation of the term “faiths” used in the book and goes on to discuss the inertia of established ideas. It describes economics as an orientation system for a market society and argues that bad economics has become a source of disorientation which serves the elite well.
Chapter 2 Economics and economists . . .
This chapter connects economic theory to the role that economists play in society and the kind of people that they are likely to be given their social role as part of the elite. It explores themes such as elite psychopathology, the way that observation changes that which is observed while that which is observed changes the observer.
Chapter 3 Early economic thought from Aristotle to the “invisible hand”
The chapter covers the early history of economic thought as slave owning classes reflected upon “self-actualisation” and on the management of their households and estates. Medieval economics was a branch of moral philosophy taught by monks and yet the subject subsequently evolved to justify robbery and enslavement in service to the rising merchant class. Economics became, in effect, a quasi-religion. The new original sin was “scarcity” while the new chief virtue has become “efficiency”.
Nineteenth century economics is described in this chapter as a subject used to train a psychopathic imperial elite – this is illustrated by the policies recommended by economists to manage famines in Ireland and India. The poor had only themselves to blame for their desperate state.
Chapter 5 Specialisation and trade – David Ricardo vs Frederich List
What Schumpeter called the “Ricardian Vice” was a mode of reasoning in which the required conclusions are buried in the assumptions of an argument. The free trade argument of David Ricardo are described in these terms and unpicked. The ideas of the German-American economist Frederich List challenged Ricardo’s view.
Chapter 6 Calculating Pleasure and Pain
Micro-economics has a philosophical foundation – preference utilitarianism. Jeremy Bentham’s clunky one dimensional understanding of human beings and human society still underpins the thinking of economists. (TEXT BOX: Jeremy Bentham’s Rational Punishment)
Chapter 7 Isn’t it time to bury Jeremy Bentham? Utility theory deconstructed . . .
Mainstream micro-economics works from a model where consumers are imagined choosing between just two commodities. The theory is unworkable in a multi-product world. The “prospect theory” of Daniel Kahneman and Amos Tversky is contrasted to utilitarian thinking. People are loss averse in an uncertain world. Kahneman’s and Tversky’s ideas open a can of worms for mainstream micro-economics.
Chapter 8 Economists as a priesthood – theologians for the love of money
Some of the ridiculous assumptions on which much of mainstream economics is constructed are explored in this chapter – for example the methodology that stresses individual decision-making, the assumption that decision-makers have the information that they need, the assumption of honesty, the default assumption of competition. (TEXT BOX Labour market competition as an alternative to corporal punishment according to Hayek).
Chapter 9 “Rational economic men” in love, politics and everyday life
This chapter explores the assumptions about human nature on which mainstream economics is based. The description of “rational economic man” ignores most psychological and psychotherapy understandings of people.
This chapter about the power elite on display and the economics of Thorsten Veblen covers topics like conspicuous consumption and the consumer society, branding and the manufacture of wants. The role of advertisers is explored as well as the way that attention grabbing has become an economic sector that affects the quality of life radically and for the worse.
Chapter 11 Happiness or Authenticity? To have or to be?
The chapter draws on the ideas of Erich Fromm and, more recently, Oliver James, to describe the problem of Affluenza. It critiques the recent enthusiasm of some economists like Richard Layard for a theory of “happiness” and “positive psychology”.
Information is lost as well as gained during the processes of economic development and change. There is a great deal of difference between direct knowledge and knowledge that is taken in through a variety of media. Much of what we take for granted is actually better understood as “consensus trance”. To orientate to the world properly we need to have a proper feel for the huge amount of what we don’t know – and there are multiple categories of unknowing.
Public health is an alternative indicator of well-being and is strongly correlated to levels of equality or inequality. Greater equality means greater well-being for everyone and a smaller need for the state – yet inequality has been increasing dramatically.
What economists call “externalities” are not unusual or a special case, they are ubiquitous. They are rooted in private property and the relationships of market society. The way in which non market societies protect bio-diversity through totem arrangements is described.
Chapter 15 Ethical disconnections and re-connections – corporations and NGOs
Externalities involve ethical choices. The mechanisms that allow corporate actors to distance themselves from responsibility from their anti-social and anti-environmental choices are described – for example the role of corporate personhood and evasions of regulation, taxation and control. NGOs and Civil Society Organisations have evolved to counter unethical corporate choices. Unfortunately they are often co-opted and neutralised.
Part Two – Economics, Land and Nature
Chapter 16 Indigenous Economics
Mainstream economics regards environmental protection as a matter of finding the “right price” for environmental preferences. This is not how indigenous people think about environmental issues. The chapter contrasts the mentalities of people that belong to places vs the mind-set of the population when places belong to people. There are differing epistemes in different societies and “traditional environmental knowledge” is a totally different way of knowing to that taken for granted by economists.
Chapter 17 Colonialist economics – the contrast with indigenous land care principles
Many, though by no means all, indigenous peoples practiced sustainable land care and used concepts that contrast strongly with modern economics thinking. Much economic thinking is intrinsically ecologically destructive.
Private property in land means enclosure and exclusion. Economists typically assume that economic choices involve inevitable trade-offs. However, it is not true that alternatives must always be forgone. There is often a potential for sharing and mutual accommodation that is being ignored. Not all choices are rivalrous.
This chapter explores the features of sustainable commons and the extent of commons today. It describes the practice of commoning as a possible response to the ecological crisis.
Chapter 20 “Improvement” through biodiversity collapse
Ricardian development involved not just specialisation of labour but specialised uses for land. Specialised uses for land have destructive ecological consequences and are only possible with much energy consumption. The increasingly destructive impact on ecological systems is approaching a global tipping point.
Chapter 21 Releasing “improving farmers” from community constraints – the Physiocrats
The Physiocrats were early exponents of the idée fixe of laissez faire economists – that by freeing up markets “improvement” will occur. The assumption here was that production increase should take priority over security for poor and vulnerable parts of the population.
Chapter 22 Agricultural empires, public works and the protection of the peasantry
In contrast, agricultural policy in India and China at the time of the Physiocrats protected the peasantry.
Henry George and Karl Marx developed alternative radical theories out of the ideas of Adam Smith and David Ricardo.
This chapter describes the “marginal revolution” of neoclassical economics. The idea of marginal productivity and payments to “factors of production” was developed for ideological reasons to counter thinkers like Marx and George. The theoretical framework learned by generations of students is contradicted by the evidence. The ideas of capital and land in neoclassical economics are incoherent.
The ideas of Henry George are still very relevant for economic theory. A site value tax would help to stabilise property market cycles and promote greater spatial efficiency. However, while helpful, market mechanisms like a site value tax will not, on its own, fully resolve the environmental crisis.
Chapter 26 “Illth” rights for sale
Anthropocentric views of nature are very different from the “nature as kin” viewpoint of many indigenous societies. In the anthropocentric view nature is converted it into “environmental goods” for which people have “preferences” of varying strengths.
Chapter 27 Contingency valuation – what it tells us about economists
Environmental economists “value nature” in whole or in parts using techniques designed to find out how much people are prepared to pay to protect it, or prepared to accept as compensation if it destroyed. There are many flaws in this approach. Cost benefit analysis is an undemocratic process rigged by economists and there are better alternatives.
Part Three – Households and Lifestyles
Chapter 28 Household economics
Do households exist to service the economy or vice versa? The composition of different kinds of households will depend on demographic structures which have profound political and economic consequences. Household arrangements can become out of balance and re-creating efficient habitats can be seen as a legitimate economic goal. The time spent in households versus the time spent in paid work time is a central feature of any pattern of economic arrangements.
As John Maynard Keynes put it: “In the long run we are all dead”. Economics has to include consideration of the long run trends of births, deaths, migration and of the age composition of societies. As we reach the limits to economic growth the death rate may start to rise. Globalisation may make the spread of diseases very rapid. Preventing novel diseases like Ebola may prove expensive and the health and well being of the population at large may become dependent on some of the most exploited and devalued people in our society – cleaners, carers and grave diggers.
Chapter 30 Allocating time
Temporal inequality is a little noticed feature of our society. Poor people wait for things – the well-off are waited on. Temporal inequality is crucial to understanding people’s time choices.
Chapter 31 Life Management, stability and life transitions
Lifestyles and routines can be considered as “packages” of elements which must be held in balance one with another like income, habitat, relationships and activities. Lifestyle transitions involve moving from one “package” to another. There are different kinds of transitions including downshifting and upshifting. Downshifters can sometimes be part of a pioneering minority in a society that is facing the limits to economic growth.
Part Four – Production in the Paid Work Sector
Chapter 32 Energy in the Economic System
The production economy is embedded in the physical world and thus, subject to the laws of physics. Concepts like “entropy”, “sources” and “sinks”, are useful to help us understand the embedded and embodied character of economic activity. Energy is converted through our bodies and through technical devices. The idea that economic development has meant a movement from an “empty world” to a “full world” is useful – but we must take care to acknowledge that we label the earlier state of an “empty world” which was often a sustainable low impact way of living by an indigenous society.
Chapter 33 Using Energy to Extract Energy – the dynamics of depletion
The “Limits to Growth Study” of 1972 was deeply controversial and criticised by many economists. Over 40 years later, it seems remarkably prophetic and on track in its predictions. The crucial concept of Energy Return on Energy Invested is explained and the flaws in neoclassical reasoning which EROI highlights.
Chapter 34 Convivial Technology versus Granfalloons
Technological innovation is considered the source of ‘salvation’ in economics. However, there are different kinds of technology and in recent years “convivial technology” has been developed to conform to more people and environmental friendly principles than those of the technological mainstream. Unfortunately, even convivial technologies are often developed in hybrid and mixed conditions using infrastructure platforms from the economy of the corporations, as well as sometimes reflecting consumerist values. At the same time, the “green technology” in the economic mainstream is not at all that it seems. The increasing complexity of products and societies leads to increasing unpredictability. There is actually no such thing as a sustainable company or product because sustainability is society-wide. Rebound effects often render environmental innovation futile. Efficiency improvements have limited effectiveness in a growing economy. Granfalloons are vested interest coalitions formed around illusory and futile innovations like bio-fuels which are sustained by the optimism bias of techno-enthusiasts.
Chapter 35 Unconventional Gas Granfalloons – Long Case Study
The drive to develop unconventional gas sources illustrates multiple concepts developed in this book: the centrality of energy, the limits to economic growth; the interpenetration of economics and politics, the use of PR and deception by corporate actors. Technologies for “unconventional gas” extraction like shale gas fracking, coal seam gas de-watering and underground coal gasification are granfalloons pushed by a coalition of economic actors. The evidence is beginning to come in that the public health and environmental costs of these innovations will exceed their benefits.
Chapter 36 Regulating Unconventional Gas
It is unlikely that regulation will make technologies for unconventional gas extraction safe. The development of unconventional gas appears to be comparable to a number of industries and products where early warnings about public health and/or environmental dangers were downplayed because the industry had powerful allies in government.
Chapter 37 Resilience or collapse?
Will a failure in hub interdependencies lead to economic and social disintegration? The connection between the energy and finance institutions, as well as the state of public health are explored to examine whether there might be a “cross contagion” of cascading collapse between some combination of a public health crisis, difficulties in the financial economy, the energy sector and supply networks which run into and reinforce each other. (Text Box. The Eurozone Crisis)
Chapter 38 Employment in Theory and in Real Life – Services and Government in a world in difficulties
The economic theory of the labour market bears little resemblance to what really happens in the labour market. Workers don’t just make material products, they arrange things and attend to people. As society has evolved and become more complex, the office has becomes the more common workplace and work is largely conceptual and intangible. Mainstream economic theory has little to say about intangible work in bureaucratic empires. As the economy becomes more unstable, paid work becomes a nightmare for many people and the temptation to work longer hours for little extra return is great.
Part Five – Entrepreneurs – Anti-social and Social
Chapter 39 Entrepreneurs in the for profit economy
In the religion of economics, the entrepreneur is a hero engaged in a narrative of destructive creation. Entrepreneurs are tragically noble figures on a treadmill of competition – but who is really making the sacrifices? Often it is the entrepreneur’s family or other “stakeholders” who are carrying the costs and risks. What motivates entrepreneurs and what are “animal spirits” anyway? As their organisations develop, the role of the entrepreneur changes and, at their most powerful, they seek to co-opt officials and politicians for their agendas. Management can be exercised through over centralised control freakery or via distributed decision-making systems. Many entrepreneurs and managers are psychopaths, and criminals are entrepreneurs too. In the modern world, control fraud i.e. looting your own company is not uncommon. The City of London as tax haven and secrecy jurisdiction is one of a number of places to hide out.
Chapter 40 Entrepreneurs in the Social and Solidarity Economy
Co-operatives have been described as freshwater fish in a saltwater environment. In the 1930s, the co-operative sector in many countries was very powerful but it was destroyed by fascist and communist regimes. What was it that the authoritarians found so threatening in co-operation? Alternative economic models like co-operatives and social enterprises are explored, together with the arrangements that can help sustain them, like co-operative federations and support networks. However, there are no panaceas – co-ops and social enterprises fail too.
Part Six – Money and Finance – Credit Discredited
Chapter 41 Money, finance and time
The history of the financial sector goes back a long way. Usury was long regarded as ethically unacceptable but both Calvin and Adam Smith tried to justify it with arguments that are still suspect. The finance sector played a role in financing wars and it evolved, strongly linked to the real estate market. This chapter looks at the functions of money and how bank credit creation creates debt money. It explores risk management and the tendency of the finance sector to turn into a casino. When collective confidence goes too far, prudent lending standards go out of the window, and there is a great deal of criminal activity. In the modern world the financial sector is on a collision course with ecological reality. (TEXT BOX – Discounting – Financial Logic misapplied to sustainability)
Mental health problems and debt finance are strongly linked. People in debt have a higher incidence of psychiatric problems, and there is a higher rate of psychiatric symptoms among the people working in the finance sector too. During a bubble, egos are pumped up with asset values – and, when the bubble bursts, reputational collapse occurs with corresponding psychological effects.
Chapter 43 The reform of the financial system and techniques for debt cancellation
Money experiments took place during the financial crises of the 1930s. Although these were repressed by central banks, the need to control the finance sector during and after the world war was recognised so that the 1940s and 1950s was an era of “tamed banks”. It would be possible to write off debts and clip the wings of the banks without collapsing the financial system in today’s world too. In the absence of a political will to do this, other reforms and DIY financial initiatives are possible. Community finance needs to be part of a solidarity economy
Part Seven – Climate Economics
Chapter 44 Climate science and the market in delusion
Vested interests who wish to deny the climate crisis have created a dishonest PR sector fostering delusion about a huge threat to humanity. This chapter presents a thumbnail sketch of climate science and then explores issues of civic epistemology – how to handle public debate about a complex controversial issue where most people lack the expertise to assess the facts. The chapter explores why climate science upsets the market faithful and whether a production and finance system collapse would be terrible but might actually save humanity from an even worse climate catastrophe.
Chapter 45 The Climate Crisis as seen by the economics mainstream
Mainstream economics frames the climate crisis in a particular way but this approach is not at all helpful. There have been a variety of controversies which show clearly how economists think – like the “price of a life” controversy. The findings of the Stern Review were widely quoted but how were they calculated? Much of the controversy about the Stern Review among economists was about the discount rate to be applied to future projections. These issues are explained.
A major issue in climate economics is whether it is possible to halt the growth in carbon emissions and to achieve, instead, a rapid reduction. It concludes that carbon emissions will never fall at a sufficient rate in a growth economy. Unfortunately, the EU operates a climate policy framework, the EU Emissions Trading System, that was designed by BP and it doesn’t work. Policies that might work were the political will there are described. However, the fossil fuel industry still has a stranglehold on policy.
Chapter 47 Economics, Land use and climate change
Land use and land use change are also major contributors to greenhouse gas emissions. There are climate threats from emissions that arise as a result of corporate forestry and large scale agribusiness. A technology like biochar, which could be used to sequester carbon in soils, is not likely to be helpful if applied by giant corporations – only if developed by small local actors.
Part Eight – Politics and Economics
Chapter 48 Co-opted States – Politics and Economics
Most economics textbooks include a little homily about the difference between facts and value. Economics is supposed to describe the world as it is, rather than as economists think it should be. This homily is deconstructed. Power asymmetries in the political process mean that there is no clear separation between politics and economics and there never has been. Powerful economic actors have always had a predominant influence in the political institutions. In current conditions – of crisis at the limits to economic growth – dystopian politics are on the rise.
Chapter 49 Degrowth – Economics “in the lifeboats”
The chapter draws together themes for an alternative narrative for the future of society many of which have already been explored through the book. The chief focus is on household and local level community arrangements managed through distributed and federated arrangements that are democratic. Linked themes like what to do about land and human resources; the need for debt cancellation, money and tax reform are explained. If sufficient change can be brought about it will also be necessary to drive decarbonisation with an upstream cap on carbon emissions.
Chapter 50 – But what if it is too late?
Without sufficient action a time may come when we have to admit that it is too late to prevent runaway climate change and/or that other forms of collapse has become inevitable, indeed that we are in the middle of a collapse. Then what?