Don't speculate on our future - References and quotes Philosophy 2021 REFERENCES AND QUOTES ECOLOGICAL ECONOMICS – PRINCIPLES AND APPLICATIONS Box 8.1 On speculation and positive feedback loop. Especially where supply of something is fixed. 140 Keynes “Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done”. 30 trillion dollars global productions per year vs 2 trillion dollar per year of paper purchasing , electrons purchasing electrons. This speculation growth of money is not possible because growth in money is meaningless unless there is a corresponding increase in real wealth. Zero-sum game between speculators and producers of something something 297 Illusions of that growth of money can grow without physical limits results from: 1. Production of real goods and services increases. But this cannot continue forever on a finite planet! 2. Financial assets grow or increase in price demand for money grows. But bubbles burst! 3. Financial capital grow because speculation transfers resource from those who produce to those who speculate. But this transfer has limits even if it is obscured by economic growth. It is impossible for real money to grow without limit! 298 Financial Instability Hypothesis. 394 Table 20.1 on liberalized financial sector. 395 Problem of the liberalization of global finance. 397 The creation of a financial crises. Moral hazard 398 ECOLOGICAL ECONOMICS – PRINCIPLES AND APPLICATIONS and explanations for financial crises. Financial assets, abstractions, IOUs on real wealth. Negative pigs and positive pigs. “The production of real wealth is limited by biophysical realities—the availability of raw materials provided by nature that can be transformed into market products, the availability of energy to power the transformation, and the availability of ecosystem services, including waste absorption capacity, that are ultimately needed to sustain economic production. When real estate prices boom, as happened in Thailand and the U.S., the flow of services from land and existing houses does not increase, and there is no new source of biophysical value to match the increase in debt. The same is true when stock market prices soar with no underlying increase in productive capacity. When the value of present real wealth plus biophysically constrained production capacity is no longer sufficient to serve as a lien to guarantee the exploding debt, the debt must implode. To reiterate the words of Frederick Soddy, ‘You cannot permanently pit an absurd human convention, such as the spontaneous increment of debt [compound interest] against the natural law of the spontaneous decrement of wealth [entropy].’” 401 “For a time growth in financial assets can sustain the illusion that the economy continues to grow even as the resources essential to economic production become scarcer, but ultimately financial assets are, for society as a whole, debts to be paid back out of future real growth, and the illusion of growth cannot persist indefinitely.” 401, 402 “Financial crises are bound to emerge when biophysical limits become binding. It is no coincidence that when fossil fuel production basically plateaued in 2005 and grain reserves failed to keep pace with growing consumption, growth in the real economy began to fall behind growth in the financial sector. It is of course possible for economic production to keep pace with financial sector growth in the short term by depleting natural capital, but only at the cost of far more catastrophic crises in the future.” Ecological economic systems, complex systems and the simplistic market. Crises and positive feedback loops in complex systems. 402 “Eventually, growth in real physical production confronts biophysical limits and must stop. Growth in the monetary value of financial assets is still possible for a time, but when continued investment of borrowed money drives up the value of financial assets more rapidly than the increase in real goods and services, collapse is inevitable, even if we cannot predict precisely when it will occur.” 403, 404 Finance and distribution. Inequity iceberg. Financial assests already owned by the wealthy grows faster thus increasing inequality. Computerly programmed redistribution of real wealth. And the computers requires existing wealth. “Even when financial assets do contribute to the real growth of market goods and services, for the richest nations, which host the largest financial sectors, marginal costs of economic growth often outweigh the marginal benefits. In this case, the few reap the financial benefits, while the many, even those living in those richest nations, pay the social and environmental costs.” 404 Dealing with financial crises/system systematically, treat economy as a complex system. See THINKING IN SYSTEMS – A PRIMER 405 “Currently, an economic crisis is defined as any threat to economic growth; a recession is explicitly defined as two consecutive quarters without growth in GNP. Implicit in this definition is the paradigm of the economic system as the whole and the ecosystem as the part, and the goal of endless growth. If we accept the ecological economic paradigm, in which the economy is sustained and contained by the global ecosystem, then continuous growth is of course impossible. An appropriate goal is to enhance quality of life. In the ecological economic paradigm, we therefore redefine a crisis as economic conditions that generate (or will inevitably generate) unemployment, poverty, misery, or instability. In other words, we define crisis as an economic threat to our quality of life.” “Among the policies implicit in these goals are public investments in education, the development and deployment of green energy technologies, maintenance of critical public infrastructure, and restoration of depleted natural capital.” 406 “Policies aimed at developing green technologies and restoring natural capital would help prevent future crises. They would help maintain the productive capacity of our global ecosystems, upon which all economic activity ultimately depends.” Tightening up financial sector 407 I DOUGHNUT ECONOMICS: SEVEN WAYS TO THINK LIKE A 21ST-CENTURY ECONOMIST Regenerative finance. 1. shrink, simplify, diversify and deleverage finance e.g global financial transactions tax See Tobin tax. 2. Longterm investment. State investment and private investment for longterm like Triodos. 3. Redesigning currency. Torekes. 193 Search for gain and rate of return. Aristoteles on interest, “For money was intended to be used in exchange, but not to increase at interest. And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of an modes of getting wealth this is the most unnatural.” Problem of search for gain drives shareholder return, speculative trading and interest bearing loans all depend on growth. See ECOLOGICAL ECONOMICS – PRINCIPLES AND APPLICATIONS. Financing meeting limits, Fullerton and Evergreen Direct Investing. Money contrasting against nature. Nature feel entropy as tractors rust, crops rot, smartphones break, building crumble but money just keeps increasing because of interest. Demurrage! Silvio Gessel, make money deteriorate. Keynes was impressed by the idea! See ECOLOGICAL ECONOMICS – PRINCIPLES AND APPLICATIONS, MYTEN OM MASKINEN: ESSÄER OM MAKT; MODERNITET OCH MILJÖ 223 I PROSPERITY WITHOUT GROWTH Credit, inequality (debt creates flow of money from debtor to creditor, destabilizing economy and fueling impossible growth. Economist in time of 2008 crises, ‘it is easy to forget that liberalisation had good consequences as well: by making it easier for households and businesses to get credit, deregulation contributed to economic growth.” 67 I COMMON CAUSE – THE CASE FOR WORKING WITH OUR CULTURAL VALUES Different solutions dependent on framing. Conceptual frames and deep frames. 41 To encouragement Next encouragement