A Capital Idea Part 107: Hurrah for Redundancy and Inefficiency (Sort of)
Here's a really exciting topic, economic diversity, redundancy, and inefficiency. It must be right up there with bored meetings -- oops, I mean board meetings -- in terms of excitement. Actually, this is a very interesting topic on an intellectual level, which is usually where I am at, although, speaking of redundancy, I know I have touched on this topic before, but hey, that was so long ago, I can scarcely remember what I wrote. Hopefully, this post will add something new to what I had done before.
Here again, I assert that ultimately, a good economy must mirror the workings of a good ecosystem. Good ecosystems include a plethora of diverse lifeforms which interact synergistically in such a way that a healthy, stable ecosystem results. Thus, a good ecosystem is diverse, but more than this, it contains redundancies, and even inefficiencies. I am not speaking as an ecologist here, but I have studied enough biology that I can make some fairly educated statements about how ecosystems work. Perhaps an ecologist could add even more or correct any misconceptions I might have about ecosystems.
Redundancies in an ecosystem include:
1. More individuals than are necessary to maintain a breeding population;
2. A variety of species which occupy the same or similar ecological niches, and ;
3. The repetition of similar environments in different parts of the world, most likely occupied by a different set of species in different areas.
Translated into economic terms, diversity means having a wide variety of goods and services available, both governmental and non-governmental. I say non-governmental rather than privately owned, because I feel we must avoid the empire-building, monopolistic tendencies of privately owned large businesses, but such ventures as economic cooperatives are a healthy alternative, along with limited size, smaller businesses.
Having a lot of individuals translates into having lots of small businesses or cooperatives, while having a variety of species occupying similar niches, translates into having a lot of small businesses or cooperatives which perform similar functions, even in the same area, giving customers more options.
The repetition of similar environments, translates into having similar economies occuring around the world. Why is this important? Well, when the Yellowstone supervolcano erupts and wipes out 1/3 of the United States, for example, there will be well-prepared people to rebuild once the dust and toxic smoke settle, and the mini-ice age the eruption causes, subsides. Sorry to be so morose, but basically, this is Gaia's disaster insurance, and large scale disasters have occured periodically throughout this planet's history, most famously, the postulated collusion with an asteroid in what is now the ocean to the north of the Yucatan Peninsula, that is thought to have caused the extinction of the dinosaurs 63 million years ago, and I infer, was so powerful that it appears to have caused a rift in Pangeia which resulted in the separate and drifting continents we now know. This same event is thought to be responsible for allowing our evolution, but if mammals had not already evolved, in more primitive form than those we know today, the niches vacated by the demise of the dinosaurs would not have so easily been re-occupied. (Notice how I worked in the word "occupy" here.)
Now I go to the strangest, most counterintuitive aspect of the ecological analogy to the economy -- inefficiency. In terms of the ecology, inefficiency happens in a variety of ways which actually help make an ecological system work:
1. As Darwin noted, every species overproduces young, which means that mortality of the young -- a form of "inefficiency" -- is built into the system. We humans, of course, are currently dealing with the fact that we have drastically reduced childhood mortality rates, resulting in a huge, planet engulfing population boom. It nice that we humans are thriving, but not so much when it threatens the health of our planet's ecosystem, and ultimately, our own quality of life and threatens to cause drastic future die-offs of humans around the world;
2. All lifeforms have regular mutations, few of which are ever incorporated into future species DNA. However, those few mutations which are advantageous and are incorporated into the DNA of future generations or species, are of extreme importance, evolutionarily. This abundance of assorted mutations, also represents a sort of inefficiency, but one which allows evolution to procede;
3. Lifeforms are relatively inefficient at collecting or utilizing energy. Only a small fraction of the sun's energy which reaches the earth, for instance, is captured by plants. Much of that plant energy, when ingested by animals, is not fully utilized, either, while other plant energy is ultimately deposited as fossil fuels. This form of inefficiency creates a reserve of energy which could be utilized at a later time. That time is now in terms of fossil fuels, but we had better wean ourselves from these fuels quickly, before they run out. More importantly, energies such as the sun's rays warming the ground and oceans of the world, create the environment which life needs in order to thrive.
Translated into economic terms, the overproduction of young translates into, I suppose for example, the plethora of restaurants that go out of business -- in other words, all those small little baby businesses which compete with each other for economic "survival," either with or without nurturing "parents."
Mutations, in economic terms, translates into new ideas, including technological and scientific advances of various kinds, as well as new knowledge in the social sciences and new economic philosophies -- that is, the stuff of which economic progress and reforms are made.
The inefficiency at collecting and utilizing energy, might best be translated into the value of labor and having a good labor environment. I have heard a couple of people propose that perhaps too much mechanization of business is a bad thing. For one thing, machines do not engage in self-correction, as humans can. If they malfunction, they continue to malfunction or become even worse, until humans fix the problem. A more fundamental problem with the mechanization of business, from the standpoint of capital ideas, is that it redirects the flow of capital to the owner of the machine -- that is, the business owner -- rather than to employees, and here we are wondering why the rich keep getting richer, the poor keep getting poorer, and the unemployment rate is chronically high. Mechanization has a lot to do with that, although it certainly isn't the only reason. Of course, as people ever since the dawn of the industrial era have recognized, there is no substitution for the human element in our lives, even in economic interactions. Using more labor intensive means of production or service is a way of keeping people employed at least reasonably productively, and building an economic base from the bottom up, which is the way that really works, rather than from the top down (which is sort of like having the entire ecosystem depend upon its predators and parasites, which would quickly cause the collapse of the ecosystem).
So there you have it: Hurrah for redundancy, inefficiency, and of course, the ever popular diversity (just so long as it doesn't refer to violence as part of a "diversity of tactics" by OWS protesters)! Sooner or later, a working economy with long term utility to humanity, must incorporate these principles as it learns to mimic what is successful in making a healthy ecology.