Economics is dead.
All you pointy-head professors can pack up your pens and take the rest of the year off. All you market magicians and policy wonks, time to update the resume.
Have you maybe considered a career in baking? We need more bakers.
Economics is dead. While I’m very happy to be the bearer of good news, like some minstrel skipping through the streets, it’s not really news. Its slowly decaying corpse has been wandering around town for ages, like some weekend-at-Bernie’s puppet, and no one’s noticed it’s dead.
At some point in the last 50 years economics died. The questions that had been driving civilisation for centuries were suddenly and quietly answered, and we found our selves at one of those quirky tipping points where reality is running far ahead of our collective consciousness.
Let me break it down.
Economics is about how we organise productive activity – what we produce, how we produce it, and who we produce it for.
For centuries we sent economics into battle with its arch-nemesis, ‘scarcity’. It was about how we could meet the basic needs of everyone in society. It was about the struggle to produce ‘enough’.
But today, that war is over.
At some point, we won.
And right now, today, there is enough food, water and shelter to meet everyone’s basic needs on the planet.
That there are still people going without is a question of distribution, not a question of production. There’s more than enough to go round.
But we carry a legacy mindset that’s all about more production. GDP is all about production. The golden goal of ‘growth’ occurs when we produce more.
But why are we producing more? There’s already more than enough to go around? It’s the wrong question to be asking.
Economics has become obsolete. It’s dead. But it’s still driving our collective efforts.
We need to move beyond it. We need a framework that is not about conquering scarcity, but is rather about managing abundance.
Abundanomics.
But managing abundance is easier said than done. Here’s what I reckon are going to be the key challenges facing the discipline of abundanomics.
- Incentivisation
The great success of capitalism was the way it coordinated productive activity quietly and efficiently. Prices instantly gave producers and consumers an idea of how much to produce and consume, efficiently processing what to central planners is an unmanageably huge amount of information.
Prices also rewarded effort and incentivized people. Without this central role for prices, the great mountain of abundance we’re currently sitting on would not have been possible.
So whatever our new economic system looks like, it needs to somehow roll over this legacy infrastructure. But that’s easier said than done. Prices are built on a relative scarcity. If something is infinitely abundant, then it’s price drops to zero. Take for example the way the internet is destroying the markets for books, music, movies etc.
And if everything is infinitely abundant, the price of everything drops to zero. Suddenly there’s no signal coming out of prices at all, and the great coordinating hand of productive activity goes limp.
We’re going to have to deal with this at some point.
- Manufactured scarcity
Manufactured scarcity is a key concept in marketing and business. Diamonds are a classic example. Diamonds are actually relatively abundant, but one company pretty much owns all the diamond mines, and keeps a tight lid on output. This keeps the prices of diamonds artificially high.
And this sets up a great irony. Technology smashes new boundaries everyday, but the best business minds on the planet are actively trying to find ways to create scarcity and lack.
This is playing out at an industry level as well. How much opposition does wind and solar face from entrenched fossil fuel interests? How much energy does big-pharma put into using patents to restrict supply?
One of the great obstacles to an abundant vision for humanity is that many (very powerful!) people prefer things just as they are thank you very much.
- A Meaningful Life
In an abundant world, what are we all going to do? Our jobs are often much more than simply a way to put bread on the table. They give our lives a sense of meaning and purpose. They give us a sense of place in our society.
We all know about the depression and waste that comes with long-term unemployment. But in our ultimate vision on an abundant planet, robots are doing everything and EVERYONE is unemployed.
How many people are really ready for that? I took 4 months off and it drove me nuts. I came home and wrote 4 blogs and a new business proposal.
We’re going to have to find ways to collectively support each other to live meaningful lives of leisure. Again, this is easier said than done.
And of all the challenges, this is perhaps the closest. The automatisation of labour is one of the most powerfully exploding trends going right now.
- Over-production and excess consumption
At some point in an abundant future we’re going to have to find ways manage a biology that’s evolved in times of lack.
Take obesity. The human machine is designed to store fat for the lean times. Just now, there are no lean times. We need to get a handle on our consumption drives.
And there are many things we simply produce too much of. Too much carbon, too much pollution, too many guns, too many violent computer games, too much porn…
And imagine how much crap is going to be produced if everyone has a 3D printer. In some cities, tips have already stopped taking televisions. There’s just too many of them. Waste management will be one of the growth industries of the next 20 years. It has to be.
…
This is really just the tip of the ice-berg. Most of the challenges an abundant world will present aren’t on anybody’s radar yet.
But ultimately, I think it will force us to grow up. To take full responsibility for what we consume and what we produce, and how we do it.
That’s a vision that’s as scary as it is exciting.
Antichrist says
Good article Jon. I think the only thing we lack is an abundance of common sense. We certainly have, and utilise, an abundance of traits as humans that will inhibit this need to take full responsibility. Selfishness, arrogance, ignorance, and idiocy seem to also have been cultivated in droves. Not to mention laziness and the apparent desire to remain blissfully unaware of the need for action. That to me is the scary part!
CSF says
We still need more growth in the number of lawyers as the easiest way to wealth is to sue someone who has worked hard and invested smartly. Somehow, the lazy and stupid people that society seems to produce in abundance, who dont want to be responsible for their own actions ( or lack therof), deserve compensation right???
Leigh-Anne says
So true! People really need to take responsibility for their actions, the way they think and the affect it has on themselves, and the people /world around them. The lack of self-discipline, common sense and head in the sand mentality has a lot to answer for in today’s Society.
John from Perth says
Another very good thought provoking article. Its true that there is now an abundance of manufactured items, plenty of food and lots of things are getting cheaper especially things like books, movies and music that can be downloaded on a computer. This is all good for our overall standard of living however it wont be good for some segments of the economy. People in those segments need to move into other segments. There’s nothing new about that (eg car manufacturing has done away with the horse driven transport economy).
This doesn’t mean economics are dead. A basic principal of economics is that our wants are unlimited. Even though we don’t need to go hungry there’s still plenty we want eg. better medical services, better aged care, more travel and holidays, less crime, better infrastructure, better defence force, better education systems, better housing, better environment, higher income in retirement etc. Our wants and ability to meet them have been improving since the start of the industrial age and should continue improve barring some unforseen world disaster.
We do need to be careful that our drive for wealth don’t affect our quality of life. Government’s want for a big Australia is certain to result in a lower quality of life with more crowding, less affordable housing, more crime, more environmental damage, less community spirit, higher risk of terrorism.
We need to be willing to make some material sacrifices to keep Australia’s advantage of having less over population than other countries so in the long run we have a higher quality of life.
Colin Glover says
Jon I think I’ll assign my inner thinking over to you this will cut down on waste and duplicate thinking – thanks.
David Smith says
Thought provoking and makes a lot of sense. You’re a man with his finger right on the pulse!
al says
Copyright 28-11-14 ‘One reflective collective minded Source’ – the $ world ahead already has – “All rights reserved”… or does it see?
Not one comment that follows is intended for individual or collective thought or daily consumption by anyone unless done.
Advice Warning: I’m not an economist, I don’t have an MBA and I wasn’t much good at school. I’m self-taught millionaire and my results are not typical. So on that basis, all advice is general advice and has not taking into account your personal circumstances. If you want to get specific advice on your personal circumstances, seek an independent financial professional who has actually achieved the results you are seeking to achieve. Good luck with that. Never blindly take action on what I says or reports. You can lose money by investing. I have, and in some cases you could lose your total capital invested. There are no sure-things in the field of investing. The only thing I know is if you don’t invest, you’re likely to end up broke when you need the money most, in retirement. It’s your money and the best person to manage it is you. The more educated you are in your specific areas of investment, the more likely you are to make smarter, educated and ultimately profitable decisions. As far as disclaimers go, here is the bottom line: If you make a million dollar after reading my thoughts and ideas, it’s not my fault (and vice-versa).
Advice Warning: I’m not an economist, I (also) don’t have an MBA and I wasn’t much good at school. I’m self-taught millionaire (not in -money but in equality of life) and my results are not typical. So on that basis, all advice is general advice and has not taking into account your personal circumstances. If you want to get specific advice on your personal circumstances, seek an independent financial (life guru or think beyond a) professional who has actually achieved the results you are seeking to achieve. Good luck with that. (?) Never blindly take action on what I (or anyone for that matter) says or reports. You can lose money by investing. I have, and in some cases you could lose your total capital invested. There are no sure-things in the field of investing. The only thing I know is if you don’t invest, you’re likely to end up broke when you need the money most, in retirement. It’s your money (sadly not true) and the best person to manage it is you. The more educated you are in your specific areas of (1 terminal life) investment, the more likely you are to make smarter, (un)educated and ultimately (dead) profitable decisions. As far as disclaimers go, here is the bottom line: … – If you make a million dollar(s, or, is that singular coin-note, now on the horizon?), after reading my thoughts and ideas, it’s not my fault (and vice-versa -) if ‘Our collective future’ domain free-dominion from all prejudice is the domain of ideas and it’s THE collective fecund womb for, all humanities own perpetually – (revolving or) re-evolution. It is so, it must be so or – save we become a gargantuan posterior mind of the mindless, sitting bum stuck or bottom glue bound in/on, our own high chairs unable to get out and still anciently full of it all s?itting in our own children’s wisdoms test?
Copyright 28-11-14 ‘One reflective collective minded Source’ – the world ahead already has – “All rights reserved”… or does it?
Is our collective existing 1 what if – like each of us is one fragment? … only One Earth actually does exist… ? .. Hmmm?
Our limited no foresight based on perpetuating tiered systems that have no organic equality, asks, who wants $ for their children?
Please reflect on this email. Unless you have no offspring you will not have any grounds for ‘no reflection’. All enquiries could first be directed to your own consideration all those that will follow you, or would you choose – die shitting in a tin can, on Mars?
Perhaps David Bowie was a prophet not as of any religious demarcation saving an own imagining, not so far off, tin can views?
You’re receiving this because you are part of an awesome awakening Source ‘membership’ provided by Jon Giaan’s newsletter.
Nothing that has been put forward has or implies in any manner of construction been presented/intended as a prejudice anyone.
Closing the door on the Mars expedition is a sombre reflection – no land title rights legally exist for those arriving already by law.
Who else but the ancestors of the America’s cultural slaying of the native tribes of that land, would first play monopoly in space?
What was the real point of the American flag being placed on the moon – real estate and all of it or – just that one spot 1 title deed?
What was the secret that Neil Armstrong took to his grave and by allegiance the others also keep silent about other things ‘found’?
What is it about the American psyche that is so despotic that it actually expresses desperation concealed by, an achievers mount?
What is it about the American psyche that is so despotic that it actually cannot express revealing it deceives the world, financially?
Copyright 28-11-14 ‘One reflective collective minded Source’ – the $ world ahead already has – “All rights reserved”… or does it not?
Getting AHead Is Noice! says
Wow! DUDE – you seriously have issues! Or me thinks too much non-constructive time on your hands…
al says
Thats what … .’ they all said to the first person who said’ – “one day we will go to the moon – just wait and see…” and we did – how has that helped the collective daily reality of humanity … could be my question if that mission ever did have any potential relevance on any daily usefulness to our worldly – daily realities? Not one important advancement (I am aware of) has become us one earth – dare I say … who paid for the grand adventure in securing that real estate?
…welcome to reality… they proved it’s not green cheese, now own it ?
..Time is a relative construct and fish bowls are part of it … dare look beyond the prismatic square corners an ‘aquarium reality’ given you – we are able to distill what works collectively equally and what does not – when will the paper thin walls of laws that we have collectively accepted as globally agree-able as they stand – ie: his time is more valuable than her time and or any other variation – do you really think if you had no money by no fault your own efforts, that you should not be able to eat.. that happens on this world..(?)
It is only a tiered system that generates such conditions – starting from that presumption(?) (which exists daily for many – of course – due the course we have followed in one version the Midas’ myth ..) that we seem and do still follow the (more often than not stuffed pockets of political ambitions and CEO’s) serving their own plates.-
what is that we should focus on – “the give” or “the (excess) take”?
night and day is elementary – so is equality – swap time for time – the new equality currency is so simple it defies all arguments – do not try me on this so said – ‘long shot’ simplicity – or – you will be up against – arguing against your own better (best) interests ? (saving you are a “politician” – that being the case – I may heat and eat you for … uuuuumm ? -say how about – breakfast …? (‘wink’ ..?!)
Ari says
Thanks for this article.
It is becoming apparent that the paradigm of scarcity is a managed/manufactured one. However -as you mention- there is a problem of distribution. This will warrant the attention of some social, economic and political structures for some time.
How about a ‘new economy’? or should we say philosophy?
AH says
You are right we live in Abundance :
Abundance of concrete, cars, carriage ways, cots, Kalashnikovs, conmen and carbon.
Also abundance of ….extinction.
50% of vertebrates are extinct; many other species are on a precipice
Paradise is paved and polluted in abundance ; poor, pregnant and powerless people pervade in abundance.
The punished pile up in jails in abundance.
See the Great Barrier Reef before it turns into an Abundant coal tip if India gets its way.
Tears for our beautiful world are silently in abundance.