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.
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.
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.