Monday, March 16, 2009

The Sustainable Economy - An Introduction

Our well being, our economy, and our future is inexorably tied to the earth and its natural cycles.  If we are not careful, we run the risk of thinking that our economy and well being is separate from the earth, and lose sight of what is critical to our well being.  Our economy is a measure of transactions that take place in the physical world, transactions focused on the exchange of monetary values and flows that course throughout our society.  These flows of value include a close integration with the natural world, an integration that we have yet to learn how to fully value and integrate with our economic thinking.  It is the integration of the natural world with our economic world that is at the core of the sustainable economy.  Without this integration, at some point, we will lose.

The impact of failure would be extraordinary.  The reach of our economy is huge, with tendrils coursing through the far reaches of billions of people’s lives.  The collapse of our economy would wreak untold havoc on those living on the economic fringes of societies around the globe.  Already, our impact on the environment is creating challenges with the water we drink, the air we breath, and the soil that we till.  The loss of resources upon which our livelihood depends will accelerate unless we adopt policies that take us to a sustainable economy.  We do not have the luxury of migrating to unspoiled lands, as perhaps nomadic tribes once did. 

The greatest danger that we face is the prospect of wars, driven by failing societies and geopolitical tensions brought on by the pain of resource depletion.  In recent years, the term oil wars has emerged, with the prospect being raised that the great epoch of oil wars have already begun.  It has also been suggested that the genocide in Darfur was caused in part by the grotesque reduction in agricultural yields, brought on, as it was by changes in the rain patterns.  These changes in rain patterns, as it has been noted, may have been caused by changes in ocean temperatures.

How value is created and destroyed underlies all survival.  The beauty of our economic system is that it mimics natural feed back loops, encouraging value creating behaviors.  There are three major disconnects with the system, however.  First, the economic system does not distinguish between sustainable value creation and unsustainable value creation.  Second, the economic system does not incorporate the impacts and interplay with the natural world.  Third, it does not necessarily do a good job of distinguishing between drawing upon stores of value, and drawing upon flows of value.   

There have been societies which observe and integrate natural cycles into their own form of economies, managing the careful balances necessary to sustain life and well being.  There have also been societies that have observed their own destructive policies wreaking havoc on their natural environments, and, for certain perhaps enlightened societies, have been able to change their behaviors and pull their own societies back from the brink of self destructive behavior.  Unfortunately, the preponderance of examples is of societies that never realized the self destructive nature of their policies and activities, and fell into oblivion.

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