contemplating economy ecologically

I'd like to talk a bit about the connection between the need to relocalize and rescale economies and how this relates to avoiding the kind of economic upheaval we are experiencing right now. As the post title suggests, what I aim at is an economy that functions like an organic system. I will use the example of a bio-region as a model for this.

Broadly speaking, a bio-region, say a forested river valley, is a system involving a material base (soil nutrients and water) which utilizes solar energy to generate and maintain a population of living organisms. Ideally, as the population reaches a certain density, the processing of soil nutrients and solar energy is turned from population growth to maintaining stability in that population.

Such a system will display periodic fluctuations in its subpopulations. For example, a particularly wet year might lead to exceptional vegetative growth. This in turn will mean an increase in the herbivore population of the Vally. It could be that the herbivore population will continue to grow until it overwhelms the plant population's ability to sustain it. It might mean that the carnivore population will grow with the availability of food and will eventually overwhelm the herbivore population's ability to sustain it. Despite such fluctuations the density of any subpopulation will keep close to an average over time. Finally, it is important to understand that the an important part of the material base of such systems is maintained by the corpses of burnt out organisms which are "downcycled" through the process of decomposition.

One of the noteworthy differences between a system like this and most economic systems is that growth is not the system's goal. A healthy ecosystem is one that fills it's niche and then maintains this level with as little fluctuation as possible. It could be said that the system "lives within its means".

An important aspect of this "organic frugality" is that the organisms that benefit from the material base of the system eventually become part of this base. The tree may act as though its whole purpose for living is the nut that will grow into a new tree. Despite this, the leaves that fall from the tree each year, and eventually the tree itself, become part of the material base on which the whole system depends. The system as a whole allows broad opportunity for individual organisms and species to flourish. Never the less there is an underlaying law at work, namely, that in the end everyone works for the good of the system as a whole. In spite of, or perhaps because of the ignorance of trees, squirrels and timber wolves to this law, no one tries to transgress the law.

Humans have devised many systems whereby they attempt to transgress the aforementioned law. Our economic systems, like many other institutions, present a temptation to transgress. I will not hesitate to state that this is folly. They also present an opportunity to use this law learned from nature to organize our lives in a way which will be harmonious with nature. The latter is the path of wisdom. I will now turn to specifically economic considerations to illustrate both paths.

Let us consider a certain kind of financial institution that was common in the US until about a half century ago, especially in small towns. Town's folk would deposit their money into savings accounts. These accounts would form a pool of financial resources that could be drawn upon by other town's folk in the form of loans. The interest levied on these loans would, in turn, provide depositors with a small amount of interest on their savings accounts.

Such "mutual" banks made depositors investors in the economic development of their community. Because the amount available to make loans was small, loans had to be both modest and conservative. Because people in the community tended to know one another, they knew who was, for example, expanding their farm or increasing the inventory in their store. The person taking a loan would, therefore be doing so under the eyes of the investors. In this way, the economic activity of the community took place in the social context of that community. The social context encouraged fiscal responsibility on the part of investors and borrowers alike.

At the same time, the economic development of a community remained firmly rooted in the actual economic resources (available material and labor) of that community. The investment base could only sustain a limited amount of growth. This growth would have to be realized In actuality before the investment base could grow. For example, a farmer who bought more dairy cows with a bank loan would have to start producing more milk and use the proceeds to pay back the loan before those resources became available for further investment. Since the bank would use either the farmer's savings or his actual farm as collateral the loan was safe. Farmers understood that a valuable resource was at stake and would therefore think carefully before going into debt. Growth, in this context, was organically connected to the actual conditions "on the ground" in the town.

In such a banking framework, no one expected to get rich from the interest on savings accounts. The point of a savings account was just that, savings. Saving was thought to be a way in which people might cover their needs in lean times (crops failure etc.) as well as to create an foundation on which successive generations could found their own economic endevors.. The idea of a mutual savings bank, however, gave the depositor the chance to invest in his or her community while preparing for their own "rainy day".

The social context in which this takes place tended to be economically conservative. Values like thrift were important. There was also a sense that debt was to be avoided. Such values meant that economic growth would be fairly slow. The expectation in this situation was that people would derive an income from their labors. A farmer wasn't necessarily interested in an ever increasing growth, rather, the emphasis was on stability.

An economic model that emphasis growth would recon the small town mutual bank of yesteryear as "stagnant". Indeed this is most likely the reason why such institutions are rare in our time. However, this type of system shares a great deal in common with the forested river valey I spoke of above.

The "material base" is the material resources available (farm land, forests, mineral resources, etc. Labor is a force analogous to solar energy in that through it, the material resources are articulated into compolex structures with greater "value" (produce, clothing, fuel, etc.). As farmers, foresters, blacksmiths, fabric manufacturers and merchants, to name a few, added value to material resources through labor their individual wealth grew. This is similar to the operations performed by plants and animals in a ecosystem through the persuit of their life functions. Beyond what labor could produce to meet its immediate needs there is "savings". The savings, when pooled in a bank, permitted a certain level of flexability in the system. Savings are, so to speak, the "leaf litter" of an economic system which provides a constant supply of "nutrients" for future economic activities.

If trade remains fairly regional--farmers use proceeds from produce to purchase tools from blacksmiths, who, in turn, purchase metals from miner who, in turn purchase produce from farmers--the economy tends to reach a kind of "steady state". In this state, everyone can persue their economic activities (that is, to labor) with the understanding that they can continue to do so indefinitely. The overall economy remains stable (or stagnant from the standpoint of modern capitolism) because, although there is a more or less steady increase of savings, there is also the periodic need to buy or repair tools, fix a roof or build a house. Such small scale "stresses" in the system are anologous to periods of drought or overgrazing in a bioregion. There is also the possibility of catastrophic losses (a church burns down, a massive crop failure, etc). A healthy economic system will be able to absorb small and large shocks and return to its former state in a realitively short time.

Now let us consider how such a system might go out of balance. Taking a particularly stable economic region, one that has good farm land, some local manufacturing and perhaps an iron mine. Suppose the mine, which had traditionally done most of its buisness with local crafts people decides that it will merge with a large mining interest. Now the resources of the mine become available to a wider range of perspective buyers. Two things will happen. First, the available materials from the mine will become more scarce for its traditional customers. Second these materials will become more expensive.

So a blacksmith might need to take a loan from the bank to cover expenses that would have been covered from sales of his service. If the blacksmith can't pay his loan in a timely manner the bank might have no choice but to forclose in the blacksmith's shop. If there are no buyers for the shop, the bank will, in turn, have to liquidate the shed and tools and sell the land on which the shop stood. Now the blacksmith might have no other choice but to move from the region, taking any potential future savings that would end up in the bank with him.

Now suppose there are no buyers for the small piece of land which used to belong to the blacksmith. Perhaps it isn't suitable for farming, or perhaps no farmer has the need or the resources to purchase the land. The bank now has a parcel of land that has a reduced market value due to the fact that, in the case of the land that used to house the shop, the supply has outpaced the demand. The bank might seek a buyer from beyond the region. Perhaps this buyer is a large retailer that specializes in farm tools. Farmers may have no choice but to do buisness with this retailer since there is no blacksmith in town. The money they pay for tools from this new retailer leaves the region and migrates to wherer ever the main office of the retailer might be.

We see here how a small hole has opened in the local economy. Such holes have a tendency to get bigger. For example, the new retailer needs employees. Let us say that the blacksmith's son wanted to stay in town, perhaps he was married and didn't want to relocate his family. He, or his wife or children might take a job with the retailer. Of course the pay at such work will be lower than that of a skilled crefts person with a good market for his goods. Such a family might have less money to spend on food. This, in turn, drives down the price of produce which means hard times for local farmers. If another retailer comes to town, one which vends produce at a lower rate than local farmers canafford to sell at, a ripple will begin to occur. This ripple might result in the sale of farmland to developers. The developers build houses to people in a near by city and thus is born a suburb.

the scenerio I have just outlined is, in fact, what has happened all over the country and around the world. I will now return to the bioregion analogy to see what this looks like from an ecological model. Suppose the stream that waters our forested valey is disrupted, perhaps by severe and prolonged drought, perhaps by the construction of a damn upstream. the first population to suffer will by the plant population. As the plant community becomes poorer the herbivorous population will suffer. Over time this blight might spread to the predator population who might move on in search of a more abundant food supply or perhaps it simply crashes. If some fragment of the herbivorous population manages to survive it will begin to grow in the absence of predators. This would put further stress on the plant population. As the plant population continues to decline, erosion will begin to take place. This, in turn, iwll silt up the stream making water even less available. In time, the valey will become an arid place that has a greatly reduced capacity to support life.

Let us return now to the law given in nature that states that all creatures ultimately support the system as a whole. In nature, a cataclism such as that outlined in the previous paragraph is far less likely to occur due to the fact that forests, for example, tend to produce the conditions that lead to greater precipitation. When such a cataclism does occur it tends to happen over long periods, giving all the subpopulations of animals and plants time to adapt. Where this is not the case, as in a great fire or flood, the event itself tends to lend aid to reestablishment of a new ecosystem by creating new conditions of fertility.

Experience shows us that most often a great ecosystem crash ocurs when some man made activity disrupts the natural cycle of things, as in the case of a damn which disrupts a watershed or a clear cut that disrupts a forest ecosystem. It is noteworthy that such occurances often signal the sort of economic cataclysm as I outlined above. One example of this is a strip mine. If the coal in a mine is used primarily to furnish fuel for the region in which it lays, this coal will be extracted at a slower rate. The growth of strip mining is tied to the need for mining companies to extract as much coal as possible in as little time as possible in order to maximize profit. Strip mining tends is highly disruptive to ecosystems.

A word about the relationship between economy and ecology is in order here. The word economy can be translated as "household management". Ecology is the body of knowledge that studies the operational principles of nature. Interestingly, ecology has the same object of interest as that which economy proports to "manage", namely, the home.

It is reasonable then to suggest that ecology should inform economy for the same reason that biology informs medicine. The world that surrounds us is the home that ecology concerns itself with. The way we manage this home determines the nature and effect of our economy.

The dramatic example of strip mining mirrors the issues confronting the world economy at this moment. The economic activity of a community is deeply tied to the management of that community's material resources. In a localized economy the transfer of resources tend to flow smoothly through economic "systems" (farming, knitting, etc). A farmer will produce enough corn or cows to feed the needs of the community. This simple fact can acts as a mechanism to control over cultivation and grazing. The manure and agricultural "waste" (the kitchen scraps for that matter) are returned to the soil of that community. The circuit of production, consumption and return is, in other words, short and simple.

The community's quality of life depends on such a circuit. Overgrazing destroys the agricultural base with economic consequences, excessive mineral or timber extraction has the same impact in time. It is important to maintain a healthy reserve in the community's resources in the same way thrift ensures the good function of the household.

The example of the iron mine above ilustrates the consequences of extended and complicated economic networks. If the iron from that mine were to be taken a long distance, to another community where labor is cheap, a factory might be established in that far away community. People may abandon traditional economic persuits to work in this factory. The employment fortunes of those who choose this path will then be at the mercy of larger markets which are even more remote. Should the demand for the factory's product collapse, or should the factory owner find cheaper labor the factory will close leading to unemployment. By this time, the local economy will have become so dependent on one large employer that it might be hard for it to absorb all the people needing work. This will also mean trouble for people back at the iron mine who must now seek work in an economy that has been similarly disrupted.

One further example should be added here. A vast amount of the table vegetables that are consumed in the United States are grown in the California's Central Valley. To fill the steamers and salad bowls of people across the land requires vast amounts of water and open land. So much so that this region of the countro can scarcely provide for its own need for water. Much of that water, along with soil nutrients, are then taken from the valey in the form of vegetables and fruit do be deposited in landfills and overburdened sewage systmes far from home. This whole process is fueled by fossil fuels that come from regions far and sometimes dangerious. Similar stories can be told about our materials that form and fill our homes and lives.

The economic collapse that we are experiencing now is the result of the collapse of those systems that fuel it. Our practices have been, so to speak, aneconomic. It is difficult to experience the impact of realestate speculation, or mining, or massive agricultural monocultures from an office thousands of miles away. difficult to sympathize with the economic plight of those who are never seen or known.

To manage is to "handle". Those who handle the objects of their household know their value, you can not manage what you can not touch. Thus we have a world out of hand, a world that does not the wise and patient guiding hand of the good steward.