Sunday, November 16, 2008

Cannabalism, entropy, economics and consumerism.

Among the millions of species of organisms out there, you can find a species that specializes in eating almost anything. There are lion-poo specialists, feather-barb specialists, lichen specialist, you-name-it specialists. There are also lots of generalist species, and many of these generalists engage in cannibalism. But no species is a cannibalism specialist. I can say this with confidence, even though we don't know what most species eat in any detail. A species of dedicated cannibals would quickly run out of energy. Everything an organism does burns energy that cannot be retrieved. Thermodynamics and all that. If a population is to withstand the ravages of entropy for any time at all, there has to be a sizable inflow of concentrated nutrients and well-ordered energy. A population of cannibals has outflows but no inflows, and quickly changes food supply or goes extinct. Engaging in cannibalism can be beneficial for short periods under specific circumstance, but you can't eat all conspecifics all the time. That way lays rapid extinction. Similarly, an ecosystem cannot persist for any period of time without massive inward fluxes of organized energy. Sunlight, geothermal chemicals or organic detritus from one of these two are necessary inputs to every ecosystem we have ever come across. Without that, organized energy in the system quickly declines until life can no longer be supported.

This same logic applies in economics. Pyramid schemes and speculative bubbles ultimately must collapse, because there is no underlying production of valuable stuff to support the outflows of capital of those involved in the speculation. Extending the analogy only slightly further, we see why a "consumer services based economy" cannot long persist. We import the carpet-cleaning machine from China, but we cannot export the carpet-cleaning service. We import the yoga mats but can't export the yoga lessons. We bring in coffee beans but can't export the latte. The consumer services part of the US economy (the biggest part) sends money out but brings effectively no money in, feeding instead on money that is already in the system.

The fact that our consumer economy lasted as long as it did/has is a testament to why economics is a social science, rather than a natural one. Humans are inherently illogical, and economics needs an understanding of that as much as it needs equations to understand the ways in which we are logical. Economic theory worked out for any other species would perform terribly for humans, meaning economics is by necessity anthropocentric, and therefore a social science. This has allowed an economy with few inflows to persist by inventing imaginary inflows, known as international borrowing. Americans may not be able to give you anything back for your stuff, but if you lend us the money to buy it from you, we will promise that at some point in the future we will borrow more money from someone else to pay you back with interest. Stated this way, it is an obvious pyramid scheme. But we have preferred to think that because our economy is large, because it has been dynamic, we soon would no longer need to borrow. Instead, I hope, we have figured out that we have to consume at a level closer to the level at which we produce. Otherwise we are just eating our children's future earnings, which is a bit too close to cannibalism for my taste.


jte said...

I'm not sure the difference between humans and other species is so great. Individual humans behave in "illogical" ways (depending on how the outside observer defines the logic--including when the observer allows the actor to define the logic for his or her self). Is that different than for, say, animals? There are general patterns of behavior, and biologists can successfully postulate evolutionary explanations for the "logic" of those patterns; but the same is true for patterns of behavior by humans--recalling, of course, that some patterns are developed under one environmental circumstance, but can linger through behavioural inertia after the circumstances change. Then it might look like pure illogic, but in the bigger picture it's just the same lag-time process that affects evolution in other spheres. Yes?

Americans are human, and so are Chinese, so what you describe in your final paragraph is not a situation of universalized cannibalism but a case in which one fraction of the total population can perhaps be described as living cannibalistically while other fractions do not. And given the porousness of the borders to economic flows, I don't see how this can be properly analogized to a population that is specializing in cannibalism.

This isn't to say that the American economy can sustain permanent trade deficits. (Nor would any economist say that it can.) (Which begs the question, then, of how the logic of economic science differs from the physical science logic you offer for biology--at least in this regard. I don't mean to suggest that economics is something other than a social science as a general rule; just that I see an overlap between that social science and that biological/thermodynamic science on this issue.)

Etc., but time to get back to work.

jte said...

PS: not yet back to work, but...

You are right that economic bubbles must collapse. That does not extend to the "consumer services based economy." They are not analogous. Consumer services are no more bubblish, per se, than mining for bauxite. A bubble can be established that is based upon--but unsupported by--consumer service value, but consumer services do not necessary create bubbles that must burst. Consumer services are real values, as real as those from manufacturing. (Where "real" is from the realm of social relations, but no less real for that reason.)

Dan Levitis said...

Wrong on all three counts, and you only made two points!
Humans and animals are certainly both prone to behaving illogically, but their patterns of illogic cannot be quite the same as ours. As you point out, our illogic is (in part) the result of the process of natural selection shaping our neurology and physiology. The same is true for other species, but other species have different evolutionary histories than we do, meaning that their neurology and physiology must have different patterns of illogic written into them than we do.
A consumer services economy is necessarily unsustainable so long as the stuff coming in has a higher degree of order than the stuff going out. What results from a consumer services industry that actually comes out of the box, rather than just circulating in the box? Heat, garbage, CO2, sulfer dioxide, debt. What goes in? Lots of stuff we have nothing to trade for except promises.

jte said...

I concede that frog illogic and algae illogic are different from human illogic. We are in a class of our own, I suspect.

I don't concede the sustainability of a service economy, though you should know I meant my comments only in regard to the relative sustainability of a service economy as compared to a manufacturing economy (which is what I interpreted you to mean). I'm not sure what you mean about what's going into and out of the box. A legal brief is rather complicated, as far as I can tell. Does that mean anything here? You'll have to explain your argument against my argument better so I can argue against you some more.