The Green Gap

In the Cold War, we feared a Missile Gap was a strategic weakness. Nowadays, we must awaken to the fact that the Green Gap is true strategic weakness: the nations whose economies will thrive in the coming years will not be those with the biggest factories, but those with the most sustainable, efficient, and ecological markets. What we require is a Strategic "Green Reserve" of ecological design to weather the coming changes that both climate and resource scarcity will force on the international economy.

Thursday, 3 March 2011

Of Amphorae, Sea Containers, and Jane Jacobs

So I just finished The Nature of Economies. Good, done in truly ancient literary style, and pretty open ended. Jacobs doesn't much try to explain how or why things happen, she simply explains what happens - which is actually far more useful than a lot of economic theory that's been written in the past couple hundred years. I still prefer Cities and the Wealth of Nations, partly because I feel the narrative style slows down the transmission of information and Cities and the Wealth of Nations is written in a far more textbook style. I do like The Nature of Economies simply because it elucidates clearly the connexions between economic and ecologic systems.

One of the keen insights that I struggled to get my head around was the concept that imports are actually a better sign of economic growth than exports. If you think about it, though, it's true. A forest keeps taking on sunlight, using it to power chemical reactions that keep energy cycling through the system for as long as possible. None of the energy is lost unless it's taken out in the form of hunting, logging, trapping, or harvesting. The more energy enters the system, the more lush, diverse, resilient, and productive it becomes. If a new animal enters the system, it brings its biomass and chemical reactions into the mix, adding to the overall wealth of the system. Cutting down trees is export. Sunlight is an import. A new species or new animal is an import. Exports actually remove natural capital from the forest.

Now, exports done right can actually help a system. Exports of lumber, intelligently harvested, can allow niches for other trees or other plants to grow. Keeping a predatory species in check can allow a prey species to expand. If these modifications are minor and temporary, they will not affect the system. But removal of predators can make prey overharvest their food sources, explode into abundance, and lead to an explosion of predators in response. Left unchecked, they can denude the ecosystem of their own food, and be forced out, making the entire ecosystem poorer by three species: predator, prey, and the prey's food.

Our current economic model attempts to keep a steady flow of exports going by making the resulting products disposable. It could be said that that's a natural way for us to exist as humans - we disposed of stuff in nature when we wore animal skins. Nowadays, however, we don't. We bury stuff. We burn it. We don't allow it to return to the ecosystem in a useful form. It gets taken out of the ecology (hence the economy) and loses its innate value.

It's like the trade amphorae of the ancient Romans. Rome used amphora only to transport goods, not to keep them. Trade amphorae had purposely pointy bottoms and slender shapes - totally useless for putting on a table or in a flat-floored storeroom - so they could be put into racks on ships. They were cheap and couldn't sit upright on a flat floor, so once they were transported across the Mediterranean, they were shattered, and new amphorae were purchased with the next shipment. The potters kept employed, and all was well with the world.

I simplify too much sometimes, but you get the point. People kept getting paid for doing the same (export) work. Clay reserves were diminished, natural capital in one area turned into waste in another, and it was not returned to the economy in any kind of large-scale systematic way.

Nowadays, we have intermodal containers. Containers are made by a variety of companies on standard sizes. They stack, fit container cranes throughout the whole world, and are durable enough to be used for other purposes once they end their service life. They are a brilliant solution to the problem of standard cargo units, and what's more - the more containers that are produced, the more containers there are. They are eminently reusable. Trade volume doesn't decrease that often nowadays, and containers are always needed. The more containers there are, the more trade can occur through them. Sea trade being the cheapest form of moving goods by far, the number of containers in the world is actually very important. In other words, the ecology of trade holds on to the energy that went in to those containers. The growth in the number of containers grows the carrying capacity of the sea trade system. Trade itself is able to develop concurrently with the total number of containers in circulation. If containers kept leaving the system, there would be more container makers, but there would be less cheap trade by sea.

Our interest in exports is an interest in money. Money is not wealth, capital is wealth. Capital isn't money, it's the ability to make money. The longer you can hold on to and reuse your capital, the more you amortise that investment, the more money you stand to make. This is why stopping waste isn't about saving the environment - that's just a very pleasant side effect (and one I am particularly interested in achieving). The real benefit to stopping waste now is that throwing stuff away diminishes the entire economy by depriving that economy of capital. Yes, friends, even poo is capital.

So, really, the more natural capital that enters an ecosystem, the stronger it becomes. The more capital that enters an economic system, the stronger it becomes. Imports are real wealth, not exports; exports are just money.

Imports are capital.

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