Back in 1968 the book “Limits to Growth” stormed the world. Computer models predicted that humans would run out of almost every resource, overshoot carrying capacity, then crash.
It was well known and widely discussed and combined with the oil crashes, made the 70s a ferment of practical and theoretical work on alternative energy, different ways of farming and so on.
Almost all of that came to an end in the 80s, with Reagan. Carter had put solar panels on the White House, Reagan had them torn down. A decision was made to crush wages and thus the oil consumption of ordinary people, while bringing new sources online as fast as possible. Obama, with fracking, made the same decision, by the way. Essentially the exact same decision, but even more successfully, turning the US back into a HUGE producer of oil.
But what’s important today isn’t all of that, which I’ve discussed at tedious length in the past.
Instead I want to discuss the basic argument against the “Limits To Growth”.
“We will substitute away.”
In other words, alternate energy will step up and we’ll move away from oil and coal. We’ll find substitutes for steel and nickel and rare earths and anything else in short supply.
BUT what matters is the metaphysics of the argument. When the people making this argument said it would happen, they assumed “the market” would do it.
Which, it sort of has, but too late. Much too late.
There was a strong assumption that prices were information which stored in them all known information about the past and the future, and that therefore prices would drive self-interested people to make the necessary substitutions or find new sources.
To market disciples, the market’s “free hand” was like God, all-knowing and all-powerful and weirdly benevolent. All we had to do was let the market run and it would solve all our problems.
So why didn’t that happen?
Well, to start, the market doesn’t price the future well at all. Never has, and never will. People making decisions in 1970 will mostly be dead before all this stuff matters, and the same is true of people making decisions in the 2010s. Even if they aren’t dead, is there anything in human history which makes us believe humans are good at making very long term plans, over decades to generations?
Why would you believe the market would do it based on a discipline which suggests humans are rational and know what is good for them and act rationally to get what is good for them? (If you believe all of that, you are more of a fantasist than some fanatic whipping himself while screaming for God to save him.)
Now I’m not concerned here with the hypocrites: the people who knew this was all bunk but expected to get rich off it (they were, in a real sense, very rational. A bad future they don’t see or don’t care about, “I get 50 good years and die rich when the bad times come, whatever” isn’t a reason not be rich now, if you don’t care about future people.
But many many people really believed this bunk and the issue is that by believing that the “market” and “price signals” and *vague hand waving* would solve the problem: by saying “we have a system that solves these problems automatically by giving correct feedback” they made it impossible to solve to the extent that they were believed. (And remember, huge amounts of money were run on the markets for decades based on these ideas. People believed and put their cash on the line.)
In fact, of course, we could have taken the warning of “Limits To Growth”, “Peak Oil” and “Global Warming” and used them to make changes.
Ironically a lot of those changes would be exactly what the disciples of hand-wavy “market” crap suggested would happen automatically.
Use markets and public policy: massively subsidize alternative energy and research so that where we are with solar today is where we would have been in the 90s. Massively research alternatives to bottleneck resources. Stop over-fishing, by force if necessary. If you’d rather get more resources or if you want more than one strategy, massively fund space exploration with an eye to mining rather than defund NASA in waves (Obama, classically, did the worst cuts to NASA ever, but their funding should have been increased in the 70s.)
Warnings only serve those who heed them and when you believe in metaphysical entities which don’t have the attributes they think they do (God, Markets), then you don’t act to save yourself. Markets were never, by themselves, going to miraculously do what needed being done in time. Oh sure, price feedback has eventually gotten us some decent solar, and so on, but decades later than we needed it.
Markets are human creations, like God, and to work correctly they have to tuned for the problem at hand or, even (heresy) one has to consider that there are things that Markets can’t do, or are bad at, and find other solutions.
So here we are, and markets have not made everything good and the world’s forests are burning and we’re about to have another oil boom, as best I can tell.
Like God, mis-using markets or assigning them powers they don’t have, leads to terrible consequences, so get ready for the invisible hand to slap us silly.
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