The Wealth of Nature. John Michael Greer

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СКАЧАТЬ peak of conventional petroleum production in 2005; economists responded to those shortfalls by insisting that declining production is simply a sign that the demand for fossil fuel energy has decreased. No doubt when people are starving in the streets, we will hear claims that this is simply a reflection of the fact that the demand for food has dropped.

      It may be worth exploring an extreme counterexample in order to clarify the limits to the law of supply and demand. Imagine that a plane full of economists makes a forced landing in the Pacific close to a desert island. The island has no food, no water and no shelter; it’s just a bare lump of rock and sand with a few salt-tolerant–grasses on it. As the economists struggle ashore from the sinking plane, the demand for food, water, and shelter on that island is going to be considerable, but even if each of the economists has a million dollars in his or her briefcase, that demand is going to go unfilled, until and unless a ship arrives with supplies from somewhere else. The lesson here is simple: economics does not trump physical reality.

      More generally, the theoretical relationship between supply and demand functions only when supply is not constrained by factors outside the economic sphere. The constraints in question can be physical: no matter how much money you’re willing to pay for a perpetual motion machine, for instance, you can’t have one, because the laws of thermodynamics don’t take bribes. They may be political: Nazi Germany had a large demand for oil from 1943 to 1945, for example, and the Allies had plenty of oil to sell, but anyone who assumed on that basis that a deal would be cut was in for a big disappointment. They may be technical: no matter how much you spend on providing health care for an individual, for instance, sooner or later it will be of no use, because nobody’s yet been able to develop an effective cure for death.

      Economists have come up with various workarounds to deal with external factors of this sort, some more convincing than others, but an inability to see economics as a subset of a much larger world governed by non-economic forces remains endemic to the discipline, and has caused some of its more spectacular failures. That inability undermines the theory of free markets governed by supply and demand: however pleasant free markets look on paper, they do not exist. Strictly speaking, they are as mythical as hippogriffs.

      It occurs to me that some of my readers may not be as familiar with hippogriffs as they ought to be. For those who lack so basic an element of their education, a hippogriff is the offspring of a –gryphon and a mare; it has the head, body, hind legs and tail of a horse, and the forelimbs and wings of a giant eagle. Hippogriffs are said to be the strongest and swiftest of all flying creatures, which is why Astolpho rode one to the terrestrial paradise to recover Orlando’s lost wits in Lodovico Ariosto’s great poem Orlando Fu-rioso. Their only disadvantage, really, is the minor point that they don’t happen to exist, and planning to use them as a new, energy-efficient means of air transport, for instance, will inevitably come to grief on that annoying little detail.

      Free markets are subject to the same problem. There have been many examples of market economies in history that were not controlled by governments, but there have been no examples of market economies that were not controlled at all, and if one were to be set up, it would remain a free market for maybe a week at most. Adam Smith himself explained why, in memorable language: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or some contrivance to raise prices.”¹⁰ When a market is not controlled by government edicts, religious taboos, social customs or some other outside force, it will quickly be controlled by combinations of individuals whose wealth and strategic position in the market enable them to maximize the economic benefits accruing to them by squeezing out rivals, manipulating prices, buying up their suppliers, bribing government officials and the like — that is to say, behaving the way capitalists always behave whenever they are left to their own devices. This is what created the profoundly dysfunctional economy of Gilded Age America, and it also played a very large role in setting up today’s economic troubles.

      There’s a rich irony here, in that the market economy portrayed in textbooks — in which buyers and sellers are numerous and independent enough that free competition regulates their interactions — is a form of commons, and a great many people who claim to be advocates of the free market have spent years arguing that commons should be eliminated wholesale in favor of private ownership. All commons systems, as Garrett Hardin pointed out in a famous essay,¹¹ have to be managed in ways that prevent individuals from exploiting the commons for their own private benefit; otherwise they fail. The 2009 Nobel laureate in economics, Elinor Ostrom, won her award for demonstrating that it’s entirely possible to manage a commons so that Hardin’s “tragedy of the commons” does not happen,¹² and she’s quite right — there have been many examples of successfully managed commons in history. Strip away the management that keeps it from being abused, however, and the market, like any other commons, destroys itself.

      The Market as Commons

      Heretical as this concept may be in term of contemporary economics, it can be demonstrated easily enough by a piece of economic history within the experience of many of my readers. Consider an old-fashioned shoe store of the sort most American towns of any size had 50 years ago. Most of the profit that paid the store’s bills and kept its proprietor fed and housed came from shoes of a relatively modest number of standard types and common sizes, but the store also carried types and sizes that were of special interest to local customers, including some quite unusual ones — for example, orthopedic shoes for a regular customer with foot deformities — and also provided shoe repair and alterations and a range of shoe-related products tailored specifically for the needs of the local market.

      Such businesses could be quite successful, but the fact that most of their profit came from a fraction of their total line of goods and services made them vulnerable to competition from businesses that offered only those profitable lines. This was the opening that department stores exploited in the postwar years. As they expanded out of the large cities, they provided shoes in the more popular styles and sizes, without the other goods and services the local shoe stores provided. Since the department stores did not have the costs associated with these other goods and services, and could draw on economies of scale out of reach of local shoe stores, they could sell their products more cheaply than the local shoe stores.

      As a result, customers went to the department stores rather than the local shoe stores and many of the latter were forced out of business. This meant that many of the specialized goods and services that had once been available in towns across America — in this example, shoe repair — stopped being available, except to those willing to travel to a city large enough for a shoe repair store to remain viable on its own, without the income stream the old stores had received from the sale of common varieties of shoes.

      Nor does the process stop there, for the department stores turned out to be equally vulnerable to discount shoe stores, which provided even fewer services and an even more restricted range of styles and sizes, and thus either outcompeted the department store shoe departments or forced them to follow the discount store model. The result, in most North American towns and a surprisingly large number of cities, is that the only shoes available to consumers at all are cheaply made, poorly fitting mass-produced shoes in a small range of styles and sizes, sold in discount shops by clerks who wouldn’t know how to help a customer find a shoe that fits even if that were part of their job description.

      This logic is by no means limited to shoes. The same race to the bottom in which quality goods and services become unavailable and local communities suffer has taken place in nearly the same way in nearly every industry in the industrial world. A torrent of cheap shoddy goods funneled through Wal-Mart and its ilk have driven local businesses out of existence and made the superior products and services once provided by those businesses effectively unavailable to a great many people. In theory, this produces a business environment that is more efficient and innovative; in practice, the efficiencies are by no means clear and the innovation seems mostly to involve the creation of ever more exotic and unstable financial instruments — not necessarily the sort of thing that our СКАЧАТЬ