The notion that a market economy is the only basis for human economy has been supported by a massive propaganda campaign of unprecedented scope.  It is taken as an article of faith by nearly every American that every planned economy must be accompanied by merciless tyranny with the Soviet Union cited normally as the principal example and proof.  Before I prove that market economies are unsustainable if not positively harmful and immoral, it might be worth mentioning that (i) no proof of the principal claims of market apologists has ever been offered and (ii) not every form of economic planning has been considered.  When the argument presented here has been assimilated, it is safe to say that it is incumbent upon those of us who understand the finiteness of the earth and the limits to growth to give serious thought to the problem of crafting a planned economy that does not suffer from the defects of past attempts to replace market economies.

What I found instead at the Austin meeting of the Association for the Study of Peak Oil (ASPO) was religious faith in market economies and, in fact, widespread intention to profit in the marketplace because of a better understanding of fundamentals than most traders.  Whatever I said in support of ERoEI* as a tool to determine feasibility was studiously ignored, presumably because it showed that every energy technology considered by the ASPO is infeasible (unsustainable) in a market economy – but possibly because my personal attributes do not meet the requirements of the ASPO for speakers, namely, youth, physical attractiveness, imposing stature, and a large public presence.  It seems that my only (slim) hope to overcome the prescriptions for doom advocated by speakers at the Austin meeting is the internet.  I plan to enter this document in my new blog at http://eroei.blogspot.com/.

The late David Delaney gave the best explanation of why capitalism and, in turn, market economies in general require economic growth. “The Economic Growth Trap”, which can be found at http://www.dematerialism.net/economicgrowthtrap.htm, begins as follows:

Various manifestations of market economies can be contrived to avoid all of these except the need to maintain tolerance of inequality.  Indeed, any steady-state economy that permits any sort of resource dominance will eventually devolve to a class of rich people who have been adept at acquiring wealth and a much larger class of losers in the competition for wealth who are not much better off than feudal surfs.  In the wake of Peak Oil, it is not clear that the losers would not become victims of Die-Off.  Any attempt to mitigate this unstable situation will be perceived as economic planning.  If society waits until instabilities arise, most of us may not like the sort of economic planning that is forced upon them.  Serfs liberated by revolution might not treat their former masters charitably.

But, according to papers I have written in the past such as “Energy in a Natural Economy” furloughed managers and financiers might be accorded equal shares of the sustainable community dividend measured in energy units with perhaps the energy that they would have expended by virtue of their participation in the economy as employee, employer, investor, trader, or hustler subtracted from a useful worker’s share. Indeed, it is time for us to channel some of the considerable creativity we have demonstrated in market activities toward the design and implementation of sustainable planned economies in which democracy is retained, tyranny is avoided, population is maintained at or near the optimum, and the greatest happiness possible for nearly everyone is assured.  I continue to dream of Earth as a garden.

4 Comments on "Why We Need a Planned Economy"

BillT on Wed, 5th Dec 2012 1:18 am 



Of course other economies work without oil. They just don’t make a select few multi-billionaires and allow millions to make money without producing anything. Allow the current system to collapse and something will replace it quickly as trade still needs to happen, but on a lessor scale. Reserve oil for the things that only oil can do and find a substitute or do without for the other things.

Quinny on Wed, 5th Dec 2012 6:04 am 



The Market is a good servant but a bad master!

Arthur on Wed, 5th Dec 2012 7:50 am 



The basic question is not how to save the market economy, let alone how to erect a socialist planned economy, but how we can save civilization under the new reality of resource depletion. The big contours of this new reality can already be discerned:

– reverse globalism in favour of local production and trade. Protectionism is no longer a dirty word.
– energy saving on all fronts
– stimulated if not obligatory investment in local energy production, that is wind, solar, bio, hydro and geothermal. Tell communities they have to bevome energy independent in a timeframe of say 10-15 years.
– prioritize application of remaining fossil fuels: agriculture comes first, car production and aviation comes last.
– replace wellfare partly with a kolchoze idea: you can get food in return for work at a community farm. No more free handouts.
– increase retirement age. Flexible arrangements enabling to work longer but ever less hours.
– the internet is going to be the backbone of economic life and will play an ever greater role in information exchange, work organization, education, transactions, buying and selling, auctions, etc.

BillT on Wed, 5th Dec 2012 8:55 am 



Arthur, you are correct, but…most of the first world would prefer to charge right over the cliff and go quickly than to take the slow withdrawal to a lower standard of living and the 3rd world. They have been brainwashed for all of their lives and cannot contemplate anything different. Nor will they even consider it even as they sense their coming demise, just as a zebra can sense the lion in the brush but keeps on grazing.