by bobcousins » Sat 19 Nov 2005, 16:39:52
$this->bbcode_second_pass_quote('DefiledEngine', 'B')ut isn't it the current economic system that has bought us to where we are? Facing multiple resource depletions? If there had been no political intervention etc. throughout the history of fossil fuels, isn't it likely that we would have used up those resources way faster?
Aren't we sending off armies today to conquer valuable assets?
I was expecting someone to make that point. Modern economics doesn't cause resource exploitation, but it does make it quicker. All previous civilisations managed to over exploit resources without modern economics. Resource exploitation is a feature of the organism (overshoot applies to all species).
The free market appears at the moment to create unsustainable growth. But the principle of the free market is that it can also restrict demand, if supply is restricted. In microeconomics, this appears to work. If you look at the prices of commodities, they have maintained low prices (this was the subject of a famous bet by Paul Ehrlich - he lost).
The big question is will this work at the macroeconomic level? Is the free market only effective under the shelter of government policy? For example, it is mainly government programmes that are developing fusion power. No corporation would ever embark on such a huge project. If you look at teh supply/demand curve, a valid solution is found where the supply tends to zero and the price tends to infinity! This is a "market solution" but it doesn't help us if it kills economic activity.
Clearly, the free market has limits. It is not a panacea like economists seem to think. I think the key is to let the free market operate where it has strengths, and use government planning to compensate for its weaknesses.
For example, the free market is an efficient way to manage resource allocation over the short term. A central beauracracy directing individual trucks and shop keepers would be horribly inefficient. On the flip side, the free market is very bad at strategic planning. That is where government programmes to develop and encourage alternatives over the long term come in (by legislation or direct funding).
Of course, it may turn out that modern economics stuffs us up completely, and future economists lit by the flicker of candlelight will scratch out treatises on the importance of a planned economy. But the fact that we have more advanced economic theory makes our civilisation different, which is why it is hard to make direct comparisons with the past.