Moving on - the Economy as a Set of Interlocking Paradoxes

One of the things that stalled the unrolling of my 2006 book manuscript into this blog was my feelings of ambiguity over my chapter dealing with the economy. In 2006 the world seemed to be in a fantastic boom period with not a cloud in sight, while my analysis of the Peripheralizing World suggested we were headed for a very turbulent period of economic uncertainty and change. I doubted my own analysis, based on the evidence in front of my eyes.

In the three and a half years since I first wrote these ideas out, the world has become a very different place. Although the economists are still spinning out a story of growth and development in a "business-as-usual" mentality (an idea I have indicated time and again in these postings simply cannot be maintained by any intelligent observer of today's world!), they are now forced to acknowledge that the world's economy is also beset by "some difficulties". If you listen to the politicians and the economists they hire to present the situation to the public, we are experiencing "local events", that is, the tail end of a "housing crisis" brought about by a lack of regulation in the banking system, followed by the collapse of the Greek economy, no doubt rendered fragile by the worldwide effects of the housing crisis in the US economy. There is no understanding of these events within a broader, cross-disciplinary framework of socio-economic-environmental change.

On the other hand, despite such "official" positions, I find my own ideas and arguments have been reinforced and substantiated by recent events, and although I still feel "precipitous" to make economic proclamations, I also feel that perhaps the time is right to put these out into the public discourse, right or wrong. Even if they are wrong, I think they raise interesting questions about the nature of the world and the socio-economic environments within which we function. I also think that we need to break through the "expert-only" mentality that says only trained economists can talk about the economy. In the context of cross-disciplinary perspectives, one can infer almost as much about the economy from other connecting studies as from economic analyses directly, perhaps more. Therefore, someone with a good grounding in relevant disciplines may actually have something intelligent to say about the economy, even without direct training in the latter. Well, so much for my attempts to bolster my credentials!

“Paradox I now see to be inevitable, endemic and perpetual. The more turbulent the times, the more complex the world, the more paradoxes there are.” – Charles Handy, The Age of Paradox (1984, p. 12)

The economy in a post-sustainable world is almost inevitably going to be characterized by zero growth, at least in terms of today’s standards. Any growth that will occur will be localized, limited in time, and offset by decline in other areas of the economy. Although today’s experts have divided opinions concerning how such an economy can function, the world will have to find or invent a way to make it work. All indications are that the world will have to give up its dependency on fossil fuels over the next twenty to thirty years, and there are numerous studies that tie economic growth to energy use. So with declining energy use and declining population growth, the emergence of a zero growth economy seems assured.

A zero-growth economy

What do we mean by a “zero-growth economy”, though? Why all the fuss?

Such innocent-seeming questions take us into the heart of modern economic theory and its paradoxes. Economic theory today is in a bit of a shambles. There is no complete theory for the global economy, not one that can be trusted to serve as a guide to policy. This despite the fact that many national governments have staked their fiscal policy on one theory or another. Regardless of the various economic theories presently in circulation, however, all, or almost all, assume as an initial condition that the economy grows. Furthermore, this is an assumption, not a conclusion.

As a result, if the assumption is challenged, the whole fabric of the theories and their predictions begin to break down, without any explanatory power to deal with the situation of zero-growth. This is, in a nutshell, the source of the disarray over the idea of a “zero-growth economy”. This is why there is a fuss. Some economists, when questioned on this issue, blithely assume that “somehow” the economy will continue to function as it always has. Others predict the collapse of the whole system. But both these reactions are, essentially, blind, almost instinctive reactions in the complete absence of any real data. They have more to do with the emotional propensities of
their proponents that to any real world behavior.

What is the way out of this dilemma? Without pretending to deep economic understanding (I am not an economist, perhaps fortunately!), the beginnings of an alternative view would appear to reside in an analysis like that of Jane Jacobs (Jane Jacobs, The Economy of Cities, 2001; Jane Jacobs, Cities and the Wealth of Nations, 1984; but also, Jane Jacobs, Dark Age Ahead, 2005.) Jacobs argues that the whole idea of global management of the economy is a non sequitor, it is the misapplication of a principle at the wrong scale. She argues that the real economy resides in the functional operation of cities, and that the very notion of a national economy is nonsensical. She uses an analysis of an ancient city, which had its own currency, as a touchstone for understanding the organic nature of the feedbacks that exist between a city’s economic development and the corrections that currency fluctuations introduce. In a few words, a currency’s fluctuations are in direct response to city conditions and automatically correct a city’s economy towards economic health. When a currency is applied to a larger region involving several cities, a number of anomalies creep in – the system of checks and balances no longer operates to correct the dynamics of the city.

The basic tenet for her idea is that cities are complex systems that concentrate the ability to replace imports on which they depend with local innovations. Each time this replacement activity, which occurs in a burst, happens, the city diversifies itself and attracts new workers to support the production of the new products. Then, it begins to import new categories of products, often luxury or unusual items that are not produced by the city itself, and exports the local innovations. Over time, the city becomes dependent on the new class of imports, and goes through another replacement burst. A city, therefore, cycles through phases where there is a dependency on exports, followed by one on imports and then the replacement burst. When in the part of the cycle dependent in imports, the value of the city’s products are lower and this exerts a pressure to reduce employment. During the replacement burst, employment pressure grows dramatically and the value of a city’s products go up, while the value of imports drops. If the city has its own currency, the fluctuation of currency values will support this cycle, dropping when in its import stage and rising when in its export stage. These changes in currency value will serve to pressure the system into moving on to the next part of the cycle – a lower currency value will make imports more costly still and encourage the development of import replacements, while at the same time keeping the cost of living low when employment is down. A higher currency value will increase the value and return on investment of exports, eventually making the exports too expensive and hence shifting the economic focus back to imports. Jacobs argues that the move to nationally managed economies and national currencies created perverse conditions where a city’s production cycle no longer receives the right feedbacks and hence may go into permanent decline.

The judicial use of trade tariffs and regulations at the national scale can partially offset these difficulties, but this is most effective for small nations with a single major metropolis. Jacobs argues that, overall, the use of a “national currency” acts as a kind of systemic pressure that slowly emphasizes one metropolis over all others within the nation. All nations move towards a “one city, one nation” environment. For small nations, this is close to the natural organization of the country. For large nations, especially geographically large nations, this creates anomalous effects that may hamper economic development, since a majority of the population resides outside the main city.

Paradoxically, this is without doubt the reason for the re-emergence of large cities as economic entities in their own right. The rise of the internet with its opportunity to form new social arrangements that start to break down the population’s sense of belonging to its national culture and government, is leading to a growth of awareness of the “major players” in the economic world – and cities are benefiting from this shift of awareness. Without necessarily accepting all the precepts of Jacobs’ arguments, this constitutes a very powerful argument for a society in transition, away from the imposition of orthodoxies (of which nations are a highly typical example) to a greater contact with paradox.

However, the globalization of the world economy has led to the emergence of other effects that are not directly addressed by Jacobs’ groundbreaking ideas. Indeed, it has become clear that the environment must be managed at a planetary level – nations are poor drivers for this, as they tend to focus on their own specific needs to the exclusion of those of others. Because we all live in the same world, there has been a net progression towards more effectively addressing the problems we have created in the environment, but this work has been undertaken at the level of world-wide organization. A return to city-based economies will not address this problem.

Also, the internet itself provides an extremely powerful global structure for the economy. In a sense, the internet acts as a kind of “virtual city”, with a market economy not unlike those of individual cities. However, its global nature makes it an effective tool both for social change and for economic development in a way that bridges regions and distances.

Third, the globalization of the world economy has created huge opportunities for wealth. With fewer currencies in circulation, and dramatically reduced presence of trade tariffs, economic activity in one area can rapidly influence activity in another area. It is a situation ripe for the operation of the “butterfly effect” in economic terms. While national economies are a kind of nonsensical structure, a global economy is a different kettle of fish. It has its perversions also, but there is a dynamic that operates globally that is not yet understand and is participating in the
profound social changes in progress.

Jacobs argued that managing the economy beyond the scale of a city makes little sense. This is where I part company with her analysis. I believe that there is a global systems dynamic that operates through and around the internet. However, I disagree with those who seek to create a “unified global economy” or that the current globalization necessarily takes us to such a situation. Rather, I believe we are headed towards a fragmentation of the economy, not in regional terms, but in the broad framework I have outlined here – at least three different, partially connected
economies, with several splinter economies also at city scales.

The global economy

Current future thinkers are suggesting that, not only are our national economies connecting with each other in unprecedented ways, but that this is leading to a situation where the income extremes are lessening, and may, eventually, disappear (Note that Jacobs was more critical of such ideas. She believed that management efforts that seek to impose controls are destined to fail – instead, we need to restore appropriate checks and balances. She argued against loans and so-called development help, which is partly what is proposed to deal with the African continent, and, indeed, suggests that poor agriculture is not primarily a problem of climate and geography, but of the lack of city development. Her arguments do not, however, constitute a direct contradiction to the ideas presented here. From a systems perspective, the large inhomogeneities between regions may well tend to subside, even when Jacobsian dynamics are included in our considerations). Until the late 1990’s, the world’s poor were concentrated in both Asia and Africa. Now, only Africa is left (except for pockets throughout the rest of the world). It was believed, up until the sudden change in the Asian economy at the turn of the century, that corruption was the primary cause of poverty (see Jeffrey Sachs). Now, with several Asian countries still rife with corruption doing reasonably well, it has become apparent that this is not the case.

Jacobs’ arguments about city-based economies applies here. Jacobs discusses a number of “hinterland” effects of large city economies that can be extremely destructive for local economies. One of these effects is the development of a “supply region”. A supply region is a region whose main purpose is to supply a city, often located at a considerable distance, with needed products. This results in the implantation of an economy within the region that serves to support the local population, but only as long as the product need exists. Because these regions do not develop into a diversified city culture themselves, they are totally dependent on the distant city for their existence. And, as already mentioned, the way a city functions, it will eventually find a way to replace such dependencies with new products that can be produced more cheaply and closer to home (often involving the development of new technology). Jacobs points out that colonies served as supply regions for their founders, and that much of the developing world acts, essentially, as a vast supply region for cities in the developed world. She points out so-called “developmental aid” – loans and injections of foreign capital, usually exacerbate the problem rather than solving it. The effective solution is to encourage the development of local capital and local business environments that have the ability to develop replacement economies. This means that they must trade with regions of similar technological and economic level, in order for the replacement principle to operate (i.e. they must have to ability to develop local products of higher quality that the imports that are not produced locally). If the economies with which trade develops are advanced cultures, this replacement can never take place.

The emergence of the Asian countries as economies of force in the world marketplace actually confirms her ideas. The cities that are at the source of the changeover include Hong Kong, Taipei, and Shanghai. These are all cities that developed through particular funding arrangements into replacement city economies. Furthermore, they traded first of all with other cities in the region – trade with advanced western cities is much more recent. These cities have now become competitive with many cities in the developed world – they were able to replace imports from the west and produce local variations of them more cheaply and more effectively, with quality near that of the originals. Now they have become net exporters of these products and are flooding western markets with them.

The route out of Africa’s poverty will need to follow a similar path. This is now being recognized by a variety of organizations, both within and without Africa. Projects such as the Millennium Cities Initiative (http://www.earthinstitute.columbia.edu/news/2006/story04-24-06b.php) aim to enhance the economies of African cities with just such a viewpoint in mind. Hence understanding of the source of such poverty has grown by leaps and bounds and through appropriate international investments, it is appears possible now to alleviate the extreme poverty of nations in this situation, regardless of social and political factors that may degrade the effectiveness of this aid. In a highly connected, zero growth economy, large economical disparities will disappear. System dynamics argue for this. Instead, we will have a constant "bubbling" of economic replacements at a range of scales. In contrast, in today’s world, the economy is driven by large gradients that are often geographically organized – and these gradients occur when there are differences in quality of life while buying power stays high. The world’s poor, although they suffer from low quality of life, also have low buying power. But, as we have seen in Asia, when buying power soars, quality of life improves dramatically (leading to improvements in education and a corresponding drop in population growth rates).

These changes occur within an economy that combines regulation and free market forces. It is now widely recognized that economies that are regulated only in limited ways do poorer than economies that have a good mixture of both, while economies can also lose efficiency if they become too highly regulated (Hank P. Savitch and Paul Kantor, 2004, Cities in the International Marketplace: The Political Economy of Urban Development in North America and Western Europe, Princeton University Press: Cambridge, Mass., 480 pp.). Finding the right balance varies from one situation to another, depending on cultural and other values, but all economies that do well are in the middle field.

Furthermore, it has become clear that cities are the motors of good economic health. In the 21st century, economic management will shift towards a greater emphasis on city scales and on global scales, with a corresponding downplay at national and regional scales. Also, there must be a return of awareness of the natural cycles that regulate an economy. Currently, all national governments throughout the world are focused on the need for innovation to be more competitive. But as highlighted by Jacobs’ analysis, there are times when innovation is the opposite of what is called for. Indeed, innovation emerges spontaneously when an economy is in the right state of readiness (at least, this is true of a city economy). Jacobs pointed out that, historically speaking, this innovation often begins with artists – it is artists who seek to replace imported goods with local equivalents of high intrinsic value, and these equivalents are then modified and used in other applications. Hence the current pressure for generating innovation “at any cost” is another perverse effect of the existence of national economies. It is an attempt to find a cure for the desultory economic development of national economies, when the source of the problem lies elsewhere (i.e. with the definition itself of a national economy!).

The corporate and consumer worlds

What kind of consumer economy will function effectively in a highly connected, zero growth world environment? Business is already changing, with the emergence of the internet as an effective economic force. The technologization of the business world and the merging of networked computing with web-based services will continue to exert huge pressure on business. This ongoing transformation may appear to be rooted in technologically driven change, but it shares with the other social changes in play the shift from a centralized economy to one in which peripheral effects will dominate.

Today, the vast majority of businesses function locally in steady-state conditions – one has only to think about the “corner store” to see this in operation. Physical location is still important, and likely to remain so for some time to come, especially as energy costs increase. Cities, in particular, are gaining in importance, and a new, worldwide, city network is currently emerging.

In a post-sustainable world, the context within which businesses will operate will be different, however – our living communities will be globally networked as well as locally rooted, and this will create pressures that will lead to new economic arrangements. The human need for progression, in the absence of population growth driven development, is leading to an increasing tendency to incorporate social values within the global economic marketplace. Today’s governments have come to recognize the importance of the so-called “social economy”, that part of the economy built on not-for-profit organizations and volunteer work. (For example, current Canadian statistics suggest that the social economy constitutes about 3% of the GDP, while government defined broadly generates about 12% of the GDP. Combined, the social economy may be said to represent 15% of the GDP today. However, these statistics should be treated with care – what they measure is still money. The social economy actually generates considerably more health than wealth, but our current measurement means do not account for this. They only track the wealth component.) The emergence of Web Two Point Oh businesses on the internet, of which the most prominent example is almost certainly Google, is accelerating this shift towards socially focused businesses.

In addition, bartering is emerging worldwide as a “new” source of economic power. Some, such as e-Bay, are based on the use of money, while others trade product for product or service for service. This forms the basis for what I call the shadow economy. (Today, the term “shadow economy” refers to that part of the economy that escapes taxation and other forms of regulation, but this usually includes monetary exchange. My use of the term is somewhat different. In the post-sustainable world, universal taxation will likely not exist in the form it takes today, since a variety of different “social contracts” are expected to come into being and participation conditions will vary. Choosing to avoid regulation is certainly a form of shadow economy, but the use of non monetary means of exchange constitutes a second form that may serve this need but has somewhat different consequences.) With the increase of non-monetary bartering within the business world, and the increasing use of corporate organizational structures within the social economy, this shall lead towards co-existence and, eventually, perhaps partial fusion, of the social and consumer economies. What is today a fundamental difference between not-for-profit societies and for-profit corporations, is already blurring and, in many cases, may disappear.

One of the means under discussion to change the focus of the monetary economy is to create new currencies based on limited resources such as energy production capacity or byproducts such as pollution (“Eliminating the Need for Economic Growth”, a Foundation for the Economics of Sustainability document, http://www.feasta.org/documents/energy/Feasta_Stern_Review2.htm). These alternative currencies are often regulated by a diminishing total supply, and hence their use favors a gradual reduction in reliance in these resources or byproducts. The creation of such new economies may offset the risk of a collapsing mainstream economy as overall growth slows.

Furthermore, it is likely that our living environments will also change. We shall increasingly live in worldwide, networked communities of individuals and groups with shared learning needs, in which both physical locality (especially cities) and non-localized social affinities (e.g. through the internet) work in tandem. This will result in the limited movement of people from one physical location to another within a given networked community, and will ensure the continued existence of the tendency to homogenize goods and services offered across different locations within the network. There will be interest in local communities and the specific cultural environments they have to offer, but there will be a tendency towards the development of global franchises. Furthermore, these living communities will likely be based on social contracts that are legally binding and will eventually replace current national systems. It is therefore likely that businesses will operate across many different legal regimes, even within a given locality.

Predictions are also almost universal that energy production will drop over the next twenty to thirty years. Oil production is near its limit, and alternative energy sources are not as “energy-rich” as petroleum products. There will therefore be a global shift towards less intensive energy consumption and changes as dramatic as those discussed elsewhere in this text in the organization of business and trade worldwide, in transportation services, and so forth. This will result, for one thing, in a drop in tourism and business travel. Long distance travel may well be more heavily focused towards maintaining new networked living arrangements, eventually, and not almost exclusively, as today, on business travel and tourism. Within the transition period, movement to the benefit of the social economy shall also increase.

Finally, as shall be explored in more depth later, there will be an intermediate period during which large inhomogeneities in wages and production costs will occur (this is already in play). This is resulting in the establishment of global methods of moving goods and services from one location to another*. Once created, even as the inhomogeneities begin to dampen out, this infrastructure will serve the new circulation structure of the economy and encourage a certain segmentation of the market place as a function of locally determined strengths and weaknesses.

Our economy will continue to function both locally and globally. In addition, larger businesses may feel the pinch sooner**. Although many businesses will sell to broader markets, the majority will remain focused on serving small, albeit networked, communities. What happens to big businesses, however? These will clearly be impacted by an economy that changes along the lines we are projecting. As we move towards a global zero growth economy, we can expect new currency-based economies as described above, to develop in many areas. Some cities may decide to form their own currency and break away from the global currency basis. Each currency, whether monetary in the traditional sense, or not, provides a means to treat a variety of activities not necessarily focused on direct production of consumer goods and services as a form of business development, and to shift trade and market development to arenas not driven by traditional quantitative production incentives. Businesses will diversify into these new markets, and the result will be “quality-driven growth” rather than the “quantity-driven growth” that we have now.

Ultimately, today’s commodity stock markets may be replaced by a kind of “social development stock market” that better integrates the many different “values” that humans share, rather than converting these to a purely monetary unit as is done today. It is likely that if such an approach takes hold, there will be a merging between organizations that are seen today as different, even opposite – so-called not-for-profit companies versus commercial businesses. Indeed, until recently, these organizations were considered to operate in entirely different ways. Today, this is no longer the case. Not-for-profit organizations are now called “businesses”, suggesting a shift in attitude, and it is recognized that they contribute in significant ways to the overall economy. They are viewed as businesses that market human resources for social gains rather than human resources for economic gains. But social gains have an economic value associated with them that is becoming increasingly evident, and economic gains may have a social value55. Already, the distinction between these two types of organization is starting to blur.

Managing the economy

One of the ideas of the 20th century that has generated a great deal of both attention and anguish has been the idea that the regional and global economies can be managed. A great many brilliant thinkers have been seduced into the idea and have generated arguments concerning how such management may be achieved. However, each timegovernments have heeded these arguments and institutionalized them as policy, real economic behavior has escaped the prison and surprised us all over again.

It is my belief that the idea of the global economy as a more or less orthodox sub-system of the world, and therefore one that can be managed or controlled through rule-based behavior, is problematical. The economy is based on the notion of the flow of money, and money itself, while it seems to be a very simple idea, is actually one of the most complex ideas we have, and one that is profoundly paradoxical.

In a world undergoing expansion, it is somehow not surprising that the main economic issues are viewed as “inflation”, “unemployment”, “capital growth”, “interest rates” and such indicators. Nor is it surprising that classical economic theory should state that as prices rise, unemployment should fall and vice versa. Although money is in circulation, it represents something that is not in circulation, but in expansion. Therefore money per se will tend to degrade in value over time, a consequence of a fixed amount being in circulation in a system whose overall value is growing. However, the paradoxical nature of the situation means that such growth cannot continue
unchecked.

In today’s world, the economy is “managed” by modifying interest rates, borrowing or lending monies, stimulating spending and promoting the reduction of debt. Essentially, these permit small fluctuations in the way in which the value of money reacts to economic drivers, but they do not really constitute management in the sense that the overall drivers are under “control”. As we shift to a zero-growth global economy, the circulation of money will come back into synch with the overall economic value of the community at large. Many of the experts fear such a state (or disbelieve it, which comes to the same thing). They believe society will collapse before it can operate in a zero growth situation. But nobody really knows – this is the first time in history our society is achieving zero growth in a highly connected environment with a very complex system in place.

Possibly the single most mysterious aspect of a post-sustainable society is what the economy will look like. Despite a growing awareness that the world is moving towards a zero-growth economy, not only is there very little consensus about what is involved, there are actually almost no ideas about what a functional zero-growth economy might look like. All current economic theories are constructed upon the idea of growth – to the point that many economists deny even the possibility of a functional zero growth economy. Others suggest that the post-sustainable world will be characterized by technological growth and hence that a zero-growth economy is unlikely to occur. There is, however, more confusion surrounding such affirmations that any form of good
sense.

The Economy of the 21st Century – A Riddle Worthy of the Sphinx

As with all the changes in progress, the evidence for how the new society will function is already in place around us. The trick is to sift through the many different threads and find those that are likely to persist. In different parts of this blog, a view of 21st century life is constructed. The broad argument is that the change to a zero population growth society within a highly connected world will engender a shift in how personal identity is viewed. We shall live in a less centrist world, one in which periphery becomes paramount. In the absence of a clearly defined centre, our
world will consist of apparently irreconcilable opposites often located next to each – we shall have to abandon the idea of consistency, and enter into a world in which paradox reigns supreme.

The economy has been treated, in various historical currents, as a mathematical system, a system of assumptions, and various forms of social subsystem. Only one school of thought suggests that the economy cannot be separated from the rest of the social system – that of the so-called institutionalists. The most prevalent economic theories of the 20th century were focused on the economics of exchange. However, all these different approaches have been based on assumptions about the nature of human beings.

In this blog, the assumption made is that human beings stand on the threshold of choosing to live with paradox instead of within orthodoxies. This is a different assumption about human beings than most economic theories make, and therefore a new kind of economic theory will be required.

Furthermore, the notion of paradox is central to the new economic theory. The role of paradox within the human psyche, as recognized by Zen Buddhism, is that paradoxes cannot be answered intellectually – instead, when approached with any kind of persistence, they result in the engagement of the whole being, a contact with irreconcilable opposites that, over time, leads to the emergence of a “third way”58. In Zen Buddhism, this is “enlightenment”. In Freudian or Jungian analysis, this is a transformation of the self, what Jung called "individuation". For society or the economy, this is a transformation of the whole.

The economy that is consistent with the world described in this blog is a non-centrist economy. All economies in recent history have been centrist in nature, many even, imperialist. As with human identity, this means that there is a dominant economy that acts as an organizing principle for the whole economy. In a post-sustainable world such as that outlined here, the world will be made up of many distinct units, not nations as today, but communities with at least a social reason for being, and sometimes a geographic one as well. Furthermore, the so-called “business economy” characteristic of the 20th century will be just one economy among several, each with different functional laws. As outlined earlier, what is called the Social Economy today will grow to rival the business economy. In addition, it is expected that a sizeable proportion of the population will “opt out” of these economic arrangements and develop a separate, shadow economy of street bartering and trade.

As suggested earlier, these different economies already co-exist in parallel with each other. One or two decades ago, these were not viewed as “economies”, simply as marginal activities. Today they play a significant role in world development, but when we discuss “the economy”, we still refer to the “stock market” as the primary and dominant motor. However, in the coming years, this will make less and less sense. In a zero-growth economy, the need for capital investment will decrease, and hence the interest in the stock market will likewise play an increasingly marginal role. The business economy will become but one part of a much larger, more pervasive economy that, in its total state will become too complex for any individual or group to understand. Each of these sub-economies will use a different form of “money” although these will have overlaps between the systems. Let us explore the issue of money a little more.

Money and the Worm Ouroboros

Money is both mysterious and quite concrete, however, it is an entity that tends to shy away from analysis. In its simplest terms, “Money is a medium of exchange”, it is a symbol that serves to simplify value transactions. It may also act as a store for value and as a unit of account for thinking about value (Kit Sims Taylor, 1996, Chapter 3: Why Economists Disagree, Human Society and the Global Economy, http://online.bcc.ctc.edu/econ100/ksttext/disagree/disagree.htm). Today we think of money as “a spectrum, running from the most liquid (easily spendable) form to the less liquid forms that better serve as stores of value” (Ibid).

The tricky part comes in trying to determine the value of money. In essence, this value depends on the willingness of others “to accept it in exchange for the goods and services we want to purchase”61. Hence money is not just the value we negotiate with the salesperson, but also the value of this purchase in relation to a kind of average social value across the monetary system.

We may make an analogy, therefore, between money and the worm Ouroboros. Remember that the worm Ouroboros is the mythical serpent that swallows its own tail. When we engage in a transaction, we either give or receive money in exchange, but the interaction in essence propagates out into the global economy and mingles with all other such transactions, then comes back around in its collective form to be swallowed again. Whether we spend money or earn it, money becomes a part of our action in the world and this returns to us in the form of its net value.

In a sense, money is the name we give to the crack in the universe, the place where the worm Ouroboros eats his own tail. By our labor, we produce value, and this value we exchange via a symbolic entity we call money. But money doesn’t mean only the value we ascribe to it, it means the value the whole operation of our social machinery returns to it. In a world of circularity, money becomes the means by which we understand how our work is valued by the collective, it is our action coming back and biting us from behind.

Conclusion

Although I call the postsustainable economy a "zero-growth economy", in essence it is really a "micro-growth economy" or a "zero net sum economy". The economy will of necessity be characterised by lots of movement and change, but the movement will be between different parts of the economy (for example, between the monetary economy, the social economy and the shadow economy) and across different scales (for example, between cities and different internet-based communities). The fear of collapse in a zero-growth economy is based on the idea that zero-growth means stagnation. But as we human beings know, beyond our rapid growth in youth, there is still enormous room for dynamic change within our sense of being. The growth spurt is not necessary to ensure change. Although analogies between individuals and global economic systems are untrustworthy, the point is, just because we don't currently understand how a postsustainable economy can function doesn't mean that it won't function! Already many of the underpinnings of the new economy are taking place around us - the trick is to see these for what they are. While my attempts to do so may be error-prone, I dare to say the same will be true of most other attempts. But I suspect the emergent economy will already be much clearer within the next decade as the world stumbles through a series of crises, each of which will allow the changes to consolidate.


*Samuel Brittan writes : “There will be for a long time opportunities for business expansion meeting the growing needs of the Third World. And even in a static Western economy there might still be a good deal of investment and entrepreneurial action. Consumer desires, even if modest, might still be subject to changes of taste; the fashionable clothing "gear" might change; or trips to old coalmines might alternate with visits to the Himalayas, or painting one's home in a novel manner, as ways of spending leisure.” http://www.samuelbrittan.co.uk/text101_p.html (Samuel Brittan, Economic possibilities for our grandchildren, Financial Times, Jan 3, 2002)

**“To be more concrete, companies that use automated, specialised equipment to make very large quantities of one thing in one place and then need to ship it to markets around the world will tend to lose out to smaller firms which use rather more labour with a higher level of skill and less specialised equipment to make a wide range of things for their local markets. Higher prices also shift the balance away from the centralised supply of energy drawn from fossil sources to local systems supplying energy from local sources. Local energy sources become important again and, just as in the past, instead of energy being taken to wherever in the world is currently a cheap place to manufacture, economic activity will move to wherever there is a reliable supply of competitively-priced energy available for its operations. This has the potential to bring about a shift in political and economic power.” http://www.feasta.org/documents/energy/Feasta_Stern_Review2.htm, Eliminating the Need for Economic Growth,
December 2005, A submission to the Stern Review on the Economics of Climate Change, FEASTA