Archive for the ‘Economics’ Category

Coming soon, how to make savings to pay for the bailouts

December 4, 2009
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Bears, Bulls, and the cost of the bailouts ..

December 4, 2009

News has broken today of the Audit Commissions’ report on the cost of bailing out failed British banks.

They report that the cost of the bailouts equates to a burden of £40,000 for each of Britains’ 26 million households, or as just reported on BBC tea-time news, £14,000 for each and every one of us.

The Commission emphasised the Government was right to salvage the collapsing banking system. I’d be in agreement – but only to the extent that there was no viable alternative that anyone could suggest in the heat of the crisis.

What irks me is that the banking system could get itself into such a precarious condition and neither the Treasury, the Financial Services Authority, nor the Bank of England could intervene. It is a failure of regulation. ..No! … Rather, it was a failure of recognition, then consequentially a failure of intervention and regulation. The above named tripartite regulatory authorities failed to see the extent of the exposure to risk. For all their schooling, qualifications, experience and ample salaries the people paid by the state on wages funded by the taxpayer did not protect the very people whose interests they were supposed to protect. Now we have to pick up the bill.

The Banks had gotten themselves into a fix. It’s not that the Banks did this by contributing to wealth creation by funding enterprise. No, the root of the problem lay inventing and investing in ever more creative ways to cream wealth of others. Complex financial wheeler-dealing that has no authentic economic function other than creaming other folks wealth ratcheted up exposure to volatility and risk because of the simple fact of being entirely geared to market confidence. In a ‘bull’ market everybody is confident and financial instruments are traded at inflated prices.

Confidence rises in bull markets. The market trend supports the confidence. However, infinite rises are not sustainable. Sooner or later, a free thinker among a minority will bet against the market trend, when others follow suit the bubble inflated with confidence will deflate; sometimes as fast and as ludicrously as the party balloon you inflate then release to “thlbthlbthlbthlb-phut” around the room! It’s now a ‘bear’ market. Values are wiped of assets and matters no longer seem ‘so safe as houses’. It’s both a long haul to re-inflate the balloon and delusional to think we can successfully knot it off when eventually fully inflated.

Risk is a consequence of economic evolution. Think of the economy like an onion with layers. At is heart is are the most biologically authentic economic functions. We need food, shelter and clothing. Only when those are satisfied can we greater economic activity around, say, plush fitted kitchens, conservatories, foreign holidays and such like. These are comforts rather than essential needs. We can distinguish them hierarchically.
It happens that competition drives efficiency. We’ve become very efficient at meeting these needs and consequentially, as matters stand, not everyone can be engaged working in these economies. Displaced people can become ever more inventive in trying to trade their efforts for someone elses’ wealth. So, while manufacturing declined the UK moved to a service based economy. Governments and Chancellors placated us. The thing is ‘service’ is not always functionally authentic in terms of human need. It can range to the downright deceitful or unlawful. Emergent sectors of developed economies represent continuing divergence from biologically authentic economic functionality. Each successive of our layer of our economic onion gets less authentic and with a greater potential for risk. When considered against the hitherto successful and collaborative division of labour that had been beneficial to the proliferation of the human species in the transition to agriculture and in moving to the age of industrialisation, continuing economic evolution appears to have increasingly undesirable traits. Greed and risk being two.

Have Banks willfully contributed to the systemic failure?
Small businesses have struggled for survival. Small businesses are important to us and to the economy. Irrespective of whereabouts in the functional hierarchy of our economic onion a small business is placed, be it food, manufacturing, or service, the local economic hyper-cycles of small businesses are closer to the individuals authentic and biological needs to feed the family and clothe the kids. Big businesses on the other hand are all about the balance sheet and profit and loss. When businesses invest in automation, constantly compete against each other to make efficiency savings people are casualties. Every redundancy is a virtuous economic hyper-cycle undermined and devalued.
Surviving small businesses are an exception. Medium sized businesses have collapsed and are a dying breed. Economies of scale have disadvantaged small and medium sized businesses; paricularly those in competition with larger ones and nowhere more apparent than on the high street. Banks have offered disadvantageous terms to smaller businesses for decades. Mergers and acquisitions amongst the bigger fish just keeps on moving relentlessly forward. Satisfactory economic hyper-cycles are being eroded. While big business, Marks and Spencer and Tesco spring to mind, invest in ever bigger DCs the units they vacate are unlikely to be filled by new occupants for some time. They will lie empty just like the smaller units neighbouring them on once economically active business and industrial estates. It’s efficiency and progress, apparently.
Blame cannot be wholly attributable to big business. As it stands they have competitive advantage over small businesses but we got there by consumer choice and buying habits. We thought one-stop shopping, price cuts, BOGOFs, convenient access and parking for retail parks and malls, and apparent value for money was in our own best interests. Thinking along more anthropological lines such a supposition looks increasingly uncertain. We need to be in employment and economically active to enjoy the malls.

You might think all the above sounds like the rant of an anti-capitalist. I have never been against free market capitalism. I have been stewing for almost one whole year. Thoughts have evolved. At times the evolutionary progress of my thinking had me wondering if I was adopting anti-capitalist sympathies. Fortunately, further thought evolved and now I recognise how one great pro-democracy theory is emerging.

People are displaced, disengaged, and disenfranchised. Meanwhile, the lobbying power of the ever bloating corporates gets greater and greater. We live in an age where features of continuing economic evolution is counter democratic. We’d do well to recognise how it is all going wrong. Certainly I view my personal liability to £14,000 of bailouts as being counter-democratic.

Food is fundamental. It is surprising how far thought can progress after that recognition.

‘Bulls’ and ‘bears’? ‘Sheep’ and ‘lemmings’, more like.

Money talks …

November 13, 2009

Money talks; and power corrupts – It’s official!

.. .. .. .. a tale of evolving consciousness.

Stuart Parkinson and Chris Langley, representing an organisation called Scientists for Global Responsibility (SGR) have authored a report, ‘Science and the Corporate Agenda’ and contributed a feature to New Scientist (7th November 2009, p32); summarising the reports’ findings.
The article and report looks at five commercial sectors of science and technology, considers the influence of commercial bias and ‘exposes problems so serious that we can longer afford to be indifferent to them’.The article specifically mentions potential for conflict of interest in medical research and its’ reporting in medical journals.
The inference is clear; that the corporate agenda influences the progress, advancement, and direction, of scientific knowledge and its’ application in ways that almost certainly satisfy commercial expediency but does not necessarily precipitate outcomes to the true betterment of humankind.

For anybody who has come around to thinking that perhaps a willingness to treat symptom or manage a problem predominates over an enthusiasm to address the root of causality then this report is a breath of fresh air.
Taking agriculture as an example the authors make the point that low-input solutions are willfully overlooked. Does it take a fertile imagination to appreciate that this trait may feature more widely?

The debate about scientific bias in medical research has raged for a while. Many of those who would highlight such bias also propose that such bias does not just direct the course of science but impacts at the point of delivery. Persistent minority dissent has been expressed over a number of health topics of our time such as the role of cholesterol in ill-health, saturated fat, mass prescription of statins, and the management of hypertension. There are a number of contributors attempting to balance the tide of mainstream consensus with counter arguments. It is difficult to know which of two opposing views may be the most reliable, especially for the layman, but the notion that the mainstream may have adopted commercially expedient stances is reinforced by the work of Parkinson and Langley.

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I have noticed a number of contributors attempting to submit a balanced and realists interpretation of the science and side effects in relation to statins. It crossed my radar that Dr John Briffa has recently blogged about drug companies trying to suppress knowledge of side effects or trying to delay action upon said knowledge.
What John is rightly illustrating, just as others are expressing similar concerns, is an example of the way the corporate agenda is permitted to direct the content, course and evolution of the knowledge economy, and in this case the knowledge economy pertaining to a group of drugs and their side effects.

There exists a problem. Let me spell it out. The problem effects millions of people at the individual level. I can perceive it effects me and it is likely it effects you. Floods are borne of individual raindrops. Likewise the problem highlighted would also appear to direct the course of advancement in the anthropological sense. The SGR report attempts to identify it, quantify it and give the recognition some credulity. What to do about it? The authors appeal to scientists to share responsibility, dispense with indifference and counter the bias.

To quote a line from a conversation I had with an employee of a prominent grocery retailer recently about an entirely unrelated topic we could elect to,

“Tell somebody that gives a shit”.

The intended irony being quoted to me was that if we recognise a problem and would like to share it or have it addressed our first and biggest challenge is to find somebody who actually gives a damn. It is a pearl of wisdom coming from a bakery manager highlighting a trait, as he sees it, of indifference in retail grocery line management. Perhaps the quote also conveys a sense of despondency and resignation. It seems to be a waste of the human spirit and intellect.

The nature of work can be very unfulfilling. Many of us have to suffer repetitive regimes in work in ways that leave no scope for self-expression. Rise up the ranks and you still have to suffer the pressures and impositions, but worse still you have to impose the malaise upon those under your management. I cannot see how such constraints contribute to mental well-being. And at the very top, executives themselves, though considerably more financially secure, seem no more cheerful than the rest of us.

I saw Sir Terry Leahy interviewed by a journalist on television recently. The business correspondent felt interpretation of Tesco results following the financial crisis and credit crunch were some matter of gargantuan import to the nation.
I felt genuine pity to el Tel. His responses were to cast Tesco in a positive light and to deflect all hint of doubt. But there was nothing about his demeanour that I could warm to. Zip.
His presence was wooden, mechanical, and entirely devoid of any endearing expression of likable emotion. There are exceptions, but contact with his employees in his stores can feel much the same. I don’t especially want to appear critical of Tesco. There are levels at which I can admire the UKs’ most prominent retailer. They are hugely successful, have transformed the face of UK retailing, and employ a lot of people; judged from a commercial perspective you cannot fault the business model. It is noted that the business has its’ detractors while I just have this sense that neither Sir Terry nor his employees look especially pleased with their degree of success.

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Human evolution and the emergence of complex and industrialised human societies has so far been based upon an advantageous balance of competitive and collaborative behaviours. We may think we are intelligent and smart to coordinate our activities in this way but truly nature evolved similar strategies long before we arrived on the scene.

Examples of the balance of collaborative of competitive behaviours abound in nature and biology, the study of things natural. Bees ants and termites are examples of creatures that live in colonies that benefit from collaboration and division of labour. In the complexification of life itself division of labour is a feature replicated at several hierarchical levels. We ourselves carry that legacy in our physiology. Really, we are not one being. For one thing we exist because of a symbiotic relationship with a mind bogglingly astonishing number of bacteria that populate our gut. I mean, who is the more persistent here?
For another matter our body is a great expression of division of labour. Our organs divide necessary life support functions between them, likewise so do constituent cells, as do organelles that split duties within cells. It is not as if this incredible coordination and collaboration has been consciously planned. It is the case because such coordination serves to needs of the constituents and preserves the existence of the species.

But evolution also confers a competitive element; the process of evolution by natural selection, survival of the fittest. We are all clear on that, but what is often overlooked is that competitive or exploitative tendencies must be kept in check. Complexification of life depends upon hierarchical levels of preceding evolution and the legacy of the older levels remains inherent somewhere within the higher orders.
If a healthy balance of collaborative and competitive behaviours is not maintained matters can become disastrous. Overly competitive, aggressive, or exploitational behaviour may lead to short-term proliferation, thus presenting an illusion of success, but it should be remembered that most, I mean all surely, beings exist as part of an ecology – a delicate balance of diversity comprising ranges of the infinitesimally small to the uncommonly large, and also ranging from the simple to the complex, from the vegetable to the intelligent. Over-dominance of a species or component ultimately destroys the very ecology that sustains it. Is this not the case with cancer?

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Let’s return to us humans and the choices we make about our daily life. One major preoccupation for most of us is the need to earn a living to satisfy our needs and wants. Needs are generally essential and wants can be classified as desirable.
The problem is exacerbated by a lack of real choice. Many of us depend directly upon large corporations for our employment and many more depend indirectly. The capacity to earn a living is the basis for the wider economy and the basis for us being able to put food upon our tables.
Small businesses struggle to compete on profitability but small business constitute far better prospects from a social point of view, People working in small ventures feel they have a vested interest and opportunities for self expression. Small businesses can be beneficial to the lower order hierarchical economic hyper-cycles that benefit local communities and contribute to social cohesion. Smaller business ventures have power commensurate with their size and are less likely to abuse it. In small businesses strategic decision making is closer those engaged and/or effected and correspondingly may have a conscience. Small businesses are a dying breed.

Evolution does not just apply to the natural world. It can be observed in the business world, too. The tendency for small and medium sized businesses to fail or be bought up by larger ones continues. Mergers and acquisitions involving large businesses continue resulting in an onward trend to fewer, but ever larger, enterprises. Breaking news today is the proposed merger of two airlines each struggling in adverse economic times. The agreement between Iberia and BA is presented as a merger of equals. Each has problems and one analyst was heard to say that the merger would not provide instant relief.
In the heat of the crisis acquisitions and mergers went on hold for a while but as the fallout continues to settle there appears a resumption to the trend.
“Keep your hands off Cadbury!”, I say. Kraft is large enough as is Cadbury. I concede there may be benefits from a business point of view but I cannot see any from an anthropological viewpoint.

I find the continuing evolution to fewer but larger corporations and multinationals un-democratising and alarming. The bigger of them are rewarded for failure. Injected with cash to preserve taxpayers jobs and without the taxpayer having any say. Moreover the behaviour of these businesses seems not to retain the essential balance of competitive and collaborative traits required for long term evolutionary success.

In the status quo the consequence for humankind by the unfettered or un-moderated introduction of technology is the capacity to evolve human induced problems at a pace that outstrips our capacity to evolve solutions that in turn would be satisfactorily consequence free. The accusation seems more or less proven in the realms of science and were I better informed I might be better placed to apply the same argument to economics. This is my best effort so far and it seems relatively fair to offer an opinion that humankind is largely responsible for it’s own problems and then, in trying to solve them, adds to them. Most of our technologies have side effects.

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I would hope that the report, Science and the Corporate Agenda, comes to the attention of our nations dedicated health professionals. I’m sure professional health practitioners could contribute considerable insight as to how the assertions of bias made in the report applies to the promotion of public health. Instances of General Practitioners speaking out of school are rare but there was a hint of dissent expressed when GPs met at a Glasgow conference and Dr David Walker proposed a price hike for chocolate. I have high regard for David Walker and his colleagues but fixing the price of chocolate is merely tinkering at the fringe of a greater problem. I had a constructive, but short telephone conversation with David but he has subsequently remained mute. Wherein lies the disincentive for, say, General Practitioners to contribute an opinion?

In health, a feature of the predisposition to prefer treating symptom sooner than establish or address cause exposes whole populations to increasing risks arising from health or treatment. Foremost in my mind is obesity and rising incidence of type 2 diabetes, but the critique could apply to other chronic disease.
If I remind you that 100,000 new diagnoses of type 2 diabetes were made in 2007, 150,000 in 2008, then you might reasonably calculate on the back of an envelope that the prospects for 2009 are 230,000. In fact the back of envelope calculation predicts 7 million new diagnoses of type 2 diabetes in the period 2009-2015. As if by coincidence Diabetes UK recently had a release covered by the press stating the opinion that 7 million of the population have already progressed to a state of pre-diabetes.

At least one team of scientists may offer some hope to safeguard us from the consequences of being overweight. An American team have identified that certain saturated fatty acids produce an errant and false immune response in an interaction with a protein known as TLR4. The team hope that a drug can be developed that can mitigate some of the consequences of being overweight. The protein mistakes the fatty acid for bacterial invasion and responds with the defensive action of promoting inflammation. Armed with this knowledge the team hope to develop a drug to block the inflammatory action of TLR4. If disabled, would it deploy correctly when faced with a genuine bacterial threat? The predictability of any new drug is that it will have side effects.
Moreover, does the knowledge of the process and behaviour of TLR4 suggest it might be worth backtracking? Is the response of TLR4 more prominent because the fatty acid is more prevalent, and why? If this could point to dietary of lifestyle factors there may exist a low-input and reduced risk solution to the problem. The avenue is a non-starter, not for lack of potential practical feasibility but for lack of commercial expediency.

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Increasing extension of risk, as a consequence of corporate evolution, recently had calamitous monetary economic consequences such that the symptoms were treated with a massive injection of taxpayers cash and corporate entities were rewarded for looming failure with a second chance. The advocation for free market economies is their being beneficial for the evolution of improved trade and business practice. Adam Smith was an early advocate. I expect he was right in the main but had not foreseen that accountants would come to have such influence, or that efficiency would open a void that must be filled by an appetite for emergent technologies or by innovation into less than noble economic ventures involving greater extension to risk. I retain hope for the future of capitalism although the concept needs modification. Judging the success of capitalism by the singular parameters of balance sheet and profit and loss account appears to have its limitations. Increasing risk and rewarding failure seems at odds with evolutionary economic theory. This alone is not clever. Clever is having promising solutions. I don’t.

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The media is excited anticipating Copenhagen. Climate change and sustainability issues are foremost in many peoples minds and before long the future plight of 7 billion people may rest in the hands of the worlds leading politicians. The science of climate change is complex. Climate change is a natural feature of the complex adaptive system that is the fragile Earth upon which we live.
The topic of human induced climate change is even more complex and even more contentious. But most significantly it has much in common with much of our knowledge in other sectors in that it is incomplete.

Humankind faces it’s biggest challenge ever to collaborate without any selfishness to secure the future for our descendants and hard decisions will have to be taken while not in full possession of the facts. The science of climate change is beyond my my field of study but comprehension of matters of sustainability seem easy to grasp. Has there ever been any instance in history where unbiased scientific knowledge should be openly pooled, transparently debated, reliably advised and respectfully received for the sake of future generations, astronomical in number, and growing daily.

OMG !! That unspeakable word Unbiased.’ just made an appearance. It’s a word that means different things to different people. By far the biggest challenge facing humankind wanting to successfully develop and implement a climate agenda is for the whole of humankind to become considerably more self-aware.

The prospects of financial rewards can clearly be intoxicating. Scientists have come out and said what has been widely known but largely ignored for some considerable time. They have done so in the language of science and with gravitas. The whole world needs to sober up; more so for western developed nations. Scientists ought to be best placed to see the need and accept greater responsibility.

Is it human indifference that is at the root of our problems and is that not a greater challenge above the science of climate change?

I am constantly wondering if leaders have grasped our economic challenges sufficiently well to make the necessary changes. Volatility seems to be an enduring feature of the modern global economy and if we emerge from this recession it’s implied that instability dictates another will follow sometime. In the very least it is to be hoped we will have recovered sufficiently well enough as to be able to afford a repetition of quantitative easing.

A few decades on will it be so easy to inject new life into a dying planet as it was to inject cash into an ailing economy? Can you ask the question of someone who gives a shit?

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I would hate to deliver an impression that I believe I know what I am talking about. I harbour great self doubt but I just cannot stop thinking. The piece you have just read really is a tale of evolving consciousness; I sense it has some pertinence but without surety. It is expansive take on matters that can be detrimentally shallow in the detail. I only have limited time to study the areas it covers to greater depth.
What I notice is that other people have found ways to express a sense that not all about 21st century living satisfies the need for a fulfilled passage from cradle to grave. Humans have the capacity via intellect and spirit but fail in the execution. Perhaps the new age movement and conspiracy theorists exemplify the recognition. Authors have written on the topic of simplicity,
Cecile Andrews and Tom Hodgkinson are two of whom I am aware. Robert Fulghum expressed it most simply and succinctly in All I Really Need to know I Learned in Kindergaten.
Christopher Lloyd author of
What on Earth Evolved? 100 Species That Changed the World conveys the sense of evolutionary biological hierarchy that I struggled to recognise in the more technically complex, The Major Transitions in Evolution (John Maynard Smith & Eors Szathmary).
The economic sub-classification of
Energetics about which I know little save for the Wikipedia entry seems to be a link that could be developed to face 21st century challenges. It is not difficult to assert that economic wealth has depended heavily upon supplementing human effort with energy sourced from fossil fuel reserves. As energy ceases to be plentiful surely energy economics will come to the fore. But energy is not the only concern. The wider economy was created when humankind became sufficiently adept at provisioning food as to have time left over for other endeavours. There had been no need for money prior to the dawn of the agrarian age. Currency, and it’s flow through the economy must facilitate the flow of energy and nutrients (food) satisfactorily between the population. We fail dismally on a global scale to satisfy that need fairly. More locally, for all the trappings of wealth; cars, flat-screens, games consoles, etc., do we retain a satisfactorily robust subsistence economy?
Prior to the publication of the SGR report I had was wrestling with the sense that the nature and extent of accumulating human knowledge, helpful as is, has a flip-side because knowledge is not dissimilar to an industrial or post-industrial monetary economy. Ever increasing division of labour, increasing specialisation of function, displacement of occupation by automation, and increasing complexification dictate that people must place increasing trust in people whose interests are measured by £££££. We are disenfranchised because of the expansiveness of knowledge and that simplifies the process of mis-appropriation. At least in the realms of science it is now official. Cease the moment, I say.
Have a think and feel free to pass comment on whether there’s sense in this somewhere or whether I’m sprouting bollocks… …  But only if you give a shit.

Pie in the sky ..

September 8, 2009

Appearing recently in the media have been submissions from scientists tabling possible worse case scenarios and last resort tactics to avert catastrophic global warming.

Some of the propositions involve deflecting solar radiation by placing mirrors or reflective dust in the upper atmosphere with the intent of deflecting solar radiation and thus with the hope of countering rising temperatures. Are they kidding?

As with other 21st century problems we need to address climate change with an appreciation of causality and addressing that at the root rather than treating symptoms by dispensing some additionally constructed human remedy. There is scope for greater insight into this as may apply to climate change as there may be from delving into the same basic flaw in the way mainstream human health-care is delivered.

Climate change and sustainability are complicated issues with diverse and often in-congruent arguments from various camps. However, I can simplify matters somewhat..

Try drawing two circles on a piece of paper to loosely represent Sun and Earth. What does the one give the other? It is child’s play, isn’t it? The Earth is reliant upon the Sun for energy, right? Rub out our circle that represented the Sun and what are the implications?

The Earth is an energy system subservient to the Sun. Life upon Earth in all its’ diversity is/are energy (and nutrient) systems subservient to the whole Earth. Humans are entirely subservient to those energy and nutrient hyper-cycles that nature has constructed by the process of evolution and all made possible by the Sun.

Through Defra and one of its’ offspring FERA (Food and Environment Research Agency) the government, via Hilary Benn, the minister responsible, recently launched a consultation document upon future food security and entitled, I think, ‘Food Matters, part 2′. This is a document that questions the future of food security on a number of lines.
Concerns are expressed about rising global populations, increasing wealth in developing nations and anticipated change in dietary expectations of wealthier people, further concerns are declining fertility, dependency upon finite fossil fuel reserves for agrochem’ production, falling water tables, and potential changes to weather patterns, temperatures and precipitation. In short it is concern about energy and nutrients and whether we are fast reaching the limit of the total capacity of the Earth to feed a rising population. The problem lies rooted in conventional agricultural methods as applied by western civilisations because inherent in the practice at a number of levels is the principle of deferred accountability. Conventional agriculture practices with complete deference to natural energy and nutrient hyper-cycles. 21st century challenges are the consequences of carrying on without any regard for these natural constraints. One such constraint, somewhat fundamental, was illustrated by drawing our two circles.

Food is produced by capturing solar radiation and nutrients through the life giving process of photosynthesis. So if we register already concern over ability to meet demand then one might deduce that we need to capitalise upon all the solar radiation we can capture, and in the face of passing peak oil we acknowledge we may have to produce increasing amounts of energy for our domestic and industrial needs from renewable sources. The primary capitals here are Sun, Moon (tidal) geothermal, and morphological (fission/fusion). Factor in that energy production may have to be carbon neutral or even carbon negative (and soon) and photosynthesis looks increasingly attractive to produce energy for requirements other than simply and primarily for food.
Such a strategy would place a huge burden upon the suitable agricultural regions of the world. We’ll need several things to meet this burden but not least will be plenty of solar radiation. Best not to pin too much hope upon launching reflective material of any kind into space. I mean, its’ hardly rocket science..

Economic reflections

August 28, 2009

Prompted by the letters page of the Economist of August 8th I was minded to construct and submit the following letter to the ed. of the Economist.  I know absolutely zip about conventional macro- economic theory, but I am in no doubt about the impact of the financial crisis, bailouts, and MPs expenses furor upon my household and domestic economy.

Here’s the letter and footnote as emailed to Economist.com. I posted a draft of the letter to CiF on the Guardian online. At the time of writing it has four recommendations; hardly exceptional, but a start.

To the ed. of the Economist magazine;

Sir,
Tony Hays (letters, Aug 8th) disclosed that he considered taking a degree in economics 50 years ago but was dissuaded on the grounds of being advised “that the exam questions would be the same from year to year, but that the correct answers would differ each year.” He elected instead to pursue a career in engineering. He ought to be well placed to understand financial market failure and recession.
Is it not apparent to all and sundry that the macro-economy is a system with inherent instabilities capable of comparison with and to the laws of dynamics as applied to unstable physical systems such as flogging sail, snaking caravan, or unsecured gate swinging in a fresh breeze? In each instance force(s) send the system swinging one way to the point where counter forces are activated to send it swinging back.
Surely, super-extension of money supply involving increasing degrees of risk associated with ever greater extension of credit must inevitably reach a glass ceiling from where it must rebound? The only comfort is that the periodicity is somewhat greater than a clanging gate on a stormy night. Perhaps this is congruent, but nonetheless a simpler explanation to that of Prof. Meghnad Desai whose letter in the same issue describes “a disequilibrium dynamic stochastic system.”
I cannot help wondering if degrees of complexity in human constructs stand in the way of comprehension, or wonder if things might be more stable if humankind could find a way to pin monetary economies with the natural economies of the Earth and do so sympathetically to natural hyper-cycles and hierarchies. Might it be the Sun, stupid?
.. Perhaps if economists were to reflect somewhat anthropologically upon the human departure from the natural subsistence economy, see that as the origin of trade and the origin of a wider economy, then make comparisons…

The following footnote went with the submission;

It is difficult for me to elaborate on the above while remaining brief, and while the final paragraph may seem like a call to fundamentalism, this is not the case. But it is a suggestion of a direction to take to gain understanding.
The natural subsistence economy is caloric not monetary, and species in general must satisfy the caloric economy or die. The imperative is to match caloric return from food to caloric effort in relation to existence, provisioning, and avoidance of predation. It was once the same for human ancestors. Fail to satisfy the imperative and death, extinction possibly, results.

The emergence of a wider human economy stems from the time when humans became sufficiently adept at provisioning food so as to have a degree of freedom from the natural imperative. Our ancestors had time to give over to making tools and trinkets. The modern scale of the macro-economy is simply measurable by the degree to which it surpasses the subsistence economy.

So, somewhat provocatively, I postulate that economists who study the flow of money are a bit like physicians who might once have recognised the importance of blood without fully understanding its’ purpose. Blood circulates energy and nutrients in a hierarchical biological being (yep, we are frequently guilty of overlooking these natural evolutionary and biological hierarchies inherent in the ‘self’)  and manages waste. Money circulates energy and nutrients around the economy.

21st century challenges are plural; climate, sustanability, and economic. Prince Charles addressed these in his Dimbleby lecture. He has a book due next year, ‘Harmony’, which purports to link these themes. I don’t know what he has chosen as the conceptual vehicle.

My paradigm lies in the facilitation and comparisons hinted at in the above. I have a graphical representation of the transitions that bring us to where we are today. Further development is needed.

I find two observations are significant.
In the departure from a fundamentally constraining natural economy and with the accompanying accumulation of ‘knowledge’, complexity is a token of two sides. Upside and downside. People do now speak of an ‘economy of knowledge’
Second, in the transition from barter to multi-nationalism and viewed from an anthropological perspective the nature of trade has evolved from collaborative, that is negotiated between parties of loosely equal muscularity, to exploitational and predatory.
.. And in a three for two offer it has something to say about chronic disease,  esp. obesity and diabetes.

There is more to be learned from the model, perhaps, such as the constant need for emerging technologies, and why full employment is an unrealistic goal.

The marginalisation and failure rates of small and medium businesses is an economic evolutionary consequence of a system that has vested a false belief in the nature and worth of ‘capital’ as constructed by humans. Virtuous economic hierarchies and hyper-cycles are imploding around humankind just as our disregard for the natural counterparts is degrading and destroying those.

Events are telling us to direct attention to Earthly capitals. Root and branch reform is needed. We must find a way to enjoy monetary economies while operating within the constraints of natural ones.

The Earth is an energy system subservient to the Sun; Life and humans are energy systems ultimately subservient to the Earth. Economies circulate energy. Wake up world, take a good luck.

Comment on the guardian has been interesting. In recognition of the failing of conventional capitalism there has bee a debate raging between proponents of capitalist and socialist agendas. Division and entrenchment will get us nowhere save for reinforcement of the resonant and cyclical nature of the periodic pendulum like swing between the two.

If we could just ditch our conditioning and vested interests then recognise true capitals for what they are,  then capitalist, socialist and green agendas might converge; that in itself may some imply or infer something of the validity in the postulation. Ideological I know, however, if we are to face concern over food insecurity head on then perhaps the error of ours ways may be apparent to all but the most pig-headed. The need to feed ourselves is fundamental after all.