Yes we live in challenging times.  We are going through a major transition that is multi-layered not just a linear adaptation within one frame of reference, although we are trying to micro-manage it in that manner. The way the economy actually works, as I mentioned in a previous post, is a creation and fabricated artefact of our culture and not an absolute reality.  We have to recognise that economists have theories and not realities just take a look at the thought experiments and practical applications of those tests that Milton Friedman undertook.  I am still aghast that people don’t understand the relationship between the economic illusion of unending continual growth and exponential growth that can destroy.

Here is an example from Derek Deighton on exponential growth which is what underpins our concept of a successful economy.  Taking the old chess board analogy put 1 post-it note on the first square 2 on the second etc. - by the 7th we have 64, which is measured at 6mm. By the final square, one would have a stack of post-it notes, which if a laser light was shone down from the top would take approximately 48 minutes to reach the bottom as it takes 8 minutes for sun light to reach the earth that is an awful big pile!

When we continue to talk about yearly percentage growth we are in fact talking about exponential growth, do we really understand this and what it means for our planet?

We face complex interrelating environmental, economic and social, issues but I feel that there is a lack of recognition of the more fundamental changes that will have to take place in how we operate our society. No one really understood how the agricultural revolution would turn out and it was the same with the industrial revolution and even more so now. Both the agricultural and industrial revolutions were underpinned by similar economic concepts that one could have unbounded growth (it has though, and has always been the case, that such growth would be at a cost to something or someone else). In my opinion the first was driven by changes in land usage, linked to the development of machinery which then impacted on the social aspects of community.  The second radically altered social interactions driven by mechanistic innovations which started to impact on the environmental. I think now we have change where the environmental feedback into the social and economic is undermining our current models we have been relying by for the past two hundred years and the solution now has to be a systems one and not primarily through technology.

Even if we look at the current economic and social models that underpin our culture we face real problems due to scarcity of resources.  Interest rates go up as costs increase and as our culture is underpinned by cheap energy principally oil then the higher costs of fuel leads to inflationary increases.  Interest rates increase borrowing increases jobs our lost, debt is not repaid and the system grinds to a stop.  There is a growing belief (except by Exxon) that we are at Peak Oil or nearing it which means we will then be on the downward slide of the bell curve. 

With climate change and resource depletion we have to look at new ways to do things.  I think that in the social arena there is a growing unease with what is happening and the increasing interest in localism and wellbeing is a sign of this. Complex systems have attractors which might be stable but then suddenly swing to a new dynamic alignment. One can also have trajectories that swing between two attractors which can become chaotic.  We must not loose sight of the fact that we are part of this multi-layered complex system and do not stand outside it but are part of the causality.  If we do not start to influence the system by actions then it might well become very chaotic indeed.  Yes looking at pricing of carbon is part of the jigsaw but there must also be an understanding that we have to find new solutions on different levels, local, national and global.  As Einstein said “We cannot solve our problems with the same thinking we used when we created them.”

Have a good Christmas and let’s hope things move a bit quicker in 2007 especially our supposed leaders.