The world is deglobalizing. There are several reasons for this, one is that the power is becoming more distributed, with the BRICS and Saudi Arabia and Nigeria and China all trying to cut up a pieces and dominate it. Another is that climate change will lead to tensions which will divide the world. Another is that reducing emissions means less shipping and flying, if not today then soon.
From the US perpective the FED has been raising interest rates to reduce lending and spending. This was in response to a reduced energy supply, less spending means you need less energy to make stuff. This lead to a slump in the stock market. Now people are wondering what will happen as the FED keeps raising interest rates. My guess is the rates will not rise a lot anymore and the economy will grow.
The simple reasoning behind it is that deglobalization means local producers get an advantage. It also means renewable powered producers and those involved in the ‘Roboeconomy’ (renewable powered AI driven) will be recieving the most (private/retail) investment. Even as people may be replaced by AI, many will be employed in the returning manufacturing industry and renewable energy/storage sector. This means economic growth.
Strangely not all that growth will become visible, because some of it does not generate increased cashflow. Renewable energy can be used (as a basic example) to make pizza’s locally without ever being converted to cash. A stamping machine can be solar steam powered and work all day long, not generating any revenue for an energy company.
It is the banks who are fighting to keep the renewable energy economy at bay, to keep installations expensive, to make sure no renewbale energy installation can be realized without significant debt. But they will lose this fight. The economy will rev up on renewables, on new manufacturing, on new ways to locally do stuff using AI, on better recycling of waste, and on the fight for survival of humanity, which will become more of a positive experience as soon as banks stop telling us its no use, its never no use to fight for a better world.
Wow. Analysts now say the U.S. has entered a 'manufacturing supercycle' that has 'gotten the attention of the world.'
Per Axios, "As of April, spending on manufacturing construction — new factories — is tracking at a $189 billion annual rate, triple the average rate in the 2010s… pic.twitter.com/r9FYEiKpEL
“Of course you can!” will be the common response, if you want you can get great food, watches, cars, hotels, all of great quality because you pay more. Another crazy way to approach it is to say that high cost is a quality in itself : “This is a two thousand dollar watch, this is a one million dollar condo”, but even then you can’t pay for the quality, you can’t pay for high cost, that makes no sense.
To clarify what I mean we should exclude for a moment machines that deliver specific quality, even though they usually need to be operated/maintained by skilled people to do so. Of course some manchines can churn out near perfect copies of the same product all day every day. But what about the quality of people, their dedication to what they do. How is that achieved?
One way to achieve it is to select the right person for the job. So a host for a party should be someone that likes people that knows what makes them happy, that can communicate well etc. These are talents you are born with that you can develop or get handed by your parents. If the job is in engineering you look for a person that wants to know how things work, that can analyse well, that can apply the knowledge base and methods that others have developed that work, but that can also invent new ways to do things. Again a person like this is selected, maybe self selected, then graded as of [pronoun] quality in an education system.
So above we have two examples of how the quality of a person for the job is not because of pay, because it is the result of life experience and their own motivation long before they get payed.
The way industry mostly achieves ‘quality’ is three pronged, one, it teaches people to want low quality. This is done by presenting low quality as the best life choice, something celebrities do.
Second it tries to avoid the need for quality, so automation and mechanization and procedures to achieve it (fast food franchies).
Third it makes people desperate through economic pressure so they want to deliver quality. So immigrant labour in Dubai builds highrises, very primitively, with lots of errors, but these people try their best at it. Part of creating desperation can be the creation of a myth about what you achieve. This can be a business in itself, like dance contests for a money prize or fame and recognition.
The irony is that the latter method encourages low wages, because only when the wages are low will the person try to do the best job. The pay however has little to do with the quality of the work, nor does it encourage it most of the time.
It is very interesting then how to actually evoke people to deliver quality. Most of the examples will be in environments of excellence. You see high quality people operating in environments that are excellent, in design, organization, cleanliness, social contact, communication. But then you may be on to something : it has to be inspired. It has to be switched on in people by their environment. How do you do that? Whoever knows can make a lot of money 😉
Even when you try to make everyone deliver quality you will discover many people do not have that ambition at all. Industry that thinks from a system’s perspective about people does not need their personell to be high quality, just sufficient and safe. Also if a person is in a job that is hard to populate, the employer might want to degrade that person’s quality as much as possible so that job mobility is minimized. Some people are selected for the quality of being able to limit and degrade the quality of others!
To achieve better quality in everything we just need to think of what that means. This puts us in a better mindset as well
It seems the bottom line is that we should not believe that money is the driver towards an optimal society, because as argued above it evokes forces that degrade quality of what society produces. It is much better to recognize quality where it exists, and make sure people can experience a life that makes them capable of recognizing it.
Just a page to allow you to download the PDF booklet about the Roboeconomy. It is version 1.0 of only 10 pages, so easy to read. The core message is we need to focus on wealth creation, which is not related to maximizing profit or money accumulation. The factors that are important are discussed and I will extend the explanation further in future updates.
Tesla is developing a bipedal robot that can replace human labour in places where the work is boring and/or dangerous. Amazon has a robot called Digit, but its not been in the news lately, it has strange legs that look alien. Boston Dynamics has developed several robots, more humanoid, but that one is probably waay to expensive. It carries a fossil generator on its back..
Walking robots are not easy, the double pendulum effect, or predicting what force you need to achieve what result when you have several degrees of freedom and inertia is hard, even for humans. It would be amazing if Tesla managed to make a reasonably agile robot in a year, but then again both actuator, sensor, analysis, energy storage, even part design and manufacturing is advancing at such a pace that its possible. It also helps that the teams no longer try to use math all the way, but more itterative methods to get the right plan for movements.
Bipedal robots can be way more efficient than drones, way more usefull in environments designed for humans
Optimus development should be going on in each first world nation, to push the boundaries of technology, but also because we need the help. We need bipedal robots. We need ‘Roadbots’ (autonomous mobile electric robotic platforms), because of climate change. Work that is dangerous is increasing, because working outside under the beating sun is becoming a problem. Such that you can now buy cool vests (ventilated vests) for people working in roadbuilding and construction.
If Tesla builds a lightweight bipedal mobile platform that can do real work (you could actually imagine a light weight system plugging itself into extra wall power if it has to use high torque for longer periods of time), that is already a game changer, it does not have to be able to keep a conversation going. I have seen videos online of a robot that can explain why its doing things, but its not clear if that is scripted or not. It will happen, I have written about it before, the hardest thing is to get the robot to have an idea of what a human is and how its behaviour could be a risk to humans. This is also hard even for humans. Humans love, and the fun fact about love is that it takes whatever comes in and makes a ‘thing to protect’ out of it. Its a messy way to do things, it will be very interesting how this pans out when done by an artificial neural net in a humanoid body.
A bipedal android that can be produced in large numbers for relatively little money will immediately be bought by mining companies, logistics, farming, chemical companies. The fun thing is that if they are as robust as Tesla cars, and the owner has its own renewable energy, they can work contiously for a fraction of the cost of a human. I described this consequence years ago because its part of my Roboeconomic vision (this is also a post on Roboeconomy.com).
The (slightly updated) question fundamental to the Roboeconomy is:
If we had a machine (system of robots) that could make everything we need that ran on renewable energy it could maintain, would we:
Be out of a job and not earning money, so unable to buy anything?
Be free to use whatever it produced without cost or based on a basic income ?
Of course everything would be free or we’d have a basic income, we’d have robots maintaining everything intcluding themselves. We’d have them set up factories, flatten the ground, make solar panels, install them, make more robots, build chip fabs, run them (also a very good place to use them). With AI and Robots and renewables a new kind of activity would come alive on Earth, we’d be pets or as Elon Musk once put it “We’re the bootloader for AI”
An important thing to note is that the Roboeconomy is not like our current fossil/nuclear/burning stuff economy. The burning does not occur. The energy is abundant, robots are expanding the capacity all the time. We won’t need to fight over it. Our current fossil habit is a serious risk because it generates objectives in people’s minds that are destructive, genocidal “If only those Ukrainians didn’t use all my gas an piss on me, if only I could eradicate them”. If those kind of ideas get hoisted onto an AI before we get to the abundant renewables phase we are in a lot of trouble. We are in a lot of trouble.
In the Roboeconomy nobody will own the energy first. Banks will not exist anymore, in fact the big bank we will have is being launched by Tesla (although not announced at the Q1 ER). Batteries will be the banks, energy will be traded for a currency the owners invent, the tax office will probably hand it out to the people on a monthly basis or something.
Not sure what happened to Digit. Its Bezos mindset that works against breakthroughs although he seems to have ideals. He does not think he should solve other people’s problems. Zuckerberg also really doesn’t care about suffering in the world. Many people do however, and my hope is those people will be the ones to bring about the Roboeconomy as an act of kindness.
Tesla is developing a robot called Optimus, it will be a humanoid, biped, walking with arms. It is a big challenge as walking has been a notorious problem for many robot projects (which has been solved by Boston Dynamics), and manual dexterity is another. Tesla is still working with ‘statistical’ deep learning/transformer networks, and is only optimzing a few vectors (or one really) for its cars. A body needs many.
Elon Musks fear of AI is fair, it is becoming real easy to make machines perform tasks once reserved for humans. A board of $20 can recognize voices and objects, even has a camera. This can be used for good, but also for evil. You can with some hacking build a gun that can shoot specific targets, even a specific person from a distance. Who will get convicted for that crime? Real ‘autonomous’ AI today can only exist in the sky. Autonomous is between quotes because such device will have a ‘preference’ build in. But it is totally concievable to have it scan the ground for objects like guns mounted on cars, and destroy them without intervention.
We can go into a lot of AI risks here but it may be more interesting to expand om Elon’s insight during his ’21 Q4 Earnings call, where he wondered what the economy even means if there is no shortage of labour (which is possible if you have a general purpose android). I have written about this world often on this blog, and named it the Roboeconomy, in short the Roboeconomy is a world in which robots are powered by renewables (and AI is assumed to have progressed). I said this Roboeconomy is where humanity is heading, and it is completely different from the current fossil credit economy.
The question that shows the difference that I asked in my post on the Roboeconomy of 2011 is:
“If we had a machine that made everything we needed,
would we all be jobless and unable to afford anything,
or would everything be free?”
The basic difference between the current and the roboeconomy is that nobody owns the energy you use, so whatever you produce with it, you don’t need to share it with anyone. Of course if you don’t share others may have nothing. Does that mean others starve or do you still share because it you who owns the energy source and produced it do not experience any loss in doing so?
In the fossil credit economy most money ends up with either energy companies or banks, both have no real use for the money
In the fossil economy we always pay for things because there are first owners of the energy we use. Fossil companies and banks own the energy and the money we use to allocate it first, then we borrow it and consume the energy. This ties us into the ‘economy’ which maximizes the power and control of banks and fossil companies. We have to go back to the gas station and find new money to buy fuel. We are forced to live in expensive homes we have to pay a ‘mortgage’ on, which also forces us to go out and find/make money. Our environment is a desert because we can’t just find what we need in it (energy and money), we have to haggle with others for it. It is this dependency that is carefully maintained and protected by our banks, who also push right wing un empathic politics. They create the fossil economic machine that is destroying our environment and climate.
If the energy is renewable we are free, we can be located in the middle of nowhere as long as we have the technology to make what we need with the energy we harvest we are good. It was clear that AI and chip technology was going to make it easier to do that. 3D printing, maker bots, deep learning development where going to allow us to eventually make almost everything anywhere. It would take human ingenuity at first, but AI aided physics modelling and CAD systems would help and eventually you would practically end up with machines that can make anything we need in any quantity we want.
Elon has been able to bring about the environment and actions that are getting us so close to this reality, where I personally did not advance beyond thinking about it, tinkering with electronics and tiny robots at home. But the significance of this push with respect to the climate crisis can not be underestimated. This is what I wrote about before : The climate crisis can not be solved within the present economy, it has to be solved with renewables because fossil fuels would be a limiting factor and above that add CO2.
What we need to solve the crisis is a lot of manipulation of our planet and a lot of activity in places where nobody lives or wants or can live at the moment. High level AI driven robots are a solution to that challenge, and robots on renewables are an obvious requirement. With those two factors you can repair the planet’s eco system, fight problems where they occur, do so much that weak organic people can not or do not want to do.
If Tesla manages to build an Optimus robot that can assemble itself, that can organize the gathering of resources needed for its creation itself, that can process those raw materials to get the parts and components to create itself itself, the world can feel relieved because it could secure parts of the economy using the AI, and not have fallible people chase after things.
It would also possibly have to deal with the freedom of these AIs, with their desires and needs, as these AIs would have to have drives other than servitude to a master. I wrote about this (some posts are missing, the last 7 years due to a WP update). The risk of a freely roaming android to humans can be protected by giving it a detailed sense of what humans are. We could also give them a detailed sense of what Earth is (for which I suggested to build an ‘Earth simulator’ that can also be used to see effects of climate action). Of course basic ‘do not touch’ rules and auditory sensitivity (for calls of distress) would be good ‘demotivators’ of intentions.
It is exciting to think about robots restoring the ecology, as it is to think about a robot you can send on an errant. The fluidity will depend on the computational capacity that these androids can carry, humans basically always want to do everything, but our environment usually only allows us to do what we can safely or decently do. It seems the Tesla cars have to filter the situation they see and select abilities for specific situations in a more exclusive manner, but they can in principle switch much more often than humans (we are stuck with 100 ms at least and longer for realities we did not expect at all). We can probably do a lot already with way less capable AIs and control systems.
It seems logical for Elon to go after productivity enhancing versions of the android first, then after the humanoid aspect and then after the Generalized AI aspect. The bots will take jobs away, but make production cheaper, and this is where the conondrum of the Roboeconomy becomes important to answer. I have suggested that if such reality comes about, the people do not need jobs, but they are not starving for lack of income because the receive a basic income. Because they just allocate energy to the producers of the products they like, and the energy is free because it is renewables, people can enjoy a free life as if they are living in a garden of Eden.
Wealth is a function of Energy, Raw materials and Skills, money is not a factor!
We forget our media really needs to capture our attention in order to teach us we need to buy products and live a certain lifestyle. The constant reminder of the existence of shiny people in huge shiny mansions with white teath, fair skin, lush hair, cozy families and interiors, is not to make us happy, but to make us consume fossil fuels and generate cashflow for banks. They world without those forces also has different people in them, people that are more content with less, that are free to travel and do good, people not stuck in horrible jobs. Once we can escape the fossil credit economy, we will not know why we ever accepted it.
Economic thinking is incomplete, it takes the perspective of a hunter gatherer in a new unpopulated environment. This is a result of its deeply introvert attitude, as it has only one motivational drive profit. Every modern economic activity happens in the artificial context of bank financing. Projects will always go to banks to ask for a loan in order to build capital to do whatever it tries to do. There are exceptions once a company or individual can amass enough cash. Whatever activity is done with cash directly can be very disruptive, as we have seen with Tesla and Apple in its haydays.
To drill down to what an economy is about we would define it as a process of combining three factors to generate wealth for people. These are :
Energy -> muscle energy, electricity, steam pressure, solar heat, fire
Skills -> brain power, intricate mechanisms, computer power
Materials -> all stuff that grows, walks around, flies or lies around or can be dug up etc.
Wealth = Energy + Skills + Materials
Originally it was a human being that combined skills and energy to shape materials into whatever it needed. fundamentally a human being doesn’t need much more than food (energy) and a place to live to exist. Humans existed for milions of years just eating and being in all kinds of ways.
Recently we have seen the introduction of coal, oil, gas and before that of wood being burned. They are a source of energy. Used in machines one creates a source of wealth independent of humans. The machine can incorporate human control skills, like the governor on a steam engine, or the movements of sowing in a sowing machine. These mechanically implemented skills where transferred to all kinds of media until today they are mainly heald on silicon in computers.
Developments in AI are pushing the complexity of skills that can be represented in computers close to human skills. Autonomous robots that would create wealth that benefited humans would be the ultimate positive outcome. Right now autonomous bots that kill humans are the most advanced type though. This is mainly because wealth can be defined negatively, in the absence of consumption of resources by an adversary.
Modern economic thinking has been biased because of the desire for banks and fossil fuel companies to make a profit. and as they where on the top of the credit food chain they have been able to keep it this way until today. The economy does not strive for general increase of wealth, and it does not consider the context in which it operates. It only looks at the parameter of profit, which ensures security of banks, because when everyone wants profit, there is continued money shortage, and bank credit will remain in demand and a controlling factor of new activities.
The Transtion to the Roboeconomy
Renewable energy are changing the economic dynamics because they can be owned by individuals, companies or the state. Because most people don’t understand the occupying role of banks these ‘assets’ are currently mixed into the fossil based economy, loaded with debt by banks and thus owned and their existence managed by them. Privately owned renewable resources without debt are a threat to the credit hegemony of banks and fought. Ultimately this will be a losing battle and all individual owners of renewable energy resources will become creditors to the roboeconomy.
You would think the replacement of fossil by renewables does not change the lack of consideration of the economy for the environment, but it does, even if it is not the final answer. This is because renewable energy resources are still sized to the actual demand. This means there is no ‘economic pressure’ like with fossil energy. In the fossil economy banks can always take more fossil fuels out of the available resource pool or try to. They simply create credit and the fossil resources can be controled by the recipient of that credit. When this happens it means profit for the bank so this is why all kinds of projects are being pushed and why “economic growth” is the main goal of governments dominated by the fossil economy. There is even an 18 month lead time before profit or demand is to be expected. These kind of rules where made up to drive fossil fuel use expansion for decades. With renewables there will be no pressure to do more, at least until we have 100% replaced fossil fuels. This “economic pressure” also means we could save enormous amounts of emissions right away by stopping economic activity that has insufficient benefits, or is are simply wastefull (like 80% of holiday air travel).
Credit in the Roboeconomy
Capitalism used to mean the management of production resources to maximize wealth. This included everything that would not be consumed, so machines, labour, skills. The way it was allocated could be directly or through trade using gold and silver backed currencies. With the arrival of fossil fuels this became a limit on development, as the extention of credit was limited by the amount of gold and silver (a problem already addressed with fractional banking). So the gold and silver standards where abandoned and today a US dollar is not backed by anything, at least so it seems. Now money is considered to be capital, and banks can print dollars and hand them over to allow projects to go ahead.
The fossil based economy depends on cooperation between oil companies and banks. This cooperation can be managed even if none of the players is explicitly aware of it
This only works because the credit buys fossil fuels or some other form of energy (renewables are still caught ni the same debt based credit system). This is not evident to most people but it is true. You can buy a running shoe, but if the money you buy it with does not allow the manufacturer to buy new plastic for more running shoes, and if it doesn’t allow the supplier of said plastic to buy the oil it needs to make the plastic, the manufacturer would be a fool to accept the money. Every product in our fossil based economy has a fossil fuel cost, often many types, and the money needs to be able to buy that fuel, and this is possible of a fundamental deal made with fossil fuel companies who gain only very little from it. Credit is carboncredit.
The world doesn’t seem to realize it but we are facing the biggest challenge to humanity since the bubonic plague. Society is carrying a large contingent of climate uncaring people with it, who don’t understand or care about the problem.Banks, oil companies, big corporations that don’t want people to stop consuming are all weakening retoric. Governments are staffed by seemingly greedy lackeys for industry, where the consequences of actions in two generations is not part of the bottom line. Money itself is still mainly carboncredit, and there is no easy answer to how credit is distributed if a society runs on renewables. We need a power grab by those that do care, but that is not possible in a world owned and run by banks!
The solution is to introduce a new currency, which can only be exchanged and shared by people who restrict their behaviour in ways that conforms with the challenge we need to meet. The greedy climate ignorers will immediately call it communism, but that is not what its about, it is about being responsible without suffering. If you want to meet the challenges you need to stop doing a couple of things, and start doing many other things. Work needs to be focussed on reducing emissions and pulling CO2 out of the atmosphere. Work needs to be focussed on actively cutting emissions of companies, groups and individuals that do not restrict their behaviour responsibly.
This currency will meet strong opposition to begin with, it will be fought by the current carbon credit monopoly. On the other hand people will not think much of it, a cryptocurrency, who cares. Maybe it should not even be a crypto currency as they are known today because its undesirable to drive such an energy intensive kind of money system. Maybe it should be a coin. The coin would however come with a contract :
1. A person can recieve the coin or a balance in its account if he/she is actively driving real climate solutions
2. You recieve the balance from peers who measure your actions against the best scientific models of what the effects are democratically
3. Any balance can be taken out again by distribution over all others if enough holders agree and if there is a clear reason
4. At the time horizon of 2030 nobody will be allowed in government or positions of power who does not hold climatecoins
5. Anyone who wants to get elected needs to recieve climatecoins
People will wonder what to do now, with the prospect painted by the IPCC. The predictions are dire, we all know it and actual reality seems to move quicker than most models predict. What to do if you are in a normal job with a wife and kids and a mortgage..
Humans are not made to change things when everything seems fine. Everything seems fine, except a couple of hot days, maybe a storm and a forest fire if you are unlucky. Its very hard to throw everything overboard and its not even clear if that would make any sense. You may have worked years to achieve your current position, or your current level of excellence and expertise, and now it seems there is a risk that needs to be neutralized, and it requires big changes.
Two new concepts
Before we get into how things will go down lets talk about the title of this piece. The RoboEconomy and the ExtraEconomy first. The two terms where made up to signify two systems in the world dealing with climate change. One is as system a lot like the one we call our economy today, the other is one which is explicity out of reach of that system. The RoboEconomy is simply an economy that uses robots and renewables instead of fossil fuels while maximizing jobs. The extraeconomy consists of climate mitigation projects that are generating resources that are NOT to be consumed in processes that are NOT to be interrupted. Ever in some cases.
The question is how to move from our current economy to the RoboEconomy, how to start the projects of the ExtraEconomy (So called Millenium projects) while still having a reasonable life, or one that is pleasant and exists at least. How fast can that be done is also an imporant question. Also what needs to be done. The scale of the problem is underestimated. It can become effectively unsolvable in the next thousand years.
Humans may find a way, but how many and what about the rest of life?
To be sure, the world still looks really nice in most places, some are seeing forest fires, some are seeing melting of snow and ice, things are changing, but you can live. And if you take human ingenuity into account, and assume we will keep access to technology on the current scale (which is unlikely) then we will find ways to adapt, even in the absolute worst case scenario of a hot house earth with H2S in our atmosphere. Then we will likely also live on the Moon and Mars and Space in an orbit around Earth.
The above is technological optimism, It applies correctly to the survival of a small part of the current population in the extreme scenarios. It is nothing to be elated about, like the techno optimism preachers hope for in their following. The singularity as a concept but also a tool for mass hynosis. They want you to buy the books that tell you humans invented so much so we will surely invent a solution to climate change. Maybe. But in reality our expectations should be much more modest, because those preachers don’t create or imagine technology, they just talk about it. It is hard to make technology, it is hard to deploy it. So the baseline for succes is survival of people, fixing climate change is going to be a millenial challenge.
What we experience influences our behaviour
Back to the lives of everyday people, the Roboeconomy and Extraeconomy. Perhaps the most important aspect of our economy is its media. The media constitute a datastream that shapes and controls our minds. Social media is a part of that. It occupies part of our mental capacity and it provides examples of behaviour that we subconsciously immitate to understand, so which can become part of our behaviour quite easily. They create an illusion of stability, like an environment, but an artificial one where the relative amount of attention ideas and events get does not mirror any practical need for it. To the media, including the social media, your engagement with it is being maximized. Through that engagement your behaviour can be influenced, and this is an ability that has value in the economy. Time spend with media is time spend with little return, and it is likely to lead to more time wasted. Wasting consumer time is on average good for the economy. It makes us more needy.
Money has become our significant other
The second most important aspect of our economy is money. The primary goal of the economy is to make us fully dependent on money. Its goal is to “install” money as our primary driver. To achieve this it needs to turn anything we pay attention to into a product or service. The drive to do this comes from four sources :
Someone wants to exchange a product or service with you, but there is no immediate need for it, so money is used to bridge the time difference
Someone wants to make money of selling you something you already have or considered of little value.
Someone handling the money (a bank) wants to handle more money.
Someone selling primary resources like fossil fuels wants to sell more fossil fuels.
We need to clearly separate these motivations, because some benefit all and others only a few.
Money is an organizational tool
Motivation nr. 1 is the real reason we have money, to organize our activities over time. Even gold as it was used in ancient times functioned to motivate a person to do something at the chosen time, and the amount was of course related to what that person knew another person would do for the same amount. A person would not do more or less than he expected someone else to do unless other circumstances compelled him/her to. Motivation nr. 1 is so true that if you have a group of people now cooperating in some way you can easily introduce a currency to do the above. This offers everyone freedom and flexibility, but also introduces the risk of inequality.
Money can be used to achieve egotistic outcomes
Of course it is clear that money in the sense above can control people. And if we have control over things it is more likely we achieve outcomes we desire, so money becomes a thing of value to hold irrespective of its exchange value. This introduces egotism in the social system, something that would be much harder without money, there egotism can only be realized through action by the egotistic person, which requires effort and is thus an exchange within the person him/herself. Gaining money to gain power and control is synonymous with profit seeking. In a normal society with money in circulation profit could never be excessive. But as money is a token that is introduced, and the amount of money is arbitrarily controled by those that coin it, the amount of profit and the meaning of profit can become hard to define.
Moneylenders and creators have taken extraordinary control
Motivation nr. 3 combines the control motive with the extaordinary privilige to create money. This is what banks can do today. They not only handle our money, they create it. Their motivation is entirely based on control and profit seeking. They do not form a basic part of a functioning society of equals, they have placed themselves above it, and because they usually behave very decently, most of us are unwilling to accept there’s anything wrong with that. Of course normal desire for safety and security drives banks to try to gain more control. Banks control our money supply and can simply decide to cut it or extend it or make it more expensive or less expensive. Because of that they can grab control of assets, drive up prices, create false competition and distort markets. To say however that profit seeking banks are something we should or could eliminate today would be wrong, and this has to do with motivation nr. 4
Our money is fossil fuel credit
Not all producers of primary resources are equal. Oil, coal and gas are both raw materials for plastics and other chemicals but also the source of energy we use to manipulate, facilityat and create our products and services. What’s more some countries depend heavily on fossil fuel sales. Saudi Arabia has a barrel price for crude oil in mind that maximizes sales and their revenue. This implies that there is a constant pressure to sell oil, to use it in as much situations as possible. If we could suddenly fly electric oil companies and oil countries would have to find a new use for their oil or go broke! Banks have a strong interest in this process, because they handle the money that is used to buy and sell oil. Their ability to create money amounts to taking oil from the producers at will, and thus in spite of what they say there needs to be an understanding between oil producers and banks, and this is having serious consequences in the fight against climate change. Money in this role is “carboncredit” and its cashflow is the oxygen for banks.
Fossil fuel credit is special
Fossil fuel credit as described above does not obey normal rules of exchange. It is easy to see that if Saudi Arabia produced all the oil the world had, it would profit so much from selling it it could basically buy a large portion of whatever is produced with their oil This is clearly not the case. This is in part a result of banking tricks, books have been written about how Wallstreet disappeard much of the Saudi wealth. But more fundamentally fossil fuel does not fit in an economy that exchanges human productivity and results of human skills. We burn oil. Oil is like a crop that grows without a need to tend it (much). But unlike real crops no person can make oil. On the other hand for millenia nobody had any use for oil. The egyptians had tar and oil and used it to waterproof boats and burn in lamps, but other than that they didn’t care about it.
It took a century of increasing our use of fossil fuels to reach the point where we are now. It was a self amplifying process and it would be foolish to deny that the lives of people improved. But today the primary method of this “economic expansion”, namely fossil fuel credit, means the tool we use to organize our activities is tied in for 100% with an energy source we can no longer afford to use. Our money and the way we create it is fundamentally expecting the availability of fossil fuels in the market. The easiest way to see this is if for instance a bank finances some new waterworld amusementpark. The money will go towards buying resources. But how come they are available? Because the money buys the fuels to create the cement, haul the concrete. That’s a lot of energy needed to do all that. Would that energy be available if we only used solar and wind (and some battery storage) ? Nope. The energy production capacity would have to front run any development and as a consequence any ability of a bank giving credit. Oil, gas and coal are stored energy, and this is what makes it possible for our bank to say “Here is 1 million go ahead and buy and use that oil”. With renewables they could only do that if they owned stored energy, or the energy source. And with renewables this would not be an exclusive privilege of banks! Our money is fundamentally pro fossil fuels.
Kate Raworth is all the rage these days. She presents a donut shaped representation of the nine planetary boundaries and asks economists to think about it when they use their simple model of producers and consumers. It sounds great. We need to take care of poor people, our planets resources etc. You’d think we’d be happy, but we’re not. The reason is that she fails to do two very important things :
1. Do more than state the problem
Our world economy is defended by econonomists, not designed by it. It’s already running, money flows, resources get scavanged and mined, oil (very imporant) drives trucks, cranes and the banks try to optimize their profits and the amount of money flowing. Economists have one option : To work in service of that system. The other option is to not work or choose another profession. Why? Because they are the key salespeople of the economic system, the ones that will always sell it more no matter what you say. So does Kate. This is the second failure:
2. She fails to name the key driver behind all the destruction : Fossil energy
Granted, she does mention that the flow of energy is very important, but then she talks about the sun, food production. She never mentions oil, gas, coal. This is insane. Our economic system would instantly collapse if we could not buy oil, gas or coal with our money. Every transaction we make still largely depends on some fossil fuel being available somewhere to burn, whether in the factory, the power plant, the truck, the home of the worker.
What kate does is exactly what banks (World bank etc.) have been doing for decades, which is to focus on fighting poverty. What does that mean? Expansion of fossil fuel use (if you don’t put the focus on that). How do we know Kate is old school? Because the use of solar, wind, renewables totally upends the economic system, and totally breaks the domination of that production/consumption cycle.
Fossil energy drives pollution also because it allows competition where there would not be the resources for it otherwise. The most stark example of this is wars. Fossil fuels allows for the production of weapons for both sides, endless amounts. Only when people fight over fossil fuels is there any reason for banks, oil companies, industry to stop the fighting.
Kate simply restates the problem and then distracts us from the real challenge, which is how to have an economy based on replenishing resources like sun and wind. We have written about the Roboeconomy before, which is an economy where robots do most of the work, including restauration of our ecosystems, all running on renewables.
The roboeconomy will come about as extraeconomic nuclei grow and connect into networks of waste free, energy self sufficient wealth creation systems.
A key aspect of the roboeconomy is the growth of ‘extraeconomic’ nuclei of activity. These are regions where interaction with the wider economy is not allowed or not necessary. Imagine a water botteling plant, that runs on solar, that has solar trucks, that recycles bottles it brings back from the supermarket itself, and that also recycles bottles using solar. All this fully automatic. What will the cost of water be? Of course there is an initial investment, but what if the plant was set up using cash, no loans. Then it could run with minimal maintenance (of course there will be maintenance robots). It will outcompete all other water brands.
A simpler example is a zero-meter house, one that doesn’t need any fossil or electricity energy input. Such a house doesn’t have gas, electricity connections, it doesn’t make money flow but it keeps it’s owners warm and comfortable. It has become an extraeconomical island because if it is fully owned, payed off, then the owner barely needs to go out into the world to work. Only for some food. But if it has a basement with hydrophonic vegetable robots that run on solar from the roof, even that is no necessary. Think zero-meter greenhouses. Of course right now hydrophonics is used to sell as much plastic oil and other crap, because it exist in an economy that has a core function : To maximize the utilization of fossil fuels.
The key strategy of the fossil fuel/banking or what we call the carboncredit system is to distract us by making us look for solutions 1. Where there are none 2. That involve using the fossil credit economy.
So we are not impressed with Kate, she is a distraction and she doesn’t point out the real challenge to economics, which is that it will have to deal with the disappearance of banks, of big financial institutitons, and needs to prepare to become expert in the managing of local autonomous independent ecosystems, EVEN independent of bank loans. Surprisingly enough economics is already pretty good in these things, because most companies function as autonomous independent systems, with one difference, they’re always deep in debt and working hard to pay it off (or just pay the interest) by seeking profit and being agressive in the market. This is where the biggest change will come : Less competition.
Just think of the bakers in the world. Most of them don’t compete, they fullfill a function locally, they are spread out over the urban areas quite evenly. They don’t have to go into deep debt to dominate the bread baking world, at least not if there isn’t some crazy financial tirant in charge. Of course we do have global bread, bagel, donut, hamburger franchises, which compete unfairly (judging by the tax incentives). But we don’t need to, and we won’t have them if bakers and farmers cooperate to grow, harvest and bake in a closed cycle extraeconomic system. Then bread will be very cheap or even free.
Kate puts poverty first, then living within our ecological means. If we don’t do the second thing first, we will never be able to do the first in any lasting or meaningfull way, in fact, we’re likely to do the first by doing the last.
The above will happen with many products we use, they will become debt free autonomous production systems. The largest portion of the money, which now goes from consumers to the fossil energy companies through the banks, will evaporate. Money will mainly be used to divide tasks because 1. energy will never be payed for and 2. resources will always be recycled. 3. labour will be avoided when it isn’t spiritually enriching. Kate’s trick is to mention all the aspects that we need to consider and strive for but not the key change which is the dissapearance of fossil fuel cashflow and credit dependence. Yes of course we should consider our well being, of course we should work within the limits. The real challenge for economists is to understand the robo- and extra- economy, but that’s really not what their future employers (banks, financial institutions, insurance companies etc.) want. Nor Kate.
Johan Rockstrom (Mentioned by Kate) Adapt, resilience Johan Rockström massive challenge feeding 9 billion people. “We can not expand , we have to use current land” “Carbontaxes it won’t work” “We can feed the poor” “What are the planetary boundairies”. Rockstrom is also a pro fossil typical ‘adapt, move with the punches’ non contributor.
Will Steffen (also mentioned by Kate) How do we fit in with the cycles of the planet. Reduce pressure of agriculture. Carbon neutral aviation fuels. That sounds much better, short term solutions.