The Crisis of Perception

by David Julian

Fritjof Capra in his book "The Web of Life" writes about environmental concerns.
'The more we study the major problems of our time, then more we come to realize that they cannot be understood in isolation. They are systematic problems, which means that they are interconnected and interdependent. For example stabilizing world population will only be possible when poverty is reduced worldwide. The extinction of animal and plant species on a massive scale will continue as long as the Southern Hemisphere is burdened by massive debts. Scarcity of environmental resources and environmental degradation combine with rapidly expanding population to lead to the breakdown of local communities, and to the ethnic and tribal violence that has become the main characteristic of the post Cold -War era.''

Capri goes on to graphically link these problems with what he calls a 'crisis of perception'. An important component to this crisis is the way we understand the economy. Economics should be the science of human resource allocation. It should be able to define the most efficient way of providing the necessary resources to sustain the maximum number of people. Yet clearly the current economic system is not doing this. Global poverty and inequality seem to be increasing, and, despite a few hopeful signs, the natural environment is still under grave threat.

Perception of our world is dictated by our time and place in it. A 40 year old in Australia has a vastly different worldview than a five year old in Afghanistan. For many Afghani children economy consists simply of being able to conserve maximum energy, allowing survival on a minimum of food and water. This is the economy of existence, and characterizes all biological systems. It is basically a means of allocating scarce resources on a biological level.

For an average Australian economics means something completely different. Notions of global exchange rates, employment statistics and the price of bread come to mind. Still it affects us in a direct way. The devastating effects of job loss, debt and rising prices can not be underestimated. Poverty, even in so called rich countries like Australia, can have devastating social, psychological and physical consequences.

The huge variety of human experience means that it is impossible to share common perception of the world. Yet there are common threads. Economics has the ability to affect all of our lives. The micro economic condition of the poor hangs them on the cusp of living and dying, and for the rest of us translates into varying degrees of well being.

Western concepts of economics and the idea of the 'invisible hand' balancing supply and demand are powerful forces shaping the world. There is no doubt that 'Capitalism', as this style of economics is termed, has made many people rich. The idea of a free market and global trade are very appealing in their pure form. After all being able to share and exchange resources is the economy of the natural world.

In an ecosystem, for instance, energy exists in many forms. It is used by one organism, transformed and passed on to another organism that uses it, transforms it, and once again passes it on. In a forest trees capture sunlight, transforming it into the starches and proteins which builds branches and leaves. The leaves fall and are used as nutrients for other plants and animals. Each process has many beneficial 'flow on' effects. Earthworms break down leaf matter, condition the soil and provide food for birds, bees collect pollen and at the same time fertilizes, flowers. These flowers may fruit, providing food for birds who then distribute the seed. Nothing is wasted, resources are constantly being recycled, transformed and improved. Each exchange point is exquisitely tuned to provide the maximum benefit.

This called 'synergy' and is clearly something that we must apply to our own human economies. At the moment resources that are produced in one country are exported to another, despite the fact that these resources could just as easily be produced in the importing country. The reason this is not done is because it is cheaper, in financial terms, to produce in the exporting countries. This is largely, although not entirely, due to labor costs. Yet in simple energy terms this transaction costs many times what it would have cost if the resource were produced locally.

This aberration is evidence of a systematic malfunction in our economic system. Instead of being tuned to maximum efficiency it is biased towards creating wealth in certain regions. Yet in essence, wealth, like energy, cannot be created only transformed and transferred. Wealth in this case is transferred from poor countries to rich. Unlike the exchange that occurs in healthy ecosystems, this exchange is not efficient. Instead of their being multiple beneficiaries, there is only one. Also the fossil fuels used in the transportation represent a net loss of wealth. This fact is disguised by the compensation effect of cheap labor costs.

This is just one example of the many inefficiencies built into our economic system. These inefficiencies go hand in hand with inequality and environmental destruction. The creation of wealth in many cases is simply the transfer either through the over exploitation of natural resources or the exploitation of human capital through lower wages and exchange rates. In both cases there is a net loss of wealth. The natural systems loose their ability to sustain themselves (thus reducing their ability to create future wealth) and poor countries simply become poorer.

I believe there are two things we can do to tune our economic system so that it is more efficient. Firstly we must accurately incorporate natural capital into our economic analysis, and account for it in our transactions. Secondly create a global currency. This would encourage local production and reduce the exploitation of countries that are now stuck in poverty. It would truly give a 'level playing field' to all participants in the global economy.

Obviously these are not easy things to do, and will require decades of work. The first step, however, is remarkably simple. That is to change our perception of the world and to see the connections between inequality, environmental degradation, our economic system and the ecosystems we are part of.