What is the purpose of the economy? The case for a geocentric turn in economics

Recently I have been working on a chapter contribution to a volume on geoethics edited by Martin Bohle “Geo-societal narratives – contextualising geosciences” (Palgrave). Dealing with literature that I was largely unfamiliar with helped me a lot to focus my thinking about ideas that I have been working on for years. This has been condensed in a chapter draft. In two posts I want to present two core themes. The first is asking the question, what is the economy for?

Since Adam Smith, economists have answered, ‘for human consumption’, or, in more abstract terms, ‘for human welfare’. The entire theoretical edifice of economics builds on the notion of utility function that not only serves to explain individual action, but also to evaluate economic outcomes. Economics is deeply anthropocentric. Outside the circles of concerned ecological economists, this fundamental stance is never given up, even in otherwise critical approaches. Clearly, this is a value statement, and therefore apparently, we might change our position for ethical reasons. This is nothing new, as in the Christian Middle Ages the idea prevailed that the economy serves a ‘common good’ as defined by religious beliefs, and that humans are mere stewards of God’s creation. Islam maintains the same idea, among many other religions. But the fact is, ethics alone does not alter the mechanisms propelling modern capitalist economies on their growth trajectories.

I suggest that we can also present an argument from science, specifically Earth science, to justify a geocentric turn in economics. This move becomes salient when we consider the function of the human economy in the Earth system. The view from functional analysis has been suggested by Peter Haff in a paper that I regard as one of the most inspiring contributions to research on the technosphere. Haff argues that the technosphere fulfills functions for human society, but human society also is functional for technosphere evolution, and that we can neither completely oversee nor control these complex functional interdependencies. In other words, the human economy partly has the function to sustain and drive technosphere evolution independent from human purpose.

If we look at this from the Earth Science perspective, we can judge this hypothesis from facts. The simple fact is that the human economy has planetary effects on all Earth system processes. As we learnt from environmental havoc and climate change, this forces us to pay respect to these effects in designing our economies and planning our economic actions. In this sense, we assume regulatory functions driven by self-interest, for plain survival. Yet, there are many variants of this insight. One is sticking to the anthropocentric reference and envisage a future of geoengineering which would effectively subordinate the technosphere and the Earth system to the human economy, including governments. But can we really presume that we would be ever able to harness sufficient knowledge and technological capacities to achieve this? Well, that’s a matter of belief, and therefore I only want to comment that many economists argue that even the economy cannot be controlled by us (‘by human action, but not by human design’ Hayek’s famous dictum), which is the pivot of the liberal defense of the market. Therefore, even further expanding the scope of the economy including geoengineering would create an evolutionary process that even further transcends our capacities of determining its trajectory. Do we really want that? (I will suggest a solution in my second post).

The other perspective is to conceive the economy as being part and parcel of the Earth system, as I argued in previous posts, the ‘control room’ of the technosphere as an emergent new layer in Earth system evolution (a ‘hybrid planet’). Here, we must be careful in avoiding the functional fallacy in regarding emergent functions as causes of evolutionary emergence. Yet, there is a general framework that allows for analyzing the economy in terms of its functions in Earth system regulation, which is thermodynamics. Peter Haff and others (including myself) have argued that the function of the economy is to enhance the capacity of the Earth system to dissipate energy, hence speeding up the working of the Second Law. However, there is a long way to go from this most general function to human purposes and intentions (although there is a maverick thinker only known in the humanities, Georges Bataille, who established this direct connection in his book ‘La part Maudite’). Yet, we can make sense of the evolutionary trajectory of human economies in the past millennia, which is story of continuous dynamic expansion, population growth and accelerating energy throughputs.

Hence, I suggest rethinking the purpose of the economy: The function of the economy is being part and parcel of the entire regulatory system of plant Earth that, following the Gaia hypothesis, makes life on Earth sustainable. If we adopt this view, there are many direct consequences for policy design, and a revolution of the architecture of economic theory follows immediately. As I argue in my chapter contribution, one example is discount rates: We must adopt geological time scales in defining the time horizons of decisions, which implies zero discount rates for the geological present, which is our lifetime. We would no longer judge economic performance by GDP growth, but in terms of positively supporting Earth system regulation. We would no longer measure ‘scarcity’ relative to human wants, but in terms of ecosystems sustainability, and so on. Since economics is deeply influential in shaping public policies and business strategies, revolutionizing economics is a key challenge, and that must start out from a Copernican turn, moving humans out of the centre and putting Earth at their place. All else follows.

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