12NaturalEconomics

I. Introduction

Recent discussions about the extinction of humans at

our scientific forum

has revealed an unbridgeable

gulf between two radically different ways of looking at Economics. On the one hand, we have what is

typically known in our contemporary world as the discipline of Economics and which I will refer to as

Artificial Economics. On the other, we find a long lost current, now exhumed, which I will call Natural

Economics. The former is represented by the likes of

Ludwig von Mises

John Maynard Keynes

and

Milton Friedman

. The latter dates from the 19th Century and originated from the works of

, and

. (1) Their work has now been revised and is significantly

different than what was initially proposed by these pioneers. Therefore, it is imperative to clarify that:

..........

1. The term '

Natural Economy

' used by Marx and Engels also falls under ‘Artificial Economy’

..............

according to this article and in no way should be regarded as a synonym of the new

..............

concept of Natural Economy discussed here.

..........

2. The terms ‘Natural Economics’ or ‘

Natural Resource Economics

’ used by Artificial

..............

economists and their affiliates (e.g.,

the Venus Project

) should also not be confused

..............

for the new concept of ‘Natural Economics’ alluded to in this article.

Genuine Natural economists argue that the perspective originally proposed by Morgan and Engels and

which now has suffered important modifications makes it obvious that:

..........

1. We are undergoing the last stages of a mass extinction

..........

2. The end result of this process is the imminent extinction of the top predator of the Earth: Man

This article is created as a reference to facilitate the discussions between these two irreconcilable

currents of thought.

II. Density dependent birth rates (

DDBR

) (2)

Let us assume that Adam and Eve are placed in the Garden of Eden and they have unlimited quantities

of food. They reproduce children mechanically every year and these children have children of their own

every year. The population expands. God can wave His Magic Wand and make another miracle. He can,

for instance, make it so the Earth increases its size, its diameter every time a child is born. For any given

cross section of time, the density of the planet is always the same. The amount of food – plants and

animals they can eat – magically expands. There is always x number of people per km² and per pound of

flesh and/or vegetables no matter what. We could continue like this forever. Instead, let’s be a bit more

realistic and assume that the Earth and the quantity of food does not expand geometrically for every human

born. Would Eve have one child per year forever? Doesn’t it seem logical that at some point the entire

population of these predators will have to adjust to the availability food? This intuitive or instinctive

adjustment of the population to the amount of food available is known as density dependent birth rates.

When we lived in the country and there was low density, women had children like if the Earth expanded.

We had a long ways to go. Today we are close to 7 billion people on the planet and, although a great part

of the world is empty, our populations are nucleated in cities, much like ants in ant holes. Since 1963, the

global birth rate of humans has dipped from 2.4% to 1.2%. By 2050 it will be close to zero. Why?

Natural Economics

Economists confuse...

Natural Economics with Disneyland Economics

Different Bull Markets

Stress has been observed to be the factor that induces non-human females to forgo estrus. In the wild,

this is triggered primarily by a dearth of food. If a female has a difficult time finding food, she has more

important things on her mind than bringing another anchor into the world. Like the newborn gazelle who

never took a blackboard course inside her mother’s womb yet ‘instinctively’ ‘knows’ that the cheetah has

not come to celebrate her birthday, the tigress ‘instinctively’ ‘knows’ that she has trouble finding food in

her territory. The male tiger has in addition the stress of ‘instinctively’ ‘knowing’ that he will have to fight

another gladiator for territory, either to expand or defend his own or to conquer his neighbor’s. He can

have fun with the girls and release the stress only after the war is over and only if the tigresses in the

region have not crossed their legs. If we define economy as ‘the management of resources’, it is this

vital resource – food – which underlies the mechanism of density dependent birth rates in animals.

Mother Nature’s economy consists of the management of food.

Our magical ability to plan and produce food, preserve it locally, and distribute it far and wide, has blind-

sided the Artificial economist to the fact that humans are bound by the same laws of life. Before a woman

can decide to have a child she must be stress free. A 19th Century country woman waking up at the crow

of a rooster had quite a bit of time on her hands and very few leisurely activities. If she and her husband

agreed to expand their empire and ensure their old age, all they had to do was plant more acreage to

cover the extra mouth. Having a baby was a no-brainer. It didn’t require years of careful planning. Having

large families was not due to the fact that our great grandmothers were ignorant brutes, which is what

orthodoxy holds today. There was no reason for family planning because there were no cultural or

economic obstacles to having clans. Quite the contrary. Culture practically demanded it and economics

allowed it.

The labor that went into guaranteeing a new member of the family tribe was minimal and within the means

of a farmer. It was not an undue drain on his resources to clear an extra plot of land, especially with some

of the new machinery that was being invented, unless unforeseen drought or disease altered his plans.

Later, when a child grew, he or she would from an early age become another farmhand and contribute to

the family economy which in turn made having yet another member again an easy choice. The critical point,

though, was that the couple was in control of their resources. They could decide how much to plant, and

food was practically the only consideration. I would guess that during drought or pestilence women

probably held back. Aside from the cultural factors – religion, custom, peer pressure – having children was

routine and not really a major decision. They could start having children as soon as they crossed puberty.

The new couple could live temporarily with their parents or be granted a plot of their own.

When the farmers migrated to the cities, all of this changed. I’ll consider only the extreme, densely

populated (locally speaking) Service Economy, just to make the contrast more visible. A working woman

is now limited by resources she has no control over. It is her boss who can hire or fire her, determines

her salary, and can offer her overtime and bonuses. Her social security – the most important consideration

for marriage and child bearing decisions in our crowded ant holes – is in the hands of others. Unlike the

calm country girl, the urban woman is under constant stress, 24 hours being insufficient to do it all. The

meager wages she earns must be divided up to pay for the ‘necessities’ of city life – from basics such as

water, electricity, and rent to transportation, clothing, education, leisure, socializing, and food. Her paper

thin disposable income is what remains to invest in child – as in singular, which although grammatically

incorrect is infinitely more realistic than the plural ‘children’. And, as just mentioned, she has practically no

control over her paycheck! Her income is her ration, the amount that has been allocated to her by the

Service Economy. Our Artificial Economy can’t be more generous for fear of subtracting from efficiency.

An urbanite lives at the cutting edge of survival. For all practical purposes she is a slave. She has enough

to live one more day so that she can make it to the rock pile tomorrow. Aside from the inevitable cultural

and spatial factors imposed by the densely packed Service regime – bachelors, single parent,

homosexuality, divorce, density, apartment, finding the blue prince, unfaithfulness, insecurity – these are

the real, day-to-day economic variables that distinguish the large family country mother from the lonely

city wife. These are the realities the urbanite faces daily and which affect her childbirth decisions.

Bacteria growing along the S-curve on a piece of 2-week old piece of bread are more or less in the same

boat, and if they are, it is hard to believe that animals in the evolutionary hierarchy above them are not.

This observation presents us with an outline that explains density dependent birth rates for any living entity,

especially, for large beasts. Although the T-Rex and the Neanderthals never even remotely attained the

numbers we have, they were also subject to density dependence at their own levels. It has been settled

that human hunter/gatherers had very low densities. There absolutely must be a ballpark 10 to 1 ratio

between trophic levels for the ecological pyramid of the Wild Kingdom to stay healthy and sustainable. If

the top predator agreed to adhere to this ratio, so did everyone else in the chain of command.

Therefore, DDBR is the key connection between population and economics. If we define extinction as the

complete elimination of the population of a given species, Economics seems to be a discipline that should

be considered when analyzing extinction. More to the point, if as has been established, a mass extinction

is patently the disappearance of an entire food chain – an entire ecological pyramid – then Economics is

a sine qua non factor in these types of extinctions. These conclusions demand that both biologists AND

economists be summoned to the next extinction conference.

III. Artificial Economics

A mathematical ‘physicist’ believes not only that marbles roll down the trampoline of warped space, but

holds that if the Sun were to disappear it would take 8 minutes for the Earth to say goodbye to its orbit.

He also entertains the possibility of traveling through time and wormholes, searches for magical black

holes through his telescope and for particles of mass with his accelerator, and has concocted the most

preposterous principles ever to come out of the mind of Man –

Anthropic

Uncertainty

Complementarity

–

to explain physical phenomena which to him still remain enigmatic.

Similarly, an adherent of either the

Chicago

and

Austrian

Schools of Economics has the eye-popping

belief that increasing investment magically creates jobs. Absent from such sweeping declarations are so

much as a hint of qualitative or contextual considerations. Friedman, Keynes, and von Mises types were

born and raised in Disneyland and naturally take for granted and have always assumed that Mickey Mouse

and Donald Duck are for real. They stand in awe when a skeptic even mentions in passing the possibility

of the contrary. The artificial economist can’t see past the perimeter of Wonderland. He has been dazzled

by lights that he can magically turn on by flipping a switch on the wall and by smartphones that instantly

connect him with people on the other side of the planet. The walls of his apartment are the extent of his

intellectual horizon.

Since he has done everything through the magic of money since birth, a Disneyland economist knows no

other world and solves all problems with this supernatural medium, firmly believing that it grows on trees.

Asked by an engineer how he would solve the finite amount of oil available on the planet, the artificial

economist is likely to answer that it’s just a matter of price. Milton Friedman synthesizes this worldly

wisdom in his dictum: “Most economic fallacies derive from the tendency to assume that there is a fixed

pie...” In Friedmanian Economics, scarce resources are physically made to appear in infinite quantities

by throwing money at the pies. Thus, it comes as no surprise that a Friedmanian casually believes that

investment automatically equates to jobs. There’s no attempt to factor qualitative or contextual parameters

into the equation.

Therefore, if God were to wave His Magic Wand today and wipe out all the money on Earth, a rational

person would answer that all the thin threads connecting the global web of relations would be irrevocably

severed and the spider would fall. There is no way to stitch them back together. The Artificial economist

offers, instead, a stunning answer. He tells you that he would replace the old green money God took

away with new brown money or with another medium of exchange, including bartering. That’s when it

suddenly dawns on the startled inquisitor that he was not talking to the psychiatrist at the asylum, but

to the patient. Such breathtaking replies irrevocably separate the handful of down-to-earth Natural

economists from the irrational hordes who follow the likes of von Mises, Keynes, and Friedman. (3)

There can be no reconciliation between these two currents of thought.

In retrospect, as happened in Mathematical ‘physics’, it was predictable that a surrealistic language would

evolve that would enable the Artificial economist to manipulate and juggle concepts in his lab. The

Friedmanians don’t talk about tangible sticks and stones, but about supply, demand, savings, investment,

taxes, interest, debt, labor, money, and other mass nouns that exist in Wonderland. It’s a dialect of

abstractions that enables the contemporary Artificial economist to grasp and talk about the Service world

in which he lives. All members of this religion speak the same language, yet inexplicably accuse each other

of heresy. The von Mises Sect sneers at the Friedman Sect which laughs at the Keynesian Sect... and all

of them at the Marxist Sect.

IV. The supply and demand curve for food

A supply and demand curve pits price against quantity. Typically, the more of one, the less of the other.

To an adherent of the Friedmanian school of thought, every tangible object, any lump of atoms, can be

bartered and sold. It’s just a matter of price. And it is patently obvious to him that a Cadillac is worth

more than a carrot. No contest. He has this opinion, however, because I have not yet described the

context in which I ask him to choose. The context is that he is marooned on a deserted island. Which

would he choose now? Which would he want to have after three days? A carrot or a Cadillac? This

example underscores the unbridgeable chasm that exists between the members of Disneyland

Economics and those handful of rational, Natural economists that still remain on our planet. (4)

Here’s an example more closer to home. What would happen to you if you did not have any money?

What if you lost your job, your house, your wife and dog and became a bum? Would you turn in the

bottles that you picked up in trashcans to feed the one-armed bandits at the casino or to buy food?

What do you think would be important to you? (5)

From Mother Nature’s perspective, food is unlike any other commodity manufactured by Man. Firstly,

it grows; it is not assembled. Then, it is deliberately grown in proportion to population. This enables us

to replace the traditional price axis with population and the quantity axis with weight or poundage. As

long as population remains constant, the supply and demand lines for the entire planet will barely slide.

In other words, food is a Goldilocks type of commodity. You can’t have too much or too little of it. It

has to be just right... under any type of economic arrangement, whether Hunter/Gatherer, Agriculture,

Manufacturing, Service, or Unemployment. Not so with other commodities. We can reduce the number

of radios we demand and have reduced

Pet Rocks

to zero. These crucial distinctions between grown

(necessary) and manufactured (unnecessary) tangibles become relevant in scenarios such as the one

depicted above. If your ship capsizes and you swim to the nearest island, a car or a TV set is probably

not be the first thing you want to take with you ashore.

V. And the problem is...?

Why would a Natural economist even raise such concerns? “Where is all this coming from?” asks the

economist of Wonderland? Has a boat capsized? Are we marooned?

They are important because our Artificial Economy, the one we experience every day and which has

blind-sided the Disneyland economists to the above facts, produces food not in relation to the number

of mouths, but in response to market conditions. The two are the same in the Artificial Economy. They

are not the same in Mother Nature’s Economy. Like our intellectually disadvantaged friends said, the

Artificial Economy treats food just like any other commodity. Vertically integrated

agricultural multinationals

such as

Archer Daniels Midland

Nestle

Cargill

, and

Bunge

process and distribute most and increasingly

more of the world’s food. (6) These companies are not in the business of feeding you. They are in business

to make profits. They are impersonal companies doing business just like any other, selling a tangible

commodity for a price. If as hypothesized earlier, God suddenly eliminates all the money in the world with

His Magic Wand, these companies have no further purpose for being. They have no incentive to grow,

process or distribute food to the world. We can do without TV sets and perhaps even computers for a few

days and if necessary forever. We cannot do without food for more than a few days. You wake up one

morning, go to the supermarket, and there is no food. The Artificial Economy is no more, and you come

face to face with what every animal in the Wild Kingdom experiences daily: Mother Nature’s Economy. The

only relevant resource that animals manage is food. Without it, they die. Without food, humans die in the

midst of Cadillacs, mansions, highways, skyscrapers, computers and all the ‘unnecessaries’ that the

Artificial Economy built. The only thing we need is food. The Disneyland and Wonderland Worlds are still

there in front of us for everyone to touch and see, but we suddenly discover that Mickey and Donald and

the Queen of Hearts had all along not been real. We discover that we lived in a fake, artificial world that

now cannot help the reality of hunger we feel in our stomachs.

Why would money disappear overnight?

It would disappear because Man’s interrelated, GLOBAL Artificial Economy is that close to collapsing.

And here there are irreconcilable differences between Artificial and Natural economists as well. The

Artificial economist has been raised and educated to believe that everything is a cycle. He gets his

pointers from his brother, the mathematician, who holds philosophically that ultimately everything is relative,

meaning, a matter of opinion. This explains in great measure why Einstein’s amusing

‘warped space’ theory

was widely accepted. Some relativistic mathematicians believe that the contraction of a ruler that travels

near the speed of light is

real

. Others, that it’s merely a mathematical expression of the frame of reference.

Some believe in black holes and Big Bang. Einstein himself vouched for neither. The beauty of relativity is

that everyone is correct.

In like manner, since the Wonderland economist never factors the 100,000 year history of Man, but at best

the last 100 years of history, he has come to the conclusion that Artificial Economics is but an endless cycle

of business booms and busts. He doesn’t realize that the context in which all this history happened comprises

only a very short strip of history: the last stages of Manufacturing and the whole cycle of the Service

Economy. The Artificial economist never ponders the long term history of Man. When

the entire history

the human economy is analyzed, there is clearly a linear pattern. Man went from Hunter/Gatherer to

Agriculture to Manufacturing to Services and never went back through any of those modes or categories. (7)

In the 19th Century it was the well-to-do which had large families. Today it is the poor
who have large families. As a result, contemporary social workers, economists and
demographers erroneously conclude that small families are the result of education and
wealth. Social workers and NGOs work on planned parenthood all over the world and
believe that it is their social work which is responsible for the decline in birth rates.
Actually, the main reason for the global decline in birth rates is the transition from
country to city, from agriculture to manufacturing and services, that every country in the
world is experiencing. This deterministic trend was unavoidable and cannot be reversed.

Thus, when the Artificial economist insinuates that the global economy will or may collapse, he is referring

to another of his cycles. He has in mind a

Depression Era

style period of lean cows and thin wheat stalks

from which we will eventually recover, perhaps under some unspecified new socioeconomic relations. This

is in fact what the followers of

(

) and

(

)

prescribe. When the Natural economist talks about the global economic collapse, he is referring to a dead

end scenario, a complete and irrecoverable collapse of money. The threads of the global web can no

longer be mended with any artificial waving of the Magic Wand. Issuing money of any kind will not

reestablish the broken links. The global economic collapse results in the disappearance of all governments

as well as of the entire chain of command, military included.

VI. I still don’t see the problem

So what is the problem?

The problem is that not one Artificial economist can imagine what job category comes after Services. If as

the long term, linear, irreversible trend went through

ever more efficient stages

, what is the next phase?

Where will billions of workers work when the

Service Economy

, which is becoming more and more efficient

as I write, sheds half of its labor in pursuit of cost cutting and innovation?

After a moment’s thought, the Artificial economist realizes that there is no category he can think of.

Realizing that there is a long term trend and being unable to think of the next category, he changes

tactics. He asks, “Why do we need another category?” or tells you flatly that, “We don’t need another

category.” Again the Disneyland economist reverts back to the last 100-year cycle: “What the Paleolithic

hunter/gatherers did 35,000 years ago or the Neolithic farmers did 5,000 years ago has no bearing on

the economics of today.”

Such replies indicate to the Natural economist that he again mistook the patient for the shrink. The

economist of Wonderland simply cannot see beyond the walls of his apartment. That’s the extent of his

intellectual horizon. He will revert to his endless loony asylum ranting where he prescribes raising

investment to create jobs out of the tip of his magic wand or lowering the tax rate to create incentives

for businesses to have more disposable capital for research or vehemently argue that we need to get

government off our backs. There is no consideration in his entire babbling for qualitative factors. He has not

realized that, on the one hand, competition in an Artificial Economy NECESSARILY conduces to

layoffs

and on the other, that there are no new subcategories of Services in which to shift these countless laid off

workers. Yet he asks, “Why do we need a new major category?” After a minute of thinking, he improvises

next that we will invent something, typically, robots. This, he believes, will create jobs for millions of blue

collar mechanics and technicians. He has again solved the problem with his magic wand. He is proposing

that humans will go back to

Manufacturing

. He has forgotten that Manufacturing has been leaking workers

into Services now since World War II. There were only 12% of workers working in the Service Sector in

1941. Today, it is over 80%. For the world, the labor employed in the Service Sector is estimated to be

around 45%. And growing! Ergo: the Service Economy.

Other Artificial economists propose the contrary: going forward. The future society is a utopian world in

which remote controlled machines do everything. We will evolve into the Leisure Economy. Again: magic.

You wonder why all these people ever went to college.

The global population

growth

rate

has been steadily declining since 1963. It stood then at 2.4% and today

stands at 1.2%. UN demographers have projected that by mid 21st Century the global population birth

rate will grind down to 0, a phenomenon that is known as

Zero Population Growth

(ZPG). (8) This

estimate has been revised downwards year after year. It originally was supposed to happen in the early

22nd Century. The Artificial economist casually proposes that the population will oscillate around 8 or 9

billion people for the rest of eternity. The only two other options are increase without limits and decrease

until extinction. (9) Which of

these three trends

will Man follow?

ZPG is a consequence of DDBR. Humans have nucleated in cities, and economic and cultural factors

inherent in

urbanization

prevent the average woman from having many if any babies. When we consider

these two symbiotic factors – DDBR and the childless bachelor (the typical ‘family’ unit of the Service

Economy) – we realize that unless the bachelor unit reverts back to the nuclear family, the population has

no chance of recovering. However, the

nuclear family

is the unit of the Manufacturing Economy, an era

long gone. No invention will ever again put billions of people to work like the automobile, telephone, light

bulb and other such ground breaking inventions did in the late 19th and early 20th Centuries. Part of the

reason is that in the incredibly efficient Service Economy – the Wonderland in which we are born – people

have or quickly obtain practically anything they need or ever wanted in order to live comfortable lives.

Therefore, those who propose that humans will oscillate back and forth around 8 or 9 billion people

forevermore have to answer how ever increasing urbanization is going to result in an increase in birth

rates in the context of the Service Economy’s bachelor society and DDBR.

If, in addition, we now factor that the Service Economy cannot be run on a constant population, that

businesses absolutely

need to sell ever more goods and services

rather than just increase prices to

make a profit, we realize that the global economy WILL collapse at some point. The Artificial Economy

is an inverted pyramid scheme. It is sustainable only if there is ever more demand (i.e., population).

The day population comes to a halt, so does the Artificial Economy.

VII. Conclusions

The unemployment we see and hear about in the news today is not cyclical as the shortsighted Artificial

‘economists’ will have you believe, but structural. The reason for the unemployment you read about today

is that Services is shedding employees to produce profits for its investors. These ex-employees go first

to the unemployment lines and then to welfare. This trend is unsustainable.

The Artificial economists, those Friedman types who solve every problem with money and magic wands,

will tell you that they will create jobs by increasing investment and that we will just replace the green

money God took away with brown money and continue as if nothing had happened. The Natural

economists will argue that all the threads of the global spiderweb are now beyond repair. Creating new

money will not mend the connections. If it were that easy to create jobs by merely increasing investment,

the governments should be able to solve our current problems easily. All that the politicians need to do is

create money at will from the end of their magic wands and put people to work today. Indeed, if it were

that easy, the governments might as well create money and give a million dollars and euros and yen to

each individual. Then, none of them would even need to go to work.

Footnotes

(1) Although the work of these authors dates from the late 19th Century, many of their concepts,

perspectives and findings are still relevant in the opinion of the Mother Nature Economists. It is

recommended that those wishing to enter the debates familiarize themselves with the underlying

arguments at:

, Private Property and the State

(2) I am indebted to my niece Mercedes Gaede for some of the key points in this section after

our productive exchange of ideas on the morning of Jan 8, 2012.

(3) I lump the followers of von Mises, Keynes, Friedman and all the other modern economists in

the same basket and refer to them alternatively as the Friedmanians, Artificial economists, or

Disneyland or Wonderland economists because there are no differences between these schools

of thought from the anthropological perspective of Morgan and Engels.

(4) A Natural economist has no use for any form or shape or concept of trade or bartering. There

is no exchange of goods or money in a Natural Economy. Mother Nature’s Economy consists solely

of food. In the wild, no animal exchanges food with any other animal. In this, the contemporary

Natural economists distance themselves not only from the Artificial economists, but from the likes

of Marx and Engels and the analyses and solutions they prescribed in works such as Das Kapital

as well.

(5) I owe this scenario to my youngest son Adrian who proposed it as a means to illustrate to the

new generation what the collapse of the economy entails.

(6)

(7)

The economic history of Man

(8)

US Census International Database: World Population Growth Rates

(The US Census files have been moved. For this reference, see the chart

above titled

World Population Growth Rates

(9)

The three population curves