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Synthesis/Regeneration 42   (Winter 2007)

Making the right stuff

Wealth or Consumption?

by Barry Brooks

Economical use of wealth means to conserve it, to make it last, to not use it up. Consume can mean either to “use” or to “use-up.” Adopting the meaning of “consume” to mean “use-up” in economics will eliminate one source of fuzzy economic thinking. If consumers merely “use” wealth the consumer economy seems harmless, but the consumer economy really works because it tries to use-up wealth.

If consumption means “use-up” then we could say that our wealth is approximately all that we ever acquired minus all that we ever consumed.

Wealth can be classified as durable or perishable. Some durable items may last more than a lifetime. A razor is good for more than one shave and it is durable because it has a non-zero life span. Perishable items, like food and fuel, perish upon first use.

Durable items are best conserved by making them last longer. The life span, or durability, of every non-perishable item is a multiplier of its use-value. This applies to all non-perishable items, houses, tools, clothes, razors and any other items that can be made to last longer or be used more than once. Durable items can be provided with less expense, less consumption, less pollution, and less work by making them more durable. Even a small increase in lifespan cuts the costs of production a little, and in many cases the lifespan of items can be vastly increased.

Wealth and production are connected by durability. (See Herman Daly, Steady-state Economics.) One example: cars produced at 100 per year that last 5 years would finally create and maintain a fleet of 500 cars. That same fleet could be supported by only producing 10 cars per year if they lasted for 50 years. As the life span of the cars approaches zero years the cars on the road would also approach zero.

Making a plan

The blurring of meaning between use and use-up has surely retarded understanding of the importance of durability. The longer items last, the more use-value comes from their production. One can hear many reports about how much we have produced, the GDP and such, but there is never any mention of how long those products will last. If one googles “wealth or consumption” it shows that consumption is usually confused with wealth. They are lumped together as if they are alternative measures of the same thing.

However we may acquire our wealth, we only have it until it is consumed. Planned obsolescence only seems smart when increased consumption is our goal. If people already had all they needed we could not sell them more. When consumption is our goal, waste is good for the economy. How can anyone believe a wasteful consumer economy will produce more wealth than an economy that avoids waste?

… the economy needs a way to adjust the amount produced to the amount really needed, rather than producing as much as possible all the time.

The combination of extended durability with population stability will finally be seen as key elements in an economy that can provide both sustainability and luxury. A mature economy doesn’t need the same kind of growth as a young economy. Inheritance can provide most physical wealth if we don’t need additional provisions for an increasing population. We could have wealth without production, almost. Does a steady-state economy sound utopian? Reconsider what is really utopian. The survival of the consumer economy is only a utopian dream; steady-state economics is a blueprint.

We need a refinement of the work ethic so it will not be used to excuse all kinds of waste, corruption or inhuman activity in the name of providing jobs. Our real scarcity is no longer due to a labor shortage. Today, we have surplus labor relative to our growing shortage of natural resources.

If we are to have a sustainable world we can’t ignore the problems of hyper-consumption or over-population. Overshoot and die-off will ruin more than your whole day. By ignoring the limits to growth we could become extinct.

Change doesn’t always require crisis; fear can be enough. If people were aware that our hyper-consumption and our denial of the limits to growth will bring on overshoot and die-off then the fear of not changing would overcome the fear of changing.

Why we have a consumer economy

Surplus labor combined with wage dependence means that we must increase consumption, beyond just filling real needs, to make jobs. It seems on the TV news that the goal of the economy is to make jobs, but the proper goal of any economy is to increase wealth.

The consumer economy is not designed to make people wealthy; it is designed to make people consume more. To have more wealth we should decrease consumption, but the consumer economy seeks to increase consumption to make jobs. Because labor productivity has been increased by automation it is necessary to consume more as full employment can produce more.

We consider any unused labor to be a waste, but when we produce too much just to stay busy we are wasting resources and speeding climate change. Since a small part of the human workforce can provide all the needed human labor, we need some way to make unemployment acceptable, even desirable. Maybe we should call it leisure. We could create a leisure class that displays conspicuous wealth, instead of conspicuous consumption.

Don’t get stuck on full throttle

We should match the labor we use to the needed jobs instead of matching the jobs to the maximum available labor, as we do now. How can we match the labor to the needed jobs? Since the labor we have available can’t be reduced, the only answer is to not use it all. Just as a high-powered car needs a throttle to avoid going too fast, the economy needs a way to adjust the amount produced to the amount really needed, rather than producing as much as possible all the time. One way to do that is to provide a basic guaranteed income which is adjusted down or up to keep wages from rising or falling, and then begin to support the kinds of conservation that can cut demand without cutting use-value.

Try a thought experiment. In a robot-run economy the total of all wages would be zero. All income would go to the owners of the robots and the resources they process for us. Robots will force us to reconsider wage dependence.

Since robots require little energy they can still operate efficient machines and probably take your job even without abundant oil. Let’s hope some service jobs will not be automated.

If total workers’ wages are not sufficient to support all workers, don’t worry; capitalism has unearned income. Unearned income does not only come from exploitation of other people. Unearned income also reflects that we are parasites on the planet. Capitalism could be defined by its support for unearned income.

We need to consider why if parasitic dividends are good how can parasitic welfare be so bad?

Face it, we are all parasites on the planet. We need to consider why if parasitic dividends are good how can parasitic welfare be so bad? We can’t do or respect important unpaid work so long as work is just about money. Unearned income will give us the time we need to do important unpaid work, such as being good parents, stewards of our wealth and thoughtful citizens. The biggest payoff of unearned income is that it can make luxury and sustainability compatible.

An economic question that doesn’t come up

While giving people a “free ride” may be unpopular, unearned income is the reason that capitalists like capitalism so much. If you don’t like unearned income you don’t like the most important part of capitalism. Whatever we may think about capitalism, we should try to like unearned income because we can’t begin serious conservation so long as people are dependent on wages.

Capitalism as we know it only provides unearned income to a small minority without government intervention. Welfare has been tolerated only if it is for helpless people, but the idea of unearned income as a supplement to wages has little support. Yet, nothing could be more capitalistic than unearned income. We could make capitalism democratic. Democratic capitalism doesn’t require wealth equality. It only requires that we give up the principle that people who don’t work don’t eat. We don’t have a law that people who don’t work don’t eat, because those who depend on unearned income (our leaders) would starve, or go on welfare.

The consumer economy can’t be ended if people are wage-dependent. Without unearned income we need growth in consumption to make jobs. Only after we end our need to consume more and more will we be able to replace the destructive consumer economy with a sustainable wealth economy.

Because use-value is the output we want from the economy, it makes sense to define economic efficiency as use-value/required consumption, but we tend to define economic efficiency as actual consumption/possible consumption as if consumption was a desirable goal. The consumer economy is very efficient in its ability to waste wealth and pollute the planet.

Barry Brooks is a retired electronic engineer who has had a lifetime interest in understanding economics. http://home.earthlink.net/~durable

[14 mar 07]

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