Fundamentals of Natural Economics

· by · in Mathematical, Natural Economic Theory, VIAAC Theory. ·

If you are unfamiliar with the basics of calculus, you can get a brief lesson here.

Scarcity and Abundance

The way we currently (at least supposedly) deal with scarcity is through the use of money.  Money and trade are conjectured to prevent shortages and allocate resources according to willingness to pay.  This may have worked when the shortages were due to underproduction, but now that we have highly advanced technology and a much higher population, our main problem has become overproduction.  We need a science, a real science, of allocation to deal with this problem.  It needs to provide not only the constraints needed to prevent overproduction and the freedom of autonomy, but also the fair provision and consideration for the planet’s health that capitalism so decidedly lacks.

How do we know if we are using too much?  First, a definition of the mathematical terms I will be using:
s_r: Supply of r
d_r: Demand of r
e_r: Exploitation of r

r can be anything, stone, wood, water, electricity, all we are going to be looking at is rates of production and consumption.  We will define another term, the parity, which is essentially the supply of r that will be left over at a given time t.  This assumes we know the supply of the resource in question, and the rate at which we are using it.  If we poll our supply of that resource two or more (more is better) times, we will be able to use numerical differentiation to get the rate of change.  It’s important to note that we need to either adjust for the amount we have exploited, or calculate the replenishment rate while leaving the resource untouched.  The same applies for the exploitation (as in harvest) and its rate.  To get the parity, we will calculate the supply at time t by taking the integral, and subtract the amount exploited at time t, which is calculated the same way.
P_{r,t}=\int^t_0 s_r \frac{ds_r}{dt} - \int^t_0 e_r \frac{de_r}{dt} = s_{r,t}-e_{r,t}

This can be regarded as the fundamental equation of natural economics.

If we just want to gauge generally how sustainable our use of a resource is, we can calculate the expected parity, similar to the expected value in statistics, a measure of the average (as in mean).  This is done by setting t to infinity:
E(P_r)=s_{r,\infty}-e_{r,\infty}

Including Ecosystem Services

From the study of ecology and ecological economics, we know that there are certain services provided by nature, known as ecosystem services.  We want to avoid depleting resources below the level needed to maintain ecosystem services, so we should adjust our parity value to account for this:
\breve{P}_{r,t}=P_{r,t}-s_{r,esv}: Parity adjusted for ecosystem services

The Semi-automatic Economy

So now the question is, what do we do with these calculations?  We could attempt to create a fully-automated economy, but that sounds improbably difficult.  Certainly a more viable option would be to automate some aspects of the economy while keeping others manual.  This is part of the answer to the question I frequently get from economists, “How do you deal with trade-offs?”  We will have to create classes of resources/products and assign priority levels (prios) to them.  In the Linux kernel, prios generally range from 100 or so (lowest) to -20 or realtime (highest).  Necessities like food and water will definitely be assigned -20 for their prio.  Luxuries that are harmful will occupy the lowest priority.

From this starting point, we have a convenient way to choose what to automate: Production in prios 0 to -20, the high-priority necessities, will be automated.  Food production, water purification, and so on will be produced automatically according to their measured usage, and padded (intentionally overproduced) to prevent shortages in case something goes wrong.  Low-priority luxuries, ranging from 100 to 1, will require manually requesting production, and will be subject to preemption.  Preemption is a concept from computer science used in multi-process systems, where a higher-priority process will be favored over a lower-priority one in situations where both are requesting the same resource.  If someone requests the production of a water heater (we’ll say it has a priority of 10), and someone else requests the production of a smart phone (prio 50), and the two require some of the same scarce resources, the water heater will preempt the smart phone.

For more on priority levels, see this follow-up post.

Finite Wants for Finite Resources

Another question I frequently get from economists is, “What about infinite wants?”
First of all, I encourage you to prove that wants are infinite.  I think there’s ample evidence that they are not, such as studies that show happiness produced by higher income levels are subject to diminishing returns (i.e. people who make $80,000/year are generally no happier than those who make $75,000/year) and the rise of consumer culture.  Second, there is a finite supply of resources, so even assuming infinite wants, some will go unfulfilled.
Third, and most importantly, the open nature of a natural economy will include public records of production, along with the person that made the request.  This will create a sousveillance state, putting social pressure on those who “cheat” by taking too much.  This also eliminates a great deal of complexity with preemption in cases where someone requests a product they already possess.  Being able to sort these records will provide an easy way to find the top (and bottom) consumers.

Open Everything

The last objection I will address is, “Nobody will support being restricted/exposed that way.”  I would argue that our current system is far more restrictive, with most of the world not even having their basic needs fulfilled.  Privacy concerns are probably exaggerated, too; generally peoples’ true concern in matters of privacy is that the information will be used for illicit purposes.  This is a decidedly benign use of information.  With these records, we can apply the above equations to show people the level of sustainability given the current and proposed level of consumption.  We can apply it as a rule to show what would happen if everyone, or a certain proportion of the population, consumed resources at the same rate.

Nearly every day the evidence that capitalism is failing us continues to pile up.  Its disregard for the ecosystem and the growing impoverished population, its inability to prevent overexploitation, and the increasingly bloated states that govern the system are harming us.  The science of natural economics may serve as a strong basis for a future society that is freer, more sustainable, and less complicated.  It may not be perfect, but it’s pointless to continue trying to make the current system work in a new reality when it has failed so unequivocally.

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