42. Cowboys on a Spaceship

Note: This post is the forty-second in a series. Click here for the full listing of the series.

I remember a cartoon I saw once, many many years ago during the debates over the cod fishery.

The left side of the panel showed a fisherman in the office of a banker, with the banker pointing at a graph with a steeply rising line, the implication being that the fisherman's revenue needed to grow at that rate for him to be able to borrow the money he needed from the bank. The right side of the panel had the fisherman at the water's edge, showing the same chart to a fish in the water, with the fish saying, "But I can't grow that fast!"

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Imagine you were given stewardship over a vast forest, and the conditions were as follows:

* You receive a fixed amount of money for every tree you chop down and place in a pickup area.
* No matter how many trees you chop down, you could never make any kind of dent in the size of the massive forest.

Under these conditions, you might take on a set of values similar to the ones I classified under the 'moral conditions of economic maximization' earlier. You would be open to strangers and aliens, inviting anyone who was interested to come chop down trees, as long as you got a cut of their profits, of course. You would want everyone to be productive and industrious and to innovate for the sake of the task of chopping down more trees.

Now imagine you were given stewardship over a different forest, and the rules were as follows:
* You received a large profit from the first 10 trees you chopped down each week,
* But, you were not allowed to chop down any more than 10 per week, because the forest wouldn't regenerate otherwise.

Under these conditions, your values would be quite different. Openness to strangers and aliens would simply dilute your profits. Industriousness and productivity would do you no good. Innovativeness might help you chop down the 10 trees faster each week, but it's benefits would be limited. Rich use of leisure would keep people away from the temptation to chop down the forest too quickly.

This example highlights how, from an economic and moral perspective, everything changes once the concept of limits is introduced. It is this importance of limits which explains why notions such as the Club of Rome's 'Limits to Growth' or the notion of 'Peak Oil' have proven to be so controversial.

This leads me to the title of today's post. Back in 1966, economist Kenneth Boulding published a prescient essay titled, 'The Economics of the Coming Spaceship Earth'.

Boulding argued that,

"We are now in the middle of a long process of transition in the nature of the image which man has of himself and his environment. Primitive men, and to a large extent also men of the early civilizations, imagined themselves to be living on a virtually illimitable plane. There was almost always somewhere beyond the known limits of human habitation, and over a very large part of the time that man has been on earth, there has been something like a frontier. That is, there was always some place else to go when things got too difficult, either by reason of the deterioration of the natural environment or a deterioration of the social structure in places where people happened to live. The image of the frontier is probably one of the oldest images of mankind, and it is not surprising that we find it hard to get rid of.

Gradually, however, man has been accustoming himself to the notion of the spherical earth and a closed sphere of human activity."

The metaphor that Boulding used was that of moving from the mentality of a Cowboy, roaming a limitless plane, to a Spaceship where everything is in finite supply.

Much like my forest example above, Boulding noted that different principles would be required in these two worlds,

"The closed earth of the future requires economic principles which are somewhat different from those of the open earth of the past.

...

The difference between the two types of economy becomes most apparent in the attitude towards consumption. In the cowboy economy, consumption is regarded as a good thing and production likewise; and the success of the economy is measured by the amount of tile throughput from the "factors of production," a part of which, at any rate, is extracted from the reservoirs of raw materials and noneconomic objects, and another part of which is output into the reservoirs of pollution. If there are infinite reservoirs from which material can be obtained and into which effluvia can be deposited, then the throughput is at least a plausible measure of the success of the economy. The gross national product is a rough measure of this total throughput. It should be possible, however, to distinguish that part of the GNP which is derived from exhaustible and that which is derived from reproducible resources, as well as that part of consumption which represents effluvia and that which represents input into the productive system again. Nobody, as far as I know, has ever attempted to break down the GNP in this way, although it Would be an interesting and extremely important exercise, which is unfortunately beyond the scope of this paper.

By contrast, in the spaceman economy, throughput is by no means a desideratum, and is indeed to be regarded as something to be minimized rather than maximized. The essential measure of the success of the economy is not production and consumption at all, but the nature, extent, quality, and complexity of the total capital stock, including in this the state of the human bodies and minds included in the system. In the spaceman economy, what we are primarily concerned with is stock maintenance, and any technological change which results in the maintenance of a given total stock with a lessened throughput (that is, less production and consumption) is clearly a gain. This idea that both production and consumption are bad things rather than good things is very strange to economists, who have been obsessed with tile income-flow concepts to the exclusion, almost, of capital-stock concepts."

I find Boulding's notion of moving from the 'income statement' approach to the 'balance sheet' approach fascinating, although I'm not really sure what more to make of it, at the moment.

Another point worth noting is that the spaceship model requires restraint from all participants in order to work. If 9 out of 10 people refrain from consuming a finite resource, but this just means that more is left over for the 10th person who is taking as much as they can, this is ineffective. Only unanimous (or monopoly) restraint will be effective.

In his essay Boulding seems to believe that the spaceship world is something that we will only encounter in the distant future, but it seems a little more present now in a world of global warming, a hole in the ozone layer and peak oil.

Of course there's one critical economic ingredient that we largely ran out of hundreds of years ago, but isn't mentioned by Boulding even though his choice of metaphorical Cowboys and Spaceships shows how it must have lurked in his subconscious - what am I referring to? Land, of course, they aren't making any more as any real estate agent will tell you. We hit peak land a long time ago (the last time we had an open frontier was the Cowboy era), but more on that another time.