Deep Economy

After reading my post on America's money shortage, a colleague challenged me to reconcile those ideas with the ideas presented by Bill McKibbon in “Deep Economy”. For those unfamiliar with McKibbon's work, he calls for a comprehensive rethinking of our economy, starting by changing what we value: Preferring local to global, small, sustainable energy footprint to large, activities over possessions, community relationships over isolation. Willing to act on his ideas, McKibbon illustrates what a year of such a life would be like by actually living it. He shops at local markets for fresh produce by season, spends more time interacting with his neighbors (and people he meets at the farmer's markets), and less time relying on mass entertainment. He's busy with tasks from a previous generation: Canning and preserving, working the field on a co-op, attending local functions. He then looks at the energy savings, and cites examples from around the world where such ideas are put into practice, including extensive energy recycling, and calls for us to think about how much richer we would be with more social bonds and local ties and less economic inequality, and the greater security from a dispersed energy and food production network over the current centralized and easily disrupted system.

My observations about the money supply and its relationship to our economic activity is merely a realization of the role a contraction plays in deepening a recession, and how a forced expansion of the money supply may provide the necessary rejuvenation to the economy that restores it to its previous value. It also underscores how the money supply needs to move with the economy – an increasing economy needs a similarly increasing money supply, but too quick on the money creation and inflation becomes a factor.

But implicit in the ideas about expanding the money supply to restore it to a previous value is the acceptance that the previous value was and continues to be desirable. No matter how unsustainable the economy has become, no matter how large and swollen it may have been, mainstream economics would have us attempt to return as quickly as possible to that state, nay, even grow beyond it! For growth is the keyword, both of business and government: grow the company, grow the economy, grow the money supply.

In McKibbon's view, we have enough, more than enough, and further growth does nothing to enhance our experience here on earth. We would need money in McKibbon's world, and although I don't recall him discussing it, I would imagine that it would have to be much more tightly controlled by the government than is current: Controlled to prevent growth beyond the small, sustainable increases in the economy to match increases in population.

And so: Should we embark on restoring the money supply in an attempt to restore our economy? Immediately I think one properly recoils from the injustice of not: Many people, not associated in any way with the run-up or the collapse are finding themselves unemployed. And, it appears very clear that is the path our government is going to attempt to follow. But could there be another way that allows the excesses to deflate, for our economy to shrink to a more sustainable size, that allows us to move towards a more McKibbonesque future, without asking an unfair sacrifice of a few? I don't know. But, I think my colleague has raised a very provocative question by asking.