Reply #16: Markets

[GliderGuider]

IMO there is a fundamental first principle to human activity. It is this: All human activity depends on available physical resources.

In a previous post I discussed the goal of human activity being the acquisition of food - that's a subset of this principle. No matter what elaborate structures we build on top of this principle - markets, political systems, economic theories or technological paradigms - it remains the bedrock for assessing the possibilities for human activity.

Markets are funny beasts. They alternately obscure and clarify what's going on at the underlying resource level, and they can hinder, misdirect and over-amplify society's response to resource changes.

I've always felt that oil prices were a good first approximation of what's going on with the resource. They're no better than a first approximation though, because there are so many non-resource factors confusing the signals. Fortunately with oil at least we can look at the actual supply in conjunction with the price signals to make more sense of the situation. Looking at both supply and price makes it clear, for example, that we hit some kind of a roadblock with oil production in 2005. Whether the roadblock is geological will take a bit more time to tell, but I think this is it.

Any political move governments or cartels make in response to that underlying resource limitation amounts to a deck-chair waltz, because in the the end human activity depends not on politics or markets but on the consumption of physical resources. Limited resources imply limited activity, and in the big picture political adaptations are a meager response. No matter who gets rich or impoverished in the interim, in the final anaysis humanity as a whole is the one left holding the empty bag.

I don't think we "create" economic systems. Y ou point out that nobody ultimately controls markets . Similarly, I don't think we "create" economic systems. I think they largely emerge from the pre-existing resource and human environment, Some people learn to modify them for greater or lesser good. However, the underlying principle of activity depending on physical resources means that making economic changes in a constant resource environment amounts to changing the colour of the pig's lipstick. Resources are definitely where our attention should be focused.

If we pay too much attention to the structures we have elaborated around resources, and too little to the resources themselves, we run the risk of missing the crucial message when limits appear. In my opinion, we have already made this mistake as a civilization. No amount of tinkering with the superstructure or structure of civilization (to use Marvin Harris' terms) will alleviate any fundamental obstacles we may encounter at the level of resources.