xenoeconomics 2: generalized energetics of production

the history of economics can be seen as various attempts to grasp the metabolism of an alien invasion from the future. more exactly, in shifting questions of value from morality (what should be valued) and politics (what has value) to production (what does value arise from), economics attempts – in typical modern fashion – to investigate what are the conditions of possibility for the individuation of a path-dependent being. such project remains incomplete, as the various stages and schools of economic thought haven’t been able to comprehend the size of the being under their scrutiny, which has continuously led to (and sometimes over) the edge of remoralization.

the advent of the discipline in any way deserving of its name begins with the free trade movements in Europe in the 17th and 18th centuries. the first wave of really systematic understanding of value production begins with the physiocrats, which saw value as a fluid stemming from the sun, through the land and then being pumped throughout the social body, implementing thus the “government of nature”.

Steve Keen makes (h/t mutual-ayyde) a good case that this original theory of value, while limited by its circumstances (the excessive focus on agriculture stemming from a largely agrarian society, ruled by landowners), has an important feature that basically all subsequent schools of thought, even in their most bitter disagreements, failed to develop: any account on the flows of energy through the social body. (he doesn’t say exactly that, but the post is short and you should read it).

in the wake of the physiocrats came the first wave of economics, now called “classic”, which expanded many themes and systematized the discipline even further. they corrected for the physiocrats’ narrow view on the production of value by anything besides land, but at the same time eliminated any notion of energetics in the process. As Keen puts it:

Smith, who was influ­enced by the Phys­iocrats and wrote in Britain when indus­try was start­ing to exploit fos­sil fuels (specif­i­cally coal) on a grand scale, could have cor­rected this over­sight. But rather than fol­low­ing the Phys­iocrats’ lead on energy, Smith instead saw labour—not energy—as the font of wealth (which he described in the same terms as Can­til­lon: the “con­ve­nien­cies of life”), and ascribed the increase in pro­duc­tiv­ity over time to “the divi­sion of labour” [my emphasis]

thus classical economy initiated a 200-year long cycle of arguments about whether labour was or wasn’t the root of all value. expanded into truly titanic levels of complexity from Ricardo to Marx, the labor-value theory repeatedly incurred in the same objection: what is the criteria for some labor to be actually valuable, and not just wasted time? it wouldn’t be unfair to say that Marx did the most accomplished and abstract attempt to resolve it with the standard of social necessity.

i won’t try and solve the century-long strife of whether this actually solves the question or just pushes it back one more step (“who gets to say what’s socially necessary, dear Karl?”), although i personally lean towards the latter. more productively, it’s enough to say that Marx’s statement of LVT, crystally clear with all it’s socialistic implication, prompted a whole generation of late 19th-century economists to come up with something else.

Kevin Carson has a pretty thorough critical review of what followed (the first chapter here), and eventually led to the current mainstream economics in all its weird diversity. long story short: the marginalists shift value from something objective (energy, labour) to something absolutely subjective (“utility”). people need different things, at different times, in different quantities, so value – goes the marginalist theory – results from the satisfaction of those wants.

unlike the dangers of the classical theory, which eventually led to a remoralization of economics, with a huge should hanging in the air, marginal utility runs the opposite risk: ignoring value altogether, in favor of talking about compositions of labor and capital, institutions, growth, development, etc, etc, etc. i’m denying the usefulness of such adjacent fields, but they largely miss the question that motivated economics in the first place: where does value com from?

in 2003 (damn, that’s 16 years), Carson himself proposed a new-old theory of value. essentially, he tried to bring back LVT in a subjectivist fashion. value was no longer completely incommensurable subjective wants and needs, but the correspondent, very fungible disutility of labor. it was aversion to work that made things valuable at all. only to the extent goods can compel labor to exertion that they could acquire value. it all boils down to Say’s law: consumption is secondary to production because every consumption demands a prior production (you can’t buy something for nothing). [extend parenthesis: i am willfully ignoring questions of coercion and force here, since they’ll be the main theme of another, later post. suffice it to say for now that coercion and force have costs of production too, and so can be economically analysed].

Carson’s effort is as laudable as it is limited in its scope. once the desiring conditions of possibility for value production are brought into play, vast new vistas open up: what, say, does evolutionary game theory can tell us about the disutility of labor? deeper still, what prompts any expenditure of energy towards increased reproductive fitness? Keen, in the aforementioned text, already starts off in the direction of a general energetics of production. his equations are a good beginning, and so is the concept of EROEI. a whole new research program is opened when we go past the human skull.

ultimately, i think, this boils us down to a thermodynamic (or, more abstractly, cybernetic) theory of value: 

there is a ton of XS links to put here, but maybe these two will be enough to the idea through, at least in initial form. in specific, don’t miss the definition of intelligence here and here. our next installment in this series heads towards these abstractions into the territory of games (and thus war).

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