A hearty thank you to the economics graduate students at the University of Missouri Kansas City, who invited me out to speak last Friday. The invitation was initiated by Brian Werner, whom I’d met at the Ecological Economics conference in Burlington in June.
UMKC’s economics department is avowedly “heterodox,” giving weight to perspectives beyond the neoclassical model that dominates most graduate education in the field (you can get a flavor at the New Economic Perspectives blog, which features work of faculty and grad students from the UMKC program). The most prominent piece of that heterodoxy is Modern Monetary Theory, which is an outgrowth of a school of thought known as post-Keynesianism. (It’s also an approach that’s had a significant impact on my own thinking in the last few years.) There’s also interest there in environmental issues, though that isn’t as thoroughgoing a concern as is the understanding of what money is and how it works.
As Brian saw it, he and his classmates were thoroughly versed in money, and also interested in environmental issues, whereas I’ve started from an ecological perspective on the economy and worked my way toward the role of money. The result was a conversation that left me with a lot to consider.
A particular point of discussion centered on scarcity and the idea that it is socially constructed—that is, not an immutable fact of life, but a function of human action. I recall two aspects of this coming up in the conversation: a demand side, and a supply side.
It seemed to me that of those, the attendees put more weight on the demand side. This challenges the conventional assertion that human wants are insatiable. In place of that idea, it posits that culture cold foster a sense of “enough,” in which case the demand for consumption—and for the resources supporting consumption—would decline, alleviating scarcity from that side.
There was also a reference to the supply side of the equation. This argument points out that resources are not inherently useful; rather, human action and ingenuity is what puts them at our service. One example would be oil, which in its raw form is a not particularly useful black gunk. But if you invent and build refineries, you can turn it into fuel, and if you invent and build internal combustion engines, you can use that black gunk to greatly increase people’s mobility.
An even more powerful example is sand. It has some useful roles as a construction material, but the invention of fiber optics it became an input that massively increased our ability to move information.
I’d like to get to the demand argument as well, but for now I’ll limit myself to that second argument, the supply one. The reason is simply that I think I have a better handle on the supply argument than I do on the demand side, so I’m giving myself a little more time for my thoughts to settle out.