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Matt Berkowitz - A Science of Economics

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Hi, I’m Matt Berkowitz. I’m a coordinator of the Zeitgeist Vancouver team, as well as the spokesman for our local chapter, and part of the Zeitgeist Movement global lecture team. Today I want to discuss 'A Science of Economics'. Have you ever stopped to consider whether or not the economic system that rules our global society could qualify as a science? And if it can’t be, why doesn’t it, and what would a science of economics actually look like? Would it have any resemblance to our current system? More specifically, how would industry function? How would society be governed? How would business, politics, and the monetary system function, or are these even valid questions to be asking? These are some questions I hope to answer in this talk. And in order to do so, we’re going to have to overcome some tremendous cultural baggage that is currently inhibiting our ability to understand economics as a science. To clarify what I mean by our economic system, I mean the market system of monetary exchange, whereby goods and services are sold in a marketplace for some monetary value, where the seller’s goal is the maximization of profit. This is the system that, to one degree or another, is in place more or less in every country in the world. Generally speaking, the purpose of a science of anything is to approximate the natural order of reality, such that our ability to make predictions from these inferred scientific principles, is continually advancing. The scientific method itself is a body of techniques for investigating physical phenomena, acquiring new knowledge, and the self-correction of previously ascertained knowledge. We have the hard sciences of physics, chemistry, biology and so forth, as well as the less exact sciences- but still sciences- of sociology, psychology, and anthropology. But do we have a science of economics? When we understand the methodology of science, it becomes clear that our current economic practices today resemble more of a traditionalized, dogmatic process. Just as the science of medicine should be geared towards maximizing public health, a science of economics would be geared towards maximizing the quality of living of every human on earth, while ensuring the protection of our environment, including plant and animal well-being. Do we have anything resembling this type of system in place today? Absolutely not! Intrinsic to the profit-maximizing goal of the monetary-market system is the need for consumption, and the more of it, the better the economy. If you look up the root of the word economy, it stems from Greek, meaning 'management of a household', with an emphasis on preserving one’s environmental support. By this definition, we currently live in an anti-economic system, far decoupled from any natural-world or scientific referent. This example should be enough to prove that we do not operate our society by any scientific protocol. But for the sake of argument, here are some more attributes in which the market system of monetary exchange is predicated on. Starting with Cost Efficiency: In order to maximize profits, all companies need to adhere to this market principle, which simply refers to the strategy of lowering one’s input costs to maximize return. This produces inferior, cheap goods inherently, for no goods can ever be produced at what could be termed 'peak efficiency'. In fact, cost efficiency is inverse to technical efficiency. It also produces strategies of planned obsolescence and intrinsic obsolescence, commonplace strategies of all goods-producing companies in existence today. Then there's Competition. From companies competing against one another for market share, to people needing to compete against one another for labour, to governments competing against one another for economic dominance, this competition poisons every part of our society, both environmentally and psychologically. Competition is an assumed ingredient of market theory, both in terms of human behaviour, and on a macro level, industrial efficiency as a whole. On both accounts, these are highly flawed assumptions. Then there's the priority of scarcity. Very simply, the more scarce something is, the more you can charge for it. This creates a perverse reinforcement to maintain artificial scarcities of life-supporting goods and services for the sake of monetary gain. And the last one I’ll touch on, although there are many more, is the need for labour for income. In a system where people need to earn money through employment to purchase goods and services, there is an inherent clash of motives; on one hand to utilize the highest forms of technology to maximize industrial efficiency, and the other to maintain employment. This is often termed the contradiction of capitalism. Notwithstanding the inefficiency this promotes, it also promotes a waste of human life to engage in activities that have no direct social contribution, but instead only exist to perpetuate the flow of money and the employment that is required to do so. Now, the focus of this talk is to describe the framework of a science of economics, rather than to spend too much time identifying the pseudo-scientific dogma of our present one. But first, let’s remember that the core mechanism which enables the scientific method to evolve our understanding of reality is 'self-correction'. This is very much an antithesis to the way we operate our society today, which is about institutional self-preservation, whether a business, a religion, or a political entity. The current economic infrastructure is setup with a built-in confirmation bias, slanted in favour of assuming traditionalized concepts and variables for economic operation. Now, when we take the known laws of nature, both on human and habitat levels, and start to calculate what our options and possibilities are technically, without reference to classical and historical assumptions on economic thought, a completely different train of thought emerges. If we wish to orient our society towards maximizing human well-being to the highest level that’s technically possible, an entirely different socioeconomic landscape emerges. A reasonable overarching goal could be said to be to maximize human well-being, or public health, while ensuring the protection of the environment; and therefore, the main goal would thus become maximizing efficiency, and thus Sustainability. Following this goal, some important strategies emerge that we must follow. Since we need planetary resources to survive, we must pay attention to Dynamic Equilibrium inherent in natural law. We need to locate and identify all planetary resources we can, as well as implement a system to track our usage of these resources in order to remain sustainable. We would also need to account for rates of regeneration, in order to ensure equilibrium, for example in forestry. Given that resources are not uniformly distributed across the planet, we need to implement some sort of approach for this variance, in different geographical areas all over the Earth. 'System’s Theory' works for this, which recognizes that nature is one huge synergistically-connected system and thus treats it as such, rather than an array of countries all competing against one another for monetary, economic dominance. So, taking all this inventory and tracking data within a Systems Theory, logic would dictate that we would have to setup a Global Resource Management System to manage it. This system would essentially be a repository of all resource-related data: their availability, their usage, their rates of renewability, along with foreshadowing external trends which may affect these variables. With that understood, we must then look at the components of management, most specifically production and distribution. In considering production, we need to employ a number of strategies to conform with our goal of maximizing Efficiency and Sustainability. The most obvious would be that of Preservation. We need to make the most diligent use of our finite planetary resources, minimizing waste as much as technically possible, in order to ensure this Peak Sustainability. Without the opposing force of the priority of profit which demands consumption at the highest level possible, this strategy will not be inhibited. Rather, it will actually be the underlying framework of a science of economics. Another component of Production will be to ensure the protection of the environment at all levels. [It] makes more sense, on this level, to utilize resources and technologies which have the lowest negative outputs on the environment as technically possible. We can call this the Safety or Environmental Preservation strategy. And the last major component of Production that I’ll cover is the actual mechanics of the production itself. Without the need to adhere to the waste-producing strategies of cost efficiency like today, we would likely follow three principles when it comes to the creation of products, the first being that every good must be designed to last as long as possible. The second being that when things do break down or are simply no longer usable, we must re-use and recycle as many of the component parts as technically possible. This means product design must incorporate this consideration at the earliest stages. And the third being that technologies that accelerate very quickly and are prone to obsolescence must be designed to foreshadow and accommodate new technological breakthroughs. These three principles, along with others that will become apparent in the future, fall in line with our goal of seeking optimal sustainability for the planet and the world’s people. That brings us to Distribution. How would a science of distribution play out with our goal of maximum sustainability? Well, perhaps the first thing to consider is the issue of market globalization today, where we assemble goods all over the world wherever is cheapest and ship them across the whole world. A science of economics would surely have a Proximity Strategy at the forefront, which sought to localize production as much as possible in order to save energy on transportation. Furthermore, in order to keep track of distribution of goods globally and ensure that demand is met, we must implement a Demand and Distribution Tracking System. This would mirror an inventory system in a big corporate chain today, but instead it would be scaled out globally. Insofar as actually physically obtaining the goods, distribution centres could be scattered around proportionally to population densities. A person could come in, take the good for use and return it if applicable. And where practical, personalized transport could be arranged to people’s homes, through technologies like pneumatic tubes. So, this Global Resource Management System and Production and Distribution Systems would be unified together, creating one synergistic, dynamic, updating, global economic management system, which could legitimately be labeled: a scientific approach to economics. This empirical, ground-up approach to economic management, all of which is a purely technical process, would be able to provide something to the entire human population never before seen. Something that would alleviate a great majority of the social problems caused by our current unscientific economic model, and that is an Access Abundance. To summarize, this science of economics, which can been termed a 'Resource-Based Economy', is simply a system where life-supporting understandings are aimed to be met through the most optimized applications of science and technology, with the goal of maximizing efficiency and sustainability, on the entire planet. You will notice that politics, money, and business were not mentioned at all in constructing this approach, simply because these institutions are not at all relevant anymore. outgrown based on our new-found understanding of what science and technology can do for us. Money is simply not needed to facilitate exchange, which is based on the assumption of scarcity, because Access Abundance is now a reality. Politics is no longer relevant, at least in its current incarnation, since the science of economics, like any science, is a purely technical process, devoid of the need for human opinion. A form of government would likely still exist, but would function under a scientifically-derived protocol for optimized economic management, rather than a haphazard bureaucracy of law, and business-trained politicians, who have no technical understanding. Now, there are a number of other issues I could touch on to show this train of thought, or how this train of thought could be extrapolated or applied to other areas of society, like city design, labour and machine automation, transportation, and the education system, as well as how human behaviour would change. But for the sake of brevity, I’ll pause here. Much more information can be found at thezeitgeistmovement.com, where the train of thought which comprises a science of economics, is much more fully deduced. Thank you very much.

Video Details

Duration: 12 minutes and 41 seconds
Year: 2013
Country: Canada
Language: English
Producer: TZM Vancouver
Director: TZM Vancouver
Views: 84
Posted by: ltiofficial on Jul 21, 2014

Matt Berkowitz of Zeitgeist Vancouver gives a short talk outlining what it would mean to approach economics in a scientific way.

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