[If you haven't read the earlier installments of this series, please do. It is much easier to follow in order:
Econology Part 1b: It's not the economy, Stupid; it's economics
Econology Part1b: Econoctopus: the deep, insidious tentacular nature of economies
Note: I am neither an economists nor environmental/ecologic specialist. In reading and experiencing the economic turmoils of recent years and decades, I have noticed some parallels which I set out to describe in this series. They offer an alternative and perhaps unique lens through which to view the impact economics has on the world.]
In a previous post, I used a factory as a metaphor for the environment. A deeper look into the structure of ecosystems would reveal the relationship is actually reversed: environments are not copies of factories, rather factories copy ecosystems; specifically, economic systems mimic biological interactions of calorie transfer.
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Economies all have common elements. One is the separation of systems of production (or economic systems) from markets (the mechanisms by which producers compete to exchanged their goods and services - to be covered in the next part). Another is inequality, a consequence of specialization. Differences in skills can be readily illustrated with a pyramid with the bulk of similar skilled working people forming the base and the remainder filled in with progressively fewer, more specialized working people.
A pyramid representing an economy is actually a pyramid of pyramids: economies contain all the pyramids of all the organizations within its purview; the smaller organizational pyramids, in turn, contain the households of their workers. Furthermore, organizations with more than one owner can be divided into two classes, capitalist enterprises (by definition, for-profit commercial enterprises) and non-capitalist enterprises (all non-profit and some for-profit organizations).
The majority of working people, the 'makers', form the base of the pyramid; they are the source of the products and services, the marketable output, of organizations. (for example, schools provide education; factories produce widgets; hospitals provide health care services; think tank produce analysis, etc.) The top portion of the pyramid is, broadly speaking, inhabited by specialized 'organizers'. They do not directly participate in the making of goods and services but instead, plan and implement strategies to increase the productivity of workers and maximize market return on worker productivity. Amongst their responsibilities is to direct the flow of capital; organize advertising strategies (marketing) and organize the organizers (executives).
[Note: Capital means all goods and services which can be exchanged for currency. This includes labor, materials, consumer products, land, structures, equipment and currency.]
A universal truth of productivity and capital flow in all organizations and ultimately, any economy, is that the goods and services produced by the makers is the primary source of all capital. The subjects of economic exchange are all products of worker labor and their value is a function of the amount of labor input. For example, dirt and water are essentially free for owners of land with dirt and water and have little market value. Bricks made out of dirt and water have market value and structures built of bricks have an even higher value. The difference between dirt and soil from bricks is the worker labor stored in bricks. Brick structures have an even greater input of worker labor which significantly increases their value over bricks alone. The value of services tend to reflect the extent of education and training required. Job skills which can be learned in a matter of hours (using a cash register) are less valuable than those needing extensive education (medicine or law). In return for their labor, workers are compensated a portion of the value of the goods and services they produce. By a similar process, the organizers earn their portion of the value of the goods and services produced by workers as compensation for ensuring the productivity of workers or lower level organizers. In other words, workers get paid to make stuff (paid with the stuff they make); organizers are paid to make workers make stuff (paid with stuff workers make).
The structure of production and direction of capital flow holds for all enterprises, both sole proprietorships and multiple owner enterprises. For single owner enterprises, the authority to make decisions lies completely in the sole owner. In multiple owner enterprises, the power to determine the distribution of worker produced capital is highly variable. On one end of the spectrum are capitalist enterprises where capitalists, as owners of the equipment and materials transformed by worker makers, hold ultimate power. They authorize lower organizers to carry out their decisions. And because the raison d’etre of capitalist enterprises is to maximize capital return on capital invested (i.e., workers produce as much as possible and owners retain as much worker produced capital as possible), it is the duty of executives/owners to minimize wages paid to workers and non-executive organizers so larger and larger portions of worker made capital is distributed to the owners.
There is greater diversity in the power structure of non-capitalist enterprises. (Non-capitalist enterprises can be broadly divided into (a) for-profit single share ownership - by workers - enterprises or (b) non-profit government or independent institutions.) Some follow the strict top down model of capitalist organizations. At the other extreme, power is equally divided amongst all members - each has equal say. (For this essay, socialism refers to this model.) In a fully socialist system, worker owners use equipment they collectively own to transform materials they collectively purchase into finished goods. Communication occurs across all strata of workers and organizers and worker produced capital is distributed according to a formula negotiated by all worker owners.
To recap… (1) Pyramid shape describes inequality of skills and wages of working people in economies, institutions and households. (2) The least skilled workers account for the majority of goods and services (capital) produced by various institutions. (3) In any given institution, power can either be concentrated in a limited number of owners or diffused among a large aggregate pool of worker owners. (4) Distribution of worker made capital is determined by holders of power.
As it turns out, economies aren’t the only entities with these four features. Living terrestrial communities form ecological pyramids with similar traits: the biomass at each tier or trophic layer reflects relative population of actors (1) and those at the base the pyramid produces the calories or ‘capital’ (2) which support the higher strata.
In natural ecosystems, plants are the makers and producers - they make more plants from simple inorganic carbon and water with sunlight (produce vegetative calories). Herbivores consume vegetation (vegetative calories) to grow and reproduce (make more herbivorous calories). Carnivores consume herbivores (herbivorous calories) to grow and reproduce (make more carnivorous calories). This pattern, the products of each trophic layer consumed by those above it, continues along the trophic pyramid to peak with apex predators. Only primary producers (autotrophs) are capable of transforming simple inorganic carbon into organic carbon (turn mud into bricks); all other subsequent trophic levels are comprised of heterotrophs and cannot make use of inorganic carbon; they must consume organic carbon (cannot turn mud into bricks, can reshape and stack bricks). Directly or indirectly, the existence and maintenance of all the plants and animals in a food web depends on plant productivity.
And just as economic pyramids are the collective households and enterprises of an economy, an ecological pyramid encompasses the individual biological entities and food chains within an ecosystem. Additionally, individual food chains can be differentiated by the biological interactions or strategies they use to collect the calories necessary to sustain life.
For instance, an example of an antagonistic biological relation is predation; essentially the biological interactions described above. In a food chain with a predator at its apex, food calories move up the food chain and power flows downward in that predators determine if prey will be able to continue producing - eating prey destroys their capacity to produce; authority over life or death… A lot like capitalism. Biomass produced by prey is consumed (taken in) by predators; predators exert ultimate control over prey (3 & 4).
Facilitative interactions where no participant is harmed and some participants benefit are well represented by social insects where the activity of each member of a community benefits the community in total (3 & 4). Take for example, a honey bee community...
In the case of honey bees, flowering plants (primary producers) and bees have a mutually beneficial relationship; the plants provide nectar and pollen in exchange for the pollination services of bees. The bees within a beehive community also have a mutually beneficial relationship. Bees at each strata carry out duties which contribute to the survival of the community as a whole. And while it may not be known how bees communicate or if there are strict lines of power, coordinated bee behavior suggests communication occurs. These include mating flights (queen and drones act in concert); egg and larvae care (feed needs to be appropriate to developmental needs of larvae); locating nectar sources (‘scout’ bees communicate direction and perhaps abundance to other bees); processing nectar (pooling of nectar and its concentration into honey requires coordinated effort by workers). The honey produced and stored by worker bees is thought to be available to all members of the colony… A lot like socialism. Production is a collective effort and seemingly no ultimate authority regulates the distribution of goods (3 & 4).
But it is not only modern economic systems (capitalism and socialism) which mimic ecological interactions. Sole proprietorships are equivalent to autotrophs, organisms capable of generating their own calories; thievery is a form of parasitism; feudalism is a variant of capitalism constrained by mobility (predation in habitats where limits on nutrient availability restricts mobility of inhabitants - oases; deep sea vents; caves; whale falls); various forms of slavery are variants of capitalism (predation) and ‘zombie’ parasitism where parasites alter the behavior of hosts. Given the diversity of biological interactions in the natural world, it is more difficult to identify an economic system without a natural analog than a biological interaction without an economic analog.
But historically, economies and economic systems are not static. Feudal economies evolved into capitalism (Western Europe) or were forced into socialism (Eastern Europe, China) and the world economies are currently in the midst of globalization. On a smaller, institutional level, other economic mechanisms modulate the extremes of capitalist and socialist structures. Unions are a means by which workers communicate with executives/owners which introduces a socialist element into capitalist ventures. Privatization of non-capitalistic institutions injects capitalist ideology into institutions and organizations which traditionally have goals other than generating profit.
To further explore the implications of these changes, Part 3 of this series will detail the role of markets and their relationship to production in the context of analogous ecological relationships.
Continued in Econology Part 2b: The geochemistry of markets.
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