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Book review: The Wealth of Nature: Economics as if survival mattered (By John Michael Greer)

New Society Publishers 2011 252pp. paper Reviewed by Derek Paul

Publishing companies are in process of issuing a welcome stream of books based upon the realization that neoclassical economics cannot address the problem of climate change, and cannot address the problems of waste, consumerism, and the rising global ecological footprint. Currently the human race maximizes the throughput of resources from extraction to pollution subject only to the economic maxims of the moment such as, for example, “there isn’t enough spending money just now to boost the economy.” But climate change requires an end to fossil-fuel burning, the sooner the better, which runs exactly contrary to current industrial, economic and trading trends. For planetary health, material resources must be recycled to the maximum extent. But how does one proceed from here to there? Many economists and environmentalists know the problem very well and few if any yet have a sufficient set of solutions on which to base a change. These solutions lie within the ways that resources will be handled (recycled), accounted and distributed, while at the same time the role of money must change. Money, that easily misunderstood human invention, will always remain with us, but must be there to serve and enable, and it cannot be allowed to dominate policymaking in any New Economy.

Greer, like all those before him writing from a position of renewed hope, has important insights to offer, and these should be duly noted, while his failures must also be enumerated.

The many virtues of this book include his attack on laissez-faire (in this he is not alone) pointing out again the many misconceptions in neoclassical economics that are currently driving civilization towards an early end. He makes many useful references to E. F. Schumacher, the famed author of Small is Beautiful , since Schumacher’s principles will undoubtedly find a place in the field of a new model of economics that socially aware scholars are currently investigating.

Greer’s first chapter, entitled “The Failure of Economics,” contains much that we have seen before, but it is worth reading for anyone unfamiliar with the gross inappropriateness of the present system. Greer makes the point, from Schumacher, that one should distinguish between primary goods and secondary goods, the latter having been transformed by human industry or labour. It is already clear that in ecological economics primary resources must be conserved as much as possible. Greer refers also to natural capital, a most useful concept, but he would have done better to adopt the comprehensive capital scheme used by Canada’s National Roundtable on the Environment and the Economy (NRTEE; c.2000) in which the researchers subdivided all capital into three categories: natural, built and human. This subdivision was important for the work NRTEE had in hand at the time, namely the construction of indices of wealth, to support future policy and planning. The fact that NRTEE nowhere used money as a measure of wealth fits nicely with some of Greer’s other messages, in chapter 3.

Greer’s second chapter is particularly useful, since it provides a framework for understanding the rapid current growth of inequity and, on the side, explains the gross inadequacy of GDP as a measure of prosperity. The GDP question has also received much attention from other authors. Greer subdivides the economy into three, depending upon whether it deals with primary resources (the first economy), processing of goods or services including investment in such activities (the second economy), and investment essentially in paper, where any value to people is at least at one remove from the first or second economies (the third economy). An example from the third economy would be derivatives, which are not direct investments in the first or second economies, and thus form part of the third economy. Part of the plight of ordinary people today living in formerly prosperous areas, the USA in particular, can be explained by the disproportionate amount of money in circulation that is going into the third economy. Great amounts of newly created money invested in the third economy are making some investment brokers very rich (in dollars) as well as some of their clients, but fail altogether to touch the mainstream of humanity, many of whom need employment, their families becoming poor amid a glut of goods. This destructive trend has worsened the already great imbalance in human equity, reducing the health of the whole, something any form of New Economics cannot allow to continue. It is a thorny problem to be faced since it challenges many of those earning the highest incomes.

Chapter 3 entitled “The Metaphysics of Money” makes the central point that money isn’t wealth, that all of us could have learned from NRTEE (see above) or from the Book of Job , since Job’s wealth is nicely described at the outset and at the end, while money isn’t mentioned, except in the last chapter, 42, verse 11, in which Job’s brothers and sisters come to dine with him after his restoration to wealth, and each gives him a piece of money, a token to assuage his past suffering.

Wealth is in fact a vector, usually of many components. For an individual, some of the components of the vector might be: house, condo, antiques, art works, equipment, car, land, stocks in the first and second economies, stocks in the third economy, mortgages, bank balances, bonds. Only some of the last few of these must necessarily be stated in monetary terms, and the rest best stated in units natural to the entity in question. Those people who still hold the illusion that money and wealth are synonymous really need to grasp this point. Money is of no value when there is nothing available to purchase (and there have been enough sad examples of this in the world) and one’s own currency is of no value when there is nothing to buy at home and the currency value has dropped out of sight relative to other, foreign currencies. As a final example, let’s consider a large-diameter, tall, straight hardwood tree having a monetary value at any time as potential lumber but, whereas the money to purchase it can be created in a tiny fraction of a second, the tree, once cut, is gone and it would require at least eighty years to replace it. The distinction between money and wealth will be terribly important in the New Economy, and Greer does a fine job here.

In chapter 4, we find Greer at his weakest. Too many of his statements are unsupported, for example, his assertion that solar energy simply cannot replace coal power because it is too diffusely spread. His arguments fail because he has not envisaged the alternative to W, Bennett Lewis’s dream of universally cheap energy. Greer furthermore avoids going into details; however, one must do so in order to make energy projections. For example, Greer describes the solar driven engine created by Frank Shuman in Egypt early in the 20th century. Research in this field needs extraordinarily close examination, including the exploration of many possible schemes, before a well-designed demonstrates that it has potentially wide use. This search has by no means been completed. Already today there are patents applied for describing systems that contradict Greer’s generality, though this does not, of course, establish any breakthrough.

Returning for one moment to W. Bennett Lewis’s dream, one should ask today whether universally plentiful, cheap energy wasn’t in fact the path to overconsumption and global pollution. Cheap energy in the United States has surely led to overconsumption, as has been shown by the profligate burning of oil since it became cheap. Nowhere in Greer’s book is sufficiency distinguished from plenty; not does he anywhere critique the massive waste of oil still continuing today in his own country. His work concentrates on supply, and by failing to address demand, reveals a route to despair rather than one leading to a sustainable civilization.

Chapter five, entitled “The Appropriate Tools” goes into futuristic guesswork and as such is entertaining. It may point out truths we would do well to keep in mind, but readers should note that the future will bring surprises. Greer is surely right that the use of the least sophisticated tool that will do a given job will be much more emphasized as time goes on. Greer tends to jump from the massively expensive machinery of today back to manual work using simple hand tools, neglecting the possibilities and value of intermediate technology. For example, the owner of a small wood lot, wishing to cut lumber selectively from heavily forested areas, needs special, inexpensive equipment for bringing the logs out of the forest. Previously, teams of horses were used, and the method was one of brute force and inefficient use of energy. However, then the horses were there and could be used to fulfill such tasks. Today, horses as work animals have largely disappeared and they will not be returning in the same numbers. Therefore, we need to design something inexpensive to do these jobs easily with only one tiny tractor or a team of two men—or perhaps just one horse! Today’s logging industry, equipped mainly for clear-cutting (itself a dubious process requiring massive capital expense), uses equipment more than ten times the cost of what a local selective cutter could afford. And it is the local selective cutter who can render his industry sustainable.

The same remark about futuristic guesswork applies to chapter 6, “The Road Ahead,” and this chapter too contains many ideas we would do well to keep in mind. In the second paragraph, however, he interprets history as demonstrating that humans will retain their undesirable human qualities and thus our species will fail to cooperate in a manner needed to deal with current world problems. History, however, also teaches that humankind has often collaborated amazingly to defeat a common enemy even though such collaboration may have been a response to enemies in war. Surely, today there is an even more formidable threat from global warming. Once this phenomenon is seen as the common enemy, an amazing new level of cooperation might develop.

It is not clear that the human race is moving into an era of very expensive energy as Greer thinks but, if and when the price goes up, then a sensible pricing scheme will favour conservation and disfavour wastage. [In Ontario today, we have rising prices without a pricing scheme that favours conservation.] Greer doesn’t refer even once to the global footprint news, one of the few sources of reliable numerical information on how we humans are doing in relation to resources and pollution. A smaller supply of energy and motivation to conserve are essentials in the way forward, not emphasized in the Wealth of Nature .

The need to replace oil burning (and coal burning) is ascribed unambiguously throughout the Wealth of Nature to “peak oil”, however, the fact is that there isn’t enough oil production as there was in 2005. But peak oil is irrelevant, except that its onset might prove a blessing as a warning call. The reasons that oil burning and coal burning must cease altogether are 1) so much is still available that burning them will drive the climate into uncontrollable warming, no longer restrainable by human action; and 2) that oil and coal are most precious resources for manufacturing, much needed for the future of the human race, so that oil and coal companies will make more total income, summed over the long term, if they reserve their resources for manufacturing.

The burning of fossil fuels will cause a major extinction if this appalling bad habit continues. According to David Wasdell, we have only sixty years to reduce such burning to zero [1]. The fact that oil production has peaked is a mere coincidence, and is irrelevant to Greer’s book.

Derek Paul is Professor Emeritus, University of Toronto and a long-time member of Science for Peace .

Note 1. David Wasdell’s webcast from the September 2013 annual general meeting of the Club of Rome:

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