Beyond Supply and Demand: A Revolutionary New Concept of Sustainability
https://systemschangealliance.org/...upply-and-demand-a-revolutionary-new-concept-of-sustainability/
In both classical and Keynesian economics, the balance between the supply of a quantity of a good or service and the demand for it is determined by the price of this quantity. What is counted, on the supply side of the equation, are the production costs, which include labor, capital, energy and materials, the expectations of future prices and suppliers, and the technology and technological advances that are used in production. Production costs are determined by the relative availability or scarcity of the amount of material and energy resources which comprises these products. Yet there is no consideration of an ecological dimension. Even the rate at which people and their organizations may harvest or use a particular resource within its regenerative capacity is viewed as the production of an economic yield, not an ecological yield.
Conversely, the demand-side measures consumer income, tastes and preferences, prices of related goods and services, expectations about future prices and incomes, and the number of potential consumers. Rather than reflecting actual human need, demand is a measure of individual consumption at the point of sale. Only the price at which a person is willing to pay for something is reflected in demand, reflecting how much cash or credit a person has. What’s not measured is the individual’s accessibility to air, water, food, health, safety, shelter, security, love, belonging or inclusion — no subjective expression of need, and no social or ecological dimension.
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Neither of these approaches to supply and demand —in which the quantity demanded by consumers or borrowers is directly balanced by the quantity that firms or banks wish to supply — reflect the constraints to the productive capacity of Earth’s resource base and the maximum size of a population which can be maintained indefinitely within an area.
As a result, planetary civilization has reached the point where these economic proxies for ecological balance have created an enormous misalignment. Human population is using resources food, water, energy and rare minerals faster than Nature can replenish them to meet human needs.
Our epistemology, our ideology and our accounting systems are to blame for this massive market failure. First, we must stop conceiving of the connection between resources and human needs as a ‘supply chain’. Instead, let’s reconsider the relationship of ecology with population.
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The needs of a population for its resource support systems must be given a new empirical basis in policy. This begins with a little reorientation. What is presently on the supply-side as the extraction and production of resources is redefined as the self-organization of resources within the limits of the planet to sustainably regenerate those resources. And what is now on the demand side as a measure of income or purchasing capacity is redefined as the self-sufficiency of people in meeting their needs through their use of these resources
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When supply becomes an ecological value and demand becomes a value of human need, ’build it and they will come’ is transformed into ‘demonstrate the need, and it will be met’ and the new dynamics of society as a living system begins.
Now, instead of a crude approximation for economic equilibrium, we have an actual measure of the cooperative activities of people using resources to meet their needs — the balance which an ecology can optimally ‘carry’ or sustain to meet the needs of its people.
This is biophysical economics — measuring the replenishment of both renewable and non-renewable resources and enabling society to manage them to sustain their yield for the human population. With this integrated accounting, we’ll generate an entirely new expression of sustainability, living and working together within the metabolism of society.