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Is money an ecosystem?

This is not really an article about the ecosystem of money, rather about how ecosystems have been used to justify practices that are far from ecological...the ecosystem myth.

The ecosystem myth started with Arthur Tansley, an ecologist who after a rather strange dream was analysed by Freud. Consequently, Tansley adopted Freud’s idea that the human brain is like a network of around which energy flows and applied it to nature. Tansley thought that despite the complexity of the natural world beneath it all everything is connected by flows of energy. He called this an ecosystem.

Beyond this Tansley believed that nature is composed of systems at every level and that these systems have a natural desire to stablise themselves, so called self-organising systems. He called his theory the ‘great universal law of equilibrium.’ Everything tends towards a state of equilibrium. The idea stuck and so a mechanistic view of nature as an understandable system took root.

This theory about how nature organises has been used to justify how societies should be organised. This was used to terrible effect in pre-apartheid South Africa whereby a self regulating system with whites in charge and blacks as servants was supported at the ‘natural state of equilibrium.’ It was and is a manipulated view serving the needs of those in power.

What has this go to do with money? Financial markets have been created that in the minds of their creators mimic an ecosystem. Following the 1933 economic collapse in the USA the Glass-Steagall Act was introduced to separate investment and high street banking. This lasted until 1999 when, under huge pressure from financiers, it was repealed. It took less than a decade for the economy to destroy itself. As a new investment bubble developed with ever more bizarre financial mechanisms financial experts believed that the system acted as a self-organising system, and ecosystem, that would always stablise itself through the free market. And that the more complex and inter-linked the system became the more stable it would ultimately become.

Sadly we know the result. Natural ecosystems do have a huge and complex set of relationships. But, unlike the financial ecosystem these relationships represent a range of links and flows some of which are strong and others weak. Take the example of Dutch Elm disease in the United Kingdom. It had a massively destructive effect on Dutch Elm trees wiping out nearly all Dutch Elm trees, but what about other species nearby? Woods and their ecosystems survived because unlike the financial markets nature’s diversity is not so tightly linked. For the financial system it took just one cause to bring the system down...a housing bubble. Ecosystems are not self-organising systems that tend to stability, they change and adapt over time to conditions.

In nature diversity equals strength. If we want to build strong societal systems we will be well served to remember this, and that whereas strong social ties build strong communities linking our futures to a narrow set of financial (or energy choices to name one other) regulations will not lead to a stable system...history has proved this twice in less than 100 years. Do we need another reminder?



Author: Richard Date: 16.07.2013

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