The Wealth of Nature

The title of John Michael Greer’s The Wealth of Nature: Economics as if Survival Mattered contains references to two very different economic works: Adam Smith’s The Wealth of Nations and E.F. Schumacher’s Small is Beautiful: Economics as if People Mattered. He calls on both books in his attempt to demonstrate that contemporary economics has gone astray.

As his title suggests, the primary thrust of this book is as an economic critique. Greer expresses some fiery opinions on the subject of current central-bank policy in the US: “It is amassing debt on a scale that makes the most extravagant Third World kleptocracies look like pikers.” Later, Greer adds, “It’s been popular for some years … to suggest that the entire system will come to a messy end soon in some fiscal equivalent of a zombie apocalypse movie.” While the straightforward, colourful prose is enjoyable to read, it lacks the gravitas one expects from a critique of economic theory.

** This review first appeared in Alternatives Journal 37.4: Rocking the Environment, published in July 2011.
Click here to see more of that issue. **

Still, the approach does not get in the way of his expansion of Schumacher’s economic theory, which lies at the heart of this work. E.F. Schumacher introduced the idea of a primary economy (nature) and a secondary one (the products of human beings based on nature’s products). Greer adds a tertiary economy: anything to do with “the circulation of monetary goods and financial services.” For Greer, money is the real culprit in this three-part economy. In the bid to be seen as a science, economics has pinned everything on the measurement of money. But, Greer argues, money is not equivalent to wealth, and all the financial wizardry in the tertiary economy cannot solve Earth’s resource crisis.

Greer believes that economics needs to take a new course if we are to avoid rapidly creating a dark life on a resource-challenged Earth. He outlines the problems posed by peak oil and sketches consequences for the world. The descent into a nouveau dark age need not be an apocalyptic slide, though. Greer proposes a few ways to ease the transition at a societal level (tax the right things, get tough on corporate offenders by extending criminal law to cover them) and at an individual level (plant a garden, give up on the dream of retiring).

Notably, Greer does not tout the green-energy movement as a saviour. While he supports alternative and renewable-energy programs, he contends that green-energy proponents do society a disservice by giving the false impression that these technologies will make up for our excessive energy needs and wasteful energy-spending habits.

Greer covers many topics in this modestly sized book. His goal is audacious: to reform capitalist excesses by challenging economic assumptions about the wealth of the natural world. The root of Greer’s critique is that the overly simplistic, money-based formula used by economists to determine wealth is a mistake. This same assessment can be applied to Greer’s argument. He has a tendency to be overly simplistic, moving immediately from statement to prediction, such as in this passage: “Even among those who warn that today’s Great Recession could bottom out at a level even worse than that reached in the Great Depression, very few have grappled with the consequences of a near-term future in which millions of Americans live in shanty-towns and struggle to find enough to eat every day.”

He says societal collapse is inevitable, just as an economist might say “monetizing debt must lead to inflation or default.” In that sense, Greer is a victim of the same type of narrowed thinking that he so eloquently attacks. He knocks the false bottom out of capitalist theory, but doesn’t grasp just how far down the system reaches, or how tangled it gets. Instead of digging into that complexity, he builds a new floor a little lower.

Greer is not necessarily wrong, but this oversimplification damages his argument. Greer evaluates economics and history throughout The Wealth of Nature, yet doesn’t concede that modern economics are complex, nor that the simple tales of bygone eras fail to capture the difficulties we faced then, and may face again. Without that historical nuance, it’s not surprising that the future Greer sees is dark. Greer’s effort may not match up to Wealth of Nations or Small is Beautiful, but it is lively, timely and clearly pinpoints some of the failures of economics today. For this reason, it earns a place alongside other books on the subject.

(Book published by New Society Publishers, Gabriola Island, BC, 2011. 288 pages.)

Paul Kaminsky has spent the majority of his 10-year financial services career as a proprietary trader with a variety of Bay Street firms.