Bulls and Bears: Promoting a Sustainble Future in Capitalism

There was lots of heat here recently for asking not if, but when and how the downward adjustment in stock multiples will occur. No, they laughed, though they laughed a bit too loud. Of course the bulls will roar this way forever!

Lots of those taken aback were professional investors who ought to know better. But anyone who manages forest inventory does know better. When you live in the forest, you feel many seasons when you behold the various trees. Looking at rings in the stumps, you see abundance and drought in cycles that mock the human span. When you live in the forest, you know with absolute certainty that out there in the economy, the bears always come back.

Regardless of whether or not we live in a season of Bulls or Bears, micro-enterprises such as profitable agro-forestry plantations will not replace global integration and massive economies of scale, they will coexist, in both low-tech and high-tech forms. Moreover, they will not be intrinsically isolated from the world economy, that will just be an option. Other autarkies besides these enlightened plantations will be, for example, guilds of programmers, whose virtual workplace and proprietary community effortlessly walks the continents.

When, then, will the Bears come? This depends on whether this current run of unprecedented technological advances has caused our global economy to experience something new, something Wired Magazine once called “The Long Boom,” where stratospheric stock multiples stay high for 50 years or more, or whether this is just another plain-wrap boom we’re having, just one a bit bigger and longer than average. Either way, the boom will end.

How will the Bears come? The second question is more stark. When the boom ends, how will the global economy adjust? Will our transition back to earth be smooth? Or will we humans have by then stripped the earth bare of its biosphere, consuming it in such a frenzy that we didn’t even know when the line was crossed from exhuberance to desperation, from civility to total war, from Finches to Lemmings. In nature, species do it all the time.

Perhaps the benefits of technology are just beginning, but the social dislocation engendered by technology; massive population growth, precarious economic interdependences, biological and ecological disruption, is also just beginning. There is no guarantee that world civilization will not descend into yet another chaotic, catastrophic maelstrom. To think we are now beyond famine, plague and war is the conventional wisdom, reminiscent of popular sentiments in Europe sometime around 1912. It is convenient and common to think that at worst such apocalyptic visions only loom slowly in the deep distance, horrible, but probably just a malthusian fantasy, at worst something easily turned away. In a culture as saturated with advertising fantasy and entertainment fantasy as America today, geopolitics are boring, and Winston Churchill would have been dismissed as a raving drunk.

So how will the Bears come? It won’t require an antarctic meltdown, an ozone layer burn-off, a burning season that suffocates half the planet. There are a lot of countries with populations of several hundred million people who could spin into disaster with nothing more than a sharp jolt, a global hiccough, an extra bad El Nino, an oil production cutback, a cholera outbreak. If rallied by demogogic politicians or fanatical clergy, they will not be predictable and will not be easily contained. Are we ready? Can’t the boom end with a whimper instead of a bang?

We at ecoworld.com think that a smoother slowdown can still be had, and so we are trying to promote an unabashedly capitalist, yet sustainable model of capitalism that believes nature and technology can exist in harmony with each other. New technology, at least this time, breeds autarky along with booms, because twentyfirst century technology is allowing competitive decentralization of information and manufacturing systems. Ecoworld.com just wants to remind the reader to see the operating systems in the forests, the fisheries, the farms, the waters, as we ponder the next operating system on the chip. Many of our new insights into information ecosystems are transferable to natural ecosystems. We can now make these smaller, better, cleaner, faster, too.

Profitable, sustainable agro-forestry not only will make a developing country prosperous and self-sufficient, its implementation will foster great leaps in public education and literacy, as well as a deep and practical understanding of ecological stewardship. Profitability is central to this plan and guarantees its proliferation. It’s just too bad that it will take a bust to make sustainable growth in real value ala the enlightened plantation a more attractive economic option.

Someday, unless we boom ourselves straight into a higher life form, this long boom will end. The price/earnings and price/sales ratios of the S&P 500 are higher now than they were back in 1929, and for good reason. The boom in the twenties was fueled by new technology, better manufacturing, new levels of global integration, and rampant speculation. The boom in the 1990s is fueled by all these, plus far more profound technological shifts, plus the stability lent by US military supremacy, something not seen since Rome was in its prime. But the days of price/sales ratios anywhere from 100 to 1000 will end, maybe in fifty years, maybe next week.

When this progress plateaus, when we finally digest all the implications and benefits of information technology, growth will slow, expectations of growth will slow, and stock multiples will return to earth. If we’re very, very lucky, underlying stock values will have grown into their multiples, instead of having to also fall. Don’t count on it.

One way to make the inevitable economic correction slower and more civil would be to have by then a critical mass of souls in this world who understand not just the autarky of electronic freedom, but also the autarky of agro-forestry, and who already understand and embrace a sustainable model of capitalism.

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One Response to “Bulls and Bears: Promoting a Sustainble Future in Capitalism”
  1. [...] | Back in 1998 we wondered here how long the boom would last. In our EcoWorld post “Bulls & Bears” we noted that aggregate public stock multiples were much higher than historical norms, and [...]

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