Institutional analysis of human activity on ecology

Prologue This is a proposal to start new field of study on institutional analysis of human activity on ecology from temporal wise dynamic analysis. The advantage of this field is that it will have full understanding of natural science as student and will present an integrated social science which starts from a mind of human into complex social interactions defined by matrix of institutions. Another advantage is that it is time wise dynamic. It is not political analysis of society (like political economy) because it does not think the Santa called perfect state does not exist with its perfection. It is not new institutional economics because it recognize the unicorn know as perfect market is not the only good thing that we can try to imitate and market development is not goal of society. It is not sociology because human beings are not just social robots and it is not just psychology because the lady is not mature enough to know the detail. It is DNA analysis of an organism called society and it integrates every field using this analysis of social DNA. It is good that is why it does not exist and it is the most perfect thing human analysis can do in social science. Nano science is the future and this is agreed by society. I am really sure Nano science has less odd of being the leading trend of the future compared to institutional analysis. The reason is simple it works well and most of the Noble prize recipient in economics are institutional thinkers. Their ways of thinking do need a huge refinement as they are addict of Santa and Unicorn. However, still they are leading could imply, it is the future of social sciences. That is why I am dropping one single here like Veblen. So one day someone will think about it. Means I don’t expect a lot of CD sell because the genre is new and does not exist at all in its perfection. But still the conclusion it is the way forward has to be made in early 20th century so people can see it in early 21st century. I will use very known economic theory of induced institutional and technological innovation theories. I will give them laundry service, though, for oral perfection and some cyber dust as glitter to make them good looking. The old theory is nice flower, though not perfect. That is why I am hoping, a little glitter of mine on the marketed flower will not hart at all. The point is: large junk of the facts are already known, but I am adding some glitter to make it perfect gift for the lady called environmental moment. The question addressed below is what is the relation between economic activity or population size with ecology. When everybody thinks the same, nobody is thinking at all. This is said by Einstein himself and if I beg to differ; it is because I think, see. That also means you think better when I beg to differ, though not much because I don’t know much. I am just selling few glitters to market institutional analysis for next generation which will come in early 22th century. This is time of unicorn, stoics and Santa, so this virgin has to stay for while but someone has to write few years in advance about this virgin. Synthesis theory based on induced technological and institutional theories In this model demand for technological change happens due to change in factor endowment. When society faces scarcity of land or other resource due to population growth or increase in economic activity; the shadow or real prices of the scarce factor will increase. This will stimulate society to invest on capital formation (capital investment), new knowledge and new technology that will economize on resource that is scarce. This will result on investment on general knowledge of the society and applied knowledge of the society, leading to technological innovation that leads to innovation of technology which economizes on scarce resource and capital investment which economizes in such resources. Here shadow price or market price can serve as proxy and private price (market) plus shadow costs which include costs in society which are not accounted by private individual as proxy for inducement of change. The private prices are clear as they are observed prices of accessing and using resources. The shadow costs are costs in form of human disutility, suffering, pain and death that are generated by unobserved costs of population size and economic activity. The difference here is that most decisions are done at individual level but some costs and benefits will happen to none decision makers and may not be known at all, either by the decision maker or the society at all. The problem is easy to handle if given the current moral base of society, which determines what is fair and right, decision makers face large junk of the cost and benefit of their action. That is if externality is very low and most importantly if they have adequate knowledge about the problems. The market does not have to be perfect, scarcity or increased cost will naturally lead them to find solution, which is well documented in Boserup’s historical observation. The problem comes when the level of externality is very high compared to decision makers cost, there is lack of knowledge about such problems and the moral base of society is inclined toward promoting selfishness. In this case we will see below for the process to work the cost has to be very visible and will demand more damage to be done before it becomes visible. The market price may have low co-moment with shadow costs, as result society may need huge social costs which make it simply visible to any lay man as common sense to find solution; given decisions are decentralized but costs and benefits may not be. However it is important to notice, either way humanity will survive and will find solution, the question is can it be done easy or not. The reason is simple, what the imbalance between ecology and population (and economic activity) can trigger is Malthusian cycles not more than that, that is the worst it can happen. And in 21st century I think humans can easily adapt better, it is simple fact. This will be explained below in detail. Now let’s explain how the technology and institution can be viewed better to see where our problem could be found for real. Let’s start from the fact that if all costs were private costs and latter on we will see what if some costs are social externalities. If the scarcity of resource caused by population is increasing private costs only, basic economics can give us good proxy where the blind watch maker system of market will find better substitutes, will lead to technological innovation and will abandon products intensive on scarce factors in favour of other products to solve the problem. The system will be more smooth given individuals will have personal interest to solve it. A farmer facing shortage of land may use his farm for other business than farming, he may use organic or chemical fertilizer, he may focus on high value products or may adapt modern technology like land improvement, irrigation and soon to improve productivity. Given the process is self correcting and trail and error will generate common sense answers by breaking the problem in to small learning steps; this will not be serious concern. The problem is serious when there are externalities and as those externalities tend to have wider impact say global impact at extreme. This will push us to many problems. First the drive to know the fact that there is problem will be slow at limit none existence, given free rider problem. Second there is need here for moral orientation of human personality to negotiate with self interest orientation of the same human. Third the power structure of the society and the distribution of benefit will determine what kind of solutions could be found. Fourth institutional structures are very complex and inter linked in complex web like DNA structure in body, changing one will affect the social structure (and associated cost and benefit) in complex way. As result the benefit of change will be highly uncertain to make demand for change very slow to come. Finally externality by demanding collective action will demand organized effort and the culture of the society will create inertia to preserve the status quo in this process. Let me explain those points and this are adapted from induced technological progress and induced institutional progress theories, with modifications to make them useful. It is just model, as result will have limit is important to recognize, though. The problem comes when externalities or negative effects like pollution and wastes are generated and the cost is mainly paid by society in general. The first problem in this process is that the individual agent who is making decision may not know such effects s/he is generating, s/he may not know the severity of problem s/he is causing and most importantly may not even know the existence of alternative technology and way of doing things. Both knowing there is problem and specially knowing the organizational (institutional solution) and the technological solution demands investment and interest to consider such costs. This depends on moral orientation of people. There is wider experimental and day to day human evidence that people are selfish but still have moral base to their life. How much social concern and altruism they can show depends on how much the moral base is well developed in the society. If a person is inclined to be very selfish s/he will have less interest to know what kind of damage s/he is causing to others, will have less interest to consider the interest of the society and other people in general and will have less incentive to invest on knowledge that improves the institution and technological base of the society; unless s/he benefits by doing so. With externality that is a problem, s/he may not benefit directly. The next problem comes from the fact that such changes to deal with externality demands collective action as such technology is public good in nature and institutional change demands organized effort of the society as public good. The moral base of the society in general will restrain the coming to picture of such changes by creating inertia that restrains change. In one side technology is path dependent as result will limit that options which are available at hand of people. If everyone is using Microsoft window software, inventing software which is not computable with window will has very low success rate. This is because existing technology benefits from economies of scale advantage. In addition when everyone is material oriented to say I am family oriented may make a person stupid in eye of society, may lead to social isolation and even worst may lead to social sanction. Again this is caused by economies of scale advantage of existing institutions. In addition given moral bases of the society are deeply rooted in side the human mind, people will be hardwired against you when you stand against the status quo. This fact will speed up the failure of people who isolate themselves from the institutional, moral and technological path of the society. Humanity is hardwired to preserve status quo which minimizes the problem of accepting wrong ideas, like extreme green moment, but tends to maximize the problem of rejecting right ideas, like serious concern about social evils and unsustainable use of resources. It is problem of type one and type two errors which is well known in maximization problems under uncertainty. It is not all bad that society is self preserving but it also can create serious inertia for good change. The next problem comes from the fact that power in society is not fairly distributed and the power base of society is organized to self sustain itself. In one side the powerful people in society will reject any change that will cost them high; given moral base that they have. If they have altruistic or inclusive moral base they will be less resistance to change but otherwise they will reject many changes and they will limit the freedom of change, making it slow and path dependent. Moreover given both technology and institutions are developed considering the wider social structure of technology and institutions into account, through trial and error and selection of blind watchmaker, they will be highly inter related with wider social technological and institutional structure. This is the reason why existing technology and institution has economies of scale advantage and this will make the net effect of change highly unpredictable. As result resistance for change will be highly organized since powerful elite and culture will work to preserve the status quo, but demand for change will be extremely weak. As result society will face serious inertia that makes it sluggish in response. However we should notice this process can speed up when social orientation tends to balance self interest based morality by strong social oriented moral base, and when society have well developed capacity to identify wrong ideas. The last point is needed because every new idea and every change is not good. Those problems have tendency to break the association between private indexes like prices and costs from their social costs and prices, which take into account social externalities. However in long run such process is self correcting. The reason is simple because society has to pay and at some point the problem will become very visible after high level of suffering, pain and death; which at extreme may push society in to Malthusian cycles until they break out of their trap or die. Again the learning process here is also determined by the same rigidities given above. How flexible the society adapts to change or if it stays under such Malthusian cycles or die is determined by how fast the above rigidities are dealt. If society is responsive in right direction, we will have slow evolution of both improved technology and institutions jointly to solve problems by trail and error using knowledge. Otherwise serious failures and human suffering will generate revolutionary change in technology and institutions. Revolution implies here concentration of large junk of change in short period of time, in otherwise cyclical evolutionary process. What we can observe in the above process is that first focus on moral changes work better. Second charismatic well informed leaders with better understanding of both current structure and better alternative options are very important for evolution of institutional change in society. The core of the problem lies in morality not in others. We cannot expect humans to change their nature or to expect power structure to be just fair (it is impossible); however the process works better when the moral base of the society is given adequate weight. It works better when people are highly moral oriented than simple self interested beings. If powerful elite see behind self interest, they will open for change. When people are morally oriented they have tendency to consider the suffering of others and will care about others. Society will easily cooperate on creating collective action for improvement and change will be more smooth process than revolutionary and ugly in nature. In addition a leader which understands social complexity, who is charismatic and has better understanding of the problem and had solutions (which have to be tried though) can pay the initial sunk costs to break the knowledge gap, social inertia and resistance of powerful elite, to bring change. This is why major changes in society are associated with the occurrence of such leaders. The focus on moral changes is well demanded in almost all those who are serious about human and ecology interaction, though there are questionable questions about what is moral in their view point. In this process having moral base which is strong enough to stand personal interest will encourage people to spend most of their year in search of the truth and nothing but the truth, no matter what is popular. Society will contribute a lot for such researches. Firms and political and other elite groups will be responsive to such changes despite its popularity or lack of popularity. This will speed up our knowledge of externality, say what is the impact of carbon dioxide on global warming and human life, from people who search nothing but the truth at cost of personal welfare, given the moral base is strong. It will lead to higher investment on alternative ways of organization, institution and technology; so society can see things better and can try different way of life. Most importantly it will generate charismatic leaders who really serve people at cost of personal welfare and interests to modify the moral base of the society and to organize society. Most importantly it will break us from begging the Santa to master as or the invisible hand of unicorn to tell us the best world is created. The answer to the problem is moral change which changes everything else and given institutions and technologies are path dependent, this will have lasting impact on society to all generations to come to the future. Means the solution is to make humans more concerned about impersonal social interests, because nature will always make them personal in essence. Selfishness does not need strong defence but moral base of society always needs real defence from decay. This is human centred morality to be precise and the focus is how to smooth the externality noticing process and how to speed the change needed to solve such problems. Alternative morality is to give higher weight to welfare of animals too in making decision. Not only as input to human life enjoyment and future, but also as right of animals for life, happiness and prosperity which is the morality imposed by most conservative moments. Society has to choose one of them, taking other alternatives in to account What is changed above, in comparison to conventional literature, is that the question is not about choosing mother earth verse our welfare; the question is do we need huge amount of suffering, pain and death to adapt to the better path possible or can we do better. What is sustainability? This is where most people get it wrong! Given the above induced technological and institutional adaption to ecology model, which is simply true because it is general framework with vague definition of many terms, we need to understand sustainable development in morally neutral vague sense. General (vague) definition is needed to make it morality neutral, so we can easily load it with any morality. That is why the conventional understanding of sustainability itself needs to be redefined. What is our problem? The problem is can we adapt and is our life good? This is because what is good and what is bad is social construct given our biological limit; and resource is social and technological construct, given the physical base of world chemistry. Sustainability can be defined to mean leaving adequate resources to future generation while using adequate for us, but what about knowledge and technology and most importantly moral base we are giving to future generations? Native Indian Americans may be conserving more natural resources, but we also know their moral base is decaying, their none natural resource is very backward, their technology and knowledge base is not very adequate. Knowing those facts are they living sustainable? We know it, if things get worst; they will not be the one to make it out of natural and social evils trap. The problem is our sustainability analysis is not morality neutral and ignores the fact our age also added knowledge, technology, manmade resources and so on, in addition to using natural resources. Our age may use more resources from nature, but has more knowledge, better technology and had other resources which are its disposal to adapt to change. We are thinking how we can live in Mars; but how can our sustainable thinking does not take such issues in to account. The above fallacies are framed in our mind and as result we don’t really see things clear. Sustainability should take in to account natural resources, manmade resources, technology, knowledge base of the society (basic and applied) and the institutional moral base of the society to adapt to changing conditions. Sustainability in general is about leaving capability to future generations that can give them ‘good ‘quality of life as they see it fit, and make us and them ready to adapt to any problem that effects society at large. Knowledge, technology, institutional base and manmade resources, should be important as natural resources; of course given the biological, chemical and physical base we have. Sustainability should mean smoothing the process of adaption by society or better we should say smoothing process of social and technological adaption in order to give adequate freedom to both current and future generation to enjoy good life, as they see it fit to them. This will encompass institutional, technological and environmental concerns while being consistent logically and historically. It is not saying this is how you live. It is about giving them adequate capability to live good life as they see it fit. The recommendation of sustainable development ranges from stopping growth at least in advanced economies, to clean development, to small scale based economies, to green development and to general cultural reengineering of society or adapting some nomadic way of life which is consistent with ‘mother nature’. However two things should be notice, first humanity has capability to have ‘good life’ than mere survival and this will open for moral view of what is good; and we should not try to impose our personal idea of good life on mind of people. Second while taking general idea of capability to enjoy ‘good life’, given our natural limit, the focus should be can we adapt to changing conditions and is this process institutionalized to our way of life or institutional matrix. The work should be dynamic in nature not static in nature. The work that is done now in name of sustainability have tendency to leave future generation with low capability to adapt to change and if it wins with more tree and rivers. Epilogue This is to show details matter a lot and precise definition of terms matter a lot. In addition, trying to think independent for yourself than repeating what you are told matters a lot. Because smart people using vague language and constrained facts can say slavery is natural. You have to say is that right. A very intelligent thinker saying humanity will be without resources is joke for anyone who knows history of humanity. For anyone who studies human history to say earth will end is absurd. So some gold dust as glitter given here will help you to see things from different prospective so your concerns can be seen from right angle. I am just adding some known facts but still they are kind of unknown, because people tend to say things which are often opposite to those known facts. Any lay man knows them as common sense, just the smart people don’t see the way simple people see it. We have recorded age of metals and sand is now becoming silicon, and even some claim the next life will be made out of silicon, how can anyone cry that the end of age of copper is end of humanity, 2000 years ago. Most importantly if informed not brain washed people are needed, what is morality and what is science has to be defined clearly. It is often mixed up. This will help them to adapt fast to problem say ecological problems or resource scarcity. I cannot grantee what is said above is true, as I am just human. But I am definitely sure that institutional moral neutral analysis of humanity is future of social science is clear and you will see it above. The questions are not do we have enough resources or can we survive or can our civilization survive. This is because the same process which works upward also works down ward, this will keep the cycle going until solution is found. How can humanity could have low capability in this age to find solution; is it a matter of tree and river or a matter of knowledge base and moral base? The question is do we need to suffer a lot to find solution or can we do better. The question is not about empowering Santa in name of society ship of some vaguely defined collective concern or saying the unicorn is always perfect, it is about looking for small genetic engineering in fundamental institutions so the system can get right by itself. Taddese Mezgebo For watching the economy blog 18/08/2015