Archive for March 9th, 2008

On A Fast Train

Sharon March 9th, 2008

Well you’ve been on a fast train and it’s going off the rails
And you can’t come back can’t come back together again
And you start breaking down
In the pouring rain
Well you’ve been on a fast train - Lyrics by Van Morrison, Sung by the incomparable Solomon Burke

If you don’t read The Automatic Earth, you should.  Over the last couple of days, Roel and Nicole have been meticulously documenting the financial disaster unfolding before all of our eyes.  The news is bad - the losses are probably more than our economy can bear.  The bad job news is worse than we thought, and equity, which has driven the economy, has fallen to the lowest level in six decades - with further to go.  We’re in trouble folks.  There are links to more relevant articles in the idiosyncratic news feed.  But the aggregate is that we’re in trouble - the train is off the rails.

Will we go back to where we’ve been?  I don’t know - it is possible that recapitalization could come, although I have my doubts, but the inflationary cycle of food and fuel prices isn’t going to change.  None of us, I suspect are going to get richer anytime soon - and the odds are, we’re be poorer in a host of ways.  And that means in a whole lot of miserable ways - the “ok, honey, you have to patch the boots and wear them one more year because we can’t afford any more” or “We can only have meat on Sundays” kind of ways.  And for some of us, it’ll get worse than that - we’re past “put on a sweater” into ‘wear you coat in the house.”

Some of my readers have been on the early end of this, and they send me their stories - accounts of what their food pantry is giving out, or what foreclosure is really like.  The generally do so in a kind and gently humorous way - they aren’t coming to me for answers they know I don’t have, they are trying to tell me where we’re going.  Kelly, one of my readers gave me permission to tell you all this:

“My grandmother used to tell me stories about taking mustard sandwiches to schoo, because there wasn’t anything to eat. I admit, I never thought that could happen to us, but now we’re losing the house, and the credit cards are maxed and we have no money, and Thursday I sent my daughter to school with a ketchup sandwich.  I guess I need to go to the food pantry - I know where it is, because I always brought things there.  Now I’m going to go stand in line.”

I doubt Kelly will be the last person to write to me with those kinds of stories.  And I wish I knew some magic bullet, some way to say “No, it won’t hurt you any more.”  But I don’t.  The simple truth is that it probably will hurt a lot of us.

What can you do?  The only thing that I can think of to offer you is this - it is time to for most of us to take one foot out of the formal economy, and put it in the informal or subsistence economy.  The truth is that the formal economy only accounts for 1/4 of all economic activity worldwide - most people in most of the world live in the informal economy at least partly.

 The informal economy includes subsistence economics, under-the-table economics, illegal economic activity, the household economy and a whole host of other ways of keeping body and soul together that don’t get measured in GDPs or reported on your taxes (ok, you are supposed to report some of these, and I cannot advise you not to).

The reality is that if we have a true Depression, in which money is hard to come by (seems to be the pattern we’re seeing right now), we’re going to need a strong, resilient informal and subsistence economy to meet the needs we now meet in the formal economy.  We’re going to need social structures to support the elderly and disabled, gardens to grow food for those who can’t afford to buy it, small home businesses in our neighborhoods for those who can no longer afford to travel long distances to run “errands.” The faster we get this economy up and running, the better off we are.

The resilience and power of the subsistence economy, then, must be central to our understanding of how to protect ourselves in hard times.  If we can get much or most of what we need outside the monetary economy, and improve the resilience of the larger economy, we can make ourselves more secure.  Gene Logsdon, in his book _The Contrary Farmer’s Invitation to Gardening_ entitles one of his chapters “Gardening to Save us From ‘The Economy’” and says what he means is,

I am talking about how in gardening you can remove yourself

from the enslaving dictums of financial accounting altogether

You do not have to worry about whether your work makes

money in the usual sense.  Your garden exists in a lovely place

outside the hot arena of profit and loss, and this can

be the beginning of true economy. (_Contrary Farmer_ 28)

Logsdon goes on to describe the ways in which gardens act as hedges against both inflation and disaster, and offer stability not just for the individual gardener, but for the economy at large, yet another way in which the formal economy is served by the existence of the informal  economy.  He adds,

It seems to me that the part of ‘the economy’ that depends on

 biological processes, not industrial processes - especially

 food, but also renewable resources such as cotton and wool

and other natural fibers for clothing, and wood for    

construction, furniture and fuel - is particularly vulnerable

 to the volatile and chaotic conditions of the industrial

manufacturing marketplace.  An ear of corn grows at its

own sweet pace, no matter how the interest rates are

manipulated.  Much more biological production than

is now the case should be protected from this market

vulnerability, and the most practical way of doing so is

by having more gardens.  A garden economy would

 provide society with a much safer ‘social security’

than pension money sunk into volatile stock and bond

markets that can collapse overnight. (ibid, 32)
Logsdon’s call is to stabilize the whole economy by expanding the unofficial economy, and by removing some of the most delicate and essential elements of our security from the vulnerable space of growth capitalism.  Now this is quite the opposite of what we have been trained to believe.  Our culture has pressed us to believe that security is monetary, rather than communal or biological, and that a stable economy is created by prioritizing the smaller formal economy over the larger informal one.  But in fact, as Logsdon argue, it is the unofficial economy that offers us stability, that keeps us alive and meets many of our basic needs, and the expansion of the informal economy ought to be our priority.            

This is both important and radical, for several reasons.  The first is that it can relieve some of our fears about the future.  That is, the end of our conventional jobs and the life we’ve been living need not be the end of the world.  I don’t want to romanticize what an economic or energy crisis will look like - I am not suggesting we will make a painless transition between the official and unofficial economies.  But it is possible to live partly or even wholly within the unofficial economy, and to function well there.  If we begin now to reinforce our own connections to the informal sector of the economy, to reduce our reliance on our jobs and our investments and strengthen our investment in our gardens and our neighbors, we can soften economic blows.  The whole economy (formal and informal combined)  is by its very nature, more robust than the formal economy, less vulnerable to short term change.  That is not to say that one can get rich in the subsistence or informal economy - in fact, you almost certainly can’t do much more than meet most basic needs there. But within the subsistence economy, most of us could have enough - maybe.

The other thing that this means is that our economic choices do not come down merely to capitalism vs. communism, as so many conventional economists would have it.  A subsistence economy can contain meaningful elements of both and things that are neither.  As founder of Peasant Economics Teodor Shanin puts it

The conventional view is that every country operates

somewhere on a continuum between the state-run

economy and the pure capitalist economy; between

left and right. Countries can move along this line, of

course: if capitalism isn’t working, the state can intervene

and vice versa. After the fall of communism, eastern

Europe inevitably tried to embrace capitalism. But the

truth is that most of mankind lives outside this model.

So we find in the former Soviet economies that while

officials are trying to privatise the economy, most people

are living in the informal economy that is neither

communist nor capitalist.

This is important in part because again we find that we have not been offered, or even made aware of, the full range of economic choices.  Shanin’s scholarship tells us that there are whole chunks of our economic story - the largest chunks - that were left out.  Most of us are to a degree participants in the real economy, the whole economy of which the economics of corporations and governments are merely a small portion.  And, as Shanin points out, most of the world lives in the peasant economy, mostly apart from the larger economy. 

The Peasant Economy is based largely on subsistence labor with some contributions from the formal economy, but it is also characterized by a different way of thinking - the goal becomes to survive, and also rather than accumulating short term wealth, to preserve what you have for the next generation.  As Shanin explained it in an article in _New Scientist Magazine_,

“The concept emerged in Africa 25 years ago.

Researchers began to notice that there was no

Economic explanation for how the majority of

the population survived. They didn’t own land.

They didn’t seem to have any assets. According

to conventional economics they should have died

of hunger long ago, but they survived. To understand

this, researchers looked at how these people actually

lived, rather than at economic models.

They found that their way of life was completely

the opposite of how a human being in an industrial

society survives. They didn’t have a job, pension,

steady place to work or regular flow of income.

Families held a range of occupations from farming

and selling in the market to doing odd jobs or

handicrafts. Their aim was survival rather than the

maximisation of profit. Rather than earn wages, labour

was used within family.”

As long as you have your job, you might as well keep it, but unless you are the daughter of the owner or have tenure in a University with an endowment that means it can essentially never go under, I’d tend to think now is a really good time to start selling your baked goods, cutting firewood, repairing small appliances, home brewing beer, or some other way of starting to slip into the informal economy. 

We still have to pay our mortgages and a host of things that don’t take chickens or barter, but however this plays out, we are safer if we can move a little bit in each part of our economy - relying entirely on the formal economy makes us vulnerable to its deepest limitations.

We’ve been on one heck of a fast train ride - and when it starts breaking down, because we’re under a strain, all we do is get off the fast train, and keep on going in the ways that sustain us.  The good news is that we can sustain ourselves - that what breaks down is not the whole of the economy, but the big shiny edifice of the formal economy.  And underneath it is something else - something that cannot give you dreams of riches, but that is ultimately of more use, is more robust and more hopeful, than a short-lived journey on a fast train.