In the study of economics, at least in the current made up nonsense of economics, an externality is a factor outside of an enterprise that isn’t something the enterprise need concern itself with. For example, profit comes from coal mining, using the local river to wash the coal and fill the river with dust that kills the fish is an externality. The microcosm of the mine is viewed solely on its own terms and is making a profit and working fine. The macrocosm of the surrounding environment does not figure in any calculations. Downstream does not exist.
This willful ignorance is part of the human condition. It’s also, when you think about it, just the way animal populations behave. The future doesn’t exist for a deer that’s eating all of the vegetation. Without predators there will be a collapse. We are lucky, we can observe and think things through, we can think of better ways of doing things.
It’s also been said, but I haven’t yet researched this, that all capitalist profit comes from abusing externalities. The enclosure of the commons that began the accumulation of capital in the hands of a few, the industrial wastelands where dumping waste carelessly into a lake caused an ecocide and so on being the results of this. The profits from the processes were made, and the damage carried by everyone else.
As we sit now at the beginning of the phase change for the climate this forcing externalities is becoming ever more obvious, but it’s not hard to see that it goes way back to the beginnings of the industrial revolution and the processes that had to happen as a precursor to it.
I came across this term in the past few years in my job writing software. It’s used by the User Experience (UX) specialists to mean the way in which software encourages the user to behave in particular ways, that guide the experience so that it is easy to get what you need from the software without much friction. It promises accurate information entry, and happy customers.
It’s interesting to think about this. If you don’t have a mental model that matches that of the software designer it could easily be a hostile and unforgiving process no matter how much effort they’ve put into designing it. We’ve all seen messages like error 46 at line 5, which are no use to the end user of the software but might have been to the original developer.
We live in an intensely bureaucratic society. There are electronic and physical forms we have to fill in all the time to get anything done. Clever algorithms that are replacing humans in decision making are every bit as biased as the humans were because the assumptions behind the data used to train the algorithms was also biased. In the USA skin colour is never mentioned explicitly, but the ghettoising of people of colour means that algorithms that check addresses and social environment are carrying on the racist assumptions that they are supposed to prevent. We have the same thing on a smaller scale everywhere.
For a UK-based example, children from deprived areas who couldn’t sit exams because of Covid 19 found themselves marked down because of the area they went to school in, not because of anything to do with their actual potential to pass the exams. Let’s also draw a veil over the better-off privately educated children sitting slightly easier exams that still count the same when allocating university places, which has been a scandal for years.
Our owners have done this for several reasons:
- Dealing with a complicated mass of individuals is expensive, so reducing them to form filling and a couple of easily managed metrics means they can control us without us even realising or being able to do anything about it if we did.
- They control the bureaucracy. This means the rules only affect people like you and me. You can see this arrogance when Covid rules were being applied in a partial and biased way.
- You don’t get to see your oppressor, they’re on the other side of the forms, and the poor stooge policing the form has no authority to do anything other than insist it’s filled in correctly, whatever that means.
- Reducing people to forms also means their human needs, not addressed by the forms, can be safely sidelined and left unnoticed and unresolved.
- You can police people solely by whether or not they have certain documents, and whether those documents have the right things on them. This allows mass discrimination without having to actually deal with the individuals. Suffering can be automated and kept invisible to the people that ultimately cause it.
So we have affordances that lock oppression in at very low cost, and we have affordances for our owners that keep them distant from us. We have affordances that mean no-one has to engage with us as human beings with needs. It’s all very tidy.
The biggest wheeze the owning class came up with was the fiction of the corporation. Originally the idea was a group of people with a common interest, say creating a canal from Liverpool to Leeds, would get together and raise finance to do this mutually beneficial thing. So we had corporations creating and running infrastructure. It also meant that the infrastructure was managed and paid for in a way that benefited the people using it. The recent concept of selling these assets to financial institutions so they can screw us all out of cash wasn’t thought of.
The next step was the idea of limited liability. A corporation has assets, materials etc. that it uses. If it causes some damage or death then only these assets can be used to pay for any repairs. The owners of the corporation are not personally liable and neither are the directors because their only legal concern is making a profit.
I think we can all see where that one is going. We now have corporations that rent everything, own nothing, do enormous damage, and then shut up shop without the people who did the actual rapine facing any consequences. We have long supply chains where the minerals are torn out of the ground in grossly unsustainable ways by poor peasants but the damage isn’t the fault of the companies that buy them, at least those companies like to pretend they have clean hands, but do they?
I have discussed this elsewhere in my review of the book Ecocide
The idiot consensus
Another interesting point is that the post war boom had what seems like eye wateringly high taxes compared with now. If you were a ticket clipping share holder who had no personal income from a job but a lot of what was bluntly called unearned income you paid a lot of tax. Similarly corporations were taxed highly and had to put their profits to work reinvesting in actual research and development or plant because they would be similarly punished with heavy taxation. This was a deliberate forcing of growth to recover from the war.
We have had forty years of financialisation since then. Corporate taxes are far lower, rich individuals’ income is now subject to the pretense they earned it, even if it came from non-productive investments like property. Executive bonuses now depend on share prices so profits are put back into buying shares in the company so they will make their bonuses as the share price rises. This benefits nobody but a tiny number of people who will make money from the rising prices. There is a similar non-productive sea anchor that comes from spinning property prices and forcing the poor into rent and debt peonage.
I have read that there is a balance between financial services that allow the economy to run, and the financialisation that solely works to enrich a very few people gambling (or pretending to gamble – if they lose we pay through bailouts) with shares and property. The figures I saw suggested this balance was reached as long ago as the 1970s, at least in the UK. All the subsequent growth has done is act like a parasite on what might be called the real economy and caused crashes from speculative bubbles.
We have an idiot consensus that happily carries on with this fantasy. Our banks have been rendered too big to fail. The services we all need have been privatised so that their new owners can make money from things the rest of us need to survive. Somehow this engine of inequality and ecocide running along is deemed to be fine, even though by any human measure it is not.
What do people actually need?
Let me quote myself from my Eco Socialism or Annihilation article.
In order to say we live in a world that is equitable, moral, and worth defending everybody must have unfettered access to these five things:
- Decent shelter
- Food autonomy
- Health care
- Meaningful work
Mixed in with this there must also be the democratic ownership and control of resources by the people who need and use them. The nonsense of nationalisation as it was originally done still kept the old structures of hierarchical companies. Rethinking how things are organised is a fundamental part of this. Otherwise it’s back to creating systems that can easily be stolen and sold again. Making it almost impossible to undo this work by organising it so that undoing it cannot be done is paramount. The organisations that provide the things we need must be incredibly democratic and well run, and also incredibly difficult to steal from us again.
We need affordances that give us the five pillars of human dignity without any fuss or ceremony. We also need to start undoing the damage caused by unthinking bureaucracy. Capitalism is perfectly logical in its own narrow terms. You can’t reform it, if you remove the corporation’s immunity and start working on ensuring the five are everybody’s without fear or favour then most of modern capitalism, with its silly market fetish and redirection of resources into the pockets of the few will be undone. As I discussed in the TINA disease the artificial scarcity from capitalist productive anarchy would have to be brought to an end. If they still need it, we can let our former owners build themselves a casino to play their bloody games in without beggaring the rest of us.
In the first place we need a philosophical shift to always think of the downstream for whatever you do. For example, one of the things Trump did was relieve mine owners of the obligation to stop waste getting into the water table because it was burdensome and made it hard to make money mining. The obvious idea, of maybe doing something else that wasn’t so destructive never entered their tiny minds. Downstream destruction is their problem, whoever they are, and for some reason this went unchallenged.
Similarly, in the UK, the Environment Agency isn’t allowed to pursue cases that may damage growth. Plus it’s also tiny compared with the size it should be. Yet no-one questions this.
Look for the downstream, look for who is affected by what you do, and make sure everything still works properly. This is simple humanity and it isn’t even hard to do. We need to let go of the idiot consensus and create a new one that includes all of us. We must make sure all of us have the affordances we need to live a decent life. We must stop listening to the short sighted fools who pretend there is no downstream, no macrocosm that needs attention.