The Secular Fundamentalist

The Blind Eye: The Accounts

Chapter 3: The Blind Eye - The Accounts


Most of the damage and loss caused by overproduction and consumption will not be measured in corporate or national accounts until restitution and repair become unavoidable.  This is when the invoice for over two centuries of ‘development’ (unrestricted production warfare) will have to be stumped up; by then very probably, a crushing demand.

When I was at school in year eleven, back in the middle 1960s, my economics class was told that domestic labor was not an ‘economic’ activity because there was no monetary exchange to quantify and validate it as an industrial wealth producing activity.  It had no relationship to the mobilization of industrial capital, so it was not visible in the national accounts. 

Even then, I wondered why value adding labor in the building and maintenance of social reproduction services wasn’t an ‘industry sector’.  And it occurred to me how easy it would be to raid and asset strip such a labor resource for industrial purposes, and pretend that it was a costless acquisition from a ‘non-existent’ labor market that was producing ‘nothing’.

Similarly, we were told that things like forests had no value other than as an extractable resource whose value would be only the direct costs of extraction and the infrastructure to get it to market as timber product.  The ecological services that forests performed had no ‘economic’ value, so this resource was also ‘free’

Something seemed to be missing in all this, but at the time, I and my classmates were told to take it on faith that this was right and we shouldn’t question it, because better minds than ours had decided that this was so.  There was always a suspicion that there was some malarkey in there somewhere, but it took decades to figure out what it was.

The industrial system is served by an accounting ideology in which only the variables that serve the industrial system’s narrowest and most myopic interests are counted.  Thus obsolescence driven production, deliberate waste making and frivolous ‘value adding’ are weighted higher than the basic necessities of life and the infrastructures that underpin them, which are dangerously under/non valued, for the frivolous waste making ‘value adding’ top feeders control the market structures, and the accounts.

In the food sector, much so called ‘added value’ is in part crude expropriation of those who have to be upstream price takers (especially those farmers working directly under contract to a large food processor or supermarket chains) which forces them to over-exploit their land, over chemicalize their crops and soils, and over concentrate on monocropping, despite knowing that lack of species diversity is in inverse proportion to ecological stability and vulnerability to pest attack and climate adversity.

I recall reading an account in the 1911 South Australian Year Book of complaints against Chinese horticulturalists because they were not spraying their crops and insect pests were coming off their properties, causing problems for their European neighbors.  Interestingly, the year book noted that the Chinese grown vegetable and fruit product was universally regarded as first class, but nonetheless, their growing methods were regarded as being out of step with ‘standard practice’. 

It didn’t cross anyone’s mind that perhaps the Chinese were just better farmers who didn’t need to be propped up with chemical poisons that would inevitably get into the product, into the soil and eventually move into waterways.  And no one was measuring these variables then, or at any time since, not just as a matter of scientific interest and curiosity, but as a cost in the system.

Downstream and into the processing, packaging and distribution chain, a grossly over-hyped and bloated sector of over distributed, over-processed, over fatty, sugared, salted, chemicalized, and flavored product, is over-feeding mass populations with an inappropriate and poorly constructed diet pattern.  It is marketed to override rational consumer understanding of nutritional balance and portioning.  It is a very poor substitute for the economically invisible, fresh, home processed and domestically controlled food production and diet planning system it has all but destroyed.

At both ends of the supply system, unsustainable practices prompted by market forces are long term undermining the security of the food supply system and fattening human populations into a pattern of obesity that will eventually overwhelm the health industry by slowly destroying their health, immiserating their later years and shortening their lives.  And all this is justified because it produces economic ‘profit’ readings, even though it threatens our ecological future and undermines public health.  Where is the genuine profit in that?

According to the Victorian Farmers’ Federation submission to the 2008 ACCC Inquiry into the competitiveness of retail prices for standard groceries, the farm gate price represented a mere twenty cents in the grocery checkout dollar, and that share is decreasing, while their input costs keep rising.

The average age of farmers goes relentlessly up because young people considering going into the industry, who are not inheriting a viably substantial family farm, can see that the capital cost of entry and climatic and market risk are high, but their return on that capital and the wages for often hard, long and uncomfortable hours worked, are low.

Yet it is the farmers who are the critical cogs in the wheel, but that isn’t reflected in the accounts.

Those farming sectors that are sufficiently large and capitalized, like the Cotton industry in the Upper Darling basin, can make a profit by utilizing their vast size to get capital intensive economies of scale, and using their economic and political clout to procure ecosystem damaging amounts of absurdly cheap water supply, the runoff from which sends heavy loads of fertilizer, pesticide and herbicide downstream with the now heavily reduced downstream flows.  And this is particularly damaging during periods of drought/flood, which are going to get worse with global warming.

The whole Murray-Darling water system is heavily overcommitted to irrigators, leaving grossly inadequate flows for the natural environment and thus making it vulnerable to rising water table salination in the south as a result of over-irrigating/deforestation, dropping ground water levels in the north from overuse, nutrient intensive algal blooms hundreds of kilometers long, wetland die off, where much of the environmental ‘servicing’ occurs, ecosystem destabilizing crashes in wild species diversity and numbers, and dramatic reduction of river mouth water flows with equally dramatic increases in years of no flow at all, that tidal salinates and acidifies up river through the Coorong/lower lakes.

Farmers who try to treat their soil and the complex life forms in it with respect, and apply environmentally friendly strategies do get healthy and diverse ecosystems underpinning the security of our food supplies, are constantly marginalized and capital starved by completely unrealistic overall primary product pricing.

The organic/Land Care farmers are the ones adding the real value both in terms of minimally chemicalized raw material quality and the sustainability of their practices.  And while they can claim some (often very variable) premium for their product, they also have significant up front restructure costs.  While their chemical input costs are lower, their need for more species diversity, higher labor intensitivity, additional equipment use for large scale composting and on the whole (though not always necessarily) smaller scale land use, means they tend to lose many of the economies of scale and convenience enjoyed by their natural resource mining competitors. The accounts do not report the limitations of ‘economies of scale’, as in for instance the negative ‘side’ effects of soil compaction caused by repeated and protracted applications of scale ‘efficient’ heavy machinery, or large beast intensive pasture use.

The bottom line for any prospect of a sustainable agriculture is that it is forced to compete against the cheaper unsustainable one.  This keeps it at the margins of mainstream food production and consumption.  The average punter just isn’t going to spend extra money to buy benefits that aren’t right-in-your-face obvious until they know they have to.  There are no market or regulatory signals around to make them think that so why would they change?  And unfortunately, public consciousness raising through education tends to mainly convert the already educated.

Only through price penalization of poor agricultural practice, regulatory mandating of sustainability standards of soil micro and macro-organism densities, humus levels and  moisture retention capacity, and ensuring farm gate profit returns overtake those of food processing/retailing, will food supplies twenty to thirty years down track be secured.  And that cannot possibly happen if the accounts only paint the unsustainable picture.

Farmers don’t want to degrade their land.  A lot of them can see the damage current farming practices do, but most of them will not be willing, or can’t afford to make the necessary changes until they can see rewards that justify their effort and commitment of additional capital.  A few people will work and sacrifice for moral or lifestyle commitment.  Most people have to work for the money.  And that is before we have even begun to talk about realistic budgeting for not just making good the damage already done, but strengthening local environments against coming climate change adversities.

My mother-in-law was born after World War 1 and grew up in a small Greek village.  As a result of disruption to the food supply caused by the world war in 1941-2, there was a terrible famine in the towns and especially in Athens.  On the whole she and the people of her village were OK because they had hidden stores and could quickly grow for their own needs or forage for wild game and plants.

She remembers wealthy people from Athens coming into their village and trading valuable furs, jewelry and fine antiques for loaves of bread and olives.  Their middle class lifestyle assets had become almost worthless.

In effect the farm gate downstream market infrastructure is misappropriating the resources that could secure modern farming indefinitely and then blowing them on what will eventually become phantom accumulated profits which have been derived from cheap but unsustainable suppliers. And while the urban Greeks of the early 1940s could take some comfort that their food shortages were a temporary wartime aberration, first world urban populations in say the 2020s or 30s may not be so lucky.

This apparently enormously profitable rural industry is living in a fool’s paradise because it actually believes its own accounting propaganda.  Were it getting accurate data, it would be scaling back its operations (much in the same way that the fishing industry is now having to do as its feed stocks start to collapse) and allowing farm gate prices to rise to ensure security of long term supply for itself and everyone else.  High prices for farm gate product will turn the food back into a high value and rationed product and the processing industry back into a luxury end market product for the occasional indulgent treat when one can afford it; healthy for consumers, healthy for the environment and long term viable for the food processing industry itself.

Ecologically stabilizing and regenerative features in the environment are not assigned any economic value, so their loss does not register, except much later through false positive indicators that come with the industrial responses to adverse environmental events, such as insurance and reconstruction activity.
 
These activities are counted as part of the GNP, which would only be alright if they were offset against not just the direct damage write offs, but the real accumulated ecological asset losses that gave rise to the adverse events in the first place.  But they aren’t and won’t be.  So there is no built in provisioning for that, and when the inevitable happens, we’ll all be about as prepared as Britain was in 1939, for the massive German military buildup that had been going on under its nose for years.

Thus without so much as a canary chirp to warn us, huge accumulated damage could have been done in the off accounts areas that would cripple and possibly bankrupt the whole economy.

The mechanisms of production have become so powerful they have removed the traditional constraints of scarcity and the requirement for use longevity.  It no longer matters whether goods represent value on any rational hierarchy of needs or whether they are designed to self-destruct either on a battlefield or in someone’s home.  The accounting system thus makes no distinction between economic junk and essentials. Plundering and wasting resources don’t register as a macro economic negative.  On the contrary!

Capitalization and maintenance of familial reproductive and existential infrastructure are ignored, so that its accounts can be neglected, pushed aside, ransacked or taken over without apparent cost.  This asset stripping and colonization turns its product stream into dysfunctional life ruining cultural rubbish.  If economic growth means anything it has to improve the full gamut of wealth types.  If it doesn’t, it isn’t real growth so much as a pseudo-industrial caricature and rip-off.
 
Clearly an accounting system that only measures what markets require to facilitate their operations is as much propaganda and smokescreen as a measuring and analytical tool.

Realistic accounting for all the variables that contribute to the total social effort and our broadly understood capital asset base would very likely show that industrial societies have been going ever deeper into the red for a very long time.  In effect they have been fraudulently converting off balance sheet existential, social and ecological assets to conceal their real losses.  Thus the faster and longer the system grows, the more dramatically and catastrophically it eventually goes bankrupt.

It has been estimated by a joint working party of the Conservation Foundation and the National Farmers Federation that to restore the Murray-Darling River systems at least partially will cost around AU$60 billion dollars over a ten year period.  If this economic region had to pay that, it would be bankrupted, and that would be if there were no delays.  Timely external support from other economic regions might enable a restoration to proceed, but that assumes that all these other areas don’t have ecological defense, repair and restoration inventories of their own, that won’t become equally pressing during the ten year period.  Assumptions about external support that exist in the absence of an overall continental, coastal and related oceanic ecological audit and strategy plan are therefore likely to be fanciful. The potential for multiple and contemporaneous adversities as a result of long term across the board ecological damage has to be factored in.  The trouble is, the accountancy system isn’t factoring anything of the sort.

The choices maybe about whether we try to save the Murray Darling or prevent much of Australia’s coastal real estate from being ever more regularly flooded by rising sea levels, and wind damaged by ever more intensive cyclonic storms, that seem to travel further south every decade.  We may well not be able to do both.

Worse still, all the river systems across the world that have been similarly over-exploited for over a hundred and fifty years, to irrigate otherwise marginal agricultural land, are in a similarly parlous condition.  They will thus have a propensity to either collapse in tandem or seriatim, with spectacular international effect.  The survivors of the resultant demographic crash will be scratching their heads and wondering how it happened, even as they continue to inflict unprecedented accelerating production war damage on still intact ecological systems to try and make up the losses.

Whole industries can wax fat producing almost worthless product, while contributing heavily to a poisonous legacy and debt burden for generations to come.  The industrial toy money that the customers paid for their soft drinks and hamburgers only provided for the internal costs of production, which is only a fraction of the environmental and social costs.  Had there been a real user pays system, those industries would never have been considered viable on anything like their present scale and their functions would have remained largely within domestic communities.  Further, the upstream primary and secondary industries that have supplied the raw materials, machinery, transport, communications and urban infrastructure for these burgeoning pseudo-industries would now be a small fraction of their existing size if they had.

Waxing fat is a good analogy to use for pseudo-industries because although they add volume to the overall economic body, this is not normal healthy growth, but a form of industrial bloating that is analogous to obesity in humans.  Obesity puts an increasingly massive strain on the entire infrastructure of the body and eventually destroys it.
 
To accountants and economists, enormously overweight cities, sclerotic transport networks, bulgingly over-sized housing, energy and resource guzzling industries and lifestyles are a sign of security and prosperity.  To me they are a sign of a debilitating and ultimately disastrous economic health failure.  An auditing system that cannot distinguish between healthy growth and surplus bloating is fundamentally flawed.  No Doctor, no matter how incompetent, would tell an obese person that they were in good shape.  But that is what the accountants routinely do. The metaphor of uncontrolled growth through fat storage is positively benign in comparison with the other great blight of first world affluence; cancer.  Modern economics is as blind to cancerous development as it is to obesity or the intimate links between them.  Thus it doesn’t so much account as provide an apologia for invasive industrial growth that parasites, pushes aside and finally destroys its host.

Inside the tumor, right to the end, the accounting system paints a picture of a burgeoning success; of overcoming all barriers to growth and the spread to new sites.  It is a success story full of heroic little cancer cells who struggle ceaselessly to not only co-opt, but outwork, outsmart and eventually outmaneuver the opposition.  It is a world where there are no second prizes for losers! Sure, there is some damage happening outside the tumor, but shit happens.  If that other tissue became cancerous too, it wouldn’t have any problems.  We can give it aid and teach it how it’s done.  The profit/loss and balance sheets for our system tell an unequivocal story that will convince even the most skeptical immune cell.  “Eat your hearts out guys.  If you don’t, we will.”

The ideology of the cancer cell creates an aura of glossy optimism when in fact there ought to be panic.  By limiting the accounting system’s field of vision, adverse realities can be reconfigured in much the same way as they were even in the last days of the Third Reich.  Self-delusional latter-day rhetoric is as much the preserve of economists and accountants, as Nazi demagogues.

When the barbarians (whatever their configuration might be) break into the empire of capital, this fabulous wall of mathematized accounting rhetoric will promptly collapse.  Then the almost complete lack of preparation by the imperial cities to defend themselves from invasion (whatever form that takes) will finally reveal itself, but far too late for anyone to do anything to stop it.

Environmental, economic and cultural fortification and reconstruction is a vast long term investment that would take at least a generation to engineer and only if doing it at a breakneck Japanese style modernization speed that taxed populations to the hilt.  And even then, once built, things like anti-desertification tree belts and cultural reconstruction take thirty to fifty years to get up to full strength, by which time the advance of the deserts, fire and extremely aggressive and feral human behavior may have overwhelmed them anyway.  This is the fate, for the most part, of last minute acts of desperation.

And finally there is deeper blindness in the accounting system.  From an accounts perspective, there is absolutely no difference between a concentration camp, a feedlot or a forest clear fell. None waste anything of the value that can be extracted from their respective livestock.  All these enterprises reward anyone who can think of a smarter way of extracting additional value for a lower cost and keep doing it.  It doesn’t matter if ever-more-powerful growth hormones start causing heart attacks in very young chickens, as long as there are enough faster growing full term survivors to offset the additional losses.  Nor does it matter if the drugs and hormones being pumped into the supply livestock get into the top feeding livestock, i.e.; us, as long as it is kept at deniably sub-traceable levels.

When the capacity to keep extracting additional value is raised to the level of sole raison d’etre for doing anything, the account system becomes blind to all else.  Concentration camps were only shocking because the livestock was human and nothing else. All the SS did was apply ordinary industrial efficiency and accountancy principles to labor extraction, slaughter and processing.  What was shocking was that the camps seemed so ‘normal’.  What was shocking was that the guards went home to their loved ones at night like ordinary abattoir workers after a tough day at the plant.  As that notable butcher Adolf Eichmann once said, “to lose a pet chicken is a tragedy; to kill millions a year is just a statistic.”

When constantly increasing productivity requirements are imposed across the economic board, in some measure we all eventually turn into beakless, featherless, neurotic, self-harming, drug dependant, close caged ‘chickens’ who teeter on the edge of their biological capacity, at ever higher risk to themselves, each other and the broader environment.  And when it comes to an accounting for the shambles this is already causing, and the accountants say to us that they were only obeying orders, we will send them back to Nuremberg for trial!

And when the going gets really tough, as the props that hold up society and its food production base continue to be kicked away, the accountants are going to have to work out which populations have the best survival prospects and which don’t.  They will run the survival models, crunch the numbers, identify the non performers, create strategic scenarios for cutting them adrift and package rationalizations for what would once have been the absolutely unthinkable.  Naturally, it wouldn’t occur to them to do the obvious and retreat before such ‘rationalizations’ became necessary, or at least retreat before entire populations had to be, ‘let go’.