finance is how society chooses its future
If climate science has it right, we have to stop releasing fossilized carbon into our sky chemistry through the combustion of coal, oil & natural gas to generate the energy we use to light our homes and power our economy.
Maybe not stop, entirely, but cut back, transformatively.
For hundreds of millions of years, Nature has been slowly been taking carbon out of our sky chemistry through the processes of photosynthesis and fossilization. Through photosynthesis, as we all know, plants take energy from the sun and trap it inside chemical bonds between atoms of carbon, hydrogen and oxygen to form carbohyrates. Carbohydrates are carbon-based solar batteries that are the source of energy that powers all animal life on earth, including our own. Through fossilization, carbohydrates that get buried under the earth, get transformed under pressure over many millions of years, into the hydrocarbons that we know as coal, oil and natural gas. Over hundreds of millions of years, vast quantities of carbon have been taken out of the earth’s atmosphere, through photosynthesis, and stored underground, through fossilization, to bring about the current point of thermodynamic balance between the earth and the universe that gives us temperate climates and places where people can prosper.
In a little more than 200 years, people have released so much of that fossilized carbon back out into our sky chemistry, through the combustion of coal, oil & natural gas to light our homes and power of our economy, that we are rapidly approaching a point where climate will change in ways that are decidedly adverse to people prospering.
What are we going to do?
We have this choice. One consequence of our fossilized carbon fueled prosperity of the last 200 years is that we have learned a lot about energy. We now know about other chemical processes that can capture the energy from the sun and change it into electricity, through photoelectric cells that are functionally analogous to photosynthetic cells. We know that solar insolation heats the earth, unevenly, causing air to move thermodynamically – as wind. Another way the energy from the sun is available to us on earth. We can harness the wind to spin turbines and create electricity. We also know that winds blowing across the vast expanses of the sea puts the water into motion, creating waves. Can we capture the solar energy stored in ocean waves to make electricity? We know that the earth is hot at its core, and releases heat out into space at a constant rate. Can we capture some of that heat, and covert it to human uses, before it continues out into the universe? What about the process of photosynthesis itself? Can we grow crops to create energy in useful forms, as well as food we like to eat?
The point is this. The civilization we built on the combustion of fossilized carbon has evolved to the point where we new have many different technologies available through which we can continue to harness the energy about us to do the work we want to do to build the civilized way of living we choose to live.
What choice will we make? How will we make it?
We have seen that civilization is made and sustained through specialization and exchange. We have seen that specialization and exchange are organized through enterprise. We have seen that enterprise concentrates the efforts of a few on creating a surplus of artifacts of technology that it exchanges with others for a share in the surpluses others create through their own enterprising concentrations of effort.
Enterprise is organized by enterprising individuals, who have an idea for doing work that others will like enough to pay them for, and gather the resources required to execute that work, at scale. Enterprise needs money to aggregate its resources.
When enterprise needs money, finance provides it.
Finance is how society decides which ideas for creating artifacts that change our world can, should and will be expressed through enterprise.
Finance operates always in the same two movements.
- It aggregates small surpluses saved by individuals living within an economy.
- It deploys those aggregations to sponsor enterprises to evolve that economy, as things change, and people adapt.
We are taught today to conceive of Finance as one monolithic and mysterious system of money, banking and securities trading. The Wall Street system. Confusion is rife within this conception of finance. Much of this confusion is created by the common convention of calling this conception of finance Capitalism, and asserting that this Capitalism is somehow existentially the opposite of other forms of -isms that are not clearly defined, but maybe can be grouped together for convience under the rubric of Statism.
The difference between Statism and Capitalism is real. The existential threat that one ism presents to the other is greatly exaggerated.
A less confusing conception of finance sees Statism and Capitalism as two different technologies for financial decision-making, each purpose-built to value the values it values, and to choose enterprise according to the logic of those values that it is built to value.
Some may object to calling the isms a technology. It is common to equate technology with gizmos and gadgets. We use “technology” more broadly, to refer to practical knowledge of how to do work. Sometimes the knowledge and work of a technology gets expressed in a device or machine. Other times, it is a human system of disciplined decision making. Financing technologies are disciplined decision-making systems.
Capitalism has laid claim to being one particular financing decision-making system. It may also be used to refer or point to all the different forms of financing decision-making that a civilization may choose to use, all the different capitalisms available to any given society for choosing which ideas for making prosperous adaptations to life’s constant changes can, should and will be evolved through enterprises of different kinds.