Want to know how economies work, why sometimes they don’t, and what you can do about it? Me, too. But we can not turn to conventional economics for answers. We need to move on ... to geonomics.
What’s geonomics? “Geo”, as you know, means earth. The etymology of “nomos” went … field, yield from the field, rules/order used to manage the field, finally law. Literally, “geonomics” means “Earth law” or "natural law".
Geonomics is not a subset of economics or a kind of economics but an upgrade from economics. And that old field needs it. Badly. Not to beat a dead horse (and economics was never much of a stallion), but that discipline has got problems.
Not the least of an economist’s problems is measuring. For economists, counting is challenging. Every month, the BEA corrects its figures. These fudgey statistics, economists self-importantly call “data”. They’re not. Data are parts per billion in chemistry or angstroms in physics, not tabulations way off by huge percentages.
A bigger problem than statistics is politics. Like history—winners write history—economics gets disciplined by the ruling elite. Not directly, not any longer at least, not since the late 1800s when land was still visible. Since then, the rich haven’t had to. Institutionalization of landless economics has seen to that. And normalcy bias has kept it that way. Doing economics without land is like doing meteorology without rain. Economics is too politicized to become a science. Students get a BA, not a BS.
For economists, everything that happens in economies is a consequence of the old industrial capital guys versus labor guys, and of the modern business-vs-consumer. They leave out the non-human factor—land, including environment. Both land—the foundation of fortunes, still—and rent, which the BEA shows to be the biggest part of the GDP, are taboo and ignored, unless you’re an economist who does not mind jeopardizing your career. (Raise your hand; I can’t see you way in the back.)
Besides land, they leave out wherein economies take place. Context or environment is huge in a real science. For economies, it’s the social context, consisting of custom and law. Call it “order”. For example, hold land, labor, and capital equal in two different societies, one free, one slave, and the free one outproduces the slave one, due only to freedom. Do the same for two communities, one of low crime (usually “oriental” or East Asian), the other of high crime (usually black or latino, sorry to say). Again you see the disparity in output and income.
Those examples of Order are on the culture side—customs. On the law side, you have government granting privileges that tilt the playing field. These are huge. If you look at official stats, those rough numbers are good enough to show that labor vs capital is not the main event in the center ring. Instead, it’s rentier vs. rent payor.
These four factors—Order, Land, Capital, and Labor—were not created equal in accumulative power. State taxation trumps the other three. Landlords charging rent trump the other two. And capital paying wages trumps the last one, labor, who only trump the family pet. Even labor unions can not compete with trade associations. Hence most surplus does not accrue to most people.
Obviously by now, economics is flawed. If science historian Thomas Kuhn is right, a flawed field can not be fixed. It must be replaced, and replaced by outsiders and an upcoming generation. Just as astrology yielded to astronomy and alchemy yielded to chemistry, so must economics yield to geonomics.
What does geonomics have going for it? What makes it a science while economics is not? For starters, geonomists notice how economies are part of the embracing ecosystem, sharing at least a dozen key features. One is filling every niche.
Economists call what they do “the study of scarce resources”. Yet that worldview—poverty consciousness—ignores reality (one of the requirements for being an economist). Check out economies. They can not help but churn out a surplus.
Indeed, that’s why we have economies instead of each person doing all the producing one needs by oneself. Instead, human societies divvy up the work (members specialize), enabling each to crank out more than they could alone, then trade with other producers to get what all they need.
Some societies progress. They produce bigger surpluses. Not just from techno-progress (capital in the physical, not fiscal, sense). Not just from education (improved labor). And not just from climate change lengthening growing seasons (land in the old triad). But also from social progress (the Order factor economists turn a blind to). Like more equality of opportunity and less crime, etc. All four allow fatter surpluses.
Citing Land and Order, geonomics fills in the blindspots of economics. It looks at each phase—production, distribution, consumption, and protection (where privilege comes in)—to answer quite innocently: who does the work and who gets the wealth? Geonomics is comfortable saying the emperor wears no clothes and points out the elephant in the room.
Bestselling author Thomas Piketty was mistaken to blame capital for the persistent wealth gap. Matt Rognlie (a former Portland neighbor though I didn’t know him) showed the real beneficiaries have been landowners. I add privilege-holders. Those two, by far.
Leaving out land, economists can not do what a real science can—predict—the acid test of a science. Paying attention to the 18-yr land-price cycle, geonomists can and do regularly. Geonomists forecast the last recession, in print, a decade in advance, and explained when and why it had to happen. None received any prizes or any press. It’s economists—who can not predict—who garner all the attention. Normalcy bias favors social success, not learning success.
Of course you can find some individuals who call themselves economists doing research along some of the lines noted above. But those few don’t define economics as a whole. Nor can they forecast.
Interestingly, economists borrowed “rent” (land output surplus) to refer to privilege output surplus. So there is a conventional sense of earned vs unearned, so to speak, albeit speak incorrectly. All output is earned. Sometimes by individuals, sometimes by community, the creator of location, location, location.
Land, of course, needs nobody’s labor or capital to exist. Nor does privilege, outside of the labor of lobbying and the capital of political contributions. While society does not make land, community does generate its value, by their mere presence!
Letting rent—location value—collect in the few pockets of speculators and lender distorts the price of land and that distorts the prices of labor, capital, and order. Price is to production what genes are to reproduction—distort the former, mutate the latter. Markets work better when prices precisely reflect true value.
Thus geonomics suggests a fundamental policy of revenue reform. Mainly, require government—society’s agent—to recover socially generated values, mainly the values of location, and also of privilege, like monopoly patents (flags on the field of knowledge). Then disburse the revenue as dividends to citizens. Everyone getting a fair share would lengthen everyone’s leisure. That, not GDP, should be the key indicator.
So now you know. That’s what geonomics is. Want to help it along?
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JEFFERY J. SMITH published The Geonomist, which won a California GreenLight Award, has appeared in both the popular press (e.g.,TruthOut) and academic journals (e.g., USC's “Planning and Markets”), been interviewed on radio and TV, lobbied officials, testified before the Russian Duma, conducted research (e.g., for Portland's mass transit agency), and recruited activists and academics to Progress.org. A member of the International Society for Ecological Economics and of Mensa, he lives in Mexico. Jeffery formerly was Chief Editor at Progress.org.