The Structural Flaws of Global Economics and the Problem of Erroneous Value Equation

A living whale swimming in the ocean has no economically recognized value to anyone, but harpooned, is worth up to a million dollars as meat. A 2,000 year old redwood tree that produces oxygen, sequesters CO2, cleans toxins from the atmosphere, stabilizes topsoil, prevents flooding, and creates habitat for pollinators and other species that are crucial to the functioning of our biosphere, confers economic advantage to no one. But cutdown, makes $100,000 worth of virgin lumber.

Excerpted from Daniel Schmachtenberger:

“Global economics has several core structural flaws (that have not been addressed in any industrialized system of economics to date) that make major environmental and social harm, including world hunger, unavoidable, irrespective of the specific people involved.

I will address some of these flaws here just deeply enough to demonstrate the level at which economics has to change, and to underscore the necessity of these changes to bring about a world of sustainable sufficiency:

* The value equation

What determines the relative economic value we place on one thing compared to another? Why is gold valued at $1,200 per ounce while air has no assessed value? Our human values both inform and are reinforced and conditioned by the value equation economically. Several of the core drivers of the valuation process create an economic incentive that is antithetical to environmental sustainability and human flourishing for all.


A living whale swimming in the ocean has no economically recognized value to anyone, but harpooned, is worth up to a million dollars as meat. A 2,000 year old redwood tree that produces oxygen, sequesters CO2, cleans toxins from the atmosphere, stabilizes topsoil, prevents flooding, and creates habitat for pollinators and other species that are crucial to the functioning of our biosphere, confers economic advantage to no one. But cutdown, makes $100,000 worth of virgin lumber.

Our value equation is extractionary and commoditizing. Even the phrase “natural resource” assumes the extraction and commodification of what was once a part of a living ecosystem. This is exactly why we have decimated 90% of the large fish populations, 80% of the world’s old growth forests, and caused more species extinction than we have been able to account for. This is also why we enslave whole species, at forced populations greater than our own, in conditions that future historians will catalogue along with concentration camps and slavery ships as tragic examples of human power, pre-civilization.

As long as the other species with which we inhabit this planet are worth more to us dead than alive, more enslaved and commodified than free, and only have assessed value insofar as they can be used to meet an immediate need of ours, not recognizing sovereignty or intrinsic value on the balance sheet…then we will continue rationalizing violence and extracting faster than renewability, eroding the very cliff on which we stand.

Our extrinsic only, commoditizing valuation system applies to other people just as much as it does to other species. This is why the aid of wealthy nations to poor ones is limited by the rationalizable case for ROI. The manufacturing of goods, including of foodstuff, for the industrialized world,depends on cheap labor from the developing world. This system of profit margin is not only predicated upon but also requires the continuance of massive economic disparity.

This is not just self-serving interest, but shortsighted self-serving interest. Beyond a living tree’s value to the rest of life, or itself, it is producing the oxygen that I breathe. That does something more fundamental for me than anything I can do with the tree. But my cutting this one tree (or forest) down won’t ruin the entire atmosphere, so I breathe either way. But me cutting down this one tree does confer immediate and tangible economic advantage to me that I wouldn’t have otherwise. It is a whole population thinking this way, because the structure of incentive within the system predisposes that, that has us nearing the end of a savings account we are not equipped to replenish nor yet prepared to live without.

Related to extraction is the expectation for continual growth, which is clearly not possible on a finite planet. Continued evolution of scientific insights and technological resource efficiencies leading to a continued increase in quality of life is possible sustainably, but requires a closed loop economic model based on evolving homeostasis rather than continued exponential growth.


What extraction is to the front of a linear materials economy, externalization is to the end of it. With the integrity of the commons not represented on anyone’s profit and loss statement, the more of the cost of operations can be externalized to the environment and others, the better the profit margin.

Hence, the agricultural run off, the mercury in the ocean, the deserts and landfills taking the place ecosystems once inhabited, the “waste” marine life accidentally killed in drift nets and long lines, and the general blind eye to the immense suffering induced in the pursuit of narrow success metrics.

If the cost of a landmine included the cost to remove it afterwards (let alone to try and remediate the irreparable harm to human life caused in its use), there would be no land mines. Real cost accounting would mean the military industrial complex would operate at an astronomical loss. Without the majority of the cost being unaccounted for, i.e., paid for by somebody else, war would be the least economically viable solution to conflicts, which would motivate the development and utilization of other strategies.

If the cost of a hamburger included the cost to clean the water used in its production, to sustainably manage the soil used for growing feedstock, to remove the methane and CO2 produced from the atmosphere, to tend to any resultant health issues in the people consuming it as a result of the antibiotics, hormones, or steroids used, to remove the pesticides from the environment, etc. (not to mention the cost of suffering to the animals or intrinsic value of life taken, which is impossible to calculate a value for), current methods of industrialized animal agriculture would be the most expensive way of producing food ever attempted.

In order for the strategies we develop for feeding people to be sustainable, they have to inventory and internalize all the costs associated. That imperative is not incentivized or even possible (to maintain competitive status) within the current valuation system.

If we inventoried and internalized all the externalities within the value and profit equation, economics would spontaneously incentivize behaviors that supported sustainability.


As long as a thing’s scarcity adds economic value on top of its real use value (whether it was scarce or not), there will be economic incentive to artificially manufacture and maintain scarcity even where otherwise avoidable. Technology’s capacity to create more abundance through increased efficiency will not be fully utilized within an economics where abundance results in lower valuation.

Where food is an economic commodity whose scarcity informs its price and thus the profitability for the most powerful stakeholders affecting the equation…and the profitability of that industry affects the homeostasis of the stock market and economics as a whole… The technologies and strategies that could produce the most sustainable abundance are directly opposed to the highest valuations for those vested in the current commodities market, i.e., sustainable global food sufficiency would be economically disadvantageous for those who have the most influence over current food production.

This is the underlying reason farmers have been paid to not grow food and why speculators drive the commodities prices high artificially, exacerbating hunger for the poor who already couldn’t afford enough.

This is why to date, air, which is seen as abundant and universally available, has no assessed value, despite its foundational role to life…while gold, which is seen as relatively scarce (factoring both total amounts and the associated extraction and refinement costs) is given a high value, independent of any real use value or lack thereof. This is why we will clear cut a forest (and damage the atmosphere in the process) to mine the gold underneath it, to put it in bars in safes serving no real value to anyone.

The value focus on scarcity is based on the underlying goal of maximizing differential advantage rather than systemic advantage. This causes unavoidable violence.


Essential to all these elements of the value equation is the concept of separate ownership. Separate ownership, at the level of an individual, family, corporation, or nation, creates a line where extraction and externalization on one side equals prosperity to the other. It is the basis of the drive for differential advantage, hoarding, and decreased sharing, resulting in decreased efficiency and thus systemic insufficiency. Separate ownership minimizes synergistic advantage and works in the opposite direction of empathy, extended responsibility, and intentional symbiosis.

As long as there is separate ownership, some people will be born into greater economic advantage than others, having nothing to do with merit, leading to socioeconomic stratification and class systems. Those with more resources have more to be creative with (and visa versa) leading to a perpetual widening of the gap and ever-greater resource disparity. This disparity is the primary driver of crime and war.

This system of resource allocation creates additional unnecessary scarcity through decreased circulation and sharing. In response to the resultant crime,which is an impulse towards equality and homeostasis, we invest the largest fraction of our already scarce resources into protecting the scarce resource stores, further perpetuating the underlying imbalances.

A world without war, crime, and poverty, requires a fundamentally new structure for resource access and allocation, and individual motive, not based on separate ownership.”

Source: Written for the World Technology Network’s World Hunger Challenge

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