Economics for the Anthropocene

Wildfires next to the A2 in Kent on the hottest day on record in Britain. Still from video by Tim Cross.

Apologies for the delay in publishing - I was tied up with organising this conference on progressive economics (follow link for the recordings!), and am still trying to get the book finished. In the meantime, here is the text of a talk I planned to deliver at Contra El Diluvio’s meeting in Madrid last month. I ended up not really sticking to this script at all, and talking a lot more about the politics than the theory, but I thought it might be of interest, anyway - looking in particular at how generalised environmental instability is a theoretical and methodological challenge to economic theory and practice.

I wanted to start with this quick illustration of our current predicament – the chart below, showing recent movements in the price of bitcoin in US dollars, and US avocado prices in US dollars. As you may have seen, Bitcoin – heralded by its army of true believers as the route out of capitalism dominated by “fiat” currencies and the beastly central banks that sustain them – has recently plummeted in value. Far from acting as a “hedge” against inflation in fiat currencies, bitcoin, like other cryptocurrencies is now working in almost exactly the same way as other assets: declining at the same time – indeed significantly more than – the value of fiat currencies and other assets.

The reason is not too hard to spot: the bigger crypto currency has got, the more it has escaped from its beginnings as a peculiar form of near-money experimentation and increasingly attracted major investors – including the inevitable Elon Musk, with Tesla remaining amongst the largest single holders of cryptocurrencies on the planet – it has attracted the attention of increasingly conventional financial institutions, from major banks to hedge funds.

That, in turn, has meant an integration of crypto into the conventional functioning of the financial system, and the loss of its assumed claim to act as a hedge against financial turmoil appearing elsewhere. To the extent that cryptocurrencies are themselves increasingly leveraged, they are liable to act as a transmission mechanism between different parts of the financial system, and actively magnify instability appearing elsewhere in the system across different parts of it. There have been some spectacular crypto blowouts in recent months, notably