Mud City Press

John Michael Greer's


Economics as if Survival Mattered

(New Society Publishers, May 2011; 263 pages, $18.95.)

Reviewed by Frank Kaminski

Having written extensively on occultism and the esoteric, and himself an adept in ritual magic, John Michael Greer is an eager student of the unexplained. Yet he's also a sharp observer of the unexamined assumptions that people make about the physical world around them, and how these assumptions have helped land the world in its present crisis. One common presupposition is that nature is independent of the world of human economics, and thus can be treated as a disposable resource. An environmentalist and a devout follower of the druid path, Greer knows better, and he's written several books seeking to dispel this mistaken dismissal of nature.

The most recent, The Wealth of Nature, argues that modern economics has failed us because it doesn't grasp the true source of wealth. While Greer admires Adam Smith's seminal book The Wealth of Nations, he rejects its opening assertion that a nation's consumption of goods and services is subsidized by its annual labor. The truth, he says, is that these things are provided for by the natural capital that makes human economies possible in the first place. And support for his argument can be found in a growing body of scientific research, with one Nature report suggesting that as much as 75 cents out of every dollar owes its existence to natural processes.*

Marching Gas Pumps

Other charges that Greer levels against modern economics are that it consistently makes off-base predictions, relies on cooked and irrelevant numbers, believes in the myth of free markets and ignores non-economic factors that affect economic processes. As two examples of the latter, he cites the crowd psychology that feeds speculative bubbles and the principles of physics and geology that limit the amount of energy ultimately available to a society.

Greer describes conventional economics as a superstition and one ill-adapted to today's world of dwindling resources. Nowhere is this more apparent than with energy. Economists tend to insist that energy will never become scarce because the invisible hand of the market will always guide us toward bigger and better energy sources. The trouble is, now that world oil output has peaked and begun its irreversible decline–statistics show that peak oil, as this phenomenon is known, happened in 2005–the only fuels left are the dirty and hard-to-access ones that were uneconomical when oil was cheap. The lifeblood of industrial civilization is draining away, and economists are oblivious because they don't see that physics trumps economics.

Their cluelessness, believes Greer, is a luxury that coming generations won't enjoy. Greer foresees that as ecological limits tighten, we'll come to learn and appreciate the true hierarchy of economies at work. This hierarchy begins with what the late E.F. Schumacher, of Small is Beautiful fame, identified as the "primary economy" of nature, followed by the one of goods and services that we've been taught to think of as central, but that Schumacher deemed secondary. Coming in last in importance is the "tertiary" economy of finance, Greer's own addition to Schumacher's model.

From this perspective, it's easy to see that the stimulus spending frenzy of recent years has served only to artificially inflate the tertiary economy to insane new heights. It hasn't driven economic activity on the ground, because that would require an increase in the primary goods supplied by nature. Instead, natural resources have continued depleting and industrial economies hurtling toward bankruptcy.

Greer likens the people of the industrial world to a lottery winner who's blown her winnings and is scrambling to maintain a bloated standard of living by racking up debt. The true task before us isn't to try to sustain this standard of living but to drastically curtail it to fit the resource base. To quote sustainability scholar Warren Johnson, we must begin "muddling toward frugality." Greer heartily endorses Johnson's book of the same name, published amid the energy crises of the '70s, because he believes that its proposal is the only option left to us. Of course, the notion of muddling is anathema to our society's faith in grand technological fixes; but Greer reasons that when a ship has already struck an iceberg, "it's a bit late to suggest rebuilding it from the keel up according to some new scheme of naval engineering."

Central to our muddling process will be relearning how to grow our food and make the products that we buy today. These were both done in households across the developed world until quite recent times. Indeed, Greer points out that before the concept of retirement became widespread, older relatives earned their keep by providing goods and services to the rest of the family. Greer recommends that anyone 30 or so years out from retirement plan on never being able to retire, and instead try to become useful in a household economy. These economies will once again become a necessity, because less money spent on basic necessities will mean less vulnerability to the increasingly troubled money economy.

Since energy scarcity is at the heart of the transition ahead, Greer also gives detailed consideration to energy conservation measures. Our current way of life involves grossly inefficient use of highly concentrated energy. Conventional ovens, for example, work by turning natural gas or electricity into diffuse heat, rather than simply tapping a source of naturally occurring diffuse heat: sunlight. The most energy-dense fuels ever known to humans, fossil fuels, have thus far been so cheap and plentiful that we've been able to shrug off such inefficiencies. But with these fuels depleting, we need to make the most of diffuse energy technologies like solar ovens, solar water heaters and passive solar heating, and to reserve fossil energy for things that require it.

We also need comprehensive changes to the tax code and the yardsticks by which we measure economic progress, thinks Greer. He recommends eliminating all taxes on the secondary economy–i.e., sales tax and taxes on income from wages, dividends, rents and so forth–but taxing financial income and the extraction of natural raw materials. These changes would help spur investment in the secondary economy, control the excesses of the tertiary economy and encourage companies to recycle rather than take resources from nature. He also suggests scrapping the arbitrary gross domestic product (GDP) as a measure of economic productivity and replacing it with the gross primary product (GPP), gross secondary product (GSP) and gross tertiary product (GTP). This would allow us to track the relative movements of the three economies so that any divergences, such as a speculative bubble in the tertiary economy, could be promptly corrected.

Reintegrating nature into economics will mean undoing the trend toward economic abstraction that has turned the economy into a proverbial house of cards supported by imaginary wealth. The fatal mistake of contemporary economics, believes Greer, was to mistake the abstractions for wealth, when they're actually measures of wealth. Greer argues that economics became overly obsessed with the measurable and the quantifiable in its rush to emulate the precision of science; and with his studies into otherworldly phenomena, Greer is in a unique position to understand the folly of this type of myopia. "What can be measured," he explains, "is only a subset of what can be known, and what can be known, at least in any given situation, is only a subset of what exists."

The Archdruid Himself

It's been five and a half years since Greer began writing about peak oil and its implications for modern society on his blog, The Archdruid Report (which takes its name from his position as Grand Archdruid of the Ancient Order of Druids in America). Originally writing for a druid audience, he expected to reach maybe 20 readers, and he's been amazed to see his blog translated into half a dozen languages and parlayed into books.** Yet its terrific following really isn't so surprising: druids may represent a tiny minority of the population, but their concerns are on an increasing number of minds, for good reason. And we all could do worse than to learn from them.


* R. Costanza et al., "The value of the world's ecosystem services and natural capital," Nature, issue 6630, vol. 387 (1997): 253-60.

** John Michael Greer, interview with Steve Patterson, "Episode 78 - The Mythology of Progress with John Michael Greer," Two Beers With Steve, Dec. 31, 2010, (accessed Nov. 27, 2011).