Sharon Billings
Spring 2012
Ecological Economics
1877-1956
Chemistry Advances
Coined “isotopes”
radioactive disintegration
Modern atomic theory and structure
Nobel Peace prize 1910
Professor at McGill, Glasgow, Aberdeen, and Oxford
After WW1, started looking at worlds problems
Conclusions:
Problem was not science, but scientists did have
blame for contribution to society
Economics = pseudoscience
Faulty
Unsafe with science advances
Good and evil
Must change economics
Soddy decided to analyze and find solutions to the
economy and it’s institutions
Free of paradigm of economics when he started his
analysis
Contempt. Lots of Contempt.
Review of Wealth, Virtual Wealth, and Debt
Sad to see a respected chemist ruin his reputation
by writing on a subject about which he was quite
ignorant. (The Times Literary Supplement)
The principles and ethics of human law and convention
must not run counter to those of
thermodynamics (Cartesian Economics)
Soddy’s basis for critique of economics as a perpetual
motion machine
“how does man live? On sunshine”
Sunshine = continuous flow of energy
Not a stock source
must obey the laws of thermodynamics
Real Wealth
Not material goods
Matter and energy useful to humans
2 dimensions
Physical: matter – energy
Theological: usefulness subject to mind and will
Wealth
Physical, subject to physics
Eventually will degrade
Debt
Imaginary quantity
Subject to mathematics
Endures forever
Actually a lien against future sunshine because
sunshine rates are constant and don’t grow at
compound interest rates like debt
Not a 1:1 ratio = compound interest will eventually
create inflation and bankruptcy
Ex nihilo: out of nothing
wealth can’t be created this way, so money (debt)
shouldn’t be either
Main Problem: banks create money
Becomes virtual wealth of community
National debt is money
Doesn’t obey laws of conservation
Negative wealth quantity
Money used to replace bartering and inconvenience
Virtual wealth = utility cost of holding money
Banks are counterfeiters
Have made a mockery of measurement standards
“ convert pounds of sterling to rubber yardsticks”
Banks must have 100% reserves
Could no longer create money
Virtual wealth ownership restored to state
Maintain a constant price-index
Falls: government prints money, lowers taxes,
redeems interest on national debt
Deflation corrected by money-creating gov’t deficit
Raises: government raises taxes and doesn’t spend
revenue
Inflation corrected by money-destroying gov’t
surplus
Freely fluctuating exchange rates internationally
World payment maintained in equilibrium
Purchasing powers among currencies
Eliminate inflation and deflation pressure between
economies
Free trade regulation, such as tariffs, would disappear
Morals
Let us have an end of the pretence that economics
should not be concerned with morals.
(Role of Money)
Economics should have honest weights and
measures under exchange
Current system gives false accounting
References
Daly, H. E. 1980. The economic thought of Frederick Soddy.
History of Political Economy. 12 (4): 469-488
Daly, H. E. & Farley, J. 2004. Ecological Economics: Principles
and Applications. Washington: Island Press.
Soddy, F. 1921. Money versus Man. England: Purnell and Sons.
Soddy. F. 1933. Wealth, Virtual Wealth, And Debt. USA: E.P.
Dutton & CO. Inc.