A resilient future (or a resilient present, for that matter) needs to be slack, not taut.
What do we mean? Core to the concept of a Lean Economy is understanding the need to move toward a “slack” market rather than one that is “taut.”
When British economist David Fleming died unexpectedly in 2010, he left behind his great unpublished work, a masterpiece more than thirty years in the making—the startling and inspiring Lean Logic: A Dictionary for the Future and How to Survive It.
The threads running through every entry are Fleming’s deft and original analysis of how our present market-based economy is destroying the very foundations—ecological, economic, and cultural— on which it depends, and his core focus: a compelling, grounded vision for a cohesive society that might weather the coming collapse. A society that provides a satisfying, culturally-rich context for lives well lived, in an economy not reliant on the impossible promise of eternal economic growth.
A key concept in this radically different economy is letting go of the classical notion of the “taut economy”. Fleming’s economy is “slack”, and deliberately so. The below entry from Lean Logic explains these concepts, with reference to real-life examples showing just why they are so crucial.
So, to the generation(s) that have been called “slackers”, now is the time to rejoice. You had it right all along.
Slack and Taut. The two ends of the spectrum of *connectedness, and one of the three pairings of properties which define the extent of a system’s *resilience.
Slack is central to the ability of a system to recover from shock. It enables it to cope with losses, and it makes space for *choice. It is also needed in well-defined ways for that special case of resilience—a post-industrial *Lean Economy.
By contrast, a price-based economy is taut. For goods to command a price they must be scarce, and a taut *market is one in which this scarcity is present. As summarised in one of the defining phrases of economics, attributed to Lionel Robbins: “Economics is the study of scarcity”—a shortened version of what he actually wrote in his Essay on the Nature and Significance of Economics,
Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.
A good or service is scarce if its production or consumption incurs an *“opportunity cost”—the loss of the benefits that could have been derived if the resources and time used for the chosen task had, instead, been used for something else (like leaving the money in a savings account to earn *interest, or buying something else with it). Opportunity cost is a central idea because it is intrinsic to the mechanism by which prices are set.
For example, a person does not have to accept a low wage if there is an alternative which would pay more. But consider the case when there are, say, more apples around than people can eat, or more available labour than job vacancies. There is no scarcity, no tautness—the economy is slack. In such circumstances, apples and labour have no opportunity cost: some (or many) remain unused and command no price.
In the case of labour, this is mitigated by state benefits paid to the unemployed. But when unemployment reaches the point at which the government’s tax revenues are so reduced that it is unable to pay unemployment benefits (the case of *hyperunemployment), the possibility of the opportunity cost of labour falling to zero—where jobs pay nothing because the alternative is no job at all—becomes more than theoretical.
Now, slack in economics occurs in two forms:
This is the case where the economy falls into depression which, at its extreme, matures to hyperunemployment. Reasons why that can be expected after the *energy peak are outlined at the end of *Lean Economics. At the heart of such a situation there is a *paradox, since there is both glut and famine at the same time. There may, for instance, be an abundance of apple orchards, abandoned because no one has the money to pay the farmer for the apples he could produce from them, thus leaving abundant food-growing potential untapped while people starve. Or there may be an abundance of labour, with plenty that needs doing—and yet that “plenty that needs doing” doesn’t happen, owing to there being (for instance) no fuel to supply the *energy it needs, and/or no money to pay for it.
In a moderate form, and if the problem is the lack of money, this can be repaired, since governments can redistribute income to those who would otherwise have none; or spend heavily; or “print money”. In an extreme form, there are so many without jobs that there is not enough tax revenue to redistribute or spend, and any government temptation to print money will immediately short-circuit into inflation. Recessions are dark reminders—or precursors—of the failure of urban economics when the large, city-based labour forces can no longer be sustained, since labour commands no price.
This is the case where an economy learns to coexist with slack. It might, for instance, work a standard 2½-day week to reduce the demand for jobs, and/or use uncompetitive and labour-intensive (but *eco-efficient) methods of production to increase the supply.
In an obvious sense, this state of creative inefficiency is irrational: why should buyers in the market bear the high costs that this would bring? In a taut market, governed by price, there is no answer to that: such inefficiencies would be wiped out in a moment and, on the large scale, this is a problem to which there is no solution. If some of the (part-time, creative and inefficient) workforce decided instead to work a full week and use the most efficient methods available, others would follow—some would be fully employed and some would not be employed at all; there would be excess labour, and wages would collapse to zero.
However, in an intentionally slack market there is a deliberate decision to build and sustain a *locally-based economy with a much lower level of output and consumption than it could produce if it were taut and *competitive (*Growth).26 Its maintenance requires that work is shared out; that the inefficient technology is freely chosen; that nature is spared. This settlement, quite fragile—like our planet *Gaia herself—is the core principle of *lean economics.
On a small scale, intentional slack can be done easily enough (see “Slack and Evolution section below). For example, the *informal economy of the domestic *household is prodigal with labour, and if it had to compete on price it wouldn’t have a chance. It works because price is nothing to do with it, and it is this kind of essential-yet-slack economy which holds out to us the possibility of a future. But it is *protected by having opted-out from the competitive *market, and it is not easy to sustain such agreements at the *large scale.
Nonetheless, most human societies in the past, outside the taut, tense experience of urban civilisation, have been slack in this sense. Here, for example, is the historian Juliet Schor’s view of the mixture of working life and days off in the Middle Ages:
The medieval calendar was filled with holidays. Official—that is, church—holidays included not only long “vacations” at Christmas, Easter and midsummer but also numerous saints’ and rest days. These were spent both in sober churchgoing and in feasting, drinking and merrymaking. In addition to official celebrations, there were often weeks’ worth of ales—to mark important life events (bride ales or wake ales) as well as less momentous occasions (scot ale, lamb ale and hock ale). All told, holiday leisure time in medieval England took up probably about one third of the year. And the English were apparently working harder than their neighbors. The ancien régime in France is reported to have guaranteed fifty-two Sundays, ninety rest days, and thirty-eight holidays. In Spain, travelers noted that holidays totaled five months per year.
It was backed up by a well-established *ritual year, and when the rituals came abruptly to an end in the Reformation, the feast day slack was stopped too; in England by the Act of 1536, which allowed itself a rant at those who ought to be at work “being enticed by the licentious vacation and liberty of these holidays”. A strong *culture that can support slack has been in retreat ever since. But the inconvenient truth is that, as the economy now begins to decompose, we have to rebuild a slack society to take its place.
The opening up of *choice—not least choice in the use of time—allows the economy to be interesting in a way which is impossible if it has to make *money with nearly everything it does. And yet, a market that is slack in terms of its relaxed use of labour, *capital and *land is unstable: it could at any time snap back to taut, full-time competitive employment for some (for a time), along with destitution for the rest.
Stopping that happening calls for things that are anathema to a *competitive economy: local *loyalties and *currencies, collusion and cartel, culture and confidence that it knows what it wants and where it is going—that it can choose how to live (*Leisure).
*Introduction • Slack, Resilience • Resilient Systems • Connectedness, Lean Economics.
Slack and Evolution: Making space for trial and error
Freedom from the taut determinism of price competition opens up the space to develop flexible relationships. Instead of the written plans which effectively rule out *incremental experiment and advance, there can be evolution in the light of experience. Initiatives can be explored, with risks limited by their *small scale. In a slack system, there is the possibility of building elbow-room into *contracts. That is, contracts may have sufficient slack to allow for the unforeseen, as in the principle of “relational contracting”, where there are informal agreements, unwritten codes of conduct, and relationships based on long-term loyalties which survive short-term trouble. Though practised since the dawn of *cooperation, this network of informal contracts only began to be recognised in *economics following the influential work by Oliver Williamson in the 1970s. The *reciprocal obligations sustained by local lean communities, based on *trust, will depend on flexible agreements if they are to last through periods of profound surprise and change.