Eucatastrophal Phoenix

The Fairest Societies are the richest

When the Black Death swept through Europe in the mid-14th century, serfdom and villeinage were prevalent. Common people were thralls, tied to their manor by law, as they had been since the Colonial Edicts of Diocletian, a millennium prior.

The plague changed this long-held balance. It attacked indiscriminately, thinning every echelon. The loss in population drove up the value of labour and bargaining power, while gaps in the hierarchy let bold and lucky folk climb in social rank. Nouveau Riche burghers applied their wealth and influence to advance culture and learning, founding universities, and boosting the nascent renaissance and encouraging the Age of Discovery.

Europe had suffered massively from the ruthless Mongol Invasions, desperate sieges, the start of a Little Ice Age, popular revolts, a great number of wars, and a long, drawn-out terrible famine. The plague, which took the lives of perhaps half the population, was the coup de grace on a long line of catastrophes. That the scrappy and beleaguered European civilisation survived at all is surprising enough; that it arrived at a favourable outcome after such tumult, and rose to global pre-eminence shortly thereafter, borders on the absurd.

In many ways, this period is a eucatastrophe: a terrible journey that somehow turned out favourably for the sufferers in the end. It seems especially strange given how the same war-and-plague combination led to devastating, terminal outcomes for other civilisations, such as the Inca and Aztec.

In our time, our civilisation faces mounting pressures: climate change, ‘forever’ pollutants such as endocrine disruptors, systemic risks from long supply chains, rampant financialisation, enormous public debt, and the omnipresent threat of nuclear annihilation.

Will these stressors finish us off for our hubris, or will we emerge anew? Can we find eustress in the midst of our difficulties? Will we fall under, or shall we snatch a eucatastrophe from the jaws of perdition?

The Triangle Shirtwaist Factory fire in 1911 killed dozens of workers in a factory 8 to 10 stories up. The factory employed desperate and hard-working young women in difficult conditions. A common practice at the time was to lock the doors so that workers couldn’t take breaks.

When fire broke out, the workers were trapped: locked doors, no exterior fire escape, no centralised alarm. Many were doomed. Suffering smoke inhalation and desperate for a breath, 62 people leapt or fell into the street below. One appalled onlooker was Frances Perkins, who was inspired by the horrible scene to champion reforms of employee safety.

A long campaign by Frances and many others eventually produced workplace safety legislation and injury compensation schemes that still exist today. One outcome was mandatory exterior fire escapes, which made such tragedies far less common.

Though tragic, the disaster forged a new relationship between employer and employee. Those hard-won battles made society safer and more equitable -- not only for workers, but for everyone.

These incidents highlight a co-dependent relationship between employers and employees. We have come far from serfdom and villeinage, but elements of it persist in at-will employment, particularly where unions are absent.

Legislation can help, but it shouldn’t be necessary. The greater fault is an inequitable shielding of liability.

There have been attempts to create jurisprudence for corporate manslaughter, since a corporation is a legal person in most respects. These have largely failed, and so companies can escape gross negligence with a fine rather than termination of management appointments, prosecution, or incarceration.

Despite progressing as far as we have, there are still fundamental roadblocks to a fairer society.

Civilisation depends upon people investing energy in it, whether in the form of attention, money, or belief. We lounge under trees on a sunny day at the park that were planted by people who knew they would never live to enjoy their shade. Civilisation is a gift to the future.

Unfortunately, things have turned. As technology has quickened the pace of the world, our time horizons have shortened -- especially in business, where bonuses reward short-term gains at the expense of long-term value creation.

Benefits are being enjoyed without being adequately paid for, whilst we borrow from the future to enjoy ourselves today. We see this in unsustainable debt, in the destruction of our environment and the species within it, and in escapism towards junk food and junk infotainment. These are symptoms of wider problems in society, perhaps the single greatest root cause of suffering in the world today: the poor accounting of shifted costs.

Shifted costs (negative externalities in economics terms) are what happens when someone does something which affects an unrelated third party in a negative way, without adequately making redress for the trespass.

Many economists shrug at shifted costs; they are considered too difficult to account for, and so are largely ignored, written off as a sad inevitability of capitalism. Only the most gross and obvious of externalities get noticed and policed; the rest in a great long tail go unaccounted for.

Our entire civilisation is built on mechanisms that shift costs to others -- pollution costs borne by the environment and public health, efficiency costs borne by personal and social wellbeing.

Exploitation happens at all layers of society. To some degree we are all guilty of it, whether we are exploiting nature, or the agency of non-human animals, or enjoying cheap goods produced in places where labour is cheap due to lack of regulation or concern. Exploitation involves turning a blind eye to the shifted cost, whether as a producer, or a consumer (though sometimes such costs are obfuscated).

Sometimes costs can be to society itself, for example through enjoying the efficiencies of globalisation but without paying for the associated greater fragility that comes with it. Without down payments to a crisis management fund, when the inevitable disasters do occur, it’s out of our control.

Another form of exploitation can stem from the misallocation of shifted benefits (positive externalities), whereby someone creates a benefit for others but does not profit from it. For example, unpaid personal care work generates tremendous value to society which would otherwise bear enormous social and economic costs in its absence.

A lack of accounting for shifted costs is the yoke by which modern equivalents of serfdom operate, and only by resolving this issue can we resolve the great failures of our age. It serves the interests of those with power to obfuscate shifted costs and benefits, as by doing so they can point the finger elsewhere. Thus we have a dire lack of education in society about shifted costs. People aren’t equipped to think of society in terms of externality tradeoffs, and thus easily get swayed by some ideology or other that has a correct observation on a small scale, but misses the big picture. An ideological lens works well as a microscope and poorly as a telescope.

However, this can be changed. By properly accounting for costs, we can account for damage to nature, damage to the sanctity of the family, damage to freedom, damage to purity of health-giving food, damage to societal trust and cohesion, damage to workers from unpaid costs of labour.

Accounting for shifted costs underpins the core values of every ideology and creed. Framed clearly, it can earn cross-partisan support. It offers a lingua franca between movements -- a shared way to articulate why a given policy is unjust, and to move past bemused opacity toward actual understanding rather than reinforced polarisation.

Accounting for shifted costs may be the answer to our society’s failures, social and economic alike. We can bring this into being through a blend of emerging technologies and established law: Artificial Intelligence, the Internet of Things, Distributed Public Ledgers, and Machine Ethics.

The flip is the point: once a shifted cost can be detected, tracked and tokenized, it gets priced before the act rather than litigated after it. Four technologies supply the accounting; the accounting supplies the evidence; the evidence opens two legal routes at once, civil tort for damages and the harsher fiduciary one, where knowing a cost and declining to book it is itself a form of fraud. The essay hedges the timing (“before long, with a few costly cases being won”), so the figure does too.

These elements combined enable us to detect, track, tokenise cost shifting, to account for its effects, and to understand which parties may benefit from an action, and which parties lose out.

Once the true cost of a decision or transaction becomes known, one can seek redress through standard litigation for damages, on an individual or class basis, with claims and depositions quickly administered through increasingly automated interfaces.

However, outside of civil tort, there are also fiduciary issues. Once the externalised costs are known with relative certainty, to not account for it creates mens rea, as it is essentially a form of fraud. Thus, a corporation (and in a just world its officers) are liable not only for true costs, but also for errors of conduct for having ignored them.

Before long, with a few costly cases being won, externality costs or usufructs will start to be negotiated up-front, instead of retroactively. Governments will use cost-shifting analyses to vet policies, to ensure that the effects of a policy are not unfairly borne upon specific demographics, with the results of analyses publicly available information that they are accountable for.

If we are to find our eucatastrophe, I hope we not only discover how interdependent we truly are, but take the opportunity to strike at the root: our failure to manage shifted costs, and their offspring, systemic risks. We must refuse to keep diverting the trolley onto each other’s tracks. True and proper accounting of shifted costs is the best path towards lasting justice in a complex yet sustainable and enduring civilisation.

I have begun to collect some ideas at www.pacha.org around these new opportunities to handle shifted costs in our economy, a concept I describe as Automated Externality Accounting.

The internet once required connecting to a single server at a time. It took the World Wide Web to let us surf between silos of information in a fast and user-friendly way. Similarly, the elements for managing shifted costs already exist; they just need the right protocol and interface to bring them together. Repositories of pollution tracking and the actions of bad actors exist today.

If we can wrap these in a protocol that facilitates the validation, integrity, and tokenisation of this information, we have an opportunity to transform our economy in the 2020s as profoundly as we transformed access to information in the 1990s. Perhaps more so.