Monday, January 21, 2013

The Price of Fish

Michael Mainelli and Ian Harris have written a wide-ranging survey of economics, choice theory (game theory, psychology and ethics), systems theory, chaos theory, global warming and evolution. So what's all that got to do with the price of fish?

One of the themes running through the book is that the price of fish bears no relation to the value of fish, especially if we are concerned about long-term value and the sustainability of fish stocks.

Oscar Wilde famously defined a cynic as one who knows the price of everything and the value of nothing. This definition has also been applied to accountants and economists. Michael and Ian are leaders of the Long Finance initiative, a movement within the City of London that aims to overcome this kind of short-term financial cynicism.

Michael and Ian describe the price of fish as a wicked problem - a problem that lacks easy definition as well as easy answers.  "Sustaining the supply of edible fish is a wicked problem that presents global risks." (p 301) And yet they suggest that the system might possibly sort itself out. "As fish run out and have to be sustainably fished, the historic underpricing of fish ceases." (293)

But this is no time for naive optimism, and the system will undoubtedly need some intervention. "When the price is the same as the value, there are opportunities for sustainable financing. So far, price has not equaled value for fish. This is the biggest, wicked decision-making problem of all: knowing how to set a price that equals the value." (p 295)

In other words, the problem is not just the alarming dwindling of fish stocks but the collective cynicism that not only led to this problem but also amplifies it and resists dealing with it effectively. The key word in the problem statement is the word "set" - even if a few clever people can agree what the right price of fish should be, the real challenge is to set this price into global trading and consumption systems.

While the survey is light on the sociopolitical elements of the problem, the authors complain that governments have often made things worse, by inappropriate regulations and subsidies. Thus lazy or short-term thinking on the part of government is another manifestation of cynicism.

The Wikipedia article What's that got to do with the ...? derives the phrase from the alleged tendency of economists to connect everything with everything else. The authors go much further in this respect than most economists. But one trouble with systems thinking is this: once you start it's difficult to know where to stop. Although the authors have covered a great deal of material, it's not hard to think of other stuff they could have mentioned.

I don't think the authors are in any hurry to write a sequel, but if they did it might be about the Price of a Bee. While fish are undervalued, bees (apart from those involved in honey production) have no direct economic value at all; but when the bee population is threatened, global agriculture as a whole is in serious jeopardy. The indirect value of bees is vastly greater than the market for honey. Under the right conditions, with appropriate political and financial systems, people and communities may be able to make long-term ethical investments in sustainable fisheries, with a reasonable prospect of a long-term financial return: the Long Finance initiative is trying to stimulate the kind of system change that will create these conditions.  But how on earth do we get communities to invest in the world bee population, without creating a market for bees? And would we really want that? Systems thinking tells us to be careful what we wish for. (Mary Catherine Bateson calls this The Revenge of the Good Fairy.)

Systems thinking also tells us that management (both public sector and private sector) has a tendency to over-intervene, to meddle and micromanage and ultimately make things worse. On the other hand, doing nothing doesn't feel like a good option either. (See Owen Barder on Good Global Citizenship, January 2013.) But there may be some kind of leverage or nudge that might just help a complex system to avoid catastrophe. It is always difficult to steer a path between naive optimism and pessimistic fatalism, but the battle against cynicism requires that we try.

Price of Fish website
Long Finance website
Wikipedia What's that got to do with the ...?

Matt McGrath, Dispute means mackerel is no longer catch of the day (BBC News 22 January 2013)
Timothy Taylor, Do markets work for bees? (10 July 2014)

10 July 2014

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