Trophic Theory of Money

Abstract: Perhaps the greatest controversy in sustainability science is whether GDP is a reliable indicator of environmental impact. Yet the trophic structure of the human economy is such that GDP — in concert with real money supplies — is an excellent indicator of biodiversity loss, pollution, ecological footprint, and other aspects of environmental impact. The trophic structure of the human economy reflects that of the economy of nature, where producers (i.e., plants) support primary consumers (herbivores), which support secondary consumers (omnivores and predators) and service providers (e.g., scavengers). In the human economy producers (i.e., farmers) support primary consumers (heavy manufacturing), which support secondary consumers (light manufacturing) and service providers (e.g., transportation). The annual amount of human economic activity — GDP — is measured with monetary flows of expenditure and income. The trophic theory of money is that money originates via the agricultural surplus that frees the hands for the division of labour unto manufacturing and service sectors, and therefore reflects the environmental impact of human activity. The primary corollary is that the quantity of money — and GDP — indicates the amount of agricultural surplus and related activity at the trophic base of the economy (i.e., mining, logging, commercial fishing and other extractive activity) and the environmental impact of such activity. Inflation, technological progress (a function of GDP), and international trade affect the precise relationship of real money supplies to environmental impact in any given country, without affecting the underlying trophics. Purely financial activity, such as speculation in derivatives, does not affect GDP or real money supplies.