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What Game Theory Teaches Us About Sustainability and Economics

November 8, 2024

Striving for a Balanced Economic System

Game Theory, developed in part by economist and mathematician John Nash, explores how individuals make decisions in strategic situations where their choices affect, and are affected by, the actions of others. Initially applied in economics, diplomacy, and competitive settings, Game Theory also offers profound insights into building balanced and sustainable economic systems. By promoting diversity, resource-sharing, and cooperation, Game Theory can reshape our approach to sustainability, creating economies that prioritize survival, resilience, and long-term well-being for all.

The Basics of Game Theory and Nash Equilibrium
At the heart of Game Theory is the Nash Equilibrium, a concept where no player can improve their outcome by unilaterally changing their strategy if others maintain theirs. In simpler terms, it’s a stable state where everyone makes the best decisions possible given the choices of others. However, in traditional economic systems, Nash Equilibria often leads to outcomes that favor competition over cooperation, with the primary focus on profit maximization rather than sustainability. This competitive focus fuels an imbalance in resource allocation, often disregarding the long-term needs of communities and ecosystems.

A large storm cloud is moving over a green field.

Shifting from Profit-Driven Choices to Survival-Driven Decisions
One of the key lessons Game Theory offers for sustainability is the idea of equilibrium, where multiple players cooperate to achieve shared benefits. Applying this principle to economic systems means moving from profit-driven choices to survival-focused strategies. In a profit-focused system, businesses, individuals, and nations often act in ways that ensure their own short-term gains, leading to overconsumption, resource depletion, and environmental degradation. In contrast, a survival-focused approach, such as physical economics, prioritizes the long-term viability of essential resources, fostering resilience and adaptability.

The concept of cooperative strategies within Game Theory suggests that players who share resources and support each other’s survival can achieve better outcomes in the long run. For example, when industries within an economy collaborate to share sustainable practices or exchange resources, they create a resilient system where all parties benefit. This approach challenges traditional zero-sum thinking and promotes positive-sum outcomes where each participant contributes to a stable, healthy environment that supports everyone’s long-term well-being.

Two people on a boat one of whom is wearing a vest that says wild cats

Embracing Diverse Resources and Economic Choices for Resilience
One principle within Game Theory that applies well to sustainable economies is the emphasis on diverse strategies. In nature, diversity ensures resilience; ecosystems thrive when there is a balance among various species, each contributing uniquely to the whole. Similarly, in sustainable economics, diversity in resources, energy sources, and methods of meeting basic needs helps buffer societies against shocks, such as economic downturns or resource shortages.

Incorporating diversity into economic systems can prevent vulnerabilities that arise from monocultures or single-resource dependence. For instance, economies that rely on a single crop or fuel source are more susceptible to crises if that resource becomes scarce or if environmental conditions shift. By diversifying our resources—such as embracing renewable energy sources alongside traditional ones—we reduce dependency and increase the adaptability of our economy.

A factory with smoke coming out of the chimneys at sunset.

Cooperative Strategies to Combat Resource Scarcity and Climate Challenges
A common Game Theory model is the “Prisoner’s Dilemma,” where two players must decide between cooperation and self-interest. When applied to sustainability, this model highlights the tragedy of the commons, where individuals acting in their self-interest deplete shared resources to everyone’s detriment. Addressing climate change and resource scarcity requires us to adopt cooperative strategies, ensuring that all stakeholders work together to protect common resources.

For instance, by applying a cooperative approach to fisheries or forest conservation, industries and governments can jointly regulate resource usage. This cooperative strategy aligns with the HREM (Human Renewable Energy Measure) model developed by Jeff Beller and Susan Caumont, which emphasizes calculating economic value based on sustainable human needs. HREM promotes a unified measurement that values resources in terms of human energy and ecological impact, encouraging stakeholders to view resources as vital to collective survival rather than individual profit.

The sun is shining through the trees in the forest.

Toward a New Economic Equilibrium: Sustainable Growth Through HREM
The HREM model embodies many Game Theory concepts by advocating for an economy rooted in shared survival rather than unrestrained competition. This model presents an alternative form of equilibrium—one where sustainability is the foundation, and resources are allocated to support basic human needs and environmental health.

Through HREM, we can design an economic system that allocates energy resources based on sustainable living rather than excess. By measuring economic value in terms of human energy and ecological sustainability, HREM allows us to see the true costs of consumption and encourages decision-making that supports everyone’s survival. This shift creates an economy where cooperation replaces competition, and survival becomes a shared goal.

Building a Balanced Future with Game Theory
Game Theory and the HREM model inspire a new approach to economics, one where diverse strategies, shared resources, and cooperative action take precedence. When applied to sustainability, Game Theory reminds us that individual choices impact the collective and that cooperation is essential for achieving long-term stability.

By aligning economic systems with these principles, we can build a world where growth and sustainability coexist—an equilibrium that prioritizes resilience, human well-being, and environmental health.

A man is sitting at a table looking at a laptop computer.

A group of people are putting their hands together.

A group of people wearing masks are planting trees in the dirt.

A woman is drawing a graph on a glass wall with a marker.

A large iceberg is floating on top of a body of water.

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The Role of Women in the Economy and the Need for a Parallel Currency

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Explore women’s impact on the economy and the concept of a parallel currency. Learn how these ideas shape sustainability and equitable financial systems.

A Government is not a Business

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The purpose of government is not to make profit, it is to protect and defend its citizens. Government is not a platform from which a business deal is made. It is carefully structured to sleuth out the most important needs of all its citizens and provide for them. When it operates as it is built to do, its citizens are generally content. When it is gamed, in bad faith, for personal power and wealth, things fall apart and the government and its citizens have to move to defend themselves. The necessity to do this should never have evolved. But a well functioning government depends on people working in good faith, who are honorable, who seek truth and have guiding morals. As we know, sometimes people get into positions of power who don't have these qualities. The unfortunate development of political positions being won by individuals who have the most money to spend has placed a significant number of people in Congress and some Presidents in the White House who have no moral compass. We see the influence of unimaginable amounts of money on campaigns. Made worse when corporations were found to be citizens. Let's dive down the rabbit hole of history. In 2010, when Obama was president, the Supreme Court found in the case called Citizens United v. Federal Election Commission that corporations have 1st amendment rights to free speech and political spending. They named this “ corporate personhood” which holds that corporations are associations of people and have certain constitutional rights. This allows, among many other things, corporations to make independent political expenditures and allows corporations to spend unlimited funds on elections. Also, a corporation is allowed to exist in perpetuity. Even Voldemort would have envied this! So, here we are. Both Democratic and Republican administrations have pushed more and more power and wealth into the hands of the few and in turn the recipients of this largesse have shown their gratitude by paying into more and more autocratic governments that will continue to protect their economic and business advantages. This is not hard to see. It is very hard to live through. And even harder to reverse. But this has been done before and can be done again. Good government is not a given. It has to be watched carefully (thank goodness for bureaucrats). But everyone needs to play a part and feel they can be effective. At Renew the Earth, renew the-earth.org, we have been developing over the past 20 years a concept that allows choice within our World Economic System. We call it a Parallel Currency. This separate currency can only be used to provide basic human needs, food, shelter, education and health care. It cannot be invested or hoarded and will not cause inflation because it is destroyed when it reaches a bank. Susan Caumont, President, Renew the Earth

Why a Parallel Currency?

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Money is fluid, it has perceived value, and can be manipulated subjectively toward stupid stuff or toward important stuff. With a separate parallel currency it would be possible to buy basic human needs, Worldwide. The closed loop of a parallel currency dedicated to providing basic human needs can produce whatever amount of money necessary to fulfill human needs, (food, shelter, education and healthcare). This money will circulate generally after its initial use but when it reaches a bank it is destroyed. It cannot be invested or saved. It will not create inflation. Savings will also be possible for taxpayers, because most social services will no longer need to be paid through taxes. The currency that is presently used in each country will continue to function as usual, toward profit making and investment. The result is two currencies functioning simultaneously, in parallel. The intent is to treat Human Needs as essential, as a Right. And to be able to afford them.

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Energy Currency: Bridging the Gap Between Economic Justice and Environmental Sustainability

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