Let’s look at another piece of the profit puzzle. Paul Hawken made this
telling observation about life in corporate capitalism: “Nothing in the modern
workplace, and very little in society at large, encourages us to take our time,
or be satisfied with what we have. We’re being presented instead with a future
where we will have to work harder, but have even less leisure than we do today,
if we are going to maintain our way of life. . . . We are speeding up our lives
and working harder in a futile attempt to buy the time to slow down and enjoy
it.”1 Sometimes, as we get caught up in our frantic modern
lifestyle, we fall for a very fundamental illusion: we mistake speed for
growth.
Let’s look at this phenomenon more closely. Despite the reasoning
expressed in the previous three posts, corporate capitalism views productivity
improvement as a panacea. It enables companies to compete and economies to
grow. But productivity improvement, at least in advanced economies like our
own, is almost exclusively dependent on technological advances. New
technologies allow an individual worker to be more productive. In other words,
new technologies allow a worker to produce more product in a given time period.
We can also express this relationship from another perspective. New
technologies allow a worker to produce the
same amount of product in less time. So, which is it? Does productivity
improvement make the economy grow, or does it simply speed things up. The answer,
of course, is yes.
If the time it takes us to produce a given quantity of goods steadily
decreases, then we must also consume those goods more rapidly. Everything
speeds up. In this sense, productivity does not make us wealthier as a society.
We simply produce and consume at a faster pace. There is not really more wealth
in the system. It merely appears so because money and products change hands
faster. The real change is that our time frame has collapsed.
Much
of what we call economic growth might be nothing more than the fact that money
passes through more hands this year than it did last year. It could be that
capitalist growth is not really growth at all. It is merely speed. When
transactions slow down, as they did for a time after the meltdown of 2008, so
does growth. The economy shrunk for nearly a year then began growing slowly
because people and businesses were not purchasing as frequently as they once
did. In this sense, growth is a function of speed, of what we call turnover.
Money is not changing hands as often as it did. Could it be that when all is
said and done, profit can be extracted from the system only when the flow of
transactions is accelerating? If so, what kind of future are we constructing
for our children and grandchildren?
Not Everything that Grows Is Good
Every solution
offered by politicians or conventional economists for our economic woes begins
with the assumption that growth is necessary for a healthy economy. Herman Daly
and John Cobb observe that although economists, like other scientists, claim to
be value-neutral, “their shared values are [in fact] easy to identify. They
are, above all, for economic growth. To challenge that goal is to place oneself
outside the community of [economists].”2 Or, as I would put it,
outside the corporate religion. But what if it is a false religion? What if the
answer is not growth? What if all the economists and politicians have been
asking the wrong questions? If so, then their answers are not merely wrong and
irrelevant, but undoubtedly harmful as well.
What if endless,
unlimited growth is not only impossible but lethal to us as individuals and
communities? David Korten, questioning the sanity of our growth fixation, made
this observation: “Growth of healthy organisms is a natural phenomenon, but
unregulated and unlimited growth is found in nature only in cancers that
ultimately destroy their hosts and themselves. We are creating an unregulated
economic system that has become the equivalent of a cancerous tumor, and its
unfortunate host is human society. In the name of free markets, prosperity, and
democracy, modern society is embarked on a path that ultimately can lead only
to the destruction of all three.”3
The metaphor is
apt. Cancers grow by stealing sustenance from healthy tissue, by fooling the
immune system, by deceiving nearby cells into forming food-bearing vessels and
producing growth-enhancing chemicals, and by opening new pathways for the
malignancy to spread throughout the body. In essence, cancer tricks the body
into contributing to its own destruction. The unlimited-growth assumption makes
corporate capitalism similar in many respects to cancer. It creates economic
growth at the expense of health in other areas of social concern. And as it
becomes entrenched, it converts the surrounding society into a support
structure for its continued growth. Everything else is absorbed into the
economic system, and self-perpetuation becomes the guiding rule.
Is there an
alternative, though? Can we even imagine an economic system not dependent on
perpetual growth? I suggest that we must begin to think along those lines
because the growth assumption is fast reaching the end of its long, long rope.
Let me introduce briefly two arguments against limitless economic growth.
The Environmental Argument
Kenneth Lux
points out that our capitalist economic theory does not concern itself with
human needs. In economics, need is a
nonword. Economists are interested only in wants,
or demand. “An important thing about wants,”
says Lux, “is that they are ultimately infinite and therefore unsatisfiable.”
Add to this the overall objective of conventional economics, which is to
satisfy these wants, and a paradox emerges. Here is an extended version of a
statement by Lux that I quoted in part 1 of this series:
It appears that economics has
construed itself so as to attempt to accomplish the impossible: to satisfy that
which cannot be satisfied. . . . From this we can start to see that economics,
even at the level of its theory, may have something to do with why we are destroying
our natural world.
We live on a finite planet. If human
beings are defined as being made up of infinite wants, and the task of an
economic system is to fulfill that infinity, then such a system will go on
endlessly churning out goods in an attempt to reach what is from the beginning
an impossible goal. When the infinite production of goods meets up with a
finite planet there is bound to be a collision.4
Endless
economic growth means accelerating the process of turning finite resources into
products, which must then be consumed at an accelerating pace and ultimately
turned into waste. This is how our market economy works. But, as economist
Herman Daly has pointed out, viewing economic activity as a circular flow of
production and consumption is like seeing an animal as nothing more than a
circulatory system, ignoring the fact that it has a digestive tract that
connects it to its environment at both ends.5 Similarly, our
corporate system treats natural capital assets as if they were expenses and
treats waste as if it had little impact on the earth. This is insanity, and we
are in part to blame for not demanding greater depth and a long-term
perspective from our elected leaders, particularly conservatives, who are
notorious for not attempting to conserve anything and are primarily interested
in selling a short-term vision for both the economy and the environment.
Economists,
businesses, and politicians of both major parties have always operated on the
assumption that the future will be similar to the past, that since the
corporate capitalist economy has grown over time, it will continue to grow.
They don’t consider the possibility that as the economy grows, it encounters
constraints that were irrelevant or invisible when it was small. The minimal
impact of industrialization on the environment when the earth was a seemingly
infinite, sparsely populated place has little relevance to our present
circumstances. Times change. We cannot logically expect the effects of the
ever-expanding capitalist economy to remain negligible.
“If
capitalism has one pervasive untruth,” declares Paul Hawken, “it is the
delusion that business is an open, linear system: that through resource
extraction and technology, growth is always possible, given sufficient capital
and will. In other words, there are no inherent limits to further expansion,
and those who wish to impose them have a political agenda. . . . [But]
ever-expanding abundance is not a theory based on science, or history, or
nature. It is based solely on self-interest.”6
The Natural Capital Argument
New York
Times columnist Thomas Friedman suggested that perhaps the economic crash
of 2008 was sending us a message.
What if the crisis of 2008 represents
something much more fundamental than a deep recession? What if it’s telling us
that the whole growth model we created over the last 50 years is simply
unsustainable economically and ecologically and that 2008 was when we hit the
wall—when Mother Nature and the market both said: “No more.”
We have created a system for growth that
depended on our building more and more stores to sell more and more stuff made
in more and more factories in China, powered by more and more coal that would
cause more and more climate change but earn China more and more dollars to buy
more and more U.S. T-bills so America would have more and more money to build
more and more stores and sell more and more stuff that would employ more and
more Chinese . . .
We can’t do this anymore.7
I
have left one piece of the profit puzzle until now for a reason. Because it is
quite possibly the most relevant piece of the puzzle and may be the one that
finally brings an end to endless growth. Perhaps all these things we’ve
examined thus far fit together to give us a picture of why and how the
capitalist economy grows: owners stealing from laborers, the introduction of
innovations, the capitalist’s sabotage of the production apparatus with
financial manipulations, the misalignment between revenues and expenses,
expansion of the money supply, and the acceleration of the system caused by
technology. But even all of these elements taken together do not complete the
profit puzzle. One final element is necessary. As mentioned earlier, new
resources must constantly be added to the economy. Without new resources,
growth simply will not occur. The problem, as many observers have pointed out,
is that a good portion of our resources are both limited and nonrenewable. So
not only are we bumping up against debt ceilings and other economic limits, but
we are also reaching some physical boundaries that we simply cannot cross.
E. F. Schumacher,
among others, has pointed out that corporations are behaving recklessly in one
particular regard. They are treating certain natural capital assets as if they
were expenses. Any business that uses up its capital will not last long. But
our economy is using up certain forms of capital at a staggering rate. The most
obvious and most critical of these capital assets is the one we have built our
modern economy upon: fossil fuels. We have created an entire way of life that
is totally dependent on plentiful and relatively cheap oil and coal. The
average person travels many miles to reach his or her place of work. And at
home or on the job, electricity generated largely from fossil fuels gives us
light, heat, refrigeration, entertainment, and the millions of benefits and
distractions computers provide. The necessities of life—not just furniture and
soap and clothing, but most of the food we eat—come not from local producers,
but from far, far away. I eat bananas from Brazil,
grapes from Chile, oranges
from Florida, broccoli from California. I wear clothing made in Honduras and wear shoes made in China. Other
necessities come from other far corners of the globe. All of these must be
shipped long distances to market. And the economy is becoming more global as
time passes, not less, as corporations search the world for the cheapest labor.
We are treating oil as if it were merely an expense. But it is nonrenewable and
will soon or later become scarce. The BP gusher on the Gulf floor in 2010 was
merely a sign of things to come. Increasing earthquakes and polluted drinking
water from fracking are additional signs. Already the easily obtainable oil is
insufficient for our insatiable needs. As we drill in ever more precarious
places or use methods, such as fracking, that may have devastating long-term
ecological consequences, we will see more environmental disasters. And soon
enough, we will experience severe shortages. Today, with falling oil prices, we
assume we are living in a state of endless glut, but our oil reserves are
indeed finite. Soon, of course, is a relative term. Not long ago some experts
were suggesting that we had already reached what is termed peak oil, “the point
in time when the maximum rate of global petroleum extraction is reached, after
which the rate of production enters terminal decline.”8 More recent
estimates, however, suggest that we now have 200 years of obtainable oil. We
may conclude that this is good news, but what is the environmental toll we will
pay for our ever-increasing use of carbon fuels?
Paul B. Farrell,
a columnist for MarketWatch, a website sponsored by the Wall Street Journal, cites several sources to propose the radical
notion that even though we have 200 years’ worth of oil, “using more than
one-fifth of it will dump so much excess carbon dioxide into the atmosphere
that by 2050 fossil fuel companies will kill the planet. And that’s exactly
what they plan to do.”9 Farrell quotes Naomi Klein, author of Shock Doctrine: The Rise of Disaster
Capitalism, who claims that for “‘the fossil-fuel industry, wrecking the planet
is their business model.’ And Wall Street knows why: Oil companies need to
protect the $150 billion in profits they make annually.”
“So the battle
lines are drawn,” writes Farrell. “The oil industry has enough reserves for a
couple centuries of earnings. But environmentalists are warning that using more
than 20% of that ‘five times too much’ fossil fuels reserves will destroy the
planet. So 80% of the reserves must be kept underground, not drilled or mined
or otherwise released into Earth’s air. However, the oil industry will never
agree to the environmentalists’ demands. [Former J. P. Morgan managing director
John] Fullerton warns: that’d be like ‘writing off $20 trillion in assets.’
Exxon CEO Rex Tillerson has no intention of keeping ‘his reserves in the
ground.’ Just the opposite: His ‘company plans to spend $37 billion a year
through 2016 (about $100 million a day) searching for yet more oil and gas.’”
So, while our
politicians bicker over the best way to grow the economy, the economy by its
very nature is slowly destroying the very environment in which it must exist.
Over the long term, endless growth is simply an unsustainable economic
philosophy. But we cannot come to terms with this truth, and so we keep asking
the wrong questions, which can never yield the right answers. Some of the wrong
questions, surprisingly, involve alternative energies, the assumption being
that we will simply replace carbon-based fuels with renewable energy sources
when they become cost competitive. But this is not just wishful thinking; it is
simplistic and unrealistic. A growing global economy will require an increasing
amount of energy.
The
economic downturn that began in 2008 temporarily depressed demand for oil, and
we are also getting better at conserving, but if corporate capitalism is to
fully heal, it must grow, and that growth is dependent, ultimately, on
plentiful oil. The global economy we have built up so relentlessly since World
War II requires more and more oil as it grows larger and larger. And as more
nations join the global economy, they will require more and more oil. Natural
gas may alleviate some of the demand for oil, but natural gas, ultimately,
faces the same future as all nonrenewable energy sources.
Those
who suggest that renewable energy will take the place of oil in our global
economy are living in a dream world. Newsweek’s
Sharon Begley cited the work of energy chemist Nate Lewis, pointing out the
enormous challenge we face.10 The world used 14 trillion watts (or
terawatts) of power in 2006. But even assuming minimal population increase,
slow economic growth, and a staggering 500 percent improvement in energy
efficiency worldwide relative to current U.S. levels, the world will use 28
terawatts of energy in 2050.
Where
will this energy come from? Nuclear power? We would have to build 10,000
nuclear reactors, completing one every other day, to get just 10 terawatts.
Wind? To get just 3 terawatts of power, we would need to erect a million
state-of-the-art turbines, and we would also have to invent a way to store that
power. Solar? “To get 10 terawatts by 2050, Lewis calculates, we’d need to
cover 1 million roofs with panels every
day from now until then.”
Are
you getting the picture? Oil, natural gas, and coal are the only sources of
energy that can enable us to maintain our current economic system. Renewable
energy will not provide even enough power to keep up with a conservative
increase in demand that will occur as global corporate capitalism seeks to grow
endlessly. And as we use fossil fuels at an increasing rate, we will
simultaneously cause environmental disaster. In other words, no source of
energy known to us at this time can provide the amount of energy the corporate
religion will need in order to enable its worship of growth and to survive
without destroying the conditions capitalism requires to endure.
So
what do we do? There is only one solution. We must stop growing. It is going to
happen anyway. We are reaching both economic and physical limits to growth. We
can either embrace a new type of economy—a nongrowth economy that is local
rather than global, sympathetic rather than self-interested, and democratic
rather than corporate—or we can live in denial. But we will be forced to change
sooner or later anyway. The change will be much less painful, however, if we
begin now and begin willingly with a spirit of unity and bipartisan
cooperation. But in these dire circumstances, we can’t even get the Republican
Party to stop denying what 97 percent of climate scientists are telling us.
Such is our challenge.
Conversion
So, is there a
different path to heaven than the one our current economic religion offers? On
the fringes of economics, certain voices in the wilderness are talking about
something called a “sustainable” economy. This is supposedly an alternative to
our current growth-based system and recognizes the inherent limits of living on
a finite planet. Unfortunately, these voices are almost totally ignored by
mainstream economists and by virtually all politicians, who are steeped in the
myths and superstitions of a false creed.
Converting
to a nongrowth, or sustainable, economy would be something akin to changing
religions. If we are to succeed, we must give up cherished beliefs, even
supposed deities, such as endless growth, and adopt different beliefs and new
goals. The corporate system we have enthroned for so long now is reaching the
end of its unfortunate life. It is no longer, pardon the double entendre,
sustainable. Even though this appears to be heresy, we must cast aside our
current economic theology and take a leap of faith.
_______________________
1. Paul Hawken, The
Ecology of Commerce: A Declaration of Sustainability (New York:
HarperBusiness, 1993), 126.
2. Herman E. Daly and John B. Cobb Jr., For the Common Good: Redirecting the Economy
toward Community, the Environment, and a Sustainable Future (Boston: Beacon
Press, [1989] 1994), 131.
3. David C. Korten, “A Deeper Look at ‘Sustainable
Development,’” World Business Academy
Perspectives 6, no. 2 (1992): 36; adapted by Willis Harman from
“Sustainable Development,” World Policy
Journal, Winter 1991–92, 157–90.
4. Lux, Adam
Smith’s Mistake, 9.
5. Herman Daly, “Sustainable Development: Definitions,
Principles, Policies,” 37–38, available at
http://library.uniteddiversity.coop/Measuring_Progress_and_Eco_Footprinting/Ecological_Economics_and_Sustainable_Development-Selected_Essays_of_Herman_Daly.pdf.
6. Hawken, Ecology
of Commerce, 32–33.
7. Thomas L. Friedman, “The Inflection Is Near?” New
York Times, March 7, 2009;
http://www.nytimes.com/2009/03/08/opinion/08friedman.html?_r=1.
8. “Peak Oil,” Wikipedia,
http://en.wikipedia.org/wiki/Peak_oil.
9. Paul B. Farrell, “Big Oil is Earth’s Public Enemy No. 1,” MarketWatch, August 3, 2012.
10. Sharon Begley, “We Can’t Get There from Here,” Newsweek, March 23, 2009, 48.
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