Sally Buchanan made an important point about the inflation/deflation question in her comment below. We may require a re-alignment of our entire value system. The much-misued Utilitarian term ‘greatest good for the greatest possible number’ might depend on thinking about what we do and how we do it based upon what we, and the planet, can afford, not slavish notions of ‘progress’. To which most economists and politicians will reply: ‘Ah, but. It’s not that simple. We live in an era of globalisation, technology, materialism, consumerism. There’s no going back’.
Normal service will not be resumed
We may have reached the tipping point where humans have become slaves to consumerism. If so, it’s time to question why we’ve allowed a bunch of self-interested geeks to ruin the world and force us into penury along the way, not to give them a second chance. Globalisation has partly succeeded in its promised a redistribution of wealth. Usurers, oil barons and arms dealers, technology monopolists, media monsters, (Murdoch now owns the Wall Street Journal, now spectacularly rancid in a very short period of time), the Russian mafia, Chinese tatmakers and certain politicians who promised democratic change and equality but delivered the opposite, have done very well. Their meretricious shamens, economists, have held their coats. Few now question the authority of the dismal science, even if we disagree with approaches – Marx, Keynes, Stuart Mill, Friedman and Weber (my favourite) are pertinent examples. None owned a 3G phone. Free Market principles (has anyone noticed the implicit oxymoron of that term?) include dismissing morality as a religious concept (bad thing), while the ‘protestant’ work ethic (good thing) underpins the neo-capitalist flim-flam game (which is the same as the work ethic, but without the work part).
It may be the case that the economics of globalised consumerism have become so embedded that there is no alternative but to ‘bail out’ the greedy and wasteful financial ‘institutions’ which lend the illusion of prosperity and push the problem round the plate. But if so, we are almost certainly prolonging and accelerating misery for all but a few. That’s why, twisting and turning and blustering, ‘world leaders’ are re-nationalising the tools of the free market – capital, the means of production and, covertly, freedom of expression, and preserving monopolies which paradoxically arose out of this whole flawed experiment in global enslavement.
Now the elites whose business it is to promote this destruction as a benefit are in a spot of bother. Globalisation has not brought prosperity for all: in fact the global economy is in real danger of implosion. The gap between rich and poor has grown, particularly in the developed world, where it was supposed to achieve the opposite result. Most of the third and fourth world still lives in destitution, reproducing at alarming rates while losing their rights to the land and skills as to its husbandry. There will be a bigger spot of bother if serious civil unrest ensues. In some places, it has already started. Poverty, gross inequality and desperation, not prosperity, are almost always the root causes.
No, I haven’t seen the Che Guevara biopic yet (another flawed idealist whose theories were adapted by people whose intent, by and large, was spoiling it for the rest of us). If economics wasn’t a willing hostage to free market dogma, another set of truths might become self-evident. For example, the credit crunch is a symptom, not the cause of the crisis of capitalism. Measures such as ‘quantitative easing‘ are not solutions, they merely prolong the illusion that money is the end, not the means, of production. We are experiencing the consequences of rampant materialism, hyper-inflation of values and of pretending for too long that we could become a ‘(financial) service economy’, when logic suggests that this is a ridiculous notion. Money is an enabler, not an output. Now we need moneylenders in order to live beyond our means. Global materialism requires us to waste resources, donate up to 15% of the price of a product to value-subtracting fripperies such as advertising and packaging, chatter on expensive mobile phones, drive and fly to places where we stay in hotels largely identical to those in the places we left, while kids in the third and fourth worlds wear leftover tyres on the feet to walk ten miles to a school on an empty stomach – the lucky ones have tyres to wear and schools to attend. If we want to prolong the illusion that we live to consume, and can do so not by producing but by bamboozling, we’ll either need to print more Monopoly money and carry on creating MacJobs or consider downsizing to lifestyles we, and the planet, can afford.
Consumerism has become the default position from which we view the world, yet the objects of our desires are exacting a huge price, not merely in terms of the consumption of raw materials and energy, but also in terms of the stress, greed and strife which results from their pursuit. Here in the UK, we grow 15% less food than we did ten years ago, pay more as a percentage of our earnings for housing, food, fuel, water, heating and electricity, public services, entertainment (TV licence) and communications. We have outsourced the management of our utilities to foreign-owned companies whose pricing does not reflect the 50% drop in energy prices over the past year. While we may we pay less for clothing, cheap bling and plastic washing-up bowls, but that will change as the impact of the exchange rate and Chinese downturn impacts.
We are involved in two costly wars, in countries which posed us no threat. The US has spent $3 trillion to manufacture a war which killed over 100,000 civilians, and accelerated its involvement in another conflict which they cheerfully acknowledge played a key role in the ruin of the former USSR. Pardon my naivety, but since the Us is the engine of the entire capitalist free market system, shouldn’t we be asking why? This is not a pothole on the road to Shangri-La. It’s the path to Perdition.
As I write, the pudding-faced Billy Big Time who told us, with a straight face, that he had ended boom and bust cycles, then that he had saved the world’s banks (Thus passim), is reading out Mandelson’s Bilderberg cant to a bunch of fellow blowhards in a grotesque double act with the hapless Ban Ki Moon, who has proved as useless as his equally oddly-named predecessors. (Why are we not surprised?) The Davos ‘elite’ should try some extreme off-piste skiing.
I’m going on an economist drive – paying no further attention to the witterings of economists. This slump is deep, we’re in for a period of prolonged austerity and I’m not prepared to pretend it’s part of some greater plan. The rich world needs to force prices down by refocusing on values. The poor, as ever, have got no choice, apart from revolution. They wouldn’t do that now, would they?
John J Kelly.
5 Comments
John, I agree with much o what you say and understand your strong emotions–widely shared right now. BUT, Im not sure utilitarian principles have much practical meaning for a world population–the word “community” is still premature. You could not get anything beyond a tiny minority vote in any “First world” country for applying that principle world wide, so that their people’s incomes dropped to some all-world average (I guess here) of about $1000 a year. Not a hope–and turkeys do not vote for Christmas, either.
You might get an archbishop to say we should vote for that, but the egalitarian moral case rests (from Marx to Shaw to our contemporaries) on the argument that the rich(er) are rich AT THE EXPENSE of their fellow citizens. But, whatever the truth of that or otherwise in one country, it cannot be applied world wide. We may worry that we exploit poor Zambian farmers but we also know perfectly well that Europe’s standard of living would not be much affected if the “third world” disappeared altogether. Our oil dependence is a special case and could be stopped in a decade if we really had to (remember Germany in WWII).
There is not even any clear case that our rise to wealth was dependent on what we now call the Third World: John Strachey demonstrated effectively that the Empire ran at a loss, and countries that never had any (or few) dealings with the rest of the world are as richer or richer than us (e.g. Switzerland, Sweden, even Germany). The belief that our historical accumulation of wealth rested on exploitation of our fellow world citizens —-and must now be rectified —-is simply false: any history of the origins of capitalism shows a mysterious mix of raw materials, religion, geography and luck. Yes, money was made from slaves and gold and many other things, but Spain made far more than we did to no long lasting effect! Our attitude to the Third World, which should be far more generous than it is, should not be based on guilt, false history, or any hint that we would benefit them by living as they do–we need to get them out of poverty not share it round.
Dear Yorick
Thanks for an extremely perceptive comment, which I’m tempted to promote to a post. I wasn’t arguing in favour of a global community, however. My point is that globalisation is a chimaera, as was colonialisation. Utilitarianism was (and is) a confused argument, but the principle tenet – greatest good etc. wasn’t a bad aspiration, then as now. No doubt we’d find plenty of archbishops to agree with the argument that we should raise standards of living in the developing world, not too many colonialists, then or now.
I don’t find Strachey’s post-hoc analysis of colonialism convincing. Belgium, France and, notably, Britain filled their boots in various colonies and left when the cost of defending their position outweighed the benefits, not because they felt it was the right thing to do. Britain abolished slavery – but not indentured labour – when the returns diminished. I agree that the benefits of colonial exploitation were not lasting, but the stuccoed houses in London, Paris and elsewhere bear testament to the fact that then, as now, people who acquire easy money fast by indefensible means have a tendency to squander. The Soviet empire, largely based on colonial principles, was no better.
I agree that real wealth is not dependent upon exploiting the third world – that’s my point, in fact. We need to make and do things and sell them at a sustainable profit. You make a good point about the chimaera of a ‘world community’ but in doing so, respectfully, you reinforce my argument that ‘global economics’ is a pernicious myth. Those who promote that myth, including neo-colonial adventurism in the pursuit of cheap oil – to be sold expensively – should not be justified by bogus economic platitudes.
Deep respect, John
The universal money yardstick only has apparent jurisdiction over elements of life that can be measured in those units. Unfortunately we currently believe that the coverage of this jurisdiction is much greater than the reality. We need to transpose to some new yardsticks.
The current market crisis is as much a symptom of lost belief and confidence in the money yardstick as a raison d’etre as it is a product of an overly complex but fundamentally flawed corrupt artificial trading system. A situation arose whereby over a period of time we were able to trade and gamble high risk deals with virtual money yardsticks and all it took was for afew people to start measuring and actaully looking to see how much real money was there in the system before the doubt and fear spread to todays situation where the old yardstick is now invalid. But that doesn’t hide the basic premise that alot of real money has actually disappeared from the system.Nor does it help that the current obsession with financial growth etc blinds us from following intuition and considering paradigm shifts of thinking required to balance life in the now and in the future. It will be very interesting to see just how much unpaid debt the world can manage to ransom itself for before it acknowledges the real rethink required.
We all know that the things that money can’t buy may sometimes be influenced by them but can’t be bought by them . These phenomena are often experiential and relational they aren’t things atall. Simple pleasures, Love, Contentedness, Spiritual experience, Enlightenemnt, Symbiosis, Awareness, Serendipity, Empathy. Interestingly these phenomena require a relinquishing of rational control and are beyond price even considered to be wooly. Doubtful objective yardsticks there?
Human survivial is not a given, it falls between two stools, money and location can undoubtedly buy us into prolonged survival chances but the real cost and impact of actual life and quality of life can’t yet be measured. Human survival is a phenomenon with many un marked up “price” elements. Instinctively our increasing numbers infer perception of ample resources and should mean bigger market shares and also bigger potential gains and losses. Bigger populations are also a product of subliminal cultural competition; expansion aided by modern medicine. Dependence and lack of productivity in old age compounds continued consumption of resources. But cultural groups are physically and psychologically stronger and more successful where grandparents live longer and provide an extra layer of support to the help younger reproducing group members.
In todays cruel world I expect that population turnover is inversely proportional to GDP,to educational attainment(of women), to materialism, and ironically directly proportional to low-tech, low-impact,low-consumptive lifestyles. The meek shall inherit the earth.
In this failure of the financial climate could some new parameters help us to balance world wide requirements energy ,food, water, resources. Perhaps since the industrial revolution when simultaneously it both became both easier to make things and human survival began to improve so much that competition for commerce and resources changed direction and led us to this point.We are so close to the situation that we have to shake our heads to see just how far off course we have come and hopefully now we can begin to adapt our game plan to terms dictated by both survival and environmental symbiosis.
Suggestions for new yardsticks most welcome.
Each of the last 4 recessions were preceded by a major spike in energy prices. The difference this time is that it was/is our first encounter with supply constraints. The notion that we’ll somehow muddle through and the party will resume might well not hold. Our model of indefinite economic growth on a finite planet with unchecked population growth, resource depletion, environmental degradation etc is being increasingly revealed as unrealistic and unsustainable. It is also disconnected from the sanctimonious “values” we purport to stand for, let alone any genuine morality.
The consensus has it that there is so much bearishness out there that things have to get better soon simple because there are so few left who can become bearish. Yet, one should at least allow for the possibility that there is not enough bearishness and that the negative feedback loops at work in the economy and in the financial system will continue to gather momentum. Such a scenario will lead to accelerating supply destruction on the heels of demand destruction. Present policies will result in more liquidity injections, which would add to the existing monetary preconditions for inflation. It shall be with us in due course and we shall respond in some way. None of this, however, has anything to do with the mess we are in and why we got here in the first place. We will not arrive at a meaningful long-term strategy by concatenating lots of short term palliatives.
Dear Yorick
You make some interesting points, which are very representative of a wider body of opinion, so I think it is worth exploring them further:
“BUT, Im not sure utilitarian principles have much practical meaning for a world population–the word “community” is still premature”
Since utlitarian principles are largely a manifestation of thinking about consequences (well, it can also mean the wolves voting to eat the sheep, which is also optimal along as it means more meat on aggregate, but anyway…) your statement can be translated to “The world is not really ready to think about consequences.”
Which may be true, but is basically a fatal position and thus unacceptable. If this is so, then we really need to do something about it, or we are in for a very bumpy ride.
“You might get an archbishop to say we should vote for that, but the egalitarian moral case rests (from Marx to Shaw to our contemporaries) on the argument that the rich(er) are rich AT THE EXPENSE of their fellow citizens.”
You go on to seemingly argue that Globalisation is a Myth and that countries have got rich 1) based on internal know-how 2) based on trade with other rich countries. And 3) NOT based on drawing in resources from a large periphery.
You cite the example of Empire being run at a loss. But this is in monetary terms, and thus reflects a capital-centric view. What if you look at wealth in other terms, such as natural resources? Well then you see that Empire was not run at a loss.
But what about the value added through capital investment raising productivity? Hmm, OK, that is a factor. But it is confounded by 2 things:
1) Geostrategy from the post-war period has aimed at keeping a supply of cheap natural resources into the rich countries. This has been through the use of military force (e.g. Iraq) or threats therof (see 1970s oil shock) or through fairly co-ercive financial arrangments (See John Perkins, Confessions of an Economic hitman.)
In other words the lack of value ascribed to natural resources, and the higher value thus commanded by processed goods in relation to them is part of a system of exchange which is deliberately weighted against the third world, in order to draw in natural resources. Just look at ecological footprint statistics if you don’t believe that there is an imabalance here.
2) Just because you export money does not mean you are losing wealth. Post 1945, the US set up a system that allowed them to export dollars, by effectively making it a Global Currency. Thus they could print dollars, send them abroad and get other forms of wealth in to fuel their economy. Hence they run a huge trade deficit, but get away with it, since the dollars they keep printing stay overseas, so do not go back into the US economy to buy goods, and/or cause inflation.
When you look at things in terms of natural resources, you also see that rises in productivity (the main benefit of capital) have not led to a reduction of resource usage: Wherever natural resource productivity has gone up, consumption has gone up faster. What this means is that growth is mainly fueled by expanding natural resource usage. This is particularly the case for Oil, you might want to take a glance at “The Last Oil Shock.”
When you combine this view with a picture of huge inequality of ecological footprint, you see very clearly that the rich have got rich by enclosing the natural resources of others. Arguably, historically, this may not have damaged the poor in a way that outweighed the benefits that modernity brought (i.e modern medicine, clean water etc..) BUT, with natural resources getting tight, this zero sum aspect will get stronger, as will the arguments for egalitarianism, not just as an ethical position, but also as a way of maintaining stability.
Because we do depend on some of them (Asia) to manage inflation via cheap goods and services, and, hey, some of their governments have nukes. Which means that their civil unrest means something to all of us.