Things are going to get worse before they get worse
- Hilary Venables
- 14 Jan 2016 02:55 (South Africa)
I almost predicted the 2008 global economic crisis. Seriously. In late 2007, I wrote this in a New Year forecast for the Cape Times:
“Economists reckon on a lag of up to a year before the economy feels the full impact of an oil price increase. Which means we are only now beginning to feel the inflationary effects of $60 a barrel oil. By this time next year $90-plus a barrel will hit us and the current price is likely to be even higher…. Unless demand collapses due to a global recession cum depression cum economic meltdown."
For all its hedginess, it was a lot closer to the truth than the opinions of almost every economist and banker trotted out by the media at the time with their soothing talk of a “cyclical correction”, a “necessary adjustment” and “sound fundamentals”, right up until Lehman Brothers collapsed in September 2008.
I am neither an economist nor a banker, so that helped. Instead of viewing the unfolding disaster as a purely financial one, I was persuaded it was the effect of a much deeper cause. If the global monetary system was a tottering jenga tower of debt, the oil price was the drunk that bumped the table. Without that shock, the nimble-fingered Masters of the Universe would doubtless have taken the rickety structure even higher before it tumbled onto its hollowed-out foundations. The fact that the drunk appears to have passed out and the MotU have started the game again does not mean the outcome will be any different the next time round. Although the tower in unlikely ever to reach its former heights.
Notwithstanding the current price slump, it has become clear that the underground lakes of liquid crude which have fuelled economic growth for 100 years are not fed by a magic, inexhaustible spring. The easily accessible stuff has already been sucked out and turned into greenhouse gas and carcinogenic smog. Production has either peaked, is peaking, or will peak before 2030 at the very latest. The only alternatives are dirtier and more expensive and anyway, cannot possibly bridge the gap in time. But it's not just cheap oil that is peaking. It's economic growth itself.
Unfortunately, the entire premise of our debt-based money system is that the economy will continue to expand forever, that the energy and materials we need will always be available, and that the natural sinks that absorb and recycle our ever-increasing waste output - the air, land and sea - will never be overwhelmed.
It is undeniable that for the past 100 years, humans have been extremely successful at overcoming the technical hurdles to squeezing more and more useful animals, vegetables and minerals from the earth's crust. But the low hanging fruit which fed the West's unprecedented growth since 1950 have become more scarce. And the easy credit and low wages which pushed things along through the early noughties could not be sustained.
Meanwhile, our most successful technological interventions are yielding dangerous unforeseen consequences. The hydrocarbon revolution has brought us global warming, toxic smog and plastic pollution; the ironically-named “green revolution” in agriculture is poisoning farmland and waterways with its artificial fertilisers and pesticides; intensive animal farming is generating deadly human pathogens and modern fishing methods are depleting the oceans. When such problems are localised, they can be managed or avoided and given time to right themselves. But when they are happening continually and increasingly on a global scale, there is no escape.
The best-known scientific study of the implications of unchecked economic expansion, conducted in 1972 by researchers at the Massachusetts Institute of Technology, warned that it would all end in tears. In their pioneering work in the field of systems dynamics, using computer modelling for the first time, the researchers generated trajectories to a dozen possible futures by adjusting the numbers for industrial capital, pollution, population growth, agricultural activities and the availability of non-renewable resources. In their worst-case scenario, industrial output per capita begins to tank in 2015. By 2030, the population die-off has begun. By 2100, the survivors are back to the average global living standards of the early1900s. It is this trajectory, the so-called Standard Run, that the world has been tracking most closely. But even those scenarios which assume spectacular technological advances and inflated reserves of non-renewable resources only delay the inevitable, which is even more sudden and catastrophic when it finally arrives.
The only paths which hold out any hope are those where both technology and behavioural change are harnessed to lead us gently down to a more materially modest, more stable, more equitable form of social and economic organisation. The authors of the study, which was published in book form as Limits to Growth, and became a global best-seller, have never claimed to predict the future. By their own admission, their models are “imperfect, oversimplified, and unfinished”. Any number of things could render all their futures void: a nice big war or a global pandemic seem likely contenders. Otherwise, an asteroid impact, an alien invasion, the second coming…. As you would expect, Limits to Growth has been roundly dissed by the economic orthodoxy which clings stubbornly to its faith in human ingenuity and the price mechanism to overcome all biophysical constraints to never-ending material expansion. And they preach to a broad church. Across the entire political spectrum, with the exception of the Greens, the desirability, nay, necessity, of economic growth is taken as a given. But the signs that something is deeply wrong somewhere are becoming harder to ignore. Prolonged economic stagnation, widespread environmental degradation, the rise of extremism, increased militarisation and the displacement of millions of people - these are worrying indications that the global economy is struggling to sustain itself, never mind the hopes and dreams of future generations.
In the decades since the publication of Limits to Growth, the case for a so-called “steady state” economy has continued to be made, and ignored. Former World Bank economist Herman Daly has spent most of his life trying to break through official, academic and public complacency. Since 2008, his ideas have been slowly gaining traction. In 2009 the head of Britain's Sustainable Development Commission, economics professor Tim Jackson, authored a report titled Prosperity without Growth suggesting detailed and practical ways of achieving a managed descent instead of waiting for collapse.
There are any number of websites devoted to the subject and a steady stream of books with titles like, “Enough is enough” (you can see the video here), “The end of growth”, “Why your world is about to get a whole lot smaller”, and “The great disruption”.
It is not all gloom and doom. Most steady staters insist that the post-growth world could be a far nicer place to live, where innovation and creativity flourish as people are relieved of the constant pressure to produce and consume more and more stuff to feel good about themselves. It could be a slower, gentler world, where quality is valued over quantity, where status is based on achievement and contribution to society rather than wealth, where no-one is in need and everyone has more free time. Of course the usual experts will scoff at the very idea and insist that all the world needs to sort out its problems is growth, growth and more growth. But then, what do they know? DM