This “Chapter Eighteen” is part twenty of Truthout’s continuing series of excerpts from Gar Alperovitz’s “America beyond Capitalism.”
This is an exclusive Truthout series from political economist and author Gar Alperovitz. We are publishing weekly installments of the new edition of “America Beyond Capitalism,” a visionary book first published in 2005, whose time has come. Donate to Truthout and receive a free copy.
Pluralist Commonwealth strategies aim to undercut forces that permit unrestrained expansion by building up converging lines of foundational restructuring over time, especially those that reduce key inequality and psychological consumption drivers and develop new community cultural norms.
The overriding issue of ecological sustainability offers a final perspective on the problem of resource allocation, the need for new political-economic strategies, and the possibility of additional groups that might one day join in a realignment of U.S. politics around Pluralist Commonwealth themes. It also casts important light on how a number of initiatives might be combined to reinforce one another and to undergird a longer-term model of sustainable development if and when new political possibilities open up over the course of the century.
Although there is dispute about the precise dimensions of the problem, prudence alone suggests the importance of confronting basic ecological limits. The issue goes beyond the narrow question of physical depletion of specific resources. A deeper problem is the system’s finite capacity to deal with the secondary effects of our current mode of economic activity – what ecologists call “sink” problems. The earth’s atmosphere simply cannot absorb infinite amounts of carbon dioxide produced by burning fossil fuels; its water systems cannot absorb the runoff of nitrate-based fertilizers used in modern food production without damage to the ecosystem.
Again, the developed world in general – with the United States leading the way – consumes an extraordinary proportion of the world’s goods and services. In 1999 the World Bank estimated that the world’s wealthiest nations – with roughly 16 percent of the global population – were responsible for 80 percent of private consumption. The United States, with less than 5 percent of the global population, consumes roughly 25 percent of the world’s beef. Americans use 26 percent of world oil, 26 percent of world coal, and 27 percent of world natural gas. Research by two government metallurgists suggests that in the brief period from 1940 to 1976, Americans alone used up as large a share of the earth’s mineral resources as did everyone in all previous history.
The late Kenneth Boulding has put the central point acerbically: “[A]nyone who believes that exponential growth can go on forever is either a madman or an economist.” (Boulding, himself a highly regarded economist, was impatient with many in his own profession who were unwilling to look beyond the limits of narrowly defined technical concerns.)
“We are practicing a kind of commerce,” adds Ed Ayres, the editor of World Watch magazine, “that is drawing down the Earth’s finite resources – its topsoil, water tables, and genetic resources – far faster than natural processes can regenerate them.”
Numerous near-term proposals have been offered to promote greater ecological sustainability – from carbon taxes, recycling efforts, and renewable energy policies, to programs to reduce population growth. Most sophisticated observers understand, however, that even the most promising initiatives are likely at best (possibly) to slow the growth of – rather than reverse – ever worsening trends. A coherent approach thus also requires a long-term strategy for dealing with the underlying drivers that create unsustainable growth.
At the outset of the twentieth century Thorstein Veblen coined the phrase “conspicuous consumption” to describe a form of materialism that has far more to do with demonstrating one’s place in society than it does with meeting a physical or other need. Modern scholars have explored related concepts – including hunger for the kinds of “positional goods” that only elites can afford, pressures to emulate those ahead of one in career ladders, defensive strategies to keep from falling behind, and many similar efforts.
Just how strong such pressures can be is suggested by studies of what Americans feel they need in order to achieve their hoped-for goals. In 1986, when median family income was only $29,458, survey researchers found that on average Americans felt they really needed far, far more – $50,000 – if they hoped to fulfill their dreams. This benchmark, of course, only offers a snapshot at one moment in time. The ongoing moving picture reveals a deeper dynamic. Only eight years later, in 1994, what people felt they needed had more than doubled – to $102,000 (while actual median family income had risen to only $38,782 in current dollars).
Not surprisingly, even as incomes have grown over time, Americans (and others) have not experienced greater happiness. Quite the contrary; given the expanding dimensions of their unsatisfied aspirations, millions feel they are on a treadmill running faster and faster simply to stay in place. Over the roughly four-decade period between 1957 and 1995, the U.S. economy and consumption expenditures both just about doubled. The proportion of Americans who described themselves as “very happy,” however, did not change in any significant way.
Ever more expansive materialism is driven in significant part by the pattern set by those who can afford high-level purchases. After “the rich and super-rich began a bout of conspicuous luxury consumption” in the early 1980s, Juliet Schor reports, members of “the upper middle class followed suit with their own imitative luxury spending.” In turn, the 80 percent below who lost ground also “engaged in a round of compensatory keeping-up consumption.”
As we have noted previously, even when there is no worsening in the relative distribution of income, as economic growth continues over time there must be an expanding absolute gap between those at the top and those at the bottom. To recall, if I have $50,000 this year and you have $1,000 – and next year I have $100,000 and you have $2,000 – the relative distribution of income has not changed since the ratio between our incomes remains constant at 50 to 1. However, the real-world distance between us has gone from $49,000 to $98,000.
Dynamic processes of the kind that systematically expand the gap between those at the top and those at the bottom generate a powerful “envy machine” – a social and cultural dynamic in which even those who climb the ladder, step-by-step, regularly experience the space between the rungs getting greater and greater and the distance to the top farther and farther away as they climb (if, in fact, they do climb).
“Compensatory consumption” to keep up is also driven by factors that are not directly related to envy or status. Essential to getting into a top college is a high-quality primary and secondary education. However, as Robert Frank has observed, for those who can only send their children to public schools, this almost always requires purchasing a home in a neighborhood supportive of good schools – that is, a location where prices are inflated by high incomes at the top.
Again, the “arms race” among car buyers is not simply a matter of taste or status-striving. To the extent that drivers of small, relatively fuel-efficient cars face the possibility of collision with a 7,500-pound Ford Expedition, they may understandably feel compelled to buy a larger car for the sake of safety alone.
The capacity of top elites to keep raising the bar in connection with consumption is almost unlimited. Income received by the ten most highly paid CEOs in the United States, as we have noted, rose from an average of $3.5 million in 1981 to an impressive $19.3 million in 1988. By 2000 it had skyrocketed to an average of $154 million. Meanwhile workers’ wages did little more than slightly outpace inflation during the same decades.
Several scholars have urged reforms that begin to suggest an initial line of attack on the expansive consumption and resource challenges created by such pressures and relationships. Schor, for instance, proposes ending the tax deductibility of advertising costs by corporations as a way to reduce some forms of unnecessary consumption. Schor and others also urge new taxes on luxury items. One specific proposal would provide that “the high-end, status versions of certain commodities would pay a high tax, the mid-range models would pay mid-range taxes, and low-end versions would be exempt.”
It helps to be specific about the meaning of the term “luxury items.” We have noted expensive grills, wristwatches, handbags, automobiles, and the like. The luxury (limited edition) fountain pen market, with prices ranging up to $230,000 for a single pen, is now large enough to have attracted thirty-five competitors. (One recent entrant, Renaissance Pen Company, offers a gold-and-diamond “Michel Perchin” line averaging $45,000 for each pen.) Nokia recently launched a line of handmade cell phones with sapphire crystal displays and precious jewels as buttons – with a price tag of $19,450. In 2002 Mercedes-Benz introduced a new Maybach sedan with base prices beginning at $310,000 to $360,000; Ferrari had a three-and-a-half-year waiting list for its $170,000 360 Modena Spider.
A somewhat broader approach is Frank’s proposal for a progressive consumption tax to replace the federal income tax. This would exempt all savings from taxation – plus an additional $7,500 deductible amount per person ($30,000 for a family of four). It would then steadily increase the progressivity of taxes on the remaining income devoted to consumption – with a top marginal tax rate of 70 percent on income and consumption expenditures above $500,000.
Important as such measures are, addressing the huge and growing income disparities that drive wasteful consumption patterns would clearly ultimately require much more far-reaching strategies to deal with the underlying social and economic dynamics. One obvious element of a long-range approach converges with elite-challenging efforts that have emerged in connection with other Pluralist Commonwealth issues – namely, greater elite taxation, including wealth taxes and a return to income taxes that might range up to pre-Reagan era rates of 70 to 91 percent for the top 1 to 2 percent.
Long-haul strategies that challenge elite income and wealth, and thereby consumption, serve both an economic and a larger cultural purpose. They begin to give content to the ecologically – and for many, morally – important principle that at some point enough is enough (or should be). Just as the environmental standards developed in local community processes help lay the groundwork for longer-term change, such strategies contribute to the development of norms that might ultimately undergird a fully developed long-term “sustainability” policy regime.
A proposal by the former chairman of the House Budget Committee, Martin Sabo, points to a further issue that a serious long-term approach would also need to address – namely, the ratio of income at the top to income at the bottom (i.e., not simply the extraordinary levels of elite income). Sabo has proposed legislation that would eliminate the deductibility to corporations of compensation at the top that is more than twenty-five times that at the bottom.
Taxation that challenges excessive elite income and consumption – both economically and culturally – could also help generate resources that might in turn be channeled back to support an expanded EITC-type program to raise floor-level incomes, thereby reducing the social distances that contribute to compensatory consumption. Additional precedents for dealing with inequality from the bottom up include increasing minimum wage levels and enacting “living wage” requirements.
Over the course of the century, a comprehensive strategy to undercut excessive materialism might slowly reduce ceiling levels of elite income (or minimally, slow the rate of increase of ceiling levels) at the same time that low-income floor levels are raised – so that ultimately the income distribution might begin to compress toward greater degrees of equality.
Additional sources of revenue could be tapped for these and related purposes. We have noted that corporate taxes declined from 35.4 percent of all federal budget receipts in 1945 to 7.4 percent in 2003. Even a partial return to levels of previous years would produce significant revenue flows. (Several states have demonstrated that it is politically feasible to move much more aggressively in this area. New Jersey, for instance, more than doubled its corporate tax levy in 2002 – after twenty years of decline.
David Bollier, the author of Silent Theft, has clarified the potential of another source of funding that might be drawn upon for such purposes – increasing the royalties from public mineral, timber, and other resource extraction; from the use of public airwaves and the electromagnetic spectrum; from government-funded research (particularly in connection with pharmaceuticals); and from the use of government’s extensive information holdings and other segments of the public “commons.” Bollier suggests establishing “stakeholder trusts that give all citizens a personal stake in public assets.” In similar fashion, trusts might be used to fund such important public goods as education, public broadcasting, and land conservation.
Bollier points out that the management of the public lands that comprise one-third of the nation has for decades been characterized by “sweetheart deals pushed through Congress and federal agencies.” Corporations “have obtained discount access to huge quantities of publicly owned oil, coal, minerals, timber and grass-lands while wreaking serious environmental havoc.”
A related proposal is that of Peter Barnes, the author of Who Owns the Sky?, for a “Sky Trust” funded through the sale of permits for the right to release carbon into the atmosphere. The Sky Trust would make annual payments to each U.S. citizen in a manner similar to that of the Alaska Permanent Fund. Barnes has also proposed a tax of perhaps 5 percent on all initial public offerings of stock to capture some of the value created by the public by virtue of its maintenance of the federal securities regulatory system.
Large-order longer-term system-wide Pluralist Commonwealth Public Trust strategies could permit the development of additional income flows not dependent upon either taxation or increased royalties and the sale of permits. Here a key question is not only who owns the existing productive wealth of the nation, but who will own the new wealth that will inevitably be created in the future.
The United States will be built and rebuilt anew over the course of the twenty-first century. Much of the capital infrastructure – homes, roads, public and private buildings, all forms of equipment and transportation, virtually everything of significant durability – will be replaced and substantially increased. On conservatively estimated current replacement rates, new factories will take the place of old ones at least twice during the century (and the equipment within them will be replaced at least six times), new offices will take the place of old ones at almost the same rate (and office equipment will be replaced fourteen times), warehouses will be replaced twice – and then again early in the following century.
As population moves from 270 million to 400 million and beyond, other entirely new productive investments will also be needed – adding the equivalent, minimally, of capital roughly half again as large as our current stock (far more, of course, if Census Bureau population projections moving toward the 1 billion range are realized).
As we have seen, Louis Kelso and others have put forward strategies that utilize public loan guarantees or other widely accepted forms of government-backed insurance to finance new capital formation aimed at broadening wealth ownership. Strategies based on the same principle could also provide a major long-term source of capital for Public Trust investment aimed at producing income flows to help narrow the growing income gap and for other public purposes.
The invidious comparison and envy machine mechanisms associated with great inequality are not the only sources of ecologically unsustainable growth. Other underlying drivers involve the foundational conditions of everyday work and community life. Among the well-known pressures generating status-oriented consumption in this regard are economic insecurity, a dearth of meaningful personal relationships and a sense of community, and insufficient time and encouragement to pursue creative and fulfilling activities that do not require materialist consumption.
Psychologists Tom Kasser, Richard Ryan, and several other researchers have shown, for instance, that low levels of life satisfaction in social and family relationships are strongly correlated with high levels of materialism. “Faced with the loneliness and vulnerability that come with deprivation of a securely encompassing community,” New York University professor Paul Wachtel writes, “we have sought to quell the vulnerability through our possessions.” What is often interpreted as materialism, adds Thomas Power, is in reality a “demonstration of the pathologies of social deprivation.” What is really being sought “is participation in authentic social and natural worlds.”
Sophisticated advertising professionals exploit this painful reality: Barry Feig, the author of Marketing Straight to the Heart, tells fellow marketers that one of the best ways to increase sales is to stress the “real reasons” (as opposed to the “logical reasons”) people make purchases – “hot button” emotional needs, including “desire for control,” “family values,” the “nurturing response,” and the “need for belonging.”
A number of the community-oriented strategies explored in Part II help open the door to dealing with foundational problems of this kind – especially specific policies aimed at achieving greater local economic stability and thereby individual job security, and the emphasis placed upon strategies designed to nurture community economic and social well-being. Locally anchored worker-owned firms, CDCs, municipal enterprises, and the like also further such goals (as well as the general principle that wealth ownership should benefit the larger community).
The development of a secure community, as we have seen, is of strategic – not simply tactical – importance for other reasons as well. In the absence of economic security localities have very little ability to resist corporate relocation threats that run counter to a variety of ecologically significant measures. This, in turn, weakens the general capacity of communities to develop ongoing support for ecologically significant standards.
Wealth-related approaches to financing changes in work pressures and free time could also obviously help increase community participation and contribute to nurturing the networks that sustain and create the reality of “community” as a lived experience. Free time is the precondition, too, of developing meaningful individual pursuits in the arts, crafts, and education – and thereby encouraging ways other than consumption to fulfill personal identity goals.
Viewed in broader historical perspective, it is clear that the growth and power dynamics of large economic enterprises (private and public alike) present fundamental environmental challenges in all political-economic systems. Corporate growth-driven priorities that are inimical to a regime of reduced consumption, reduced material resource use, and ecological sustainability are particularly difficult to contain. In general, the Pluralist Commonwealth strategies attempt to slowly and steadily undercut the economic and social forces that permit unrestrained expansion by building up converging lines of foundational restructuring over time. Especially important are those that reduce key inequality and psychological consumption drivers, on the one hand, and measures designed to establish conditions needed to develop new community cultural norms, on the other. In addition, public accountability and transparency are basic principles of the Public Trust and other public wealth-investing institutions. We have previously also noted some of the ways public utilities have achieved high efficiencies and reduced energy consumption.
In all of this, we are again obviously beginning to confront some of the most far-reaching and difficult issues likely to challenge not only the U.S. political economy but virtually every political economy over the coming century. It is by no means clear that viable solutions will ever be found to the problem of ecological sustainability – or that those concerned with the environment will come to terms with the need to form alliances with others beginning to confront some of the common resource-related issues and systemic questions involved.
What is clear is that any attempt to deal seriously with the central issues will ultimately require a self-conscious effort to move beyond the conceptual limits of traditional approaches to consider strategies that confront the underlying sources of the problem.