“Out of the frying pan, into the fire” is an apt description of our current place in history. No matter what you think of globalization and economic growth, I believe we’ll soon discover that capitalism without them is much, much worse.
Of course, no one has to convince establishment economists, politicians and pundits that the absence of economic growth spells trouble. They’ve always extolled globalization as the Viagra of economic growth. But globalization has never been popular with everyone. Many believe that capitalism generates tremendous wealth and power for a tiny fraction of the Earth’s seven billion people, makes room for some in the middle class, but keeps most of humanity destitute and desperate, while trashing the planet and jeopardizing human survival for generations to come.
A loose alliance of ecology and labor activists, small farmers, indigenous peoples and human rights advocates has disrupted international economic summits for many years. They say malignant capitalism demolishes habitats and poisons ecosystems, wreaks havoc with the climate, destroys indigenous cultures, pushes farmers off their land and into slums and erodes wages by pitting desperate workers around the globe against one another. At annual World Social Forums, these social movements voice their opposition to globalization and growth and unite around the belief that “Another World Is Possible!” They work toward the day when neoliberal globalization is replaced by a more democratic, equitable, Earth-friendly society.
Since globalization is so damaging, most activists assume that any future without it is bound to be an improvement. But now, it appears that this assumption may be wrong. In fact, for all of its depredations, future generations may someday look back on capitalism’s growth phase as the halcyon days of industrial civilization, a naïve time before anyone realized that the worst was yet to come.
Today, worldwide energy and financial crises – that some call peak oil and peak debt – are beginning to permanently strangle globalization and growth. At the fulcrum of this historic tipping point lies the hard fact that civilization is running low on the only concentrated source of power we know of, whose energy return on energy invested (net energy) is large enough to sustain relentless growth. Today, the unparalleled economic take-off fueled by the Age of Fossil Fuels is reaching its apex. The rapacious flight to the top was powered by the Earth’s dwindling hydrocarbon reserves. From these lofty heights, the drastic drop-off ahead appears perilous. As fossil fuel extraction fails to meet global demand, economic contraction and downward mobility will become the new normal and growth will fade into memory. But will this new growth-less future bear any resemblance to the one for which activists have been fighting?
Peak oil brings no relief to climate activists like Bill McKibben, since there is more than enough carbon left in the planet’s accessible fossil reserves to unleash horrific climate catastrophes. Nevertheless, optimistic Green reformers like Al Gore, Jeremy Rifkin and Lester Brown see a window of opportunity at this historic juncture. For years, they’ve jetted from one conference to the next, tirelessly trying to convince world leaders to embrace their planet-saving plans for a sustainable, carbon-free society before it’s too late. They hope energy scarcity and economic contraction can act as wake-up calls, spurring world leaders to embrace their Green New Deals that promise to save capitalism and the planet.
Their message is clear: rapid, fossil-fueled growth is burning through the Earth’s remaining reserves of precious hydrocarbons and doing untold damage to the biosphere in the process. Businesses must lead the way out of this dangerous dead end by adopting renewable energy and other planet-healing practices, even if it means substantial reductions in growth and profits. But, despite their dire warnings, hard work, innovative proposals and good intentions, most heads of state and captains of industry continue to politely ignore them.
The more radical activists in the anti-globalization movement also hope climate chaos, peak oil and economic contraction will become game changers. Many assume that economic growth is so essential that capitalism must fail without it. And, as it does, social movements will seize the opportunity to transform this collapsing system into a more equitable, sustainable one, free of capitalism’s insatiable need to expand at all costs.
Both the optimistic reformers and the radical anti-globalization activists misunderstand the true nature of capitalism and underestimate its ability to withstand – and profit handsomely from – the great contraction ahead. Growth is not the primary driving force behind capitalism – profit is. When the overall economic pie is expanding, many firms find it easier to realize profits big enough to continually increase their share price. But periods of crisis and collapse can generate huge profits as well. In fact, during systemic contractions, the dog-eat-dog nature of capitalism creates lucrative opportunities for mergers, hostile takeovers and leveraged buyouts, allowing the most predatory firms to devour their competition.
One of capitalism’s central attributes is opportunism. Capitalism is not loyal to any person, nation, corporation or ideology. It doesn’t care about the planet or believe in justice, equality, fairness, liberty, human rights, democracy, world peace or even economic growth and the “free market.” Its overriding obsession is maximizing the return on invested capital. Capitalism will pose as a loyal friend of other beliefs and values, or betray them in an instant, if it advances the drive for profit … that’s why it’s called the bottom line! Growth is important because it tends to improve the bottom line. And ultimately, capitalism may not last without it. But those who profit from this economic system are not about to throw up their hands and walk off the stage of history just because boom has turned to bust. Crisis, conflict and collapse can be extremely profitable for the opportunists who know where and when to invest.
But how long can this go on? Can capitalism’s profit motive remain the driving force behind a contracting economy the net energy returns of which are too paltry to generate growth? Definitely – but the consequences for society will be grim indeed. Without access to cheap energy to extract resources, power factories, maintain infrastructure and transport goods around the world, capitalism’s productive sector will lose its position as the most lucrative source of profit and investment. As profits dwindle, factories close, workers are laid off, benefits and wages are slashed, unions are broken and pension funds are raided – whatever it takes to remain solvent. Transnational corporations will find that their size, complexity and economies of scale have become liabilities rather than assets.
Declining incomes and living standards mean poorer consumers, contracting markets and shrinking tax revenues. Of course, collapse can be postponed by using debt to artificially extend the solvency of businesses, consumers and governments; but without growth, paying off debts with interest becomes futile, eventually. And, when the credit bubbles burst, the defaults, foreclosures, bankruptcies and financial fiascos that follow can paralyze the economy.
Without the capacity for growth, the recessions and depressions of times past, that temporarily disrupted production between long periods of expansion, now become chronic features of a contracting system. On the downside of peak oil, neither liberal programs to increase employment and stimulate growth nor conservative tax and regulatory cuts have any substantial impact on the economy’s descending spiral. Both production and demand remain so constricted by low net energy that any brief growth spurts are quickly stifled by resurgent energy prices. Instead, periods of severe contraction and collapse may be buffered between brief plateaus of relative stability.
In a growth-less economy, the profit motive can have a powerful catabolic impact on society. The word “catabolism” comes from the Greek and is used in biology to refer to the condition whereby a living thing feeds on itself. Catabolic capitalism is a self-cannibalizing economic system.
The essence of catabolic capitalism is captured by the riotous train scene in the film “The Marx Brothers Go West.” The wacky brothers commandeer a locomotive that runs out of fuel. In desperation, they ransack the train, breaking up the passenger cars, ripping up seats and tearing down roofs and walls to feed the steam engine. By the end of the scene, terrified passengers desperately cling to a skeletal train, reduced to little more than a fast moving furnace on wheels.
Without fuel to generate growth, catabolic capitalists stoke the profit engine by taking over troubled businesses, selling them off for parts, firing the workforce and pilfering their pensions. Scavengers, speculators and slumlords buy up distressed and abandoned properties – houses, schools, factories, office buildings and malls – strip them of valuable resources, sell them for scrap or rent them to people desperate for shelter. Illicit lending operations charge outrageous interest rates and hire thugs or private security firms to shake down desperate borrowers or force people into indentured servitude to repay loans. Instead of investing in struggling productive enterprises, catabolic financiers make windfall profits by betting against growth through hoarding and speculative short selling of securities, currencies and commodities.
Social benefits, legal and regulatory protections and modern society itself will also be sacrificed to feed the profit engine. During a period of contraction, single-minded catabolic capitalists put their lawyers and lobbyists to work tearing down any legal barriers to their insatiable appetite for profit. Regulatory agencies that once provided some protection from polluters, dangerous products, unsafe workplaces, labor exploitation, financial fraud and corporate crime are dismantled to feed the voracious fires of avarice.
Society’s governing institutions of justice, law and order become early victims of this catabolic crime spree. Public safety is stripped down, privatized and sold to those who can still afford it. As budgets for courts, prisons and law enforcement shrivel, private security firms hire unemployed cops to break strikes, provide corporate security and guard the wealthy in their gated communities. Meanwhile, the rest of us will be forced to rely on alarm systems, dogs, guns and – if we’re lucky – watchful neighbors to deal with rising crime. Meanwhile, privatized prisons will profit by contracting convict labor to the highest bidders.
As tax-starved public services and social welfare programs bleed out from deep budget cuts, profit-hungry capitalists pick over the carcasses of bankrupt governments. Revenues for social security, food stamps and health care programs are chopped to the bone. Public transportation and decaying highways are transformed into private thoroughfares, maintained by convict labor or indentured workers. Corporations scarf up failing public utilities, water treatment, waste management and sewage disposal systems to provide businesses and wealthy communities with reliable power, water and waste removal. Schools and libraries go broke, while exclusive private academies employ a fraction of the jobless teachers and university professors to educate a shrinking class of affluent students.
In the previous era of industrial expansion, catabolic capitalists were marginal profiteers, living in the shadows of the growth economy. They were the illicit arms, drugs and sex traffickers; the loan sharks, debt collectors and repossessors; the smugglers, pirates, poachers, black market merchants and pawnbrokers; the illegal waste dumpers, shady sweatshop operators and unregulated mining, fishing and timber operations.
As the productive sector contracts, this corrupt, cannibalistic sector emerges from the shadows and metastasizes rapidly, thriving off conflict, crime and crisis; hoarding and speculation; insecurity and desperation. Catabolic capitalism flourishes because it can still generate substantial profits by dodging legalities and regulations; stockpiling scarce resources and peddling arms to those fighting over them; scavenging, breaking down and selling off the assets of the decaying productive and public sectors; and preying upon the sheer desperation of people who can no longer find gainful employment elsewhere.
Cannibalistic profiteers can thrive in a growth-less environment for quite some time, but ultimately, an economy bent on devouring itself has a dismal, dead-end future. Nevertheless, changing course will be difficult because, as the catabolic sector expands at the expense of society, powerful cannibalistic capitalists are bound to forge influential alliances, poison and paralyze the political system and block all efforts to pull society out of its economic nosedive.
Catabolic enterprises are not the only profit-makers in a growth-less economy. Even a contracting economy must extract energy and other resources from the Earth. Unless the profit motive is removed by bringing these assets under public control, fresh water, farm land, timber, energy and mining corporations will deploy their lobbying muscle to completely privatize these vital resources and enhance their bottom line with government subsidies, tax breaks and “regulatory relief.” The growing capital and technology commitments needed to commodify scarce resources may cut deeply into profit margins. As less solvent outfits fail, the remaining politically connected resource conglomerates may maximize their profits by forming cartels to corner markets and send prices soaring while blocking all attempts at public regulation and rationing.
The extractive and the catabolic sectors of capitalism have a lot in common. An alliance between them could put irresistible pressure on failing federal and state governments to open public lands and coastlines to unregulated offshore drilling, fracking, coal mining and tar sands extraction. Scofflaw resource extractors and criminal poaching operations proliferate in corrupt, catabolic conditions where legal protections are ignored and shady deals can be struck with local power brokers to maximize the exploitation of labor and resources. To pay off government debt, national and state parks may be sold and transformed into expensive private resorts while public lands and national forests are auctioned off to energy, timber and mining corporations.
So, is catabolic capitalism inevitable? What about Green capitalism? Isn’t there money to be made in wind, solar and geothermal energy? What about redesigning transportation systems, buildings and communities? Couldn’t capitalists profit by producing alternative energy technologies if government helped finance the unprofitable, but necessary, infrastructure projects needed to bring them online? Wouldn’t a Green New Deal be far more beneficial than catabolic catastrophe?
Catabolic capitalism is not inevitable. However, in a growth-less economy, catabolic capitalism is the most profitable, short-term alternative for those in power. This makes it the path of least resistance from Wall Street to Washington. Green capitalism is another story. As both radical Greens and the corporate establishment realize, Green capitalism is essentially an oxymoron. Truly Green policies, programs and projects contradict capitalism’s primary directive – profit before all else! This doesn’t mean there aren’t profitable niche markets for some products and services that are both ecologically benign and economically beneficial. It means that capitalism’s overriding profit motive is fundamentally at odds with ecological balance and the general welfare of humanity.
In its growth phase, capitalism used fossil fuels to turn an enormous profit. Capitalists used machines and desperate workers to transform the Earth’s resources into an ever-expanding marketplace of disposable commodities. But energy scarce, catabolic capitalism can be profitable as well – by tearing down, hoarding and auctioning off society’s shrinking assets; selling weapons to those fighting over them; and exploiting the desperation of those willing to do whatever it takes to stay alive.
But profit is a problem for stable, ecologically balanced societies. The profusion of insidious opportunities to exploit greed and fear, so prevalent in capitalism’s manic-depressive economy, drop to a manageable minimum in a healthy economy that encourages people to take care of each other and the planet. While people and the planet may thrive in a sustainable society, the self-centered drive for profit and power cannot. Thus, capitalists will resist, to the bitter end, any effort to replace their dysfunctional bipolar economy with a stable one.
Would the transition to a sustainable society be expensive? Of course. Our petroleum-addicted infrastructure of tankers, refineries, pipelines and power plants; cities, suburbs, gas stations and freeways; shopping centers, mega-farms, fast food franchises and supermarkets would have to be replaced with smaller towns fed by local farms and powered by decentralized, renewable energy. But the cost of making this Green transition is a priceless bargain compared to the horrific consequences of suicidal catabolic collapse.
The real problem isn’t price; it’s politics … breaking the death grip of profit-driven corporate power over our lives. (A discussion of this daunting struggle will be the subject of the upcoming article: “Defending the Future.”)