Wednesday, November 16, 2011

On the Economy: Shrinking Pains

Natural systems do not grow forever. Populations either reach a certain point and then stabilize as they rub up against competitors and resource limits, or they drop off a cliff as they exhaust their resources. The real core of the economic crisis we are facing now is that the economy is an artificial system that has been built on a foundation of unlimited growth. At every stage it is simply assumed that growth is the ultimate goal. 

Sales had better be up, consumption had better be up, resource extraction and manufacturing and profits had better be up! 
Even as we're hoping our economy will generate more wealth and jobs, we're hoping for stabilization in world population figures. And there's actually good news here: we're seeing a slowdown in population growth. We may have passed the seven-billion-people mark, bet getting to eight will take longer than it took to get from six to seven. 

But consider: if the population doesn't grow faster this year than last year, how can we have sales that grow faster this year than last year? What happens when we reach the point where everyone simply has enough stuff, and stops buying more? And given that our currency actually represents debt (not gold, not grain, not any naturally occurring commodity), how can it continue to grow if people tire of borrowing to purchase things they do not need.

It becomes harder to make money. The incentive for crooks within the financial system to steal and cheat becomes irresistible, and soon the whole system itself is a farce. (See the Lehman Brothers collapse, the “too big to fail” bailouts, etc.)

So how can we build a financial system without a foundation of constant growth? 

Our current situation is unprecedented. The world population has never faced a slowdown in growth, never mind a decline. (The Black Plague may have decimated Europe, but it put just a tiny dent in the world population.) This turnaround is something to celebrate. It's a success of the world's increasing prosperity and education. Given that no population can grow at an accelerating pace forever (just ask any petri dish full of bacteria) we should thank our lucky stars that this is happening. 

But can we build an economic system that rewards stability instead of growth? Is it a matter of regulating the money supply? Could we turn back from debt based currency to a gold or silver standard? Or do we need to reconsider what incentives people respond to? Rather than measuring success as taking more profits than your neighbor, can we build a culture that fosters stable communities, humane working environments, and supportive relationships?

That's hippy-dippy, pie in the sky utopia talk, for sure. But the alternative sounds dreadful. If we can't adapt our economy to a population that isn't growing at a constantly accelerating pace, then both the economy and the population are bound to collapse with a viciousness that is as brutal as it is inevitable.

I don't hear anyone else asking these questions. The silence horrifies. 

Instead, I hear Bill Clinton talking about ways to restart growth. I see companies scrambling to drive down costs to save their profits in the face of declining sales, producing cheap products that suck in working environments that are inhumane. I sit in meetings where everyone breathes a sigh of relief if our percentages are just a little higher than last year's, and we say, "well, at least we haven't started to slow down yet," in the knowledge that the minute we do, we're dead. I hear European politicians saying things like, "Only growth can lift us out of the Eurozone crisis," but they never say where the growth is going to come from, who is going to buy their exports, or what fuel will power their factories to run faster than they're running now. And then I see reports of entire cities in China, skyscrapes and condominiums and shopping malls, vast and shining and new, without a single person who can afford to live in them. The government is building for the sake of their growth reports, while their citizens live in shacks, five families to one bathroom, not a one of them able to afford the empty prosperity looming above them. 

The wealth is there. The buildings are there. Why not just let the people...move in? 

An economic crisis seems like the most artificial folly on the face of the planet. Markets crash; the sun still rises, the tides flow in and out, birds still sing, all oblivious to the fact that debt figures hit some number and stocks are in the tank. An ounce of gold doesn't know it's worth ten times as much because people are desperate. 

This is a collapse of fiction. But it's been such a rewarding fiction, for so long, that we'll struggle to maintain it for as long as we can. We'll give absolutely everything we can to believe our lives can keep going on like this forever. We'll give everything we can, until we have nothing left.


  1. seven *billion* people, my friend. not million :D

  2. Thanks Ted. Corrected.

    What's a few thousand million people among friends?

  3. I think we need to change our national, and our world, paradigm. We got, in this country, in the habit of such rampant consumerism that we tossed quality in the trash for most products, making products designed for lowest price and disposability. Yes, it creates more product to be bought, but it also creates more waste. We as typewriter lovers should know this as well as anyone! My first washing machine lasted me 25+ years; the last one 11 years and the new one I just bought is projected for 5 years. Do you realize that only 27% of this country's land is inhabited? We have room-that's not the issue-the issue is that our economic engine is not sustainable, never was and never would be. And no one can survive solely on a service-oriented economy without producting anything. RichardK/TX
    Thanks for a most insightful posting!

  4. It also disturbs me to see people actually buying into the old Reagan thing about the government being the problem. We ARE the government, we elect these people, we re-elect these people, so we get what we deserve, no matter what political stripe we follow. This is not the first period in our history when politicians have put greed ahead of the country. The worst period, actually, was the last quarter of the nineteenth century. We are the least educated populace in 150 years, due to decline in printed media, and the eagerness of our countrymen to get their opinions in sound bitees off of the "fair and balanced" TV demagogues. It won't work. RichardK/TX

  5. Thank you for saying it out loud, Winston. More people have to. Your presentation is thoroughly convincing (although I must quibble with the "hippy-dippy, pie in the sky utopia" characterization as unfairly, wrongly ridiculing). To the idea that there is plenty of land: should people be even more crowded together? To the idea that products are made to break quickly in order to keep employment up: that, and other make-work concepts, are just that--make-work. I content that there is no shortage of jobs, because everything that needs doing is getting done; there are just too many people for the planets workload (in addition to the resources question). And I do not intend anything drastic by that contention. There is much more to the topics than I can put in a comment, so just let me point you all to Center for the Advancement of the Steady State Economy (CASSE) at and their links.

  6. Michael - I didn't know about CASSE but I'm glad to see it. It's nice to know I'm not alone in wondering about this.

    Richard - I meant the "hippy dippy" thing at least a little ironically, in that it seems to be the standard knee-jerk reaction whenever anyone starts proposing sustainable policy. And the problem with the government that we elect is that we aren't given the choices of responsible candidates, anymore. By the time we get to vote, the media has filtered the field down to the most corrupt individuals, the ones it's easiest for special interests to control. Else they wouldn't have gotten the media exposure they needed to run in the first place. The Rep/Dem split seems so laughable, these days, with both sides determined to wreck the planet and screw the population.

    Some of the responsibility for this lies on the voters, for being ill-informed. But just where are we supposed to get our information, when the institutions tasked with providing it are in the hands of special interests?