Why the LibCon’s “Big Society” won’t work and the structural problems in the Global Economy.
The libertarian ideals that are behind the drive in the UK, the USA and elsewhere for smaller government, lower taxes and a more responsible, ethical and caring civil society are admirable but fatally flawed. Like many people, I have always been hugely attracted to libertarian concepts of personal responsibility and personal freedom but I have also been very aware that attractive ideas are often wrong. As global problems such as poverty, climate change, peak oil and failing economies impinge ever more strongly upon those least able to stand up for themselves, this is the very worst time for political movements to press for welfare systems to be shrunk, cut or dismantled.
The global economy, upon which all but the rarest of agrarian, subsistence economies rely is in deep trouble: the job market is shrinking while populations rise; consumerism is threatened by depleting resources and higher costs; credit, though available to those who qualify at temporarily low interest rates, is increasingly dependent upon collateral and a steady, high income and, furthermore, success in any field is becoming more and more competitive. In short, the race that is global consumer-led capitalism is nearing the finishing line of resource depletion and only the most competitive of individuals are likely to be out in front as the end of the race draws near.
Against this background of gloom and struggle, we have also to deal with corruption and risk-taking on a massive scale in our banks and institutions and a frightening loss of biodiversity; and, while many major politicians are well aware that reforms and structural changes are desperately required to return us to a sense of order and confidence, all such positive actions will be doomed to failure unless the basic problems are tackled at root. We do not require our politicians merely to provide a sense of order and confidence; we need them to acknowledge that what is broken is the system of consumerism itself – not our society.
Nearly 20 years ago, the 1992 Rio Conference, a glorious failure that promised so much, did a huge amount to publicise the limits to growth that consumerism faces. But, though the growing environmental movement did their best to sway the sceptical political elite to take these issues seriously, what emerged were three watered down treaties that did little to challenge the structures that underpin the global consumerist project. Agenda 21, The Climate Convention and The Biodiversity Treaty undoubtedly kick-started an environmental agenda that now is acknowledged by the vast majority of governments around the world; yet those same governments are still committed to bolstering the failing status quo as if we might somehow ‘wish’ ourselves out of trouble.
In my 1996 address to the Green Shift Symposium, I outlined why I thought the structural blocks to sustainable development would not be laid by Agenda 21 if governments were hell-bent on denying the physical limits to consumerism. Then, as now, it is clear that resources are limited and that, at some point in the near future, the expansion of consumerism will come up against those resource limits. And though the 19th Century Malthusian concept of limits to growth has been consistently rubbished over the years by those who would deny the maths, Malthus’ general point is still as true as it ever was – at some point limits will be reached and that point is staring us in the face.
Changes in technology, improved efficiencies and a levelling-off of population growth through the alleviation of poverty will undoubtedly buy us time but real physical limits can not be thwarted by good intentions – what is needed is a complete re-evaluation of how the global economy actually functions, how it needs to be changed and how welfare might be funded by whatever system takes its place.
In classical economics it is assumed that resources are both scarce (the supply and demand concept) and are a ‘free good’, i.e. they have no value until exploited. Classical economics also assumes that resources are fundamentally limitless and that it is only the availability of capital that limits the expansion and exploitation of the infinite resource-base. These three opposing and contradictory ideas underpin all the decisions governments make on our behalf concerning growth, surplus and welfare. The basic mantra is:
i. Grow the economy
ii. Increase capital
iii. Exploit resources
iv. Create surplus
v. Fund welfare from the surplus
This mantra is believed by capitalists and socialists alike; the old British Empire, the old Soviet Union, modern America and modern China and, indeed, pretty much all governments around the world for the last 200 years have assumed the above to be true. And if we had limitless resources and a limitless natural habitat, it would be true. But we don’t and it isn’t. It makes no difference if welfare is provided by governments or by an altruistic citizenship, the plain fact is that economic growth and the availability of capital is limited by our resource base and the ability for the planet to remain stable in the face of the depletion of habitats and ecosystems; add greed and corruption to the mix and we see that the ever-shrinking surplus will be owned and controlled by fewer and fewer people and we can not rely on altruism to be either fairly administered or equitably administered unless very heavily regulated. I’m not against the ideal of a ‘big society’, far from it, but I do recognise it will not work in times of crisis; indeed, it barely succeeds when times are good.
Now it might be that our politicians are so wedded to classical economics that they do not realise the implications of their folly. If that is the case, we must persuade them otherwise. But it might be that they fully realise that the oncoming crisis I have outlined is real and that they are making sure that they come out on top at the end of the race.
Either way, the “Big Society” is really just a big Red Herring. I don’t honestly think that our ruling classes are so ignorant that they do not understand how limited resources will end the consumerist dream. I believe that the “Big Society” is simply shorthand for an end to the surplus being shared out equitably; a policy designed to hide the fact that the rich and powerful, now more aware than ever that their gravy train might be hitting the buffers sooner than anticipated, will be keeping the economic surplus for themselves.
Who has paid for the wealth of the bankers? Who funds the high living of corporate chiefs? Why have governments courted drug barons and oligarchs? Who owns the machinery of warfare and fossil fuel extraction? I am not, and never have been a conspiracy theorist because those that believe in a right-wing ‘tooth and claw’ or ‘social Darwinist’ view of the world naturally club together to out-compete the rest of us. Sadly, many of those people call themselves socialists.
As I have said, the political colour of the people who think we can compete our way out of trouble has always been irrelevant; what matters is that we, the citizenry, understand the dynamics of what is taking place in the world and come up with viable solutions.
If the 1 to 5 stages of the Classical Economic mantra are false, how are those mechanisms played out on the world stage? To explain what is really happening, let me quote from my aforementioned 1996 analysis:
- The object of industrialisation is to convert resources into consumable and capital products (goods and assets)
- The object of mechanisation is to increase output and throughput per unit of input
- Mechanisation requires an increase of investment and the production of capital products
- The consumption of goods ensures the continuing production of goods and the continuing use of diminishing resources
- As goods are consumed, the global stock of resources including those tied up in capital goods and those about to be consumed is diminished.
- As goods are consumed, the economic value of the global stock of resources is increased by the value of the labour entrusted to the resource stock and by the diminishing possible supply of resources
- The potential value of all resources is thus tending to the very high while the supply of resources tends to the very low
- Wealth is created in the growing global economy which must service a naturally diminishing resource and goods potential:
INFLATION IS LINKED DIRECTLY TO THE FINITE NATURE OF RESOURCES AND CANNOT BE THE SUBJECT OF FISCAL POLICY.
That is how the economy operates at the global level. Because inflation is built-in from the beginning, it cannot be subject to fiscal policy: anti-inflation measures in one area will force inflation elsewhere. But show this scenario to political economists working at the nation-state level and they absolutely refute it! They say, “No, this isn’t how it works because there are markets out there”. But on a planetary level there is no “out there”. You’re already in it. A different perspective is required. There are limits to what we can do. Add to this the way in which the global stock of resources is being depreciated by pollution and poor environmental practices and you have a perfect picture of non-sustainability.
From: Nakorn, N.C., Green Shift Symposium 1996, (Green Audit Research Group and The Centre for Alternative Technology, 1997, ISBN 1 899999 03 5)
Then, as now, the global economy is doomed to fail through ever-increasing inflation and unemployment; not always in ‘your’ neck of the woods but in the global economy as a whole; kept at bay in the powerful countries by the manipulation of the financial markets and the control of resources – often by military means – and popping up in the poorest and least powerful societies. As we know, the LibCon belt-tightening is not happening at the top. The power-elite will be unaffected by the cuts. Take 10% or 20% away from a person who has £10 millions or £100 millions a year coming in and they still have umpteen £ millions at their disposal. Take the same amount away from someone who earns £1 million and s/he will still have hundreds of thousands of pounds to live on. Take away 10% from someone who earns £10,000 and it’s a very big hit indeed. But if you’re really poor and live day-to day, that 10% might be the difference between life and death. It’s the poor who will pay for these cuts in fewer life chances, declining health and abject poverty. If we’re “all in this together” the power elite must voluntarily give up their wealth. It is the only test that has any moral or ethical authority. But, as you will see in my next piece, it is not just the system of value that is unsustainable but the nature of money itself.
Coming soon: How a new global economy needs to be structured and how we progress from our currently unsustainable global consumerist economy to one that takes us all to a reasonable standard of health and prosperity. Meanwhile, please read and sign the Sirisuk Declaration by going to www.sirisuk.org
If you’d like to read my 1996 paper, you can find it at www.nagara.co.uk
Nick Nakorn 9th September 2010, Devon.