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Capitalism at a Crossroads

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  • Sun, Aug 23, 2009 - 08:21pm

    #1

    xraymike79

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    Capitalism at a Crossroads

Present standards of living ecologically unsustainable

Published on August 22, 2009

In this third e-mail interview with The Nation, US-based historian Eric Zencey looks at the future of capitalism in the wake of the global economic slowdown. The topic was discussed at the Nation Conference yesterday on “Asia: Road to New Economy” with Dr Jomo KS, assistant secretary-general for economic development from the United Nations in New York, as one of the speakers.

All of this brings to mind the question of the future of |capitalism in driving the world economy. How do you see this evolving? Is the financial crisis pivotal to the change we are witnessing?

 

I’ve written recently about how this financial crisis is a manifestation of our society’s environmental crisis. Briefly: debt is a claim on the economy’s ability to produce wealth. We let debt grow astronomically, but the real, physical wealth that that debt has a claim upon can only grow in two ways: by increasing the efficiency with which we use matter and energy from nature, or by using more matter and energy.

 

Increasing the throughput of these resources increases the economy’s ecological footprint, and destroys natural capital. At some point, trying to grow the economy through growth in throughput has to hit a limit. When debt grows exponentially but wealth doesn’t, eventually some trigger leads to a spasm of debt repudiation. People who hold debt as an asset – creditors – have to lose some of their assets. Debt repudiation takes a variety of forms: bankruptcy, foreclosure, default, stock market crash, inflation, the disappearance of paper assets in any form.

 

Back in March, Larry Summers told an audience at the Brookings Institution that by his count, we have a crisis every 2.3 years, and he allowed that “we’ve got to do better”. We’re not going to do better unless we address the underlying cause of these crises of debt repudiation: our system allows debt to grow a lot faster than we can grow the means of paying it back. Ultimately, we’ll have to limit growth in debt to the amount that real wealth can grow sustainably.

 

Policy planners aren’t talking about this. They’re not talking about debt repudiation as the underlying cause of recurring crisis, and I wish they were. Still, there’s reason for hope. There are signs that this downturn-and-recovery is leading us in the direction of a “greener”, more ecologically sustainable relationship to the planet. Recovery money spent on building renewable energy and energy conservation infrastructure – windmills and mass transit and geothermal energy, all of that – is wisely spent. We have it in our power to build a thing never seen before in the quarter-million year history of humans on the planet: an ecologically sustainable society that has a high standard of living that is widely and equitably shared among the human population.

 

Our present industrial civilisation, built on fossil fuel, gives us a high material standard of living that is widely shared – not as widely as many people would like, but more widely than any other previous kind of civilisation. The problem is, it’s not ecologically sustainable. I hope that as we come out of this crisis we build the infrastructure we’ll need for such a society.

 

And the future of capitalism? Well, I like to quote Oystein Dahle: “Socialism failed because it did not let prices tell the economic truth. Capitalism will fail if it does not let prices tell the ecological truth.” Getting our basic index of economic well-being right is one part of getting prices to tell the truth.

How did you come to be interested in this subject and are you doing research in it?

 

As an undergraduate back in the 1970s, I lived through the US gas crisis, as it was called then – after US domestic oil production peaked in 1971, Opec exercised its new-found market power and set a market-demand exploration for oil that raised its price significantly in the US. It was, for some Americans, the first clear intimation that energy isn’t just another commodity and that there are limits to our ability to exploit past solar energy – fossil fuel – to make wealth in the present.

 

Another formative experience was majoring in politics and economics, which at my university were housed in different departments, different colleges. In studying those subjects I was trying to understand what we were doing to the planet and what we were thinking of while we did it – the idea being, we need to change the way we think if we’re going to have an ecologically sustainable society.

 

I pursued those two questions through graduate school and have been thinking and working in this field since then. Currently I’m working on my next book “Factory Planet: Preserving Democracy in an Era of Ecological Constraint”. The American political and economic system is built on the assumption that we can have infinite economic growth, and when we come up against limits, as we are, it’s clear that some things have to change. So I’m trying to do Green Political Economy – showing where and how our theories in politics and economics, and the institutions built on that thinking, have to change as we recognise that we can’t have infinite economic growth on a finite planet.

 

Eric Zencey is associate professor of historical and political inquiry at Empire State College, State University of New York. He is the author of ‘Virgin Forest: Meditations on History, Ecology, and Culture’, and a novel, ‘Panama’. This is the third and final of a threepart series.

  • Sun, Aug 23, 2009 - 09:24pm

    #2
    Peak Prosperity Admin

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    Re: Capitalism at a Crossroads

No offense as to your inquiry. But if you have a ponzi scheme in place, can one expect anything but greed and corruption to follow. If your house is built on sand, do you expect it to stand in high winds or earthquakes happen I’m sure Adam Smith vision of capitalism never had the Fed and IRS in place.  We need to go back to a sound monetary policy based on the Gold standard. Get rid of the Fed, IRS. Close down most of the military bases (760). This is just a start. Then we need to educate everyone on economic’s and have history of the types of folly’s that insue when we deviate from the course.

 I don’t have all the answers, just know that we need to get special interest out of politics and have two term limits for any public office and bar anyone from being lobbyists after leaving conrgress. Have a certain amount of money for the running of the president and to open up the chance to run for anyone; removing the hurdles put to keep the two party system in. Total financal demands of pay as you go. Perhaps then we can start to solve some of the pressing problems of the planet.

 A revolution in policy and paradigm. Perhaps a new form of economics………

  • Sun, Aug 23, 2009 - 10:19pm

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    Re: Capitalism at a Crossroads

You summed it up nicely there. So where is the outrage? Where are the protests in the streets? The corporations now control the government and have turned “our” government against its own people. It looks like “Game Over.” What you are talking about is the disassembling of empire that was built on the idea of perpetual growth and world control. Until there is a complete meltdown, there will be no “real change.” Business as usual until we burry ourselves into the ground. Most people on this site will be dead and burried before the dollar collapses.

“The condition of the American economy is strikingly similar to the Soviet state economy of the last two decades of the 20th century. People are trying to sustain a system “as is” that is based on bad assumptions, unworkable constructions, conflicting objectives, and a flagging empire laced heavily with elitist fraud and corruption. The primary difference is that the US has a bigger gun and its hand is in more people’s pockets with the dollar as the world’s reserve currency. But the comparison seems to indicate that the economy must indeed fail first, before genuine change can begin, because the familiar ideology and practices must clearly fail before they can recede sufficiently to make room for new ways and reforms.” — http://jessescrossroadscafe.blogspot.com/2009/08/why-austrians-keynesians-and.html

 

 

 

  • Sun, Aug 23, 2009 - 10:29pm

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    Re: Capitalism at a Crossroads

[quote=xraymike79]

You summed it up nicely there. So where is the outrage? Where are the protests in the streets? The corporations now control the government and have turned “our” government against its own people. It looks like “Game Over.” What you are talking about is the disassembling of empire that was built on the idea of perpetual growth and world control. Until there is a complete meltdown, there will be no “real change.” Business as usual until we burry ourselves into the ground. Most people on this site will be dead and burried before the dollar collapses.

“The condition of the American economy is strikingly similar to the Soviet state economy of the last two decades of the 20th century. People are trying to sustain a system “as is” that is based on bad assumptions, unworkable constructions, conflicting objectives, and a flagging empire laced heavily with elitist fraud and corruption. The primary difference is that the US has a bigger gun and its hand is in more people’s pockets with the dollar as the world’s reserve currency. But the comparison seems to indicate that the economy must indeed fail first, before genuine change can begin, because the familiar ideology and practices must clearly fail before they can recede sufficiently to make room for new ways and reforms.” — http://jessescrossroadscafe.blogspot.com/2009/08/why-austrians-keynesians-and.html

 

 

 

[/quote]

Yes, where is the outrage? I for one am riding threw the streets like Paul Revere and no one seems to even know about it or what to do. My warning is about false flags. As before the collapse I think we will see either a fake swine flew pandemic or some other big flag. Just look whats come out about the past Bush election.

Fake Homeland Security Terror Alerts during Bush Adminstration

http://globalresearch.ca/index.php?context=va&aid=14881

  • Sun, Aug 23, 2009 - 11:39pm

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    Re: Capitalism at a Crossroads

The outrage will come as we enter the 2nd phase of the deflationary collapse, which I still expect to start this fall…some are saying spring.  

Then we’ll see how the government handles the Paul Reveres.  I hope the Reveres win.

Investorzzo, you’re correct Adam Smith’s version of capitalism didn’t involve an all-powerful financial monarchy.  His was a “free” form of capitalism built on small businesses on Main St, Localtown, USA.  We haven’t had that for a long time.  We’ve had financial monarchy that captures everyone under the power of debt and then uses mega corporations much like the medieval knights to collect resources for the monarch and destroy small biz competitors, the small bases of power that weren’t dependent on the king.  I’m thrilled that version of capitalism is dying…though it will be quite painful. 

  • Mon, Aug 24, 2009 - 03:03am

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    where’s the outrage?

Simple…. when did anyone riot for austerity?

  • Mon, Aug 24, 2009 - 03:10am

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    Re: where’s the outrage?

LOL. I think we would be rioting for the elite to be austere.

Here’s a good article on the GFC and class warfare:

http://www.redpepper.org.uk/Their-crisis-our-challenge

Their crisis, our challenge

In a far reaching interview with Red Pepper, David Harvey argues that the current financial crisis and bank bail-outs could lead to a massive consolidation of the banking system and a return to capitalist ‘business as usual’ – unless there is sustained revolt and pressure for a dramatic redistribution and socialisation of wealth

  • Tue, Aug 25, 2009 - 05:12am

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    Re: Capitalism at a Crossroads

Mike,

I don’t think I’ve read anywhere, an analysis that I agree with more.  It seems to me that if we don’t make all our future decisions first on how they affect the planet, then we are doomed to destroy our earthly home, which we almost done.  And secondly, if we continue to give virtually no thought to whether, and how much, profit we can squeeze out of every enterprise, rather than giving equal thought to how our enterprise affect the overall well-being of human beings, we might soon realize that we have destroyed, not only our earthly home, but also all of those on whom we depend to purchase what we produce.

I’m not at all sure that we can save our country, or the world, unless we get huge run-away corporations, (and the governments they dominate)  under control.  But given how much they control, I can’t, for the life of me, see how we can ever get them to change anything they are doing, except to let the whole rotten, out-of-control system collapse.  And, it may very well do that, without any of us ever having to raise a finger..;…but just being able to do some suffering, and re-learning some important survival skills that we have lost, in our easy lifestyles.  

My opinion  is that we will continue to prop up, and prop up, a failed system, and easy lifestyle, until it does finally collapse, and I think that’s going to be a very nasty event, maybe over a relatively short period of time.

  • Tue, Aug 25, 2009 - 07:24pm

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    Re: Capitalism at a Crossroads

Ben A,

     We’ve managed to externalize the real world, the natural world from the man-made, technology-driven world we’ve created. Ask a kid where food comes from and the answer will be ” the grocery store.”

Our selfish economic model needs a reboot

We cannot afford to ignore these flaws any longer.

Flaw 1: Nature performs all kinds of “services” that we can’t duplicate: It removes carbon dioxide from the atmosphere and returns oxygen; it enriches soil with nitrogen; it transforms sunlight into molecules that we need for energy in our bodies; it degrades the carcasses of dead plants and animals and disperses the atoms and molecules back into the biosphere. And more. We dismiss those services as “externalities” in our economy.

Flaw 2: Economists believe that because there are no limits to human creativity, there need be no limits to the economy. But the economy depends on having healthy people, and health depends on nature’s services, which are ignored in economic calculations.

We are witnessing the collision of the economic imperative to grow indefinitely with the finite services that nature performs. It’s time to get our perspective and priorities right.

The ultimate hubris is the hubris of human exceptionalism.

The Overextension and Collapse of the World System? 8-3-2009

“…the excessive acceleration of recent decades of development/growth, of consumption and waste, has shown us the ecologic limits of the Earth. No technology or economic model can guarantee the sustainability of the present trajectory. Economist Ignacy Sachs, a friend of Brazil — one of the few who proposes an eco-socio-development — comments: «One cannot exclude the idea that, by the excessive application of partial rationality, we will end up on a path of suicidal global irrationality»  («Forum», June 2009 p.19). I have already affirmed in this space that the culture of capital has a suicidal tendency.  It would rather die than change; carrying others along with it.

The framers of the systemic vision call this phenomena over-extension and collapse. This is to say, we have surpassed the limits and are headed towards collapse.

Am I being pessimistic? I respond by quoting Jose Saramago: «I am not pessimistic, reality is what is terrible.»  Clearly: either we abandon the unsustainable development and move towards what the Earth Charter calls «a sustainable form of living» and the Andean people call, «living good,» (buen vivir) or we must accept the risk of being eliminated from this planet.

But the universe is comprised of yet untapped potentialities, so let’s hope that one appears to save us all.

Do you see any evidence that the human species differs from any other in having an ability to control our ultimate destiny? I don’t see it. All species appear to expand their population until a resource boundary is reached, or an equilibrium is established by a long term predator relationship. Humans have no natural predator besides themselves. We clever humans are masterfully adept at resource exploitation and predation mitigation which evolution gave us. But collectively, we are no wiser than yeast. Here is the question:

What will the equilibrium mechanism be that nature will devise for us, and how degraded will the ecosystem become before this equilibrium is established?

  • Fri, Aug 28, 2009 - 03:08am

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    Re: Capitalism at a Crossroads

Measuring the damage of our ‘water footprint’

Published: 27 August 2009 12:37

A Dutch hydro engineer has come up with a “water footprint”. At a conference in Sweden, he and other participants discussed water waste, supermarkets filled with fruits and vegetables produced in some of the world’s most arid regions and ways we can stop wasting our most precious resource.

By Samiha Shafy

Arjen Hoekstra didn’t really stand out in the crowd of 2,000 scientists, activists, politicians and representatives of industry who attended the World Water Week in Stockholm last week. The 42-year-old Dutch hydro engineer preferred to keep a low profile at the annual global conference that focuses on water-related issues, but his creation of the water footprint. served as a magnet for debate.

His equation is actually just a couple of numbers used to describe the amount of water that is used – or polluted – during the manufacture of various products. Anyone can calculate their water footprint by looking at the amount of water they use directly and then by looking at the amount of “virtual water” they use – that is, how much water is used in the production of any goods they consume. The global average for an individual’s water footprint is 1,243 cubic meters of water per year. In the US, this goes up to 2,483 cubic meters per year; in Germany it’s 1,545 and in China, 702.

Hoekstra’s water footprint formula has already made headlines around the world with its estimates of the amount of water that is used or abused in the simple products that are a part of our everyday lives:

  • 140 liters of water for one cup of coffee
  • 2,400 liters for a hamburger
  • 10,000 liters for one pair of jeans

In the discussions and workshops in Stockholm, participants debated what sort of action should be taken as a result of the water footprint figures. The WWF environmental group first recognised the validity of the water footprint, and further conservation and environmental protection groups as well as the United Nations and the World Bank soon followed suit. Finally, even multinational companies like Nestlé, Unilever and Pepsi got on board.

Water flowing in the wrong direction

And they all seem to agree that Hoekstra’s numbers could be potentially explosive – mainly because they make it clear how thoughtlessly water, the most precious of resources, is handled in so many areas. “Because of the international trade in water-intensive products, there are floods of virtual water flowing around the world,” Hoekstra said. “And many of them are flowing in the wrong direction, going from water-poor regions to the water-rich.”
Mostly these flows involve food, biofuels and cotton. Between 70 and 80 percent of all the water consumption in the world is used for agricultural purposes. The European Union, for example, contributes indirectly to the drying out of the ever-shrinking Aral Sea in Kazakhstan and Uzbekistan through its cotton imports from the region. And when the Germans, for example, buy ham from Spain or oranges from Israel, they are also contributing to water scarcity in those areas.

Today, around 1.4 billion people live in areas where water is scarce. Climate change, population growth and the flows of virtual water only serve to exacerbate the problem. “By 2050, we will be confronted with the paradoxical situation of having to feed another 2.5 billion people, but with significantly less water,” said Colin Chartres, director general of the International Water Management Institute, an internationally funded, non-profit organisation looking into ways to improve land and water management.

Will countries abandon agriculture?

Against that backdrop, delegates in Stockholm argued about how realistic Hoekstra’s more radical ideas are. “In dry areas there should be no more agriculture,” the Dutchman has suggested. His idea involves using the trade in virtual water to rebalance the earth’s water budget. Instead of watering desert fields, Egypt would be better off importing beans or millet from Ethiopia, for example. And Australia, where the outback is one of the world’s most arid regions, should also cease to export virtual water in the form of meat, fruit and wine production.

The same arguments could be applied to all of earth’s dry zones – from the Middle East to northern China and northwestern India to Southern California. Hoekstra says all of these regions could mitigate their water paucity by letting their fields dry up and importing more virtual water. “These water-poor regions need to come up with a new vision for the future,” Hoekstra argued. “Just as the oil producing countries, where oil is starting to run out, have had to do.”

But what would make any country abandon agriculture, altogether or partially? British environmental researcher Tony Allan (72) first coined the phrase “virtual water” in the 1990s and he agrees with Hoekstra. “Singapore is an interesting example,” he said. “They don’t have water sources or agriculture. Ninety percent of their water needs are covered by the import of virtual water. The rest comes from recycling and desalination.”

Of course, Allan knows that Singaporean model isn’t necessarily appropriate for the rest of the world. Even he admitted that no country would voluntarily give up its agricultural practices in the foreseeable future. “But it is no longer taboo to talk about these things,” he noted.

Companies’ image

During the Stockholm workshops, experts quickly agreed that new pricing structures could steer the water trade in the right directions. Today, water prices are often distorted through government subsidies to farmers – mainly because if the subsidies were not there, then agriculture and animal husbandry would very quickly become prohibitively expensive in those dry regions and no longer worthwhile.

Meanwhile, countries like China and Saudi Arabia are buying up large, fertile pieces of land in places like Africa, Asia and Latin America. By buying land instead of food, they are ensuring access to water in the future. The land-grabbing countries aren’t alone, either – they’re competing directly with food production giants like Nestle and Coca-Cola, which have been buying up rights to water reservoirs around the world for years.

Many companies are welcoming the increasing debate about water footprints in Stockholm. It’s a great opportunity for them to do something to improve their image. Indeed, several large corporations sent whole delegations to Stockholm. At the workshops, the delegates continually repeated the same message: Their employers are trying their very best to leave a smaller water footprint.

 

“…Species’ numbers regularly overshoot or grow beyond carrying capacity. It is simple enough to see this has happened with the human population. Agriculture and fossil fuels have not increased carrying capacity; they have merely led to our overshooting it, providing what William Catton calls “phantom carrying capacity.” It is not carrying capacity at all, and is only temporary.

This is especially easy to see with regard to oil depletion. Oil is a finite resource. Relying on it, therefore, to support global food production can only be temporary. But here are two less widely recognized observations which also demonstrate my point:

First, large scale agriculture has always been unsustainable. It has brought with it soil erosion and a slow but inevitable depletion of finite soil nutrients. This is comparable to our depletion of finite resources such as oil. It may have taken ten thousand years for us to see this, but that is barely an eyeblink in human history.

Second, consider that none of the processes which have allowed our numbers to explode has come without cost to the web of life. We know well enough about the environmental impacts of extracting and burning oil. Less discussed is the cost of agriculture to other species. Cultivation agriculture means the elimination of all life from a piece of land, turning it then exclusively to human use. Multiply this by billions of hectares and we see clearly how agriculture has been the primary driver of the Sixth Mass Extinction of species in Earth’s history.

Not only have we not increased carrying capacity, we have decreased it. It’s simple ecology. We depend on the web of life for our own survival. When a species consumes resources to a degree which degrades the habitat on which it depends, it erodes carrying capacity.

The damage we have done to the biosphere and the web of life has temporarily allowed us to grow our numbers but has reduced carrying capacity. This may be hard to believe when we consider that for nearly all of human history, prior to exploding into the billions, our numbers never exceeded more than a few million. It underscores the shocking degree by which we’ve overshot carrying capacity.

No, there is no evidence we have increased carrying capacity. Rather, basic principles of ecology reveal we have managed only to overshoot it by an incredible margin.”

_____

 

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