In our current economic paradigm, growing the economy is only possible by diminishing the living planet
Money & Life: Understanding the current economic system lay at the heart of understanding our global crisis of everything
At the heart of our perfect storm of crisis lay economics. We now live in a global economic system which is unbalanced and out of step with human and ecological values. We must restore balance between ecology and economy if we are to survive as a species; we must find a way to feed ourselves without destroying the environment from which we derive our food, water, air, shelter, warmth and other basic resources. To do this, we must first see how the economic system we’ve all taken for granted is inadvertently leading to the long term destruction of human civilization.
A Broken Paradigm
By ignoring the finite nature of resources and by neglecting the long-term well-being of the planet and its potentially crucial biodiversity, threatens our existence.
- Jeremy Grantham, Leading Financial Analyst, GMO
Who better to talk about the economy to others in the money game than one of the world’s great financial analysts? Jeremy Grantham sits on top of $100 billion in portfolio investments at his investment firm GMO. He is a new breed of captialists who really see what is going on. Grantham basically holds that if we proceed along current capitalist lines, then “our planet’s goose is cooked“. Capitalism is fixated with narrowly defined growth. He stresses that “fifty and one-hundred-year horizons are important, despite the ‘tyranny of the discount rate,’ and grandchildren do have value.” Grantham further holds that “My conclusion is that capitalism does admittedly do a thousand things better than other systems: it only currently fails in two or three. Unfortunately, for us all, even a single one of these failings may bring capitalism down, and us with it.”
Grantham warns. “A company is now free to spend money to influence political outcomes and need tell no one, least of all its own shareholders, the technical owners.” In fact, some parts of the industrial complex fight “to increase the inherent weaknesses of capitalism,” which further increases its blind-spots and continues the addiction to unsustainable forms of growth.
For the United States, the country which is suppose to show global leadership, it has a unique weakness in its political system which affect its policy making. US politics shows not only disinterest but active denigration of science. Grantham cites these startling statistics that may explain the US’s peculiar position:
- China: 8 out of 9 leaders are scientists
- US: 2 out of 535 members of Congress are scientists
- About 100 Congressmen do not believe in evolution
- the US is 60th in number of science degrees awarded
In other words, the government of the United States, supposedly the global policy leader, is scientifically illiterate!
It is no coincidence that the majority of the Business Community, whose creed is self-interest is offering the greatest resistance to Global Warming while the majority of scientists, whose creed is truth is promoting the greatest awareness of it.
When cancer is unimpeded, it continues to grow until it kills its host, sealing its own fate. Similiarly, our current global economic system is like a planetary cancer, out of control and transforming natural resources into toxic waste and pollution at an alarming rate. The surface of the planet can only offer us so many resources and can only absorb so much waste. Already, CO2 is double what the the trees and oceans, the planet’s lungs are capable of absorbing and Ocean Acidification, Biodiversity loss and extreme weather is taking place at unprecedented rates. When Tipping Points manifest, we will be in even bigger trouble.
Jeremy Grantham’s Dec 2011 speech at Saint James’s Palace, London on the Limits to Growth
Manufacturing Cancer: How to Turn Natural Resources into Toxic Waste
Natural Resource In MANUFACTURING / CONSUMER PIPELINE Waste Out
We don’t have one problem, but an interconnected network of problems…all driven by an underlying and fundamentally flawed economic model. How do we produce a planetary cancer?…by creating an industrial economy driven by a policy of unrestrained growth. Our finely honed and highly efficient manufacturing machinery is like a wild animal with a veracious appetite; feeding on natural resources at the front end and producing a final product of waste at the other. In between this input and output, the material flow passes through a brief stage of usefulness… when the manufactured throw-away products are fed to hungry consumers.
From an end-to-end, black box perspective, our economic model basically transforms natural resources into waste and sanctions planetary destruction; the more we can destroy, the wealthier we get. This unsustainable model drives the entire un-value chain of our current socio-economic system.
Steps to Creating a Planetary Cancer:
- Marketing and advertising create desire and strong demand
- Demand drives manufacturing
- Resource must be depleted to feed the manufacturing machine
- Manufacturing produces throw-away products to the Consumers for a short period of time
- Waste is created at two points: during the manufacturing and at the End-of-Life of the consumer product
The Economic System that forgot about Human and Planetary Well Being
In this growth-based economic model, higher rates of consumption are desirable because it increases profits for shareholders. Because this incomplete definition of profit excludes the environment and human well being, it is perfectly logical to abuse the environment and human well being. However, once we begin to factor in the environmental and human costs of current manufacturing practice, it no longer becomes sustainable.
The Centralization of Power
The Centralization of power is happening in every aspect of society and is the natural outcome of an unfettered capitalism based on greed and self-interest. Under the guise of globalization, these relatively few companies have expanded around the globe practicing a new form of economic colonization. Like a gigantic octopus, these Multi-national corporations redirect the entire global wealth of humanity directly into their pockets; the power of the few can only come at the expense of the powerlessness of the many.
These multinational financial institutions, oil companies, pharmaceutical companies, technology companies, food companies, etc….drive the entire global economy. The fundamental problem with this centralized control is that with self-interest as their main motivation, people and the environment will always be compromised.
In order for the current unsustainable economy to run, it must continually grow, continually expand markets and continually create consumer demand for cheap throwaway products. Jobs that are created at the expense of critical life support elements are unsuitable jobs at best and dangerously harmful jobs at the worst. All of this economic activity depletes resources and pollutes the environment at extremely high rates.
The unrealistic demands placed on nature by this unsustainable system is causing stress on both sides of the manufacturing pipeline. On the resource side, we are high grading many natural resources, leaving little for future generations. Oil is, of course peaking. Fresh water is being depleted at dangerously high rates. Soil is being eroded by unsustainable farming practices. Even the high technology solutions that technocrats advocate as a panacea for existing problems are threatened because of the increasing lack of supply of critical minerals and elements in their manufacturing. On the waste side, after manufactured products have outlived their short lifetimes, they add to the burgeoning streams of waste. Pollution in the air threatens the entire planet through Global Warming while land, sea and water pollution is having increasingly detrimental effects on the entire ecosystem. And of course, the manufacturing process itself generates air, water and solid pollution that further reduce the quantity of healthy air, water and soil available for a healthy planet.
This current economic system has also created a serious global dependency on the products and services that are supplied by an increasingly small number of Multi-national companies. As a result, when (not if) peak oil really hits hard, most of the global population will not be ready for it. We have all become dangerously dependent on an economy run on cheap non-renewable energy and our jobs have become so specialized, we do not know the basics of survival. How many people know how to grow their own food? …Build their own homes? …Maintain the equipment and technology such as computers, cellphones, furnaces, cars that they use? Very few indeed. When this fragile economy comes to a sudden halt, so will the unsustainable lifestyles of hundreds of millions of people.
The emerging field of neuroeconomics which fuses neuroscience and economics is revealing fundamental insights about why our current economic system has become so inequitable. Such a flawed economic model is the main obstacle to a truly sustainable future. As long as human beings are forced to continue playing an economic game that follows rules that intrinsically harm people and the environment, we will never be able to get off of this treadmill whose ultimate destination is global tipping points that will breach physically fixed planetary boundaries. To make the step change necessary, we all have to fully grasp the flaw of this current system.