This is Naked Capitalism fundraising week. 452 donors have already invested in our efforts to combat corruption and predatory conduct, particularly in the financial realm. Please join us and participate via our donation page, which shows how to give via check, credit card, debit card, or PayPal. Read about why we’re doing this fundraiser, what we’ve accomplished in the last year and our current goal, more meetups and travel.
Yves here. I have a small quibble with Gaius’ piece. He claims “No large company can survive with no growth — it will die or be absorbed into another large company.” That simply isn’t accurate. First, a private company can be managed for any objective that suits its owners: serving a vanity market and only occasionally being profitable (as in being a bragging rights project for the owners), keeping ne’er do well relatives employed, or being a nice stable business in a mature market that throws off steady cash flow. Public companies are subject to demands from shareholders for growth in revenues or dividends. Even then, some public companies have enough ownership by insiders so as to be able to be run as fiefdoms (think of Larry Ellison’s relationship to Oracle).
Most entrepreneurs who do not harbor squillionaire fantasies seek to create businesses in defensible markets (say niches that have barriers to entry or scale factors) and repeat customers. Those are the best candidates to generate good cash flow. A businessman understands that cash flow, and not growth, is what defines a truly successful venture.
Another way to look at it is that the fetish with growth at the business level (as opposed to the economy level, where a pie that keeps getting bigger on a per head basis makes it a lot easier to manage social issues) is to a significant degree a creation of the 1980s and 1990s. In the 1980s, raiders funded by Mike Milken made fortunes by buying overdiversified conglomerates that were trading at a discount in the stock market. These vultures were able to spin what was almost without exception mere financial engineering as entrepreneurs showing up corporate bureaucrats. The fact that these takeover artists became so fabulously rich also led to fawning press coverage as well as advocacy masquerading as academic research arguing that corporate executives needed to be paid like entrepreneurs, as in get more stock incentives. The leading light of that movement, Michael Jensen, has repudiated that work, but as we know, it lives on and continues to have destructive effects.
Mind you, I am not saying that there would not be companies that would be run with growth as a major goal, but the preoccupation with growth is a result of a change in ideology.
By Gaius Publius, a professional writer living on the West Coast of the United States and frequent contributor to DownWithTyranny, digby, Truthout, and Naked Capitalism. Follow him on Twitter @Gaius_Publius, Tumblr and Facebook. GP article archive here. Originally published at DownWithTyranny
The video above comes in two parts — the first four minutes or so deals with the title problem, and the last two minutes offers a solution. Note those two sections and the points they make as you watch. I’ll address each point separately below.
Capitalism, Infinite Growth and Climate Change
We seem to have turned the corner on American belief that climate change will result in a bad end for us unless we stop it or alter its trajectory. Most Americans, however secretly, have come at last to that conclusion, even if (or perhaps because) they think the “us” in the previous sentence is “other people,” the un- or soon-to-be-born.
Even Republican office holders are starting to affirm the obvious trajectory of climate change, not to mention ordinary Republican voters of all stripes and kinds. Yes, there are still deniers and agnostics in the mix, but I don’t think they represent the majority of the nation any more. That tide has turned, if only just.
We have also likely turned the tide on the notion that infinite economic growth, defined as “more cans and bottles for you, more and greater wealth for the rich,” can be sustained, though most don’t realize it yet. Watch the first four minutes of the video above and ask yourself — Who doubts the main point made? Is there anyone you know (or know of) who thinks we can have “infinite growth on a finite planet” and survive? Likely no one.
It’s the connection pf infinite growth to capitalism that hangs people up. Most don’t see yet that infinite growth — more cans of coke, more terrible fast food restaurants, more smart phones you can’t repair — is required for our present economic system to continue to function. They don’t see the present economy, defined as the production of “things,” as requiring infinite growth. Does a corner grocery store need infinite growth to survive? they ask. Obviously not. And isn’t a corner grocery store “capitalism”?
But today’s capitalism isn’t the world of the corner grocery store, where the owner who lives upstairs can do well by earning enough to meet his or her expenses, year after sustainable year. That world has become this one, a world of giant companies eating giant companies in order to grow, absorbing others to ensure they’re not the next prey, because quarterly earnings can never be said to be flat when market analysts come calling.
No large company can survive with no growth — it will die or be absorbed into another large company. And at some point, all of this growth will end. Grow or die is one of the marks of late stage capitalism, with “die” the inevitable end of all of them.
Just as late stage capitalism is unsustainable, by the way, so too is infinitely increasing income inequality, a situation into which we’re heading, both nationally and internationally. The image of a world collapsing under the burden of extreme wealth inequality brings to mind one of the most memorable lines from the video above:
“Imagine what it means for your personal security as a heavily armed civilian population gets angrier and angrier about why this was allowed to happen.”
Sound familiar? Sound like it may be nascent now?
Why Don’t We Choose Differently?
All of the above situations suggest a grand “problem statement” — one that American citizens, indeed world citizens, are coming to grips with as we speak. Is this train’s journey sustainable into the future? If not, how do we get off?
Just as the first four minutes of the video engender fear, the final two minutes water the tree of hope, suggesting that humankind can fix these problems if only it wishes to. I too believe that we can fix these problems — hold at bay a collapse due to the twin tsunamis of wealth inequality and climate-cause chaos — at least within limits, if we choose to. In fact I’ve offered an “Easter Island solution” to the problem of addressing climate change, offered it many times:
You’re a villager on Easter Island. People are cutting down trees right and left, and many are getting worried. At some point, the number of worried villagers reaches critical mass, and they go as a group to the island chief and say, “Look, we have to stop cutting trees, like now.”
The chief, who’s also CEO of a wood products company, checks his bottom line and orders the cutting to continue.
Do the villagers walk away? Or do they depose the chief?
There’s always a choice …
It’s a simple solution, and certainly not unique to me. Naomi Klein, for example, brings it up in a different form every time she speaks — depose the chief and run the island ourselves.
So what prevents us from choosing that?
There is very good reason to believe that, in a generation or so, capitalism itself will no longer exist – most obviously, as ecologists keep reminding us, because it’s impossible to maintain an engine of perpetual growth forever on a finite planet, and the current form of capitalism doesn’t seem to be capable of generating the kind of vast technological breakthroughs and mobilizations that would be required for us to start finding and colonizing other planets. Yet, faced with the prospect of capitalism actually ending, the most common reaction – even from those who call themselves ‘progressives’ – is simply fear. We cling to what exists because we can no longer imagine an alternative that wouldn’t be even worse.
This is in line with the video presenter’s idea, that fear is our natural reaction to this awareness, and fear can lead us to make changes.
Graeber then explains why, instead of experiencing fear that spurs us to action, we’re gripped by fear that locks us to inaction:
How did we get here? My own suspicion is that we are looking at the final effects of the militarization of American capitalism itself. In fact, it could well be said that the last thirty years have seen the construction of a vast bureaucratic apparatus for the creation and maintenance of hopelessness, a giant machine designed, first and foremost, to destroy any sense of possible alternative futures.
He means “militarization” as a metaphor, that the apparatus, the “giant machine” he’s talking about, is a form of capitalism that’s been weaponized and propagandized as a defense against its own consumer base, which is all of us. When has any major company’s commercial not had as its secondary message, “We’re doing this because we want to help you,” whatever else the primary message — for example, “This $1000 drug is your only hope” — may be?
Every bought commercial paints its purchasing corporation as noble, as the solution, when in fact its purchaser is the problem. That description is true even of those benign-appearing car ads that offer off-road “freedom” to wage slaves chained to cubicle farms. The fault is never the corporate-dominated life; the solution is the corporate-dominated life. Or so says the commercial. Do the wage slaves of the car companies buy those cars to experience freedom?
“You can’t have that”
In the passage above, Graeber, writing in 2011 about manufactured hopelessness, also presciently reminds us of Hillary Clinton’s virtual campaign slogan, “You can’t have that.” This still serves as a slogan for the current neoliberal “support” for Medicare for All — in Al Franken’s words, it’s “aspirational,” something to want but never to expect to get.
Graeber then exposes the inner workings of the apparatus of manufactured hopelessness:
At its root is a veritable obsession on the part of the rulers of the world – in response to the upheavals of the 1960s and 1970s – with ensuring that social movements cannot be seen to grow, flourish, or propose alternatives; that those who challenge existing power arrangements can never, under any circumstances, be perceived to win. To do so requires creating a vast apparatus of armies, prisons, police, various forms of private security firms and military intelligence apparatus, and propaganda engines of every conceivable variety, most of which do not attack alternatives directly so much as create a pervasive climate of fear, jingoistic conformity, and simple despair that makes any thought of changing the world seem an idle fantasy. Maintaining this apparatus seems even more important to exponents of the ‘free market,’ even than maintaining any sort of viable market economy. …
Economically, the apparatus is pure dead weight; all the guns, surveillance cameras, and propaganda engines are extraordinarily expensive and really produce nothing, and no doubt it’s yet another element dragging the entire capitalist system down – along with producing the illusion of an endless capitalist future that laid the groundwork for the endless bubbles to begin with.
Finance capital became the buying and selling of chunks of that future, and economic freedom, for most of us, was reduced to the right to buy a small piece of one’s own permanent subordination.
In other words, there seems to have been a profound contradiction between the political imperative of establishing capitalism as the only possible way to manage anything, and capitalism’s own unacknowledged need to limit its future horizons, lest speculation, predictably, go haywire. Once it did, and the whole machine imploded, we were left in the strange situation of not being able to even imagine any other way that things might be arranged. About the only thing we can imagine is catastrophe.
A being can nibble on itself from time to time, but it cannot eat itself forever and live.
“Consumed with that which it was nourished by”
In the capitalist vision of infinite growth, we see, to paraphrase Shakespeare‘s words…
That on the ashes of its youth doth lie,
As the death-bed whereon it must expire
Consumed with that which it was nourished by.
In other words, that which feeds it, eats it. Infinite growth, the fuel of late-stage capitalism, can only burn it down to a bed of ashes that lingers briefly warm, then dies.
What drags us into hopelessness is the carefully manufactured illusion that there is no possible economy but a “free market” economy, despite (a) the fact that no free market ever existed anywhere, and doesn’t exist now; and (b) that successful communal — non-competitive — markets exist everywhere around us.
Start by looking within your own family. Or at any community that sustains its weaker members rather than feeds on them. At Social Security, say. Or Medicare.
Medicare isn’t “aspirational,” Mr. Neoliberal. It’s already here. How do we know we can have that? Because we already do have that. We just want a little more of it.