Gaius Publius: Capitalism, Infinite Growth, Climate Change & Manufactured Hopelessness

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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?

Manufactured Hopelessness

For the answer I’ll turn to David Graeber. This is from his excellent book Debt: The First 5,000 Years (quoted here, my emphasis throughout). Graeber begins:

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.

He concludes:

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…

…the glowing of such fire
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.

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  1. John

    You can’t have steady growth at 3% either, because it would mean the global economy doubling by 2060 and then doubling again by the end of the century. Secular stagnation is here to stay.

    1. Mel

      That sheds light on the rush for Intellectual Property, and the search for nouns to disguise what we would have called “rent-seeking”.

      1. nonclassical

        …important…as we view obama TTP mutate into trump new “nafta”…just as it would have under HC..

    2. Sue

      True. And nevertheless, median income, relational wealth indicators and other data are more important as far as I am concerned

  2. Steve Ruis

    Economists and financial types seem to not believe in the laws of biology. In a Petri dish, a colony of bacteria will expand until it runs out of resources and then it will stop. Why? Because it is mindless and: all biological species expand to the limits of their food supply, etc. Out species started with just a few individuals and now there are seven billion of us. Can the planet carry the load if our population doubles and doubles again? Probably not. The only advantage we have is to think our way out of the problem.

    Unlimited growth is an extension of childish thinking (“When you grow up, you will …”) without recognizing that all organizations go through phases. When a company is young, it needs to grow to survive. There is a minimum size most companies have to surpass to be viable (Can you imagine FedEx as a “Mom and Pop” operation, for example?). But at some point the growth has to plateau … has to …but our business cheerleading class keeps chanting “grow, grow, grow …” which is the philosophy of a cancer cell.

    Maybe we should look at the factors which make a company stable for a longer term and cherish those things. This fixation on growth is unhealthy and wrong.

    1. Left in Wisconsin

      I was in the auto industry (labor side) in the 1980s when many (most?) believed that markets for manufactured goods like cars were “mature” and would not keep growing indefinitely. While there was a fair amount of first-worldism about that view, there was a lot of realism about limits, too. But Reagan, Jobs,, etc. blew away that view and one rarely (ever?) hears business people talking about limits now.

  3. Jim A.

    IMHO part of the fetish for corporate growth comes from the simple fact that the stock market has been “overpriced” for decades. Realistic stock prices based not on P/E ratios, but actual dividends would be significantly lower, especially if you were to weigh in risk. The ONLY way to justify higher prices today is the belief that prices will be higher in the future. And the only plausible explanation for prices being higher in the future, is expansion in earnings. Thus growth is a mandate to management from those who have bought already overpriced stocks. This leads to all sorts mismanagement, especially when a company starts to approach some reasonable degree of market saturation. Because the stock price is way too high to be justified by current profits and the dividends that they could support.

    1. Vatch

      It has always astonished me that some high priced stocks don’t pay dividends. There are articles out there providing reasons why a person would buy such a stock, but my reaction to such a notion is a very simple “no”. I’m not Jay Gould or Warren Buffet, and I do not expect to to come out ahead in such a transaction.

  4. Steve

    We are past the point where many systems that we depend on such as energy, climate, food, and finance are already on a feedback loop resulting in failure. The climate alone is far into the loop which will make living conditions basically impossible for 7 billion let alone 9 billion. If every government took immediate action and all peoples agreed to participate we would still face decades of climate deterioration and the loss of billions of people not millions. The time to act isn’t now but it was in the 60’s. I was in elementary school in the late 60’s and every problem we had then is now worse. The last chance to try and take very extensive steps was 2008. In the great words of Captain Jack Sparrow – If you were waiting for the right time, that was it mate. The global cooperation necessary to effect change is impossible. Here in the US there are millions who believe to the core of their being that Jesus is coming and none of this matters or is to be welcome. This isn’t going to be fun and then it is going to get much worse :(

  5. DJG

    In the video, the presenter early on uses the words “our demands.” There seems to be very little consciousness of what kinds of demands matter (political) and what kinds of demands don’t matter (more to-go cups, more delivery services). Yet we are stuck in the world of the joyless demand (more coffee to go in a cup that isn’t biodegradable). I am reminded of how Epicurus and Lucretius taught years ago that human beings are motivated by pleasure. But this society of joyless demand (more choices of automatic rifles, more artisanal bourbon, the aisle of kale chips at Whole Foods, more classes of seats on airplanes) is going through the motions. And now the markets and U.S. society are teetering: There is too much mistrust. So much of our daily lives have been turned by the market into empty gesture.

    And the analysis of “manufactured hopelessness” by Gaius Publius is excellent. Even the “hope and change” adminstration that was going to transform things ended up mainly in manufacturing more hopelessness.

    Given that I consider hope a theological virtue, which means that it may not be appropriate for the public space (the republic), I may quibble and call the idea “manufactured listlessness” instead. Lack of will for change. Lack of that Gramscian optimism of the will.

    1. John Foran

      I love the video! Paul Gilding has done a magnificent job of telling one of the stories that needs to be told, especially to Americans. The word “our demands” is grating, and it seems to me it is supposed to be. It’s clearly part of the problem, and I see that as the message here.

      I teach university students in Santa Barbara, California in such courses as “What’s Wrong with the World? How Do We Fix It,” “The World in 2050: Sustainable Development and Its Alternatives”, “Climate Justice,” and “Earth in Crisis.” (They should probably be taken in reverse order.)

      And I will show them this video.

  6. John Wright

    One can suggest the future for humans could be viewed through the “mind’s eye” of all life on this planet.

    For other species are already seeing a shrinking resource world, habitat wise, be they butterflies, bees, large mammals, fish, or trees.

    The “science” of economics has a hand in this as human economists seem to promote that the remaking the world for human comfort is the only important goal.

    An animal based “economist” would be very troubled by what has already occurred as the future is not “up and to the right” as they see numerous species struggling, and failing, to survive.
    In my opinion, the prominence of economics and celebrity economists is based on relatively inexpensive hydrocarbons allowing the “you CAN have it all” message to flourish.

    The positive growth message of economists is welcomed by leaders around the world.

    And people refer to economics as “the dismal science”, which seems to me, to be doubly incorrect, as it is neither “dismal” nor a “science”.

    1. Wukchumni

      Economics strikes me more as dismal scientology, with the high priests of money stuck somewhere in the 20th century, as the 21st century is trying to teach an old dog new tricks about pavlovian responses in a completely different paradigm involving much sleight of and.

  7. JCC

    “In a Petri dish, a colony of bacteria will expand until it runs out of resources and then it will stop.”

    In High School Biology we were taught that the colony of bacteria doesn’t only stop, but starts to die off rapidly due to poisoning by it’s own waste products.

    Anyone who has brewed a batch of beer or wine knows this, the yeast dies when it’s waste product, alcohol, starts killing it off. There is still sugar (resources) left in the yeasts’ environment.

    This all will not end well, at least not well for the human species at the rate we are going.

  8. TG

    “all biological species expand to the limits of their food supply”

    Not really. Wolves, for example, control their reproduction: likely because a small pack of strong and healthy wolves is more effective than a larger pack of chronically malnourished and weak animals. And so do humans, more often than not. WHEN THEY ARE LEFT TO THEIR OWN DEVICES.

    The engine behind all of this is the global population explosion. And this did not occur because people are mindless animals. It occurred because the rich love cheap labor, and through various means, here and there, over the generations, they have pushed to maximize population growth. And we can’t talk about it. Because cheap labor

    There are direct pro-natalist population policies. China shortly after Mao took over: even with the draconian and desperate one-family one-child policy that came after, this policy added more than a half a billion to the world’s population. Or Mexico not that long ago, or Syria, or Iraq, or Iran, or Japan before WWII…

    And there is immigration. Immigration does not just move people around: it maximizes total global population. Because every person who escapes from a place like Bangladesh, makes room for one more person to survive to adulthood and have children…

    And there is demographic momentum and the ratchet effect. Once a population explosion has been deliberately created, even when the government backs off the population will continue to grow for some time to come. And it’s easy to grow a population: it’s hard to reduce it. So even if the pro-natalist policies of the rich have been largely scattershot and on-and-off, as local oligarchs want their cheap labor, the net global effect is cumulative and massive.

    And perhaps most of all: propaganda. The obvious truth of Malthus and Mills and Keynes and Ma Yinchu – that nothing grows exponentially for very long, and if we try to double our population every few decades it won’t be long before misery and chronic malnutrition (not typically starvation) limit it for us. This isn’t speculation, it’s reality, it has been in the past, it is now in places like Bangladesh and India and Syria. This has been censored from almost any coherent discussion, because cheap labor. So who are we to criticize the people of Nigeria for having six kids a pop, when all these famous Nobel-prize winners keep screaming ‘the more the merrier’?

    I do understand why the topic is difficult: if we acknowledge the essential truth of Malthus et al., this would short-term increase tensions surrounding immigration. But if we refuse to address the issue, then global warming and climate change are not even relevant: with a constantly growing population we will trash the environment no matter how much we lower per-capita consumption, and with a population pushing up against subsistence, it won’t matter if the climate collapses or not.

    1. Vatch

      Thanks for introducing me to Ma Yinchu. I never know what I’ll learn here at NC! Mao Zedong was a genuinely evil person — from the article about Ma Yinchu:

      In June 1957, at the fourth session of the First National People’s Congress, Ma presented his New Population Theory. Having examined trends of the early 1950s, he concluded that further population growth at such high rates would be detrimental to China’s development. Therefore, he advocated government control of fertility. During the following three years, Ma’s theory suffered two rounds of attacks, and he was dismissed from public life. The charges of the government were that the theory followed Malthusianism, attempted to discredit the superiority of socialism, and showed contempt for the people.

      Ma’s New Population Theory did not receive mention in the People’s Daily again until June 5, 1979. On July 26 of the same year, the Central Committee of the Communist Party of China formally apologized to him, stating that events had validated his theory. In September 1979, all charges against him were retracted, and he was made honorary president of Peking University. Ma Yinchu died on May 10, 1982 due to heart and lung disease and pneumonia.

      Even before Ma’s death, scholars were realizing the enormity of the government’s error in censoring his views for two decades. This view can be demonstrated by the title of a newspaper article published in 1979: “Erroneously criticized one person, population mistakenly increased 300,000,000”.

      (Mao Zedong died in 1976, making the rehabilitation of Ma Yinchu possible.)

  9. Tomonthebeach

    I tend to side with Yves. While Gaius makes good points, there is still no doubt in my mind that if somebody builds a better mousetrap they will sell every one they make until the market saturates. Thanks to Irma, I just popped $6K for roof repairs. Everybody needs a roof over their head, and roofs eventually weather and leak. The market for roofers, thus expands with the population – more roofs/more repairs.

    Thus, it maybe that vultures can only find adequate feed at the large corporate level, where nibbling on the dying carcass provides nourishment without killing the prey; it just weakens it to make future nibbling easier and more convenient. However, for small prey (businesses), the likelihood of death by vulture is too high to ensure a steady supply of nourishment, so they fly over to the next plump corp.

  10. PKMKII

    The populace has been trapped into supporting the growth monster as well because the social, communal, and public systems that support those too old to work anymore have been undermined. Pensions have largely become a thing of the past, social security is inadequate to live on and is under threat of getting smaller and smaller, charity is a drop in the bucket. So people are dependent on 401k’s and Roth IRA’s for their retirement. Fixed income investments, due to the interests rate being so low, give piddly returns, so everyone needs a constant 5% growth on their mutual funds in order to not starve when they hit their 60’s.

  11. tommy strange

    Excellent. Really glad Graeber continues to be read. I also liked his Direct Action book…great first person stuff in there….

  12. Peter Dorman

    Since no one else is questioning this post, I will.

    1. The issue at the moment is not “infinite” growth but today’s growth. If current economic growth is a problem, we should stop it whether or not there is a problem with “infinite” growth. If it isn’t, we can let it go on and, when it does become a problem, stop it then. Isn’t the urge to apply criteria that emerge at infinity to present-day circumstances an example of the slippery slope fallacy?

    2. Yes, you can have infinite economic growth on a finite planet. Economic growth is growth in value. If the natural resource component of value diminishes at the same rate that total value increases, the resource draw remains constant. In practical terms, this is about shifting our economy to one whose main value added derives from skill, design and similar human attributes and not the accumulation of “stuff”. As a teacher, I believe I am adding to the GDP with minimal impact on the planet. How would it help us meet our ecological challenges to lay me off?

    3. And what is the means by which economic growth is to be curtailed? Getting rid of capitalism is hardly a solution, since under any system new activities will take the form of growth unless someone steps in and forces an equivalent value of existing activities to stop. So which will it be, anti-growthers? Are you going to forbid new enterprises, new products, new services? Or are you going to forcibly shut down existing ones? And who is you?

    In the real world, we do have an anti-growth policy; it’s called austerity. It really works: you can cause an economy to shrink by several percent a year by using some combination of political domination and lack of monetary sovereignty to impose procyclical fiscal policy. Presumably this is not what most NC readers want.

    I’ve had this argument dozens of times before, and I always hear the same reply. No, we don’t want austerity, and we’re not going to lay off all the teachers. We are going to end growth by eliminating only the bad stuff—fossil fuels, junk food, the pleasure palaces of the rich. That’s the growth we don’t need.

    Well fine. I agree. But then the problem isn’t economic growth on a finite planet, it’s what we produce and how we produce it—so say it.

    4. What we produce and how we produce it is so unsustainable that an economy half the current size is ecologically disastrous. Fiddling with a few percentage points of economic growth to solve problems like climate change is simply a distraction. The arithmetic of meeting a carbon budget constraint like that of the IPCC calls for putting as much energy as possible into transforming our economy, not tinkering at the margins with its size.

    5. This is the hard part: I think the anti-growth rhetoric reflects a relatively privileged economic position. After all, if “infinite” economic growth in the US is impossible, so is the same growth in India, China, South Africa and everywhere else. But do you really want to make that argument? And again, who is “you”?

    Even in the US, arguing for reduced economic growth—and reduced employment, reduced resources for education, infrastructure, etc.—is political suicide. Is that really because 95% of the population is brainwashed?

    Anti-growthism presents itself as hyper-radical, but it’s a distraction from the much greater radicalism we really need.

    1. lyman alpha blob

      Well technically yes you can have infinite economic growth, depending on how you define ‘economic’, because then it’s only about numbers. If a company makes 1000 widgets annually at $5 per, and then produces 900 a year later at $6 per, economically it has grown while expending fewer resources. But that’s not how most people or this article would define it.

      The article states:

      …infinite economic growth, defined as “more cans and bottles for you, more and greater wealth for the rich…

      Clearly it’s about more and more people consuming more and more things which is in no way sustainable.

      The key thing we are producing too much of is people. Cut that back and many problems will solve themselves.

      1. Peter Dorman

        And at what rate of population decline will the current economy be sustainable? And what policies will bring that decline about?

        1. lyman alpha blob

          I don’t think our capitalist system is sustainable, period, which I think is maybe what you’re getting at.

          Mother Nature will bring the decline about, whether we like it or not.

          Once that happens, hopefully the survivors will learn from the mistakes of their ancestors. I don’t hold out a lot of hope that will be the case though as we don’t seem to have learned anything from the mistakes of our own ancestors.

          1. reslez

            As a species we seem only to be breeding more vicious versions of ourselves, whether that means psychopathic feudal warriors or sociopathic Wall Street investors. I don’t have much hope for the descendants of the next big scramble for survival.

            Clearly civilization was a mistake. When humans invented big piles of resources we also invented thieves. This doesn’t seem to have turned out well for our species. We do better with less. It encourages cooperation… except when cooperation genes are in decline.

        2. lyman alpha blob

          Hopefully this isn’t a duplicate – I tried replying earlier and that comment didn’t show up but a later one on another thread that went into moderation did, so trying again.

          Our current capitalist economic system is not sustainable, period. Maybe that’s what you were getting at too.

          Mother Nature will bring population decline about, whether we like it or not. Hopefully the survivors will learn from the mistakes of their ancestors although I don’t hold much hope that will be the case as collectively we don’t seem to have learned a thing from the mistakes of our own past.

        3. John Wright

          Sustainable population in the USA?

          I listened to someone who estimated 100 million.

          What policies will bring that decline about?

          Maybe Daniel Patrick Moynihan’s “benign neglect”?


          “While it is difficult to determine exactly how many Natives lived in North America before Columbus, estimates range from a low of 2.1 million to 7 million people to a high of 18 million.”

          One might suggest this 18 million estimate represents a sustainable (non resource depleting) population for the 15th century America with primitive technology.

          If we assume modern sustainable technology has been developed to make better use of resources since 1492, an approximate 5x the 18 million (90million) is close to the 100 million figure mentioned.

          There were a great many resources for the settlers to develop over the last 500 years, but many of mineral resources have been lost/degraded/dispersed.

          But there has been a lot of degradation of other resources, for example topsoil..

          “Unless new approaches are adopted, the global amount of arable and productive land per person in 2050 will be only a quarter of the level in 1960, the FAO reported, due to growing populations and soil degradation.”

          Then add in that much of easily found resources have been exploited, and it is more difficult to argue the economy can grow, in a consumer goods sense, to accommodate ever more people.

          To an extent, we have an economy that is miss-measured in human welfare terms, there is no subtraction from GDP for long work commutes, crowded parks, polluted air/water, devastating floods/weather or open space lost to development.

          It is easy to cast the climate change/population boom as a problem that we will solve when it is manifestly evident.

          But that assumes we have some flexibility, resource wise.

          Options disappear if we are simultaneously short of potable water, arable land, inexpensive energy, critical minerals/metals and a good climate for farming.

          It took Rome about 400 years for its population to peak in the second century and then be entirely depopulated by 546.

          This might have not been devastating to those who left Rome, as the world was small in population and rich in resources so they had other areas to populate..

          But now, with globalization, there are no unexplored/untapped areas that can serve as a “New World” for the large world population.

    2. Susan the other

      I’d just like to say this about that. As always in our anaysis, time is the discounted factor. Everything focuses on productivity and efficiency – but you can’t speed time up, you can only run yourself raggedy. And if we observed time as a bedrock measure of maintaining stability we would not resort to high-powered machinery to out-produce the other guy. We would be limited by the natural constraint of human time. Yes. Let’s go back to working by hand, with innovative new tech to help out the burdens of hand labor. Let’s restructure economic time.

    3. ChrisPacific

      Point #2 has been raised and debunked before: ‘Exponential Economist Meets Finite Physicist’. Unfortunately the certificates on the original are broken so I can’t link it, but here’s the relevant section from Google’s cached version:

      Physicist: Then in order to have real GDP growth on top of flat energy, the fractional cost of energy goes down relative to the GDP as a whole.

      Economist: Correct.

      Physicist: How far do you imagine this can go? Will energy get to 1% of GDP? 0.1%? Is there a limit?

      Economist: There does not need to be. Energy may become of secondary importance in the economy of the future—like in the virtual world I illustrated.

      Physicist: But if energy became arbitrarily cheap, someone could buy all of it, and suddenly the activities that comprise the economy would grind to a halt. Food would stop arriving at the plate without energy for purchase, so people would pay attention to this. Someone would be willing to pay more for it. Everyone would. There will be a floor to how low energy prices can go as a fraction of GDP.

      Economist: That floor may be very low: much lower than the 5–10% we pay today.

      Physicist: But is there a floor? How low are you willing to take it? 5%? 2%? 1%?

      Economist: Let’s say 1%.

      Physicist: So once our fixed annual energy costs 1% of GDP, the 99% remaining will find itself stuck. If it tries to grow, energy prices must grow in proportion and we have monetary inflation, but no real growth.

      Economist: Well, I wouldn’t go that far. You can still have growth without increasing GDP.

      Physicist: But it seems that you are now sold on the notion that the cost of energy would not naturally sink to arbitrarily low levels.

      Economist: Yes, I have to retract that statement. If energy is indeed capped at a steady annual amount, then it is important enough to other economic activities that it would not be allowed to slip into economic obscurity.

      Your point #3 is the million dollar question, but I would suggest that the starting point is to collectively agree that it’s a question worth asking and answering. Debunking infinite growth won’t necessarily answer the questions you have raised, but it might make it politically tenable to start devoting significant resources to doing so.

      1. Peter Dorman

        If the physical quantity of energy, measured in quads, used falls as GDP rises, this is likely to be accompanied by a rise in the unit price of energy. Because of scarcity rents it isn’t even certain that the value of energy employed relative to GDP has to fall, although, if the economy adapts, it should over time.

        1. ChrisPacific

          That’s the point that proves you can’t have infinite growth on a finite planet. For that to be true, the cost of finite resources such as energy as a proportion of GDP (or whatever growth proxy you choose) would have to shrink to vanishingly small values in the long run, and the argument above (and your comments) demonstrate that can’t happen. In other words, if the economy grows without limit then so does energy consumption (albeit at a slower rate).

          The original article argued this also applied to ‘infinite’ energy sources like solar and its derivatives (wind, hydro etc.) because the waste heat from entropy would eventually render the Earth uninhabitable, similar to Venus.

  13. nonclassical

    ….”growth” is inimical to cooperation…as it translates, “competition”…see Huxley, “Brave New World” and
    Orwell, “1984”, as today provides ability to realize both these disparate visions. Yves accurately notes Naomi Klein (“Shock Doctrine-rise of disaster capitalism”) perspective-focus.

    Orwell’s version (and he was Huxley’s student) of militarism is much more (“Project For A New American Century” – total global military domination) relevant imo…military budget? Unrepentant, unaccountable wars, war crimes? FEAR?

    Adam Curtis, BBC videographer, as usual: “The Power of Nightmares”:

    Disc 1. The POWER of NIGHTMARES. Instead of dreams of a better world, today’s politicians only promise to protect us from nightmares. The most frightening is the threat of an international terror network. The nightmare is an illusion — a myth that has spread unquestioned through politics and international media — a fantasy that restored the power and authority of politicians in a disillusioned age. 3 hrs.

  14. Sound of the Suburbs

    The monetary system itself requires growth, there is never enough money in existence to pay off the debt plus the interest.

    Money = Debt

    The money supply is the sum of all the public and private debt in existence within a currency area, with nothing extra to pay the interest.

  15. Sound of the Suburbs

    Under the Emperor’s new clothes of neo-liberalism, was an old economics, neoclassical economics, that was last used in the 1920s.

    The 1920s roared with debt based consumption and debt based speculation, this then tipped over into the debt deflation of the great depression.

    No one fixed any of its problems before rolling it out again.

    The UK and US roared with debt based consumption and debt based speculation until it all blew up in 2008.



    This economics that doesn’t look at private debt should come with an economic health warning.

    If the existing economic ideas come from the 1920s, what did they do to fix it?

    Keynes looked at the problems of the debt based economy and came up with redistribution through taxation to keep the system running in a sustainable way.

    He had factored in the high inequality of basic capitalism that has existed since it started.

    The cost of living = housing costs + healthcare costs + student loan costs + food + other costs of living

    Disposable income = wages – (taxes + the cost of living)

    High taxation funded a low cost economy with subsidised housing, healthcare, education and other services to give more disposable income.

    Keynesian ideas went wrong in the 1970s and everyone had forgotten the problem of the debt based economy that he originally solved.

    Corbyn and Sanders are presenting solutions that should keep us going for a while.

    It does tend to end up in 1970s stagflation, but we’ve got a few decades to work out what went wrong last time.

    1. JBird4049

      We have the tools, and the knowledge, to solve all our problems, and if don’t we can certainly get them very quickly. The problem is that it would almost certainly require that the current elites’ leadership be ended, or drastically reduced, which they do not want. So we will have push-backs, crackdowns, violence from people with tanks, and heavy artillery, along with screams of communism, liberals, and pink ponies.

      So we don’t have a few decades I fear. We have at best two decades as we will need at least one decade to defeat, and then dismantle, the current power structure and create the new, and necessary, leadership that will deal with the crisis(es).

    2. nonclassical

      ..if we are to intone “neoliberalism”, need historical documentation=definition (certainly not “liberal”):

      “The term neoliberalism was coined at a meeting in Paris in 1938. Among the delegates were two men who came to define the ideology, Ludwig von Mises and Friedrich Hayek. Both exiles from Austria, they saw social democracy, exemplified by Franklin Roosevelt’s New Deal and the gradual development of Britain’s welfare state, as manifestations of a collectivism that occupied the same spectrum as nazism and communism.

      In The Road to Serfdom, published in 1944, Hayek argued that government planning, by crushing individualism, would lead inexorably to totalitarian control. Like Mises’s book Bureaucracy, The Road to Serfdom was widely read. It came to the attention of some very wealthy people, who saw in the philosophy an opportunity to free themselves from regulation and tax. When, in 1947, Hayek founded the first organisation that would spread the doctrine of neoliberalism – the Mont Pelerin Society – it was supported financially by millionaires and their foundations.

      With their help, he began to create what Daniel Stedman Jones describes in Masters of the Universe as “a kind of neoliberal international”: a transatlantic network of academics, businessmen, journalists and activists. The movement’s rich backers funded a series of thinktanks which would refine and promote the ideology. Among them were the American Enterprise Institute, the Heritage Foundation, the Cato Institute, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute. They also financed academic positions and departments, particularly at the universities of Chicago and Virginia.

      As it evolved, neoliberalism became more strident. Hayek’s view that governments should regulate competition to prevent monopolies from forming gave way – among American apostles such as Milton Friedman – to the belief that monopoly power could be seen as a reward for efficiency.”

      1. Sound of the Suburbs

        I have read “Democracy in Chains” and “Shock Doctrine”, which are pretty depressing when you realise how global this is and how powerful the people are that are running it.

        Hopefully, they have biased the system so much in their favour that it will fall apart through a lack of demand and the signs are there.

        Neoclassical economics is rigged in banker interests by not looking at private debt and rentier interests by ignoring the difference between “earned” and “unearned” income.

        The debt it has been running on globally is maxing out.

        Implosion time is coming,

        “The Marxian capitalist has infinite shrewdness and cunning on everything except matters pertaining to his own ultimate survival. On these, he is not subject to education. He continues wilfully and reliably down the path to his own destruction”

        Their own greed and short- term self interest is there undoing.

  16. Paul P

    Using current technology, Mark Jacobson believes the US can become carbon free by 2050. I’m surprised no one has mentioned
    it. See, The Solutions Project. Not that humans will take the necessary action. We seem bent on proving that intelligence is a negative characteristic for species survival.

  17. some lurker

    I think by this —

    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.

    — s/he means that the allure of a sale will be too strong to resist. Someone will offer a premium price for a merger or sale and the shareholders will cash out.

    1. Yves Smith Post author

      Plenty of parties turn down that sort of thing. I have had billionaire clients who didn’t IPO companies they owned at what clearly would have been a ginormous premium during the dot-com craze. Similarly, the owner of my apartment building also owns six other residential rentals in Manhattan, plus the big kahuna asset, an office building that takes up a full block on Park Avenue above Grand Central in the 40s. He could clearly cash out a a huge price, particularly in this super low rate environment, since the office building is prime prime prime and tons of investors love owning glam office buildings.

      But they don’t. Nor have they even had any interest in co-oping or condoing my building, which would also be a hugely profitable exercise.

      They like having assets that throw off tons of cash like clockwork. They don’t want the hassle of reinvesting and facing market risk.

      1. Gaius Publius

        Yves is correct in drawing the distinction between privately held companies and entities and public ones. I had public companies in mind entirely as I was writing but failed to specify. My bad. If I redrafted this piece I’d make that difference clear.

        In fact, the freedom of private companies to ignore outside pressures is the basis of one of my two climate fix fantasy scenarios, something I may write up later.


  18. John Doe

    Getting down to first principles businesses do not need to grow. Just look at Philips. But the money supply in the world needs to grow because of the way money is created, with interest. So if we don’t grow the money supply constantly and hence create new widgets then we have depressions and debt write offs. Bring back debt jubilees and we can slow unsustainable growth. Take the money supply out of the hands of the bankers and we can see stability.

  19. Frank White

    For an in-depth analysis of the issues mentioned in Gaius’ article, a must read is the now classic book “Prosperity without Growth” by Dr. Tim Jackson, British ecological economist and professor of sustainable development at the University of Surrey.

    And Jackson does the math to support his arguments.

    I am in the process of writing synopses of the book’s 11 chapters, section by section. You can access these on my website beginning here: “Tim Jackson: In a finite world, what can Prosperity (without growth) possibly mean?”

    Here is an excerpt from this opening post:

    “The vision of social progress that drives us – based on the continual expansion of material wants – is fundamentally untenable. And this failing is not a simple falling short from utopian ideals. It is much more basic. In pursuit of the good life today we are systematically eroding the basis for wellbeing tomorrow. In pursuit of our own wellbeing, we are undermining the possibilities for others. We stand in real danger of losing any prospect of a shared and lasting prosperity.”

  20. Sound of the Suburbs

    Neo-liberalism made it very difficult to build anything that works, be it a national or global economy.

    It used neoclassical economics that doesn’t look at private debt or rentier activity within the economy, leading to nations saturated in debt and parasitic rentier economies throughout the West.


    This real estate and financial speculation economy was always on a one way trip to a financial crisis.


    They’ve got 1920s neoclassical economics back that doesn’t look at private debt and they’ve removed the 1930s regulations, another 1929 is guaranteed. There goes the global economy.

    The UK has BTL, the obvious sign no one has a clue about the detrimental effects of rentier activity on the economy.

    “Income inequality is not killing capitalism in the United States, but rent-seekers like the banking and the health-care sectors just might” Angus Deaton, Nobel Prize Winner

    If we want something that works, we need to ditch neoclassical economics and neo-liberalism fast.

    1. Sound of the Suburbs

      Let’s design the Euro with our finest neoclassical economists from the University of Chicago.

      Oh dear.

      Let’s put experts in neoclassical economics in our Central Banks to ensure financial stability.

      The financial instability begins.

      In 2008 the Queen visited the revered economists of the LSE and said “If these things were so large, how come everyone missed it?”

      They are neoclassical economists ma’am, they don’t have the knowledge to see things like this coming.

      It’s easy when you know where to look.

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