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Small is Beautiful… Can Big Be, Too?

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Recently I’ve noticed economic observers engaging in something of a backlash against the idea that small businesses are the key to economic prosperity. And as much as I hate nearly every feature of large corporations, I have to agree that the fetishization of small business is blind to the very important matters of stability and productivity.

In one important contribution to this emerging counter-trend, Jared Bernstein of the progressive Center on Budget and Policy Priorities wrote an op-ed that appeared in the New York Times under the title “Small Isn’t Always Beautiful”. Bernstein is primarily concerned with job growth, and while he seems to tacitly admit he’s ignoring the rest of the big vs. small picture, that picture is by no means black and white.

Think Progress’s Matt Yglesias picked up on the Bernstein piece, praising purported evolutionary characteristics of the growth of firms. This prompted Karl Smith at Modeled Behavior to wax positively apoplectic about this “market selection” process that weeds out the little guys and yields benevolent giants.

Perhaps most readably, The New Yorker financial writer James Surowiecki made a series of astute, essentially undeniable points about large vs. small businesses vis a vis economic growth, under the title “Big is Beautiful”. He followed up these statements (which I’ll get to in a minute) with a conclusion that only makes sense in a world where all economic writing in the American liberal press has to somehow uphold the absurd notion that capitalism is not utter lunacy. In the end, Surowiecki conspicuously does not uphold the title assertion about big being beautiful, but rather just exposes one of capitalism’s many critical contradictions: that big and small are often both bad and good simultaneously.

Let’s look at some of Suroweicki’s unassailable truths, all building the case that large companies are good for the economy because “greater productivity is the main driver of long-term economic growth and higher living standards”:

small businesses are, on the whole, less productive than big businesses, and though they do create most jobs, they also destroy most jobs, since, while starting a business is easy, keeping it going is hard.

True enough (though I think semantically it should say small businesses create and destroy the most jobs, not most jobs).

In part, this is because big businesses are able to enjoy economies of scale and scope. Big businesses are also better able to make investments in productivity-enhancing technologies and systems;

Another truism. And these are big matters. Productivity and employment stability are huge factors in any economy.

But let’s look at some of the more qualitative assessments of the large-small break.

A recent study by the economists Erik Hurst and Benjamin Pugsley shows that only a tiny fraction of small-business owners have any interest in becoming big-business owners, or even in bringing a new idea to market. Most are people who simply want to run a small company, do work they enjoy, and have some control over their own financial lives.

Now that’s curious: most small-business owners (thus almost certainly most business owners) are in it not for empire or wealth so much as for self-management and fulfillment.

Some of the [political] support [for small businesses] derives from real virtues that small companies offer—diversity of choice, connection to local communities.

Surowiecki doesn’t take this further, but it’s also true that large businesses have an incredibly difficult time meeting the challenges of diversity and community. He’s tacitly arguing for the loss of these things.

The conclusion?

Small may be beautiful. It’s just not all that prosperous.

Think about that. The more qualitatively appreciable way of doing business doesn’t provide as many stable jobs or as much growth as the approach that is inferior in qualitative terms. Shouldn’t such a glaring contradiction be considered a fundamental flaw of capitalism, rather than treated as a natural law of economics that we all just have to accept? In order for it to be a law, it would have to extend across systems and not be particular to just some, like market capitalism.

Let’s examine scale by looking at some of the relevant factors that inhibit small businesses from being more productive in raw economistic terms. It’s not too complicated; mainly, we’re talking about the ability to pool resources, carry out common tasks in-house vs. using vendors, and the advantages mass-oriented branding and reach.

  • wholesaling & resources — This is the most common element we think of when the term “economies of scale” is raised. The more you buy, the less you pay per unit, thus the higher the margin. Each item you stock in your corner grocery cost you more from the wholesaler than it did the giant chain that has a retailer competing with you across the street. If you custom-build motorcycles, you’re going to pay way more per tire than a big manufacturer does when it puts in an order for 100,000 at a time.
  • distribution — Whether you own your own trucks like many groceries, department stores, and other chains, or you simply have a huge contract with a major trucking company (and other shippers), you’re paying less per unit to ship the goods you sell if you’ve got a massive network and are shipping huge quantities around the clock.
  • R&D — Research and development is resource intensive, and in most industries it doesn’t make a lot of sense for the “little guy” to buck up against concentrated capital. Consider even that many (if not most) terrific inventions and innovations that arise from independent minds (rather than big R&D departments) get licensed and gobbled up by major operators, and also that rolling out innovations can often be costlier than developing them, and it’s easy to see why this area is dominated by big guns, with wonderfully notable exceptions.
  • labor — Payroll processing, benefit packages, human resources overhead, and numerous other costs of employing workers are cheaper per-unit for large companies with thousands of employees than for small businesses.
  • marketing — In a capitalist economy, massive advantage is accrued by firms that can leverage advanced or large-scale marketing campaigns. National companies can afford to create higher-end ads for multiple markets, and they can do ad buys in bulk.
  • market access — That larger companies can reach more potential customers is obvious, but consider that it also more likely includes overseas markets, and we see another fundamental advantage to scale.
  • capital and credit access — As a rule, big companies can more easily raise fundamentally more operating funds.
  • administrative overhead — Sure McDonald’s spends more on accountants than Joe’s Burger Joint, but probably not as a share of gross revenues. Big businesses concentrate and compartmentalize management and secretarial functions in ways that small operations simply cannot.
  • environmental impact — (This isn’t a productivity factor, for the most part, but I’m including it so we can assess and understand the fuller advantages of scale.) Environmental impact is a mixed matter, but generally speaking fewer facilities doing more concentrated production means less pollution, duplication, waste, and greenhouse gas emissions. However, it can also mean concentrated pollution that is fundamentally worse than distributed pollution (such as with factory farm waste). It can also mean more alienation between decision makers and the habitats they affect, which encourages careless policies. And it can lead to increased shipping activity. But overall, like it or not, fewer facilities would be more environmentally friendly than more facilities, assuming the same production output.

All these advantages would seem to uphold Surowiecki’s conclusion that big businesses are the true backbone of growth, and that the more of them we have, the better off everybody is.

Setting the rest of their relative “ugliness” aside for now, let’s first note that an economy heavily reliant on big businesses isn’t without growth- or jobs-related liabilities, not to mention the political threat of conglomerated capital. As unlikely as the corner store may be to innovate or offer a great benefits package, it’s also unlikely to offshore jobs or move overseas at the drop of a dime. And while small businesses can associate to apply generalized pressure on policymakers, rarely can they muster the same kind of concentrated, specialized political influence as giants in fields such as manufacturing, agribusiness, telecom, finance, and so forth (especially compared to the power these sectors wield when they associate). Nor are small businesses so phenomenally distanced from the rest of the population — including their own workers and consumers — as giant corporations inherently wind up, enabling the notorious “faceless corporation” to engage in anti-social policies without having to face the consequences so immediately or directly.

Nevertheless, while he conspicuously fails to paint a complete picture of big vs. small for us to evaluate the merits of each, and by extension consider his thesis that “big is beautiful”, Surowiecki is correct on the matter of productivity advantages of scale and scope, and it’s a very important point that many who romanticize small business tend to want to downplay.

But all this contradiction exposes is how inadequate capitalism is. This isn’t some side feature of the system that naysayers like me can take potshots at. It’s a core attribute: the keys to productivity inherently detract from the quality of economic interactions. As scale increases, workers are alienated from their bosses and the products they make; consumers are alienated from the decision-makers of the businesses they patronize; marketing departments and firms add a whole layer to this mediation.

One of the key ways to grow an economy is to concentrate production processes in order to create greater marginal advantages of scale. This also tends to concentrate capital and to alienate capitalists from consumers, not just within firms (think of the quality of interactions at Barnes and Noble compared to your local independent bookseller), but also in the economy as a whole as more and more small businesses give way to big competitors, leaving fewer producer-consumer interfaces available.

A sane economic system would harness the opportunities of scale without losing the advantages of more intimate enterprises. But how could this be done? What is keeping firms from doing this in a market capitalist system?

The key problem is propriety. In order to achieve scale in a competitive market system, a company has to grow itself. Want a spiffy ad campaign? You have to be national. Want to do your own shipping? Get vertical.* To take advantage of scale in a market economy, a business has to grow its power base. In doing so, it sacrifices the community connections and personal capacities that make it a quality employer and producer. This is a simplistic generalization, but it’s basically stipulated by reasonable critics of the “small is beautiful” mentality.

The key, then, is to break the bonds of competition so that all producers of all sizes can take advantage of scale. In a participatory economy, scale would be built into every enterprise, no matter the size. While each firm would have to demonstrate its ability to work generally as efficiently with resources as the others in its industry, it would have the freedom to customize and personalize everything from its workplace to its products, within socially agreed norms that maintain the integrity of its output.

Let’s see how a participatory economy fairs on the main productive aspects of scale mentioned earlier.

  • wholesaling — In a “parecon”, all resources are equally accessible by all producers. Without markets, all allocation is merely a logistical matter, with no one looking to take a cut out of being the “middle man” doing the simplest or fewest transactions for the highest relative return.
  • distribution — All firms have equal access to distribution networks with priority managed through participatory planning that seeks equity (fairness) rather than profit in distribution. There is no obvious advantage to a firm being large, except that it might influence location of transportation “hubs”. Locating near such a hub would achieve this advantage for a small producer.
  • R&D — The elimination of patents and intellectual property means the advantages of all inventions and innovations are immediately available to all producers. The advantage of this to the entire economy cannot be overstated.
  • labor — In a parecon, aside from relatively minimal overhead of tracking personnel, the marginal advantages of scale offered to large employers in modern capitalism are all but eliminated. No more bulk health insurance packages or payroll management to tip the scales in favor of big players.
  • marketing — Participatory socialism entirely eliminates the need for marketing, trusting consumers to know what they want and facilitating the acquisition of it without hawking wares through an artificial desire-creation machine that itself constitutes a net drain on the economy, requiring work and spawning waste where there need be none.
  • market access — The entire participatory economy benefits from giving all producers bilateral access to consumers (who are after all participatory planners), but more importantly, a lack of such access on a large scale would not make or break a firm. Parecon facilitates appropriately scaled consumer-producer interactions, and it does so fundamentally better than any capitalist marketing department or firm could ever dream.
  • capital and credit access — All firms have access to the counterparts of these features in a participatory economy, with industry and consumer councils considering all proposals for expansion on their merits. Size would not be a condition for acquiring increased capacity.
  • administrative overhead — This is perhaps the one area where participatory socialism might at first appear weaker than capitalism. No doubt, generally more “man hours” will be spent on managerial tasks inside a given firm or industry, though many administrative tasks would either be eliminated or would lend themselves to concentration with the achievement of scale. In any case, the upside of this distributed (collective) management is the huge advantage of widespread personal empowerment as a byproduct of economic activity. This is that self-management factor Surowiecki noted as an incentive for small business owners to stay small. There’s no concentration of managerial power or overhead at the top… and this is good. Most of us want a nice, comfortable, fair share of management, not a king’s ransom of power.
  • environmental impact — On this matter, there’s really no contest. In a participatory economy, there are in theory essentially no externalities; the environmental effects of production and consumption are built into “prices”. This would likely encourage scaling of at least some aspects of many production operations, all else being equal, but it would only be one factor, and it wouldn’t necessarily effect key elements of an enterprise, such as community interface or worker self-management.

In short, a participatory economy permits firms of various sizes to productively coexist, respecting the needs of each operation and the population it serves (both workers and consumers), be it local, regional, international, and so forth, all while increasing access to most of the advantages currently only associated with large-scale firms. By eliminating the incentive to make those advantages proprietary, society can assure that they don’t get hoarded. If society decides the efficiency enhancements of concentrated administrative activity and softened environmental impact militate toward increased scale, such would be the trend. But if consumers and workers decided smaller is indeed overwhelmingly desirable in terms of workplaces, public interfaces, product outlets, etc, few if any advantages of scale would be lost on smaller firms.

An economic system that offers the advantages of economies of scale and the advantages of small, personalized enterprises would seem to be fundamentally superior than one that poses a trade off. Too bad the very idea of a rational economy is outside the realm of acceptable discourse, where a system rife with contradictions has been pre-ordained.

 

* There are notable exceptions in businesses that pool resources to achieve some advantages of scale, including owner cooperatives and associations. Better known is the franchise model. But these exceptions have weaknesses that prove the rule. To the extent they achieve scale through association, they lose the distinct characteristics that customers and employees appreciate.

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Is Capitalism Doom?

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I’ve been seeing a lot of commentaries by mainstream, liberal economists and economic observers (that’s my classification) declaring, more or less, “Capitalism is dead; long live capitalism.” These presentations are typically made by people who present detailed, fact-based, rational cases why their economic system of choice is destroying our habitat and our politics, ruining life for many while ending it for many others, or at least devouring itself and spoiling everything even for the people it’s served relatively well thus far. These same people invariably then make a nonrational, largely fact-free case for why only capitalism can save us from capitalism.

The cognitive dissonance is really quit astounding, and I must confess the urge to analyze it largely inspired this blog. I knew the next couple of years would see a rash of these all-but-admissions that capitalism is a fraud and it doesn’t “work”, and I wanted to be well positioned to pounce on them.

I probably could have predicted one of the first pieces of prey to come along once I launched FuturEconomy would be from none other than liberal economist Nouriel Roubini, who over the weekend declared that capitalism was doomed… but could still save itself. Roubini makes quite a case in his commentary that the contemporary practice of capitalism has all but devoured capitalism, but he couldn’t help declaring his hope for capitalism to save itself at the last minute if the US and Europe follow his prescription.

As with other recent examples, Roubini’s case against capitalism is substantial (though missing literally dozens of points), and the case for it pathetic, lacking even a lazy attempt at substantiation or even logic to support assertions. I don’t know Roubini, but I’ve seen this phenomenon enough to suspect a religious belief in the almighty capitalism is all that’s behind his thin veneer of optimism.

Devoid of Ethics

The commentary is called “Is Capitalism Doomed?” I love this title. It is kind of a “woe are we” approach to the inevitability of social change. There’s not really a shred of ethical interest in the piece, mind you. Roubini isn’t upset that people are suffering and are going to suffer whether capitalism succeeds or fails. He is apparently just worried for capitalism, the ideology/model, per se.

The first 13 paragraphs are a cogent pre-obituary. The failings, mind you, are not that billions of humans don’t have their needs met. That’s never been something legitimate to hold against capitalism. (Fuck ’em.) It’s off the radar. Roubini is more concerned about the system’s failure to function as it has — which incidentally includes exploitation on a scale never dreamed of by emperors of old. Roubini and his contemporaries are worried that capitalism will even stop serving those it has done well for: the privileged classes. If the technical backbone of capitalism (global finance) grinds to a halt, that’s bad for the capitalists. And Roubini seems aware it comes right on the heels of other privileged groups getting pinched:

Recent popular demonstrations, from the Middle East to Israel to the UK, and rising popular anger in China – and soon enough in other advanced economies and emerging markets – are all driven by the same issues and tensions: growing inequality, poverty, unemployment, and hopelessness. Even the world’s middle classes are feeling the squeeze of falling incomes and opportunities.

Note this is the only mention Roubini makes of popular discontent, and he lists the concerns as evidence of a threat to capitalism, which is what he appears to actually care about. The most charitable reading is that Roubini finds this discontent to be further evidence that capitalism is on the wrong track, but I think that’s too generous.

Here’s an example of the crassness so common in these discussions. Roubini also notes that “cutting jobs reduces labor income, increases inequality, and reduces final demand”. The problem with cutting jobs and reducing “labor income”, you see, is that it decreases demand — not that it causes hardship. It’s nice of Roubini to include inequality, but we know inequality is an objective problem of the kind economists can include in their analysis. The subjective aspect of it (exploitation and deprivation) aren’t notable factors.

In a sane economy, decreased demand would be a good thing, per se. If people wanted less stuff, everyone should be able to work less, not to mention saving on natural resources and reducing pollution. But this is an Achilles heel of capitalism (it has several). Decreased demand has a “positive feedback loop” effect on unemployment and wages in a market capitalist economy, and the cure for it (increased demand) means more resource use and more pollution. It is quite simply insane. Taking into account a world in which consumption is already way over sustainable limits, contraction = bad is a very ugly proposition. We need the biggest economies to contract or humanity and its habitat are in trouble (never mind capitalism). So we need contraction = good. But capitalism doesn’t play that way.

“Capitalism is Dead, But…

Stepping away from moral matters (which I’m never going to win economists over on anyway), Roubini’s commentary amounts to a strong case portraying capitalism’s downfall impending, basically illustrating how people and institutions are running out of shipwreckage to cling to.

The conundrums are lined up:

  • an expected third round of “quantitative easing” in the US “will be too little too late”;
  • “Italy and Spain are both too big to fail and too big to be bailed out”;
  • nearly all economies “need a weaker currency and better trade balance to restore growth, but they all cannot have it at the same time”;
  • European governments “are so distressed that bailouts” of European banks are “unaffordable”, and paradoxically sovereign risk is “fueling concern” about those banks’ health, cyclically putting them at greater threat because they “hold most of the increasingly shaky government paper”.

The case goes on and on, and even if you don’t understand the particulars of all these dilemmas, you get the gist. The contradictions of capitalism are on display. It’s a tour de force of arguments why capitalism is functionally on the brink. It falls way short of a complete case, but it’s pretty damning in and of itself.

…There Is No Alternative”

This prompts Roubini to write one of the most interesting conclusion sentences I’ve ever seen. Paragraph Ten begins:

So Karl Marx, it seems, was partly right in arguing that globalization, financial intermediation run amok, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct (though his view that socialism would be better has proven wrong).

What a sentence! It’s hard to tell what Roubini actually means by it. After all, he presents a case that Marx was totally right inasmuch as he said what Roubini demonstrates vis a vis capitalism, but then he declares that Marx was partly right. He never gets around to saying how Marx was not totally right about capitalism’s downfall. Roubini says “globalization, financial intermediation run amok, and redistribution of income and wealth” are killing capitalism, just as he says Marx predicted. So what makes Roubini’s rendition of Marx only partly right?*

One way to read the sentence is that Marx’s entire body of work was “partly right” because socialism isn’t better than capitalism. Marx is best known for two very broad theses. One was that capitalism would make its own demise, the other was that socialism would be better. So maybe Roubini wedges in that parenthetical statement about socialism being no better just to prove that Marx was wrong about something. Or maybe he wedges it in to remind us that we’re stuck with capitalism.

But how can Roubini suggest socialism has been proved not to have been better than capitalism? What kind of self-delusion would be required for a learned economist to write those words?

Here are some statements that could tread the waters of truth:

  1. Marx’s version of socialism, to the extent it is understood, has been largely demonstrated to be inadequate and even inferior to capitalism in some respects.
  2. Socialism as implemented by autocrats has been all but proven inadequate for meeting human needs or safeguarding basic freedoms.

One could argue the above statements either way, but at least there would be a logical case to be made. They’re not absolutist like Roubini’s dismissive socialism is no better). Having set out to implement something like Marx’s version of socialism or an autocratic version, practitioners have yet to come close to a model that could be considered clearly superior to capitalism, and in fact have largely established nightmares. It’s reasonable to believe this; I do in fact believe this. It’s just not the end of the story, except for the nonrational true believer.

I mean, how bizarre it is to declare that failed attempts to implement peculiar versions of a broad idea constitute proof that no version of that broad idea can ever work? By this logic, pre-Wright Brothers attempts to achieve manned flight would be considered proof that humans will never pilot aircraft.

It’s one thing to hear “there is no alternative” from capitalists making a case that capitalism is doing well — “…besides, there’s no alternative.” But when the capitalist apologist is up against the ropes — even admitting piles of evidence that its contradictions put capitalism three jabs and a right hook away from a self-knockout — it’s strange to see them quoting Margaret Thatcher not just to explain why they refuse to throw in the towel, but actually to somehow provide hope and rally for their cause.

Capitalist, Heal Thyself

Mercifully, Roubini doesn’t leave us hanging. He’s not saying capitalism is dead and socialism can’t work, so we’re doomed. He sort of kind of answers the title question, “Is Capitalism Doomed?” by hinting that if a bunch of changes are made just right, it is not doomed.

Now, I have major objections to this. First, as I mentioned before, Roubini entirely fails to substantiate why he thinks his recommendations will save capitalism from itself. He just says that they will, and sophisticated fanboys worldwide will take comfort in that assertion. Roubini lays out an antidote, in three paragraphs, that will miraculously resurrect his ideology. This is unsatisfying to me, because I’m a critical thinker. People who love capitalism probably find hope in Roubini’s faith.

They should not.

But what if we stipulate that Roubini’s blueprint could save capitalism? Is it a real possibility? Is it what we should hope and maybe work for?

My answer is hell no. It wouldn’t be worth the trouble, and it has profound opportunity costs.

Resurrecting capitalism mostly just means making it functional again, and this isn’t worth lifting a solitary finger for. The problems endemic to it will still mostly be there, if softened. The next crises are not financial as much as they are existential; Earth is running out of resources at an alarming rate, and the planet is cooking. So Roubini’s best case scenario puts us in position to grow economies that should be shrinking. This is not just not great, it is catastrophic. Roubini’s antidote is out of the frying pan into the fire.

Besides this, Roubini’s prescription is nearly impossible to imagine. It will mean major transformations and gargantuan policy reforms that are very hard to fathom. This is not a reason not to try, though. “Demand the impossible” is one of my favorite slogans. It doesn’t mean “act unreasonably”, it means “strive for the things they say you can’t achieve”. But as long as we’re going to try for the impossible, why should we break our backs trying to resurrect a zombie that will try to eat our brains? Why not try for something that is next to impossible but is fundamentally better in nearly every way? Why not a new economic system?

End stipulation. Now let’s review Roubini’s suggested remedies, in case you’re still thinking resuscitating capitalism is desirable.

His first suggestion is that we “return to the right balance between markets and provision of public goods.” No more supply-side economics or free-market silliness, but also do away with the “deficit-driven welfare states.” He says we need infrastructure investment, progressive taxation, “short-term fiscal stimulus with medium- and long-term fiscal discipline”, “reduction of the debt burden for insolvent households”, breaking up too-big-to-fail banks, and tighter regulation of financial markets.

These are the typical liberal solutions to the recession and the threat of increased discontent and further economic turmoil. But do they really address the host of problems Roubini himself listed as potentially dooming capitalism? Not even close! Dr. Roubini has listed numerous symptoms of multiple terminal diseases and then effectively said, “I’m pretty sure I can treat that nasty rash you’ve got.”

But this commentary was widely hailed. Bloggers and aggregators looked up at Dr. Roubini and said, “That’d be swell, Doc. This rash has been bothering me somethin’ awful!”

Then Roubini gets a little more philosophical; he departs from reality a even more.

Over time, advanced economies will need to invest in human capital, skills and social safety nets to increase productivity and enable workers to compete, be flexible and thrive in a globalized economy.

Increase productivity in order to enable workers to compete? His solution to the dilemma of international trade being one of the downfalls detailed earlier is to “be flexible”? That’s it?

In order to save itself, capitalism needs to learn to invest more in human capital. In case you didn’t hate capitalists and their rationalizing apologists before, try that statement out for size.

“But Dr. Roubini,” a rational patient complains, “I’d like to hear all the options. There must be something else we can try. I mean, I felt pretty sick before I got the rash. I’ve got cancer and congestive heart failure.”

Roubini’s answer:

The alternative is – like in the 1930s – unending stagnation, depression, currency and trade wars, capital controls, financial crisis, sovereign insolvencies, and massive social and political instability.

And that’s it. Hilariously, that’s where the commentary ends. Finito. There is no alternative to his prescription. It’s Roubini’s way or doom.

Roubini’s review of capitalism is like that archetypical television scene where the sheriff sits on the edge of his desk, arms folded, and declares with forlorn: “Boys, I don’t approve of what you’ve done. You’ve been reckless, you’ve endangered lives, you’ve crashed several cars and half the town burned to ashes. That said, it appears I’ve got nothing to hold you on, so you’re free to go. Now scram, and stay out of trouble.”

But capitalism is not the moral equivalent of Bo and Luke Duke; it’s not a good-natured country bumpkin just trying to get by in a confusing world. It is the confusion.

What we’re really seeing from Roubini and others is self-interested terror combined with a dearth of ethical concern finally infused with a profound lack of imagination. It’s typically presented in a fashion that is practically self-conscious; the critic will make a strong case using facts and reason to explain why capitalism is to blame for our current condition… and then he or she will make what amounts to a religious case, lacking facts and reasoning, to argue that capitalism can or will turn everything around, if we’ll just tinker here and there.

This is remarkable, if you think about it. It requires a dual failure of imagination that is close to pristine in its self-delusion. The critic must fail to carry market capitalism’s structural implications to their logical conclusion, usually by ignoring all but a subset of problems that are in and of themselves pretty damn damning. It’s like showing how a plastic bag will rise and fall on the wind but then claiming it will never finally hit the ground or get stuck in a tree. This requires nonrational faith.

Roubini starts off with the wrong question: Is capitalism doomed? Who cares? There’s just one question worth asking: Is humanity doomed? My answer is, If we stick with capitalism, humanity is in deep trouble.

Roubini and the unimaginative see these questions as one and the same. They want to stay on the ship with the massively compromised hull on the off chance that some Sisyphus will come along and bail out the bilge indefinitely, despite a lack of apparent interest in the endeavor. They cling either because the ship is the only place they’ve ever called home and they can’t bear leaving it, or because on this ship they’re in first class, and on the lifeboats or the rescue vessel, class disappears.

Just imagine the near certainty of a figurative death by drowning frightening you less than the idea of having to live in a society that offers everyone roughly equal dignity. That’s the only impetus I can figure is behind these ridiculous declarations that there is no alternative to a system pretty much everyone from center leftward knows is a pile of garbage.

 

* I actually disagree that capitalism eating itself in the ways that it is now demonstrates that Marx was totally or even largely right, but in presenting a limited, carefully distilled sample of Marx’s claims, Roubini makes Marx seem positively ingenious in his forethought! (For people with religious beliefs in the predictive capacities of markets, the bar on predictive capacities is so low even 19th Century meteorology must seem positively prescient).

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Will the New York Times Profit Off an Elitist Profile?

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It never ceases to amaze me how disconnected, or just plain unconcerned, the privileged can be when it comes to worrying about the future of the world. Believing they’re safe from the worst pains of anthropogenic climate change and contrived resource scarcity, their main concern tends to be how they are going to continue to grow their personal wealth when the shit hits the fan…

Long-term business analyst Jeremy Grantham has been noticed recently for what some see as economistic doomsday predictions, usually in the form of open “letters” to the investor class. In these communiques, Grantham says the same thing progressive economists and scientists have been saying for decades, citing roughly the same evidence (if far less of it!) and drawing essentially the same mid-term conclusions, with updated numbers. But Grantham has credibility because he’s not remotely radical, or really even progressive — he’s a late-to-the-game mainstream financial analyst… and more importantly, he’s got the interests of elites in mind, which means the New York Times will perk its ears up and give unconventional observations the kind of attention only a Magazine feature profile can provide.

Grantham and some fanboys drive the conversation of an August 11 NYTM piece titled “Can Jeremy Grantham Profit From Ecological Mayhem?” In a way only the extraordinarily privileged could swallow with a straight face, source after source lavishes Grantham with praise for looking out for the vulnerable, neglected investor class. Unless you’re made of money, it would be hard not to get outraged by the cavalier attitude of this whole story. But if you are a big investor, how “objective” and “unbiased” the feature must seem.

Let’s start with writer Carlo Rotella’s gushing treatment of Grantham:

Doomsayers are always plentiful, and the economic and environmental news has encouraged even more doomsaying than usual of late, but Grantham compels attention, in part because he’s not simply prophesying doom. […] And, crucially, the consequences will be unevenly distributed, creating angles for you to make money and look out for your interests, however you define them.

[emphasis added]

The New York Times is saying a man deserves attention not because he is pointing out how much trouble lies ahead (however inadequately); it’s because he inspires us to call our stockbrokers rather than run to the woods. In other words, it’s newsworthy because he can help people with capital exploit volatility, the rest of us be damned.

Bailout Nation author and prolific business blogger Barry Ritholtz, whose work I have followed for a couple of years now, appreciates Grantham as a fellow straight shooter. But with praise like the following in the NYTM story, it’s easy to see which side these guys are shooting for:

He’s not telling people to stockpile water and dehydrated food. He’s saying this asset class will underperform or not.

And what about those of us who can’t invest in assets of any class? (The ugly irony, of course, is that if a major collapse happens, it’s unlikely all the asset holdings in the world are going to keep these guys and their families fed and protected, but on the way to “doomsday” they can get filthier rich on paper!)

The whole piece is such a fawn fest, the Times even quotes sources with financial conflicts of interest. We’re treated to praise of Grantham from the head of the Environmental Defense Fund, a group backed by the Grantham Foundation for the Protection of the Environment. We also hear from the executive director of that same Foundation, whose job no doubt depends on Grantham’s good graces. On what planet is that legitimate journalism?

The article includes no critics of Grantham or his attitude. In fact, the only bit that could be conceivably construed as criticism is mixed praise of the quarterly letters, coming from another employee of Grantham, who notes some investors complain that Grantham’s advice isn’t immediately applicable enough for them to exploit!

No source points out how bizarre it is that someone notes potential suffering only to dismiss or distract from it, making no real mention of current suffering. No one offers alternative analysis. No one even challenges Grantham’s numbers from any perspective, Left, Right, or Martian.

Enough views about Grantham. What about Grantham’s views? Let’s start with a zinger. In Rotella’s words from the Times piece:

The world’s population could reach 10 billion within half a century — perhaps twice as many human beings as the planet’s overtaxed resources can sustainably support, perhaps six times too many.

We aren’t told that this is only true if we assume the planetary elite — that tiny percentage of the global population that consumes a massive share of resources that could otherwise be used to feed, clothe, heal, shelter, and educate the 60 percent or so that live on less than $2 a day — is permitted to maintain its sickening dominance of global wealth and resources. This status quo is a given for the Times and people who look at Grantham as a prophet of profit angles.

Rotella quotes Grantham’s open letter from July:

We humans have the brains and the means to reach real planetary sustainability. The problem is with us and our focus on short-term growth and profits, which is likely to cause suffering on a vast scale. With foresight and thoughtful planning, this suffering is completely avoidable.

The above statement is just plain wrong. First, it ignores the “suffering on a vast scale” that is already underway! On Day Zero, we’ve got suffering on a vast scale. Who can look around and consider that the horrors already caused by “scarcity” that is in turn caused by market capitalism’s wicked misallocation of goods and resources is anything other than “vast” — I’d rate it as “epic”, even.

Worse, it’s absurd to suggest by implication that the suffering of the world’s poorest can be averted. Some of it can be curbed — perhaps much, even — but the trajectory we are on offers no option for sparing a great many, no matter what radical changes are made. (See, for instance, the recent work of fellow market optimist Paul Gilding, who at least has the integrity to admit widespread suffering caused by climate change and scarcity will be hellish and is inevitable and underway.) And make no mistake, Grantham is not advocating radical changes anyway, least of all those with the most vulnerable in mind.

It isn’t actually clear what “suffering” Grantham is referring to. But even if he’s talking about the “suffering” of wealthy investor class that risks losing its $300 shirts if they don’t play their dollars right, that hardship can be but delayed as Grantham and his friends trample to the aft rim of the Titanic.

Grantham does give some indication of who he’s looking out for, noting that a drastic change in economic priorities will likely come “too late in the sense of failing to protect much of what we enjoy and value today.” By we, he probably doesn’t mean the world’s poorest.

Grantham wisely wants to tie the issue of climate change to that of resource depletion, which he thinks will have a greater impact on the American conscience than that abstract bogey man of global warming. “Global warming is bad news,” Grantham tells the Times. “Finite resources is investment advice.” Again we’re back to those real interests. You’re not going to ride out Grantham’s storm on your 401k.

Cynics like me will have to agree with Grantham to an extent: it’s true that Americans are more interested in their short-term concerns than looking down the road. But Grantham goes a step further; he considers this unfortunate attribute a strength, saying Americans “respond to a market signal better than almost anyone.” How great that we don’t care about those who will be first and most severely affected by climate change — by gosh, we’ll respond when it puts the economic pinch on us… after all, we’re Americans. Meanwhile, the Global South is collectively begging us to respond for their sake (and our own), but the virtuous Americans are awaiting the proper signal.

The Times feature ends unsurprisingly on a note of praise for Grantham.

But I’m not done with him yet.

Grantham’s most-recent letter — the one that has garnered him cult-like attention (that I contributed to because his numbers are very interesting) — is a moral disgrace.

Grantham is extremely smart and insightful. He has a keen eye for some of the limitations of the system he lives by.

Capitalism does not address these very long-term issues easily or well.  It seems to me that capitalism’s effectiveness moves along the spectrum of time horizons, brilliant at the short end but lost, irrelevant, and even plain dangerous at the very long end.

Again, how capitalism can be considered brilliant in the short term when billions of humans are food-insecure or at risk of dying from curable diseases is kind of hard for us non-elites to understand. But it’s important for business analysts to comprehend, as Grantham does, that capitalism isn’t even good at keeping their interests steadily shaping up, because markets have extremely limited predictive capabilities.

Grantham tentatively advocates reducing the human population of Earth in such a way that “might leave us with a world population of anywhere from 1.5 billion to 5 billion.” Well, we certainly could go a long way toward solving our resource problem by eliminating the wealthiest billion humans, but something tells me that isn’t who Grantham is thinking about. (I don’t advocate it either, for the record.)

We could more palatably solve many of our resource concerns by knocking out excess consumption by the wealthiest 15 percent of the global population, even while raising the standard of living for the lowest 60 percent or so. But of course that’s not a serious option for the Paper of Record or anyone they’d herald in a praise piece.

Grantham’s letter is devoid of the following words: hunger, poverty, refugee, famine, disease. These are hazards that even the most cynical of elite analysts doesn’t take seriously. Malnutrition and starvation are both mentioned, but one is a historical reference. One use of the terms is in a bullet point glancing over the fact that there will be “increases” in Africa and Asia, and nothing will be done about it. Another mention is used to crassly bolster Grantham’s case against US ethanol subsidies.

Grantham’s letter focuses heavily on agricultural issues, lending some very good analysis of soil and water problems that are worth reading. But it conspicuously ignores the root causes of the soil and water problems he notes: factory farming, livestock dependence, and monocropping. He’s either just learning about the cornucopia of deep-seeded oh-shit crises already facing humanity, or he’s burying most of them for whatever reason. Either way, his agricultural analysis is embarrassingly amateurish.

Perhaps worst of all, Grantham naively exhibits symptoms of a very typical chronic optimism disorder that is virtually religious in nature. This is not uncommon among elites trying earnestly to look down the road. After lamenting (while the Fukushima crisis is still at a high simmer in Japan) that humanity probably won’t make a revolutionary switch to nuclear fission energy, Grantham brightens up:

I believe that in 50 or so years – after many and severe economic and, possibly, social problems – we will emerge with sufficient, reasonably priced energy for everyone to live a decent life (if we assume other non-energy problems away for a moment) even if we don’t radically improve our behavior and make true sustainability our number one goal. In other words, current capitalist responses to higher prices should get the job done.

I’ll stick to the worst of this quotation’s many offenses: the belief, based on nothing but faith, that markets and humanity will somehow, magically, make everything peachy again mid-century. No need to switch economic systems or do anything too radical; after some undisclosed “social problems” that we can assume away, we don’t even need to “radically improve our behavior” in the meantime — everything will fix itself.

Substantiation of such a bizarre claim is unnecessary, because Grantham is telling the financial elite what they want to hear. Worst case scenario: everything will sort itself out after some problems. No worrying about that whole screwing-over-future-generations conundrum. Even the chief doomsayer says they’ll be fine.

That must be comforting for the kind of people the Times finds relevant.

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Revolt is Inevitable; Riot is Not

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To any insightful observer of the sociology of riots, the only thing that’s hard to understand about these extraordinary social phenomena is why they occur so seldom. As irrational as rioting may seem in terms of who bears the costs of the immediate damage and violence, there’s a difference between irrationality and senselessness. Riots tend to erupt without much historical consciousness on the part of instigators, so contextual disincentives (e.g., wariness of aftermath) are not fully in effect. In any case, something can seem irrational from the perspective of a distant observer, even while that same event can make total sense to the people engaged in the action (or for that matter, strongly sympathetic bystanders).

Riots and revolutions alike tend to be sparked by an incident or other concrete injustice from which moral outrage spreads. The differences between riots and revolutions, as two distinct types of uprisings, have to do with the level of organization of the response and whether the intentions are expressive or transformative.

In the current UK turmoil, it was the murder by police of a young black Londoner that set things off. The visceral, localized response to the frustration of never seeing injustices sufficiently addressed is understandable. In this case, it has spread to envelope people from many areas of England carrying myriad torches they believe are not being validated by anyone in position to make a difference. I doubt anyone has ever put it better than Rev. Martin Luther King Jr did in 1963:

When you cut facilities, slash jobs, abuse power, discriminate, drive people into deeper poverty, and shoot people dead whilst refusing to provide answers or justice, the people will rise up and express their anger and frustration if you refuse to hear their cries. A riot is the language of the unheard.

Nothing fundamental has changed since MLK spoke those words. For all the social progress that has been made, governments still act on behalf of their wealthy sponsors and underwriters, and the most privileged race still sees itself as superior and specially deserving while pretending to abhor that very idea. Almost nobody in a position to be heard states the obvious: that wealth is power, and a system that fosters the accrual and concentration of power will before long so silence and disenfranchise some that they will seek to be noticed however they possibly can. Furthermore, it is easiest to disenfranchise an underprivileged class if that class is divided against itself on superficial lines of race, gender, age, and so forth, and when that class is kept quiet and complacent.

When it comes to articulating their discontent, the poor are reliant on the corporate news media to convey their plight. But mainstream outlets have a static handful of perspectives on poverty, youth, and race: ignorance, patronization, scapegoating, demonization, and distortion. In societies where media outlets mediate nearly all interfaces between the poor and the privileged, and where police conspire with geography to protect the privileged from those they exploit, the self-destructive orgy of chaotic looting and burning is one of the only available options for sending messages.

Here’s another apt quote that’s gone viral. An NBC News reporter asked a participant of the riots were achieving anything. He replied:

Yes. You wouldn’t be talking to me now if we didn’t riot, would you? Two months ago we marched to Scotland Yard, more than 2,000 of us, all blacks, and it was peaceful and calm; and you know what? Not a word in the press.

Of course, such rare glimpses of explicit conveyance notwithstanding, the message typically received by the voiceful when they look at rioting is, “Insulate yourselves from us so we can’t burn your house down or hurt your kids.” It’s doubtful that many people in positions of power hear the proper message: “Give us some justice and share your shit with us or we’re coming for it.” The power elite take their cues from the fire department during riots: stand back, maybe spray some water here and there, try to contain the blazes to the poorest neighborhoods.

The political and economic dimensions of the riots rocking British cities are too big to ignore, no matter how earnestly politicians and members of the media insist the events are acts of crazed criminality. Jérôme E. Roos assesses the “structural causes” of the riots in an excellent backgrounder:

While it would be ridiculous to use [youth unemployment and child poverty] statistics as a justification for the dangerous, irresponsible and anti-social behavior of the rioters, it would be just as foolish to simply ignore this crucial social context and only focus on the “aberrant behavior” of “deviant individuals.” The violence and thievery may be entirely indiscriminate and a-political, but the root causes of it are profoundly political and carry a very clear discriminatory component.

See Dan Poulton’s “Riot in the Age of Austerity” for more context.

The question in our minds shouldn’t be whether civil society will respond to intolerable conditions like wealth disparity, alienation, and discrimination imposed upon the populace by elites. The question is simply how will we respond? We can do it in an organized, intentional fashion, with preparation, cohesion, and foresight. Or we can do it in a chaotic climax of rage.

We will revolt. But will our upheaval take the form of organized revolution or spontaneous spasm? That latter, default option isn’t “pointless” or “senseless” as many would depict it. But it only achieves the goal of scratching an itch. Revolution serves that goal, too, but it also can exchange itchy, dead skin for healthy new flesh.

Still, given all that I’ve said about corporate media forming a status-quo-protecting shield between the privileged and the exploited, what is the practical alternative to rioting? Please, you urge, because you’re anti-lameness… don’t prescribe more of that passive demonstrating and those sniveling petitions! That stuff only reminds us that we’re itchy; it scratches nothing!

The answer is organized direct action. Premeditated campaigns of operations that are considerate and self-conscious, not merely reactive. Campaigns carried out in concert with a system for implementing a new mode of truly just and equitable social relations. Such is where mob rule yields to grassroots democracy. Easier said than done? Hell yes. Still easier than dealing with the repercussions of riot? Just maybe.

So if you expect rioting to visit your neighborhood as “austerity measures” and heavy handed policing increase, maybe it’s time to think about organizing to channel all that outrage toward productive goals using forward-looking strategies and tactics. Build recognizable alternative institutions that are precious so services and supplies can be maintained while previously dominant institutions of dependence go up in figurative or literal flames. Target only otherwise-unaccountable property and materiel that is itself used as a weapon of exploitation.

There will be revolt. The choice between riot and revolution is ours.

Top image credit: Phil Noble; Second image credit: Lewis Whyld.

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Hacking Urbania: Applying Open Source Development to Cities

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Open-source development is bound to be a growing factor for change as it demonstrates in more and more areas just how profoundly bad the ownership of innovative ideas has been for the common good. If you haven’t noticed that idea reaching out of our computers and into our 3D world, you’re in for a treat.

I just finished reading some mildly curious thoughts from radical sociologist Saskia Sassen (via The New Significance). In addition to being painfully abstract if not esoteric in her presentation, Sassen’s quirky approach to an idea titled “Open Source Urbanism” was entirely unsatisfying, except that it caused a stream of ideas to flow in my tiny brain.

It’s not at all clear that Sassen really understands the concept of open source, or that she bothered doing a Google search using the terms in the title of her commentary. We need to start with a better articulation of what open source means.

Open source is rejection of private intellectual property, at least in the conventional sense. If it’s open source, anyone can see, use, and even copy bit for bit the inner makings of the project under a highly permissive license.

In addition to this, what most of us think of as open source (in spirit if not technically) is a development model by which contributions are relatively democratic and assessed for utility and merit over profitability or their potential to concentrate authorship or credit. Virtually anyone can participate, and contributions that succeed in improving the project will be incorporated into the final product; otherwise, they could inspire a spin off, or maybe fall by the wayside.

Sassen is not the first to come up with the idea of applying this development attitude to our cities. I first learned of it a couple years ago when entrepreneur Mark Groton made a splash in a Wired feature story on his open source urban planning projects. While heavily software-oriented, we’re talking about mass transit and conventional urban planning functionality done using open standards and semi-proprietary code bases. (Basically, the stuff is packaged, installed, and supported by a company at a fee, but the underlying code is open and usable by anyone.) In theory, no longer must small- and medium-sized municipalities either hire contractors to custom-develop planning systems from scratch or pay for big-money packages just to have tools comparable to those the big cities enjoy.

Open Source CityBeyond software, how else would open source concepts be relevant to city planning? I think it would be more in the form of open source architecture or open design, which is to me by far the most exciting new branch of the open source movement. I’m talking about people who may or may not work in a municipal office contributing concrete planning work — blue prints, research and assessment efforts, policy drafts, functional technologies — and just handing their ideas over to the public. The idea of this happening would have sounded insane 20 years ago, but now we see people with talent and expertise making patent- and copyright-free contributions of all sorts to the public good.

Remember, a key attribute of open source is that it can be freely copied by another project, as long as it is always kept open. So I can view the code behind a piece of open-source software, without ever having lent a single minute of my time or ounce of my expertise to that project, and simply copy and paste all that code into a new folder and start building my own version. I just can’t claim the part I borrowed as my own creation or try to prevent someone from borrowing it or try to profit off that portion. (I modified the theme of this very blog by hacking the open source code base!)

Cities do this all the time, quite consciously. So do nations for that matter. They meet at conventions or send direct delegations and share their successes on nearly every front, from dealing with crime to delivering water to acquiring revenues, and they encourage their peers to copy them, without asking for money or even credit in return. It’s not a revolutionary idea at all; it’s simply how we relate when cooperation trumps competition.

But cities are not entirely unlike the corporate world, especially when private contractors are involved. They pay for consultations that might have generalizable applications, but either they or the contractor might consider the results proprietary, forcing every city that wants a similar assessment to start at the drawing board with a consultant. There is room for more openness.

Another matter is labor: those who best know how to innovate and automate aspects of municipal functionality are perversely incentivized to withhold their ideas for fear of ironically innovating their way to a layoff. In these times of austerity and hostility toward labor, even unionized municipal workers are barely more protected from this perversion than unorganized private-sector counterparts. This is a big part of the problem with productivity gains not being generalizable.

Even where openness and idea sharing are commonplace, the approach of an explicitly “open source” process for urban planning might be a positive shift. If at every stage of development, any urban initiative (or rural initiative, for that matter) were treated as open — handled with the understanding it would be kept transparent and shared freely, as well as welcoming public participation in managed ways — we could see new approaches to everything from after-school programs to traffic coordination to emergency services to zoning to local currencies*. City planners of all types could benefit from the technical approach honed by open source software developers with their version planning, communication methods, beta testing models, code repositories, and so forth.

As long as I’m brainstorming, I should note the most exciting potential for open source city organizing is in grassroots form. Above I’ve implied city officials taking advantage of the open approach, but the real beauty of this is something that Sassen did indeed seem to be trying to get at in her commentary: let residents engage in hacking their city through organizing movements that take advantage of ideas coming out of the grassroots, either locally or from another town somewhere, then push for implementation or engage in direct action.

Imagine open-source technologies like 3D printers and open-license designs giving neighborhood activists the technical power to build and install their own traffic light or construct expertly designed playground equipment without contractors. The possibilities are endless. It’s the kind of hyper-localized empowerment (not in any figurative sense, either) that communities can use to thrive during crises.

If you find this stuff interesting, you may dig…

  • The Open Source Ecology project is one of the most fascinating undertakings you’re likely to come across. These guys are pushing (and beginning to practice!) open design on a grand, social scale with ambitious intentions. Take some time to check it out — the promise here cannot be overstated. Watch their video here if you want to have your eyes pop out of your head. (You will also marvel at how utterly shitty the background noise is, but I swear it’s still worth the viewing.)
  • The Open Plans Project is rife with interesting ideas that, properly applied, could have radical implications; I think they’d need to be tied to the kind of social movement that can best take advantage of them.
  • This short interview is decidedly un-radical but it’s kind of inspiring nonetheless.
  • Finally, Open Source Urbanism is something I found in that Google search for the title of Sassen’s article, though I haven’t looked into it very deeply.

With apologies for the disjointed entry, I hope I got some of the salivary glands in your brain working like they are in mine.

*Incidentally, all sorts of community-based alternative economies have traditionally considered openness of design key to their functioning and development, be it an enhanced barter system or a local currency like Ithaca Hours; leaders and advocates of these projects tend to strongly encourage customized implementations of their ideas, which they’ll eagerly share for the price of a cup of coffee.

Image credit: opensource.com

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The Truer Threat of a ‘Carbon Bubble’

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You aren’t an idiot, so you’ve long known many of the impacts of climate change are inevitable at this point. Some are already occurring. You get that. The trajectory is in place, and unless we change it sharply, we’re going to see worse and worse conditions.

But what if financial markets have embedded the trajectory to a great extent by all but guaranteeing dependence on fossil fuels? A new report (PDF) raising fear of a bubble in the fossil fuels market inadvertently suggests this trajectory is precisely what’s underway, although its authors don’t seem particularly concerned about the threat to our habitat. The deck has been stacked; there’s a carbon commitment in place, if you will.

I found the report through a blog entry by Lydia Prieg over at NEF. She summarizes some key points for those of us more interested in humanity and the planet than investors:

This research offered a fresh perspective on investment and tackling climate change, by noting that more fossil fuel reserves are currently listed on stock exchanges than can be burnt if we are to avoid breaching the 2 °C global temperature rise (above pre-industrial levels), beyond which it is believed that climate change will be irreversible. For example, the CTI notes that:

  • “global markets are currently treating as assets [carbon] reserves equivalent to nearly 5 times the carbon budget for the next 40 years.”
  • “the CO2 potential of the reserves listed in London alone account for 18.7% of the remaining global carbon budget.”
  • “If the 2 °C target is rigorously applied, then up to 80% of declared reserves owned by the world’s largest listed coal, oil and gas companies and their investors would be subject to impairment”

Note that the +2°C point is way too high. We want to aim for +1° beyond pre-industrial levels by Century’s end, fully conceding we’ll spend most of the next hundred years cooking well above +1°. (And the prospects for even +2° are more than a little grim.)

Like Prieg’s, my take on this is different from that of the report’s authors. They seem concerned for fossil fuel investors, which is probably their mission. But I’m more worried about the rest of us. If the world’s governments get serious about curbing carbon emissions, it’s unlikely they’ll leave speculators holding the bag. Whoever is holding a hot potato (oil field) if and when steep regulations kick in could get bailed out.

Even if the influence of those invested in dirty energy were to fail in some way, they’d almost certainly succeed in protecting their existing investments in the trade-off. Which in turn means burning that fuel or transferring the burden onto the consumer/citizen, who is of course relatively unprotected by government.

Anyway, as Prieg notes, the industry isn’t particularly worried about the prospect of harsh emissions limits being imposed on fossil fuel reserves already on the market, wagering either that curbs are not impending or that the price spike they’d cause would benefit contract holders.

But Prieg’s personal insights are most important:

Both these arguments, however, demonstrate the lack of interest investment managers have about the role that they themselves may be playing in bringing about irreversible climate change. Apparently, when one is focused on optimizing an investment portfolio’s performance, concerns regarding the state of the planet just don’t feature on the agenda.

Indeed.

Image credit: Carbon Tracker Initiative

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Thriving After Collapse: Three Approaches to Survival and Beyond

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I see three general approaches to preparing for the impending social/economic/ecological collapse. I’ll talk more about my own views of how I see that coming, and in fact more about the preparation strategies described here, but I thought a brief introduction would be handy down the road.

The most obvious model is the nuclear survivalist approach. I use the term nuclear as in the “nuclear family” unit, but the strategy has its roots in the original contemporary apocalyptic scenario*: atomic holocaust. This is where you stockpile supplies for you and yours and prepare to protect them by force.

The second and third ways are similar, and not mutually exclusive**. The second approach is community survivalism. This is where an entire community prepares for the eventual collapse. A community here might mean a neighborhood or a village or conceivably even a city, or it might be a local sub-group that self-identifies as a federation or network of households.

The third approach is dual power. This is where a community (defined as above) pro-actively organizes to avert the worst impacts of collapse. A dual power is named such as it operates while the current system is still fully functional. This approach, if taken up on a large enough scale, would constitute a social revolution. It would not avert the collapse of the current system per se, but it would potentially ameliorate some of its worse impacts, and might indeed more gracefully bring about the downfall of the dominant system. And if it failed in doing so, it could fall back to functioning as a community survivalist approach to endure collapse.

There are pros and cons to each of these systems, but as you can already tell, I strongly favor the dual power model, because I’m not a very individualistic, short-term, or even local thinker. I advocate the approach that is best for the most. But I also think in the long run, the dual power strategy is the only one that has the potential to do anything other than delay suffering even of the best-prepared survivors.

Nuclear Survivalism

The nuclear survivalist approach is a model that offers you the most control. There are fewer moving parts, so it’s the most reliable, independent option. Even if you expand the model slightly beyond the nuclear family or household, the scale can be relatively manageable. There’s none of the messiness associated with democracy, mutual aid, and larger-scale cooperation.

Unfortunately, the nuclear survivalist model has severe limitations, owing primarily to economies of scale and division of labor — that is, a distinct lack of each. A small group with limited skills can only accomplish just so much, so the nuclear survivalist must stockpile massively. Stockpiles, besides being strictly finite and thus having a literal shelf life, are attractive to hostiles and require vigilant defense.

The nuclear survivalist also has a limited domain. Even if you’re using the cabin-in-the-woods approach, going out to hunt, gather, cultivate, or scavenge is very dangerous. So once stockpiled supplies are depleted, the game shifts dramatically. At this point, the nuclear survivalist will be wishing for community.

Dilbert talks survivalism.

Community Survivalism

This model essentially just ups the scale from the household model to a larger group. Since a community can be defined as just an array of households scattered around a neighborhood or village, or it can be an entire town, it’s hard to paint an encompassing portrait. But all applications share some basic advantages and liabilities.

Greater division of labor and economies of scale make life easier once any stores are depleted, and indeed they open up various options for stockpiling and distributing essentials. The community approach offers basic insurance against acute tragedies such as fire (backup housing) or illness (assuming there’s at least one medical specialist in the group and/or supplies include medicines no single family would expect to store).

In most cases, the community scale also upgrades the domain in which it is safe to be outside acquiring inputs, as perimeter patrolling becomes realistic.

On the other hand, this model requires cooperation between units with varying interests, and presumably it involves democratic structures that are more unwieldy than those enjoyed (or eschewed) at the household level. In terms of economics, the community survivalist model introduces the problems associated with scale, such as competition over “surplus” resources between people who contribute variously. And in the end, all of this cooperation and organizing is still hyper-local and short-sighted, not particularly unlike nuclear survivalism.

Finally, as compared to the dual power strategy, community survivalism offers no recourse for practice. Community survivalists plan for crisis but do not engage in active relations as an operational community until that crisis hits.

This is incidentally the approach that resonates with many because Michael Ruppert advocates it in Collapse. Review this short clip and decide for yourself its relative appeal.

Dual Power Community

This strategy is largely identical to community survivalism, except it is put into practice before crisis hits. Or, perhaps more accurately, it recognizes a crisis in the present and begins addressing said crisis. The other difference is that the dual power model is intended to be transformative. Its mode is not survivalist but rather transitional and change oriented. Dual power organizers look to affect conditions rather than merely cope with them. They see change not just as something inevitable to respond to but forces that can be affected. The dual power approach plans to come out the other side of any crisis ahead in as many realms as is possible.

Otherwise, it shares the weaknesses of community survivalism, and these are not insignificant. There is far less of a guarantee that a community undertaking a dual power strategy would make it through the first winter in a post-collapse world than the nuclear survivalism approach. And it’s obviously much harder to talk about issues of organizing for crisis with one’s neighbors than with one’s family.

But as time goes on, these difficulties will likely fade, as the topic of surviving post-collapse will become increasingly popular and less taboo. Those with an idea of how to thrive, not merely cope, under chronically catastrophic conditions may sound more appealing than advocates of running for the hills.

Conclusion

I have a lot more to say on these matters, but for now I just wanted to get a general entry up so I could refer back to it as I post on various related issues. To be clear, I’m not one of these people who is heralding collapse as the way to spark the change I’ve always known we’ve needed. I have hopes that we will respond to collapse, at least when it is imminent if not sooner, in a way that gives us a foot forward by building community and planning for transformation. But I’d much rather see that happen now, and watch humanity enjoy a relatively bloodless transition to a model that works for everyone instead of just for elites, as market capitalism and central planning always have. And I most hope we avoid the command capitalism (fascism) I think a lot of people will want to turn to once it’s “too late”.

* It’s curious to note that there was very little time in human history prior to the advent of nuclear weapons during which any kind of event — war, weather, economic collapse — threatened to set an entire society back dramatically. Local subsistence and self-reliance were watchwords in an epoch marked by acute scarcity. Only in the industrial age, which started scarcely a century before the US acquired the atom bomb, have we become so dependent on institutions of scale that their disappearance threatens nearly every aspect of our way of life, and certainly our economic footing.

** To be fair, the nuclear survivalist strategy is not necessarily mutually exclusive to the community and dual power approaches. It’s more a matter of where effort and focus are concentrated. One could stockpile and plan for one’s family while also engaging in community organizing efforts. But generally, the mindset is very different, and I think individualism effectively discourages a more social approach.

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How Outsiders Will View Our Demise

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I made this movie to express my frustration with where we’re headed. It’s not particularly informative, but I hope it’s a funny way to make people think about how untenable our economic system is.

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Bring on the Robots; Death to the Robots

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The subject of automation and innovation — especially their effects on labor and productivity — is one I’ve spent a lot of time pondering and researching. The issue is gaining renewed, much-deserved traction lately.

The matter boils down to productivity increases, and why in a sane economy they would be good for workers writ large, but in market capitalism they are not. As economist Tim Jackson (Prosperity Without Growth) put it recently:

We are caught in a productivity trap. While it generates wealth, productivity also generates unemployment.

We’ll hear more of Jackson’s critical ideas in the future, but for now I want to implore you to check out a piece called “Debtmaggedon vs. the Robot Utopia” from Caleb Crain’s blog Steamboats Are Ruining Everything. A taste of the brilliance:

You remember the robot utopia. You imagined it when you were in fifth grade, and your juvenile mind first seized with rapture upon the idea of intelligent machines that would perform dull, repetitive tasks yet demand nothing for themselves. In the future, you foresaw, robots would do more and more, and humans less and less. There would be no need for humans to endanger themselves in coal mines or bore themselves on assembly lines. A few people would always be needed to repair and build the robots, and this drudgery of robot supervision would have to be rewarded somehow, but someday robots would surely make wealth so abundant that most people wouldn’t need to work and would be free merely to enjoy and cultivate themselves—by, say, hunting in the morning, fishing in the afternoon, and doing literary criticism after dinner.

Your fifth-grade self was wrong, of course. Robots aren’t altruistic beings; they’re capital investments; and though robots may not ask to be paid, their owners demand a return on their investment. We now live in the robot utopia, which isn’t one.

Thanks in large part to computerized mechanization, manufacturing productivity in the past century has increased many times over. Standards of living are higher than they ever were, but we no longer need as many humans to work as we once did. Perhaps not coincidentally, human wages, in America at least, have stagnated since the 1970s. If humans made no more money in the past four decades, where did the wealth created by the higher productivity go? Toward robot wages, as it were. The owners of the robots took the money—that is, the capitalists.

Any fifth-grader can see where this leads. At some point society has to choose. Either society accepts the robots’ gift as a general one, and redistributes the wealth that the robots inadvertently concentrate, or society allows the robots to become the exclusive tools of an ever-shrinking elite, increasingly resented, in confused fashion, by the people whom the robots have displaced.

[paragraphing added]

The idea of “robot wages” collected by capitalists is brilliant, and I’m disappointed I’d never thought of it quite that way.

This is all similar to something I went around saying for a couple of years. “You know what’s wrong with capitalism? Robots, that’s what.” Why aren’t robots making our lives easier? The typical pro-capitalist response would be something about productivity increases — we’re getting more stuff. Much more. It’s everywhere. Between cheap labor and automated labor, those in privileged societies/classes are veritably are piled with crap. But “more stuff” isn’t making our lives significantly better in the short term, and it’s killing our habitat.

A sane economy would take benefits accrued from productivity increases of all kinds and parlay them into generalized gains.

I don’t know why we’d expect capitalism not to disappoint in this regard. After all, we were also promised jet packs.

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