I took part in a discussion of macroeconomic policy this week.
One participant dismissed discussion based on the scale of our current crisis that suggested it was similar to that Keynes faced in the 1930s, saying there is no comparison. His point was that the 1930s were much worse than now.
I begged to differ. I said that was completely wrong. And I stand by that. The 1930s might have been grim, but we now face an existential crisis of the sort most could not have imagined, and I am sure Keynes did not, in the 1930s.
In pure economic terms we face what will be described by conventional economics as a recession. Most economies are already heading in that direction.
At the same time we have a private debt crisis. I stress, few countries face public debt crises as yet. Many face private ones. And in a world literally dominated by private banking interests, that is a problem of epic proportions.
In purely conventional terms we do then see a risk of massive spillovers from this. Already battered working populations face the risk of greater insecurity few have the resources to bear. The capacity for grief is enormous.
And at the same time we face two other crises. One is econo-political. Our model for economic organisation, in the form of neoliberalism, is redundant. Its assumptions of growth without limit, fuelled by advertising created demand and funded by unlimited private debt that ensured most of the net benefit accrued to a few in society, no longer work. If we had a replacement to hand it would be useful. I will not pretend there is agreement on one. And that is dangerous.
Simultaneiusly we know we have just a few years to change behaviour or the planet burns. The risk is much greater than that of the 1930s, and I am not in any way understating that. This time everything is at stake.
To pretend that this is not as serious as the issue Keynes faced is a mistake, because it is simply bigger than that. And that is evidence enough to make my case.
And yet, although a sufficient new theory of the type Keynes proposed may be absent in its entirery I am not without hope.
First, there is real awareness of the need for actual change. Maybe appeasement will not win this time.
Second, behaviour suggests people are ready for change. The fact that people will not upgrade phones and cars for the sake of it any more is a sign of hope. Maybe the drivel of marketing has been rumbled.
Third, there is awareness that what people really need - housing, a safety net, healthcare, education, pensions, a basic income - can only be supplied communally. The freedom from fear cannot be won individually. It is a collective responsibility.
Fourth, there is discussion of the Green New Deal, tax justice, modern monetary theory and more. Are they a grand unifying theory? I am not claiming that. Are they a grand plan? I think so.
We face an enormous crisis. Our job is to rise to the challenge.
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It is sad to see there is still a culture of denial out there.
Your respondent probably feels that all is OK because of historically low levels of interest or something silly like that.
It’s the same with cars. We think that we can afford to just have the same number of battery driven cars as we had as oil burning ones instead of realising the best use of energy is in moving around people and material in bulk (more public transport – battery driven/electric).
What I am saying is that the paradigm shift we need to deal with resource depletion and the environmental damage is just simply not emerging as fast we need it.
Pilgrim Slight Return says:
“It is sad to see there is still a culture of denial out there.” Well. Yes. Can’t argue with that. It will take the next major financial crash to alter that. And even then there will be those who want more of the same but with more gusto and more market rigour because they can imagine nothing else.
” We think that we can afford to just have the same number of battery driven cars as we had as oil burning ones ”
I’m sure you’re correct that it is the limit of the general imagination; same as before but with a different power source.
I’m a little more optimistic that autonomous self-driving vehicles will reduce the need for so many individual vehicles. Most individually owned vehicles spend well over 90% of the time doing nothing, standing idle in car parks or cluttering up the streets. If it’s possible to dial a vehicle when it’s needed and it be in use by someone else until it’s needed again, we could reduce the total number of vehicles quite considerably.
And autonomous public mass transport could easily lead to there being much better availability and frequency of services. With fewer cars on the road they would even run more regularly perhaps.
The change will not happen overnight, but could be with us ‘sooner than we expect’…whatever that means. As ever it will be reliant on political will, and will need vast changes in our already stretched electricity generating and distribution capacity.
Its true that many vehicles spend a large percentage of their time idle. This is generally due to the fact that most of us stick to the same diurnal rhythm: we go to work in the morning and come back home at night. Without changing this routine the number of vehicles (whether `self-driving`or not) in use is not going to change much.
And meanwhile our idiot politicians argue the toss about damage limitation from a Brexit which offers no benefits at all.
Andy
Fair enough – but the whole issue with the environment and resources is that they are being depleted on the basis of selling individualism/individual freedom in the market place.
How many car adverts show the object of desire cruising quickly on an open road or congestion free inner city roads? Answer: All of them from what I have seen. We are still being sold a dream. An unreality.
To coin a phrase, when it comes to the future of the car, we seem to be asleep at the wheel. There are going to be winners and losers and it is not beyond the bounds of possibility that we could go back to pre-war levels of vehicle ownership due to the cost which will be because of resource limitations.
Will ‘The Machine that Changed the World’ change the world as we have to make less of them?
The answer must be ‘Yes’.
When the long history of our times is written when you and I are long gone, this period we have lived through with the car, high finance and oil etc., will be seen as a period of the greatest misallocation of resources in human history EVER.
“When the long history of our times is written…”
You assume that there will be someone there to write it! I would rather look to the time post WW2 when there were many initiatives (don’t mention the Atom!) which were, naturally, forward-thinking both planet-domestically and space-“internationally”. The Cold War was, admittedly, the driver for some, but there was an aspiration borne of the old-times are now past, let’s look to the future?
The human race lost sight of that post-war optimism and started to (again) navel-gaze and to fiddle with the planet-domestic. The group-psychology changed to fear of others; despite them being neighbours and immigrants. When the Cold War was ongoing, it directed the path. When it finished, it was as if one side had “won” and was free to decide the direction of travel. An opportunity lost, if ever there was one. That climate “awareness” seemed to become more mainstream simultaneously, was the next driver-in-waiting…next to nothing happened, beyond the “I want it now and want more tomorrow! brigade” appeared and the “consumers” were now larger in number!
Unfortunately, I do not share the optimism of some here…some (most?) people simply do not like making hard-decisions and would rather continue believing that somehow, it will all work-out better tomorrow, the day after or next week.
To quote another Scot (Private Fraser), we really are “doooomed, I tells ye, DOOOOOOMED”!
When whatever life-form picks-through the wreckage and wasteland of “our times”, they will no doubt be highly confused as to how this civilisation could not change direction, like so many others before it and not see the remedy for their imminent demise. Or even, for some (most?) see it coming!
It only requires some to make hard decisions, thankfully
That has always been the way
The global elite are not taking climate change and inequality seriously. It will be interesting to see whether anything positive comes out of the Davos meetings this year. People in the UK are finally waking up with protests such as extinction rebellion and school boycotts in Sweden and Australia. The gloom of brexit is really beginning to lift when the speaker decides that a motion from a former Tory Attorney General is accepted in the House of Commons that is not acceptable to the rabid right wing Tories.. Rays of sanity can appear in the darkest hours whatever howls of venom come from the Sun and Daily Mail………
There are no “new deals” only old deals retreaded. The trouble is that as with cars and car owners the the old tyre is usually too far gone for this to be a success. I do not think anyone really understands the mechanics of the new digital world, population increase and dynamics of media driven politics.
We may not
But we have to progress as if we might
That’s always been the way
History is written in retrospect Andes disputed
Life is lived in forward gear and is uncertain
Demetrius I think you underestimate the level of understanding TPTB have of the internet and how much they need. They’ve recognised a threat and. may have been slow to respond initially but they’re getting there. I see an internet that is being steadily enclosed like all the commons before.
You’ll all laugh at this and I’ll happily admit it is a new level of over-optimistic (and long-winded) thinking even by my standards. But it’s my birthday so hopefully you’ll forgive me 😉
What gives me hope at the moment is seeing SpaceX making a concerted effort to get its ass to Mars.
The way I see it is that since the end of the cold war the fierce international competition that motivated technological advancements and territorial ambitions has somewhat waned. From the late 18th century through 1990 often terrible and violent international competition to be quickest to industrialise and conquer the world led ultimately to the development of fossil fuel based engines, advanced powered flight, the computer, nuclear weapons, nuclear power and the space race. Following WW2 it also brought relatively egalitarian policies to the west as our elites deemed this necessary to keep the general population happy during the long standoff with the USSR.
Since the late eighties the international pressure eased but we’ve nevertheless seen 30 years of incremental improvements across all the newly invented hi-tech stuff. However those advancements that have so far been largely focussed inwardly in a planetary and cosmic sense. Telecoms, GPS, computing and biological-sciences for example are all much advanced since the 1980s but nothing has occurred in terms of pushing our real physical frontiers out into the unknown – just more deforestation and other destruction of the natural world! We know more about the universe perhaps but we’ve actually physically retreated since our furthest manned advance in the sixties and seventies.
On the plus side old fashioned empire building and colonialism has, rightly, become generally unacceptable. The balance of power is such that the great powers now pursue their imperialist ambitions via stealthier but perhaps less violent means than in the past.
Unfortunately (or fortunately, depending on your circumstances) the near total victory of the western capitalist system reduced the risk of popular uprising and hence the western elites’ perception of how big a piece of the pie they need to leave for the masses to ensure our obedience. This may change if China overtakes us in terms of GDP and standard of living. Although that’s something I can well see happening by mid century for now austerity led declines in return to wages and ever increasing returns to profit remain the order of the day across the West.
It feels like in the West the unifying and motivating force of a potentially existential battle between alternative civilisational paradigms has been replaced by the divisive and pathological greed of a few and the resignation, indifference and existential angst of the many. Without a clear and present existential threat like war or immediate catastrophe to drive us (stick) or the possible reward of new wealth, new excitement and new horizons (carrot) we as a society seem to sink into a stupor of boredom, self doubt and nihilism.
Beyond our collective psyche the real world situation is this: as a species we’ve explored and conquered the entire planet and grown rich doing so. But now it seems the strategies that brought us to this zenith threaten to kill the planetary ecosystem and us with it.
In our civilisation’s moment of victory we’re slowly realising we face imminent defeat and yet our systems, which used to be so flexible they seemed capable of rising to any challenge, have hardened to a state of sclerosis where significant change appears impossible. Fierce competition drove us to develop great speed, flexibility and strength but victory has apparently left us slow, stiff and enfeebled.
Perhaps our whole civilisation is in a state of grief? Grief for the loss of what our parents/grandparents were promised after WW2 and grief for what we thought we’d already won in our conquest of nature. Reality is the future is looking bleak because we didn’t conquer nature or our own rapacious greed and selfishness – the latter just caused us to piss off the former and now we fear we’re defenceless in the face of nature’s revenge.
Some of us are angry, some in denial, many are trying to bargain for the life of the existing system hoping it can return to greatness, a few have reached a state of abject depression and just given up caring. If that’s true then what we all need to do is quickly reach acceptance so we can move beyond grief and start creating new plans for the future.
Some appear to be doing that already and maybe to an extent we have to come up with the new plans before we can overcome our collective grief. So between them the space-obsessed billionaire megalomaniacs Musk, Bezos’ and Branson want to:
– make space flight more affordable
– colonise and terraform mars
– extract resources from asteroids
– move industrial production to the moon
I suspect the national space agencies are looking at these private organisations and thinking they need to speed up their own efforts or risk getting left behind. So a new space race could be dawning.
Maybe these seem completely impossible dreams or, worse, stupid distractions. I think though that if you allow your imagination to runaway you’ll see that great things would become possible if those dreams come to pass:
– population, production and technology can continue advancing nearly ad infinitum, at least till we fill the whole solar system with life,
– the Earth, freed of so much heavy industry and production, could undergo extensive re-wilding and become a much nicer place to live not just for humans but all species,
– the technologies and experience generated by conquering the solar system may one day set us on the path to seed life and civilization in other star systems.
I believe this is all desirable whatever perspective you look at it from. These dreamers are imagining the carrot where most looking to the future only see the stick.
If you take a deep-green radical eco-warrior position: what could be more redemptive and uplifting for a species that is currently causing mass extinction than to one day turn it around and spread life across our star system and maybe even the galaxy?
If you’re a capitalist there’s so much wealth potentially available that everyone involved would stand to get richer than we can even imagine. It’ll be like the difference between the wealth available in preindustrial societies compared to that of our highly industrialised civilisation – there’ll simply be no comparison. That’s one big enticing carrot to motivate even the richest people. All it’ll take is someone to prove it’s possible and suddenly the whole world will sit up and take notice. Fear of missing out will very rapidly set in. That’s perhaps what Musk is trying to achieve via SpaceX.
If you’re normal Joe Public like me then just knowing things are going to get better and more exciting in the long run and our kids and grandchildren will have better lives than us is enough to keep us happy while we watch history unfold from the sidelines. For those who are bright enough and brave enough there may soon literally be whole new worlds awaiting exploration and conquest.
For me the key thing is this: surely it is much easier to sell this daydream of a new frontier and reaching for the stars than it is to sell the idea of retrenchment into the low energy, steady state economy that is required if we just stay here on Earth?
Yes we can make the world more pleasant and fairer with existing tech and existing ideas but that only goes part way to expunging our guilt for so much destruction already done. So it’s not even fully satisfactory to the green radicals proposing it.
It’s also boring and unappealing to most non-greens. We think it means our children will be worse off than us and we fear that a foreign power may eschew such eco-friendly changes and bully us in the future once we’ve voluntarily weakened ourselves. That or we’ll impoverish ourselves in vain because the rest of the world will just carry on merrily destroying the planet anyway.
Capitalists don’t want a scenario where real growth becomes practically impossible so steady state economics definitely doesn’t appeal to them. They also fear that the radical greens are actually radical leftists stoking fears over climate change and the environment as a Trojan Horse for their communist revolution.
Honestly we’ve known what we ought to do to save the planet for some time now. Clearly not enough of us want to do it otherwise we’d be doing it already. We need a long-term plan that’s universally appealing and motivating enough that we’ll all tolerate change and potential short-term pain for promised long-term gain. This dream of a new frontier means we might one day be able to have both a greened Earth with a steady state economy AND overall continuing economic growth as we expand beyond our homeworld.
For me that’s the only way forwards and to be totally honest it’s what I imagined was going to happen ever since I was a little kid. I think a lot of us brought up in the West during the mid and late 20th century believed that’s how things were going to go and that’s part of the reason such a dream will prove so universally appealing. It goes deeper than that though.
We and our ancestor species evolved as nomadic hunter gatherers for millions of years. I don’t believe we can unlearn or breed out the instinctive adventurous spirit that goes with that deep evolutionary history over merely decades or a few centuries. Nor can I imagine why anyone would even want to try. So if we’re stuck with this will to explore, expand and conquer we better find some outlet for it or suffer the psychological and societal consequences. The progressive/green solutions to our current predicament don’t seem to be offering that outlet and so I think they’re fundamentally incomplete.
Richard, we desperately need all the stuff that you and other progressive thinkers are working so hard at but I really think it must be wedded to a grand unifying dream of the future if it’s ever going to catch on. Maybe our greatest problem is that for the past 30 years we just haven’t been dreaming big enough?
I blame myself for the last
I did not think it possible when I was younger
I was wrong
And happy birthday….
Historically, apart perhaps from bacteria, all Earth species become extinct….Humans too? This may be the only hope for the Earth?
Happy birthday!
Agreed Richard – life is lived going forward but only really understood when we look back.
The trouble is that I do not think that this is strictly true.
There were a number of people warning about what eventually happened in 2008 in the financial crash before it happened. They were marginalised. And are being marginalised again as debt grows but also in the environmental arguments.
I also think that the paradigm of looking back can only survive if there is a present to look back from!!
I think that the environmental aspect here is the game changer. We have the evidence now. But will it be allowed to be the epochal moment? Will we listen?
It is worrying. As for me I’m using a combination of my bike and public transport to do my bit.
I saw 2008
I can see what I think is happening now
We just have to live with waiting for the inevitable and then start picking up the pieces
The human population has more than trebled and is still rising. This isn’t good sense to me, though as a third child I probably wouldn’t exist if we were practising population good sense. Most religious creed is against population control and even condoms etc. However, most European Catholics are either extremely virtuous or cheating. Good sense on breeding is still not clear nearly a century on from a time when eugenics were rather popular. One still finds people saying it is wrong to select out cells very likely to have strong disability likelihood for in vitro fertilisation etc. We still allow austerity policies that discriminate against women, single parents and the disabled, which according to Lady Hale are illegal.
Human societies still resemble those of social mice, with an elite that disables the many. Ignorance of biology and evolution still chain us to biological reductionism. Have ideologies such as work ethic, work as money distribution and so on changed much? Do we know what they conceal? How we continue myth establishment? It may be that things are much the same as 1930 and even 492 BCE – I don’t think this is true but fear our economics may be ineffective because of lack of ability to live more openly in obvious plenty and equally obvious inability (or corrupt) to distribute fairly and to get on using our resources for a better future. Meanwhile May and Trump get away with rhetoric from ancient times and 1930. Strong and stable behind a wall.
Apologies for the pedantry, but, the population has more than trebled since when?
The father of Environmental Ethics Holmes Rolston III has a good article on why the human race needs to rethink the origin and nature of caring and consequently logically extend it to encompass the planet:-
https://mountainscholar.org/bitstream/handle/10217/39368/Care-on-Earth.pdf?sequence=1
The article is a chapter from the book “Information and the nature of Reality” edited by Paul Davies and Niels Henrik Gregersen. Paul Davies is a British educated physicist and cosmologist who’s written many books in the past on cosmology including “The Goldilocks Enigma” which discusses why the universe has just the right conditions or factors for life. Rolston argues that most human beings are currently disrespecting this phenomena.
Richard,
Can it be true that we could ever have a private debt crisis? I mean, we just owe the money to each other, so that is alright.
I presume you are joking?
Dogleg4 says:
“Can it be true that we could ever have a private debt crisis? I mean, we just owe the money to each other, so that is alright.”
In a sense it is a fair question. But as long as we are wedded to the system of finance that underpins our entire social structure, private debt remains a ‘killer’ problem.
I see no prospect of that changing. ‘Money makes the world go round…” catchy little tune and we are condemned to dance to it for the foreseeable future.
Forgot to say I agree this is an existential crisis – this time with facts rather than god questions. Current times ar overlaid by ‘best of all possible worlds’ arguments that asked why a beneficent god threw us into this world of pain. The answer was that he rejected millions of worse worlds and gave us this best possible one. This rather easily turns into tough love and TINA in conservative attitude. Change would be so much worse. Look at all the failed “socialist paradises”. History had ended and we had the best of all commercial-legal-economic systems in democratic capitalism. Huzzar! Extra marks for students mis-spelling one of the main protagonists Fukuover on this.
Without even beginning the argument on what we need to do and how to get there, there are obvious questions on where real argument can take place and its control, how we collect something like real data in the raw before it’s tampered with. Currently we can’t even see the manufacture and sales of engines of death as part of what we need to stop and relate this to a new economic system. In short we don’t talk turkey.
https://www.google.com/amp/s/www.psychologytoday.com/us/blog/denying-the-grave/201901/climate-change-denial%3famp
A psychologist’s perspective on the enormity of climate change. Basically most of us are guilty of denial, it’s an intrinsic part of our evolved psychological defence mechanism. We can’t just blame denialist members of the elites for misleading us.
Richard, I wondered if you read much of the literature on Degrowth (Research On Degrowth (2018) by Giorgos Kallis et al. is a good overview) and if so what you think of it?
I have not read it
Jon Cloke,
I haven’t read it either – though I have read Limits to Growth and various other fairly deep green stuff. What does he have to say above the realistic practical possibilities of any form of degrowth occurring via anything other than war, famine and disease?
My problem is I cannot see any nation state unilaterally choosing a peaceful path of degrowth without being rapidly overpowered and overrun by competing international actors. So I think it’s a non-starter for unavoidable game theoretic geopolitical reasons. The best we can likely manage is a negotiated multinational transition to less harmful modes of production that still allow for some level of continued economic growth – and that’s still going to see each of the great powers eyeing their competitors with suspicion the whole time.
More than happy to be proved wrong though…
“…fuelled by advertising…”
I have long determined that stopping unlimited advertising expenses being a deductible expense for businesses would solve a lot of the consumerism and all its the ensuing chaos.
A simple pill. What do you think?
I have long argued for it
I will find and repost the material
“Conversely, trying to stimulate the economy through higher budget deficits doesn’t work because the extra public borrowing leads to a loss of confidence in the markets, higher interest rates and lower growth. In the jargon of the trade, public borrowing crowds out private investment.”
Mr Elliot in the Guardian is still writing this……
No he wasn’t
He was quoting the Treasury view, and criticising it
I do not always agree with Larry, but this is unfair criticism
I agree it is not well 3dited though
That may not be his fault
But he is arguing the exact opposite view of what you suggest
Agreed Richard.
What Elliott is doing Denis is showing you what the orthodox thinking in the Treasury looks like. He is arguing for a new approach in this article – wrenching public investment from the cold dead hands of the Treasury.
It’s an age old lie – emphasising that what the Government is doing is nothing but ‘debt’ and completely ignoring the investment side of it and the gains that result.
Apparently only the private sector and rich individuals are allowed to get richer through debt – not the country.
Oh – and this orthodoxy completely ignores the macro side of MMT as well. But it also reminds us that if we were to practice MMT, a whole swathe of new regulations, laws and architecture (a state ran investment bank for example) would need to be operating in the finance markets before we did so.
Thanks PSR