Changing Course, Part: 1

In Economics, Politics by Ross JacksonLeave a Comment

“If we don’t change our direction we’re likely to end up where we’re headed.” This ancient Chinese saying is simple but very profound, and is especially relevant to our time.

Our global civilization is on a very destructive track right now, with multiple threats hanging over our heads; not only runaway global warming, which is one that most people will acknowledge, but also resource depletion, toxic pollution, social unrest due to growing inequalities, widespread starvation, uncontrolled genetic manipulation, and a rate of species extinction not seen in 65 million years. On top of these threats—most of which are intermediate term—is the threat in the very near future of an economic tsunami once the global demand for oil exceeds supply for the first time ever.

And yet, political leaders in just about every country consistently ignore the warnings of our best scientists and continue to promote increased consumption, in spite of the fact that we are already consuming 40% more each year than Nature can replenish according to ecological footprint analysis by the World Wildlife Fund. That is to say, we are consuming not only the yield of our natural capital—but we are consuming the capital itself—the basis of all life—and calling it growth.

I do not intend to delve further into the above-mentioned threats here. They have been described quite sufficiently by numerous scientific studies. What I would like to deal with here is two questions. Firstly, why do our elected leaders fail to act? Secondly, what can we do to change direction in the face of the lack of response from the political establishment?

Some observers have suggested that our genetic structure could explain why we do not react quickly enough to slowly evolving, longer term threats like environmental degradation. Our evolutionary development has refined to a high degree the “flight or fight” response to immediate danger, but there is no obvious way evolution could select for the recognition of long term threats. This phenomenon could explain the many historical examples of collapse of civilizations due to destruction of the local ecosystem. We are now facing a similar threat on a global level.

However, there is a problem with this explanation in our case. While the DNA structure may well explain the insensitivity of the majority of people to long term threats, it cannot explain why the majority rejects the warnings coming from a well-informed minority that thinks very long term. Hundreds, if not thousands of scientists and other innovative thinkers have documented the reality of these threats to our very survival. To mention just one example out of many; as far back as 1992, some 1,700 of the world’s leading scientists, warned that “a great change in our stewardship of the earth and the life on it is required, if vast human misery is to be avoided and our global home on this planet is not to be irretrievably mutilated.” All such warnings have been consistently ignored. Why?

One explanation sometimes offered is that politicians cannot think longer into the future that to the next election. While there is a great deal of truth in this, it is not a sufficient explanation for their behavior. We have many counter examples, particularly at UN summit meetings, where political leaders from the great majority of countries have signed off on ambitious declarations to show long term environmental responsibility well beyond their term of office. For example, the Kyoto Protocol was such a commitment adopted by a majority of nations to reduce CO2 emissions by 5.2% over the twenty year period 1992-2012. The Kyoto Protocol’s very modest, and quite insufficient goal was not attained, but nevertheless, there was agreement on intending to take action in this case—with the notable exception of the major polluter, the USA.

For a while, I thought the explanation was to be found in the way our global civilization has evolved into a group of competing states, each of which puts its own interests before the common interest. This situation is similar to the “prisoners’ dilemma” of game theory in which competing entities end up with the worst possible result for both parties. For example, an elementary theorem in economic theory is that all the production costs, including the indirect environmental and social costs must be included in product prices if they are to lead to optimal resource allocation. But while all economists agree on the principle, it has never been possible for the international community to agree on how to implement this. Just one major holdout can destroy the solution that was best for everyone. The entirely predictable result is that the current economic system rewards the companies that destroy the environment most efficiently.

A similar debate is going on right now in Europe as regards a proposed financial transaction tax (FTT), also known as a “Tobin tax”. Clearly, this could raise a lot of money from financial speculators while reducing the likelihood of further destabilizing asset speculations that threw the global economy into a tailspin in the “” crisis of 2000 and again in the “subprime loan” crisis of 2008—an apparent win-win proposition. But once again, it just takes one major holdout internationally to destroy a good idea. A limited regional tax will simply penalize those who are trying to act in the global interest, because business and jobs will move to the less responsible states that only think of themselves. So part of the explanation for the lack of action is the absence of a recognized institution of international cooperation that could adopt and enforce across-the-board policies like a financial transaction tax when they were in the common interest and approved by a qualified majority of states.

Then why has such an institution not been founded? I have come to believe that the explanation can be traced to the reigning ideology of the one superpower, the USA. It is a fact that no substantive decisions are made in the WTO, IMF, the World Bank, NATO or the UN Security Council against the wishes of the USA, which in effect controls these institutions. Thus, de facto, the USA controls the whole of global society. If the USA supported an international institution such as that mentioned above, with the mandate to protect the interest of the whole planet, there is no doubt that it would become a reality. Obviously then, since nothing is happening, it is because the USA does not want to see any such institution established. More specifically, the US Congress would not allow such a thing, even if a majority of world citizens and a large segment of the American public would support it. Why not?

The explanation, I am sad to say, is that the US Congress no longer represents the American people. The American political system has been slowly taken over by its financial backers, also known as the 1%, that launched neoliberalism on the world thirty years ago with themselves as beneficiaries. It is almost impossible to get elected, and even more difficult to get re-elected to Congress today, without the financial backing of what has become a “corporatocracy”—the rule of American society by large, sociopathic corporations. One of the USA’s leading political scientists, professor Sheldon Wolin, calls the current American political system “inverted totalitarianism…… the political coming of age of corporate power and the political demobilization of the citizenry”. The result is a “casino society”, where the most important economic sector in the United States today is made up of financial institutions that produce nothing productive, while using trillions of dollars of borrowed money speculating in changes in asset prices (housing, stock markets, currencies, commodities, corporate debt, sovereign debt, interest rates, etc.) using the most sophisticated computer technologies. The effect is that of a parasite that sucks the life out of its host, in this case, the non-profit seeking parts of society—the environment, communities, and working people.

The tragedy of this development is that the ruling American elite is not the least bit interested in the global devastation being caused by their dysfunctional economic system and destabilizing financial manipulations as long as they remain in charge with their fortunes intact. They are entirely focussed only on growing their “phantom” wealth, which represents claims on the real wealth produced by the rest of society. Things have gone so far that it is no longer possible to challenge them politically, nor through demonstrations, boycotts or rational arguments. Even the president can no longer do anything significant against their will—not even get through a minor increase in their extremely low taxes, as demonstrated recently. I emphasize this in order to make absolutely clear that if we are to change course globally, it must be achieved without the support of the American political leadership and its major allies, at least initially. What happens later is a different matter. Keep in mind that the majority of Americans are just as keen on real change as the rest of the world, and are in reality hostages of the corporatocracy.

Also read: Changing Course Part: 2

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