Monday, November 23, 2009

The world that made us and the world we made

In June this year an Australian by the name of Paul Gilding made an interesting statement about the cause of the global financial crisis. Gilding gives public talks around the world highlighting the alarming issue of global climate change. In his talk he said that in July 2008 the world entered ‘the crash’ that resulted from a planetary economic and environmental system pushed to its limits.
“….We entered the crash then because oil prices were going through the roof, because of supply issues. Food prices were going through the roof because climate change was crashing the Australian wheat crop and rice crop, and therefore we had food spikes around the world for that and other reasons. We had floods since then in the US destroying the corn crop. This is climate change. This is what we forecast would happen, that you would get distributed impacts, hard to pinpoint a specific cause …. nevertheless would have impact on the economy. That's what we were seeing. We saw oil prices going up because consumption in China was going ahead of forecast, right? So that's what happens when you push a system against its limits, right? It bounces and it has the responses, and those responses are resource prices going up, ecological systems breaking down, the biggest-ever melting of the North Pole sea ice, right?…” [1]

‘Distributed impacts’, an interesting concept for economics. We could imagine that the global economy collapsed last year because of a giant financial ponzi scheme reaching its logical conclusion. However, the existence of diverse (and much more widespread) currents of collapse in the environment and society could explain why this apparently mindless financial engineering game existed in the first instance.

For instance, over the 20th Century it is possible to see the games of Empire being played by out in a way that increasingly impoverished what we now call the ‘third world’. Barnet and Muller, in their 1974 book entitled ‘Global Reach’ point out that in 1900 people in poor nations had ½ the per capita income of rich nations. By 1970 their income had dropped to 1/20th, as measured in 1900 dollars [2]

During that same century the ‘advanced societies’ began to experience “a doubling of the total output of goods and services…every fifteen years.” And the doubling times were shrinking. [3]

Ironically, but not surprisingly, economists by 1976 were talking about a global recession. Jim Cairns, a left-winger heterodox economists from down-under pondered whether the stagflation that existed at the time was one of the implications of the development of ‘bigness in capitalism’. He said things were not so different in Australia compared to the rest of the ‘advanced’ world where “some 2 percent of the companies control about 50 percent of 'gross national product' in some way or another.” [4]

It seemed logical to many writers and thinkers that the increasingly warped wealth distribution in the world would lead to ongoing economic crisis. A very disturbing consequence of this imbalance was that the political power had also concentrated. The corporate elite constituted “a hierarchy developed and run from the economic top down.”

“The chief executives are now at the head of the corporate world…In them is vested the economic initiative, and they know it and they feel it to be their prerogative. As chiefs of the industrial manorialism, they have looked reluctantly to the federal government’s social responsibility for the welfare of the underlying population. They view workers and distributors and suppliers of their corporate systems as subordinate members of their world, and they view themselves as individuals of the American individualistic sort who have reached the top.” [5]

The markets that this new power elite created were not politically neutral. The ideological power of the forces of globalisation
“have a strong preference for measures that reduce inflation at the expense of higher unemployment, for measures that reduce public spending in ways that diminish welfare provision, and for precedence to be given to ‘development’ over environmental protection… Globalisation is thus not just the spread of corporate and financial activity: it is the spread of political ideas backed by economic power.” [6]

A war ensued. It was waged on the planet’s atmosphere, on the land, sea and other conditions of life. The number of malnourished people in the world has increased by about 20% in the last decade, from 800 million to near a billion people… global warming is already making itself felt in the drying out of grain producing areas in Australia, China, Africa, and arguably the American west…. we are already consuming more resources than the Earth can sustain by any reasonable measure.” [7]

The truth is that the Ponzi scheme began a hundred or more years ago. We’ve been drawing heavily from our capital and presenting this as ‘wealth creation’. Capitalism was ‘sped up’. Space was substituted for time and that meant, according to Theresa Brennan “that neither the environment nor the people who live in it are given the opportunity to regnerate.” [8]

Regulation of the global financial system won’t cut the cake. There needs to be a move away from streamlined thought produced by the machinery of propaganda. Can we no longer differentiate between the world that made us and the world we made? If we could, would we see that corporations are more often not the creators of wealth - their efficiency often merely lies in how quickly they can usurp natural and human capital. Militarism and empire strategies make the concept of ‘comparative advantage’ in trade null and void. ‘Freedom’ is not the right to impose our will on our environment in violation of natural laws. ‘My country’ is the world. ‘The crisis’ is not a deficiency of demand but one of supply. The earth does not belong to man – man belongs to the earth.

[1] The great disruption. Paul Gilding. 14th June 2009

[2] Richard J Barnet & Ronald E Muller. ‘Global Reach – The Power of the Multinational Corporations’. Touchstone publishers. 1974. Page 190.

[3] Alvin Toffler ‘Future Shock’. Pan Books. 1970 Pages 31 and 32

[4] [1] Jim Cairns 'Oil in Troubled Waters' Widescope International Publishers Pty Ltd, Camberwell Victoria. 1976. pp 133-134. As quoted in:
Bigness in Capitalism. Brenda Rosser. October 2009

[5] C Wright Mills, ‘The Power Elite’ Oxford University Press. 1956. Page 165.

[6] Clive Hamilton ‘Growth Fetish’. Allen and Unwin, 2003. Page 118

[7] Silent Armageddon?
by Alexis Zeigler for Culture Change

[8] Theresa Brennan ‘Globalisation and its Terrors’ Routledge 2003.

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