Growing Pains

The fault lines within modern capitalism are widening. What once seemed tiny fissures, barely visible to the Western eye, have now become deep chasms threatening to engulf entire nations.

Between the fall of the Berlin Wall in November 1989 and the rise of the financial crisis in September 2008, capitalism’s star had never seemed brighter. There was, to echo Margaret Thatcher, no alternative. Debates about the variations of capitalism were more or less academic. The Anglo-centric nations trumpeted the virtues of ‘liberalised markets’. Germany and France championed the ‘social market economy’. Communist China even developed its own particular brand of centrally planned capitalism, triggering a mixture of anxiety and quiet satisfaction in the Western mind.

All of these forms of capitalism rely inherently on the assumed insatiability of human needs: confident expectations of a relentless growth in consumer spending. Across the world, capitalism advances by seeking out new consumer markets for new consumer products. The continual throwing over of the old in favour of the new, together with the intrusion of the market into ever more personal areas of our lives.

In the beginning, this process can be immensely productive, leading to manifest improvements in our real standard of living. But to keep the process going in perpetuity as the system requires, we need people resolutely hooked on stuff, prepared to borrow and spend – even to mortgage their own financial future if necessary – to carry on shopping.

Let’s be honest, it’s pretty easy to find these people. Novelty matters to us. Through novelty, for instance, we tell each other stories about how important we are. Status is just one of the social dynamics that thrives on novelty. Novelty also signals progress. It offers hope. A brighter shinier world for our children and their children. And if we’re ever inclined to forget or forgo that desire, there is a host of canny advertisers, marketers, investors and politicians on hand to help us remember it. To persuade us, in very simple terms, to spend money we don’t have, on things we don’t need, to create impressions that won’t last, on people we don’t care about.

In short, there appears to be an uncanny fit between the demands of capital and the restless soul of the consumer. Armed with this rationale, and with economic growth as its mantra, capitalism itself seems unstoppable. ‘Accumulate, accumulate, that is Moses and the prophets’, as Marx once put it. By the beginning of this century, the global economy had already expanded five times over the size it had been in the middle of the last century.

The default assumption is that – financial crises aside – growth will continue indefinitely. Not just for the poorest countries, where a better quality of life is desperately needed, but even for the richest nations where the cornucopia of material wealth is beginning to threaten the foundations of our wellbeing. At the historical rate of expansion, by the end of this century the global economy will be 80 times the size it was only 50 years ago.

This unprecedented ramping up of economic activity is without historical precedent. It is totally at odds with our scientific knowledge of the finite resource base and the fragile ecology on which we depend for survival. And it has already been accompanied by the degradation of an estimated 60% of the world’s ecosystems.

For the most part we tend to ignore the stark reality of these numbers. The reasons for this ‘collective blindness’ are easy enough to find. Expanding demand is the default mechanism for achieving economic stability. When demand falters, bad things happen. Businesses struggle to survive. People lose their jobs and sometimes their homes. A spiral of recession looms. In these circumstances, questioning growth is deemed to be the act of lunatics, idealists and revolutionaries.

But question it we must. The collapse of Lehman Brothers on 15th September 2008 signalled more than the onset of a cyclical liquidity crisis. The pallid light of recession illuminated crack after crack in the shiny surface of capitalism. It is now apparent that these cracks run right to the heart of the model.

Leaving aside for the moment that a system built on continually increasing demand is ecologically illiterate. The financial crisis revealed that it is also structurally dangerous. Relentless expansion of demand requires rising levels of debt. When the debts become toxic, the system collapses. Since September 2008, governments have committed trillions of dollars to bail out the banks and re-stimulate the global economy. But fiscal spending financed through government borrowing has only precipitated a further crisis.

Across the Eurozone, country after country is facing rising deficits, unwieldy sovereign debt, and down-graded credit ratings. Austerity policies, brought in to protect these ratings, have failed to solve the underlying problems. Worse, they have created new social problems of their own. The withdrawal of social investment has bred an increasingly agitated public.

In London, during August last year, a spree of rioting left the streets in chaos, buildings burning out of control. Not all of that unrest can be attributed to political protest. But the injustice of bailing out the architects of the crisis at the expense of its victims has become plain for all to see. The conditions for wider social unrest are palpable. In the United States, that unrest is now playing itself out in the form of the Occupy Wall Street protest, later mirrored by Occupy London in the UK and over a thousand others under the Occupy banner worldwide. Civil action is striking at the living, beating heart of capitalism, expressing resistance and rage at the injustices carried out in its name.

The only remaining moral framework for capitalism is one in which ecological and social justice go hand in hand. Prosperity for the few founded on ecological destruction and persistent social injustice for the many is no foundation for a civilised society. One of the most fundamental errors of capitalism is to mistake citizens for consumers. Another is to mistake prosperity for income. Living well on a finite planet cannot simply be about consuming more and more stuff. Nor can it be about accumulating more and more debt.

Prosperity, in any meaningful sense of the term, is about the quality of our lives and relationships, about the resilience of our communities, and about our sense of individual and collective meaning. Prosperity, as the word itself suggests, is about hope. Hope for the future, hope for our children, hope for ourselves. Maintaining this hope remains a task worth engaging in. Capitalism must adapt to it or perish.

Tim Jackson is Professor of Sustainable Development at the University of Surrey in the UK and author of Prosperity without Growth – economics for a finite planet.