Let us step back and consider again the global situation sketched in Chapter 3. It was explained that the increasingly serious range of problems, including environmental destruction, resource depletion, deprivation of the Third World, conflict over access to resources and markets, and the deterioration of social cohesion, are direct consequences of the fact that there is far too much producing and consuming going on. The main argument in this chapter is that this society is not capable of dealing with this situation, and that it will inevitably culminate in the more or less catastrophic breakdown of society on a global scale.
Before detailing that argument, some aspects of the trajectory should be considered further.
Following is an attempt to sketch the most likely trajectory ahead.
The multi-factored “limits to growth” noose will tighten, hopefully slowly but probably too quickly. Many of its elements are already gathering force and compounding to increase difficulties towards a time of great and terminal troubles. As explained, the key determinants of our near-term fate seem to be the future of fracking and of debt. Most likely is a relatively sudden bursting of the enormous global debt bubble causing a far more serious global economic collapse than the 2008-2009 GFC. There are varied expectations regarding the time scale; Ahmed (2017) explains why it could be a matter of a decade or so before the Middle Eastern failed states become unable to maintain oil exports. Tverberg and several others have a similarly short-term expectation. Randers (2012) however expects the disruption to impact after 2050.
But the most important determinant of our fate is probably not directly to do with biophysical limits. It is the extent to which the long-suffering and docile masses will go on tolerating how they are being treated. For at least 6,000 years people have been astoundingly passive, putting up with tyrants, kings, and rule by usually brutal and greedy elites. But over the last two or three decades people in rich countries have become seriously discontented with their situation, recognising that it is deteriorating and governments are not attending to their needs.
One result is the worldwide decline in belief in democracy. Others are the advent of Trump, Brexit, right-wing populism and support for fascism. Guy Standing and Michael Hudson (2022) analyse this well (2012), pointing to the way financialisation is replacing Neoliberalism with domination by the accumulation of assets on which rents can be drawn. Standing stresses that this is casting more and more people into the “precariat”, a class struggling with insecurity and personal debt. The hard-won achievements of old labour, secure jobs and good wages etc., are being swept away and replaced by “gig” economies in which the precariat suffers high indebtedness, struggles to find intermittent work, and pays high rents (e.g., interest on mortgages, accommodation, student fees.) Below them is the “lumpenproletariat” of chronically unemployed, aged, infirm, homeless and excluded. The above chapter on the US points to the Walmart-gutted towns, impoverished casual labour, rural poverty and dying country communities, and the social wreckage generating the opioid crisis and other harmful effects of a system that works mainly for the rich. It is not surprising that this produced such support for a Presidential candidate promising to “drain the swamp” of those in Washington seen to be responsible for the situation.
The decline in regard for democracy that is underway is another consequence of immiseration. People are becoming less satisfied with the capacity or willingness of the system to attend to their problems and fix things. The Australian National University’s recent Australian election survey shows distrust of politicians rose from an already high 63% in 2014 to 76% in 2016. Another question found 56% think the federal government is run for a few big interests. (Yeginsu, 2018.)
Tverberg (2021) sees how low disposable household income is now a major determinant of what is happening to the oil industry. The crisis of low prices and rampant bankruptcies in the petroleum industry has not been due to running into scarcity as the “peak oil” thesis once predicted, but to falling demand because large and increasing numbers of people cannot afford to purchase goods at previous rates. This is a most important and somewhat overlooked causal factor in the discussion of global economic woes. Consider the following evidence on it.
There has been negligible increase in household disposable income for 60-80% of Australian households since 2012, while prices and the income of the rich has risen considerably. Similarly in the US real incomes for most workers have barely risen in 40 years and the minimum wage has been at $US15,000 p.a. for years. (Hutchens, 2018.) Stasse (2020) refers to literature on “an unprecedented squeeze on living standards for ordinary households.” Wright (2019) says that in the US “average hourly pay is below what it was in 1973; 40 percent of adults lack the savings to pay for a $400 emergency expense.”
The shrinking middle class and increasing precariat class are part of the phenomenon, and it is evident in the rise of household debt, now very high in Australia. Karp (2020) says that in the US, households’ debt-to-income ratio was less than 40% in 1950 but is now 120%, and since 1985 the wealth share of the bottom 90% of adults declined from 40% to 27%. Indices of increasing hardship at the bottom are clear. In the UK, Macfarlane (2019) reports, “Rough sleeping in England has increased by 165 per cent, while homeless deaths have more than doubled. The number of people using food banks has increased to 1.6 million … up from just 26,000 in 2009. 14 million people are living in poverty … the UK population is still 1.6 per cent poorer than it was more than a decade ago on average.” Menadue (2020) reports that in Australia, “Homelessness is also increasingly significantly. It rose by 30% in the decade to 2016.”
Hudson’s works, which emphasise the significance of debt and financialisation, are especially impressive on these themes. As outlined above, throughout history the rich have relentlessly pushed to acquire assets they can draw rent and interest from, and if not checked they often become so dominant that they own most of the land and impoverish the masses so badly that the whole society collapses. He says this is what is happening to us; debt levels are so high that they cannot be paid off. People are having to pay out a large proportion of their income in rent and interest. Murray and Fritjers (2022) say that in Australia it is now around 50%. Thus the disposable income left to fuel the real economy is shrinking.
These observations point to a killing of the goose that was laying golden eggs, a failure to attend to the way the drive to extract as much wealth as possible eventually undercuts the capacity to go on siphoning it out, by leaving most people with too little purchasing power. This situation is a consequence of the success of the capitalist class. Their dominance has meant that they have been able to ride over the resistance that might have got them to make sufficient concessions to defuse the problems they were causing. Streeck (2014) puts it in terms of capitalism becoming its own worst enemy: “It has eliminated criticism and oppositional moves, which would have pushed it to adapt …”
The accumulating power has also led to corruption, which in time reduces a system’s capacity to respond to challenges. Streeck (2014) points to the way the GFC revealed “rating agencies being paid by the producers of toxic securities to award them top grades; offshore shadow banking, money laundering and assistance in large-scale tax evasion as the normal business of the biggest banks with the best addresses; … the leading banks worldwide fraudulently fixing interest rates and the gold price, and so on.” He notes the billions of dollars in fines for these offences which several large banks have had to pay recently, including by some major Australian banks. In more recent years several inquiries and revelations have detailed similar criminal behaviour on the part of mainstream institutions, especially via the Australian Banking royal commission, and exposures of global tax haven and laundering operations.
Collins (2021) and others point to the way the economy’s increasing difficulties have led it to enter a “catabolic” or “cannibalistic” phase. As the capacity to do good business producing useful things deteriorates, investors turn to activities that plunder the economy. It is as if a hardware firm was able to stay in business only by selling the corrugated iron on its own roof. The illicit drug industry and the Mafia are similar; rather than producing new wealth, effort goes into extracting previously produced wealth. Much financial activity is of this nature, such as “short selling” and “asset stripping”, but the main activity is quite legal. In the lead up to the GFC a lot of money was lent to home buyers incapable of meeting the payments, because investors and banks could not find less risky outlets. When the borrowers could not pay their interest instalments their houses were repossessed by the banks and sold off.
Similarly in the US some of the money in the worker’s pay packet is put into a pension fund run by the corporation, to be paid back on retirement, but many corporations have taken these funds to invest and “lost” them. Often they were lent to smart operators in the financial sector to put into speculative ventures, who siphoned out fees in the process. Sometimes money is borrowed to buy weak firms, arrange for them to borrow too much and thus drive them into bankruptcy, and then sell them off, and because the pension money was an asset of the firm it goes to the lenders and is lost to the workers who earned it and set it aside. So, accumulation and profit making are being kept up by activities which enrich big and smart investors (lenders) by getting hold of the wealth of little and naive investors (borrowers), through granting them loans they cannot repay.
A kind of cannibalism is often evident when governments privatise operations. Consider students now having to pay for college and university education, meaning large loans must be taken out and large interest payments then flow to lenders from the earnings of students and parents. Again the process does not involve lending to produce anything, it just enables wealth previously produced to be acquired by lenders. Sometimes financialisation does involve producing something useful, such as a toll road, but the terms usually agreed by Neoliberal governments enable lucrative and avoidable rents to be drawn for decades, again feeding off the real economy.
Collins (2021) and others see this process accelerating because the ever-increasing volumes of accumulated capital find it increasingly difficult to find investment opportunities in producing anything of value. Streeck (2014) says, “the struggle for the last remaining profit opportunities is becoming uglier by the day.”
Collins says, “catabolic capitalists will stoke the profit engine by taking over troubled businesses, selling them off for parts, firing the workforce, and pilfering their pensions.” As difficulties increase for governments and their revenues decrease they will come under greater pressure to give business the conditions it wants in order to stimulate economic activity.
“Regulatory agencies that once provided some protection from polluters, dangerous products, unsafe workplaces, labour exploitation, identity theft, and financial fraud will be dismantled … Public safety will be stripped down, privatised, and sold to those who can still afford it. Court budgets will shrivel, privatised prisons will exploit convict labour, and police will seldom respond to everyday crimes. Instead, private security firms and gated communities will guard the wealthy … catabolic capitalists will pick over the carcasses of bankrupt governments. Crumbling public transportation and decaying highways will be transformed into private thoroughfares, maintained by convict labour or indentured workers. After pressuring bankrupt governments to sell off public utilities, water storage, and waste management systems, corporations will deliver these essential services only to the businesses and communities who can afford them. And, as public schools and libraries go broke, exclusive private academies will employ a fraction of the jobless teachers and professors to educate a shrinking class of affluent students.”
A number of analysts see the foregoing phenomena as aspects of a terminal decline, partly driven by increasing resource and ecological difficulties, partly by worsening inequality and “immiseration”, and partly by deteriorating “legitimacy”. Rising discontent in Europe and the US is evident in support for populist and fascist movements. Blame is usually put on the wrong targets, especially immigrants. That the squalor is due to capitalism is not recognised, thanks largely to the weakness of Left parties and the fine work done over generations by those keeping capitalist ideology in good shape.
In my lectures on Marx I point to a list of things which I and others think he got wrong. But there are some extremely important things I think he got right. One is that capitalism is shot through with serious contradictions such as the fact that the interests of workers clash with those of the class that owns capital. Another extremely important point he made is that as the system matures immiseration will eventually increase. This is what we are seeing now (Marx’s timing was way out.) As the rich and super-rich cream off increasing proportions of wealth, the masses are increasingly having to struggle to get by and are therefore less able to keep up the purchasing that is the life-blood of the system. And they are becoming more and more discontented. Most importantly, he saw that these tendencies would result in the system’s self-destruction.
The question is, when will people finally cease putting up with what the system does to them? When will they realise that the system is not designed to work for them? When will they see that it cannot but worsen their situation as time goes by? When will they realise what is causing their plight?
The tightening limits will intensify the immiseration as governments are forced to cut spending on welfare etc., drive workers’ conditions down and give more favours to the rich to encourage them to invest and get the economy going. Governments struggling to control dissent and to help capital are very likely to adopt fascist options, but unlike in the 1930s, now the materials necessary to maintain armies, large bureaucracies and secret police and to stage mass rallies will not be available, so descent towards a warlord dominated feudalism becomes plausible. In some Third World regions and even US cities this seems to be happening, for instance in the form of drug gangs.
Many analysts have tried to draw attention to where these limits are taking us. Mason (2003) for instance sees the many problematic trends culminating in “The 2030 Spike”, the title of his book. As noted above, among those who discuss the multi-dimensional global breakdown likely to be brought on before long by limits and scarcity are Korowicz (2012), Morgan (2013), Kunstler (2005), Greer (2005), Bardi (2011), Duncan (2013), Gilding (2011), Randers (2012) and Streeck (2014). Some foresee more or less totally catastrophic collapse, the end of Western civilisation, with a die-off of billions.
The next collapse might not be the final one; some foresee “a long and bumpy road down”. Randers (2012) expects the time of troubles to be around 2070. However, Ahmed (2017), Tverberg (2021), Mason (2003) and other “collapsologists” give reasons to expect it to be before 2030. The hope must be for a protracted Goldilocks depression, one that is not so severe as to destroy the chances of salvage, but savage enough to jolt people into recognising that they must shift to the local, cooperative and frugal self-sufficiency detailed in Chapter 10.
The situation will at best be confused and chaotic, with governments and “leaders” continuing to not understand the fundamental causes and being quick to blame the wrong things. The present tendencies to right-wing populism and fascism are likely to gain momentum, supported by many in privileged classes who will call for repressive measures to restore order and protect their security and property. Many in angry lower classes will want strong leaders willing to break rules. A recent survey found this to already be true of a majority of UK people. (Walker, 2019.) Capitalism is very likely to again morph towards its fascist form whereby an authoritarian central government rules in cooperation with a selected few big capitalist firms. It is highly unlikely that there will be sober, clear headed rational thinking about causes and solutions. Financially struggling governments will be even less capable of analysing or dealing with the situation effectively than they are now.
The international possibilities are similarly disturbing. Dominant powers will surely become more aggressive in their efforts to control sources of scarce resources and markets. Third world governments wallowing in debt are likely to allow corporations to cause greater environmental destruction in the hope that extracting more resources will yield more tax revenue, and they will be likely to resort to increasingly repressive measures to control dissent over deteriorating living conditions. (Ahmed, 2017).
The conventional assumption is that the problems can and will be solved by the institutions and processes of present society, such as by parliaments implementing effective policies in line with international agreements and resolutions, and ordinary people accepting legislated adjustments to their circumstances. But from the perspective of The Simpler Way, this expectation is now clearly mistaken. Given the foregoing account of the nature and magnitude of the problems, the institutions and political process of this society are not capable of recognising the situation and rationally facing up to it, and then making the enormous and extremely difficult changes required to solve it. Consider the following reasons supporting this conclusion.
The World Wildlife Fund’s “Footprint” measure (2022) indicates that the amount of productive land required to meet the demand of the average Australian is around 6 ha. This means that if the 10 billion people likely by 2050 rose to Australian “living standards” we would need around 60 billion ha. But the planet has only about 12 billion ha of productive land. Thus if one-third of it is left for nature the per capita amount available would average only 0.8 ha. In other words, Australians today are using over 7 times the per capita amounts that would be available to all in 2050. (The “Half Earth” movement argues that one half should be left to nature.)
The Footprint measure takes into account only a limited number of factors. A full accounting of the sustainability overshoot would reveal a much higher multiple than is indicated above. The Planetary Boundaries approach identifies 9 crucial factors and states that sustainable limits have already been exceeded in 6 of them.
Almost all global resource sources are depleting. Mineral oil grades are falling, water resources are increasingly scarce, most fisheries are over fished, forests are diminishing, agricultural soils are being lost or damaged causing concerns about global food supply. It is likely that petroleum supply will peak within a decade.
Massive and accelerating damage is being inflicted on the ecosystems of the planet. A major consequence is the huge loss of species. This is mainly due to loss of habitats, and that is being caused by economic growth.
Environmental effects are generating cost increases of many sorts especially due to storms, fire and floods. This is producing rapid rises in resource, construction, energy and insurance costs. More importantly, it is destroying the life-support systems of the planet, the natural processes that are essential for maintaining life on earth.
The major environmental impact is the climate crisis. The goal of limiting temperature rise to 1.5 degrees is now clearly unattainable. Carbon emissions are continuing to rise. Various scientists say temperature rise will not be kept to under 2 degrees. If the present trajectory, which is to a 3-4 degree rise, continues it will probably mean the end of “civilisation”. The world rate of transition to renewable energy sources (about a 4% p.a. increase) is a very small proportion of what would be required to replace fossil fuels by 2050. There is a strong case that renewables cannot sustain energy-intensive societies. (See below.)
As has been noted, around the world there is increasing discontent with government, fuelled by deteriorating living conditions and the rising cost of living. Governments are unable to fix the big problems. Faith in democracy is declining and many are turning to authoritarian leaders. This will not solve their problems and is leading to fascist regimes.
Rich world affluence is built on exploitative resource extraction from poor countries, estimated by Hickle to be worth a net annual flow of $2.5 trillion (2021), not including the environmental damage, low wages and social disruption left in poor countries. The global capitalist economy inevitably generates this outcome. Again it cannot be remedied without vast degrowth in rich countries, reducing the volume of resources they are consuming.
But there is one factor which trumps all of the above. It is the imminent inevitable collapse of the global financial system. The only way the global economy can be kept healthy has been by pumping in vast amounts of money created by the banking system and issued as debt. Global debt has tripled in three decades, it is much higher than before the GFC, and is now totally unrepayable. It is not possible for the vast amount of borrowed money to be invested in ventures that will repay it plus interest. It cannot be invested in productive activity basically because people suffering cost of living increases do not have the surplus purchasing power to buy more products. (So the capitalist class uses it to buy up assets such as housing which yield rents without producing anything.) This cannot continue for much longer. At some point borrowers and lenders will realise that the loans cannot be repaid. Catastrophic effects will quickly cascade, including widespread bank failures and loss of savings, bankruptcies, inability to finance trade, etc.
The biggest impediment to sanity is the obsession with affluence and growth, the almost universal mentality that involves fierce demand for and expectation of limitless growth in production and consumption. This is taken to define progress and the good life. Very few understand that this is now not just an absurdly impossible quest but is actually suicidal. To reverse this world view by rational argument and “education” would be an astronomically huge cultural revolution, far greater than any in our history.
In addition consider the immense difficulty involved in dismantling structures and systems built to enable growth and affluence and replacing them with arrangements required to enable degrowth to a stable economy in which people willingly accept frugal and sufficient ways. Consider the disputes there would be over framing just laws dramatically limiting consumption, investment, distributions, resource use, property ownership, house sizes, redistribution of land, etc. It is inconceivable that rational discussion could arrive at decisions that all would accept.
These many factors compound and magnify each other. There are positive feedbacks accelerating the overall predicament.
There isn’t time. All these problems must be solved in a few decades at most or we are in very big trouble. But right now there is not even an understanding that the basic cause of the predicament is that far too much producing and consuming is going on.
This has only been an indication of the present grossly unsustainable situation. We must add the effect of economic growth. If by 2050 the expected 10 billion people were to rise to the GDP per capita Australians would have then, given the standard expectation of 3% p.a. economic growth, then total world economic output would be over 12 times the present amount. But the present amount is grossly unsustainable: the WWF estimates that at present we’d need 1.7 planet Earths to meet global resource demand sustainably.
Again, all of the big global problems are being largely if not entirely caused by this massive overshoot. It is depleting resources, wrecking ecosystems and biodiversity, generating resource wars, depriving the Third World, and undermining social cohesion. When this is understood it is obvious that rich world “living standards” and GDP must be dramatically reduced, probably to less than 20% of their present levels.
The fundamental premise in Simpler Way transition theory is that there is no possibility of achieving transition to a sustainable and just society via deliberate and rational procedures within our official policy-making institutions and processes. Many analysts concur, for instance Streeck (2014) says, “What is to be expected, on the basis of capitalism’s recent historical record, is a long and painful period of cumulative decay”.
The only way the transition might be achieved will be discussed in Chapter 11. It involves preparing to build local alternative systems as the coming global breakdown gives us no other option.