OK in the short term ?

“… and that is what is behind the abrupt rise in climate change denial among hardcore Conservatives: they have come to understand that as soon as they admit climate change is real, they will loose the central ideological battle of our time – whether we need to plan and manage our societies to reflect our goals and values, or whether that task can be left to the magic of the market.”

Naomi Klein

When I was young I used to think of 2020 as being the future, that was when everything would be different, we would have lots of cool technologies, we would have colonies on the moon, I used to think of all sorts of possibilities.

Now 2020 is just a year away and most of the things I dreamt of have not come to pass, except that we have the Internet and powerful computers.  Things are different but not in ways I envisaged, and most things are the same.

My children don’t see 2020 as being the future in that sense they see the future as being more like 2100.

But I wonder what will 2100 be like, will our children see us as having looked after the planet and handed it on in a better state than we received it in ?

I doubt it.

How often can we truly say we are thinking about the well-being of future generations ?

How often do we consider the impact of our decisions as they ripple down the decades and centuries ahead ?

I think the problem is that ‘Now‘ demands attention much more forcefully than the future, we are living in comfort at the moment and most of the demands of the future would require us to give up some of that immediate comfort to do something about a problem which we see as still being a long way away.

The timeframe over which we think of things is getting smaller and smaller so the perceived urgency of future problems is diminished by comparison.

It is easy to concentrate on the ‘now’, because it commands so much more attention than the future.  It is getting more and more difficult to look beyond our immediate problems.  Today’s news, the latest fashions, the newest technologies.  Politicians are only concerned with what happens up to the next election, anything beyond that is irrelevant to them as it might not be their problem anyway.  Businesses concentrate on ‘maximising shareholder value’ to maximise their share price in the short term, for them the timeframe they worry about is the next quarter.  On the Internet the timeframe of interest is minutes, and on the financial markets it’s about sixty milliseconds.

No wonder that in the Twitter fuelled politics of 2019 most people in society are not concentrating on the big problems which threaten the continued existence of the human race, like Climate Change.  They are not seen as immediate threats, that’s something for the future.

Some politicians even choose to deny the evidence on climate change and continue with business as usual and there are many reasons why they would do this.

In my opinion this ‘short termism’ is probably the biggest threat humanity has ever faced.  But what if we could be altruistic enough to care about people we will probably never live to see ?

The ability to have complex abstract thoughts about non existent scenarios is what sets us apart from most animals.  To imagine scenarios which do not exist and may never exist and to be able to plan how to bring these scenarios about or to avoid bringing them about is a vital adaptation which has led to the phenomenal success of humans as a species.

We can imagine what we want to do tomorrow or next week or next year, where we would like go on holiday, what job we would like, and we can imagine alternative versions of these scenarios, and we can evaluate each of them in terms of their likelihood and desirability.

We have the innate ability to imagine the consequences of our actions in the long term, but sadly not always the will or the motivation to escape our immediate desires.

Despite our mental faculty to look and plan ahead, we have a weakness in our thinking called ‘present bias’, which favours short-term payoffs over long-term rewards.

For example, people are more likely to accept an offer of £100 today, rather than a guarantee of £120 in a week or to smoke cigarettes despite a shortened life or to spend on pleasures and not save for a rainy day.

If we are so likely to neglect the our own future wellbeing, it’s even harder to muster empathy for future generations.

There is nowhere this is more apparent than in the world of politics and economics.

Politics and economics are inextricably linked especially in the politics of free market capitalism.

There is a fallacy at the heart of economics and that is that there must always be growth.  Free market capitalism has tied us to having economies which must grow in order to survive.

I think it was David Attenborough who once said that “to believe in never ending growth you must either be insane or be an economist“.

So why are capitalist economies so obsessed with growth ?

GDP stands for Gross Domestic Product, it is a figure which represents the total cost of goods and services traded in an economy in a year.  It was invented in the 1930s, but it very soon became the overriding goal of policymaking, so much so that even today, in the richest of countries, governments think that the solution to all their economic problems lies in more growth.

In 1960 this thinking was codified in a book by W.W. Rostow called “The Stages of Economic Growth: A Non-Communist Manifesto.”

In his book Rostow tells us that all economies need to pass through five stages of growth: first, traditional society, where a nation’s output is limited by its technology, its institutions and mindset; but then the preconditions for take-off, where we get the beginnings of a banking industry, the mechanisation of work and the belief that growth is necessary for something beyond itself; then we get take-off, where compound interest is built into the economy’s institutions and growth becomes the normal condition; fourth is the drive to maturity where you can have any industry you want, no matter your natural resource base; and the fifth and final stage, the age of high-mass consumption where people can buy all the consumer goods they want.

Well, you can hear the implicit airplane metaphor in his story, but this plane is like no other, because it can never be allowed to land.  Rostow left us flying into the sunset of mass consumerism, and he knew it.  As he wrote, “And then the question beyond, where history offers us only fragments.  What to do when the increase in real income itself loses its charm?”  He asked that question, but he never answered it.

So here we are, flying into the sunset of mass consumerism over half a century on, with economies that have come to demand infinite unending growth, because we’re financially, socially and politically dependent upon it.

We’re financially dependent on growth, because today’s financial system is designed to pursue the highest rate of monetary return, putting publicly traded companies under constant pressure to deliver growing sales, growing market share and growing profits, and because banks create money as debt bearing interest, which must be repaid with more money.  Therefore those companies which incur extra cost because they take care of the environment will be out competed by those who don’t.

We are socially addicted to growth, because thanks to a century of consumer propaganda we have become convinced that we transform ourselves every time we buy something new.  The real purpose of advertising is to make you dissatisfied with the things you presently have in order to persuade you to go out and buy something new to replace it.

And we are politically dependent on growth because politicians want to raise tax revenue without raising taxes and a growing GDP seems a sure way to do that.  They don’t want to inflict any tax rises to pay for long term threats because they are always looking towards the next election.

This is why politics is so shackled to the short term view, they are always looking towards the next election.  It goes something like this; “If it is a threat which is beyond the next election then it might be someone else’s problem if we don’t get re-elected so why worry about it, paying for it now just lessens the chances of our re-election and if the other lot get elected then this problem becomes something we can use against them“.

Future political threats are evaluated with something called ‘Discounting’.

Discounting is standard practice in politics all over the world.

Imagine a politician who is facing a difficult decision, there is a future problem which is known and well documented and they are trying to decide whether or not to spend large sums of money to mitigate the problem.  In the future this will have looked like money well spent perhaps saving many lives and billions of pounds.  It will certainly be of benefit to the grandchildren of the politician.  On the other hand spending all that money now will cause immediate problems for the taxpayers who will see little or no immediate benefit to themselves.

So the politician turns to an economist for a cost benefit analysis and they feed the numbers into the economists spreadsheet.  The economist points out that something called a ‘discount rate’ can be applied to these far future benefits.

A social discount rate is a technique that economists and politicians use in their cost-benefit analyses to decide whether to make investments with a long-term impact.  It weighs the benefits for future people against costs borne in the present-day, and proposes that the calculated value of benefit to society in the future is worth less to society in the present depending on how far into the future these benefits occur.  For example, if you’re deciding whether to spend a lot of money to boost the economy in the future, it’ll tell you that a 10% boost in economic growth in 2 years is worth a lot more in the present than a 10% boost 20 years from now.

The underlying assumption (fallacy) of economics is that economies must continuously grow and therefore it is assumed that future generations will be richer and more able to bear the costs of future problems.  But there is another reason why discount rates are used, on average individuals are not very willing to give up comfort and/or income today for a putative benefit at some time in the future for people who don’t even exist yet.  The society as a whole reflects the views of it’s individual members so politicians, and the societies they govern, have a limit to how much cost they are collectively willing to bear for the benefit of future generations.

So the politician turns to the economist and the economist runs the numbers in their spreadsheet and they realise that dealing with the problems now might not show enough payback for decades or possibly even centuries, so the proposals fail their cost-benefit analysis. The politician will leave it to their successors to deal with the problem.

Most people would accept that there is a need to bear some costs to avoid future climate catastrophe, but how much?  If we continue to postpone action the cost of dealing with the problem continues to rise and this makes it even more likely to be postponed next time the decision comes up.  If we leave it until urgent action is required then it will be too late and we will not be able to deal with the problem.

Ask yourself what portion of your own income today would you be willing to give up for the benefit of future generations?  When economists and politicians are debating this question, they are essentially arguing over how big a discount rate to apply.

If you apply discount rates over long time periods then the importance of the benefits felt by future generations in these calculations eventually dwindles towards zero.

But there is another way of looking at the problem of discounting future harms.  If we turn to philosophy we can see that discounting the needs of our descendants is akin to burying a shard of broken glass in a forest.  If a child steps on the glass and cuts themselves today or tomorrow, then a discount rate suggests this injury is much worse than a child hurting themselves on the glass a century from now.  But ethically, there is no difference between the two.  The child stepping on the glass in one hundred years time feels just as much pain and suffers just as much harm.

So we must ask ourselves is it ethically defensible to do nothing about climate change ?

So, ask yourself what portion of your own income today would you be willing to give up for the benefit of future generations ?  Make yourself heard, write to the politician who represents you and make them aware that something needs to be done now.

Our world is dying of consumption.  Consume less and recycle more.  Fix things that are broken rather than replacing them.

Have less children.

Join a green movement.

Ignore adverts!

If one person does this it won’t make much difference.  If everyone does this it will make a difference.

The time to act is now!

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Will Technology destroy Democracy ?

Technology has made some wonderful advances, it looks like we will fairly soon have self driving cars, just tell it where you want to go and it will take you there. Your fridge will know when things were bought and when they are likely to go off, it may also give you dietary advice. You might have a personal assistant on your desk listening to your every word you say and controlling your connected home, remembering all of your appointments so you don’t have to and answering any question you ask it.  There are many technologies which are ‘just around the corner’ so the next few years could see some interesting changes.

So how is it that with all the incredible advances in technology we have today and with increasing automation the rewards have not been spread more evenly ?

It seems to me that there is something very wrong about how technology is benefiting the world today. There is also a fundamental threat to democracy which few people seem to be aware of.

It is said that we have entered a new ‘Information Age’ but the information economy seems to be about endless austerity, jobless recoveries, lack of social mobility, and intense concentration of wealth and power for the few whilst most people struggle to make ends meet.

One of the principles of the information age seems to be the spread of free information and services. For example social media, Wikipedia, free software, free ‘Cloud’ storage (which is just your data stored on someone else’s server), free online education and many variations of the above.

Most people would think that this is a good thing. It spreads the power of information to the many. Control of this information has passed out of the hands of a few elites and into the hands of anyone who cares to download it.

But there is a problem. There are consequences which nobody seems to have anticipated.

Revelations about Facebook and Cambridge Analytica came as a shock to many people but this should be a wake up call! I think that this is only the tip of the iceberg and that Cambridge Analytica was not unique among companies.

The actual problem runs far deeper and this is just one example of a struggle which is going on between technology and democracy. There are some benefits to free stuff online but this has blinded us to the fundamental ways technology is eroding our democracies.

A typical server, many racks each containing many computers all linked together.

A server is a group of computers linked together to perform a particular function. The computers in a server are linked to a network and provide services to other computers on that network. Computer programs can be split up to run on many computers in parallel and get results much faster than if the program was running on just one computer. A server may consist of a few tens of computers up to many thousands of computers.

All the servers that crunch ‘big data’ are physically similar. They are placed in obscure sites in anonymous buildings and have lots of security. Because they are very valuable.

When people share information freely, those who own the biggest and fastest servers benefit in ways that ordinary people can’t even imagine let alone emulate. Companies with large servers can simply calculate wealth and power out of free information.

While the free and open information ideal feels empowering, it is actually enriching those with the biggest servers to such an extreme that it is weakening democracy. The uses to which some of this data is put is also weakening democracy, I’m talking about micro-targeting here.

It doesn’t matter if the servers run social media sites, national intelligence agencies, giant online stores, big political campaigns, insurance companies, or search engines. What they are all doing in the background is remarkably similar.

All these servers gather data about people and then process that data to find out all they can about the people the data is about. This data might include emails and tweets or social media likes and sharing, private documents on ‘cloud’ storage, sightings through cloud-connected cameras, or commercial and medical dossiers. There are no limits to the snooping.

All these sites (apart from the national intelligence agencies) need a ‘hook’ something to entice people into this asymmetrical information relationship.

The hook might be free Internet services or music, or easy-to-get mortgages. But there is a price to be paid for these ‘free’ services.

Ordinary people are the sole providers of the information that makes the big servers so powerful and valuable, and ordinary people do get some benefit for providing their data.

They get the benefits of an informal economy usually associated with the developing world, like reputation and access to barter. The real monetary benefits are given to those who own the servers.

More and more ordinary people are thrust into a winner-takes-all economy. Social media sharers can make all the noise they want, but they forfeit the real wealth and clout needed to be politically powerful.

In most cases there was no evil plot, it is just a result of human nature. Many of the people who own the servers are genuinely nice people. But a lot of the people who use the data they harvest have their own agendas. And the people who have wealth and power want what almost all people with wealth and power want … more wealth and more power.

In a world of free information, the economy will shrink as automation rises radically. This is because in an ultra-automated economy, there won’t be much to trade other than information.

The threats to democracy come from the uses to which the data is put.

Our democracies evolved for an analogue age and they developed alongside institutions which support them like a free press and citizens who all have access to the same information. There are rules to follow like the secret ballot and expenditure limits. These institutions and rules keep the whole thing fair and equitable.

But in the past few years things have changed drastically and things are still changing. Most people don’t realise how much things have changed already.

Digital technology works by a different set of rules to those which evolved alongside democracy. It is de-centralised and difficult to control and it is improving at an incredible rate.

Western democracies have rules to make sure that all their voters have access to the same set of information for an election. The statements which a candidate makes are on the whole accurate because they know that if they make a false statement this will be picked up by news organisations and the media and they will be found out. Issues are debated in the media with representations being made from both sides of each argument.

But now we have ‘Big Data’ and micro targeted messaging and the rules which ensure free and fair elections don’t apply anymore.

Using Big Data analysis servers can build up very accurate and detailed psychological profiles of millions of individuals and politicians who pay for the services of companies like Cambridge Analytica can target each one of them with a highly personalised message. They can exploit our psychological vulnerabilities and prejudices on a vast scale and in a way that no regulator has access to.

It is out with the old shared frame of reference against which new information can be judged and in with millions of private frames of reference which may or may not bear any resemblance to the shared frame of reference.

How can we hope to hold politicians to account for their statements if everyone gets a different message and nobody knows what anyone else was told?

But it gets even worse.

Facebook have algorithms which can build up a very accurate psychological profile from what seems like innocent, unconnected and irrelevant pieces of information. The original purpose of these algorithms was to give you more content that you like in order to keep you on the Facebook website longer and therefore expose you to more targeted advertising.

But it didn’t stop there when Facebook amassed all this data about its users the next question was “How can we make more money out of all this data?”

It isn’t just Facebook who are tracking their users, Google, Microsoft and Amazon are doing much the same thing along with a host of other companies and national security agencies of many countries.

The more data they get about you the more accurate their psychological profile becomes, they can make predictions about your political and religious beliefs, how likely you are to take risks, how introverted or extrovert you are and many other aspects of your character which you might not have wanted to share with others.

Pretty soon your car will know about every journey you take, where you started from, where you went to and what time you set off and arrived, your fridge will know everything about your diet and if you like to buy the yellow label discount items from the supermarket and your personal assistant will know how you feel because of your tone of voice and all this information about you will be correlated and cross referenced against all the other sources of information about you.

The whole is greater than the sum of its parts. All this information will reveal more than you ever wanted to share with the rest of the world. In such a world as I describe there will be no such thing as privacy.

You will be constantly bombarded with messages based on all this information and that will open up a whole new level of manipulation targeted at you personally.

But there is another aspect to this which is fracturing society. In the social media realm we create our own reality which alienates us from one another. This is a result of the algorithms whose purpose it is to keep us hooked to Facebook and other social media platforms.

Democracies need informed citizens who all have access to the same shared base of information but in the social media realm we create our own reality. Social media gives us more of what we want so if we ‘like’ a post with a particular political leaning the AI on the server takes note and makes it more likely that we will see more posts from that particular political leaning in order to keep us looking at the social media platform longer and be exposed to more targeted advertising.

On social media we create our own reality, our own mix of opinion, information, misinformation, real news and fake news. This creates our own bubble in which we only see what we want to see and only hear the views of those people who agree with us.

This is making people more angry and more extreme in their views and it makes it much less likely that we will compromise with each other.

In the end there will only be one winner in the struggle. Either technology will destroy democracy and the existing social order will be destroyed or the current political system will exert its authority and control over the digital revolution.

As things stand at the moment technology is winning and unless things change dramatically democracy will be washed away just like communism, feudalism and absolute monarchies have been.

It will be regarded as a system which persisted for a while but could not adapt to the new technology.

If democracy is washed away what would replace it ?

I think it will be authoritarianism, but not like anything which has gone before !

Corporatocracy. Huge multinational corporations too big to fail will dominate the global landscape and a very few people in the world will, and already do, hold the vast majority of wealth and power.

Their wealth and influence being the key to influence global politics to favour their own needs. They will have and feel no responsibility to the rest of humanity.

Big business has already had such a tight grip on politics that for a long time now people have just accepted that you can’t budge big business and that the worker is in no position to fight back or negotiate.

They monitor us with advanced technology and have built a consumer society which seeps into our cultural psyche. We slowly, through globalisation, will become homogenous until all there are only two classes. The consumer, alienated and kept down by the exploiting classes and the capitalist, who demands a homogenous class of downtrodden and subdued consumers to keep themselves rich, and who knows the price of everything and the value of nothing !

Even now the ruling elites are plotting behind the backs of millions to set up trade deals and line their own pockets and have been doing so since the rise of neoliberalism – oligarchs are pulling the strings of our ‘democratic’ nations. In effect, these past few decades have simply been a restoration of power back to private industry and history is once again repeating itself. Over and over again it is the same struggle between humanity (the working people), and the ruling elites.

In such a world ruled by big business they would probably keep governments and elections just to keep a sham of democracy but government would be under the control of big business. Corporate interests, profits, growth, and returns would come before all else !

 

 

Brexit, what a stupid decision!

“Ever feel like you’ve been cheated?”

John Lydon

As far as I can tell the referendum started out as an internal spat in the upper echelons of the Conservative Party.

Why did the country collectively make such a monumentally stupid decision in the EU referendum?

And now that we have made such a stupid decision, the people who were encouraging us to vote to leave and making such grand promises, 350 million pound per week to spend on the NHS, control over our own borders, control on immigration, etc, etc, these people are just turning away and dropping out.  Even David Cameron has resigned.

The leaders from the leave campaign are all leaving, they don’t want to take responsibility for the mess they have created, they don’t want anything to do with the aftermath because they know that the lies they told us will be exposed as lies.

“Well actually we won’t have 350 million a week to spend on anything, it was a fictitious figure.”

“Well actually we won’t be able to control immigration after all sorry, bit of an over-exaggeration there.”

I think one of the problems was that both sides were running such negative campaigns. Both were claiming disastrous things would happen if you don’t vote the way we want you to vote. The Remain campaign should have focused more on the positive aspects of EU membership and what we were getting for our money.

Things like the Advanced Manufacturing park in Sheffield, that was funded with EU money.  Would it have been funded without EU money?  Well it might have been but only if it was in London!  and therein lies the problem.  There is a metropolitan elite in London which marginalises the rest of the country, if it’s outside London it dosen’t matter.

There are a lot of people outside London who feel marginalised, there are many people who wanted to show the London elite that they can’t ride roughshod over the rest of the country, they wanted to make a difference.

The EU vote wasn’t just a vote to leave the EU it was a big two fingers up at austerity and immigration and at the cozy clique of public school toffs who are running things.  And yes they made their voice heard but what a mess they have created in the process.  Leaving the EU won’t significantly reduce immigration, not if we want to remain part of the single market and if we do leave the single market then we are screwed financially.  Leaving the EU won’t mean an end to austerity, it will actually generate a lot more austerity, you thought you had it bad brother, you ain’t seen nothing yet!

The 350 million pounds a week was a fictitious figure, yes as a top line figure we gave 350 million pounds a week but we were getting most of that back in a rebate so the actual figure was much smaller, and on top of the rebate we also got money for projects like the Sheffield Advanced Manufacturing Park, grants for scientific research, subsidies for farmers, etc, etc.

So if you were expecting an increase in funding for the NHS after this vote then think again, the money isn’t there, it never was.  Funding will probably be cut drastically when the value of the pound falls through the floor and we suffer the worst recession in living memory, but at least we got our county back yippee!

The Lure of Growth

There is a mantra which pervades society that everything must grow, people must update their systems, get the newest device, adopt the latest fashion, etc … Business spends vast amounts of money on advertising. The role of advertising is to create dissatisfaction, to make you dissatisfied with your current ‘stuff’ so that you will go out and buy new ‘stuff’.

Our capitalist society is predicated on growth. The concepts of profit and interest are seen as necessary for capitalism but they are merely growth by another name. This myth pervades our whole culture, the myth that things must always continue to grow. Populations must increase, the amount of money in the economy must increase, manufacturing output must increase.

If the amount of growth falls below that which is expected then economists and politicians start to panic and call it a recession, if the amount of growth decreases to zero or below then they call it a depression and things really get serious.

The dependence on growth is so deeply ingrained in the capitalist system I don’t think we will ever break free of it. Just keeping the status quo is not an option.

But there is a problem which is conveniently ignored by politicians and economists. The problem with growth is that it is not possible to have infinite growth within a finite system. Sooner or later something will be overloaded or some resource will run out.

There are always limits to growth.

A lot of people in our modern capitalist society are so busy accumulating wealth, property and power that they have forgotten what it is to be human, they behave as if the accumulation of wealth was the sole purpose of their existence. At some point these individuals within the system start to believe that they are not just proletarian slaves but that they are actually masters and that they are actually in charge of their lives. This is a very important misconception for capitalism to promote because it allows the system to go on driving these people faster and faster, it is a kind of submission by these people, the belief that you are in charge of your life when you actually aren’t is very important for sustaining capitalism.

Karl Marx, the 19th century German philosopher and economist believed that capitalism was radically unstable. He wrote that it had an inherent tendency to produce ever larger booms and busts, somewhat like oscillation in a very under-damped feedback system (although he did not express it in those terms), and over the longer term he thought it was bound to destroy itself.

In order to understand why the capitalist system is locked in to this drive for unlimited growth one must understand a little about how the capitalist system works. Never ending continuous growth is a surprisingly simple but specious idea.

Private ownership of the means of production is, generally accepted as being the definition of capitalism.

The capitalist system which characterises the consumer economies of the west is big-firm capitalism with a large dose of entrepreneurial capitalism mixed in, growth is the very raison d’être of this type of capitalism. However this type of capitalism is devoid of any consideration of ecological or environmental realism, profit is the only measure of success.

Businesses make use of people (the labour force) and capital (investments used to buy buildings and machinery) to produce the goods and services that households want and need. People offer up their labour (work) and capital (savings used as investments) to businesses in exchange for incomes. The businesses sell their goods and services at a profit and this allows them to pay people’s wages and to pay off the interest on their capital borrowing. People spend some of their income on consumer goods and save some of it. These savings are invested (directly or indirectly) back into businesses.

This is the ‘circular flow’ of the economy’. The system is actually a lot more complicated than this but that is the general idea.

The financial sector controls the flows of money in the circular economy and controls the dual role of saving and investment. This is also a simple idea to understand. People save some of their income. These savings are invested, usually through a bank, building society or investment house, in businesses to generate profits.

The banks charge interest on the loans they give out and a proportion of this profit is paid out to the owners of the savings in the form of interest. This ‘return’ on their capital is why people save their money in a bank.

Profit provides businesses with working capital (cash) to pay for maintenance and improvements in production. It is also needed to pay off the company’s creditors, people who’ve lent the business money in expectation of a return.

Another use for the profits is to pay dividends to shareholders, people who’ve bought a share in the company. Some businesses seem to concentrate all their efforts on ‘increasing shareholder value’ as if it were the primary purpose of the company.

A business that shows good returns attracts more investment. The value of the business rises because people are prepared to pay more for shares in it. When share values are rising, more people will buy them. Creditors know they will get their money back with interest. Shareholders know that the value of their shares will rise. The business knows that it has sufficient resources to maintain its capital and invest in new processes and technologies.

This ability to re-invest is very important. Machinery wears out and buildings decay with the passage of time. Investment is needed to repair or replace worn machinery. Without investment in new machinery product quality is lost. Sales decline. The business loses its competitive position and risks bankruptcy.

In order to maximise profits businesses will also try to cut costs of production. But capital investment is needed, in addition to its role in maintenance, to achieve cost reduction in the other two factors in the cost of production, labour and materials.

The key point in capitalist economies is towards increasing labour productivity. Since this means producing the same quantity of goods and services with fewer people, the cycle creates a downward pressure on employment that’s only relieved if production is increased.

There are two major factors contributing to economic growth, novelty and efficiency.

Efficiency drives growth. By reducing labour and resource requirements, efficiency reduces the cost of goods over time. This stimulates demand and promotes growth. Far from acting to reduce the throughput of goods, technological progress serves to increase production output by reducing costs.

But efficiency alone doesn’t guarantee success in business. Simply making the same thing more and more efficiently doesn’t work for a couple of reasons. The first is that there are physical limits to efficiency improvement in specific processes. At the basic level, these constraints are laid down by the laws of thermodynamics. The second is that failing to diversify and innovate risks losing out to competitors producing newer and more advanced products.

The second factor is novelty, the process of innovation, is vital in driving economic growth. Capitalism proceeds through a process which Marx called ‘creative destruction’. New technologies and products continually emerge and overthrow existing technologies and products. Ultimately, this means that even successful businesses cannot survive simply through cost-minimisation.

The ability to adapt and to innovate, to design, produce and market not just cheaper products but newer and more exciting ones is vital. Businesses who fail in this process risk becoming bankrupt. It makes little difference to the economy as a whole if individual companies fail. It does make a difference if the process of creative destruction stops because without it economic growth eventually stops as well.

The role of the entrepreneur, as a visionary, is crucial here. But so is the role of the investor. It is only through the continuing cycle of investment that creative destruction is possible. When credit dries up, so does innovation, and when innovation stalls, then growth will slow down and eventually stop.

But there is a fundamental question here which is not being asked. That question is; how does this capitalist system serve the needs and desires of ordinary human beings? The circular flow of production and consumption may once have been a useful way of organising human society to ensure that people’s material needs are catered for. But what does this continual cycle of creative destruction have to do with human happiness?

Does this self-perpetuating system really contribute to individual happiness in any meaningful sense? Isn’t there a point at which people have enough to meet their needs and we should simply stop producing and consuming so much?

The thing that prevents this happening is the dependence of capitalism itself on continuous growth. The imperative to sell more goods, to innovate continually, to stimulate higher and higher levels of consumer demand is driven forwards by the pursuit of growth. But this imperative is now so strong that it seems to undermine the interests of those people it was supposed to serve.

The cycles of creative destruction become ever more frequent. Product lifetimes fall as durability is designed out of consumer goods and obsolescence is designed in. Quality is sacrificed remorselessly for cost reduction and volume throughput. The throw-away society is not so much a consequence of consumer greed as a prerequisite for the survival of capitalism. Novelty has become a conscript of the drive for economic growth.

Our world is dying of consumption.