Our crisis is the unraveling of modernity and associated industrialization due to resource/capital depletion (Hall, Lindenberger, Kümmel, Kroeger and Eichhorn, 2001, also Hall and Day, 2009.) This is the consequence of a ‘culture of excess’ that refuses to accept limits: there is human over-population, too many machines along with extractive industrial agriculture. Failures in credit- political- and production sector marketplaces are the manifestation of resource/capital depletion. What is underway is ‘conservation by other means’.
Modernity is a long-running process (550+ years). It has been too successful too long for it to continue. Modernity cannibalizes its capital, as such our crisis is irreversible. Conventional marketplace remedies such as debt jubilees/write-offs, re-distribution, bailouts, stimulus, austerity policies, monetary easing, etc. have no effect on outcome other than to worsen conditions. These are efforts to reclaim capital that no longer exists. Consequently, remedies accelerate unraveling process by increasing gross debt (claims against capital) while exposing remaining capital to consumption at higher rates. The capital ‘pie’ cannot be redistributed, only a new and much smaller pie is to be had and carefully tended. Our smaller pie of non-renewable resources is what we have to make use of, to last us and the rest of the world’s creatures until the end of humanity.
Economists insist that the crisis is one of debt and out-of-control finance or intrusive government. Rather, the crisis is a non-productive physical economy which monetizes resource waste. Popular culture promotes the process, management policy defends the process’ beneficiaries from any undesirable consequences.
Economists insist that capital is symbolic (money) rather than material. Capital = resources (Daly, 2005), all industrial money is debt. Abstract money is infinitely reproducible, material inputs are not. Existence of debt-money is an incentive to waste even as input constraints unravel input-dependent enterprises (petroleum fuel, also topsoil, water and waste-carrying capacity).
Waste-based economy depletes the capital it requires. Adjusting the waste-based economy to operate at greater efficiency depletes capital more thoroughly at a higher rate (Alcott, 2005 RE: Jevons).
On a cash-flow basis the consumption economy is continually ‘underwater’, the gap between capital cost and system return is financed with debt. When input prices are low, the amount to be financed is affordable. Scarcity reprices resource capital, it becomes more costly than what can be affordably financed. At some point both capital and necessary credit are priced out of reach. The outcome is credit-driven ‘demand destruction’ which is currently underway around the world.
That the industrial economy cannot afford itself is self-evident: if the enterprise was productive it would retire its own debts. Industrial productivity is a myth … promoted by industrialists themselves who use credit to effect economies of scale … to continually take on greater amounts of debt.
The Dominion of Debtor-Tycoons
The industrial economy is a system that allows a few to borrow immense fortunes, leaving society to repay the associated debts.
Industries’ promise of future returns stand as collateral for loans which are funneled to the owner. Firms borrow their profits as enterprises cannot earn organic, ongoing real returns (they must continually borrow against the accounts of their customers or that of the state). By answering to the transitory demands of fashion the firm gains access to loans. Sufficient funds are left in firm accounts to maintain the appearance of actual business until it is time to borrow again. Firms by themselves are collateral for nothing, they are abstract containers for promised potential in some undetermined future; the ‘promise’ becomes collateral for debts and nothing more. Resource waste-over-time is the justification for the firm’s borrowing as well as for the firm itself.
A firm’s ‘secondary good’ is jobs provided for willing workers: however, centralized industry eliminates employment. The labor of entire communities is concentrated into a few firms, this reduction in labor is abstract ‘productivity’, a statistical artifact. The debtonomy evolves toward simple arbitrage: money gains money returns directly without the need for physical output or workers. The process enables tycoons while repressing the rest.
Solution: Institutionalized Restraint
The aim is to change culture, to substitute restraints within culture that currently makes a virtue of limitless excess. In the conservation culture, the husbandry of all forms of capital becomes virtuous. Finance is re-ordered to provide the necessary rewards for those who conserve. People are paid to conserve rather than the same people borrowing to consume. Desire is redefined in the same terms and by the same means that now reward waste.
Desire has been a monopoly ‘good’ of money lenders, industrialists and advertisers: it is redefined as a good of those trusted to carefully tend resources/capital.
– Confiscate the fortunes of the top-ten wealthiest Americans every year with the proceeds distributed to the poor. Money and wealth are de-sanctified thereby, a limit is automatically imposed as other wealthy look to restrain themselves or lose everything. Taxes on labor can otherwise be reduced.
– Change culture from the bottom, provide leadership by example: managers must pay off debts, get rid of cars and TVs, remove themselves from the suburbs or ‘trendy’ urban areas, refuse to purchase consumer goods and processed-food, refuse to take on debts, pay cash and negotiate with merchants for goods and services, etc. Entrepreneurs gain by conservation and husbandry rather than enabling consumption.
– Create a new American political group or party that excludes money from donors and wealthy candidates! Enforce laws and punish lawbreakers!
– Remove debt subsidy for industry including agriculture: decentralize workspaces re-introduce craft method of independent workshops. Offer constitutionally enforceable freedom from advertising and commercial intrusions. Demilitarize and restructure agencies as militias (Swiss model). Extend credit only for efforts that gain capital by way of husbandry (capital return on capital). Extend credit for endeavors that identify or inventory capital without consuming it (scientific discovery).
– Pay young women around the world not to give birth. Pay any 1 billion girls of child-bearing age US$1,000 each per year not to have a child: US$20 trillion total invested over a period of 20 years would reduce population while increasing the capital stock by the US$20 trillions worth of resources not turned to waste.