vingt-cinq: Where Are We Going?

Homemade Matchbox Pinhole
Kodak BW400CN
Salt Lake City, Utah
May 2010

Lots happening with the economy. It all seems so untouchable, devoid of actual meaning. In my mind, this is probably the leading cause of our stagnation - the fact that none of this mess seems like a reality. But how do we gauge anything when we're dealing with numbers that don't even really exist? Does anyone understand what's actually going on? And where are we going anyway? What comes after trillions?

From Adbusters again:

There is very good reason to believe that, in a generation or so, capitalism itself will no longer exist - most obviously, as ecologists keep reminding us, because it's impossible to maintain an engine of perpetual growth forever on a finite planet, and the current form of capitalism doesn't seem to be capable of generating the kind of vast technological breakthroughs and mobilizations that would be required for us to start finding and colonizing any other planets. Yet faced with the prospect of capitalism actually ending, the most common reaction - even from those who call themselves "progressives" - is simply fear. We cling to what exists because we can no longer imagine an alternative that wouldn't be even worse.

 And Lester Brown's World on the Edge:
 

No previous civilization has survived the ongoing destruction of its natural supports. Nor will ours. Yet economists look at the future through a different lens. Relying heavily on economic data to measure progress, they see the near 10-fold growth in the world economy since 1950 and the associated gains in living standards as the crowning achievement of our modern civilization. During this period, income per person worldwide climbed nearly fourfold, boosting living standards to previously unimaginable levels. A century ago, annual growth in the world economy was measured in the billions of dollars. Today, it is measured in the trillions. In the eyes of mainstream economists, the world has not only an illustrious economic past but also a promising future.

Mainstream economists see the 2008 - 09 global economic recession and near-collapse of the international financial system as a bump in the road, albeit an unusually big one, before a return to growth as usual. Projections of economic growth, whether by the World Bank, Goldman Sachs, or Deutsche Bank, typically show the global economy expanding by roughly 3 percent a year. At this rate the 2010 economy would easily double in size by 2035. With these projections, economic growth in the decades ahead is more or less an extrapolation of the growth of recent decades.

How did we get into this mess? Our market-based global economy as currently managed is in trouble. The market does many things well. It allocates resources with an efficiency that no central planner could even imagine, much less achieve. But as the world economy expanded some 20-fold over the last century it has revealed a flaw - a flaw so serious that if it is not corrected it will spell the end of civilization as we know it.   

The market, which sets prices, is not telling us the truth. It is omitting indirect costs that in some cases now dwarf direct costs. Consider gasoline. Pumping oil, refining it into gasoline, and delivering the gas to U.S. service stations may cost, say, $3 per gallon. The indirect costs, including climate change, treatment of respiratory illnesses, oil spills, and the U.S. military presence in the Middle East to ensure access to the oil, total $12 per gallon. Similar calculations can be done for coal.

We are facing a situation in economics today similar to that in astronomy when Copernicus arrived on the scene, a time when it was believed that the sun revolved around the earth. Just as Copernicus had to formulate a new astronomical worldview after several decades of celestial observations and mathematical calculations, we too must formulate a new economic worldview based on several decades of environmental observations and analyses.