It’s the New Year, and the global economic crisis is still going strong. But while pundits cross words over whether 2015 holds greater likelihood of a recovery or a renewed recession, new research suggests they all may be missing the bigger picture: that the economic crisis is symptomatic of a deeper crisis of industrial civilization’s relationship with nature.
Far from implying the end of the world, some economists see the current era of slow growth and austerity as part of a momentous, transitional shift to a new form of civilization that could either adapt in the face of natural limits and prosper, or crumble in denial as nature restores its own balance. So could 2015 herald the dawn of a new era of prosperity, or the breakdown of the global economy?
In the run-up to the New Year, some experts claimed optimistically that most signs are that the economy is back on track, while others offered grim uncertainty. Indeed, with uncharacteristic humility, many conventional economists conceded they had no idea what is in store this coming year. Justin Wolfers in The New York Times advised simply: “Prepare for the worst, hope for the best, and count on being surprised.”
Several, though, have been forthright in warning that the worst is yet to come. For instance, David Levy, who oversees the Levy Forecast founded in 1949 which has predicted every major US downturn for decades, believes that a global “recession… worse than the last one” is due this year. According to economist Harry Shutt, who consults for the World Bank, European Commission, and the UN, “the inescapable onset of a renewed banking collapse must now be viewed as imminent,” with 2015 marking the beginning of “deeper global breakdown.” For Shutt, this is not a mere recurrence of cyclical boom and bust, but a symptom of the fact that the old paradigm “based on the primacy of private profit has been rendered obsolete.” He warns gloomily of a “descent into a new dark age” as policymakers continue to rely on “violent repression” and outmoded economic tools to address the crisis.
Could we be on the verge of a major tipping point in the way civilization works?
The long decline
Some argue that even as the economy descends into madness, the seeds of hope are being planted. Even as global crises are accelerating—encompassing the risk of climate catastrophe, energy instability, and many others in addition to economic breakdown—a range of interconnected systemic revolutions are converging in a way that could facilitate a positive transformation of the global economy: from one that maximizes material accumulation for the few, to one that caters for the needs and well being of all.
That’s the conclusion of a major new book published as part of the Routledge Studies in Ecological Economics series, The Great Transition, by Mauro Bonaiuti, an economist at the University of Turin in Italy. Bonaiuti’s book applies the tools of complexity science to diagnose the real dynamic and implications of the global economic crisis that most visibly erupted in 2008.
That crisis, Bonaiuti argues, is a symptom of a longer “passage of civilization.” Advanced capitalist societies are in a “phase of declining returns” measured across the period after the Second World War, including GDP growth, energy return on investment (how much energy is put in compared to what we get out), and manufacturing productivity, among others.
Bonaiuti’s graph of GDP growth rate in Europe from 1961 to 2011, illustrating a fluctuating but consistent long decline.
Bounaiuti points out that Energy Return On Energy Investment (EROIE) is also declining for major fossil fuels.
Consider this: compared to these declining returns, in the same period and on a global scale, we have faced near exponential increases in energy consumption, public debt, population growth, greenhouse gas emissions, and species extinctions.
For Bonaiuti, the declining returns are a consequence of the “the interaction between limitations of a biophysical nature (the exhaustion of resources, global warming, etc.) and the increasing complexity of social structures (bureaucratisation, the reduction in the productivity of innovation and in the educational, health and productive systems, etc.).”
Global population growth and energy consumption plotted in one graph (Source: The Oil Drum)
Global rise in debt to GDP ratio from 2000 to 2013 (Source: The Telegraph)
Correlation between exponential increase in consumption, C02 emissions, species extinctions, and environmental degradation (Source: Skeptical Science)
The economic crisis is therefore not just about debt, or deregulation, or market volatility or whatever. Fundamentally, the crisis is due to the global economy’s ongoing breaching of the limits of the biosphere. Ironically, as Bonauiti points out, after a certain point as material accumulation measured by GDP continues, well-being and happiness have not only stopped growing, they are now also in decline as depression and other psychological ailments are accelerating—a phenomenon that mainstream economists are at a loss to explain.
All this begins to make sense, though, when we reframe the crisis as not simply an economic one, but as a “bio-economic” one, in which exponential material consumption is increasingly destabilizing the biosphere. This environmental overshoot explains “the inability on the part of the capitalist system to continue to produce social well-being and to face the ecological question with any efficaciousness.” And this is why contemporary capitalism has run out of tools to meaningfully address the crisis.
Collapse? Or renewal! (Or both…?)
Civilization is thus undergoing a huge, momentous phase shift as the current form of global predatory capitalism crumbles beneath the weight of its own mounting unsustainability. As this process unfolds, it simultaneously opens up a range of scenarios for new forms of society, within which there is an opportunity for “a great transition towards new institutional forms” that could include greater “democratic self-government of communities and their territories.”
Despite the very real disruptions this phase shift entails, many of which have been explored in depth here at Motherboard (the unprecedented spate of global unrest being a major example), the Italian economist is cautiously optimistic about the potential long-term outcomes.
“When the framework changes, as the sciences of complexity teach us, there will be other forms of economic and social organization more suited to the new situation,” Bonaiuti wrote. “In particular, in a context of global crisis, or even stagnant growth, cooperation among decentralized, smaller scale economic organisations, will offer greater chances of success. These organizations can lead the system towards conditions of ecological sustainability, more social equity and, by involving citizens and territories, even increase the level of democracy.”
Bonauiti uses the term “degrowth” to describe this new framework, but degrowth does not simply mean no growth, or even negative growth. It actually entails a new science of “post-growth economics” in which the obsession with measuring material accumulation as the prime signifier of economic health is jettisoned.
Endless growth on a finite planet is simply biophysically impossible
This perspective recognizes that endless growth on a finite planet is simply biophysically impossible, literally a violation of one of the most elementary laws of physics: conservation of energy, and, relatedly, entropy.
If Bonauiti is right, then even as conventional economic tools turn out to be increasingly impotent, we should expect to see more and more signs of this changing framework, and with it, the emergence of potential new forms of economic and social organization that work far better than the old industrial paradigm we take for granted.
And that’s exactly what’s happening.
In an upcoming installment of this column, I’ve rounded up five major “revolutions” which are already undermining the old paradigm and paving the way for viable alternative approaches: the information revolution, the energy revolution, the food revolution, the finance revolution, and the ethical revolution.
The big shifts constituted by these revolutions are developing disparately, tentatively, and often incoherently—but despite that, they are evolving inexorably, and in coming years will be increasingly difficult to contain and co-opt.
All of them involve an increasing dispersion of power to people and communities, away from traditional centralized hierarchies of control. As they accelerate and begin to interact, the opportunities for transition will also open up.
That’s not to say any of this will happen in a simplistic, easy-peasy manner. Bonauiti identifies four potential scenarios for the future, and one of them involves “collapse”—which somewhat speaks for itself. Those who benefit from the old paradigm are likely to resist the most. Quite literally, the future of our species and the planet will be defined by the entirely unpredictable way people everywhere might respond to the reality of change, whether through resistance, disbelief, apathy, engagement, adaption, or action.
So welcome to 2015: a year when our choices could determine the future of the planet.