Why the party’s not over after capitalism.
Worried about the shit hitting the fan on climate change and other major crises? Good. Because those crises prove that we have an unprecedented opportunity to change the world.
Yesterday, I pointed to the groundbreaking work of University of Turin economist Mauro Bonaiuti on the deeper roots of the ongoing crisis of capitalism in a wider environmental crisis. The 'endless growth' model of unlimited material accumulation that we take for granted is increasingly breaching natural and environmental limits of the biosphere, with devastating consequences.
Yet Bonauiti is hardly a lone voice. He represents a widening movement of economists and scientists who are pointing to the need to re-engineer capitalism as we know it if we want to sustain prosperity while saving the planet. The pseudo-debate over whether 2015 entails recession or recovery overlooks the bigger picture: that the global economic crisis is simply a stage in the long decline of a paradigm that has outlasted its usefulness.
Far from being all doom and gloom, continuing global economic fragility is symptomatic of a fundamental shift
Far from being all doom and gloom, continuing global economic fragility is symptomatic of a fundamental shift in the very nature of civilization itself. The new era of slow growth and austerity has emerged because the biosphere is forcing us to adapt to the consequences of breaching environmental limits.
This fundamental shift has also brought about significant changes that offer profound opportunities for systemic transformation that could benefit humanity and the planet. These five interlinked revolutions in information, food, energy, finance and ethics are opening up opportunities for communities to co-create new ways of being that work for everyone. This year we could discover that the very disruption of capitalism itself is part of a major tipping point in the transition to a new post-industrial, post-capitalist paradigm.
The information revolution
The world is currently, quite clearly, at the dawn of a huge technological revolution in information that has already in the space of a few years transformed the way we do things, and is pitched to trigger ongoing changes in coming decades. A glimpse of some of those changes, and the possibility of weaponizing them, can be found in my article on the Pentagon's plans for defense reform.
The main impact of the information revolution so far has been the decentralization of communications infrastructure across the world, the increasing interconnection of different countries and communities, and as a consequence, the opening up of myriad sources of information, often for free, to the public.
Of course, this is no global village. Access to the internet remains massively unequal between rich and poor, and new battle-lines have been drawn—illustrated by the impunity and unaccountability of mass surveillance by intelligence agencies in cahoots with corporations, as well as ongoing efforts by telecoms giants and governments to explore ways of controlling and censoring the internet.
But this is largely a regressive response to the increasing inability to control the inherently uncontrollable and decentralized dynamic of the information revolution. We now know that intelligence agencies are playing catch-up as it has become clear that social media is an enabler of radical political messaging and, thus, an amplifier for social movements capable of facilitating the toppling of repressive military regimes that happen to be our closest allies (Egypt, anyone?).
Similarly, the attempt to shut-down Pirate Bay has been futile. The moment legislation was introduced to kill the site, instead of disappearing, hundreds of Pirate Bay mirror sites proliferated in a manner demonstrating the literal impossibility of ever being able to eliminate the flagship pirating portal. The latest raid on the Pirate Bay's servers in Sweden resulted in the immediate launch of a Pirate Bay "clone" site by competitor Isohunt. In 2012, the site had become more portable and easier to clone. Now Bruno Kramm, Berlin chairman of the Pirate Party which was founded after the first Pirate Bay shut-down in 2005 to promote online information sharing, promised that the site would simply re-open by multiplying servers. "Basically, each time you shut the Pirate Bay down, we will multiply," he said.
It is this freedom of information, both in accessibility and cost, that is also eating into the traditional business models of the broadcast and print media.
Those models are walking dead. The members of the next generation do not read newspapers, and they don't watch TV news. They get their info from YouTube shows, curate their news from across multiple mainstream and alternative digital sources, while sharing and communicating news across social networks like Facebook, Twitter, Instagram, WhatsApp, Snapchat, Vine, Tumblr, and so on. And this is a big reason why the conventional business models of the mainstream media are experiencing rapid decline.
Despite its pitfalls, the information revolution has thus opened up previously unthinkable opportunities for alternative media, accessibility of information, and interconnections between different people, communities, social movements, and nations. Hence, the rapid proliferation in the last decade of alternative news sites and sources such as blogs, community news platforms, and reader-supported models of digital journalism.
This is already undermining the relevance of traditional centralized information highways, and creating space for public engagement and new digital media models, in a process that will only accelerate and become increasingly unstoppable as encryption and privacy tools become cheaper and more common.
The energy revolution
As I've shown elsewhere, the fossil fuel system is already in its death throes. Costs of production have rocketed for oil, gas and coal, and the market simply cannot afford to pay prices high enough for the big fossil fuel majors to sustain increasing profits.
Mark Lewis, former head of energy research at Deutsche Bank, points out that theindustry is investing "at exponentially higher rates for increasingly small incremental yields of energy."
This year the US Energy Information Administration found that as a consequence of this shift to expensive energy, the world's leading oil and gas companies were sinking into a debt trap even before the latest oil price crash. Their net debt increased by $106 billion in the year up to March, while they sold off $73 billion of assets to cover surging production costs. "Alarm bells are ringing. Investors can see that this is unsustainable," Lewis recently told the Telegraph. "They are starting to ask whether it wouldn't be better to return cash to shareholders, and wind down the companies."
As the fossil fuel empire crumbles, in contrast, the cost of renewable energy technologies (especially solar and wind) is dramatically falling even as efficiency gains are rapidly increasing. According to Silicon Valley entrepreneur and Stanford business studies lecturer Tony Seba, who forecasts the dominance of solar within just 15 years, the Energy Return On Energy Investment or EROIE of solar is far superior over the long-term than fossil fuels.
Seba told me that conventional EROIE calculations are potentially misleading because they ignore critical costs and externalities, especially in land and water usage, waste and pollution. Applying the concept of Energy Payback Time (EPBT) to photovoltaic (PV) solar panels—where EPBT is how long it takes to produce the same quantity of energy that was used to create and install the panels—Seba notes that recent thin film technologies will payback this energy in around just one year. After that point, effectively, energy is generated for free. If a thin film panel produces energy for 25 years, then its EROIE is 25. "This is far higher than the published results for most forms of energy today, including oil, gas, wind, and nuclear," Seba said.
But Seba also pointed out that PV panels are likely to last many decades after 25 years. Panel performance degrades at around 0.5 percent per year, which means that even after 60 years, they would produce at 70 percent capacity. EROIE would therefore be on the order of 50 or 60. Given that by 2020, PV costs are expected to drop by another two thirds or so, this suggests that by then EROIE for solar would be even higher, potentially as much as 150. And as the efficiency and capacity of PV technology continues to improve (at a rate of 22% every 2-3 years), EROIE of solar PV technology is pitched to reach triple digits and exponentially improve, rather than degrade.
Fossil fuels simply cannot compete with this. As costs continue to drop, businesses and communities are already shifting rapidly to cheaper, decentralized solar, where post-EPBT energy is literally free. When combined with the fast emerging storage solutions diminishing prices, the old model of being dependent on expensive, centralized and dirty oil, gas and coal will be increasingly displaced by the relentless momentum of cheap, distributed clean energy.
The food revolution
As we wean ourselves off fossil fuels, one of the most energy-intensive pursuits ripe for transition is industrial agriculture. In the US alone, 19 percent of fossil fuel consumption goes to the food system for pesticides, fertilizers, on-site machinery, processing, packaging and transport. But as industrial agriculture continues to degrade the soil, the productivity of land in key food basket regions is steadily declining.
With global food prices at record levels in the context of these challenges, combined with the pressures of climate-induced extreme weather, volatile oil prices, and speculation by investors, the incentive to develop greater resilience in locally accessible food production is also growing.
In the UK and US, for instance, demand for locally grown food production is rising fast. The US Department of Agriculture reports that between 1992 and 2007, demand for local produce grew twice as fast as total agricultural sales, and the number of local food outlets has quadrupled from 1994 to 2013.
Transition initiatives across the western world are pioneering community efforts to grow their own food, organically and outside of the industrial food system. Preliminary studies show that the relocalization of food economies is a viable option that could have huge benefits to local economies and create a wide range of jobs—although this would involve less meat consumption, with greater numbers of people living on and working the land.
Recently, the UN Food and Agricultural Organization (FAO) has been exploring the potential to scale-up agroecology—a specialized farming method which combines organic agriculture with an ecologically-conscious social, economic and political structure. Successive UN special rapporteurs on the right to food, drawing on a rich peer-reviewed literature, have endorsed agroecology as a viable solution for increasing crop yields for the small farmers that provide 70 percent of global food production.
A Masters thesis in Environment and Planning completed this year by Zainil Zainuddin, a food and agriculture researcher at RMIT University in Melbourne, Australia, conducted a case study of 15 households doing urban farming on a 1,096 square meter sized collective plot in Melbourne city. Eleven of the participating households farmed using permaculture design principles, including no-dig, raised beds for food growing, the use of compost and/or worm-farm castings for soil improvement (and the use of animal manure for those engaged in poultry or fowl raising), companion planting for organic pest management and rainwater harvesting. In one year, the project produced a total yield of 388.73 kg worth of fruits, vegetables, nuts, honey and meat, along with a total of 1,015 eggs. The study found that, "All participants register a surplus of between 5 per cent to 75 per cent, depending upon the crops and seasons," which was shared among immediate family, and local communities" through local swap and share networks.
In ensuing years, more and more food will be produced and consumed locallyin both urban and rural environments, as the industrial food system becomes more unsustainable and costly. Real-world cases like Park 2020 in the Netherlands show that with the right design principles, large-scale urban agriculture to sustain a community food system and local businesses based on "closed cycles for materials, energy, waste and water," represents a viable future for converting modern cities into regenerative ecologies.
The finance revolution
The information, food and energy revolutions are being facilitated by a burgeoning revolution in finance. Once again, the emerging trend is for new models that give greater power to the crowd, and undermine the authority and legitimacy—and even necessity—of the traditional, centralized banking infrastructure.
This has been enabled by the information revolution. According to the technology market research firm Forrester, the avalanche of new mechanisms for potential lenders and borrowers, or funders and receivers, to interact online without the intermediation of traditional banks and financial institutions, poses a huge threat to conventional banking. Of these new mechanisms, peer2peer lending has experienced particularly rapid growth.
Forrester Research's new report shows that since 2005, over $6 billion has been generated in loans. Although peer2peer remains tiny in the context of banks' larger balance sheets, Forrester forecasts that the long-term trend is for these new forms of social lending—including digital investment management and crowdfunding—to "continue to grow, chipping away at banks' profits, diverting deposits, and disintermediating banks."
Banks have now been brought to the edge of the disruption abyss.
As the Australian Business Review recently noted, "banks have now been brought to the edge of the disruption abyss" where "the media, mail and music businesses" are already on the verge of toppling over. These new social lending and finance mechanisms will "break the business of banking into its parts, each with its own set of disrupters."
This has also opened the way for new digital currencies and new digital wallet systems, which many forecast will disrupt billions of dollars a year in banking, especially in less developed markets where banking infrastructures are not well established. While Bitcoin is often the most hyped, others are quickly emerging which promise greater stability, transparency, and public accountability, such as MaxCoin and StartCoin.
According to Walter Isaacson, CEO of the Aspen Institute and former chairman of CNN, "digital currencies and micropayments are likely to be the disruptive innovation of 2015."
One of the most significant potential developments in finance is in the concept and practice of the "circular economy," which focuses on the need to recycle resources in an economic system, rather than simply generate escalating quantities of waste in the name of endless growth. A major report to the Club of Rome this year by Ugo Bardi of the University of Florence's Earth Sciences Department showed that recycling, conservation and efficiency in the management of the planet's mineral resources could enable a prosperous and high technology society, though not one indulging in the sort of mass consumerism we take for granted today.
Corporations are leading the way in exploring the circular economy purely for business reasons. Resource costs have rocketed since 2009 more quickly than global economic output. A report put out earlier this year by the financial consultancy McKinsey noted that businesses are being forced to find "novel ways to reuse products and components" in managing access to "valuable natural resources." The relative success of these efforts led by companies like Renault evoke the possibility of "an industrial system that is regenerative by design," which "restores material, energy, and labor inputs."
In the age of expensive energy, McKinsey points out that the incentives to shift to a circular economy are huge. Savings in materials alone could exceed $1 trillion a year by 2025. While the corporate and business sectors see the circular economy as a necessary means to sustain growth in a new age of resource scarcity, Bardi points out that endless material growth is a simple impossibility. The rise of the circular economy being led by some of the world's largest companies represents an unwitting but accelerating shift to a post-growth economic system.
The ethical revolution
Perhaps the most profound shift of all, implicit in these seemingly disparate, but inherently interwoven revolutions, is the ethical revolution.
The old paradigm, which is facing increasing disruption by the emerging revolutions described above, is premised on a model of centralized, hierarchical control focused on unlimited material accumulation, and premised on the values of individualism, self-interest, competition, and conflict.
The model that is fast developing and disrupting this paradigm from within, is one premised on open access to information; distributed and effectively free, clean energy; local, community and democratic ownership over planetary resources; and a form of prosperity and well-being that is ultimately decoupled from the imperative for endless material accumulation.
The old and new paradigms can be clearly related to two quite different value systems. The first paradigm, which is currently in decline, is that of egoism, crude materialism, and selfish consumerism. It is a value system that, we now know from our best scientific minds, is on course to potentially lead to an uninhabitable planet, and thus, perhaps even species extinction (with many scientists arguing we appear to be at the dawn of the planet's sixth mass extinction event). This suggests that this value system is actually dislocated from human nature, our biophysical environment, and the relationship between them.
In contrast, a value system associated with the emerging paradigm is also supremely commensurate with what most of us recognize as 'good': love, justice, compassion, generosity. This has the revolutionary implication that ethics, often viewed as 'subjective', in fact have a perfectly objective and utilitarian function in the fundamental evolutionary goal of species survival. In some sense, ethics provide us a value-driven benchmark to recognize the flaws in the old paradigm, and glimpse the opportunities for better social forms.
This ethical revolution is ultimately rooted in a profound fundamental shift in our scientific understanding of life and the world, from the old Newtonian/Cartesian paradigm to the new paradigm represented by relativity, quantum physics, evolutionary biology and epigenetics. This shift has on the one hand brought to light curious parallels between Eastern mysticism and Western science which occupied the minds of the very founders of quantum mechanics, and on the other highlighted concepts like "nonlocality" and quantum interconnections, the inherent relationship between observer and observed, and the complex irreducibility of mind-body interactions. These point to an emerging scientific worldview in which human beings are intimately interwoven with our biophysical environment, and where ethical values therefore in some way provide us a means to objectively navigate this relationship in our day-to-day moral choices, regardless of religious dogma.
As these five revolutions accelerate and disrupt the old paradigm, as they are already doing—resulting in the increasing eruption of social movements that challenge and overthrow states and systems—the phase shift to a new era also accelerates. The birth pangs of this new era are premised on the escalating disruption of the old paradigm, a process that invokes chaos, uncertainty, and violence. Yet it is precisely in the ashes of that great disruption that the opportunities for these revolutions to take flight will become ever greater.