On Hoarding and Collapse

I frequently wonder about how the inherent contradictions within Capitalism will play out over the long run. You know… questions like “will this lead to create a revolution birthing a new economic order, or just the end of organized society?” I don’t know if this means I have too much free time, too much privilege, or I’m just a total dork. Probably all three. But I do know these thoughts invariably lead me to a paradox, a meta-contradiction at the core of what’s wrong with our system. Under Capitalism, both high economic growth and low economic growth are disastrous for working people and the planet, and this will either undermine Capitalism or undermine humanity itself.

Of course, Capitalism has proven remarkably more “stable” than many in the early left predicted. There’s lots of explanations for this and I won’t go into much detail here. Although I’m in the camp that believes this stems from the unique 20th Century mixture of welfare Capitalism in core countries coupled with rampant Imperialism in the periphery, then global expansion of speculative financial and credit markets over the last 50 years. Short version: Capitalism has done remarkably good at war-making, creating new markets out of thin air and rescheduling crises. 

But the crises keep coming, growing worse, and highlighting profound problems at both possible ends of the economic model. Capitalism inevitably leads to environmental devastation and yawning economic inequality. Sometimes you have more devastation, sometimes more inequality, sometimes both -based in part on the level of economic growth.  But there is a finite and diminishing amount of each that we can take before we’ll break. I don’t believe there’s a sustainable level of Capitalist growth that can be reached, somehow mitigating both. These are the logical outcomes of an irrational system: both high growth and low growth are fucking killing us.

In the US, high economic growth is around five percent or more a year expansion in Gross Domestic Product. Growth is largely driven by people purchasing goods and services, which means more jobs and spending by working people, something we folk on the left ostensibly like. But in a globalized, horizontally integrated society, it also means multi-sourced international production, subcontracting, global shipping, and a relentless drive by corporations to undersell each other through lower wages and skirting regulations. This inverse relationship between profits and wages is a core contradiction in Capitalism  But the more terrifying thing to consider here is the devastating environmental impact.

I don’t need to drive home the terrifying and ongoing environmental impacts of Capitalism. We’re all living through massive storms, tragic floods and devastating wildfires. We watched much of the western US burn over the last few years. My friends in Australia witnessed their continent burn. We are living through a global pandemic that is likely to be the first of many and, as Mike Davis shows, it is all tied to the relentless expansion of profit seeking, the destruction of habitat, and the collapse in traditional food economies forcing people to turn to alternative forms of protein. It’s been obvious for a long time that something’s got to give.

There are no high growth solutions to the climate crisis. I have techno futurist type friends who believe that virtual space will somehow create new markets that are free of physical resource extraction, allowing Capitalism to flourish without impact. I find this highly dubious on many levels I’ll go into in other posts. There is no technological or emerging market fix to a fundamentally structural problem when they are based on the same profit assumptions as what created the problem.  Electric cars are a great example. The automotive industry could have rolled them out over 30 years ago. They didn’t because the old model was too profitable. It’s only happening now under immense pressure and huge subsidies, and gas cars aren’t going away for a bit. As Naomi Klein so eloquently proves over and over again, it really is Capitalism Versus the Environment.

On the other end, you have low economic growth. There’s a pretty broadly accepted idea in parts of the left (particularly for US and European environmentalists, who have more privilege) that lower growth is an essential part of preventing climate collapse. I agree 100%, although with the important caveats that we need to make this about economic growth and wealth distribution, not some vaguely Ecofascist claims about the number of people on the planet. As demographers have shown, the earth could easily sustain 10 billion or more people under a different economic model. This would require moderate sacrifices for American and European consumers, a just transition for workers in the fossil fuel related industries, and massive wealth redistribution. So, yeah, Socialism. Short version: people aren’t the problem. Capitalism is.

Why can’t we achieve meaningful low growth under Capitalism? Because truly low growth would cause the system to come to a screeching halt. And existing low growth periods in Capitalism are correlated with wealth hoarding and inequality, so they tend to be terrible for working people everywhere. Capitalists have less incentive to produce surplus, so they cut their workforce. But they maintain investments and assets earning passive income. Think about you and your friends during the COVID pandemic. Some work remotely, save money and are sitting pretty. Others are unable to work, exhausted their unemployment benefits, and are terrified of the coming end to eviction moratoriums. Magnify that by billions -you get COVID Capitalism.

This is one of the central pieces in Thomas Picketty’s modern classic, “Capital in the Twenty First Century.” Picketty uses over a century of tax and data to demonstrate that in low growth periods, the vast majority of income goes to the rich. This makes perfect sense, as the rich still make much of their money off of investments, stocks, capital, rent and other sources of passive income. Conversely, high growth is inherently associated with high production, which generally means, regardless of how exploitative the economic arrangements are, the working class is earning more money. It also means that Capitalists are more likely to reinvest their money into production, which means more of it is tied up and in cash or stockpiling.

The Obama White House used research on the US and twelve developed countries to develop the “Great Gatsby Curve,” demonstrating that intergenerational wealth transfer was almost impossible for working people in high inequality countries. Harvard Economist Richard Freeman has shown that under high inequality, the income and wealth stakes for the rich are so high that they inherently incentivize “Crony Capitalism” and corruption, and the conditions are so dire for the poor that they breed desperation, crime and violence. Ironically, high inequality also leads to horrific levels of pollution, as elite capture of the regulatory process undermines environmental protections. I agree with both claims, although I obviously think the outcomes are inevitable, and solutions are different.

So there’s the rub. On one end, we hurtle towards ecological collapse. On the other, Poverty, violence and decayed social fabric. Both ultimately lead to shitty outcomes for the masses, either via Elon Musk Mars green zone space hotel Elysium for the rich and squalor for the rest of us, or straight-up Mad Max world of roving fiefdoms, desertification, and wars for water and gas. This is what Karl Marx and Rosa Luxemburg mean by “Socialism or Barbarism.” It’s also why so many trade unionists, civil rights leaders, environmentalists and other organizers identify with or drift towards Socialism, and why Bernie Sanders, Jeremy Corbyn, and the Democratic Socialists of America recently saw explosions of support. These People feel the contradictions like they do their own alienation. They want an analysis. They want to organize.

These are the logical outcomes of an irrational system. And they are only a glimpse into the many profound contradictions of Capitalism, a system that’s very existence creates the conditions that undermine itself.  And while Capitalism has proven much more resilient than Karl Marx, Rosa Luxemburg, or countless early revolutionary or utopian Socialists predicted, it still suffers the same underlying crises, no matter what technologies, policies, or modifications it creates to reschedule them. We have to envision and co-create a better world, and we have to organize together to achieve it. The burning question is will we be able to accomplish this in time and create something  out of the ashes, or go down with the ship?