2 January, 2020

The End of the World (as we know it)

Here is a question I have been pondering: does a social system or political economy based on free markets and (capitalism) automatically result in unbridled consumerism and all the consequent ills of trivialisation, egotism, debt, and debilitation of our natural environment and morals? Or is the current mess we are in the result of some specific conditions of this particular strain into which what we still think of as free market capitalism has mutated.

I think I have been asking this question in some for or another for decades, but I am asking it with a greater sense of urgency now as I look at the voting patterns of the younger half of society in the UK in last week’s General Election and realise that, if the statistics are to be believed, the majority of under 45s in the UK would have preferred a socialist, categorically anti-capitalist party and leadership for their country than the conservative alternative.

This despite the fact that nobody is quite sure what sort of ‘conservative” this Conservative government is going to turn out to be, apart, that is, from the obvious signs that it is certainly NOT going to be moving the state leftwards along the Rahn curve or much further rightwards on the Laffer curve. Capitalism must indeed have an appalling reputation if over half the young population of an advanced western economy with an hitherto unheard of level of prosperity would prefer a model whose outcome in past live experiments has reliably ended in penury and serfdom, let alone the trashing of those individual liberties the younger generations esteem highly and take for granted.

Also feeding in to this need to ask and answer the question are the concerns of the environmentalists, particularly the many thoughtful and sensitive thinkers – from Terry Patten to Joanna Macey to name just two – who reflect openly on the damage being done to our souls and societies by the current environment and our societal priorities. In a recent interview in the beautifully produced austrailian magazine Dumbo Feather, Joanna Macey, author of Coming Back to Life, refers to Prof. Jem Bendell’s “Deep Adaption” paper in which he states that “Currently, I have chosen to interpret the information as indicating inevitable collapse, probable catastrophe and possible extinction.” , having explained what he means by each of those terms in the previous chapters. He goes on to state

Unfortunately, the recent years of innovation, investment and patenting indicate how human ingenuity has increasingly been channelled into consumerism and financial engineering. We might pray for time. But the evidence before us suggests that we are set for disruptive and uncontrollable levels of climate change, bringing starvation, destruction, migration, disease and war.” Jem Bendell, “Deep Adaptaion” (IFLAS Occasional Paper University of Cumbria 2018)


The West’s response to environmental issues has been restricted by the dominance of neoliberal economics since the 1970s. That led to hyper- individualist, market fundamentalist, incremental and atomistic approaches. By hyper-individualist, I mean a focus on individual action as consumers, switching light bulbs or buying sustainable furniture, rather than promoting political action as engaged citizens. By market fundamentalist, I mean a focus on market mechanisms like the complex, costly and largely useless carbon cap and trade systems, rather than exploring what more government intervention could achieve. By incremental, I mean a focus on celebrating small steps forward such as a company publishing a sustainability report, rather than strategies designed for a speed and scale of change suggested by the science. By atomistic, I mean a focus on seeing climate action as a separate issue from the governance of markets, finance and banking, rather than exploring what kind of economic system could permit or enable sustainability.” Jem Bendell, “Deep Adaptaion” (IFLAS Occasional Paper University of Cumbria 2018).

It occurs to me that there are two apocalyptically inclined groups of thinkers from, I suspect, diametrically opposed ends of the political spectrum currently formulating their eschatological hypotheses, namely the environmentalists and, for want of a better basket to put them in, the “sound money” proponents from the Austrian School of Political Economy. Both are predicting collapse and/or catastrophe in the short to medium term, although the sound money school don’t appear to have a view on the extinction option, possibly deeming it outside of their sphere of competence. Both schools see the “capitalist” model of society as it is currently evolved as the root cause of our problems and both have deep thinking traditions that stretch back into the late 19th century (although both would claim that their philosophies and world views can be traced back for hundreds if not thousands of years).

I have no understanding of climate science and have absolutely no idea whether the statistics bandied about claiming to validate one or other side of the argument are real or not. I am as deeply suspicious of the claims of big industry and their lobbyists that the whole thing is a hoax as I am of big government using highly selective data to increase the size of the state, impose draconian regulatory systems and increase the tax burden. Common sense and observations of the natural world around us tells us that our current trajectory is not a happy one. Our cavalier attitude towards the natural resources we have been gifted as attested to by litter on the streets, oceans full of plastic, food that contains no nutrients, animals tortured and pumped full of antibiotics and hormones, landscapes denuded and scarred, will not be without consequence for us. How could it be otherwise?

I am on firmer ground – as a christian libertarian with thirty years or more of business and finance experience – when it comes to the proximate causes of our economic malaise and this, I think is where we will find the surprising confluence of these two rivers of thought. In the island formed in the middle of the meeting of these two rivers there is ample room for an exchange of views and solutions between the two experts and their common calculation that the end is nigh and that our systemic demise will not be pretty.

The problem for both camps is money. The environmentalists abhor the profit only motive of multinational corporations: As Joanna Macey says: “ What’s scary to me is that corporations only have one variable they seek to maximise: profits and that is both toxic and time-limited….And when you get a system driven by one single variable .. it cannot stay in balance, it cannot self-correct.” That may or may not be true of all corporations generally, but it is undoubtedly true that when money (or capital) is placed at the centre of the value creation system then its unlimited demand for (and ability to) scale, soon drive all other considerations to the very edges of the organisational focus. The tidal wave of cheap capital sloshing around the system and available primarily to the largest of institutions (banks, multinationals, governments and their agencies) is the key issue behind our burgeoning environmental stress, not the nature of capitalism itself.

Simply put, we have allowed too much money to be created out of thin air by a fractional reserve banking system deeply in cahoots with a rapacious state which derives its mandate from promises that it can neither finance nor keep that go well beyond the power of the working (tax paying) population to fulfil. This status quo is then dogmatically defended by an increasingly authoritarian elite of technocrats espousing a high octane mixture of deeply flawed economic principles loosely based and selectively cherry-picked from John Maynard Keynes’ postwar and post depression-era recipes.

The policy environment in which we have been living over the past 50 years (longer if you want to extend the period of monetary irresponsibility back beyond Nixon’s severing of the US-$’s convertibility to gold in 1971) is neither liberal nor capitalist: it is a technocratic pseudo-liberalism or clientele capitalism (crapitalism being my preferred epithet) which becomes ever more statist and reminiscent of a centrally planned economy as it becomes entangled in the web of its own inherent contradictions.

Pretty much every ill we can observe in our society can be traced back to the increasing levels of what Ben Hunt and Rusty Guinn, in their excellent Epsilon Theory essays, have come to call the financialisation of our political economy and, by extension, lives. Excessive amounts of money produced by central bank fiat at an exponential rate are metastasizing and consuming the whole body politic – there is something rotten in the state of Denmark and the rot goes to our very core. It turns citizens into debt slaves, companies into insatiable, sociopathic forces of destructive, governments into the handmaidens of oligopolists and the environment into a refuse dump.

Crapitalism in this advanced stage of the disease is a direct consequence of a 50 year era of profligacy in which ‘higher and faster’ dictated the direction and priorities of a society whose entire existence is predicated on the belief that endlessly borrowing from tomorrow to finance today is somehow a sensible way to conduct its affairs.

The environmentalists see the consequences for our planet, it’s resources and our mental and physical health and enlist the help of a dour 16 year old swedish girl to write their Mene Tekel on the wall of the carousing babylonians. The sound monetarists – the Austrians – have no such spokesgirl, but use the statistics of monetary expansion, out-of-control debt creation and broken money to tell their story for them. (A story by the way that nobody is really listening to except possibly the Remnant – you know who you are.) Both camps recognise the simple truth that if something cannot go on for ever, then it will stop. One side wants the state to do more, the other wish the state would do considerably less, secure in the conviction that more state hardly ever produces the innovative technical solutions and competition of ideas which have so far secured our continued prosperity. One side believes we are heading for extinction preceded by collapse and catastrophe. The other side recognises the danger of collapse and of severe distress, but does not claim to envisage any apocalyptic scenarios beyond the demise of the current broken monetary system.

Those in power seem happy enough to embrace, encourage and highlight the increasingly hysterical extinction psychosis of the environmentalists, using them as a vehicle for an expansion of their sphere of regulation and interference (witness the ECBs recent public ruminations on the idea of expanding its remit to include climate change management), whilst dismissing out of hand and ridiculing the concerns of the sound monetarists (whist at the same time building up the largest stores of physical gold in its vaults ever witnessed). It seems to me though that the thoughtful proponents on both sides would benefit from talking to each other much more than they do in order to foster the four Rs of Prof. Bendell’s “Deep Adaptation”: Resilience, Relinquishment, Restoration and Reconciliation and work together dismantling the crapitalist system before – well, at least after – its inexorable collapse.