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This stage started in 2008 and still continues. We can assume that Marxism as a political philosophy was dead around 1970 when it became evident that working class does not represent the new dominant class and communist party is unable to secure higher standard of living for people then advanced capitalist societies, And that The Iron Law of Oligarchy in applicable to the USSR no less that to any Western country. But it took 20 years for the USSR to collapse after that.
I would assume that neoliberalism is probably twice more resilient that Bolshevism as existed in the USSR, but we can envision the same process of the growing gap between ideology postulates and real life conditions, especially falling standard of living for most of the people (let's say, lower 80%). Do let's make an unscientific estimate that another 40-50 years of neoliberalism from 2008 are probable. That brings us to 2050-2060.
Much depends on the dynamics of the price of oil, as globalization is inherently dependent on cheap hydrocarbons and with their disappearance will be revered just by the force of nature. Also high cost of hydrocarbons means "end of growth" (aka permanent stagnation), and neoliberalism financial schemes based on cheap credit implode in the environment of slow of zero growth. A lot of debt becomes unplayable if growth stagnates.
Consistent price of oil, say, over 120 is a direct threat to neoliberal project in the USA. Even with prices over $100 the major neoliberal economics entered the stage of "secular stagnation". It also makes the US military which is the largest consumer of oil in the USA much more expensive to run and increase the costs of neoliberal "wars for regime change", essentially curtailing neoliberal expansion. Or at least making it more difficult. The same is true about financiering of color revolutions, which as a new type of neoliberal conquests of other countries, also require some cash, although not at the scale of "boots on the ground".
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The implosion of the entire global banking/mortgage industry in 2008 has essentially delegitimized neoliberalism as an economic and social model which the U.S. has been pleased to espouse as the royal road to prosperity for decades. It signified the end of Washington Consensus.
At this point ideology of neoliberalism as an ideology is completely discredited and its fake nature is evident to large part of global elite (which probably never have any illusions from the very beginning) as well, which is more dangerous, large part of middle class. It still is supported by pure military and financial power of the USA and its allies as well as technological superiority of the West in general. So only postulates of neoliberalism, especially as for free market absolutization, started to be questioned. And partically revised (increased financial regulation is one example). This form of neoliberalism with the core ideology intact but modified one of several postulates can be called post-neoliberalism.
The USA still remains the most powerful country in the world with formidable military, and still behave as a word hegemon and the only source of justice ignoring US and other International organization, unless it if convenient to them. But as Napoleon noted "You can do anything with bayonets, but you can't sit on them". Running aggressive foreign policy on a discredited ideology and relying on blunt propaganda is a difficult undertaking as resistance mounts and bubble out in un-anticipated areas (Crimea, Donetsk and Lugansk in Ukraine are recent example, when neoliberal color revolution, which was performed by few thousands trained by the West far right militants, including openly neo-fascist squads, led to civil war in the country).
Still, unfortunately, Libya, Syria and Ukraine, were not probably a swan song of muscular enforcement of neoliberal model on other countries. While sponsored by the USA and allies anti-Putin putsch in Russia (aka white revolution") failed, events in Libya and Ukraine prove the neoliberalism sill can launch and win offensives (aka color revolutions). At the cost of plunging the country into economic and political chaos including civil war.
Rule of financial oligarchy also gradually comes under some (although very limited) scrutiny in the USA. Some measures to restrict appetites of financial oligarchy were recently undertaken in Europe (bank bonuses limitations).
HFT and derivatives still remain off-reach for regulators despite JP Morgan fiasco in May 2012 in London branch. Trade loss was around two billions, decline of bank value was around $13bn (The Guardian) At this stage most people around the world realized that as Warren Buffett's right-hand man Charlie Munger quipped in his CNBC interview Trusting banks to self-regulate is like trusting to self-regulate heroin addicts. At the meeting of the Group of 20 (G20) heads of states in the spring of 2009, British Prime Minister Gordon Brown announced the death of “the Washington Consensus” — the famous list of market-liberalizing policy prescriptions that guided the previous 20 or 30 years of neoliberal expansion into third world countries (Painter 2009).
Prominent economists in the United States and elsewhere pointed out that after decades of reform, market-liberalizing policies had not produced the promised benefits for either economic growth or social welfare of countries were those policies were applied (Stiglitz 2002, 2006; Rodrik 2006). These criticisms further undermined the legitimacy of neoliberal governance, exactly the same way as similar criticism undermined socialist model of the USSR and Eastern Europe. the probem is that while socialist experiment could be compared with the Western countries capitalism achivement, here there is no alternative model with which to compare.
Still a backlash directed at the USA is mounting even from the former loyal vassals. Even the UK elite starts to display the behavior that contradict its role of the US poodle. The atmosphere is which the USA is considered "guilty" of pushing though the throats of other countries a utopia that harmed them is a different atmosphere for the US oligarchy that the role of it accustomed to.
Everybody is now aware of the substantial costs that the modern financial system has imposed on the real economy and no amount of propaganda and brainwashing can hide this simple fact. It is questionable that the "financial innovations" of the last three-four decades can compensate for those huge costs and that they warrants those costs. Shocks generated within the financial system and transformation of economies imposed by international financial oligarchy as the core of neoliberal elite, implies that the rule of financial oligarchy creates negative externalities for societies and that some types of financial activities and some financial structures should be treated like an organized crime (as purely parasitic, extortionist type of players).
Still this stage preserves several attributes of previous stage and first of all push for globalization and aggressive foreign policy. While economic crisis of 2008 destroyed legitimacy of ideology of neoliberalism, neoliberalism as an ideology continue to exists as a cult, much like communism as an ideology continues to exist, despite the failure of the USSR. And being phony ideology from the very beginning, a smokescreen for the revanchism of financial oligarchy, it still can be promoted by unrelenting propaganda machine of the same forces which put it into mainstream albeit with les efficiency.
So far no viable alternatives emerged, and inertia is still strong, as strong as G7 block with the USA as the head of the block. Like in 20th failure of neoliberalism led to rise of nationalism, especially in Europe (France, Hundary, Ukraine). In some countries, such as Ukraine, the net result of neoliberal revolution was establishing several far right regime which has uncanny similarities to the régimes which came to power in 30th such as Franko regime in Spain. The phase of neoliberal dominance still continues, it is just the central idea of neoliberalism, the fake idea of self-regulating market that was completely discredited by the crisis (it was discredited before during Great Depression, but the generation the remembered the lesson is now extinct (it looks like it takes approximately 50 years for humanity to completely forget the lessons of history ;-).
Latin America, once paragon of a neoliberal revolution (Chile, Argentina, Mexico, etc), is now dominated by left-wing governments elected on explicitly anti-neoliberal platforms. Around the world, economists and policymakers now come to consensus that excessive reliance on unregulated financial markets and the unrestrained rule of financial oligarchy was the root cause of the current worldwide financial crisis. That created a more difficult atmosphere for the USA financial institutions to operate abroad. Several countries are now trying to limit role of dollar as the world currency (one of the sins Saddam Hussein paid the price).
Also internal contradictions became much deeper and the neoliberal regime became increasingly unstable even in the citadel of neoliberalism -- the USA. Like any overstretched empire it became hollow within with stretches on potholes ridden roads and decaying infrastructure visible to everyone. Politically, the Republican Party became a roadblock for any meaningful reform (and its radical wing -- the tea party even sending its representatives to Congress), the Party that is determined to rather take the USA the road of the USSR, then change its ideology. All this points to the fact that neoliberalism as an socio-economic doctrine is following the path of Bolshevism.
But its media dominance of neoliberalism paradoxically continues unabated. And this is despite the fact that after the crisis of 2008, the notion that finance mobilizes and allocates resources efficiently, drastically reduces systemic risks and brings significant productivity gains for the economy as a whole became untenable. We can expect that like was the case with Catholicism in middle ages and Bolshevism in the USSR, zombie phase of neoliberalism can last many decades (in the USSR, "zombie" state lasted two decades, say from 1970 to 1991, and neoliberalism with its emphasis on low human traits such as greed and supported by military and economic power of the USA, is considerably more resilient then Bolshevism). As of 2013 it is still supported by elites of several major western states (such as the USA, GB, Germany, France), transnational capital (and financial capital in particular) and respective elites out of the sense of self-preservation. That means that is it reasonable to expect that its rule in G7 will continue (like Bolshevism rule in the USSR in 70th-80th) despite probably interrupted by bursts of social violence (Muslim immigrants in Europe are once such force).
In the US, for example, income and wealth inequality continue to increase, with stagnating middle-class earnings, reduced social mobility, and an allegedly meritocratic higher education system, generously supported by tax exemptions, has been turned into the system whose main beneficiaries are the children of the rich and successful. Superimposed on this class divide is an increasingly serious intergenerational divide, and increases level of unemployment of young people, which make social atmosphere somewhat similar to the one in Egypt, although the pressure from Muslim fundamentalists is absent.
More and more neoliberalism came to be perceived as a ruse intended to safeguard the interests of a malignantly narcissistic empire (the USA) and of rapacious multinationals. It is now more and more linked with low-brow cultural homogeneity, social Darwinism, encroachment on privacy, mass production of junk, and suppression of national sentiments and aspiration in favor of transnational monopolies. It even came to be associated with a bewildering variety of social ills: rising crime rates, unemployment, poverty, drug addiction, prostitution, organ trafficking, and other antisocial forms of conduct.
While ideology of neoliberalism is by-and-large discredited, the global economic institutions associated with its rise are not all equally moribund. For example, the global economic crisis of 2008 has unexpectedly improved the fortunes of the International Monetary Fund (IMF), an organization long famous for the neoliberal policy conditions attached to its loans that served to incorporate countries into a global neoliberal economic system. In 2008, a cascade of financial crises in Eastern Europe and Iceland fattened the IMF’s dwindling loan portfolio.
World Trade Organization (WTO), the key US-used and abused universal opener of markets to US corporations and investments is in worse shape then IMF, but still is viable too. The Doha round of negotiations is stalled, mostly due to irresolvable disputes between developed and developing countries. Consequently, the current crisis of neoliberalism raises many important questions about the future path of the current international institutions promoting the neoliberal order. But still Russia joined WTO in 2012 which means that this organization got a new lease of life.
Nonetheless, that "neoliberalism in name only" is still a powerful global "brand" which the U.S. seeks to maintain at all costs for macro geopolitical reasons (The Great Crash, 2008: A Geopolitical Setback for the West , Foreign Affairs)
The financial and economic crash of 2008, the worst in over 75 years, is a major geopolitical setback for the United States and Europe. Over the medium term, Washington and European governments will have neither the resources nor the economic credibility to play the role in global affairs that they otherwise would have played. These weaknesses will eventually be repaired, but in the interim, they will accelerate trends that are shifting the world's center of gravity away from the United States.A brutal recession is unfolding in the United States, Europe, and probably Japan -- a recession likely to be more harmful than the slump of 1981-82. The current financial crisis has deeply frightened consumers and businesses, and in response they have sharply retrenched. In addition, the usual recovery tools used by governments -- monetary and fiscal stimuli -- will be relatively ineffective under the circumstances.
This damage has put the American model of free-market capitalism under a cloud. The financial system is seen as having collapsed; and the regulatory framework, as having spectacularly failed to curb widespread abuses and corruption. Now, searching for stability, the U.S. government and some European governments have nationalized their financial sectors to a degree that contradicts the tenets of modern capitalism.
Much of the world is turning a historic corner and heading into a period in which the role of the state will be larger and that of the private sector will be smaller. As it does, the United States' global power, as well as the appeal of U.S.-style democracy, is eroding.
Currently neoliberalism, even in its zombie state looks like dominant political system and ideology, that might change.
While indoctrination now reached almost all adult population, there are some instances of resistance, especially among young people, who are insisting that casino capitalism isa act of violence against them and destruction of thieer future. And if it does not come to an end, what we might experience a mass destruction of human life if not the planet itself.
As the most recent tranformation of capitalism, neoliberalism is a broad economic and political project of restoring class power of financial oligarchy it enjoed in 20th of XX century (financial revanshism). It involved consolidation, globalization and rapid concentration of financial capital (Giroux 2008; 2014).
As an ideology, consider profit-making to be the final arbiter and essence of democracy. And consumion as the only operable form of citizenship. With the related religious belief that the market can both solve all problems and serve as a model for structuring all social relations.
As a mode of governance, it produces the ways of life driven by a survival-of-the fittest ethic, grounded in the idea of the free, predatory individual in economic jungles. And it declared the morrality of the right of ruling groups and institutions to exercise power ignoring issues of ethics and social costs (variant of "might is right" mentality).
As the political project, it involes the privatization of public services, the dismantling of the connection of private issues and public problems, the selling off of state functions, liberalization of trade in goods and capital investment, the eradication of government regulation of financial institutions and corporations, the destruction of the welfare state and unions, and the complete "marketization" and "commodification" of social relations.
Neoliberalism has put an enormous effort into creating a commanding cultural apparatus and public pedagogy in which individuals can only view themselves as consumers, embrace freedom as the right to participate in the market, and supplant issues of social responsibility for an unchecked embrace of individualism and the belief that all social relation be judged according to how they further one’s individual needs and self-interests.
Matters of mutual caring, respect, and compassion for the other have given way to the limiting orbits of privatization and unrestrained self-interest, just as it has become increasingly difficult to translate private troubles into larger social, economic, and political considerations. As the democratic public spheres of civil society have atrophied under the onslaught of neoliberal regimes of austerity, the social contract has been either greatly weakened or replaced by savage forms of casino capitalism, a culture of fear, and the increasing use of state violence.
One consequence is that it has become more difficult for people to debate and question neoliberal hegemony and the widespread misery it produces for young people, the poor, middle class, workers, and other segments of society — now considered disposable under neoliberal regimes which are governed by a survival-of-the fittest ethos, largely imposed by the ruling economic and political elite.
That they are unable to make their voices heard and lack any viable representation in the process makes clear the degree to which young people and others are suffering under a democratic deficit, producing what Chantal Mouffe calls “a profound dissatisfaction with a number of existing societies” under the reign of neoliberal capitalism (Mouffe 2013:119). This is one reason why so many youth, along with workers, the unemployed, and students, have been taking to the streets in Greece, Mexico, Egypt, the United States, and England.
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Nov 03, 2015 | Dissent Magazine
Booked is a monthly series of Q&As with authors by Dissent contributing editor Timothy Shenk. For this interview, he spoke with Wendy Brown about her new book Undoing the Demos: Neoliberalism's Stealth Revolution (Zone Books, 2015).
Timothy Shenk: You note early in Undoing the Demos that while references to "neoliberalism" have become routine, especially on the left, the word itself "is a loose and shifting signifier." What is your definition of neoliberalism?Wendy Brown: In this book, I treat neoliberalism as a governing rationality through which everything is "economized" and in a very specific way: human beings become market actors and nothing but, every field of activity is seen as a market, and every entity (whether public or private, whether person, business, or state) is governed as a firm. Importantly, this is not simply a matter of extending commodification and monetization everywhere-that's the old Marxist depiction of capital's transformation of everyday life. Neoliberalism construes even non-wealth generating spheres-such as learning, dating, or exercising-in market terms, submits them to market metrics, and governs them with market techniques and practices. Above all, it casts people as human capital who must constantly tend to their own present and future value.
Moreover, because neoliberalism came of age with (and abetted) financialization, the form of marketization at stake does not always concern products or commodities, let alone their exchange. Today, market actors-from individuals to firms, universities to states, restaurants to magazines-are more often concerned with their speculatively determined value, their ratings and rankings that shape future value, than with immediate profit. All are tasked with enhancing present and future value through self-investments that in turn attract investors. Financialized market conduct entails increasing or maintaining one's ratings, whether through blog hits, retweets, Yelp stars, college rankings, or Moody's bond ratings.
Shenk: Discussions about neoliberalism often treat it as an economic doctrine, which also means that they concentrate on its economic ramifications. You shift the focus to politics, where, you argue, neoliberalism has "inaugurate[d] democracy's conceptual unmooring and substantive disembowelment." Why does neoliberalism pose such a threat to democracy?
Brown: The most common criticisms of neoliberalism, regarded solely as economic policy rather than as the broader phenomenon of a governing rationality, are that it generates and legitimates extreme inequalities of wealth and life conditions; that it leads to increasingly precarious and disposable populations; that it produces an unprecedented intimacy between capital (especially finance capital) and states, and thus permits domination of political life by capital; that it generates crass and even unethical commercialization of things rightly protected from markets, for example, babies, human organs, or endangered species or wilderness; that it privatizes public goods and thus eliminates shared and egalitarian access to them; and that it subjects states, societies, and individuals to the volatility and havoc of unregulated financial markets.
Each of these is an important and objectionable effect of neoliberal economic policy. But neoliberalism also does profound damage to democratic practices, cultures, institutions, and imaginaries. Here's where thinking about neoliberalism as a governing rationality is important: this rationality switches the meaning of democratic values from a political to an economic register. Liberty is disconnected from either political participation or existential freedom, and is reduced to market freedom unimpeded by regulation or any other form of government restriction. Equality as a matter of legal standing and of participation in shared rule is replaced with the idea of an equal right to compete in a world where there are always winners and losers.
The promise of democracy depends upon concrete institutions and practices, but also on an understanding of democracy as the specifically political reach by the people to hold and direct powers that otherwise dominate us. Once the economization of democracy's terms and elements is enacted in law, culture, and society, popular sovereignty becomes flatly incoherent. In markets, the good is generated by individual activity, not by shared political deliberation and rule. And, where there are only individual capitals and marketplaces, the demos, the people, do not exist.
Shenk: It's easy to depict neoliberalism as a natural extension of liberalism, but you insist that the relationship is much more complicated than that. You illustrate the broad transformation by examining the intellectual history of homo economicus, a term whose meaning you claim has shifted radically since the time of Adam Smith. How has "economic man" changed in the last century?
Brown: You're right, the relationship is quite complicated, especially if one accepts Foucault's notion that neoliberalism is a "reprogramming of liberalism" rather than only a transformation of capitalism. Here are the simplest things we might say about the morphing of homo economicus. Two hundred years ago, this creature pursued its interest through what Adam Smith termed "truck, barter, and exchange." A generation later, Jeremy Bentham gives us the utility maximizer, calculating everything according to maximizing pleasure, minimizing pain-cost/benefit. Thirty years ago, at the dawn of the neoliberal era, we get human capital that entrepreneurializes itself at every turn. Today, homo economicus has been significantly reshaped as financialized human capital, seeking to enhance its value in every domain of life.
In contrast with classical economic liberalism, then, the contemporary figure of homo economicus is distinctive in at least two ways. First, for neoliberals, humans are only and everywhere homo economicus. This was not so for classical economists, where we were market creatures in the economy, but not in civic, familial, political, religious, or ethical life. Second, neoliberal homo economicus today takes shape as value-enhancing human capital, not as a creature of exchange, production, or even interest. This is markedly different from the subject drawn by Smith, Bentham, Marx, Polanyi, or even Gary Becker.
Shenk: You mentioned Foucault just now, and you devote two chapters to him in the book, where you also call Birth of Biopolitics-the volume that emerged from lectures he gave in the late 1970s on neoliberalism-a "remarkable" work of "extraordinary prescience." But he also comes in for a hefty amount of criticism. What do you think Foucault got right, and what did he miss?
Brown: What's amazing about Foucault's lectures is that he grasped neoliberalism as Europe's present and future in the 1970s-before Reagan or Thatcher were elected, and before the Washington Consensus. What's also extraordinary is his appreciation of neoliberalism as a form of political reason and governing that reaches from the state to the soul, and not simply as economic policy. Then there's simply the fact that Foucault is a fearless, deep, and profoundly original political-historical thinker, who probes archives or a single utterance with equal brilliance and imagination. These features make Foucault's lectures illuminating despite the fact that he is mostly discussing neoliberal ideas, not neoliberalism as it has unfolded over the past three decades.
But there are some distinctive gaps in Foucault's account of what neoliberalism is and does resulting from his allergies to Marxism at the point in his life when he's giving these lectures. For Foucault, as I said, neoliberalism is fundamentally a "reprogramming of liberalism," not of capitalism, and there is astonishingly little discussion of the latter. He is also largely indifferent to my own central concern, democracy, which was true across his work. So one takes the useful insights and then builds on them. It would be silly to be an "orthodox Foucauldian" on the subject of neoliberalism, or for that matter, on any subject.
Shenk: What about the politics of Foucault's analysis? There's been a lot of debate recently about whether he was so attuned to neoliberalism's rise because his own work was compatible with neoliberalism. What's your position on this?
Brown: Well, on the one hand, Foucault's degree of sympathy with what he was studying is not, for me, particularly important. The usefulness of certain historical accounts and theoretical formulations turns on their capacities for illumination, not on the theorist's political affinities. (No one who mines the history of political theory to think about our present can draw only from theorists whose affinities line up with contemporary progressive values. None would survive the test, and that's also a poor approach to learning from great minds.) Moreover, he didn't and couldn't have anticipated the neoliberal formations we are grappling with today. On the other hand, the idea that Foucault was deeply attracted to neoliberalism for its "emancipatory" dimensions strikes me as incompatible with a careful reading of his lectures where, among other things, he considers neoliberalism as a novel form of governing human beings that requires the individual, as human capital, to become a "portfolio of enterprises" and that makes us into both "producers and consumers of freedom." Foucault's signature theoretical move is to grasp human beings as produced by governing powers, not "freed" by them.
Shenk: Homo economicus is a fairly common term; less common is the notion you oppose it to, homo politicus. What's the genealogy of homo politicus, and how is it related to its more famous counterpart?
Brown: To understand what neoliberalism is doing to democracy, we have to return to the point that, until recently, human beings in the West have always been figured as more than homo economicus. There have always been other dimensions of us imagined and cultivated in political, cultural, religious, or familial life. One of these figurations, which we might call homo politicus, featured prominently in ancient Athens, Roman republicanism, and even early liberalism. But it has also appeared in modern democratic upheavals ranging from the French Revolution to the civil rights movement. Homo politicus is inconstant in form and content, just as homo economicus is, and certainly liberal democracy features an anemic version compared to, say, Aristotle's account of humans as realizing our distinctively human capacities through sharing rule in the polis. But it is only with the neoliberal revolution that homo politicus is finally vanquished as a fundamental feature of being human and of democracy. Democracy requires that citizens be modestly oriented toward self-rule, not simply value enhancement, and that we understand our freedom as resting in such self-rule, not simply in market conduct. When this dimension of being human is extinguished, it takes with it the necessary energies, practices, and culture of democracy, as well as its very intelligibility.
Shenk: Some of the major interpreters of neoliberalism, especially those who approach it from a Marxist perspective, depict it as a straightforward byproduct of 1970s economic turmoil and backlash against welfare states led by a revanchist capitalist elite. It seems like you're not satisfied with that interpretation. This is a big question, but do you have an alternative explanation for how we got here?
Brown: That's too long and complicated a story to rehearse here but I can say this. For most Marxists, neoliberalism emerges in the 1970s in response to capitalism's falling rate of profit; the shift of global economic gravity to OPEC, Asia, and other sites outside the West; and the dilution of class power generated by unions, redistributive welfare states, large and lazy corporations, and the expectations generated by educated democracies. From this perspective, neoliberalism is simply capitalism on steroids: a state and IMF-backed consolidation of class power aimed at releasing capital from regulatory and national constraints, and defanging all forms of popular solidarities, especially labor.
The grains of truth in this analysis don't get at the fundamental transformation of social, cultural, and individual life brought about by neoliberal reason. They don't get at the ways that public institutions and services have not merely been outsourced but thoroughly recast as private goods for individual investment or consumption. And they don't get at the wholesale remaking of workplaces, schools, social life, and individuals. For that story, one has to track the dissemination of neoliberal economization through neoliberalism as a governing form of reason, not just a power grab by capital. There are many vehicles of this dissemination-law, culture, and above all, the novel political-administrative form we have come to call governance. It is through governance practices that business models and metrics come to irrigate every crevice of society, circulating from investment banks to schools, from corporations to universities, from public agencies to the individual. It is through the replacement of democratic terms of law, participation, and justice with idioms of benchmarks, objectives, and buy-ins that governance dismantles democratic life while appearing only to instill it with "best practices."
Shenk: Undoing the Demos covers a sizable amount of ground in just over 200 pages, but, as your discussion of governance just now indicates, you also spend a lot of time with specific instances of neoliberalism in action. My favorite of these more focused studies is your extended analysis of Citizens United. What does that case tell us about neoliberalism more generally?
Brown: Progressives generally disparage Citizens United for having flooded the American electoral process with corporate money on the basis of tortured First Amendment reasoning that treats corporations as persons. However, a careful reading of the majority decision also reveals precisely the thoroughgoing economization of the terms and practices of democracy we have been talking about. In the majority opinion, electoral campaigns are cast as "political marketplaces," just as ideas are cast as freely circulating in a market where the only potential interference arises from restrictions on producers and consumers of ideas-who may speak and who may listen or judge. Thus, Justice Kennedy's insistence on the fundamental neoliberal principle that these marketplaces should be unregulated paves the way for overturning a century of campaign finance law aimed at modestly restricting the power of money in politics. Moreover, in the decision, political speech itself is rendered as a kind of capital right, functioning largely to advance the position of its bearer, whether that bearer is human capital, corporate capital, or finance capital. This understanding of political speech replaces the idea of democratic political speech as a vital (if potentially monopolizable and corruptible) medium for public deliberation and persuasion.
Perhaps what is most significant about the Citizens United decision, then, is not that corporations are rendered as persons, but that persons, let alone a people, do not appear as the foundation of democracy, and a distinctly public sphere of debate and discussion do not appear as democracy's vital venue. Instead, the decision presents speech as a capital right and political life and elections as marketplaces.
Shenk: You're clear that democracy is an ideal that deserves defending, but you're skeptical about actually existing democracy, which you describe as a system where "the common rage of the common citizen has been glorified and exploited." And you worry that matters could get much worse, with democracy as we know it giving way to "a polity in which the people are pawns of every kind of modern power." Do you see a tension between your tributes to democratic ideals and your grim assessment of its current state?
Brown: Democracy is always incomplete, always short of its promise, but the conditions for cultivating it can be better or worse. My point was that democracy is really reduced to a whisper in the Euro-Atlantic nations today. Even Alan Greenspan says that elections don't much matter much because, "thanks to globalization . . . the world is governed by market forces," not elected representatives. Voting has been declining for decades everywhere in the Western world; politicians are generally mistrusted if not reviled (except for Varoufakis, of course!); and everything to do with political life or government is widely considered either captured by capital, corrupt or burdensome -- this hostility to the political itself is generated by neoliberal reason. Thus, today, the meaning of democracy is pretty much reduced to personal liberty. Such liberty is not nothing, but could not be further from the idea of rule by and for the people.
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Left Flank
by Dr_Tad · November 1, 2010
In my review of John Quiggin’s Zombie Economics I started to develop a theme about the nature of neoliberalism that goes beyond his focus on a set of flawed economic ideas and their application:
So why do market liberal ideas persist despite being disproved in practice? Quiggin suggests a mixture of the influence of vested interests and institutional inertia among economists. Both are true, but they overstate the independent power of the ideas he is critiquing. His description of the history of policy responses to the crisis of the 1970s exposes a rapidly shifting theoretical terrain, more consistent with a desperate and pragmatic search for a solution to recession on capital’s terms. So under “really existing neoliberalism” the state never removes itself from economic life, it rather acts more aggressively for elite interests. Market mechanisms don’t get applied neutrally but to increase the exploitation of workers and increase profitability at ordinary people’s expense. And behind every mystification within neoliberal ideology is the drive to make the majority class pay for the restoration of the minority ruling class’s power and wealth.
Quiggin ends with a modest program for mainstream economics, one that is necessarily lacking in hubris because he doesn’t claim to have “the answer”. Yet he strongly implies that the ideas of market liberalism will eventually die out as a result of their practical failure (currently for him they exist mainly in reanimated, “zombie” form, hence his title).
In their recent paper “Postneoliberalism and its malcontents”, Jamie Peck, Nik Theodore and Neil Brenner argue that the nature of the neoliberal project is unlikely to have a “Berlin Wall” moment of final collapse, of the sort prophesised by everyone from Eric Hobsbawm to Kevin Rudd. They acknowledge “the free-market project is on the ropes”, but that this is not the same as there now being a simple path towards some clear new arrangement. They argue this is for three main reasons, related to the nature of the dynamic process of “neoliberalisation”.
First, attempts at post-GFC economic policy reconfiguration have seen “flamboyant denunciations of the follies of laissez-faire, delivered from right stage as well as left, coincide with desperate efforts to reboot some reformed version of the same system”. This is because neoliberalisation is a variegated and decentred process. It is also about managing crisis, displacing and postponing risk rather than eliminating its destructive effects.
Second, unlike the crises of state capitalist (Keynesian or Stalinist) growth models that opened the way to neoliberalisation, this time there is no alternative elite economic ideology awaiting its chance to take centre-stage. Instead responses have been largely pragmatic, aimed at defending and extending capitalist interests but without any clear endpoint in mind: “The crisis managers seem effectively to be flying blind, and occasionally will confess as much.” Indeed, the very same layer of technocrats who brought us the GFC are entrusted with fixing the mess, using largely the same toolkit and with no coherent ideological alternative to challenge their hegemony. The lack of alternatives can be seen not only with Quiggin, but in All That’s Left, a recent collection of essays on directions for the ALP. While claiming a postneoliberal orientation, it mostly fits the picture of “a harder-edged form of the revisionist accommodations and centrist triangulations fashioned by the likes of Blair, Clinton and Schroder during the 1990s.”
Finally, the authors see neoliberalisation as a “hegemonic restructuring ethos, as a dominant pattern of (incomplete and contradictory) regulatory transformation, and not as a fully coherent system or typological state form”. In some ways it cannot exist except in relation to the structures and policies it seeks to break apart and obliterate, developing as a “mongrel phenomenon” rather than being divided from them by an iron curtain. In this sense the current crisis might leave market liberal ideology discredited, but its practical (rather than theoretical) aspect may be what really survives in zombie form, most likely in as many different and specific permutations as it did before the GFC.
David Harvey has put the issue whether neoliberalism will survive the crisis well:
Does this crisis signal the end of neoliberalism? My answer is that it depends what you mean by neoliberalism. My interpretation is that it’s a class project, now masked by a lot of rhetoric about individual freedom, liberty, personal responsibility, privatisation and the free market. That rhetoric was a means towards the restoration and consolidation of class power, and that neoliberal project has been fairly successful.
Formulating an alternative to neoliberalisation, then, must start by penetrating its form of appearance in terms of ideology and policy choices. As valuable as critiques like Quiggin’s are, the solution is not an alternative repertoire of economic levers but a focus on the class nature of neoliberalisation. Such an approach implies the development of an alternative class project, a hegemonic practice from below.
Thanks to Gareth Dale for keeping me excited about zombie metaphors and for pointing me to the paper by Peck et al.
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04/27/2013 | Tyler DurdenIn a slight digression from the usual pure market-based discussions of Jeremy Grantham's perspectives, the fund manager addresses what is potentially and even more critical factor for the markets. As he writes, we are in a race for our lives, as our global economy, reckless in its use of all resources and natural systems, shows many of the indicators of potential failure that brought down so many civilizations before ours. By sheer luck, though, ours has two features that might just save our bacon: declining fertility rates and progress in alternative energy. Our survival might well depend on doing everything we can to encourage their progress. Vested interests, though, defend the status quo effectively and the majority much prefers optimistic propaganda to uncomfortable truth and wishful thinking rather than tough action. It is likely to be a close race.
Via GMO,
The Fall of Civilizations
The collapse of civilizations is a gripping and resonant topic for many of us and one that has attracted many scholars over the years. They see many possible contributing factors to the collapse of previous civilizations, the evidence pieced together shard by shard from civilizations that often left few records. But some themes reoccur in the scholars’ work: geographic locations that had misfortune in the availability of useful animal and vegetable life, soil, water, and a source of energy; mismanagement in the overuse and depletion of resources, especially forests, soil, and water; the lack of a safety margin or storage against inevitable droughts and famines; overexpansion and costly unnecessary wars; sometimes a failure of moral spirit as the pioneering toughness and willingness to sacrifice gave way to softer and more cynical ways; increasing complexity of a growing empire that became by degree too expensive in human costs and in the use of limited resources to justify the effort, until the taxes and other demands on ordinary citizens became unbearable, so that an empire, pushed beyond sustainable limits, became vulnerable to even modest shocks that could in earlier days have been easily withstood. Probably the greatest agreement among scholars, though, is that the failing civilizations suffered from growing hubris and overconfidence: the belief that their capabilities after many earlier tests would always rise to the occasion and that growing signs of weakness could be ignored as pessimistic. After all, after 200 or even 500 years, many other dangers had been warned of yet always they had persevered. Until finally they did not.
The bad news is that as I read about these varied scenarios – and I have missed listing several – they all appear plausible and each seems to be relevant to several earlier collapses of empires and civilizations both large and small. Very recently, one of these scholars, William Ophuls, wrote a new book, Immoderate Greatness (a quote from Gibbons’s Decline and Fall of the Roman Empire), with the subtitle Why Civilizations Fail. It is a straightforward summary and synthesis of all of the ways to fail in 70 small pages, yet with extensive notes and references. It is written in remarkably accessible, simple language and divides the causes of failure into six categories. Unfortunately, all six seem to apply to us today in varying degrees, and where one factor might be manageable – although often has not been – he makes the chances of our managing all six seem slight. It is persuasive and needs to be read. It takes about two hours.
William Ophuls’s conclusion is that we will not resist the impressive list of erosive factors and that, in fact, we are in the fairly late stages of our current civilization’s race for the cliff edge with nothing much to head us off. His study of history leads him to believe that civilizations are actually hard wired to self-destruct: programmed to be overconfident, to keep on pushing for growth until limits are overstepped and risks accumulated to the breaking point. His offer of good news is that after the New Dark Ages, when civilization again rears its head, presumably with a much smaller population, we will have acquired the good sense to be less overreaching, less hubristic, a lot humbler about growth and our use of resources, and more determined to live in balance with the natural energy we receive from the sun and the heat, food, and water with which we can sustainably be provided.
I have just two comments about our current problems. First, that there is one particular pressure this time that seems particularly serious: aversion to bad news. The investment business has taught me – increasingly as the years have passed – that people, especially investors (and, I believe, Americans), prefer good news and wishful thinking to bad news; and that there are always vested interests to offer facile, optimistic alternatives to the bad news. The good news is obviously an easier sell. Good news in investing in particular is better for business; good news on resource limitation is better for the suppliers of resources; and good news on climate change – that it basically does not exist and is even a hoax – is better for energy companies, among the biggest and most profitable of all companies. Historians have pointed out the bias against the need for change: there are always clear beneficiaries of the current state of affairs but the benefits of a changed world in contrast will look vague and uncertain to the likely beneficiaries. That is always the case. What is less common, although not unique in history, is what we have today: the near complete control of government by the powerful beneficiaries of the current system.
The second point is that although I find Ophuls’s argument well-reasoned and although I must acknowledge the strong possibility of a very negative outcome, I feel it is too pessimistic (which, sadly, is a rare occurrence for me on this topic). Yes, we are taking extreme risks with resource depletion and with the environment, especially concerning climate damage and ocean acidification. Yet I believe the case for the near certainty of our running off the cliff misses the existence of two extraordinarily lucky (and, one could argue, undeserved) gifts that were not available to any prior stressed civilization. They may arrive like the U.S. Cavalry, just in time to turn us away from the cliff edge. But at best, as Wellington is famously paraphrased as saying about the Battle of Waterloo, it will be a “damn closely run thing.” It will be the race of our lives.
Our Last Best Hopes: Declining Fertility and Improving Technology for Renewable Energy
Declining Fertility
The first of the two incredibly fortunate factors that might enable our current world to avoid at least partial collapse is declining fertility. Malthus correctly analyzed the main problem of our then history (in 1800): population had always kept up with food supply, leaving even successful societies only a few bad growing seasons away from starvation. He predicted that this would always be the case and he was wrong on two counts. The first is a short-term factor – only existing for 200 or 300 years and therefore irrelevant for the longer term of our species – and that is the increased ability to extract previously stored energy in the form of coal and oil. This hydrocarbon interlude will end either when that share of hydrocarbons that can be extracted economically is used up, or more likely when the tyranny of the second law of thermodynamics imposes its will: enough of the higher forms of convenient compact energy like coal and oil will have been converted into heat, waste, and especially carbon dioxide to ruin our climate in particular and our environment in general.
Malthus, however, completely missed declining fertility, a potentially very long-term and hence much more critical factor to the survival of our species. Neither he nor anyone else before 1960 even dreamed that we would voluntarily decide to have fewer children even as we became richer. In his day and until the early twentieth century, rich families routinely had eight or more children. Ironically, it has turned out that the same instincts that bring us the problems of excessive consumption and unnecessarily rapid resource depletion have also brought us the attitude that children are inconvenient and desperately expensive. Improved medical services that further allowed populations to explode now allow the confidence to have smaller families. Increased farm technology lowers the significance of the labor from many children. The most obvious drivers of lower birth rates, though, are the improved education of women and advances in birth control methods. The net effect of these factors is a change so profound that just a hundred years ago it was not even guessed at, and indeed population growth and fertility continued to rise until about 1960 – just the other day.
The following exhibits show the remarkable and promising data. The dashed horizontal line at 2.1 in Exhibits 1 through 4 is the fertility level required to have a stable population in the modern world under normal conditions. Exhibit 1 shows the remarkable drop in fertility in the richer East Asian countries, including China, with almost a fifth of the world’s population.
Exhibit 2 shows the drop in the larger and wealthier countries to an average level just below replacement, with the very latest update for U.S. fertility in 2012 dropping below replacement.
Exhibit 3 shows selected important and sometimes spectacularly unexpected examples. At the top of the unexpected list is Iran, which has dropped from a fertility rate of 7 – children per woman! – in 1960 to an almost unbelievable 1.6 today. Another remarkable example of a large Islamic country is Bangladesh, which has also fallen from 7 in 1960 to 2.2. This is extraordinary given their extreme poverty. The particularly important India, with its 1.2 billion people, has fallen from 6 to 2.6. This is quite remarkable in absolute terms, but given the previous two examples and given India’s pressure from overpopulation, it’s almost a disappointment.
Exhibit 4 shows the more serious disappointments. Yes, the rates have dropped in these countries, but their populations are still growing rapidly and most of them have intermittent food problems already. They are almost all in Africa.
Unless they and the world are lucky and they improve (perhaps with appropriate help from rich countries), we are likely to end up looking to the students of long-term civilizations as if we have had two separate systems: one in Africa, with failed states, poverty and malnutrition, and rapid population growth, probably having been left increasingly to cope on their own; the second in the rest of the world, with substantial and still growing affluence and with fertility below the replacement rate, forming a single market for resources and global trade in general, and trading as if they comprised one gigantic old fashioned imperial economy.
This remarkable decline in fertility is our last best hope, both from our civilization’s point of view as well as for the well-being of all of the life on our planet. Exhibit 5 summarizes the past data and projects the more optimistic end of the U.N. data for future global population. The world’s population is shown peaking around 2050 at just over 8 billion and then declining to near 6 billion by 2100. Ex-Africa, it reaches just under 6.5 billion in 2040 and declines to below 4 billion in 2100, back to where it was in about 1978. Africa is shown growing from about 250 million in 1950 to well over a billion today and, even under this relatively favorable outlook, continuing to expand to over 2.3 billion by 2100. The U.N.’s more pessimistic end of the range (not shown) has a continuing rise in population, but at a slowing rate, to 11 billion and beyond. At that level the stresses on global food and on global law and order, especially in Africa, will almost certainly be too great and Ophuls’s prediction will likely be correct. The lower population track, in contrast, holds out a strong hope of survival – that is, of maintaining a reasonably stable global civilization and continuing to improve the quality of the average life.
The return, therefore, to helping encourage a lower population everywhere is incredibly high. Yet little is done at an international level and indeed the issue is treated like a hot potato even by usually well-meaning NGOs. But we can do it, and my guess is that we will indeed succeed on this front. In the meantime it would be encouraging if economists, The Economist (not to pick on them but I tend to hold them to higher standards than others), and economic discussions in general would look out a few more years and stop discussing lower population growth as if it were a dire economic threat rather than our last best hope. Of course, as growth rates drop rapidly and populations quickly age, there is an added burden to workers of carrying more non-workers for one generation as the changes flow through the system. Then things stabilize again. This cycle can be ameliorated enormously by having older people extend their contributions and by facilitating the full participation of women in all countries. The ruinous alternative is to have an ever-growing population run off the cliff collectively. The economics industry has indeed done a particularly inadequate job on long-term sustainability in a world of finite resources. It is a good time for them to wake up to the problems we face on this front. Fortunately, individual decisions on fertility might well get the job done anyway, without any help from a potentially less blinkered and longer-term economic theory.
Renewable Energy
This brings us to the second remarkable gift, which involves a branch of the “cornucopian” optimism that I usually deplore: that the infinite human brain combined with technology will solve all problems. Yes, this is the same brain that brought us World War II, several thousand years of soil erosion, and the collapse of endless empires. An obvious generic weakness in this cornucopian argument is that it ignores our massive dependence on cheap energy. Trains and coal, cars and gas, and electricity and air conditioners and refrigerators in turn drove forward economic activity and the feeling of well-being (try being in Sydney on January 18, at 114.4°F, the hottest day in that seaside city’s history, without air conditioning!), but each came with a cost – an increased wave of energy use, almost all of it from our irreplaceable stores of oil and coal. Yet now, finally, there is an example of a great technological leap that for the first time is accompanied by less energy use – the technologies of solar, wind power, and other alternatives as well as electric grid efficiencies and improved energy storage.
For once, all of the innovations, corporate start-ups, and risk taking – the best part of the capitalist system – work to decrease our use of depleting hydrocarbons and therefore to increase our chance of stabilizing our civilization before the cliff edge is reached. Exhibit 6 shows in orange the truly remarkable decline in the cost of electricity from photo- voltaic cells. The only thing to compare it to is the Moore’s Law decline in the price of semiconductors.
That would indeed be a happy comparison, for perceived physical limits to semiconductor progress have been overcome time and time again. If the physical limits on photovoltaic efficiency, and hence its price, are similarly maneuvered in future decades, then the price of photovoltaic energy would guarantee us cheap and plentiful energy forever. Wind power may also be vital in less sunny zones, but there the cost reductions are, probably, mainly behind us. Exhibit 6 shows in green the early rapid declines in the costs of wind power mainly as improved technology allowed for increases in size and therefore efficiency. However, during the great leap in resource costs between 2002 and 2008, which I have been obsessing about for the last two years, the price of steel, cement, and aluminum from which wind towers are built (and all of which are incredibly energy-intensive), all rose from two to three times! Only the flat cost of human labor and improved turbines allowed for wind costs to rise by only 40% during this period. Our exhibit allows for only modest reductions in future wind costs, so that even by 2025 wind costs are estimated to be still higher than 2000, before the great surge in material prices. The remaining component of Exhibit 6 is the cost of coal-fired electricity.
For future estimates we have made a range. The lower end represents a modest 1% a year increase in coal prices and the upper end 4% a year, which is still a little less than the 5% annual average price rise for coal of the last 10 years. As can be seen, by 2025 to 2030 both solar and wind power are likely to be cheaper than coal. All of these comparisons, of course, are made without charging coal for “externalities” – those ills that the coal industry inflicts that we the people have to pay for: mountain tops ripped off and mountain streams polluted, acid rain, and particulate matter damaging health. Even more serious in the long run, the CO2 that is released by burning coal imposes the increasing costs of rising global temperatures: unstable weather for crops and rising costs of more extreme weather-related events. Coal is likely to be a hopeless choice for electricity generation in 20 years, as its price rises and those for alternatives fall, but fully costed for externalities it is an uneconomic choice today. Any potential investors today in a new coal-fired utility should ask some tough questions about “stranded assets” – cost-ineffective assets that will not have had the time to make a positive return on their investment before they will have become uncompetitive or illegal, caught between the falling costs of alternative energy and the rising costs of controlling for “externalities” – pollution and climate damage – that were once passed on as public costs but that will become steadily the responsibility of the emitter.
We have the time, technology, and money to completely replace nonrenewable energy in 30 to 50 years and, on average, in that time period such replacement will be economic (less so in the earlier years but by a wide margin later). As we do it, we will increasingly have much lower marginal costs, for what is often forgotten in these comparisons is that the high cost component in our two main alternatives, solar and wind, are up-front capital costs. Once constructed, the marginal costs of merely operating the wind and solar farms is far, far lower than the marginal costs of digging and shipping coal, even without those other health and environmental costs borne by the general public. You should be aware that when we calculate the costs of alternative energy projects, a high corporate discount rate is used to reflect the idea that to a corporation a dollar spent today to build a wind power project needs to be offset by a dollar and 10 or even 14 cents next year, or $8 or so in 18 years, to pay for the current loss of the use of money and to jump over the corporation’s hurdle rate for attractive investments. The required investment return (hurdle rates) for alternative energy investments is often higher than for traditional corporate investments partly because of unnecessary uncertainties still surrounding these projects: erratic government policies, rapidly changing technologies resulting in most projects having new features, and general unfamiliarity to providers of capital.
But what of the social benefits of these alternative energy projects? Personal average wealth and income has been rising by only 1% to 3% a year for the last 30 years, not 10% or 14%! Solving our long-term energy problems may not only be the most critical economic problem, it may also, as I argue here, be one of two most critical inputs into our future viability as a civilization. A discount rate that would reflect this significance should obviously, in a reasonable world, be far less than the 10% or 14% return needed by a corporation for such projects. I could make a case for a zero social return hurdle in this extreme case, but let us merely settle for a lower-than-average corporate hurdle rate – say, 5%. At a 5% real return (which, by the way, compares to an average delivered 7% real return on all corporate capital in the past), these wind and solar projects would have a much lower levelized cost of energy (the cost that reflects both operating and capital costs) than they would have at higher corporate rates – up to 40% lower. At those lower capital costs typical wind power projects would have a lower “levelized cost” than a typical coal-fired plant and be far ahead in 10 years. Solar farms would still need 10 years at the current rate of progress in cost reductions to catch up with wind power (although roof-top solar is getting to retail rates as we speak). The point to remember is that once the capital is found and the project is built, a wind or solar farm delivers far cheaper energy than a coal-fired utility plant, at around one-third of the marginal cost of coal (about 1¢ per kilowatt hour at a minimum of 3¢ for coal).
The impressions the average businessman carries in his head tend to be a moving average of the last five years’ information. Life is too busy to keep up with everything and usually five years is recent enough. But when there is a sudden shift in a year or two, average opinion is left sometimes far behind and that is exactly what has happened to solar energy and to a lesser extent to wind power. The current issue of Prospect magazine in England carries a story of an energy expert who invested three years ago in heavily subsidized home solar panels in the U.K. because doing so more or less guaranteed a 7.5% return (tax-free because the benefit comes in the form of lower bills), which for a low-risk investment was and is far better than anything else these days. You might suspect, the author argued, that the recent two-thirds drop in subsidies would end that game, but he points out that the installation costs of panels (adjusted for increased efficiency) have also dropped from £6,000 to £2,000 for a typical home in just over two years so that homeowners still receive a handsome return. You can just imagine how much easier it is to get a handsome return, without subsidy, at these new lower prices in areas where the sun actually shines – say, California, which receives almost twice the sun of London. (I’m stinging from a totally grey month in London.) At the other end of the spectrum, Duke Power was reported in Bloomberg as stating that the cost of solar panels to them had dropped by 75% in two years. These are truly remarkable shifts and now even modest steady progress from here will get the job done. Meanwhile in wind, the very latest large-scale wind farm in Australia was announced as having levelized costs lower than recent coal plants. All in a world where the cost of coal has doubled and oil quadrupled since 2000. This is not the same game that it was just three years ago.
Energy Storage
Energy storage is now the Holy Grail of environmental progress. The bad news is that progress in the past has been slow. The good news is that there are now scores, if not hundreds, of research teams working on this. Before wind and solar reach a large percentage of total electricity production, it is extremely likely in my opinion that some real cost progress will be made in storage (halving or so), especially at the retail level where a storage device, unlike a car battery, can be heavy, bulky, and relatively inefficient as long as it is cheap. Cheapness would deliver to the household electric market the potential for grid independence. However, let it be admitted that lack of expected progress in energy storage could materially slow down the rate at which alternative energy is adopted. It is therefore an area that particularly needs encouragement and good fortune.
Smart Grid
Over several decades, modernizing the grid to allow much wider and more efficient transfer would dramatically reduce storage needs. Reaching into homes and using temporary electric car battery and refrigerator adjustments, etc., (all by agreement and for a discount) would also reduce the problem. As back-up, natural gas electric generation is the ideal technology with perhaps some use of bio mass and urban waste. Coal for electricity generation is just not necessary today in the U.S., and the last coal plants anywhere may be built in the next 20 years.
Chinese Cavalry to the Rescue
On this topic, I have high hopes of China setting a brilliant example. They are embarrassingly long capital, accused of wasting much of their 50% of GDP capital investments on subway stops in the middle of farm fields, empty cities, and redundant regional airports. We, in contrast, are embarrassingly short capital, with capital spending having fallen to 16% of GDP and federal debt owed to the public having accumulated to over 70% of GDP and currently increasing at 6% of GDP per year. China could smooth out their potentially dangerous transition from 50% capital spending to a more reasonable 35% over the next 20 years or so by managing a giant program of alternative energy, including the smartest-yet national grid and broad-based research into storage, and all sources of renewable energy, including fusion. (As with the U.S., natural gas from fracking would help in the transition.) Such a massive broad- based program would potentially give them global dominance in the most important industries of the future and would relieve them of their greatest single worry: energy security. It would also relieve them of what will surely become their greatest societal irritant: the incredible air pollution of their major cities, which must already be reducing life expectancy in those cities by several years, as well as substantially increasing health costs. Best of all for them, it would leave them as the low-cost energy player in global trade, and if that, added to their lower labor costs, rising educational standards, rapidly improving infrastructure, and capital deepening, does not put the fear of God into U.S. capitalists, then it should.
It would be a blessing in disguise for the developed world and the U.S. in particular if China announced a 25-year program of alternative energy (enough of these paltry five-year plans!) that embodied a Manhattan project level of commitment. Within just a handful of years of watching them execute this program, we would calculate the competitive consequences and would be forced defensively to emulate them. We would surely discover that we are in fact still wealthy and can afford worthy projects with long-term payoffs and that our perceived poverty is more about leadership and perceptions than it is about reality. The U.S. is, after all, richer than it has ever been and is still the richest large country in the world. I have made a part of this point before. I am repeating it because: a) it’s very important; and b) the Chinese government has inexplicably failed to snatch up my idea. It would be a lay-up for them if they did. (Dear Chinese translator, a “lay-up” means “an easily achievable goal.”) In a world lacking U.S. leadership in energy sustainability, a truly major Chinese effort might be the difference between collective global success and failure. In this case it would be the Chinese cavalry heading us off at the cliff edge, but I’ll take any cavalry we can get.
(Postscript: recent, several leading Chinese cities recorded disastrous levels of pollution. On a scale where 30 is the barely safe limit, they hit over 300 several times. The Chinese government responded almost immediately, which was not a bad idea, because yearly reoccurrences of dangerous pollution will pretty soon guarantee that some smart but critical people will move out of these worst cities. Wouldn’t you? They upped their current target [already very aggressive by U.S. standards] for installed solar generation capability in just three years by 65%! Astonishing by any standard and currently politically impossible outside China. This new target means that they will have the equivalent in solar power of seven or so giant coal-fired plants, a very large absolute number anywhere except in China, where it is still dwarfed by coal plants. But, it is a down payment.)
Epilogue
The two favorable factors described, with luck and some improved effort and leadership, may buy us enough time to completely retune our agricultural system, for it will take many decades to change attitudes and build the infrastructure, training, and research to move to complete agricultural sustainability. That in turn would allow us time in a stable environment to address the problem that will no doubt take the longest time of all: addressing our failing supplies of metals. Yes, we are blessed with large supplies of aluminum and iron ore, although, like agriculture and civilization itself, their usefulness to us is completely dependent on the availability of cheap energy. More to the present point, affordable supplies of most other metals, some very useful, will run low this century and must be replaced by organic alternatives, which process will need all the time and research that success with the other factors might be able to deliver.
Suspended over this close horserace between destructive and regenerative forces are the wild cards of rising temperatures, slowly rising sea levels, ocean acidifi cation, and, above all, destabilized weather for farming. Even if the cavalry arrives in time to prevent the main disaster – a rolling collapse of much of civilization – much damage is being done and will definitely continue to be done to the environment and biodiversity as global temperatures continue to rise. But with improved behavior, we may well buy enough time to save our own species and most of what we really value. In my opinion, all of the other factors in this mix are reasonably susceptible to data and analysis. The scary part of the climate issue is that by its nature there can be no precision on extent or timing and, consequently (as I have mentioned before), scientists, in their desire to avoid being seen to exaggerate, end up systematically underestimating the case.
The January 23 New York Times science section, for example, had an article on rising sea levels that said that the authors – scientists all – “share an emerging consensus that the increase in ocean level in this century will probably be on the order of three feet, perhaps as much as six feet,” requiring many millions to evacuate. “But many scientists,” they add “are plagued by a nagging fear… that their calculations will turn out to have been too conservative, and social stability will eventually be threatened.” “At every point as our knowledge increases,” Dr. Raymo, the leader of the project, is quoted as saying, “we’ve always discovered that the climate system is more sensitive than we thought it could be, not less.” [Emphasis added.] To be perhaps a little cruel, a statistician might suggest that after serial underestimations, expectations might be adjusted.
The bottom line is that if we put our minds to it we can overcome normal inertia and abnormally powerful vested interests that oppose necessary change. Our population is likely to start declining in a few decades, slowly but surely, and the fertility rate of 1.8% or less would allow global population to fall back more or less gracefully by 2200 to a probably sustainable level of 4 billion, particularly if we sensibly encourage its decline. Important progress in alternatives is certain. Other scientific progress, especially in computing power will also help. Whether we can move fast enough on these fronts and at the same time reduce the output of greenhouse gases to avoid going off the cliff is simply not knowable for certain, but every minute saved and improvement made, betters our odds. Let the race begin.
Correction: Natural Gas Forecast
I am bullish about the longer-term price of natural gas and in my personal account I am long the futures several years out. At five years out, the implied price is $4.50 mcf. However, in the Q&A section of a talk I gave recently I was quoted as saying that in five years the price “would have tripled.” This implies a price, then, of $12. This is either a misquote or a misspeak. What I intended to say and have said before was that from the low last year the price would be likely to triple in 5 years: that is to about $6 or $7 mcf, far above the assumed $4.50 then, but far below the number in the quote.
Society
Groupthink : Two Party System as Polyarchy : Corruption of Regulators : Bureaucracies : Understanding Micromanagers and Control Freaks : Toxic Managers : Harvard Mafia : Diplomatic Communication : Surviving a Bad Performance Review : Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime : PseudoScience : Who Rules America : Neoliberalism : The Iron Law of Oligarchy : Libertarian Philosophy
Quotes
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Bulletin:
Vol 25, No.12 (December, 2013) Rational Fools vs. Efficient Crooks The efficient markets hypothesis : Political Skeptic Bulletin, 2013 : Unemployment Bulletin, 2010 : Vol 23, No.10 (October, 2011) An observation about corporate security departments : Slightly Skeptical Euromaydan Chronicles, June 2014 : Greenspan legacy bulletin, 2008 : Vol 25, No.10 (October, 2013) Cryptolocker Trojan (Win32/Crilock.A) : Vol 25, No.08 (August, 2013) Cloud providers as intelligence collection hubs : Financial Humor Bulletin, 2010 : Inequality Bulletin, 2009 : Financial Humor Bulletin, 2008 : Copyleft Problems Bulletin, 2004 : Financial Humor Bulletin, 2011 : Energy Bulletin, 2010 : Malware Protection Bulletin, 2010 : Vol 26, No.1 (January, 2013) Object-Oriented Cult : Political Skeptic Bulletin, 2011 : Vol 23, No.11 (November, 2011) Softpanorama classification of sysadmin horror stories : Vol 25, No.05 (May, 2013) Corporate bullshit as a communication method : Vol 25, No.06 (June, 2013) A Note on the Relationship of Brooks Law and Conway Law
History:
Fifty glorious years (1950-2000): the triumph of the US computer engineering : Donald Knuth : TAoCP and its Influence of Computer Science : Richard Stallman : Linus Torvalds : Larry Wall : John K. Ousterhout : CTSS : Multix OS Unix History : Unix shell history : VI editor : History of pipes concept : Solaris : MS DOS : Programming Languages History : PL/1 : Simula 67 : C : History of GCC development : Scripting Languages : Perl history : OS History : Mail : DNS : SSH : CPU Instruction Sets : SPARC systems 1987-2006 : Norton Commander : Norton Utilities : Norton Ghost : Frontpage history : Malware Defense History : GNU Screen : OSS early history
Classic books:
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Last modified: August 28, 2016
