Shock and Awe on the New York Stock Exchange – Picture courtesy of Brokers with Hands on Their Faces:

“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”Kenneth Boulding, economist.

“This sucker could go down.” – George W. Bush, 9/25/08

Capitalism requires growth. A system that requires growth cannot last forever on a planet that is defined by ecological and social limits. Capitalism is therefore fundamentally unsustainable – sooner or later it will run up against those limits and the system will stop functioning. At this moment we are in the midst of a crisis which is calling into question the future of this system. Now is a perfect opportunity to envision a new way of living in the world that can meet human needs while also respecting the needs of the planet. It is time to build this new world.

The current economic crisis which began in 2007 is unlike any previous crisis faced by global capitalism. In earlier downturns there remained a way to grow out of it by expanding production – there were new resources and energy supplies, new markets, and new pools of labor to exploit. The system just needed to expand its reach, because there was plenty of money to make outside its existing grasp. If we study what lies at the root of today’s crisis, we will discover very real limits to growth blocking that path this time. From extreme poverty alongside excessive consumption to exhaustion of resources and ecosystems, the system’s capacity for growth has reached a breaking point. The present economic recession might not be recorded in the history books as the final chapter of capitalism. But the ongoing crisis illustrates that like Humpty-Dumpty, the capitalist system is broken and there’s no sense continuing to use all the King’s horses and all the King’s men to try to put it back together again. It would be wiser to spend those resources developing an economy that works better for our communities and our planet.

Contrary to what may be reported in the news, this is not merely a financial crisis. Professor Richard Wolff in his excellent video Capitalism Hits the Fan explains that this crisis did not begin in the financial markets and it hasn’t ended there. When the corporate media cast blame for the recession on abstractions like “toxic assets,” “collateralized debt obligations,” “credit default swaps,” or focus discussion of the problem on the crimes and errors of individual investors and firms, they obscure the true depth of the crisis. This is a crisis of the system itself, meaning the only solution is a total change in the structure of the economy.

Capitalism cannot be “fixed,” it must be replaced. Despite unprecedented efforts on the part of the King’s men, who have spared no expense on his recovery, Humpty remains in critical condition today and his long-term prospects are not looking good. Journalist and former Goldman Sachs executive Nomi Prins has been tracking the extent of the Wall St. bailout, and reported in December ’09 that the US government has in the past year committed over $14 trillion to buy up worthless debt from troubled banks. (Putting this in perspective, the entire yearly economy of the United States is also $14 trillion.) Despite these unprecedented giveaways, businesses continue to close their doors or downsize their workforces, pushing the official US unemployment rate over 10% as of November ’09. But this number only includes those jobless workers who are currently looking for full-time employment. A more accurate figure, including the underemployed and those discouraged from actively seeking employment would be 17.5%, or nearly 1 of every 5 American workers out of a job.

While the US Congress quickly gave out trillions of dollars to banks and corporations facing hardship, it has thus far created no new job training or unemployment programs to ease the suffering of the millions of workers losing their incomes. Nor does it appear willing to create a public health care program for the nearly 50 million Americans now without access to a doctor. At the same time the US government continues to drag its feet on the issue of climate change, recently joining with China to “wreck” the Copenhagen climate summit (in Bill McKibben’s words) that was attempting to curb global greenhouse gas emissions. Such favoritism towards banks and corporations while neglecting the basic well-being of the public and the planet reflects the sickness of capitalist priorities. In this system, profit is valued more highly than human and non-human life.

Capitalism requires growth, and according to an article published in New Scientist, growth is “killing the Earth.” The article included the below graph, showing the size of the global economy (GDP) skyrocketing over the last fifty years. But this tremendous growth in economic output corresponds to an equally rapid growth in damage done to the global environment. Forest loss, fisheries depleted, ozone destruction, species extinctions, carbon dioxide emissions, and the rise of global temperatures all race towards the top of the page, suggesting that if capitalism were able to recover from its current fall and continue on a path of endless growth, there soon might not be any planet left to live on.

Capitalism is killing the planet. Click the image for more detail.

Capitalism is killing the planet. Click the image for more detail.

Luckily for Earth and all those who call it home, there are limits constraining capitalism from further growth. These limits are both ecological and social because they originate both from the planet and communities of people. The ecological limits include shrinking supplies of water, soil, uranium, and fossil fuels like oil, natural gas, and coal. The most important limiting factor is oil, which fuels much of the capitalist economy, including 95% of current transportation. Global capitalism today could not exist without oil, but worldwide oil production appears to be near its ultimate maximum, or “peak.” Peak oil doesn’t mean that there is no more oil, just that the oil remaining underground is deeper, heavier, more remote, and more expensive – so it cannot continue to be pumped at the same rate as before. As demand for oil continues to grow, this supply limit is creating a shortage that cannot be overcome by existing alternative fuels, which has sent oil prices soaring. And without the cheap and plentiful fuel it needs to grow, capitalism as a way of organizing society will become obsolete.

Social limits are the other side of the story, and here we see a conflict between the wealthy elite who manage global capitalism and everybody else whose needs are not being met by the system. The growth of the system therefore tends to benefit only the prosperous few, and people all across the world are working together to resist it and build a new world. Capitalism’s hunger for growth reached its highest level with the doctrine of corporate globalization (or “neoliberalism”). Corporate globalization meant allowing the free transfer of wealth across the entire planet, uniting the world in one giant market so that banks and corporations would face no boundaries to maximum profits. Naomi Klein explains in her excellent book The Shock Doctrine how in the pursuit of profit, elites reduced wages by moving factories to poorer countries, privatized social services like public water systems, and dismantled laws that protect the environment. This doctrine threatened jobs in wealthy countries like the US while simultaneously polluting and pillaging poor countries in Latin America, Africa and Asia, often called the Global South.

The injustice of corporate globalization provoked a powerful response called the Global Justice Movement. Starting in the 1990s the Global Justice Movement mobilized millions of people to take action against this project by making it impossible for elites to hold meetings without facing overwhelming protest. Corporate schemes were discredited and institutions promoting them were driven from many countries that had previously embraced them. Latin America reacted especially strongly and moved in a much more progressive direction, epitomized by the election of Evo Morales, the first-ever indigenous President of Bolivia and an outspoken critic of capitalism. Today, the defeat of the project of corporate globalization is most apparent in the irreparable damage done to its flagship institution, the World Trade Organization (WTO), whose negotiations have totally collapsed under the refusal of Global South nations to compromise further. The lesson of this upsurge of powerful social movements is that the system cannot rule us without our consent. By joining hands and naming its injustices, regular people can defeat capitalism’s increasingly desperate attempts to expand its exploitation of communities and the planet.

As capitalism faces its limits, a new economy based on fundamentally different ecological and social relationships must replace it. Will this new reality will be more democratic, more free, more just, and more sustainable than life under capitalism? We can’t know. The answer will in large part be determined by what we do. Will we succumb to fear over the loss of wealth or privileges? If so we may allow ourselves to be led into something far worse. This path could end at a kind of neo-fascism – a militarization of society to keep Humpty going, regardless of the cost. Or conversely will we be guided by love, of life, of each other, and of ourselves? If so it is entirely possible to build a new way of life that restores humanity to a healthy balance with nature, while reinvigorating the core values that make life meaningful – freedom, democracy, justice and sustainability. We could develop a society that values us, based not on the profits of a few but on meeting the needs of all, planet included.

To reach this destination we must cultivate ways of viewing the world that are both common-sense, or based on our lived experiences and inner knowledge rather than imposed by outside formulas, and radical, meaning going to the root and discovering the hidden forces beneath the surface of reality. A common-sense radicalism would recognize the immense potential that lies within human beings, such as our ability to create, to listen, to live in balance with our surroundings, to solve problems collectively, and most importantly: to change. Such a perspective would necessarily question any system that hinders or restricts such natural abilities, and seek to liberate human potential so that we can better care for our planet and our communities.

A common-sense radical approach should also inform us that we cannot heal others until we begin to heal ourselves, from the social and ecological trauma we have endured under capitalism. The first step on that healing journey is to educate ourselves so we can name the problem as capitalism. Naming the source of the trauma opens up our imagination to the immense possibilities that lie beyond it. Our imagination is the source of all real hope for the future. Only we can unleash it.

[Your feedback on these ideas is very welcome! Please share your thoughts by commenting on the Discussion page.]

Next: Part 2. What is Capitalism?

Synopsis Outline:

  1. Is This the End of Capitalism?
  2. What is Capitalism?
  3. Why is it Breaking Down?
  4. What Comes After Capitalism?
  5. Conclusion: The World We Are Building