How modern economics causes both inner and outer climate change

| 1st April 2008
It’s the battle of the century. In one corner, the Economy – big, bloated, greedy and growing. In the other, the planet Earth – fragile, finite and fighting back.

We are the referees who can change the game, and when Earth wins, we all win. Jonathan Rowe kicks off this series of articles with the view that it’s not only the carrying capacity of the planet that is running out, but also of its people.

It is a chronic and overriding concern of politicians in the West to bestir the growth of this thing called ‘the Economy’. That term sits heavily in the public mind with the dead weight of assumption. Rarely do we stop to consider what exactly it means, what it is and – most importantly – what it is for. Those questions would set free a debate that has long been repressed but can’t be much longer.

The original Greek meaning of the word ‘economy’ was the prudent management of the household. It had to do with the wise mustering of resources for the purpose of wellbeing. But the concept has been co-opted by the modern notion of economics, which has nothing to do with wisdom or wellbeing. Rather it has to do with that part of life transacted through money, and its central concern is the perpetual increase of this.

It is understandable that such increase could once be equated with wellbeing. When Adam Smith wrote The Wealth of Nations, life was hard, the world vast and the supply depot of nature seemed without limit. Railroads and factories were opening new vistas of output, along with a euphoric sense of the possible. That production led to wellbeing... Well, where else could it lead? How could goods lead to anything but good?

More than two centuries later that assumption no longer works, and not only for environmental reasons. The connection between wealth and weal, goods and good, has become increasingly frayed.

The question – the what of economics, as opposed to the how much – seems glaringly obvious, and yet to the professors and their amanuenses in the media it cannot arise. Their entire system of belief is premised upon the eternal beneficence of stuff – and stuff equivalents called ‘services’. There is no need to look past the abstractions of the economic mind – output, growth, production, standard of living, all that – because whatever lies beneath them must be, by definition, good.

When buying lags there is no possibility, therefore, that people generally have enough; still less that they have begun to be bedevilled and depleted by what they have already. The model cannot tolerate that. We always need more – that’s GDP and ‘growth’. We need always to produce this ‘more’ with less work – that’s ‘productivity’.

The what makes no difference, just as long as there is more of it. To put this another way, there is a growing disconnect between economics and economy – between the autistic maths of output on the one hand, and the intelligent mustering of resources to meet human need on the other. Increasingly, individual and social dysfunction has become necessary for ‘the economy’ to function.

Can anyone look at the increase in things such as junk food, video violence, mobile phone chatter, addiction, traffic, clutter and pills upon pills – all the products of a ‘healthy’ economy – without wondering just what it is that politicians are stimulating when they say they are going to ‘stimulate’ the economy?

From external to internal

There are two main critiques of the prevailing model. The first deals with distribution. A capitalist system (or perhaps any industrial system) has a built-in tendency to accrue benefit at the top. Thus the state must step in to spread the wealth around. The beneficence of the wealth is a given; the problem is that too much of it ends up in the wrong hands.

That’s fine as far as it goes, but what happens when wealth is no longer conducive to a ‘sound, healthy or prosperous state’? Even in its extreme form, in which the machinery of production itself belongs to the state, this critique ends up transposing the progress narrative of the market in that direction. As somebody once said, ‘Turn Adam Smith upsidedown and you still have Adam Smith.’

The more recent critique is ecological. It focuses on the embedded assumption that the supply depot of nature is limitless, and that a market will always conjure new resources into being as old ones run out. Ecological economics tries to remedy this fallacy through the price system. It uses taxes, fees and the like to provide the price ‘signals’ that the market lacks, to push people to conserve resources that otherwise would run out.

Again, fine as far as it goes. Ecological economics is far better than the kind we have now. But it is still economics, in that it assumes the eternal beneficence of output, only with ecological costs factored in. So we get organic Ritalin. Mobile phones ringing everywhere but with special shields to protect users against cancer. Solar-powered videos in the back seats of hybrid SUVs that ensure parents and children never talk with one another. People so busy turning out recycled stuff that they don’t have time for their families and communities.

There could be ecological accounting throughout the economy and it still would not be economic in the larger sense. Ecological economics deals with ‘externalities’, the unintended offshoots of activity that otherwise is presumed to be productive and benign. The car is the product, greenhouse gases the externality.

It is revealing of the mentality of economists that they regard the health of the atmosphere as ‘external’ to the central activity of life. The problem no longer is just that, however; it has penetrated into the realm of internalities – that is, the impact of this consumption upon those who are party to and supposedly benefit from it. The car is a problem not just because it pollutes, but also because of the way it precludes walking, isolates people from one another and disfigures cities so that such isolation is the norm.

Internalities are a forgotten dimension of the growth debate, which has focused almost entirely upon the limits in the external world – peak oil, for example, and the capacity of the atmosphere to absorb our gunk. But it is very possible that we will reach the limits in ourselves before we even get close to those.

The culture of need

Milton Friedman, the fundamentalist of the free market, said that the word ‘need’ when used in the context of economics is ‘always a fallacy’. Within the perimeters of his own belief system, he was right. Economics deals not with need but with ‘demand’: the desire to buy plus the means with which to do it. The buying is the key; what drives it is irrelevant. The corollary, not often stated, is that people must be in a constant state of lack and want. No matter how much we have, we must want still more. Textbooks say economics is the ‘science’ of the ‘allocation of scarce resources’. Resources must always be perceived as scarce in order to be economic.

Friedman missed the point. Need really does matter, but the need in question begins not with individuals but with the ‘economy’ as a whole – an economy ‘in need of need’, in the words of John McKnight of Northwestern University in Chicago. We serve by wanting, and this makes demands not only on the natural habitat but also on us. For the machine to keep going, capacities must become incapacities, ease must become dis-ease, selfsufficiency must become dependency and social function must become dysfunction.

The result is an extractive industry that is everywhere and yet unnamed. Both society and the self must continually be mined for new forms of deficiency and new veins of need. Mining begets depletion, and this happens in many dimensions of experience, the most obvious of which is perceptual. Prosperity, as conventionally defined, requires continual conditioning to the belief of lack. Poverty must be redefined upward so that more people feel that they suffer from it.

The means of this conditioning, advertising, has come to fill practically every nook and cranny of conscious space. In the US, schoolchildren are now subjected to it on their buses, in their hallways and even in their textbooks. We are immersed in ads to such a degree that we start to become numb, so advertisers have to hit us harder, and then harder again.

But need is not simply a message that occupies space; it has become the governing principle in the design of space. Shopping malls are the obvious example, but suburbs too were conceived as spatial goads to buying. Get people out of urban apartments and into larger homes to furnish. Get them out of range of mass transit so they will have to use cars. In the 1920s, Herbert Hoover, as US Secretary of Commerce, actually promoted suburbs as Petri dishes of consumption and need. There should be a shopping centre, he said, within half a mile of every house.

Most transportation systems in the US – from the early programmes of ‘internal improvement’ to the railroads, urban trolleys and interstate highway system that followed – have been aimed less at serving existing needs than at creating new ones.

As with the design of space, so too with products themselves, from car bumpers that don’t bump to inkjet cartridges that resist refilling. Economy means products that fill needs; economics requires products that create new ones. Plastic is the ideal product for economics because it is so hard to repair. Break something and you have to buy again.

This culture of need drains people financially and emotionally. It accounts for the prodigious increase in consumer debt. Worse still, need-creation has entered a grim new phase where the stuff we buy creates real problems that more buying seems necessary to address.

A prime example is food. Food is where markets started, and today it shows what the current version has become. It is supposed to ‘maintain life and growth’, according to the Oxford Dictionary, but the foods most promoted now are the ones least conducive to this. People eat them and get fat. The resulting coronary problems, obesity and diabetes lead to medical bills of $100 billion a year in the US; the National Health Service spends at least £500 million.

Americans spend another $35 billion on diet and weight-loss remedies, including pills to suppress an appetite that advertising (more than $20 billion worth) has stoked. They spend $15 billion on health clubs and $3⁄4 billion on liposuction to vacuum out the flab. You could feed the world’s hungry on what Americans spend to rid themselves of the effects of eating too much of the wrong kind of food.

In the charming euphemism of the economics trade, this is a ‘virtuous circle’: one form of consumption begets another in an unceasing quest up a mountain of delight. In reality it is a treadmill, an iatrogenic spiral in which the supposed remedy to a problem becomes itself a generator of more problems.

Iatrogenesis is a medical term that describes disease induced by a supposed healing process, but increasingly it applies to the economy at large. The automobile is a prime example. It is supposed to solve a problem – transportation – but as more cars are sold traffic gets worse and transportation becomes a bigger problem.

Americans burn close to $9 billion a year in petrol sitting in traffic and going nowhere. In the UK, drivers spend an extra £2 billion every year because of cheesy bumpers that turn fender-benders into major repair jobs. Meanwhile the bad air contributes to respiratory problems: asthma treatment alone costs more than $11 billion a year in the US; car wrecks give rise to more than $32 billion in medical bills.

It is no accident that, according to Business Week magazine, the entire increase in jobs in the US since 2001 has come from the medical industry. On current trends that industry will produce 30 to 40 per cent of the new jobs over the next 30 years. ‘We have to spend our money on something,’ shrugged Robert E Hall, an economist at Stanford University, to a reporter from the New York Times.

One need is as good as another as long as there are more of them. We must become sick so that the economy – as conventionally conceived – can become well.

Childhood is rife with these iatrogenic spirals. The function of children in economics is to play host to them. Junk food begets tooth decay, obesity and diabetes. A hyperkinetic media environment contributes to attention problems that are diagnosed as ‘disorders’ in need of pharmaceutical ‘intervention’ at a cost of more than $1 billion a year in the US. A study in the UK found expenditures on these drugs for children and adolescents is likely to increase 10 times over from 2002 to 2012.

Teen magazines play on the body image insecurities of girls, with the result that anorexia and associated problems have become epidemic. Anorexia and bulimia are diseases of obedience to the conflicting messages directed at these girls – to consume with abandon and yet to be svelte. The cycle of binge and purge becomes a literal acting-out of this; a representation of an economy that is like the beast in Dante’s Inferno, who ‘can never sate her greedy will; when she had fed she’s hungrier than ever.’

The internal climate

What happens to the individual body and psyche happens also to the supportive structures of family and community.

It is one of the strange paradoxes of this economy of ours that people feel lonely when they are wired and connected, and empty and depressed when they have so much. A survey by USA Today a while back found that 25 per cent of Americans say they have no-one they can confide in. Depression is epidemic and stress has become a trademark affliction of a supposedly prosperous age – and prosperity is supposed to bring ease, not disease.

How could this be? When you look at what the so-called prosperity actually consists of the answer is not hard . We are dealing with an epidemic of market-related disease. The same forces that are making the atmosphere sick are making us sick as well – and not just because of the physical effects upon our bodies. There is something deeper at work, a kind of interior equivalent of climate change that could open up a whole new dimension to the battle to stop the exterior kind.

To most people, climate change is distant and abstract. It is an issue that appears to belong to experts who argue over parts per million and arcane models few can understand. Interior climate change is different. We don’t need experts to tell us we are stressed out and depleted – financially, emotionally and socially – and this makes the problem immediate and personal.

To see that climate change is in here as well as out there is to make real the argument that solutions can enrich our lives rather than impoverish them – that indeed, these solutions are things we’d want to do anyway. It can open the way to nonmarket ways of meeting real needs – common gathering spaces and traditional main streets to help deal with loneliness, for example, rather than counselling and drugs. A big obstacle to action has been the belief that it would come at the expense of our ‘standard of living’. To see that this standard is actually a treadmill of need is to put that argument to rest.

The realisation that the language and metrics of economics disguise dysfunction as prosperity would help open the way to better ones. The policy people would have to measure results rather than simply output – ends rather than supposed means. They would have to assess the productivity of the food and automobile industries for example in terms of the health and transportation they provided rather than the way they do now, in terms of the stuff turned out per hour of work. The Gross Domestic Product (GDP) would go back to what it was intended to be – a measure of industrial capacity, not economic performance.

This next economics will be informed by genuine economy, reflecting an understanding of the difference between health and sickness, value (from the same root as valour) and price. It will seem so obvious that students of the future will wonder about the benighted souls who could have thought any other way.

Jonathon Rowe is a contributing editor  at Washington Monthly and YES! magazins, and is a Fellow at te Tomales Bay Institute. He is also co-director of West Marin Commons in Point Reyes Station, California, US

This article first appeared in the Ecologist April 2008

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