That's part of the answer, but there are some fundamental systemic problems to overcome…and a profound change in human expectations. In the early days of exploration and settling of North America, fortunes were made in timber and gold. Land was cleared and the rich soil's nutrients were squandered. Dust bowls, polluted streams from mining operations, clear-cut forests. But people got rich. The bounty seemed infinite.
Eventually things settled down to a more systematic exploitation of oil, minerals, fresh water and timber. Businesses grew, propelling the economy; a lot of people got rich, and a lot more made a decent living. The 20th Century was the American Century. Our economy propelled us from a second-tier power in 1900 to the pinnacle…the richest, most powerful nation the earth has ever seen by the end of the millennium.
Our ascendancy was powered by Capitalism, and the stock market was the propellant. Companies issue stock, people buy it with their savings, and the money is used to expand the businesses. If a business grows and prospers, the stock price goes up, and investors can sell, pocket the profit (less taxes, of course) and look for the next investment opportunity. What is a company's stock worth? Whatever someone is willing to pay for it, and a whole new industry emerged…financial services. Investment "experts" analyze businesses, study their operations, their balance sheet, estimate future earnings, and issue reports that investors use to select their investment choices. There are many measures of "value." The most common is price-to-earnings ratio. (P/E) A low P/E could mean that a stock is "undervalued," and a good investment, whereas a high one suggests that it is "overpriced." But the earnings history and future prospects also affect the price, and both are subject to honest error or deliberate exaggeration.
So, the secret to successful investment is to buy low and sell high…and maybe collect some dividends in the interim. But this presupposes that there is another investor who is willing to buy at that higher price. And that would require an analyst to conclude that the stock was still undervalued. If that is true, the seller shouldn't sell it, should he? Or he should ask a higher price. Meanwhile, the new buyer expects the stock price to continue climbing until he decides to sell it to yet another buyer who expects the same thing. The whole thing starts to sound like a modified Ponzi scheme, where each fool buys hoping to sell to a bigger fool later. The last guy holding the paper, the greatest fool, is the loser.
Stock market gurus would answer that the market is made by buyers and sellers who have different opinions of the value of a stock, and that a sale happens when a buyer and seller happen to agree on a price. So the market "value" of every stock is established by numerous transactions, and every buyer expects the company to grow and the stock price to increase. Otherwise, he would be foolish to buy it. And that brings me to the point of this long description of how stock markets operate: That expectation of growth, unending growth, is, ultimately, unrealistic. Eventually, there will be a greatest fool.
Why is it unrealistic? It's always been that way, you say. Yes, so far in the history of our nation, growth has been continuous…growth in the population, growth in the economy, growth of the businesses in which we invest. But accumulating evidence indicates that we are reaching a "tipping point," a crucial time, not just in the history of the United States, but a climax in the history of man's ascendancy on the planet. Population experts say that we are in "overshoot," far above sustainable population levels. Moreover, we are rapidly depleting the easy energy sources, fossil fuels, and the combustion of them is damaging the ecosphere in countless ways. Minerals and fresh water are being depleted at ever increasing rates.
The long-term prognosis is obvious. Reduced population, reduced consumption, and as a result, a near-zero-growth economy. You can argue about when it will happen, how large the population can grow, how long the nonrenewable resources will last, but that only changes the date when the inevitable happens. Eventually, we will reach a limit. We can do it gracefully, limiting population and consumption, taking control of the process of adjustment, or we can continue headlong, like a runaway train, and the results will be dire. The business community is beginning to recognize this. Businesses are "going green," limiting energy use and ecosphere pollution in their processes. There is a lot of talk (and a little action) on development of renewable energy sources. But the realization and acknowledgement of the limits to growth have yet to be factored into the investment equation. Stocks are still priced as if growth will go on forever.
Once this sinks in to the investment community, that the expectation of growth is no longer realistic, stock prices are going to go through a truly monumental "correction," because most of the perceived value of stocks is the expectation of growth. Take away the lure of capital gains, and stocks will be worth a fraction of their former value.
We have been living in a Capitalist fool's paradise. We save a little money during our working life, invest it, and retire with a nest egg that far exceeds our savings. That growth in our savings was fueled largely by capital gains in the investments, which were in turn fueled by growth in the underlying businesses and the expectation of further growth. What happens when that expectation is gone, or greatly reduced?
The result will be that capital gains, the process that has built fortunes in this country over the past hundred years or so, will be largely (if not entirely) a thing of the past. Our savings will grow more slowly, mainly from dividends and interest on loans…if we can find anyone who will borrow money in a static economy. Mostly, our savings will be…our savings, and that's all.
Life is going to be a Helluva lot more modest for most people. Lower energy usage, lower consumption of everything. Do you really need a two-ton 300 horsepower car that gets 15 mpg to go to the grocery store? Future generations won't have one. Do you really need to blast around the world in jet airliners? They will be the first transportation mode to go the way of the dinosaurs. Life is going to get a lot quieter and simpler. Bicycles are going to make a big comeback! And walking. That won't be a bad thing at all for a nation suffering from a pandemic of obesity-related diseases caused by our sedentary lifestyle.
Geez, what a gloomy guy, you say. Not at all. Life will be different, but not necessarily less rich, rewarding or interesting. Riding bicycles in a local park can be just as much fun for the family as driving two hundred miles to the Colorado River, towing a 500 horsepower speedboat behind a three-ton SUV, to do a little water-skiing…with earplugs to muffle the roar from the engine. Appreciation of literature, music and the arts will flourish. Our current obsession with the accumulation of "stuff" will dissipate. Recycling will be largely replaced with re-use.
What about technology, you ask? It has always bailed us out before. Somebody will come up with an abundant, cheap, nonpolluting energy source. That could happen, but we still have to eat, and growing food takes land space. The more people there are, the less space that is available for agriculture. Land area is limited. Two thirds of our planet is covered with water. Okay, what about aquaculture? Sure, we can do "fish farming." And desalinize water. We undoubtedly will do all of those things, even to sustain a smaller population than we have now. But all of those things just tinker with the final numbers. Those numbers have a definite limit, and we are almost certainly over that limit right now. So growth is over. Get used to it.
Capitalism may survive the coming changes, but it will not be your father's Capitalism, wild and free. By necessity, it will be a process that is leashed and tethered and constrained in ways that are unthinkable today. That doesn't mean that innovation and hard work won't be rewarded. They will, but not with fabulous material riches. Future innovators will be rewarded with the satisfaction of knowing that they have contributed measurably to the well being of the planet and its living occupants.
But that will require a change in human nature, won't it?
Yes, and I am optimistic that it will happen.
AFTERWORD
I didn't mention the idea that humans may eventually develop the technology to enable interstellar travel. If that were to happen, then we would not need to remain constrained by the limitations of our planet. We could hopscotch our way across the Cosmos, and spread colonies on any habitable planets we found…assuming the local residents didn't object. But that's almost like believing in the Tooth Fairy…or God…to rescue us from our predicament. It's fine to pursue that goal..or wait for salvation...but in the meantime, we had better take care of matters here on this planet…just in case the miracle doesn't happen and Earth ends up being our permanent home.
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Comments: 53
Until now, the "winners" who've gained control of governments are the ruthless, the arrogant, the greedy. Kind and generous leaders are damn few in history. Will that change? Maybe.
I hope this generates the long and deep discussion it deserves. I'll keep in touch.
Why shoud capitalism, or just the way we distribute work and resources, not evolve to keep up with changing conditions?
If Darwin taught us nothing else, we should have learned that failure to change and adapt is a sure path to...oblivion.
but I'm the dreamer's grandchild, I'm the optimist, I'm the idealist, the believer in Utopian concepts.
It could happen that our next leaders might be visionaries, the Congress could receive a majority of optimists and visionaries as well in the next round of Congressional elections. These people could thoughtfully reposition the US, and its capitalists, toward a vision of doing no harm while truly supporting the consumers who create the wealth.
Education on the invisable and down side of capitalism, like your excellent article, must be taught in schools from the middle school on. Non-denominational ethics must be taught again in colleges and even high schools. Gradually, the pendulum will swing back to honor-- in business and in the community. It will become unfashionable to receive these mega-contracts in the billions for simply running a company. Thoughtfulness and frugality will return to human existance at all levels.
Wha-what, oh, sorry. I guess I was dreaming again.
the world won't go without kicking and screaming. in a place like America, we'll be lucky if we can get them to go at ALL. too long with too much.
(i couldn't've written it better, Bert. always a pleasure.)
If we keep on goin' on the current path, it's gonna get ugly someday. I don't know how far off it is, but it's only a matter of time. That's why we need to address the problem now.
We're all guilty, Dena. We're late...but maybe, hopefully, not too late.
Truth be known, that is exactly how world business operates, it is the very nature of the capitalistic system that you have described, the one that relies always on growth, expansion, new SUCKERS coming in at the very bottom, exponential growth ... and the relatively few that began it all, have repositioned their own profits for maximum return at every conceivable level ... to such a degree are they strategically invested, that they actually control almost all of it ... with the assistance of the think tanks they own ... (and of course the politicians that write the laws of the land in their favour, owned by them also).
And of course the ability to fool and deceive the general public (us) who are required to make it function as well as it does for them.
Back to the dire warnings and the laws against you and I starting a pyramid operation for anything ... without of course registering first and then jumping through regulatory hoops so that we can be taxed and controlled by our "masters" ... they wouldn't want any Johnny come lately newcomer getting too big for his britches and ruining their cushy "system" ... control of the lower levels is necessary to the freedoms of the very top.
Well, as I have been saying for years, the very top DOES EXIST ... in anonymity as best as they can keep it ... they buy up their agents with their wealth and power derived from that, with those below kept ignorant of what goes on above, such inside knowledge substituted with great sums of money, prestigious titular positions with great perks (not to mention the fear of loss of all such if one does not play along) and probably even the promise of further advancements towards the very top ... greed rules.
Our own politicians are even comparably ignorant of the depth of this power and control ... but those that suspect it the most are probably the ones that have (been) "bought" into it already ... the others have not a chance in comparison.
There is a Spiritual/Metaphysical saying; "as above so below" that equates to equals but OPPOSITES ... life imitating art ... the manifested objective physical reality imitating God's (subjective to us) Spiritual reality ...
The hidden esoteric deeper metaphorical/allegorical meaning of the Jewish Star of David (which most all are ignorant of) is just those/these two PYRAMIDS super-imposed as reversals of each other ... TWO PYRAMIDS ... one with it's apex denoting the controllers of the world schemes we have both, especially me, alluded to ... where the controllers of this worlds wealth do it in secret and with deceit, taking advantage competitively, in a very SERIOUS way, of those below them who are fooled into trusting those above them ... without ever even really knowing who they are or what they are conniving to do to us ... the "world way" ... the "fallen" way that religions speak of as existing "after" life ... truth be known, a hell on earth ... at least for those at the bottom being suckered into a form of servitude that amounts to a slavery in effect. A relative "heaven" on earth for those controlling the whole thing.
The OTHER PYRAMID stands for the beneficent ONE of the TRUE SPIRIT, such a HEAVENLY one with the very APEX BEING GOD even ... relative and comparable to each other ... one that actually deals in transparency, not invisible to a truly spiritual person, but of course pretty much so to the average "worldly" person, especially those at the upper levels of the earth/world apex mentioned, the objective ones.
I will go no further with this for the moment, but there are truths and wisdoms in these concepts that could help folks to begin to understand the relationship between our present reality and that which we would hope to have IF we could only begin to believe it possible ... I assure all that it is possible, an actual Utopia does await us ... but FIRST we must awake from the nightmare we are in which our leaders call the American Dream ...
If we do not soon wake up on our own ... we damn well sure will when it self destructs all around and down upon us ... as it surely will eventually ... maybe a lot sooner than anyone thinks.
IMnsHO.
And God will surely supply them with an increased reality there of other beings who think much like them ... who will probably be even more powerful, possibly even nastier in temperament ... at which point such earth leaders (and their minions who have "followed" them) may well get back some of what they have handed out down here on earth) ... remember please ... there really is a spiritual interconnection, of all karmically through eternity itself, and what goes around DOES come around ... there are no free lunches and no such things as "accidents" in that greater picture.
Make your (spiritual) decisions for a better future before it is too late for you this time around ... unless you want to be one of the minions still working for these same leader types later when the karmic chickens come home to roost on your head ...
I think you've got something here, Bert, but we're lucky in that other parts of the world are already understanding this line of thinking. Both Europe and the Far East tend to think in terms of generational needs and that is pushing them to act earlier than we are.
In a way, our unfettered capitalism will work. Either we'll change things and do better earlier than we'd like or we'll be crashing while others are weathering the storm because they already know what's coming. We still don't realize how much more energy per capita we use than everyone else. That will have to change and, more importantly, we'll have to find out that there are some things money can't buy. Including resources that no longer exist.
Stephanie,
The US has 5% of the population, and uses 25% of the energy, creates 25% of the greenhousoe gases, and who knows how much of the world's other pollutants.
But other nations are catching up with us, notably China. with four times the population. Everybody wants the American lifestyle, and you can't blame them.
Other countries are emulating us with stock markets and growing consumerism, driving us all toward that brobdignian trainwreck. (isn't that a great word?)
Thanks for your thoughts...and for your considerable effort in expounding them here.
I am not sure I share your view that there is a vast conspiracy of shadowy figures controlling things. It is possible, but it may be that the "system" of Capitalism just ends up causing oppression of the poor and downtrodden, and enrichment of the oligarchy by its very nature! It is basically an amoral system. Whatever it takes to generate growth and profits! If laws get in the way, try to change them...or sidestep and ignore them, bribing whomever to ignore the violations. That is what must change, so that the earth and its inhabitants are the primary concern, or at least a factor in the business equation.
Individuals are trying here, too, but we don't yet have the government being part of the solution and most big business, at least to my eyes, still going through the motions more than really doing something. There are, fortunately, a few exceptions.
Some Chinese cities have the worst air pollution in the world.
They are still in the early stages of industrialization...where we were a hundred years ago. Growth is the main goal.
I get as involved in these concepts as I do because my whole philosophy has come to require my looking at the totality of all possible potentials to best understand the present and how it has come to be what it is ... such a "look" requires me to contrast what I see as the very best qualities of a God on one hand, with what the metaphoric opposite of that would be on the other hand ... only then can I come up with the balance needed to understand the truth of here and now ... but of course, to each their own ... :-)
We in the west have set the standards and others are just following through ... the world standard has become manifested wealth and the power which it can purchase ... that IS the world standard so far ... IMnsHO.
And THAT is the standard that NEEDS CHANGE ... ing. I Am Sure of THAT !
In this country we've got to stop patting ourselves on the back because China has nearly as much/barely more of a carbon footprint as we do and fix ourselves. Or that Europe has centuries more pollution than we do. Or that otherwise starving people are using fertilizers that we've been using for decades that we no longer think are good for the environment. If we want the world to be better, we'd best start with our own mess. Believe me, that will be work enough.
When we're DOING something more constructive than pointing fingers, maybe we can nudge the rest of the world along. Right now, and I think that goes for China and India, too, we're falling behind. Those areas at least acknowledge what's coming.
What needs to happen is that the "good life" is redefined...so that the emphasis is not on consumption and consumerism. We are the worst offenders, and can't throw rocks at anybody else on this.
Finger pointing is of little use unless it is attempting to tell a truth and that truth comes to be believed so that the "root of the problem" can be so defined so that we the people can finally recognise just what needs changing ... a world of smoke and mirrors only adds to the confusion and gives the ones selfishly benefiting the most, something to hide behind ... just as they wanted it and do their best to keep it going ... for now.
There is enough blame to go around for sure, but as it is some relatively few who are getting better than a free ride at the expense of the many ... we need to wake up to that fact, greed and selfishness abound because so many know NOT of our common spiritual interconnection ... something even so many of our most religious deny in their selfish dualistic thinking of them VS us ... human nature is rather grim and selfish, ego oriented without true spiritual realization ... the latter is all that can truly save us all. IMnsHO.
You msy be right that most intelligent people know what is coming, but many on the Right are in apparent denial. They think the solution is to just drill more wells, strip-mine the tar sands and oil shale, get every last possible gallon of gasoline, no matter how destructive the process. They also scoff at the idea of global warming.
Are they sincere? Or just looking to line their pockets further?
Sorry about all of the allegory and metaphor, but that better says what plain English seldom allows peoples minds to accept ...
I am willing, if necessary, to be considered just a kook claiming the sky is falling, there is no ego involvement with what others "more intelligent" will think of me ... if only one listens and benefits the world in some way, I will have accomplished something ... IMnsHO.
The perception, reinforced by media and fiction, that scientists and the like are fame-grabbing, intolerant, unwilling to entertain a different viewpoint does a apply to a tiny fraction of those true experts I know - less than 5% - but that leaves 95% maligned or, worse, confused with the non-expert noisy folks with no real expertise.
That saddens and frustrates me.
And the same thing applies to other social interactions also, most notably lately in our press coverage of the election process ... the press coverage of everything is highly editorialized in the direction favourable to the rich and powerful who actually own so much of that which informs us all ... by their design because they have larger plans than we are privy to and which could not work for them if we were aware of their intentions ...
Sorry if that sounds off the wall, scary and ominous to most people but it is a dark truth that needs to see the light of public inquiry ... IMnsHO. ... and that is my "mission", ineffective as it seems to be ... :-)
So thanks for the explanation, that sounds a whole lot better than a sigh of condescenion that I took it for ... something I often get, and rightly so from "normal" perspectives ... we do probably agree more than we realize ... I would hope anyway.
Bert's basic premise is that capitalism requires continual growth to survive, and that the planet must have a limit to the economic activity it can sustain. What that limit may be is really hard to discern. It's instructive to remember that the world's greatest thinkers in the 18th Century believed that the absolute population limit for a modern city was about 1 million. The limiting factor was disposal of horse manure. A city of more than a million people would have to expend so much energy disposing of horse crap that further growth would be impossible.
The shortcoming in their thinking was not so much that they couldn't imagine a new energy source that didn't rely upon horses, but that they couldn't imagine that the planet's capacity to absorb the byproduct is limited.
What is today's horse crap, and how do we get around it? Is it pollution from energy production? And if we do get around that limit, what's the next one?
Yes, we may solve the pollution problem with clean, renewable energy sources, but transportation...or being able to live close to work and limit the NEED for transportation...is still a problem in large urban areas.
I believe our capitalistic economy may be going through analogous stages. The industrial age was our acquisition stage - making THINGS, like manufacturing centers, cities, interstate highway systems.
For the last 40 years, we've enjoyed the fruits of that acquisition, with our advanced standard of living. Maybe the electronic age we're in will let us relax into non-manufacturing activity, retreat to the smaller population centers you mentioned, earn livings in a knowledge/information economy - still captialistic, but not depleting natural resources.
Is the United States entering "old age," to be replaced by younger, more dynamic nations?
While I'd like to hope, I think we are witnessing how true your statement is, Bert. Capitalism, by its nature, rewards the few, not the many.
Debra...Capitalism rewards ingenuity, innovation, selfishness and ruthlessness. As I said before, the system is amoral. And, as you say, it definitely tends to divide the wealth unequally. Some of that is just human nature, though, and can't be blamed on Capitalism. We are inherently a competitive, quarrelsome, selfish lot. That's why we survived and climbed to the top of the predator pile. Now, the question is, can we change...and change our system...to survive in a new world with different rules.
Thanks to all of you for your insights!
JP
As Ben Franklin said in his famous writings in Poor Richard's Almanac:
"Got helps those who help themselves."
Thanks for your perceptive comments. It's true that many past societies have failed. If you would like to read an interesting book on the subject, pick up a copy of "Collapse," by Jared Diamond. The book attempts to analyze the reasons for past failures, and to apply the lessons from them to our current predicament.
And I agree with you that the explosion of humanity is almost like a cancer, growing unchecked by the "natural" constraints that have limited populations of other animals.
But ultimately, there will be natural constraints. The planet and its ability to support life are finite.
If the US is going to get out of this mess, we need to get our business back into this country in a large order, then the money will flow again. Not only that, but we need the new thinkers to be released to develop more industry to handle the situations of today. Then the investors will have new markets, and more stable markets to work with again.
THe issues the Democrats and the Republicans want to keep throwing in as fixes to the economy are jokes that will not help us at all.
There are many reasons businesses are moving overseas. One is lower labor costs...would you like our workers to take pay cuts to, say, $1/hr, like they make in China?
Another reason they move is to avoid environmental laws. Would you like to see us scuttle all our air, water and ground pollution laws to encourage them to come back?
We are already running huge budget deficits to support stupid wars. Meanwhile, our infrastructure is crumbling, in desperate need of hundreds of billions of dollars for road and bridge repair. So you think we should cut taxes on business? Then how do we pay for everything? There are only two ways that I can think of: Raise taxes or drive ourselves even deeper into debt. So if we don't want to increase debt, our choice is to either raise business and personal taxes...or lower business taxes and raise personal taxes A LOT.
Tell me which you prefer.
But all of this has absolutely nothing to do with the subject of this two-part article which addresses the problems that mankind is going to face in the future...overpopulation, pollution and depletion of natural resources. Capitalism, with its emphasis on growth and profits, will require even MORE regulation, not just here, but all over the world if we are to survive.