An Economic System Incompatible With Life on Earth. Time to Move On to Something Better.

The only thing that troubles me about this is having to say it yet again - our addiction to perpetual exponential growth is not survivable. It is lethal. It will end us. This road only leads one way. That's what happens when you have just one, very finite planet, a single biosphere, Spaceship Earth.

Think of it as a lifeboat that's designed to hold 30 people. Maybe it can hold 50 people if the water is calm enough but our leadership, political and corporate, insist they can squeeze 90 or 100 in it. That's where we're at today.

Jason Hickel, an anthropologist at the London School of Economics, thinks it may be time to revive an idea that traces back to Chicago in the 1930s.

When it comes to global warming, we know that the real problem is not just fossil fuels – it is the logic of endless growth that is built into our economic system. If we don’t keep the global economy growing by at least 3% per year, it plunges into crisis. That means we have to double the size of the economy every 20 years, just to stay afloat. It doesn’t take much to realise that this imperative for exponential growth makes little sense given the limits of our finite planet.

Rapid climate change is the most obvious symptom of this contradiction, but we’re also seeing it in the form of deforestation, desertification and mass extinction, with species dying at an alarming rate as our consumption of the natural world causes their habitats to collapse. It was unthinkable to say this even 10 years ago, but today, as we become increasingly aware of these crises, it seems all too clear: our economic system is incompatible with life on this planet.

...The most obvious answer is to stop using GDP to measure economic progress and replace it with a more thoughtful measure – one that accounts for the ecological and social impact of economic activity. Prominent economists like Nobel Prize winner Joseph Stiglitz have been calling for such changes for years and it’s time we listened.

But replacing GDP is only a first step. While it might help refocus economic policies on what really matters, it doesn’t address the main driver of growth: debt. Debt is the reason the economy has to grow in the first place. Because debt always comes with interest, it grows exponentially – so if a person, a business, or a country wants to pay down debt over the long term, they have to grow enough to at least match the growth of their debt. Without growth, debt piles up and eventually triggers an economic crisis.

Hickel believes that debt, or rather an economy in which currency is based on debt, is the culprit.

This might sound a bit odd, but it’s quite simple. When you walk into a bank to take out a loan, you assume that the bank is lending you money it has in reserve – money that it stores somewhere in a vault, for example, collected from other people’s deposits. But that’s not how it works. Banks only hold reserves worth about 10% of the money they lend out. In other words, banks lend out 10 times more money than they actually have. This is known as fractional reserve banking.


So where does all that additional money come from? Banks create it out of thin air when they make loans – they loan it into existence. This accounts for about 90% of the money circulating in our economy right now. It’s not created by the government, as most people assume: it is created by commercial banks in the form of loans. In other words, almost every dollar that passes through our hands represents somebody’s debt. And every dollar of debt has to be paid back with interest. Because our money system is based on debt, it has a growth imperative baked into it. In other words, our money system is heating up the planet.

His solution is to switch to a debt-free currency.

Instead of letting commercial banks create money by lending it into existence, we could have the state create the money and then spend it into existence. New money would get pumped into the real economy instead of just going straight into financial speculation where it inflates huge asset bubbles that only benefit the mega-rich.

...This is not a fringe proposal. It has been around since at least the 1930s, when a group of economists in Chicago proposed it as a way of curbing the reckless lending that led to the Great Depression. The Chicago Plan, as it was called, made headlines again in 2012 when progressive IMF economists put it forward as a strategy for preventing the global financial crisis from recurring. They pointed out that such a system would dramatically reduce both public and private debt and make the world economy more stable.

What they didn’t notice is that abolishing debt-based currency also holds the secret to getting our system off its addiction to growth, and therefore to arresting climate change. As it turns out, reinventing our money system is crucial to our survival in the Anthropocene – at least as important as getting off fossil fuels. And this idea is already beginning to gain traction: in the UK, the campaigning group Positive Money has generated momentum around it, building on a series of excellent explanatory videos.

I think Hickel may be reaching a bit in his argument that a change in economic systems is the secret to arresting climate change. The reform model he champions could contribute significantly to changing our lethal extraction, production, consumption, waste cycle that is indeed harming the planet but it won't be a magic wand. Where I cannot disagree with him is his observation that our current economic system is incompatible with life on Earth.

The Lethal Cult of Growthism

Even though the political spectrum has been compressed into the hardtack of neoliberalism there remain at least notional differences between left, centre and right in our national body politic.  Yet if there is one reason for us to reject the lot of them, it's their obsessive embrace of perpetual, exponential economic growth.

Canada's political parties, or the tattered remnants that we know today as Conservative, Liberal and New Democrat, are merely following a "it's the economy, stupid" script that guides the political leadership in most, if not all, Western countries.  The Guardian's Zoe Williams explores growth-focused politics in Britain and you may find what she has to say applies very much to Canada.

The big idea of the three main parties is the same: not capitalism, or neo-liberalism, or social democracy – but growthism. This term was coined by the author Umair Haque to describe the pursuit, above all other things, of economic growth. Never mind who it benefits, who gets left behind or what it destroys; never mind if its practices are unfair or unsustainable: if the numbers go up, everyone is happy, and if they’re not happy, give them a tax break.

If they’re still not happy – maybe because they don’t earn enough to warrant a tax break – dismiss them as failures (if you’re a Conservative); boost their income with money borrowed from somewhere else (if you’re Labour); or promise to raise taxes on the rich by trivial amounts, knowing this is a promise you’ll never be called upon to keep (if you’re a Lib Dem).

Many ordinary people hate growthism: from the doctors heckling Jeremy Hunt at the Royal College of GPs last week, to the midwives going on strike for the first time in their 133-year history; from the Ukip voters who blame it all on the EU, to the Mumsnetters who just want politicians to be people with “authenticity”. They hate it not because it’s rightwing or leftwing, not because it lets in too many foreigners or creates inequality, but because it is not a worthwhile endeavour in itself. It’s just not worth the candle.

...Green party membership is up 45% this year, over 20,000 for the first time – Natalie Bennett, the party leader, highlights a surge in Young Greens of 100% since March. But if the Greens haven’t captured the whole of the progressive side, it is because they are seen to answer only half the problem. As illustrated by the political pressure group Compass and the thinktank New Economics Foundation, current politics fails, and will always fail, to meet two challenges: climate change and inequality.

I have watched in dismay as the party I once supported gradually, over a period of years, parted company with its progressive element and their once recognized values.  Even as I disengaged from my former party I was shocked to see the New Democrats also slip their moorings in a shameless quest for power at the expense of principle. 

If you listen to them now they sound like three parrots sharing a shit-stained perch, squawking endlessly "growth, growth, growth."  They're oblivious to the very world we live in and the changes that are rapidly overtaking us.  They're incapable of meeting the challenges that beset the lives of most of us.   Harper used to smear Ignatieff, claiming he was in it for himself.  They all are - Harper, Trudeau and Mulcair - and that's why we must accept at some point and sooner rather than later, that we have to get free from this political caste.

At this point it might be useful to repost a YouTube video clip from the past of David Suzuki giving a useful explanation of why exponential growth of the sort cherished by our political class is, in a word, suicidal.