A hundred years ago, markets ruled: fortunes were made, workers abused, bubbles blown. The Austrian School of economists, led by Ludwig von Mises, said this was fine: despite temporary messiness, the market knows best.
But the messiness of markets was unacceptable to socialists, some of whom led a revolution in Russia to establish the first state-controlled, planned economy.
The catastrophes of the Great War and The Great Depression led to the ascendancy of John Maynard Keynes, who argued that even capitalist economies need regulation to avert manias and subsequent implosions.
Keynesianism then reigned, as Britain, the US, and most other countries adopted regulations on banking, finance, and industry, in many cases nationalizing railways and other central features of the productive economy.
Meanwhile, rival economist Friedrich von Hayek quietly plotted the Austrian School’s revenge, the occasion for which was offered by stagflation and labour unrest in the 1970s. Von Hayek, who had toiled in obscurity, was now the man of the hour; his acolytes Margaret Thatcher and Ronald Reagan promised to show the way back to prosperity: government was the problem and... Read More...
The contraction of the global economic system bodes nothing but good for global ecosystems. Growth is dead – long live sustainability
Banks are teetering. Car companies are on life support. The dollar is rising in value, not because anyone has faith in the US economy, but because other currencies are shedding confidence even faster. Chinese factories are closing by the thousands. Store shelves in Russia are bare.
Meanwhile, oil demand and prices are falling. People can’t buy fuel if they don’t have money, and most consumers have less real money in their pockets than they recently did.
The oil price has now fallen below the cost of bringing a new marginal barrel into production – but that new barrel won’t be needed for some time. Meanwhile, depletion continues, production declines accumulate and investments in new production capacity are not being made. Call it capacity erosion.
The worldwide financial crisis, together with the decline in available energy, means that we have seen the final year of aggregate world economic growth – ever. This is a statement... Read More...
During the past weeks, the world’s media have been transfixed by the convulsions of the US and global fi nancial system. At stake are billions in bail-outs and trillions in derivatives. The viability of banks and currencies is threatened, and ultimately the savings and investments of hundreds of millions of ordinary people.
The news from the environmental front is just as terrifying: this summer saw the second-highest Arctic icecap melt-rate (after last year’s record), and Russian scientists observed the large-scale release of super-potent greenhouse gas methane from thawing Siberian permafrost. How is the average person to judge the relative importance of the fi nancial and environmental news?
Of course financial turmoil has real-world consequences for people. Families that were formerly middle-class may now be forced to learn what poverty feels like. However uncomfortable, though, this kind of economic dislocation is inevitable, given the nature of our economic system. During the 19th century, the world’s industrial nations endured a depression, currency collapse or financial panic at least once every decade or two. The most recent general depression, during the 1930s, was followed by war and a period of relative stability (and furiously paced, fossil-fuelled growth). Sweden,... Read More...
It’s hard to learn much or do much about sustainability without getting your hands dirty.
True, global problems of resource depletion and climate change entail some high-level thinking. We need to understand some important numbers: 350 parts per million of CO2 (the atmospheric target necessary to avert catastrophic climate change); 5 per cent production decline rate in existing oilfields (what must be overcome each year to forestall the inevitable peak of global oil output). We need skills in analysis and persuasion.
Inevitably, all of this requires much time spent in front of computer screens. However, while we attend to these technologies and abstractions, we are much more likely to succeed in our ultimate goal of building sustainable culture if we are also grounded in the most basic of activities – obtaining food directly from the Earth.
Reading has taught me a lot. Gardening has taught me as much or more. Often, these lessons tend to be ones that sound trite when put in words: stay humble; don’t demand too much too fast;... Read More...
Climate change is a problem of fossil fuel dependency, and solving it requires reducing that dependency quickly and dramatically.
From a policy standpoint, however, climate change is hard to address. Because the worst of its impacts may come decades from now, its solution is framed as a moral imperative: we should reduce fossil fuels for the environment and future generations. Many policy-makers genuinely want to do the right thing, but when a choice arises between climate protection and economic growth, growth wins nearly every time. Because 85 per cent of world energy comes from fossil fuels, it is hard to find a way quickly to end their use without a severe reduction in energy and a contraction of the economy. Any politician campaigning for economic contraction faces a tough battle.
The peaking in production rates of oil, coal and natural gas presents a different problem. Again, it is one of fossil fuel dependency, but in this case, instead of a sink (or pollution) dilemma, it is one of source (or scarcity). Fossil fuels are finite. Depletion ensures that the rate of extraction of these... Read More...
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