Economics of the Future: Winning the Future

[This is the second of two related posts. The first one is directly below.]

In this review of two books--both Marxian views of contemporary economics-- in the London Review of Books (February 3, 2011), Benjamin Kunkel articulates his own ideas on what economics can tell us about our present and future, based in part on these books.

I'm not going to review his review but simply jump to what I understand as his basic argument and conclusion, and then to the conclusion I draw from that. The problem capitalism faces is having too much money (money it can't invest because markets are already saturated so there's no point in making more stuff), which throws the producer-consumer system out of whack, showing up first of all as decreasing profits. For awhile recently, that surplus went into unreal estate and other fictitious financial fields, but we know what happened with all of that.

Part of the problem--and this is where Marx comes in--is that capitalism is not used to dealing with the fact that labor has to be paid enough to be consumers of the products it makes. There always exists "the fundamental antagonism between capital and labour, with their opposing pursuits of profits and wages..." But even with strong labor unions and relatively enlightened capitalism,"the antagonistic nature of class society nevertheless prevents such a balance from being struck except occasionally and by accident, to be immediately upset by any advantage gained by labour or more likely by capital."

So that's not the entire answer, nor could it be, because there's still the problem inherent in capitalism--the whole idea is to make more money on the stuff you make than you spend on producing it, and the surplus is often way more than even the grossest plutocrats can spend (which is one reason that corporations are sitting on two trillion bucks while unemployment is a shade under 9%.)

In the past that surplus went into huge investments, sometimes by corporations but quite often the much bigger investment projects led by government: "Examples on a grand scale would be the British boom in railway construction of the 1820s, the Second Empire modernisation of Paris, the suburbanisation of the US after World War Two, and the recent international pullulation of commercial and residential towers..."

Now add the huge factor that Marx didn't figure on, and that even most contemporary economics ignores: the ravaged Earth. "In the recently published Ecological Rift: Capitalism’s War on the Earth, John Bellamy Foster and his Marxist co-authors refer to the identification by a group of scientists, including the leading American climatologist James Hansen, of nine ‘planetary boundaries’ that civilisation transgresses at its peril. Already three – concentrations of carbon in the atmosphere, loss of nitrogen from the soil and the extinction of other species – have been exceeded. These are impediments to endless capital accumulation that future crisis theories will have to reckon with..."

Add to that Peak Oil and you've got problems on a scale that threaten to wreck not only the endless growth mandated by classic capitalism, not to mention its habitual predation, but any chance at the "steady-state" economy the world would otherwise be evolving towards, at least as an alternative to economic suicide.

Now this is about where Kunkel leaves off. He offers no prescriptions. But to me they are obvious: that surplus goes into massive investments necessary if civilization has any chance of transitioning into the future more or less intact. The ravaging of the planet means that there are places for that surplus to go, stuff to invest in, that just happens to be stuff we need in order to survive. They include the kind of investments in a clean energy industry that President Obama is sponsoring in his "Winning the Future" initiative, which are similar in kind if not quite up to the scale that the leaders of China are instituting, among others.

They have to be bigger, but they can't stop there. Investments are required in the means to reduce and virtually eliminate carbon pollution, and control other greenhouse gases. Investments are required in infrastructure of all kinds--physical and organizational--to cope with the inevitable effects of the Climate Crisis that are in the cards, due to past carbon pollution.

All of this is necessary to save the future--I've been saying that for awhile now, of course. Only this time, the argument is also based on economics. It's a way for capitalism to save itself, maybe. That this analysis comes from Marxian analysts is just too damn bad, but sooner or later capitalism is going to have to get over itself. It will be the hard way or the easy way. Well, there is no easy way. But some ways are easier than others, and this way is the easiest--and the most hopeful--I've seen.