The global market-capitalist economy is
a growth machine. Capital accumulation - the endless quest to invest money
in order to make more money – is, and always has been, the defining imperative
of the system. It cannot stand still. As Marxist Scholar William Robinson
puts it capitalism is like a bicycle. If you stop peddling a bicycle you fall
over. Likewise if capitalism stops expanding it crashes. Marx, of course,
pointed this out long ago more poetically: ‘accumulate accumulate that is Moses
and the Prophets’. But, as growing numbers of people are realizing, this
‘growth compulsion’ is obviously a major problem given we face severe limits
to growth. The Marxist Geographer David Harvey talks about
the ‘contradictions of capital’. This contradiction – between accumulation and
ecology – is, I think, the deepest and most fatal for the system.
The contradiction is so severe that
members of the transnational
elite – who now informally govern the world capitalist economy – as
well as the army of ‘sustainability’ experts who, usually with good intentions,
serve them, are getting very worried. According to a new report
put out by the World Economic Forum the world economy is struggling to cope
with a historically unprecedented rise in resource costs. It notes that since
the turn of this century ‘commodity
prices overall have increased by nearly 150% from 2002 to 2010, erasing the
entire last century’s worth of real price declines.’
The report attributes the rising prices
to the rapidly growing demand from new consumers, so-called, ‘emerging
economies’. But as the eco-socialist Saral Sarkar has argued
it is very likely there is a deeper cause rooted in growing geo-physical energy
and resource scarcities. As he says, ‘the raw materials in question must increasingly be
extracted in geographical and geological regions and layers of the earth which
are getting more and more difficult to access.’ After all if the price rises
were only the result of rising consumer demand we would expect to see
additional supply come alone from resource/energy companies resulting in a drop
in price back to previous levels. This has not happened.
In the future, resource costs could
conceivably be brought down if access to abundant cheap energy is found, but
this is not likely given the emergence, in the last decade, of expensive oil,
and with forecasts
for peak fossil fuels, including coal, as early as 2020. Renewable energy
technologies – even if they could be scaled up quickly – will be far more expensive,
especially when one factors in the rising cost of increasingly expensive fossil
fuels inputs necessary for the infrastructure.
What then to do? Many of the more
enlightened members of the TE are pinning their hopes on the 'Circular
Economy’. This is actually a rehash of ideas that were popular during the last
systemic crisis of capitalism in the 1970s when it was then called ‘industrial
ecology’ or the ‘closed loop economy’. The aim of the circular economy is
the familiar ‘green growth’ hope. As the report makes clear:
The concept of the circular economy is
rapidly capturing attention as a way of decoupling growth from
resource constraints. It opens up ways to reconcile the outlook
for growth and economic participation with that of
environmental prudence and equity. It is inspiring CEOs,
politicians, engineers, designers and the next generation of leaders
So the aim is not the end of
capital accumulation. Given capitalism that must, as always, go on. The aim is
to 'decouple growth' from resource consumption.
According to the report the circular
economy is about more than just recycling. It is involves reducing resource
consumption across the entire production process, and also between industries,
via reuse and recycling of materials. As one summary puts it ‘it is a model of
industrial production which involves designing products so they last longer, so
they can be repaired and upgraded, so they can be reused or resold (on eBay,
for example), and so their materials can be used in remanufacture.’ The
circular economy, in short aims to apply the old ecological principles -
reduce, reuse, and recycle - to all resources across the economy.
Great idea. Any future ecological economy
worth its salt would be based on these principles. But of course the World
Economic Forum is discussing all this within the context of the
market-capitalism. And there in lies the fundamental, indeed insurmountable,
problem.
For starters, unless they are forced by
(unlikely) regulation, capitalist firms concerned, as always, first and
foremost with the bottom line, will simply ignore many of these measures. They
will end up as so many ‘nice ideas’ in a flashy report. Take ‘making products
to last’. That just ignores the reality of capitalism today. Firms back in the
1930s used to make fridges and toasters etc to last. But gradually they
learned, under intense competitive pressure, that ‘planned obsolescence’
- i.e. making shoddy cheap products – tended to maximize sales as
consumers where forced to return at regular intervals to replace broken or worn
out items.
The circular economy concept obviously
relies on extensive recycling of materials, whether end-use recycling or
intra-firm recycling. But there are real limits to recycling. Industrial
commodities are most often made up of a complex mix of materials. Think of a
typical mobile phone with its plastic cover, circuit board made up of gold and
silver and other precious metals, batteries using nickel, cobalt and cadmium,
and the glass display. Separating and collecting those materials, ‘requires the
expenditure of energy, labor and materials’ (Sarkar, 1999, 117). And that means
it is costly. It is very costly – often prohibitively so – for affluent nations
with high labor costs. That is why, for long, companies have found it cheaper
to use the global south as a dumpsite for waste. But even more fundamentally,
recycling, being an energy-intensive process, will become increasingly
expensive in the near future, as energy costs increase.
No doubt, in many cases, as the report
points out, the above measures may well be to an individual firms competitive
advantage. After all, firms stand to benefit from reducing their expenditure on
increasingly expensive resource inputs. But, as Sarkar has noted, what is good
for individual firms may not be good for the macro-economy as a whole. For
example, the report provides the example of car manufactures selling ‘hours
behind the wheel’ rather than new cars to every consumer, thereby reducing
overall car production. This may well make handsome profits for the car
manufacture despite reduced ‘capacity utilization of their plants and machines’
(Sarkar, 167). But any reduction in car production would inevitably cripple the
suppliers of tire, steel and other parts. These firms would experience
cutbacks, closures and lay-offs.
The biggest, and most obvious, problem
is that any resource reduction is usually outweighed by the sheer growth in
output. This applies at both the level of the firm and the global economy as
whole. For most capitalist firms, except maybe small niche companies and those
shielded from direct competition, growth is an imperative, which must be obeyed
on threat of extinction. All must re-invest capital in building up the forces
of production and increase market share in order to stay viable. Growth at the
level of the firm increases resource use across the economy. A study by Peter
Victor on material throughput in Germany, the Netherlands, United States, and
Japan found that, from 1980 to 2002, despite a 25 % reduction in material use
per unit of GDP, there was an overall 36 per cent increase in resource
extraction (Victor, 2008). In Australia, according to the ABS, despite half of all waste now being
recycled, landfill continues to grow.
One of the reasons for this macro growth
in resource consumption is the ‘rebound effect’ or ‘Jevons Paradox’. This
occurs when cost reductions resulting from improved efficiencies increase the
disposable income of consumers, triggering increased consumption and
overwhelming the original resource/energy savings. The report itself is aware
of this problem, but does not discuss or reflect on it at any length. At one
point it promises reduced prices for resource efficient mobile phones and
washing machines. Apparently they are oblivious to the fact that this will only
free up income to be spent on more products, services and industries across the
economy, triggering….you guessed it, further resource growth!
The rebound effect is a perpetual
reality in capitalism. It renders the noble aims of the circular economy
useless. The report believes the circular economy could achieve a ‘materials
cost savings of…US$ 1 trillion p.a. by 2025, net of materials costs incurred
during reverse-cycle activities.’ But how long will these ‘savings’ last in a
72 Trillion dollar global economy, which requires, at least, 2 to 3% per annum
compound growth to stave of economic and political problems? Not more
than six months!
Many more problems and flaws could be
pointed out. And this despite the huge resources, and academic research, put
into such reports. How can this be explained? Is this just deliberate ‘green’
propaganda, designed to give the impression that something is being done, so
the show can roll on and the corporates can continue to rake in the profits?
Such an interpretation is tempting. But the reality, sadly, is that ideas like
the ‘circular economy’ are sincerely believed, especially by the army of green
sustainability academics and lay people, despite the obvious elite agenda it
serves. It is the result of decades of neo-liberal economic training, and the
deep penetration of market assumptions into the fabric of our culture. This, in
turn, reveals the power of capitalist ideology, and the inability of both
academics and lay people to imagine ‘another world’.
All that said, the elite will, very
likely, make large reductions in resource use through these efforts. They will
have too as the resource crunches intensify. But - and this is the major point
- it won't be enough. They will not achieve the vast reductions in resource use
required in the affluent ‘global north’ to stave of ecological crises, let
alone the numerous other problem this system is generating from global poverty
and inequality, endless wars, social and community breakdown and the
errosion of democracy and civic participation. According to the best evidence
of ecological scientists industrialized countries need to make factor ten
reduction in resource/energy throughput. This cannot be achieved via
technology, efficiency gains, and waste reductions alone. And neither can it be
achieve in or through transnational industrial capitalism, whether of the green
variety or not. In affluent societies it will require a radically new simpler,
co-operative, and democratic social model
that can only be built slowly, over many decades by ordinary people at the
grassroots!
References:
• Sarkar, S., 1999. Eco-Socialism or
Eco-Capitalism: A critical Analysis of Humanity’s Fundamental Choices. London,
Zed books
• Victor, P. 2008. Managing without
growth: Slower by design, not disaster. Cheltenham: Edward Elgar Publishing
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