Just struck me that Australia is suffering a similar but even more silly fantasy than Brexit. Brexit is the idea that Europe is of no importance to the UK’s prosperity or coherent politics….
In Australia we think we can do “Eco-exit”. We can cheerfully exit a functioning ecology and water supply, and make heaps of money out of it, and that money will keep us alive and prosperous….
I spent several days last week in the Hunter Valley, visiting various community groups, with colleagues.
I saw that the Hunter is covered with huge coal mines, most of which are hidden from the road by scenic barriers; mounds of earth with trees growing on them, or by metal panels stuck on stilts. It is almost as if the mining companies were not proud of what they were doing, and did not want people to observe it.
I also learnt that open cut coal mines tend to have two, or even three parts. There is the mine pit, which destroys the land it occupies and much of the land around it, and there are the waste mountains which are composed of the rocks and soil covering the coal and separating the coal seams. That also destroys the land it is piled on and around it. The third place is where the finished coal is dumped for transport.
Several of these processes require heavy water use. The coal dust is apparently damped down to keep it from flying around, although excavation through explosives cannot be damped. The coal at the “holding for transport place” is supposed to be damped down, again to stop it from flying about, although we watched for quite a while at one mine without any evidence of this damping happening. The air was heavy with clouds of coal dust. The truly massive trucks involved use lots of diesel which is also polluting, and poisonous to breathe, but they get the tax removed on diesel usage, so its all good.
People who live near mines tell us that coal dust covers everything, and the general suspicion seems to be that coal is not damped down at night. So everyone is breathing coal dust. The mine waste also produces dust. Its dumped from the big trucks and clouds of dust rise up. The ground and trees around the dumps are covered in white/grey powder. The growth is not healthy looking.
Mining companies are supposed to do rehabilitation of the mines. This apparently means filling the pits with water, which then leaches poisons from the coal and sinks into the land taking the poisons with it. The process not only poisons rivers and bore wells but deprives the areas of water flow, on top of the water the mines get to appropriate for their own purposes. I’m not sure why the pits are filled with water, but the obvious suggestion is that it is cheap for the companies. There is some evidence of seedling planting but this mainly on the mounds that are shielding the mines from tourists, or on the sides of the dumps facing the roads. Apparently areas away from vision are largely untouched, although clearly I cannot confirm that. Most of the growth you see covering the sides of the rubble areas looks random, or natural, and very sparse. It is probably at least as unhealthy as the areas covered in the white or grey powder from the dumps.
We did not see many people working the mines or the dumps. The huge trucks, conveyor belts and mining by blowing ground up and using huge digging implements to scoop up the rocks, means few workers are needed. We were also told that most of the workforce is now contracted out, so the workers earn much less than they used to and have no sick or holiday pay or pension funds other than what they put aside out of their diminished pay. The aim of business is nearly always to decrease wages where possible.
People of course fight new mines and mine expansion, because it endangers their health, their communities and the countryside they live in. Mining companies buy up property, but this always comes with a non-disclosure agreement, so people cannot find out what the prices being paid are, and so don’t know what to hold out for; this amounts to suppression of the market for profit. People who protest might find that their houses are not bought while the rest of the village is destroyed. Sometimes companies were told to destroy the houses because the areas was too dangerous or too uninhabitable, but they would rent out the houses instead, further poisoning their workers who rented them.
People who protest can suffer from death threats in the streets from pro-mine people, which the police take seriously, and they can similarly be threatened by government agents although, so far, not with death. Under new laws they can be imprisoned for up to seven years, and if they protest about these laws can be told they are for their safety, as protesting on mines can be dangerous. If the court rejects a mine because of its destruction, then the laws can be changed retrospectively to get that mine through. It also seems to matter who you are in terms of successful protests. So far more mines seem to have been stopped to protect horse studs than farms or villages. As one person said “Horses are more important than people”.
It can sometimes seem like the main reason for the mines going ahead is the pleasure of destruction. In one place where a mine was stopped, the fertile ground, attractive hills and Aboriginal sacred sites were clear. It would have been a loss for very little long term gain.
People have argued that agriculture could make more for the local economy and the State (mining companies pay very little in royalties for our minerals, and generally avoid tax), and that farming would continue a lot longer that mining with fewer health side effects, but even that is not enough to persuade the State not to support miners. One group was told by a government official that “wherever there are resources we will harvest them” – clearly fertile land is not a resource which can be harvested.
We were taken to one site were a well known company had spent considerable amounts of money building gas storage facilities, only to find that the company prospecting for that company had neglected to inform them that the plain flooded regularly, and that the ground was so honeycombed that any gas bored out would leak into the air. The Government office relied entirely on documents provided by the company to do the approval and did not know about either point. They did no further research.
Some people alleged the government and its committees had been stacked with people from the fossil fuel industry or chosen by that industry, so there was no possible objections to the conduct of the industry or what it could destroy. This appears standard throughout most of the capitalist world.
Quite a number of people suggested that the process was so biased towards the mining industry that there was no point engaging with the State, actions had to be taken outside it to have any effect. However, there is no doubt the courts can be useful, if the situation is aligned, and pro-mining evidence can be shown to be wrong. Ultimately gains are precarious, but it seems necessary to participate.
One group was trying to get people to think about the future of the Hunter beyond coal. They were told by a representative of the industry that diversification was suicide. The stupidity of this statement, if reported correctly, is unbelievable. Focusing on one industry is a recipe for disaster. All eco-systems including economies, benefit from diversity.
There was only a little talk about renewable energy. Although some people suggested that the coal heaps could be covered in solar, as they were not fit for anything else.
All the people we met were inspirations. We need to join with them to preserve the earth from destruction for profit and from joy of destruction.
One of the ways Capitalism works:
Step 1: Destroy or poison something, because it helps make a profit.
Step 2: Sell people what they used to have before it was destroyed, and make a profit.
Step 3: Say “how great is this?”
Capitalism could love climate change, because there is now so much to repair and replace. You can sell people air pollution filters, oxygen tanks, reforestation, bottled water, water filters and desalination plants, rehabilitation of destroyed reefs and artificial fish stocks, flood walls, geo-engineering projects to lower temperature rises, and machines to remove CO2 from the air. You might invent things that remove plastics from food. You boost production of medical treatment due to anti-biotic resistant bacteria generated by farming practices and so on.
The GDP should go up like anything.
The Question
Can repeated economic crashes and collapse disprove Neoliberal positions for neoliberals?
What are neoliberals?
‘Neoliberal’ is the name given by their opponents to a collection of people and economists (Mises, Hayek, Friedman are the traditional core) who support domination by corporate capitalists, through talk of free markets and through imposition of an unrestrained capitalist state (paradoxically often by supporting the idea of a small State or a demolished State). Neoliberalism seems primarily about re-regulating markets to preserve and increase corporate domination. Some neoliberals may propose a more humanistic corporate domination, while others may propose a more total form of that domination.
‘Neoliberal’ is not a neat category, it is defined by function rather than by ideology. Democrats and Republicans, Coalition and Labor[1] can be called neoliberal, depending on their level of support for capitalist plutocracy. That few people call themselves ‘neoliberal’ does not mean the term describes nothing. The term sums up the political dynamics of corporate dominance and the ideology of its supporters.
An answer
Repeated economic crashes and collapses cannot prove neoliberalism wrong, because the official pro-free market position is that capitalism can never be harmful, never produce unintended consequences, and never fail. Failure must, as a consequence, always be explained by something supposedly outside capitalism, or outside the “free market”, such as the State, or by any attempts by workers to soften the effects of capitalism, or diminish capitalist exploitation.
Some followers of ‘Austrian economics’ (Mises, Rothbard etc.), have argued to me that the superiority of free market capitalism can be deduced from obviously real/true axioms, and that no empirical check is ever necessary as the superiority and naturalness of capitalism becomes intrinsically obvious and only denied by the willfully stupid. This position also helps people to ignore failures or to explain them as being caused by the political obstruction of perfect free markets.
However, a theory which tells you some process of organisation is always the best, cannot fail and is only disrupted by ‘others’ is pretty clearly ideological. When Communists say communism does not display its full democratic glory only because of the actions of paid capitalist subversives, this ideological factor becomes clear to most people.
Capitalism as the State
Perfect capitalist non-State based free markets, as promoted by neoliberals, have never existed, because the State is part of the capitalist system. There is no known species of capitalism which does not have a State to protect capitalist forms of private property, capitalist types of market, extreme inequalities of wealth, and capitalist power. States have, largely through violence, also helped the establishment of capitalism through dispossessing people from their land and helping to stop people from being self-supporting so they have to become wage labourers and dependent on wage-payers.
In Capitalism, wealth not only becomes the primary token of virtue but it allows its possessors, as a class, to buy politicians, buy the State, buy the laws, buy the violence, buy the religions, buy the education, buy the media and buy public information generally (nearly all media is owned by corporations, and the media that is not corporately owned is constantly threatened). Through information control, PR, media and advertising, pro-capitalism becomes a form of “common-sense”.
Consequently, wherever there are successful capitalists, they attempt to take over the State (even if it was previously non-capitalist), or establish a State, to help protect themselves and regulate markets to benefit the corporate elites and discipline workers. Unrestrained capitalists always produce a capitalist State. The big contribution of Neoliberalism to this takeover has been to try and obscure the connection between business and the State, so as to shift blame away from capitalism.
In the neoliberal capitalist State, the idea of “free markets” is used to argue that the corporate sector must not be inhibited in any way, or by anything such as worker’s rights, as these disrupt the workings and perfection of a (non-existent) free market. Observation will show you that supposed libertarians will almost always vocally and hostilely oppose anything that could benefit workers, or give them some liberty from business control, and largely ignore regulations or subsidies that support the corporate sector. Neoliberal ‘liberty’ is always about the liberty of those with resources, although neoliberals usually do not say this as they would lose popular support.
Unrestrained capitalism always produces plutocracy. Hence it tends to be heavily promoted and supported by the rich. Capitalism almost always ends up undermining the liberty that it claims to promote.
The conditions we observe today of corporate domination, curtailed liberty, incoherent policy, an unresponsive State that people feel separated from, stagnant or declining wages and conditions, and massive environmental destruction, are probably what we could expect from the pro “free market” talk that we have been bombarded with over the last 40 years. Capitalism without regulation is, in reality, a contradiction in terms; an impossibility, or a joke.
[There are occasions in which other classes, or wild parties, can gain partial control over the State, but they generally end up protecting some corporations; we don’t have to assume the wealthy are always unified, although they will probably tend to support their class in general.]
The State and economic failure
Because there is no capitalism without a State, and neoliberal capitalism pretends it is different from the State it controls, neoliberals can always blame the State, and its unsuccessful attempts to prop up industries and finance, for any economic collapse or the hardship that anyone suffers to lower the costs of business (like mutilation and injury at work, wages too low to live on, no health care, heavy pollution, etc.).
Capitalists can also point to the failure of Communist States to prove capitalism is the best system going. This is hardly logical, as the failure of Communist States could equally be evidence of the wonderful success of Byzantine forms of State organisation. Neoliberal apologists then appear to confuse post-world-war II mixed economies and Nordic Socialism with communism, rather than seeing them as States where people had some participatory role in controlling their lives. This becomes part of the capitalist common sense, promoted by capitalist media.
These ideological non-falsifiable positions make it harder to restrain economic collapse, or even to observe how businesses generate collapse through the ways they pursue profit, organize themselves, pursue internal and external corruption, distort information for economic purposes, or use the State to keep themselves going.
The Neoliberal ‘Small State’
Neoliberals claim that because the State is always to blame, rather than business no matter how corrupt or stupid, it must be diminished. However, their ways of making the State small, always end up (possibly unintentionally) being about diminishing the power of ordinary people to oppose corporate domination. This is one reason why the State constantly expands while being controlled by people who talk about making the State small. They cut back social insurance, medical assistance, pensions, anti-pollution controls, working conditions, health regulations at work, etc., while massively expanding the military (subsidies to arms manufacturers etc.), using expensive private contracting, subsidizing already wealthy private schools, boosting tax concessions for wealthy people, extensively policing the workers or poor people heavily while giving liberty to the rich to rip people off, and so on. Again this is because actions by the working or middle classes that might curtail, or seriously challenge, corporate power are said to interfere with the completely fictitious and beneficial “free market”. [2]
Neoliberalism opposes any efforts to constrain the generation of climate change and its growing effects on the middle and lower classes, because that would interfere with the free market and the power of some corporations and wealthy individuals. If people die from bad health care or corporately generated disaster, that is their fault for not being wealthy enough to avoid it.
With neoliberal small State policies, the State usually becomes much more oppressive and useless for most people, and many can be persuaded to support making the State even ‘smaller’ and less useful to them.
Concluding Remarks
Neoliberals can be distinguished from anarchists, because anarchists recognise that corporate capitalism involves concentrated power, and they challenge that power.[3] Neoliberals can also be distinguished from real conservatives who recognize that capitalism often destroys tradition and virtue for profit.
Neoliberalism is an ideology of transcendent value imposed by money, experts and capitalist hangers-on with no regard for empirical reality, or attention to the ways capitalism is dysfunctional. It is, at best, a set of good intentions which produces harsh consequences for most people. It is designed to help its followers avoid noticing the ill effects of capitalism, and so cannot be disproved by those ill-effects.
NOTES
[1] The supposedly left wing Labor Party introduced neoliberal policies to Australia by floating the currency, privatising State-owned institutions, removing tariffs and so on, with many ‘humanistic’ qualities such as working public health, good social services, and a wages accord between unions and business. It has proven very easy to dissolve this humanistic framework in favour of corporate dominance. Support for ordinary people seems incompatible with neoliberalism; such support must be attacked. It has been argued that the neoliberal military coup in Chile demonstrates that neoliberalism is, however, completely compatible with dictatorship, violence and terror.
[2] Given that ideas about the free market function entirely to justify corporate dominance, then if the dominance of particular factions is better served by imposing tariffs, controlling prices, inhibiting competition, or providing taxpayer subsidies then this can be done. Sometimes this is done at the same time as praising free markets.
[3] It should be noted that plenty of trade and exchange has occurred without a State, but these systems are not capitalist. If you want learn how to establish a ‘market’ without a State, then you need to read some anthropology.
Howard T. Odum was one of the earliest people to tie economics together with energy and ecology, so it is worthwhile giving a brief outline of some of his thought. As Odum develops his thought, the ideas seem to get a little overcomplicated, so this is only a basic account which seems enough to be useful for understanding our current situation and highlighting its problems. More detail may follow later.
Ramage & Shipp (Systems Thinkers) describe his underlying theme as follows:
The central method for Odum in understanding the behaviour of an ecosystem at any scale was to follow its energy flows: the way in which energy was transferred and transformed from one part of the system to another.
Odum also wanted to develop principles which applied to any ‘ecosystem’ from the ‘individual’ to the world.
I’m not sure what Odum’s definition of energy is, as I cannot find one at this moment, but let us assume energy is the ability to do work, move particles (produce heat) or to build organisation, structure or what is sometimes called ‘negative entropy’. We can use the Jancovici definition of energy as produced by, or allowing changes in, the world/system, or as being the engine of transformation. A constant stream of fresh available energy is needed to maintain any system’s functioning.
Paying attention to the ‘laws’ of thermodynamics, Odum notes that there is always a loss (or more accurately ‘dispersal’, or ‘degrading’) of energy; this is known as ‘entropy.’ There is always a difference between usable, or available, energy and the total energy expended to produce, transport and concentrate that available energy. The usable energy is generally less than the total energy expended, through the system.
For example, the energy used by motor transport is not just the energy used by the automobiles to move around, but the energy used in manufacturing the cars; building the roads and bridges and petrol infrastructure; transporting petrol; maintaining roads and cars etc. Energy is constantly dispersed, or lost as heat, in these processes, and the energy required to maintain the whole traffic system is much greater than just the sum of petrol burnt to power cars.
The amount of available, or net, energy to a society, organism or ecological system, determines the limits of what may be done. For Humans, real wealth, or prosperity, is ultimately limited by geophysical, ecological and energetic processes.
Odum argued as far back as 1974 that humans were using more and more of our available fossil fuel energy to generate new fossil fuels or other energy sources, thus lowering socially available energy as a percentage of energy use. This was presumably overcome through using up energy sources more rapidly.
Most business predictions about future available energy are based on the gross (total) energy of the source and not the available energy. This relationship between energy consumed to make energy available (what other people call Energy Return on Energy Input) can be excessive and Odum argued that shale oil, for instance, would never yield more energy than was used to extract it. This does not mean that people cannot structure the market to make profit from shale oil in the short term, but it is ultimately a non-constructive use of energy and will cause collapse somewhere in the system.
Odum suggests that social systems will succeed and dominate, the more they can “maximize their useful total power from all sources and flexibly distribute this power toward needs affecting survival”. When it is possible to expand inflow of available energy into a society, then survival can be helped by rapid growth or expansion allowing that society or organism to take over a domain, even if there is a large amount of energy (and other) wastage.
This spread or domination often involves using energy before others can use it; or ‘stealing’ energy from others and the future. The expanding system is heavily competitive (perhaps internally as well as externally). The more energy a system steals from others, the more likely its expansive phase will be short, as it is probably destroying its ecological base.
In general, if a society, or organism, consumes all of the resources it requires for survival, then it must change, diminish or die out.
Furthermore, if the energy expended by a society (especially one with decreasing available energy) does not help support energy collection and concentration, or social replication and general equilibrium processes, then the system is also likely to become vulnerable to collapse.
When energy inflows are limited or declining then successful systems (or parts of systems) are more likely to use the available energy to build relatively co-operative, stable, long-lasting, high diversity, equilibrium states. These societies are more oriented towards maintaining energy inputs without increasing energy expenditure to do so. In this case, previously marginal lifeforms or societies, using energy sources that are neglected by the dominant form, may continue after the dominant form has burnt itself out.
Odum seems primarily interested in the dominant systems using maximum power and then changing, rather than in evolution on the margins. He also seems to assume steady states (equilibriums) are what ‘nature’ seeks, rather than that all systems change and risk disequilibrium. His thesis was largely developed before Chaos and complexity theory, and assumes that all systems develop maximal use of energy: “systems organize and structure themselves naturally to maximize power [energy use]”. However he notes that “energies which are converted too rapidly into heat are not made available to the systems own use because they are not fed back through storages into useful pumping, but instead do random stirring of the environment.” This could be destabilising.
He suggests that modern economics developed during an extremely high expansion era, and economists are generally not even aware of the possibility of relatively steady, low growth, societies. Most of our other institutions and understandings are also based upon, and demand, expansion. These institutions and ideas will be challenged and stressed by lower energy availability and may actively sabotage attempts at change.
However, most of human existence has occurred in relatively low expansion societies, so such societies are not impossible.
Furthermore, as most economists take expansion as natural (living in societies of high energy availability), they assume expansion of energy is also natural or easy. They tend to oppose ideas which suggest contraction or conservation are healthy phases, and tend not to notice how new post-fossil-fuel, energy sources (e.g. nuclear and solar) often depend on a kind of subsidy through fossil fuel use. These new energy sources become less useful, less easy to build and less profitable when that energy subsidy is removed.
[M]ost technological innovations are really diversions of cheap energy into hidden subsidies in the form of fancy, energy-expensive structures.
It is even possible that the successes in expanding agriculture in the last 100 years does not primarily come from improvements in agricultural knowledge and practice, but from burning lots of fossil fuels, so that we invest far more energy into food than we get out of it. People now eat “potatoes partly made of oil.” The expansion of fish catch has come from massively increased tonnage of ships, massive increase in the energy expended in the building of them and powering them. With the decline of fish populations, even more energy may be required to carry on getting a profitable fish catch, until the fish are gone, and the fishing system collapses.
Changing social energy sources to renewables takes massive energy expenditure (and probable ecological destruction) to make the factories, gather resources, build the equipment, fuel the transport etc. That does not mean it is completely impossible to slowly organise the manufacture of renewables entirely through renewable energy, but that it won’t occur without considerable planning and enforcement, and it may not happen in time to prevent disastrous climate change.
It may be the case that there there are no new sources of low energy input, and low polluting, energy becoming available. For example, fusion is still a fantasy.
The energy available to contemporary society, and hence the amount of work/organisation and effective activity that can be done, may well be running down. Consequently economic expansion is slowing. Quite a number of people argue that the period of real growth in the West ended in the 1970s or even earlier.
It could be that current appearances of expansion are largely being funded by the attempt to use easy currency availability as energy, through low interest debt and through syphoning wealth up the hierarchy. But this ‘simulation’ of available energy cannot continue forever, without new sources of energy availability. Some of the global expansion may be happening because developing countries are using energy to generate growth, from a low basis, as happened earlier in the west.
The question arises that if we are now beginning an era of declining global energy availability, how should we best spend the energy remaining? Sixty years ago we possibly could have used the energy to build a renewable system, that may now be more difficult, because of the decline in availability.
Societies also receive an energy subsidy which comes from the natural workings of ecologies such as the flows of sun, wind, waters, waves, etc. Another method of achieving apparent growth could arise through accelerated destruction of the world ecology (consuming it without replacement) which will have fierce consequences as life supports are destroyed, and need to be repaired (requiring large amounts of energy if possible).
An economy, to compete and survive, must maximize its use of these [ecological] energies, [while] not destroying their enormous free subsidies. The necessity of environmental inputs is often not realized until they are displaced.
Our current societies are tending to destroy these subsidies, or remove vital parts of the system (such as water) and replace the ecosystem workings (if replaced at all) by high energy expenditure technologies, which become vulnerable to energy decline. A society which is aiming for relative equilibrium may need to make sure it helps its natural ecology to increase its own replication and equilibrium capacity.
After this discussion it should seem obvious that the energy used to give us energy availability includes the works of the sun, ecologies, humans and technologies. A lot of this energy availability comes without human work, and the more human activity destroys this ‘free energy’ the more expensive energy production becomes.
High availability of energy allows the building of complicated structures, greater resilience against natural fluctuations and threats, and allows greater concentrations of people and built organisation. Cities, for example, depend on cheap energy for building concentrated structures and for bringing in food. With fossil fuels, cities have increased in size as food can be brought in from far away and local lands do not have to support the population. Loss of energy availability, may mean cities collapse.
High energy availability also gives greater capacity for expansion. High energy availability human societies are usually military threats to lower energy availability societies – hence the pressure for everyone to increase energy availability for defense. Attempts to maintain growth seem to be a matter of maintaining, or obtaining, dominance at the expense of a functioning eco-system. In times of energy scarcity, militarily active societies may burn themselves out, putting energy into expansion rather than conservation, or they may put increasing amounts of energy into maintaining the power and lifestyles of the already wealthy and powerful. This may postpone apparent system breakdown, but it will only increase the problems and collapse will more likely be hard to control.
In the contemporary world, those countries which have only recently embarked upon the growth/expansion process, may be starting it at a time when it would be better to support or improve their former economic and energy flow patterns, if they wish to survive.
Countries which save energy now are more likely to survive, and they will have functioning energy resources in the future. Countries which attempt to solve their energy problems through warfare at a distance will probably expend more energy than they can recover.
With the decline in available energy human labour will become more important. Without some degree of social change in attitudes to labour, this seems likely to involve the creation of an under class or even slavery (although Odum does not argue this). Information storage, processing and availability may well decline, as that consumes a lot of energy. Information (because of the second law) tends to disperse, depreciate, and develop error, and it requires ongoing energy usage to preserve unchanged or develop, although it may require less energy to replicate than to generate anew.
The contemporary world is caught in the paradox of needing energy to continue with its patterns of development and expansions, but the only energy and economic processes which can power this, are destructive of the ecosystem at large and of the capacity of these societies to continue. The only way non-catastrophic way forward is to find some way in which general economic expansion can be curtailed, ecologies supported, and energy usage reduced.
Climate, technology and chaos Blog 