Most economies today are growth economies, meaning they require continuous growth or there is a recession, companies go bankrupt, jobs are lost, and so forth. This is unnecessary, unsustainable, and very unstable, as we are increasingly discovering.
Any sector of the economy that requires continuous growth is a bubble. When the entire economy requires continuous growth, then the whole economy is a bubble.
A far better and more traditional economy is the steady-state economy, or Stable Economy, which is sustainable indefinitely if done properly. By sustainable, I mean that employment, environment, and wealth – People, Planet, and Prosperity – are preserved. A stable economy is far more secure for the middle class, though not as ripe for plucking by the greedy.
The Stable Economy in Action
The stable economy is easily visualized: Let’s start with a neighbourhood, called James Bay for convenience. Imagine several thousand people living in James Bay, some in apartments and condominiums, some in townhouses, and some in detached houses. James Bay is served by a grocery store: If the population of James Bay remains stable, that grocery store will be profitable forever without growing or shrinking in size, sales, or employment.
Now expand: any neighbourhood will also have cafés and restaurants, various professionals such as doctors, dentists, and accountants, plumbing firms, flooring and book stores, a library, and so on. There are also farms and factories producing the goods sold in the stores. None of these need to grow continuously to be successful; they don’t need to grow at all.
This is the single most important point to understand about the stable economy. Any stable business can produce the same level of products or services and employment forever; there is no need for it to grow, ever.
In fact, growth puts great pressures on the neighbourhood. More people move in, so lots and homes must get smaller while their prices increase, privacy diminishes, noise and traffic increase, taxes go up to pay for upgrades to sewage lines, and so on.
The Stable Economy still has plenty of room for change and innovation. The population of James Bay may grow younger or older as people move in or out, have children, or age. They will still need groceries and plumbers. And they will still want iPods and the latest gadgets. There is also a place for investment in the companies that make up the Stable Economy.
That’s it: the essentials of the Stable Economy explained in less than 500 words, because it is simple, straightforward, and honest. It is only when instability is added in the form of continuous growth that things get complicated, because, essentially, greed requires complex justifications to hide the trickery that goes on.
For more, read on.
Bigger is Not Better
There are some outdated myths underlying the Big is Better continuous growth economy. For example, most of us have been taught that the more a factory makes of something the less it costs per unit. This ‘rule’ fails in many cases, and here are three simple examples:
- Micro steel mills are more efficient than mega mills
- Manufacturers close to customers pay less for shipping, something that will become increasingly important as oil prices increase
- Megacorporations have mega-overhead that small businesses do not have
In reality, the megacorps have gained much of their dominance through ‘influencing’ governments at various levels – with the result that they have been able to externalize many costs. They pollute and taxpayers shoulder the clean-up costs, for example, or they insist on tax breaks that must be made up by the rest of the taxpayers. They demand subsidies and bailouts and protection from competition.
In the worst cases, they abuse workers, which resulted in the rise of unions. Or, they cause harm to people who live nearby, resulting in sickness, death, and lawsuits. Where again, the large corporation has the money and muscle to break unions, pay skilled and unscrupulous lawyers, and push governments to make the immoral legal. Nowadays they outsource to developing countries where government officials are more easily ‘persuaded’ to turn a blind eye to abuse and pollution.
Technically, any business from corner store to megacorporation could remain a certain size forever, providing employment and paying dividends to investors – if governments maintained a level playing field by preventing pollution, insisting upon the same taxes for all, and so forth. Capitalist theory serves more as a cover for growth than a valid justification for it.
Greed is Not Good
So who or what is driving this continuous, cancerous, bubble-causing growth? Quite simply: greed. The people who have clawed their way to the tops of massive corporations want ever bigger salaries and ever larger corporate empires. They want bigger yachts, grander offices, larger mansions, more private jets, more servants, their own islands. They want more control over everything that could affect their personal security, including government.
We all want security: Financial, physical, and emotional. We all want to live long and happy lives, and not worry about the fears that have plagued humanity from the beginning of time. We don’t want to worry about a sabre tooth tiger eating us, or an enemy taking all we have, or where the next meal is coming from, or sickness and sadness and death. These are normal and natural human fears, and they are biologically ingrained.
The problem is that there is never ‘enough’ for those afflicted with greed. They go far past normal self-interest and always want more money and control (power). It is an insatiable addiction. They are predators.
The Nastiest of Men
Our forebears knew this well and attempted to warn us. The seven deadly sins – wrath, greed, sloth, pride, lust, envy, and gluttony – are destructive individually and also socially if allowed to run out of control. The foundation of modern capitalism is greed: Greed is Good is the credo. It is no surprise that an economic system founded on the love of money would be corrupting. Here’s what the late, great economist Sir John Maynard Keynes said sarcastically about capitalism:
For at least another hundred years we must pretend to ourselves and to everyone else that fair is foul and foul is fair…. Avarice and usury and precaution must be our gods for a little longer still.
For only they can lead us out of the tunnel of economic necessity into daylight.
Sir John Maynard Keynes, 1930
Keynes developed the idea that the government should spend money when the economy is in recession in order to keep people employed. This is bitterly opposed by libertarians and conservatives today because they are ideologues and fanatics who put their theories and ideas before what has actually been tried and tested. They do this to justify their evil. As Keynes pointed out, capitalism is:
the astonishing belief that the nastiest motives of the nastiest men somehow or other work for the best results in the best of all possible worlds
The father of capitalism himself, Adam Smith, was also under no illusions about the nature of capitalists, but he foolishly thought that the forces of capitalism itself would be sufficient to constrain greed. But he knew well the nature of capitalists; they would try to take anything and everything, whether it was ‘theirs’ or not:
As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.
Note the major error that Smith makes in believing that all men are selfish and greedy. In fact, the nastiest of men, the capitalists, are very selfish and greedy. The rest of us are pretty decent, actually. Most of us get along just fine. We share, we cooperate, we help each other.
Perhaps Smith spent too much time among the rich and greedy and it distorted his views. A quick look at history prior to ‘civilization’ would have made this clear. People in his country, England, shared the Commons for millennia until the greedy capitalists came and enclosed the land, driving the people off it with military force. 92% of land in England is still private property, some of it vast estates owned by the very rich.
Labour Comes Before Capital
Another lie we’ve been led to believe is gospel is that without the capitalists, we would all be dirt poor peasants. Without their money, how would we do literally anything? Poor us. We wouldn’t be able to afford seeds to plant crops, we wouldn’t be able to get a mortgage for a house, no businesses would exist, and so on, Except that’s bull. Adam Smith, the father of capitalism:
Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all wealth of the world was originally purchased.
And Abraham Lincoln:
Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”
This should be obvious if you think about it: clearly there has always been labour, but capital has been a recent invention. Without people’s labour, there is no capital. Let’s say I persuade some fellow tribesmen to build a food storehouse…but only for me. Now I have capital and power: If you want to safely store your food, you must pay me.
But how did I get the storehouse? Only through the labour of others. And in reality, most of history has not involved average people being paid fairly for their labour. Slavery, forced labour, indentured servitude, and government policies that favour capital over labour are how most capitalists got as rich as they are.
Quoted unironically in Forbes:
Behind every great fortune there is a crime.
Honore de Balzac
God is Dead
The reasons we abandoned a stable economy for one based on greed are somewhat complex, but I’ll pick two key ones:
- A greatly reduced fear of God – and therefore established religions, which had provided morality for the masses, and
- The rise of corporations, which are institutionalised greed.
Greed has certainly existed throughout human history, but as science discredited traditional ideas of God and the various religions failed to evolve, there was a vacuum in morality. That hole was filled by a new god, the Almighty Dollar, and this allowed a new class of money and power-worshippers to rise to power, the Chief Executive Officer (CEO).
In addition, with God dead, the rest of us soon embraced greed, albeit to a much lesser extent than the upper crust. In this we were strongly encouraged by those who stood to make the most from our abandonment of conservative principles: the CEOs. Most advertising is simply the encouragement of one or more vices, sometimes accompanied by the mocking of our former principles.
As time has gone by, the CEOs have wangled many laws enabling and encouraging greed, including the most recent easy credit era and deregulation of banking. They have also poured literally billions of dollars into ‘think tanks’ like the American Heritage Institute and Cato for the purpose of justifying the goodness of greed.
And, just as greedy religious leaders and kings had in the past encouraged heavy breeding by the masses in order to increase the size of their followers and armies, today’s CEOs insist on continuous population growth as the simplest and crudest way to keep the economy – and their markets and salaries – growing. Even though it is obvious that someday the population growth must stop, the answer is always: Not now. That is the response of an addict.
The result is a corrupted society, and an economy and environment teetering on the brink of collapse.
Because so many of us have bought into the idea that Greed is Good, returning to conservative principles of thrift, of living within one’s means, of common sense, will be difficult. Sooner or later, however God/Nature/Reality, whether you believe in it or not, will force it upon us. The cost will be greater the longer we remain disconnected from reality.