Accelerating Concentration of Income and Wealth: Another Positive Feedback Loop

That which seems to be wealth may in verity be only the gilded index of far-reaching ruin.
~ John Ruskin [1]p.187

Everybody seems to know that the concentration of income and wealth among “the one percent” has accelerated in recent years. Actually, the most extreme concentration is in the top one percent of the top one percent of the population. We all agree that beyond some undefined point that is not a good thing. Conservatives don’t want to talk about it. Liberals will decry the situation but don’t want to talk about the conservative’s bugaboo: “re-distribution of wealth.” That’s a bit of a contradiction, of course, since the recent extreme concentration of income and wealth is exactly that: a massive redistribution of income and wealth from the whole economy to the top 0.1% of the population – the wealthiest of the wealthy.

Democracy Derailed
A funny thing happened on the way to democracy. The “American Experiment” got de-railed by the formation of power elites and their reinforcement since before C. Wright Mills first wrote about them in 1959.[2] Mills was a true maverick sociologist. American sociology had been busy finding its place as an academic profession among the more established fields of economics, political science, and psychology. In the 1940s and ‘50s, sociologists were trying to distance themselves from the European sociologists and their socialist leanings. That was the era of the “Red Scare,” Joe McCarthy, and the height of American anti-communist witch-hunts after the Korean War. Mills was an accomplished researcher with all the right academic credentials, but his iconoclasm forced him out of Columbia University. His work exposing the workings of class, status, and especially power under industrial capitalism is as relevant today as is President Eisenhower’s warning of the “military-industrial complex” in his farewell address to the nation. The power of financial, corporate, and military elites has grown much greater since Mills’ work.

The political ideology of the power elite is simple: the corporate and financial elites are presented as the source of innovation, technology, jobs, and economic growth – they are “the job creators.” Therefore, its members should be left to do their good works for society with no regulation and no taxation on their wealth creation. For, the riches they create will certainly “trickle down” to the masses and everyone will live happily ever after. Somehow, the distorted invocation of Adam Smith’s metaphor of the “invisible hand” – whereby the self-interested behavior of all the economic actors will mysteriously result in the public interest being optimized – is supposed to fit into that image of elite noblesse oblige.

Fortunately, that mythological form of elite ideology is beginning to conflict with the understandings of the public. That is one of the main reasons for the initial popularity of maverick outsider candidate for the Democratic Party nomination for President for 2016. Bernie Sanders unashamedly speaks directly to the failure of the ideology of the economic elite and the blatant injustices that now dominate the economy. He proposes programs to compensate for the failures of the endless-growth economy to include the general population in the economy. He would even break up the “too big to fail” banks that caused the financial crisis of 2008, directly challenging the financial elite on Wall Street.

But why does this concentration of wealth and income seem to be inevitable if unconstrained by populist politics? Will it be enough to just develop programs such as those of Roosevelt’s “New Deal” during the Great Depression, to rebalance the economy?

Positive Feedback
One thing is generally missed when extreme income inequality and concentration of wealth are topics of conversation. Quite simply, the concentration of income and wealth is a positive feedback loop. In other words, they feed upon each other; each reinforces the growth of the other. I would even go so far as to say that this is a universal principle of power accumulation in any money economy that has no counter-force. Money is power and that power is usually exercised politically. High income and extreme wealth make the accumulation of more wealth easier because of the access it gives to economic and political resources. Great wealth provides great opportunities to influence politics; the exercise of that undue political influence results in decisions by politicians – legislation – that affords the wealthy more income and thus more wealth. It’s a positive feedback loop.

Most Americans do not make enough income to accumulate even a modest amount of savings, no less anything that could be called wealth. The very few, on the other hand, through very large incomes – including salaries in the millions, obscene self-gifted bonuses, stock options, dividends, and capital gains – are able to accumulate large fortunes. That can happen only by the creation of growing poverty.

Phantom Wealth Causes Poverty
John Ruskin, the nineteenth century British art historian, articulated this problem very well when he wrote on political economy. Ruskin argued that the creation of wealth inevitably produces poverty whenever wages are unjust.[1] Ruskin’s analysis of just and unjust wages was the basis for his critique of the political economy of his day for its obtuse claim to be simply “the science of getting rich.” I cannot imagine a more relevant consideration in examining the wildly distorted wage disparities created and accepted in today’s corporate state under the same crass ideology. Elites accumulate ever more millions in salary and bonuses, as well as capital gains through stock market manipulation, etc. The real wages of workers are ever lower as better-paying jobs are outsourced to destitute workers in poor nations. The greater the concentration of wealth, the broader is the spread of poverty.

The accumulation of vast wealth provides many political opportunities to influence the economy through the political system of lobbying, graft, and corruption. Tax laws have been significantly changed since the 1950s more and more to favor the rich and powerful. Yet the clamor of the political elite for “lower taxes” and deregulation of corporate activities – including the direct economic influence over elections – continues unabated. Political elites reinforce extreme income and wealth concentration by legislative pandering to economic elites. The two tend to merge.

Pushed to the Breaking Point
The American people have been victims of the ideology of the economic elites for decades. But just as with mass incarceration, unrestrained police shootings, and other political aberrations, the middle class did not lose its values over the last few decades, become lazy and thereby fall into poverty. The power of the wealthy has gotten so great that the inevitable distortions to what might have been a just or a moral economy, have intensified. People have been forced out of the middle class and have become poor because the rich have increasingly become super-rich. We are reaching a breaking point. All money economies rely on the circulation of money to sustain their operations in support of human life. The extreme disparities in income and wealth are pushing our economy to collapse as the super-rich abandon life for money.

Fortunately, more and more people are recognizing the absurd extent of income and wealth concentration and are looking for a new model for the political economy. But we need clarity to change our vision of a new life-sustaining economy.[3] We would all do well to read John Ruskin and C. Wright Mills today. They are more relevant than ever.
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[1] John Ruskin, “The Roots of Honor,” and “The Veins of Wealth,” pp. 167-203 in Unto This Last and Other Essays.(1862) London and New York: Penguin Classics, 1985, 1997.
[2] C. Wright Mills, The Power Elite. New York: Grove Press, 1959.
[3] David C. Korten, Change the Story, Change the Future: A Living Economy for a Living Earth (Oakland, CA: Berrett-Koehler, 2015) goes a long way in seeking that clarity.

Local Community Resilience to Reduce Climate Disruption

In some ways, Northern New Mexico may be ahead of other regions in building local community resilience and adapting to increasingly difficult environmental conditions. Santa Fe sports a reputation for one of the lowest per capita water usage rates in the nation. On the other hand, its recycling program is dismally inadequate. Over-dependence on a national economy that infuses cash into local businesses through tourism may be a risky strategy as climate disruption intensifies. Tourism may become a declining economic asset as conditions become more severe.[1] It has become almost a cliché to say that local economies must increasingly rely on local production to be sustainable. As the converging crises of climate, economy, and energy intensify, conditions will be less stable.This calls for building community resilience. How can this resilience be accomplished? So far, we see too much image, not enough substance, but we know deep down that we must reorganize our lives in exceptionally challenging ways.

Critics of climate action and the “sustainability movement” look to an imaginary prosperity driven by international trade in a fantasy-world of ever-growing energy use and unacknowledged waste. Like most Americans, the people of New Mexico participate in that fantasy in various ways. Maybe the most obvious is the extravagant highways speeds at which we drive our over-powered pickup trucks. Then, look at those busy “big box” stores and ask what of all that stuff do we really need. However, the “slow food” and “slow money” movements are taking root at some moderate level here.

From Corporate Dependency to Community Resilience

A burgeoning local organic farming industry in Northern New Mexico struggles to mature in the sparse high-desert valleys as the record-breaking drought continues. Local communities still depend mostly on national food distribution as California’s ever more severe drought continues to damage production in the “nation’s bread basket.” The U.S. depends on California’s factory farms for over ninety percent of many staple food crops. The vast majority of grain and feed crops are produced by giant Midwestern factory farms. Systems science has known for decades that large complex systems are vulnerable to catastrophic breakdowns and even collapse. The signs are there. Dependency on these mega-systems puts us all at high risk.

Climate forecasters predict that total precipitation, in the near-term anyway, may not be terribly low in Northern New Mexico. But early snow melt and a moderate snow pack means premature runoff and less usable water. In the hotter climate, evaporation accounts for a large amount of water loss. As seen elsewhere, extreme storms with sudden downpours result in flash floods, rather than building reservoir reserves. This year’s spring and early summer rains may produce extra fuel for wildfires in the Fall.

The climate disruption we already experience is part of a planetary problem brought on by the carbon emissions the “advanced” industrial nations have caused since the dawn of the industrial revolution over two centuries ago. It is cumulative and accelerating. Worse, its effects lag its causes, making the nastiest effects seem far off. It is already here and the only mitigating response is to drastically reduce further emissions to stave off far worse climate catastrophe than we have yet seen. To merely adapt to the evolving disturbances in our climate will not suffice. In the vulnerable Southwest, as elsewhere, increasingly extreme measures will have to be taken to give relatively stable communities a chance.

The growing climate crisis is now and it is urgent. If recent (and past) world-wide governmental responses and voluntary “commitments” to arbitrary reductions in carbon emissions are any measure, we are in deep trouble. They are not only fictions, but they bear no relation to the real requirements of climate mitigation based on the best science. Moreover, it is increasingly clear that we can neither rely on rationality among politicians nor wait for them to take the drastic measures that are necessary to avert the catastrophic convergence of climate disruption, poverty and violence around the world.[2] All the most powerful incentives are provided by the lobbyists for the fossil fuel industry and its mega-corporate allies. These powerful incentives, of course, point the politicians in exactly the wrong direction.

Resistance, Replacement, Resilience

The accelerating climate crisis requires massive mobilization of populations to take back control of their lives through Resistance, Replacement, and Resilience. Relatively small groups of people around the world are beginning to resist the pressures of the hyper-consumer culture. But majorities have not “just said no” to the Big-Box stores. The few resistors are replacing corporate dependency by building local economies, producing and buying locally, forming co-ops and resilient community institutions. These movements must grow rapidly. It is a race against time.

To replace corporate dependency with local community economic independence in harmony with living-earth systems requires a new vision. Creating sustainable local communities requires forging new ways and adapting the old ways to transform our relations with the earth and each other. We must capitalize on the natural elements of working with instead of against the earth systems upon which we all ultimately depend.[3]

Resilience comes not from adapting to climate chaos, but from creating viable local living  economies not dependent on the mega-industrial endless-growth global economy that causes climate chaos. Such local community economies must adapt to the increasingly difficult environmental conditions we face while replacing dependency on corporate products with self-sufficient community economics. Such resilient local communities will be the most sustainable and better able to respond to increasingly severe climate conditions. No small task.

The first principle of this New Great Transformation is that control of economies must shift from multinational corporations to local communities. Corporate trade legislation such as the “Trans-Pacific Partnership” attempts to steal national sovereignty over environmental, health, and labor rights worldwide. That, of course, would further constrain already subservient national governments. Control of the global economy is already mostly in the hands of the mega-corporations and financial elites. Power is concentrating in the largest institutions, which transcend location or nation. We need just the opposite.

The great challenge is to recognize our personal and cultural ways of living that must be changed, then figure out how to change them, together. Taking back control over community and economic life requires resistance to the mega-corporate domination of life ways, replacement of the extractive-industrial consumer culture of waste, and creating community resilience by living in harmony with the living earth systems we inhabit.

Only when many communities take these actions can the leviathan of extractive international-trade driven capital plundering earth resources and people be slowed. When earth-integrated local community resilience replaces profligate consumer culture, a social movement will have arisen from civil society, which will force governments around the world to constrain corporate plunder and slow carbon emissions to a point where human survival can be sustained.
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[1] NASA expects increasingly sever droughts in the Southwest and Central Great Plains, exacerbated by continued global warming. See Mark Fischetti, “U.S. Droughts Will Be the Worst in 1000 Years: The Southwest and central Great Plains will dry out even more than previously thought.” Scientific American, February 12, 2015. http://www.scientificamerican.com/article/u-s-droughts-will-be-the-worst-in-1-000-years1/
[2] The “catastrophic convergence of poverty, violence, and climate change” across the latitudes most vulnerable to early extreme weather events, mostly near the equator, is well under way, as well documented by Christian Parenti, Tropic of Chaos: Climate Change and the New Geography of Violence. New York: Nation Books, 2011.
[3] To shape a living economy in support of resilient communities, a lot of good ideas are contained in David Korten, Change the Story, Change the Future: A Living Economy for a Living Earth. Oakland, CA: Berrett-Koehler Publishers, 2015.

The Essentials of Resilience in a World of Growing Chaos

By now, it ought to go without saying that the evidence is in – after all, global warming has been recognized by scientists for decades. The accelerated release of “greenhouse gases” since the dawn of the Industrial Age is now causing accelerated warming of the planet with multiple interacting deleterious effects. We just don’t have time to argue the scientific consensus vs. the propaganda of the growth economists and industrial apologists. It is what it obviously is. Far more important challenges than “climate deniers” lay ahead. Resilience will be the key to meeting those challenges.

The most urgent question today is what must be done now and in the near future to achieve major mitigation of carbon emissions. The second most urgent question is: What can we do to adapt to the inevitable effects of climate disruption already “in the pipeline”? Mitigation and adaptation go hand in hand, although adaptation without mitigation is akin to seeking a more comfortable collective suicide. Without rapidly reducing the release of greenhouse gases, conditions will become so extreme that humans and many other species will be unable to adapt and survive. The species-extinction rate is already extreme by evolutionary measure.

Mitigation and Adaptation

So, resilience must be understood as the ability to both mitigate the sources of climate change and adapt to climate disruption in just the right balance. This must be done in the context of improving knowledge of the climate changes that are already occurring. We know that some of the processes are also accelerating because of interactive positive feedback loops. But the methane and CO2 releases from nascent arctic permafrost melting are not yet accounted for in the current IPCC climate change models. We need to know and immediately act upon the most strategically important climate disrupting factors. We must choose those factors with both the greatest impact on climate and the most potential for rapid and radical mitigation.

Fortunately, some mitigation efforts may also have adaptive benefits. For example, a massive program to improve the energy efficiency of buildings will not only reduce energy use and waste. It will also provide better shelter from extreme temperatures. Unfortunately, some attempts at mitigation will both reduce carbon emissions from energy production and stimulate more energy use and waste. It is almost universally assumed that the installation of renewable energy production technologies to replace high-emissions production, such as coal-fired power plants, will simply reduce emissions. However, the extraction, manufacturing, and installation processes release carbon dioxide into the atmosphere. They also can encourage expanded energy waste because of greater availability of energy at lower cost.

The Politics of Necessity

We live in a minefield of cost-benefit dilemmas and potential unintended consequences of strategic alternatives. Then there is the problem of the political economy. Little if any meaningful and timely climate action at an adequate scale can be expected from the corporate state. Profligate U.S. energy consumption has caused more of the extant climate disruption than any other nation. Yet our “leaders” – both corporate and governmental – treat any commitments to carbon reduction as if it were just another trade-deal negotiation. The fact that China recently surpassed our current level of emissions does not relieve the U.S. of its responsibility for the highest levels of over-consumption and waste. We led the world into this mess and we ought to take the lead in unwinding the fossil-fuel driven growth economy. We can and must lead in the development of an ecological economy with appropriate infrastructure and social structure as well. That will not be easy, nor can it be accomplished by conventional means.

The current social structure is uniquely adapted to the perpetuation of the failing industrial leviathan. What David Korten calls the “Sacred Money and Markets story” sustains a social structure comprised of alienated individuals, fragmented families and communities. That social structure is dominated by a corporate state, which is driven primarily by the interests of the financial-military-corporate-political elite. Comprehensive whole-society-level mobilization and centrally coordinated action could theoretically make the most difference most quickly. One of the greatest contradictions of our current dilemma is that, the power structure steadfastly resists such action. Its capabilities include a significant potential for “command and control” over climate action. However, its interests are in continuing with “business as usual.”
Interestingly, China has a lot of command and control capability because of its one-party dictatorship. Oddly, so does the U.S. – since the two-party state operates as one corporate state. Yet, it will not take significant climate action since its interests lay in exploiting the present situation more than in human well being. Such action is in direct opposition to the short-term financial interests of the power elites to retain the system they control and from which they profit so handily.

The Ultimate Resilience

Throughout history, people have risen up in response to oppressive conditions and attempted to overthrow kings, dictators, and other regimes. But climate change, as Naomi Klein puts it, “changes everything.” Not only are conditions such that any kind of violent rebellion is impossible if not suicidal. But structural change through normal political processes is almost entirely blocked by the two-parties-as-one oligarchy.

Change must come from people organizing themselves at the local level in a number of ways, where access to political decision-making is at least possible. Many groups in communities all over the nation, and across the planet as well, are organizing to take local actions to either resist or replace the control of their lives by the corporatocracy. If they create enough momentum, these actions will evolve into the new economy. The resulting eco-community based life in harmony with our living earth systems will become the ultimate resilience.