The Trouble with Economics: William Nordhaus and Pope Francis

Economics is perhaps the one social science “profession” that is most entrenched in the political economy of contemporary nations. Little economic thought escapes the halls of academia without the neoliberal stamp of theoretical approval. The trouble with most of the social sciences is that it is very difficult for them to actually be scientific. In the first place, complexity is amplified exponentially by the fact that human behavior is mediated by language. Moreover, the language of human affairs is saturated with concepts and terms that have implicit political content.

Economics, like sociology, political science, and psychology, is a “discipline” that is disciplined by ideology. In particular, in its contemporary form economics is a powerful influence over national and international political policies, especially as applied to economic forces in society. Economics is in turn powerfully influenced by the most prevailing societal forces in the world today – the machinations of financial elites. Academic economics is dominated by the so-called “free market” theories for which Milton Friedman is most famous. From his intellectual throne at the University of Chicago, Friedman and his minions have dominated the economic framework of U.S. international as well as domestic policies for decades. Of course, there is little human freedom in the corporate-controlled “free markets.” Many of these policies have been at the heart of U.S. imperial strategies of foreign domination in the later twentieth century right up to today. U.S. geopolitical strategies have been driven largely by attempts to control world fossil-fuel markets.

Empire of Emissions

Anyone so naïve as to believe that U.S. foreign policy is meant to “bring democracy” to other nations must read Confessions of an Economic Hit man, by John Perkins (2004). As an “economic hit man,” it was Perkins’ job to persuade leaders of developing nations to accept huge loans to build massive infrastructure projects that did little to aid the development of those nations. Instead, they were designed and structured to bring poor countries with rich resources into submission to U.S. corporations and indebtedness to the U.S. government and the Big Banks. The deals required the money from the loans to be spent with U.S. construction companies on projects that would never generate enough income to pay off the loans. Pressure was then brought to bear on such nations to comply with U.S. political demands for resource exploitation and political subservience. Perkins’ book is a fascinating on-the-ground account of the workings of the expansive imperial structure, the larger picture that Naomi Klein characterizes as “disaster capitalism” in her book, The Shock Doctrine: The Rise of Disaster Capitalism (2007).

Despite the exposure of the massive economic and social failings of the growth-at-any-cost form of predatory extractive capitalism that is ideologically propped up by the neoliberal economic theorists, not much has changed in “modern economics.” This is also true of the specialty of “environmental economics.” The latest effort to stand firm supporting “market mechanisms” as the means to solve all problems in the world, is made by William Nordhaus. His essay in the New York Review of Books, October 8, 2015, tries to destroy the economic credibility of Pope Francis’ recent encyclical, Laudato Si’: On Care for Our Common Home (Vatican Press, 2015. Available at w2.vatican.va).

Nordhaus is Sterling Professor of Economics at Yale University and a well established environmental economist. His attack on Pope Francis’ encyclical pretends to be grounded in supposed rock-solid economic facts of “effective” market approaches to restraining carbon emissions. He entirely ignores the strong evidence that carbon trading in Europe has been a dismal failure. Rather than having a basis in scientific findings, his analysis is actually grounded only in neoliberal economic ideology. It ignores both the severity of the economic and ecological facts of our destabilizing world and the moral questions raised by Pope Francis’ argument.

At least ecological economists examine economic systems as operating within the living earth systems that sustain all life, including economists and other humans. Norhaus’ failure – and that of economics in general – is that he treats earth systems as mere economic factors to be incorporated in the economists’ models of market forces. In fact, economies are human systems operating within and now seriously disrupting the earth systems upon which they rely. This is a direct result of the propagandistic role of economics in the political culture of the U.S. and most of the other industrially overdeveloped nations.

Immoral Economics

Nordhaus wants to protect the failed economic system by tweaking its damaging impacts. However, living earth systems are being so severely destabilized by the fundamental ways that system operates, that only a massive reorganization of human economic life will be sufficient to allow those systems to re-stabilize.

Nordhaus concludes his essay by chiding the pope for not endorsing a “market-based solution” such as carbon pricing (and the disaster that is carbon trading) as “the only practical policy tool we have” to turn back the dangerous trends of climate change. Certainly, such “solutions” would constitute the limit of action if we had to accept the corporate free market ideology. But Pope Francis has other ideas. He asserts the social immorality of a system that destroys climate stability and all that depend on it while creating more plutocracy and poverty. Pope Francis calls upon the people to turn away from compulsive consumerism. He calls upon world leaders to abandon the “magical conception of the market” and to turn away from the failed economic system they have allowed to rule us and severely damage the planet.

Nordhaus will have none of it. He dismisses economists like Anthony Atkinson, Thomas Piketty, and Joseph Stiglitz, who recognize in different ways the relationship between capital gone wild and increasing inequality. By attacking the idea that climate disruption causes poverty, Nordhaus attempts to deflect attention from the fact that unrestrained predatory global capital causes both. He optimistically asserts that utilizing assumed magical qualities of market mechanisms can somehow undo the damage that unbridled global capital markets have wrought. That is the trouble with economics.

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.

Overcoming Ideology: New Actions and New Ideas

Efforts to find a viable path to mitigating climate chaos and forging an ecologically viable economy are just not moving fast enough. They seem bogged down in struggles over old ideas and inadequate actions. Even some of the most esteemed liberal economists who are not on the corporate bandwagon have failed to escape this trap.

Paul Krugman and Joseph Stiglitz, both highly respected liberal economists, oppose the crass neo-conservative economic ideology of corporate imperialism. Yet, in his own way each remains trapped in the general economic ideology of extractive capitalism as the only way forward. Krugman imagines robust restrictions on carbon emissions without curtailing economic growth. Stiglitz imagines a ‘reformed’ capitalism where healthy competition can be restored. The imaginary and the possible are not necessarily the same.

French economist Thomas Piketty’s recent book, Capital in the Twenty-First Century, has received vastly more attention and sales than ever expected of a heavy economic tome. Piketty seems to expect inequality to be reduced by expanding economic growth. A simpler version of the myth of sharing a “bigger economic pie” or the “rising tide lifts all boats” story is available in any Econ. 101 class. Unfortunately for these fables, inequality is a positive feedback loop – greater power begets greater power.

Meanwhile, Krugman argued in his September 18, 2014 New York Times column, that carbon emissions can be reduced cheaply amidst strong economic growth. He does not mention the skyrocketing depletion rates of many important industrial materials – including petroleum – upon which continued economic growth depends. The connection between economic growth, growing poverty, and climate disruption is nowhere to be found.

Stiglitz writes in last September’s Harper’s Magazine, that Piketty is wrong in concluding that inequality is an inevitable outcome of capitalism. Instead, he says, ‘capitalism as we know it’ isn’t truly competitive like a capitalist system should be. Our system’s growing extreme disparities in income and wealth have been engineered by the wealthy. Stiglitz would reform capitalism.

Ending Economic Ideology

Stiglitz and Krugman are stalwart and articulate critics of the neoliberal economic ideology that attempts to justify corporate dominion over economic and political policy. However, despite their rather sophisticated economic analyses, our present economic system is what it is because it is not allowed to be reformed. The concentration of both wealth and income in the hands of a small elite is inherent in any economy in which excessive political power accrues to the financial elite. Inequality is becoming extreme, extractive demands of industrial production grow ever stronger as resources are depleted, and the devastation of the planet continues. Reform? You can’t get there from here.

As the international death dance continues around failed commitments to reduce carbon emissions, sufficient national and international actions to curtail climate chaos seem ever more unlikely. We know a lot about carbon emissions and the most important sources. Technically, the necessary reduction of greenhouse gas emissions could be planned as effectively as the U.S. mobilized the entire economy upon entering World War II. But execution is a political matter and therein lays the collective failure. Another way is needed and not even the most sincere and smart conventional economists seem able to help.

Increasing poverty, massive concentration of income and wealth, and accelerating climate disruption all have the same cause. The economy of endless growth required by the debt-driven imperatives of extractive capital is not susceptible to political reform. The very financial and corporate elites that drive the economy have captured and completely control the key players in the political process. We must look elsewhere for solutions. And elsewhere we will find them.

Resistance and Replacement: Actions Reforming Ideas

The people and the planet desperately need resistance to and replacement of the very institutions that even the most liberal critics of economic and environmental failure cannot give up. As neo-conservative economic policies still seek to solidify the empire of growth, progressive leaning conventional economists seek to reform what needs to be replaced. Powerful financial and corporate elites do not give up easily. Consider Jamie Diamond’s arrogant dismissal of Elisabeth Warren’s desire to regulate Wall Street’s excesses. The conversation in which it occurred is noted in the Afterward to the paperback re-issue of her book, A Fighting Chance.

Neither resistance nor replacement will be easy. But both will be nurtured by the growing sense among more and more people that we are on a path to catastrophe and need an immediate course correction. There is much to learn from non-violent movements of resistance that have succeeded, as reported in Peter Ackerman and Jack Duvall’s A Force More Powerful: A Century of Nonviolent Conflict. Even so, new models of resistance must involve accelerated withdrawal from the consumerist complex – no easy task. There is still a place for the forms of resistance seen in the Occupy and Arab Spring movements. But Gene Sharp, whose From Dictatorship to Democracy: A Conceptual Framework for Liberation, inspired those movements’ strategies, urged practical agility and creativity in fighting oppressive forces.

Today’s forces of oppression, especially in the ‘industrially advanced’ nations, are of a different order than the old dictatorships. The “inverted totalitarianism” with a façade of democratic formalism, as Sheldon Wolin describes in Democracy Incorporated, calls for new creative forms of resistance. Naomi Kline argues for ideologically driven forms of resistance in This Changes Everything: Capitalism vs. the Climate. However, new ideologies of humane social and economic relations, economic justice, and ecological society must be shaped by resistance that has direct and meaningful relationships to the immediate crises we face.

Replacement of the failed perpetual-growth political economy and its extractive energy-production and consumption practices requires even more creativity and organization. Various books, magazines, and Web sites, such as John Brown Childs, Trans-Communality, David Korten, Change the Story, Change the Future, Yes! Magazine, and Resilience.org – to name just a few – seek alternative cultural and political as well as economic paths. Works like that of Juliet B. Schor, author of True Wealth: How and Why Millions of Americans Are Creating a Time-Rich, Ecologically Light, Small-Scale, High-Satisfaction Economy, point to the formation of a new society grounded in humanity’s relationship to the earth and all its inhabitants. The idea of the good life is captured in that title. Many families and communities are experimenting with new ways of living outside of institutional entanglements. But much more is needed and on a much larger scale.

The hard part, of course, is getting it done, especially with so little time before catastrophic consequences of our current path become unavoidable. Some argue that it is too late. But that claim is pointless. We fight not because we will win; we fight because we must win.

How to Change the Economic Culture…and Save the Planet

It’s pretty clear that the corporate state is in control of the economic culture of the U.S. and that of most other nations as well. As environmentalists try to get enough attention to explain what is obvious about climate change, the scientific information is minimized, suppressed, or distorted.  We’re told that the best solutions to “potential” climate disruption is to apply established “free market” solutions of the “growth economy.” Never mind that imaginary “free” markets are tightly controlled by giant trans-national corporations whose congressional lackeys ignore the radical disruption of the complex climate systems upon which we depend for survival.

From local building ordinances to national economic policies and ruthless trade agreements, decisions are supported by an economic ideology that always makes “economic growth” the top political priority. It is an assumption so deeply ingrained in our culture that it remains unchallenged, even as we try to find ways to mitigate the economic causes of the climate chaos that is already upon us. The ideology of economic growth and the illusion of U.S. “energy independence” allow more CO2 and methane emissions from fracking for short term production increases. We might as well be lemmings.

The scientifically aware continue to argue with the Koch brothers’ agents provocateurs as if it was merely a matter truth prevailing in rational debate. We have to face the fact that culture does not change by rational discourse when the power structure dominates the flow of “information.” All you have to do is listen to the Sunday talk shows to see who defines the culture through the media. However, sociologists and behavioral psychologists have known for decades that the most powerful way to change behavior and influence opinion is to strategically exert peer pressure. Education can help a little, but will be too late. It is no match for pervasive mass media propaganda so prevalent today. Strategic behavior of “influentials” in a community is.

While mass media control the economic culture instilled in the general population, significant numbers of young people around the world, including the U.S., are aware of the nascent climate disaster and have begun to campaign for divestiture of fossil-fuel investments by university endowments. The response from Harvard’s president Drew Foust illuminates the “generation gap,” claiming that Harvard should not be a “political actor.”  See:  http://www.harvard.edu/president/fossil-fuels  Well, investing in fossil-fuel is a political act. This is a classic case of the old established economic culture opposing the new ecological culture of sustainability.

Neither the civil rights movement nor the anti-apartheid movement succeeded by the relatively minor economic damage they inflicted – they won by exerting major political pressure. But as that battle continues – and it does have promise as one avenue to put political pressure on the fossil-fuel economy – we must find  ways to immediately divest our economic behavior from dependence on oil, gas, and coal. We face an urgent – time sensitive – crisis.

As a general principle of urgency, every effort possible is necessary. But we need a strategy that applies the facts of social science to maximize the broad adoption of innovations to drastically reduce carbon emissions. Behavioral change does not come fast by rational argument. Most people adjust their behavior when the judgment of others matters. That is what “politically correct” language is all about. When racist speech was no longer accepted in public, many Americans changed their public speech even though they did not purge their personal racism. They knew that they would be judged badly if, for example, they used “the N word” in public, even in their own segregated suburban neighborhoods. We all know folks who still harbor racist feelings but avoid expressing them in public settings.

The recent racist outbursts of L.A. Clippers owner Donald Sterling and Nevada rancher Cliven Bundy are the exceptions that prove the rule.* Initially oblivious to the offensiveness of their words, even they back-pedaled with media exposure. For the most part, overt racism is banished from public discourse. When we are able to elevate “sustainable living” behaviors, such as installing solar systems, to the level of politically correct actions, it will mean that peer pressure can be brought to bear on economic behavior that affects individuals’ self-perception in relation to those peers who are “influentials.” Open opposition will fade and support will blossom.

The “bulk Solar” strategy is an example of how this can be done. If a relatively small group of “early adopters” organizes to make bulk solar purchases, say 5 houses in a neighborhood, the installer can do the work cheaper and give a discount. The innovative “first adopters” are likely to be “influentials” who can have an impact on their neighbors. A tipping point can be reached where it becomes no longer an odd thing to ‘go solar,’ but the popular thing to do. It then becomes a new norm: to take that [personally and socially] rational step of reducing one’s carbon footprint.
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* See “What Donald Sterling and Cliven Bundy can Teach Us about Racism in America” https://thehopefulrealist.com/2014/04/30/what-donald-sterling-and-cliven-bundy-can-teach-us-about-racism-in-america/

Tipping points need Paradigm Shifts: Paradigm Shifts are Tipping Points

If you are familiar with the history of science you have probably heard of The Structure of Scientific Revolutions.  In it, Thomas Kuhn describes how science progresses not by gradual evolution but by revolutionary transitions or “paradigm shifts” between “normal science” and new models of reality.  Normal science chips away at small areas of ignorance around the fringes to build out the basic accepted framework of knowledge. The new model or paradigm, on the other hand, incorporates all the information explained by the previous framework, but also explains incongruities in the old “normal” or accepted view, as well as incorporating new observations and problematic evidence that the previous paradigm could not explain.  A classic example would be the shift from Newtonian physics and Einstein’s relativity theory.

We very well may be at a point today where economics is undergoing a paradigm shift from the classical paradigm based on the assumption of perpetual growth, to a new ecological economics that takes into account the finite resource base, the ecological basis of human societies, and the planetary population limits that classical economic theory ignores entirely.

French mathematician René Thom developed catastrophe theory in the 1960’s to describe sudden transformations in natural systems.  Under certain conditions, a system will sudden transition into new very different kinds of behavior. This bifurcation value of the parameter is sometimes also called the “tipping point.”  The concept was popularized by Malcolm Gladwell in his immensely popular book by that name, in which he describes situations in everyday life in which such sudden fundamental transformations occur.

Today, we appear to be at or very near a “tipping point,” in our relationship to the earth system of which we are a part.  Much evidence now supports the idea that if we do not experience a cultural tipping point immediately, we will shortly find ourselves at a catastrophic ecological tipping point – beyond human control – that will lead to a fairly rapid slide into conditions that will force species extinction in a matter of a few decades.

What will it take to turn the corner from the “business as usual” approach which attempts to apply old imaginary entities such as “free markets” and Adam Smith’s metaphor of the “invisible hand” in attempting to respond to the economic implications of climate disruption, which is fundamentally outside the old economic paradigm?  That is the question of our time.  Only by a rapid cultural paradigm shift in political economy will humanity be able to respond adequately to the catastrophic consequences of the old model on the biosphere.

As markets developed in corporate industrial economies, and as corporations and cartels extended their domination over economies, the concept of free markets became irrelevant of to actual economic systems controlled by a few corporations.  Yet, the “science” of economics, as well as the practice of corporate business held onto the concept as a useful ideological tool to maintain political power. But both the ideology and the practice of market economics are increasingly detrimental to any scientific understanding of the relationship of economic behavior and systems to the biosphere on which we all depend.

Tipping points and paradigm shifts are like chickens and eggs.  Tipping points in human systems are constituted by cultural paradigm shifts.  The evidence of the failure of classical economics to operate as an “invisible hand,” guiding an ideal distribution of income and wealth without political intervention is now overwhelming, despite the political and economic power of corporate and academic “free market” ideologues.  The evidence of the severe damage of corporate-industrial economies to the planet is now irrefutable.

Yet the existing institutional interests fight hard to retain their cultural and political control.  The consequent inability of the political economy to respond to the ecological crises it has generated is now so obvious as to be undeniable [except, of course, by Senator Inhofe and a few other corrupt science deniers].  Not only is the paradigm no longer defensible as a framework for economics, but its ecological consequences are no longer tolerable from the perspective of human survival.

It is increasingly clear that a massive reduction in resource extraction and a re-allocation of existing resources by means of a comprehensive reorganization of society to effectively change the ways in which we live – in order to drastically reduce carbon emissions –  is necessary in the near term.  Otherwise, global warming will continue to the point where human action becomes futile and human survival is no longer possible.

The Next Great Transformation

Most of us tend to see the world in fairly stable terms.  Our own daily routines, as well as those of the world around us have a consistency that is predictable and thus comfortable.  Yet over extended periods of time, human history has been punctuated by many major upheavals, revolutions, and transformations of the way we live.  In a book by that name, Karl Polanyi characterized the massive changes of the late Nineteenth Century expansion of the industrial revolution and its impacts on the early twentieth century as The Great Transformation.  Today, we sit at the cusp of the Next Great Transformation, and in some ways perhaps the last, as the accelerating climate disruption, resource depletion, financial, water and food crises, and the end of the era of the limitless-growth economy, all converge as the single greatest crisis to ever confront humanity.

The Next Great Transformation is undoubtedly in its initial stages now.  It is likely accelerating beyond expectations, just like climate chaos has.  But its character and direction are not easy to predict, since they will rely on the human response as well as on biophysical trends already in play.  Some of the key factors in determining its shape and trajectory include:  1) whether sufficient massive social mobilization will occur to reduce carbon emissions to a degree that will slow the headlong rush into ever more devastating climate disruptions; 2) the degree of resiliency of human populations in responding to radically changed environments, and in creating massive changes in the way we live; and 3) the extent to which the fossil-industrial and financial world political economy can be dismantled and transformed into a ‘planet-friendly’ localized ecological economy.  These factors will determine whether the Next Great Transformation will be of a kind that will sustain human life on the planet through the end of this century and beyond, or will extend beyond human intervention toward mass extinction.

In The Great Transformation, Polanyi analyzed the “free-market” economic ideology of nineteenth century unfettered capitalist development as the cause of the economic crises of the Great Depression and two world wars.   Revolutionary changes in technology and geographic expansion had been initiated in an era of great economic growth, but the ensuing crises resulted from distortions brought on by what Polanyi saw as a utopian image of a self-correcting market.  The nineteenth century civilization based on classical economic doctrine had collapsed, as evidenced by the Great Depression and the world wars, but the society was subsequently rescued by the expansive growth of World War II and the booming consumer economy that followed.

After FDR failed to follow through with his New Deal reforms, the massive economic and social mobilization of World War II ended the economic crisis of the 1930s.  A similar but much larger crisis complex is playing itself out today with much the same utopian economic “free-market” images being used to justify unsustainable growth to feed an ever-greater concentration of wealth and unprecedented corporate power over both economy and politics.  The emergent corporate state still pays little heed to the resultant burgeoning planetary crisis that knows no political boundaries.  The headlong clash of this political economy with the physics and chemistry of the biosphere will either be averted by rapid social mobilization to transform society, or it will result in a massive extinction of many species due to inability to adapt to changing ecologies, including the human species.  Elizabeth Kolbert describes these processes vividly in her new book, The Sexth Extinction: An Unnatural History.  Five great extinctions have occurred in earth’s history, including the greatest, the Permian-Triassic extinction event of 252 million years ago, likely caused by an asteroid-impact and killing seventy percent of terrestrial vertebrates.

The Next Great Transformation will likely involve a catastrophic plunge into the sixth mass extinction, if total mobilization to curtail climate chaos is not achieved rapidly.  Or, if we create new modes of collective survival – most likely based on building local resilience and international cooperation – they must involve a huge reduction in fossil-fuel driven economic activities, which have for over two centuries focused on growth but which now must massively reduce activities that emit carbon into the atmosphere.  Here’s where human creativity and innovation come in.  To achieve a workable, livable Great Transformation will require us to come up with a full range of new economic forms, locally, regionally, and nationally.  But this time, we will have the advantage of drawing upon all the [appropriate] knowledge and technology from both our history and our latest innovations.  For this, we will have to start making decisions on the basis of science, not magical thinking.

To achieve all this will require total mobilization toward converting carbon-based activities to carbon neutral activities.  That will require the populations of the “advanced” fossil-fuel economies of the world to drastically change the way we live.  Remember, the per capita emission of carbon is vastly greater in the first-world nations than in third-world nations.  And, of course, most of the emissions so far have come from the fully industrialized nations.

Either path of the New Great Transformation will entail huge human displacements and comprehensive reorganization of human life – it cannot be otherwise.  Nor can I imagine how this will be easy, either way.  But one path will lead to species extinction [or near extinction] for humans as well as many other species; the other path will lead to some new level of survival as a result of humans re-organizing their relations to the biosphere and each other in ways that will dampen the plunge into further climate chaos.  The right path, if chosen, will be the one previously less traveled.