Trapped by Finance Capital: Business as Usual While Planet Burns Part III: Creative Destruction

Humanity must minimize the chaos of a catastrophic convergence of accelerating climate destabilization, growing poverty and food shortages, armed conflict, and massive migrations around the world. Otherwise, while the old plutocratic order will be destroyed, nothing viable will emerge to replace it. A new form of “creative destruction” must occur for human survival. A new Great Transformation of humanity’s relationship with our earth systems has to happen. It will be very complex and difficult, and “success” is unpredictable.

While it is hard to imagine, a massive social transformation in all industrially developed nations is necessary very soon. Social transformation is no simple matter. How do you turn around the most powerful institutions in the history of humanity? How do you redirect the fundamental thrust of distorted economies? Well, maybe you don’t. It just might be that the only way to stem the tide of anthropogenic economic and climate destabilization is to resist its continued domination. But that resistance must be indirect, since the corporate state has a monopoly on physical power. Resistance must take the form of replacing the very institutions that individuals and groups do not have the power to directly transform. As R. Buckminster Fuller is often quoted:

You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.

While that may not always be true, it certainly is when confronted by the overwhelming power of the corporate state and all the physical force that entails. The New American Revolution will be one of replacement, not of fighting the existing reality in order to overthrow or destroy it. In the intellectual history of economics itself we find a concept that recognized the destructive power of replacement through creativity. Joseph Schumpeter [1] popularized the notion of “creative destruction” in economics as a theory of economic innovation. It refers to a process within economies “that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”

The concept has since been used by orthodox neo-liberal “free-market” economists and politicians to justify the destructive effects of any innovation produced by technology or the investment of capital. Innovation may destroy environments or peoples’ livelihood or health, but that is deemed okay because it results in “economic growth,” the end-all of finance capital. Ideologically, it has been a defense of the unregulated right of finance capital to plunder the planet.

However, we may take the liberty of re-framing the concept of creative destruction in an entirely new light, given the circumstance we find ourselves in. We must turn away from the destructive economics of finance capital. We must resist its inherently destructive force by withdrawing from participation. We must replace it by creating new ecological forms of economics in local and regional contexts.[2] Economic systems exist only by people participate in them. We must form new human scale economic relationships, thus creating a new economy. If we do that on a sufficient scale, much of the perpetual-growth economy that finance capital sustains will inevitably be destroyed. Its markets will simply contract into oblivion. In Fuller’s terms, we must build “a new model that makes the existing model obsolete.”

The perpetual-growth economy driven by finance capital certainly is obsolete. By executing the innovations needed to create a new ecological economy, we will automatically destroy the old, mostly by ignoring it. It will wither away by disinterest and disuse. Now that would be a far more positive form of creative destruction than imagined by either Marxist or neo-liberal economists. Unlike them, we must realize that there is no inevitable course of history; there is no invisible hand or inevitable stages of development. We must choose.

Progress” may very likely come crashing down upon us – or not. It is our choice. We must create our new ecological economy amidst the ruins of financial capital. The path to human survival will be extremely difficult, if taken. The ‘business as usual’ alternative would be beyond difficult; it would be suicidal. We are at a crossroads between following the old path of ecological destruction by repeating the mistakes of our economic history, and forging a new path of creating a viable ecological economy that we can live with.
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[1] Joseph Schumpeter, Capitalism, Socialism and Democracy (1942). New York: Harper Perennial, 2008.
[2] David C. Korten, Change the Story, Change the Future: A Living Economy for a Living Earth (Oakland, CA: Berrett-Koehler Publishers, 2015) conceptualizes a new way to envision human economies and to create them in harmony with the living earth systems upon which we depend for survival.

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.

Individualism and Its Discontents

Why Our Culture Keeps Us from the Pursuit of Happiness

Individualism may be the most entrenched and pervasive icon of American civilization.  After all, personal liberty was one of the founding principles of the republic formed in rebellion against the oppressive rule of the British monarchy and its economic elite.  Rarely mentioned, however, is the historical fact that the economic elite in the British colonies retained power in the new republic and were the main beneficiaries of the political freedom that came to be expressed as individualism.  Yet, over time, liberty has been transformed from a right of political independence and free political expression to an ethic of unlimited shopping.  I will never forget George Bush’s emblematic admonition to the American people after the tragedy of 9-11, to “go to the mall,” as a reaffirmation of the freedom and individualism for which “they hate us.”   Perhaps it is not so odd that the emblematic day of shopping madness is named “Black Friday,” the near-violent or actually violent character of which bring to mind the catastrophic nature of the numerous Black Fridays throughout history.

From its origins in the eighteenth century Scottish Enlightenment philosophers who developed theories of the individual citizen’s relationship to society and government, American individualism has remained central to the political-economy and culture of the nation.  Yet it has been gradually transformed into a more contemporary ideology that serves the economic interests of the neo-conservative wealthy class – heirs of the colonial economic elite – that shapes the nation’s political and economic policies.  We need not recite the familiar mantra of Adam Smith’s “invisible hand” or the utopian supposition that the “free market” makes the world right for everyone, to grasp the fact that current economic theory and governmental policy are driven by the usefulness of these illusions in retaining and gaining ever more social control by the power elites that fund their political campaigns.  Do we really know that these concepts are illusions meant to preserve the shape of power in the declining American empire?

I think most people know and understand that the power elites direct the giant financial, corporate, fossil fuel, political and military institutions.  They know that the name of the game for the rest of us has become all against all in the economic realm and that the game is rigged.  Upward social mobility is largely a thing of the past.  Most importantly Americans mourn the loss of community and the fragmentation of families.  But the game is also driven by the use of ideology to control public perceptions of what individualism really is about in this era’s unique race to nowhere. 

Personal identity is now very much tied up in the culture of individual consumption.  The cultural core of the endless-growth economy, which requires unbounded expansion in order for the debt on which it is based to be paid, is driven by orchestrated wants that have little if anything to do with achieving happiness, and everything to do with capital formation in the biggest banks.  Individualism and freedom are equated with the ability to buy the products of the giant corporations, while shrinking paychecks make it impossible to do so without incurring further debt.  In a cultural world dominated by advertising, the corporate media are the primary sources of our images of need, which uphold unrestrained consumerism.  While people know deep down that something is very wrong, it is difficult to see our own relation to the problem when it is the very source of the problem that also shapes our images of reality.

Neither ecology nor human relations are considered by an economy that is driven by profits through increasing debt and endless expansion.  While the ecological limits of growth will ultimately stop the profit-through-debt machine, if we do not override the consumer culture with reality-based behavioral and social change – and a new ethic that recognizes interdependence – the end of unbounded consumerism will be globally catastrophic – both ecologically and socially.  Only by seeking happiness in the areas known to actually produce it, such as personal and community engagement in the context of a steady-state economy based on the pursuit of happiness in an ecologically sustainable economy, will the end of the endless-growth economy mitigate global catastrophe.  Black Friday symbolizes the illusions of individualism by its frantic embodiment of the most absurd elements of the culture of consumerism.