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.

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.