The Upside-Down Economy

The idea that the financial markets are the essential force that drives economic growth and progress, has dominated political thinking for too long. The financial markets and their agents have dominated politics and the Congress over recent decades more than ever before. After all, it took several decades for the financial elite to accomplish the complete abandonment of the controls instituted to prohibit the financial market excesses that caused the Great Depression. We are at greater risk today of an even bigger crash than 1929.

The U.S. and world economies are stumbling on the precipice of part II of the “Great Recession” of 2008. The global integration of financial markets and institutions put the entire world at risk and none of it has any democratic foundation. It is all happening against the will of the people and in opposition to the public interest. The massive contraction of the middle class and the swelling of the ranks of the poor are now undeniable. The so called “recovery” has been all about the financial elites and the stock market. Corporations are awash in cash. Those who lost jobs that had a livable wage can now only find minimal-wage jobs and must work at least two to pay rent. The real economy falters and the financial markets are built on quicksand.

The Disappearing Real Economy

The economy is upside down because real economic activity – the production and exchange of goods and services needed by the people in their everyday lives – no longer drives the global economic system. The most powerful economic force in the world today consists of the actions of multinational corporations attempting to continually grow consumption by reducing the costs of growing production. International “free trade” is in effect the removal of production from the nation – outsourcing.

To minimize cost and maximize output, capital is moved to poor nations with the least labor costs and environmental controls. Economic “globalization” allows U.S. corporations to import cheap goods for our increasingly poor workers to buy at Wal-Mart with credit cards. That, of course, reduces the availability of production jobs here by exploiting the destitute elsewhere. While capital is easily mobile globally, labor is relatively immobile. The globalization of capital drives wages down so that U.S. citizens can only buy cheap imported goods.

Continuing down the ruinous path of the Wall Street financial elite is supported by a lot of political rationalization. The fact that work, pay, production, and consumption are what any real human economy is actually about, is simply ignored. On the one hand, we are told that capital must be free to find its “highest and best use.” That will enable the capitalists – falsely characterized as “the job creators” – to invest in new technology and production, thereby improving employment. Well, how has that worked out? The new technologies have mostly reduced the need for skilled labor in the U.S. The free international movement of capital – they call it “free trade” – has increased demand for unskilled cheap labor abroad. Who benefits? The wealthy investors in “globalization.” Who suffers? Workers everywhere suffer the loss of control over their lives and the inability to earn a living wage.

Feed the Rich, Starve the Poor

The myth that the super rich somehow need a tax break pervades the political discourse even though wealthy corporations and individuals pay less in taxes than ever. The delusion is that such public largess economically favoring the already rich would allow them to invest in the real economy. The “news” media – owned by the same mega-corporations that feed the super-rich – go along with that fiction even in the face of several decades of decline of American work, pay, production, and consumption.

All the while, the rich continue to get richer, paying less and less taxes, by controlling politics and indebting the nation. Both the U.S. Congress and the President are elected by having access to massive political funding by so-called “political action committees” (PACs). Legislation is actually written by the biggest financial lobbyists in the Congress – the lobbyists for the financial elite that is enriched by the “globalized” economy. Worldwide corporate theft, subsidized by the U.S. government, is a scam of unparalleled proportion.

Simply put, in a real economy it is income from employment that drives economic health. Employment provides individuals and families with incomes to buy the necessities and niceties of life. It is employment that produces goods and services people need. The income from employment allows consumption to drive production. Financial speculation among the super-rich has distorted the real economy by “financializing” it and ruined all that.

That is why the economy is so upside-down today. Financial speculation drives investment in cheap overseas production, leading to domestic poverty and declining ability to buy what is produced elsewhere. It is all driven by the greed of the financial elite, not by any national economic policy. Big investment banks’ speculating in abstract financial instruments – derivatives and the like – are allowed to create phantom money by depleting the real economy in the form of consumer and government debt.

In a real economy the Big Banks would be invested in actual productive activity. But because of outsourcing, underemployment, and low wages, workers cannot afford goods produced domestically as cheap goods from abroad flood the shelves of the big-box stores. At the same time, the propaganda of marketing and advertising encourage more and more consumption of less and less meaningful products. Low wages force reliance on consumer credit, increasing indebtedness to the corporations controlled by the financial elite. It is an upside-down economy.

Growing suppression of public education and critical thinking facilitates the manipulation of consumer behavior. People keep trying to buy whatever represents the imagery of the consumer culture that dominates their experience. “Affluenza” afflicts some of the few who experience new wealth. But the pervasive desire for the trappings of affluence – driven by pervasive marketing propaganda – drives consumer behavior, leaving little room for “free will” in economic behavior. Mass media images dominate consumer as well as political thought. Cultural images of “the good life” all involve increased unthinking consumption of corporate products.

Converging Crises and Catastrophic Collapse

In the present context, certain fundamental factors are at work. The vast accumulation of “phantom wealth” by the Big Banks via the “bailout” has encouraged further speculation and facilitated more economic concentration. The easy availability of cheap loans to corporations already awash in cash has not resulted in their investing in the domestic economy. All that cash and cheap credit is used for mergers and acquisitions, which further concentrate corporate wealth. A stock market booms while the main-street economy remains stagnant with vast numbers of workers unemployed or underemployed. Stock market growth is without foundation in the real economy. It has little basis in actual economic value, its growth is speculative, and is at increasing risk of collapse.

After the greatest financial heist of the public treasury ever, we must ask why such vast accumulated wealth has no benefit to the real economy. Overextended consumers can no longer rely on home equity and credit cards to make up for those decades of stagnant to regressive wages. It becomes clear that another few hundred million more dollars in the coffers of billionaires will not be invested in domestic production for the suppressed consumer demand for necessities that results from stagnant domestic employment and over-indebtedness.

It is not as if this is all happening in the abstract. Real world allocation of capital has planetary consequences. The distortions of mass production induced by extractive capital are global in scope. With a world population of over seven billion people and the drive to emulate Western patterns of consumption, the carrying capacity of the planet’s ecologies is already exceeded. Whatever one’s interpretation of the world’s economic system and imagined alternatives, the convergence of overproduction, consumer culture, overpopulation, looming crises of food production, resource wars, and climate chaos, all foreshadow a catastrophic collapse of existing economic and social systems. Only a massive human effort to reorganize the way we live on this planet can avoid human tragedy on a scale as yet mostly unimagined.

Homelessness, Plutocrats, Over-population, and the Climate Crisis

The “homeless” person is part of what is perceived by the power elite as an unneeded collection of persons of no value to the system – a “surplus population.” I first ran across the concept of “surplus population” in a sociology journal article many years ago. The point was simple: a certain number of “positions” exist in society at any particular time and the number of people in society is often larger than the number of persons. The residual, or surplus population, consists of those who have no position.

It is now abundantly clear that all the production of goods and services – even including the superfluous, trivial, and just stupid products – can be accomplished using fewer and fewer workers than in the past. Overflowing suburban garages and commercial storage units demonstrate the oversupply of often meaningless products. Waste abounds. At the same time, the shrinking middle class tells the story of job shortages and a growing “surplus population.”

As the Industrial Age advanced, more and more goods could be produced per unit of labor; increased labor efficiency resulted from the application of technology to the production process. In the 1950s and 1960s, many people feared automation because it eliminated the need for many jobs. At the same time, we were told that new technologies would lead to shorter working hours, labor-saving home appliances, and more leisure time for everyone. From the 1960s on, women entered the workforce. But the expanding economy kept most workers employed.

Producing Waste and Wasting Lives

Because the economy was expanding so much, the need for workers expanded too, for awhile. Even the computer revolution absorbed more of the workforce as it expanded. Yet, many “middle-management” jobs were eliminated by the power of spreadsheets, word processors, and database management systems. The information economy expanded, but eliminated many jobs in the process. Through the 1980s and 1990s, as information control was enhanced, well-paid manufacturing jobs were lost as labor was “outsourced” to destitute low-wage workers in Asia and Latin America. Capital is mobile, labor is not. This trend was strengthened by a stream of international trade agreements like NAFTA and the TPP, which have increased corporate power over national economic policy. Many manufacturing jobs in the U.S. were lost. The remaining jobs were mostly retail and menial service jobs with marginal wages. Well, we all know how well that has worked out. The “American Dream” became a nightmare.

So, as the middle class contracted, Americans are left with less and less employment offering a living wage. Large numbers of people can no longer participate in the labor market while others live at or below subsistence level on minimum-wage incomes or less. Neither rents nor food are cheaper. Prices continue to rise as wages decline.

This is all well and good for the power elites who run the system, at least in the short run. More profits mean more power. For the growing numbers left out, the system seeks to either abandon them or find new ways to exploit them. They are to be 1) imprisoned for profit; 2) shot in the back by police; or 3) run out of town by any means necessary. City ordinances are commonly passed these days to make being homeless illegal! As usual, the victims are blamed.

But dark economic storm clouds are stirring on the horizon. As long as the money markets are run by the plutocrats and oligarchs for their own further enrichment, the real economy deteriorates. The economy is not run democratically for the benefit of everyone being able to make a living. The Congress represents the plutocrats, not the public. So, whoever is pushed out of the economy will be treated in these ways. The race to irreversible climate chaos continues as does the illusion that it is something about an abstract future.

The only alternative to this existential contradiction is a moral and ecological economy. And that requires locally organized movements for resistance and replacement of the mega-banks, international corporations and their political allies. These institutions have no national allegiance; they have no human allegiance. They must be overcome, not by force of arms (impossible) but by turning away and replacing corporate rule with community institutions. Otherwise, collapse.

The New Capitalism and Its Death

Unfortunately, Corporate Capitalism is the capitalism we have, and it is not about to relinquish its institutionalized greed. It is not the American Capitalism that built this industrial nation; it is a predatory capitalism that is extractive in nature and is destroying the nation. It does not merely extract the remaining resources of the planet. It also extracts monetary value from the economy to the point where instability is inevitable.

While still in control, the financial elites will never allow a hybrid economic model such as the Europeans have partially achieved, that would balance their greed with the public interest. That would not allow the obscene profits and power that it now enjoys. So, various forms of resistance are needed in concert with local ways to simply replace the “financial services” that the mega-banks fail to provide communities in their quest for phantom wealth generated from within the mega-banking system itself.

Local control can build community institutions and economies that can employ their populations instead of relegating them to ghettos and prisons. A genuine response to climate disruption would, of course, generate massive new employment. That will only be possible when we let go of our Wells Fargo, Citi Bank, and Bank of America accounts [of all kinds] and replace them with locally controlled banks with community ownership and ecologically sound policies. The new global movement of local resistance to predatory extractive capital can also direct community resources to employment in building resilience in a rapidly changing environment.

Homeless Plutocrats

Fact is, weird politics aside, overpopulation is a huge globally problematic factor in trying to curtail climate disruption as well as unemployment, underemployment, and homelessness. There will be nowhere to go for all those Bangladeshis when the seas rise a few feet and wipe out much of their farmland and homes. India is already building defenses against possible climate-forced migration. Similar scenarios are unfolding around the globe.

But the main source of the impending planetary climate crisis is the plutocracy driving global economic growth; that process also excludes more and more people from participation. Of course, it is the U.S. and other industrial nations that consume vast quantities of resources and produce vastly more CO2 per capita than the populations of “developing” nations. A key way to get population to level off and for masses not to starve is for the education and empowerment of women all over the planet to be accelerated. But none of it will much matter unless the plutocrats are driven from their comfy corporate homes and the economy is turned from extractive to ecological. There will be no place for plutocrats in a new “living earth” economy.

Meanwhile, corrupt corporate capital continues to exploit “surplus populations” in the U.S. and around the world. The “carrying capacity” of the planet has been outrun by endlessly growing numbers of people clamoring to participate in the phantom wealth of the industrial nations. Only consumption constraint of the wealthy nations can begin to bring the impact of their populations in line with the carrying capacity of the land they occupy. An unwinding of the ongoing re-distribution of ever more wealth to the very rich can allow a re-balancing between population and environment to begin. Some plutocrats may become homeless in the process.

Without major climate-chaos mitigation humanity will be depopulated alright — by resource wars, including water and food wars, mass starvation, and unprecedented social chaos. Homelessness could become the new normal. Hard, mostly political-economic, decisions lay ahead.

Global Capital, Illusions of Wealth, and the Walking Dead

Any genuine scientific analysis of the trajectory of global capital is hard to find. Economic history is rife with ideological stories of “wealth creation,” “capital formation,” and the mythical “invisible hand.” What is capital? What is wealth? What is money? Well, they are all pretty much taken for granted in most economic thinking – conveniently so for the financial elite. On top of that, economics itself has been dominated by the ideology of the power elites that dominate society. Little room is left for science. International finance and the ‘wealth of nations’ are managed in very strange ways – I describe them below in a highly condensed sketch.

Global Capital and Central Banks
Put as succinctly as I can, during the industrial age finance (the management of capital) has gradually become globalized. But it was not international trade that spurred the emergence of a global financial network of banks. It was more a matter of the most powerful banks forging a network of control over the monetary systems of nations. In fact, industrial development and the human misery that has accompanied unprecedented wealth have always involved a struggle between public and private control of money and banking.

Each historical example of public banking and sovereign control of national currencies has been accompanies by prosperity and stable prices, then followed by an assault on public authority by private banking. Usually, this has led to the “privatization” of what is in its essence a public utility: money and banking. Benjamin Franklin explained to the British parliament how the Pennsylvania and other colonies were funding their economies by issuing credit in the form of paper script not “backed” by gold or silver to stimulate commerce, leading to unexpected colonial prosperity. Soon King George banned colonial script, and Parliament passed a Currency Act, requiring all taxes to be paid in gold or silver, forcing them to borrow from the Bank of England at usurious rates. That put an end to colonial prosperity based on public credit and gave a strong impetus to revolution.

Numerous other examples, from Canada to New Zealand, Lincoln’s “Greenbacks,” etc., eventually let to a cartel composed of the central banks of each nation, each privately owned and coordinated by the Bank for International Settlements (BIS) in Geneva, itself owned by the central banks. The International Monetary Fund (IMF) and World Bank (WB) impose financial requirements and lend to ‘developing countries’ in support of the interests of global capital in dominating national economies.

So, the currencies and banking requirements of nations are controlled by the private international banking cartel. The control of national economies in the interests of central banks, causes booms and busts in their pursuit of bank profits and control of national economies. Today, each central bank is largely controlled by its relationships to the cartel. Governments take a back seat to the whole of global finance, and their economic and monitary policies are subordinate to the global capital markets controlled by the BIS, the IMF, and the WB, all operated in the interests of the banks, not nations.

Illusions of Wealth
Most of the ‘highest values’ of modern economic ideology are buzzwords for the mechanisms by which the Big Banks control national economies and extract vast amounts of “wealth” from them.

“Free Trade,” for example, is actually the freedom of giant corporations and the giant banks that finance them to exploit labor internationally and avoid any responsibility for environmental damage they do in the nations in which they operate. “Financial innovation” is actually the various schemes of the Big Banks to extract phantom wealth out of the banking system by ‘packaging’ debt into complex derivative instruments from which additional fees and profits are squeezed, and risk externalized.

It is all built on a system of debt-based money, that is, money created out of debt through double-entry electronic bookkeeping when a bank makes a loan. Banks are allowed to lend much more money than they have ‘on reserve.’ The money they lend is thereby created “out of thin air.” They can borrow even more from the central bank – the Federal Reserve in the U.S. – at very low rates and lend it to their customers at much higher rates. Remember, the Fed is owned by its member banks.

It’s a great big illusion. Why? Because the creation of money is not related to actual economic activity in the real world. Of course, lending does occur for actual production of goods and services for the economy, but the money and banking system I am describing here operates independently and in addition to the real world of investment in the economy itself. In the past couple of decades the phantom-wealth ‘economy’ has expanded to the point where it accounts for a much larger share of the GDP than before. Yet, it contributes nothing to the real economy. Despite massive “quantitative easing,” little of the vast funds released to the Big Banks have reached down into the real economy. Contrary to the dominant ideology, you could do away with these “too big to fail” banks and nothing much in the real world would be missed.

The Walking Dead
The unbridled global capitalist system has no natural constraints, except the finite supply of energy and other resources. It is in the early but rapidly accelerating stage of near-death. Unless it is radically transformed, quickly, the extinction of the human species from which it emanates, will be its final constraint. That will depends upon whether or not the illusions of global finance capital continue beyond the tipping point of ecological and societal collapse. In either case, it is already the walking dead.

Creative Destruction Transformed

The concept goes way back in the intellectual history of the West, also the East.  Simply put, “creative destruction” suggests that in the creation of the new, something of the old is destroyed.  Innovation often makes “the old ways” of doing things obsolete.  Not surprising.  Examples abound in the history of the growth economies of the industrial era.  An obvious case: The American family farm virtually disappeared with the mechanization of agriculture driven by fossil fuel energy mostly in the twentieth century.

What is Creative Destruction?

Like so many fundamental concepts, creative destruction has a history of ideological dispute, at least in the West.  The Hindu god, Shiva, on the other hand, has offered a consistent vision of change.  Shiva, “the transformer,” is the god of creation and destruction in the world of the Hindu — he creates and he destroys.  Thus, he is seen as both the fearsome and beneficent agent of all change in the world.

In the West, however, the idea of creative destruction has been shaped by a history of philosophical debates about the politics of the economy.  The Hindu idea was brought into German philosophy by Herder, then used by Hegel in his dialectic of history.  Then Marx turned it on its head as his own dialectical principle of material (economic) change.  Later, for Austrian-American economist Joseph Schumpeter the idea was used  to explain how innovation transforms an economy from within.

Today, the Austrians, especially Friedrich Hayek, are the philosophical darlings of the quasi-libertarian anti-government neo-liberal economists.  These are the economic ideologists whose ideas about innovation are used to justify corporate actions that may have destructive consequences for society.  For Example, they use “free markets” to argue that the destructive consequences of unlimited financial “innovation” — manipulation of financial markets — are necessary and good for promoting economic progress.

That creative destruction is so easily adopted by both left and right economists should raise some questions.  Does it explain everything and thus nothing?  No.  But it is important to understand why its application is so broad, and with such different political implications.

For the capitalist, the importance of creative destruction is found in the effect of innovation on markets.  When capital is invested in new technologies, the result is said to be “disruptive,” and often is.  That is defined as good and healthy for economic progress.  In fact, it may wipe out existing industries and jobs.  But new and better ones are expected to result.  While people can be put out of work and factories shut down, the ultimate outcome is said to be good because of the growth and new products and profits that often result from such disruption.  “That’s progress.”  And, of course, it is all based on the idea that growth is always necessary for a healthy economy with full employment.  The argument is all internal to economics, as if it were a closed system.  But it is not.

Karl Marx admired the creative destruction he saw in capitalism resulting from the innovations it stimulates, but he saw within the capitalist system inherent “seeds of its own destruction.”  Without external constraints, it was never clear when Marx’s internal contradictions might actually produce the revolutionary end of capitalism as he had predicted.  Both the Russian and Chinese revolutions were largely agrarian in origin and did not really fit Marx’s model, although they adopted his terminology as their ideology.

The historical realization of Marx’s image of industrial revolution never quite materialized.  But the vision of Werner Sombart — that capitalism’s internal contradictions would lead to periodic crises — has been repeatedly confirmed by historical events.  The biggest and most obvious U.S. example was the Great Depression.  The New Deal was capitalism’s relatively effective response to that crisis — it worked for several decades.  The Great Recession of 2008 is another — it was caused in part by elimination of the New Deal financial reforms.  But in this case the responses were denial and bailouts, which are pushing the crisis down the road without real economic adjustments.  Be that as it may, Marx made the same mistake that today’s corporate economists make — they all treat the economy as if it were a closed system.  Internal contradictions aside, they all assume that the economy is unaffected by any environmental constraints such as resource limits or ecological destruction.

The Destruction of Creation

Neo-liberal economists attempt to justify the concept of creative destruction as inherent in innovation, the driving force in developing the economy.  It is required for capital growth and investment in new technologies, which have new resource-extraction and waste production requirements.  But their vision of economic growth has no direction or meaning, except that of an irrational faith that whatever innovation occurs and whatever the destruction, the result will be good.  After all, the illusion of Adam Smith’s “invisible hand” is still at play in their minds.

Economic theory is often not very empirical.  Of course, money is the easy measure of all undifferentiated economic activity.  But it says nothing of the value of an investment, an innovation, or a business decision or practice for humanity.  It’s about that darn externalization of costs, which is always ignored in the investment of capital.  What are all the consequences of an economic decision?  Well, consequences external to the unit in which capital is invested are routinely ignored.  The creation of phantom wealth by destroying the environment it attempts to dominate can be clearly seen as destroying creation.

Ending Destructive Capital, Creating a New Economy

One of the most important — and destructive — innovations in the use of capital today is the corporate application of micro-electronic computing power to the processes of capital investment, or, I should say, “programmed trading,” in the stock markets.  “High-speed institutional traders” — computer programs — can “capture” minute differences in price from one nano-second to another and issue buy/sell orders that intercede into an ordinary trade and in effect steal pennies that the ordinary trader would have received in a trade while the price information is being transmitted to the trader.  At super high rates of programmed trading, this results in millions of dollars skimmed off the market in any given week.  Yet the SEC does nothing.  This is only one of the many corrupt practices that are tolerated in a culture that deems whatever you can get away with as the highest value.

Only by setting human and ecological values as the primary criteria for allowing or banning economic system “features” can a new ecological economy be shaped in the public interest.  The highest public interest in the economy is to foster practices that support the health and well-being of people and the planet.  Any economic practice or institution that conflicts with that value must be destroyed.  New practices and institutions that serve the interests of life on the planet must be created.  Creative destruction is an economic process with limited justification.  Only if an innovation supports life and the practices and institutions it destroys are damaging to human life and the biosphere that supports us, can it be justified.

The Happiness Factor: What’s the Point of Having an Economy anyway?

Globalization is widely touted in the mass media as both inevitable and good. But why? It is claimed that products are more efficiently produced, labor is more productive, technology is improved by greater innovation, and capital is more efficiently allocated. But wait, there’s less!

According to Paul Hellyer, former Deputy Prime Minister of Canada,

“Globalization is really a code name for corporatization. It’s an attempt by the largest corporations in the world, and the largest banks in the world, to re-engineer the world in such a way that they won’t have to pay decent wages to their employees, and they won’t have to pay taxes to fix potholes and to maintain parks, and to pay pensions to the old and handicapped.”

Corruption of Economic Purpose
We have to ask, what’s the point of having an economy anyway? Is the purpose of an economy to serve the special interests of giant transnational corporations? Or should it be to serve the needs of the human population? (No, corporations are not persons.) I would have to answer that the only excuse for having a particular economy is to better support the happiness of the people. When basic needs are met, happiness is maximized. How is that achieved? If an economy provides enough jobs and income for people to live comfortably in a stable safe environment, I’d say it has succeeded.

If an economy grows at a healthy pace by eliminating jobs and reducing household income of ordinary workers to secure higher corporate profits, then it has failed. If work is available and wages are livable, then it has succeeded. Social science research has shown that income improves happiness only up to the point of a modest middle-class life. After that, it fails to contribute to happiness. Today’s accelerating and extreme disparity in wealth and income between the 1% and the 99% reflects a dangerously defective economy.

In fact, the wonders of globalization all accrue to the giant transnational corporations that control the world economy. These enormous organizations are constrained only by nations’ laws meant to protect people and the earth. Environmental laws, labor laws, safety laws, all protect populations and ecologies from damage due to uncontrolled exploitation. The “globalists” make international trade deals in secret to exempt themselves and override the protection of people and the planet. Having bought off Congress, they “fast track” legislation that circumvents national sovereignty to liberate capital, enslave labor, and exploit the planet.

NAFTA (North Atlantic Free Trade Agreement) and now the “Trans Pacific Partnership” (TPP), are secretly negotiated, then “fast-tracked” through Congress, without deliberation. They actually take precedence over the sovereignty of nations that agree to them. Their corporate courts can overrule national environmental, labor and safety laws. Nothing is allowed to interfere with the freedom of international capital to exploit labor, and generally plunder the planet. Does that contribute to human happiness? In this equation, people are the dependent variable; their happiness is irrelevant. Human needs and happiness are not the determinants of globalization; they are its victims.

An Intentional Economy
For an economy to be morally justified, it must serve human needs and not destroy the ecosphere upon which we all depend. Human survival in the very near future will depend upon whether we can re-cast the economy to reflect human needs under local conditions. That will mean distributed food and energy production, re-designing technology to fit the needs of communities, and reorganizing the flow of capital to serve the needs of local democratic ecological economies. All of these things will require both lots of labor and a major reallocation of capital.

A huge amount of imaginary capital exists today in the “Too Big to Fail Banks.” That phantom “money” was created by the Fed buying the largely worthless debt of the Big Banks to cover their speculative losses. All that must simply be abandoned and a banking system re-created to serve local and regional needs for investing in ecologically creative ways. That alone will create many jobs. An ecological economy will directly serve the needs of humans where they live while intentionally reducing carbon emissions. Such choices will build a survivable future for people and the planet’s diversity of species. An intentionally ecological economy is necessary to sustain the environment we depend on. Any chance for human happiness depends on it.

In the New Ecological Economy, if we will have it, industrial and trade policies will be determined by human needs and the necessities of sustaining the ecosphere of which we are a part. There is simply no getting around it. But to support human happiness, who would want to? Today, those who would traffic in any kind of human misery for a profit still rule the global corporate-growth economy. Any movement in the exact opposite direction toward building an economy intended to serve human happiness must begin from the ground up.

State Secrecy: Collapse or Transformation

A number of books and articles have appeared over the past few years raising the specter of societal collapse. The crises of climate disruption and hyper-inequality in an increasingly unstable U.S. and global economy are converging toward destabilization. These converging destabilizing forces will likely produce some form of radical change –like it or not. But what will it look like? That will depend on us.

Societal Collapse
One of the most comprehensive works on historical cases of societal collapse is Jared Diamond’s book, Collapse: How Societies Choose to Fail or Succeed. Focused entirely on how and why things happened in the societies he studied, Diamond cautiously avoids any direct contemporary predictions. He steadfastly avoids inferences from the catastrophic collapses of Mayan civilization, the Easter Islander society, or several others he studied. But a number of implications seem obvious. For example, in each case, when confronted with ecological crises, elites squandered declining resources on self-aggrandizing displays of wealth or power, accelerating the approach of collapse. These were all societies dependant on irreplaceable local or regional ecological resources. Today, we arguably face the same kind of problems, but at a planetary scale. Only a massive “Great Transformation” has any likelihood of staving off a global collapse of both economy and ecology. We are used to moving on to the next land to plunder. No more.

Like the examples Jared Diamond describes, our power elites engage in denial and projection as they busily accumulate more and more phantom wealth and power. They entrench themselves in an increasingly totalitarian security state they think will insulate them from the world. Their state benefactors, obsessed with a perceived need for secrecy and military control of everything, give them a false sense of security. The corporate-state response to almost any problem is violent repression. From 9-11 to Gaza, from Viet Nam to Ukraine, each power elite, whether here or there, acts in the same way. It posits an all-powerful enemy – the evil Other – who can only be defended against by overwhelming superiority of weaponry and violence.

The Secrecy of the Surveillance State
Robert David Steele’s book, The Open-Source Everything Manifesto, is striking because it proposes a radically different framework for “intelligence,” and for avoiding societal collapse. It identifies massive systemic fraud and corruption in the secretive ‘top-down’ violence-driven intelligence establishment and he calls for its abandonment. But what is most stunning is that Steele is a respected and accomplished member of the military and intelligence communities. Steele would abolish and replace those institutions. Based on his extensive professional experience, Steele argues that “intelligence” produced by secret agencies is mostly dysfunctional and often just wrong. Steele’s take on the modern form of totalitarianism with a democratic façade is grounded in the insider perspective of a professional spy. In contrast, Sheldon Wolin’s Democracy, Inc. describes a creeping “inverted totalitarianism,” from a political scientist’s outsider viewpoint. But the implications for democracy and its survival are remarkably similar.

Steele’s case for universal “open source intelligence” rests on a model of shared information in which the ever-growing secrecy establishment would be counter-productive. After all, the more secrecy in a system, the more opportunity corrupt elites have to “manage democracy” in their own interests. To the extent that society’s major institutions are shrouded in secrecy, democracy is destined to become a façade for totalitarianism. The evidence is overwhelming that both state and corporate secrecy and unrestricted spying are seriously dysfunctional and lead to oppression. Open source intelligence demands an entirely new way of thinking about nation states and various social formations. Effective human systems operate as whole systems and whole systems require whole-systems thinking and participation – by everyone, not just elites.

The combination of predatory capital and power technology operated by a secretive military-industrial corporate state destroys true democratic processes. The secrecy based intelligence establishment inevitably further concentrates power and wealth in the institutions that are controlled by the less-than-1%. These trends have reached their breaking point.

The Unknown Transformation
No, the center will not hold – it’s not even the center anymore. Internal contradictions quite different than Marx predicted are driving the social hierarchy to a chaotic collapse. With all the inter-dependencies of Big-System Society and its global reach, collapse may well spread broadly. The big question is what will replace the corporate state and how. A great transformation is inevitable, but how it occurs and with what result is not. Hierarchical information control has so far assured elite dominance, but dysfunction is accelerating; it cannot be sustained. We seem to be headed for widespread political and economic chaos. One plausible result may be massive breakdowns of systems of supply of industrial and consumer products, even the very necessities of life.

Then, there is the Achilles heel of the so called “global economy.” Complex systems have internal vulnerabilities. Moreover, both climate chaos and the limits of the growth economy predict the end of the corporate state – it just can’t cope. Allies such as the World Trade Association and the International Monetary Fund, have no value other than to the failing system they attempt to support. Nor does the array of military alliances that support global empire.

Very little serious work has been done on the question of how a viable transformation can be accomplished without high levels of chaos and damage to both people and environments. The works of Diamond and Steele provide two hard sources (and there are others) for beginning to shape a new social intelligence that can help transform the old institutions to meet the needs of the post-industrial era.