Put a Fork in It
I have developed the late-night habit of obsessively tracking through articles and reports on the global financial system. It appears that the patient is in the throes of a massive heart attack, after years of abuse and hyper-activity, and all attempts at resuscitation are failing quickly. Recent highlights include:
- A LEAP2020 report argues persuasively that the US will be forced to default on its debt next summer, and the Telegraph agrees that the current infusion of hundreds of billions of dollars from European and American central banks will only delay the next level of collapse by a few months, potentially leading to martial law in the US and many European countries.
- An editorial from Sunday’s NY Times anticipates an upcoming “rash of corporate bankruptcies” that will be “very bad news” for stockholders, employees, and lenders.
- An analysis concludes the $700 trillion derivatives market is about to melt down, along with thousands of hedge funds, according to the Guardian.
- Meanwhile, the lack of credit is crippling export of basic goods from the “developing world,” endangering the lives of millions of people whose existence depends on our purchase of their products. A mega-crisis caused by the greed of the rich is destroying the lives of the poor.
All of this data, and much more, strongly suggest that the global financial system, in its current form, cannot be salvaged. At best, we may have a year or 18 months before the system fails us entirely. After that, money, in its current form, may have no value at all, as basic trust in our institutions evaporates.
Since previous human societies used different mediums of exhange - such as the gift economies of tribal people - it is quite possible that our current form of money could also be displaced by a different mechanism. Few people in our society have considered this prospect. Nobody has developed a working contingency plan that address all of the problems we face in a systemic way. In order to do this, we need a "comprehensivist" approach - think Buckminster Fuller meets Machiavelli - that takes into account all of the essential elements, including human psychology and design science. We need a new model, along with a message that appeals to the vast majority of global stakeholders, one that speaks to both the wisdom and madness of crowds.
If the global financial system goes down, what will have value, and how will value be exchanged? How will we maintain the inextricably complex support systems that sustain billions of human lives in our globalized world? How can we evolve to a new ecological and ethical paradigm instead of degenerating into warring factions? We better come up with answers to these questions, as quickly as possible. It may help to study recent case studies, such as Cuba and Argentina, which demonstrate how complex modern cultures can reorganize manpower and resources when they have been cut off by the global system.
We can only find the answers when we share a coherent understanding of how we arrived at this juncture. With a crisis as massive and multidimensional as this one, it seems difficult to find the proper framework to interpret and understand it. While one immediate cause was the overvaluing of housing and the packaging of sub-prime mortgages into complex financial instruments, that was ultimately only a symptom of deeper structural flaws. For the last decades, financial speculation was used to extract value and tangible assets from the poor and middle class, and transfer it to the wealthy. This greed-based system has self-destructed, as happened previously when the "roaring Twenties" led to the Great Depression and New Deal.
The modern West created an economic system fundamentally based on the creation of debt. Capitalism requires constant expansion and exploitation of new markets in order to maintain itself. Economists have ignored the hard limits on planetary resources when calculating future potential for development. It was an absurd, almost cartoonish error to believe that we could continue limitless growth on a finite planet.
Capitalism has tremendous dynamism but is inherently unstable. In the future, we will look back to realize that capitalism was a transitional system, unifying the world into a single market and communications grid, before being replaced by a more durable and sustainable economic order. Ironically, considering his repudiation in recent decades, much of Marx’s analysis is proving accurate and prescient.
On another level, we can see that the current global crisis has been forced by the mindset of domination and competition that reflects our immaturity as a species. The Darwinian notion of the “Survival of the Fittest” was an imposition of our competitive and ego-centric worldview onto the natural world. As most biologists now see it, healthy ecosystems are based on complex patterns of cooperation and interdependence. As the WBAI talk show host Tiokasin Ghosthorse notes, humanity must shift from living "on" the earth, to living with her.
Put in the simplest terms, then, our global society is going to have to undergo a rapid – almost instant – transition from competitive and possessive behavior to cooperation and sharing if we want our species to survive, let alone thrive, into the future. Considering the ecological crisis of species extinction and climate change and the fragility of our support systems, this change has to happen in an extraordinarily compressed timeframe. What we don’t have yet is a realistic plan of action that gets us from here to there.
Photo by malinky, Courtesy of Creative Commons license.Tweet