[R-G] [BillTottenWeblog] The Effluent Society

[Bill Totten]

by John Michael Greer

The Archdruid Report (September 17 2008)

Druid perspectives on nature, culture, and the future of industrial society


The latest round of convulsions in the world's financial markets has
caused a great deal of panic among pundits and ordinary citizens alike.
I have to admit, though, that I don't share their consternation. One
benefit of living on a writer's limited means is that I don't have the
funds to spare for investment - like most of my generation, I'll never
be able to afford the luxury of retirement; unlike most of my
generation, I'm well aware of this fact - and the lack of any personal
stake in the fate of Wall Street makes it possible to sit back and watch
the carnage with a certain degree of detachment.

Of course it doesn't hurt that most of the money lost in the recent
troubles never existed in the first place. The wealth allegedly created
by rising house prices, for example, consists of nothing more than the
belief that a great many houses could be sold by their owners for more
than their previous purchase price. Only a small fraction of said owners
can actually sell their homes at any one time without crashing the price
- this is, after all, how housing bubbles inevitably end - but while the
bubble lasts, even the most theoretical increase in value is treated as
cash on the barrel. The popping of the bubble, in turn, simply dispels
the delusion that these evanescent gains are actually worth anything.

Still, my habit of reaching for the popcorn instead of the panic button
when the stock market swoons has another source. It's sitting on a
bookshelf a few steps from the desk where I'm writing this: a much-read
copy of The Great Crash 1929 by the late John Kenneth Galbraith. The
Great Crash is considered the definitive history of the speculative
bubble and bust that ushered in the Great Depression; it is also the
funniest work of serious economic history ever written. Galbraith's wry
humor and his superb grasp of economic process make it arguably the best
introduction to the way that markets run amok and bring about their own
worst nightmares.

As this suggests, bubbles rise and burst with tolerable regularity. The
crucial lesson of Galbraith's book is that what's happening now has
happened before. Dozens of times in the past, people convinced
themselves that the world had entered a new economic era in which
getting something for nothing was the way things worked. Dozens of times
in the past, markets driven by this giddy conviction soared to absurd
heights, then plunged back to earth with a resounding thud. Even the
rhetoric repeats itself so precisely that you can time the market by it;
when leading political figures respond to a market slump, for example,
by insisting that the economic fundamentals are in good shape - an
utterance that has already passed the lips of several American
politicians, including John McCain - it's always time to head for the exits.

What this implies, of course, is that the end of a bubble is not the end
of the world. This is not to say it will have no impact. A great many
people who thought they had huge amounts of money, and who made dismally
bad decisions on that basis, will have to deal with the consequences. A
great many companies made the same mistakes on an even larger scale, and
face bankruptcy in many cases and massive layoffs in others; the impact
on employment levels, tax revenues, and many other aspects of our
collective life will not be small. If the consequences are handled
clumsily enough by government and the upper levels of business, the end
result could be - well, since the word "depression" has been gently
shepherded out of the realm of public discourse, let's call it the Great
Recession, a period of economic contraction and retrenchment that could
easily run on for a decade and leave America's economic and political
life in shreds.

All this has happened before. Only the comfortable delusion of American
exceptionalism - a belief that manages to ignore all of American history
before 1950, and assumes that the second half of the 20th century will
repeat itself in a tape loop until the end of time - makes many
Americans think that it can't happen now, or that it won't happen again.
Yet that same delusion makes it hard to remember that our society
survived this same process many times before, and will doubtless survive
it once again. Nations have perished for many reasons, but curiously
enough, financial collapse is not one of them - a reminder, if one is
needed, that money is not wealth, but simply a tool for facilitating the
exchange of that real wealth that consists of goods and services
provided by people for people.

Over the last two decades or so, I've had quite a few occasions to
reflect along these lines. Beginning with 1987's Black Friday, which
ushered in the current era of financial instability, economic crashes
and convulsions of one sort or another have come at fairly regular
intervals, and each time Galbraith's book has offered a useful
counterpoint to the pronouncements of the moment. This time, though, has
been spiced with an additional dose of irony, for a few weeks ago one of
the used book stores here in Ashland provided me with a dog-eared old
copy of what was once Galbraith's most famous book, The Affluent Society.

Some economists spend their lives writing in obscurity, and some become
famous without seeing their ideas put into practice. Galbraith was not
so lucky. Published in 1958, The Affluent Society argued that the United
States had achieved a self-sustaining level of opulence to which the old
laws of economic scarcity no longer applied, and that this abundance
could support sweeping public programs to eliminate poverty and provide
amenities for all. These claims became holy writ in mid-20th-century
liberal circles, and drove most of a generation of American public
investment, from Johnson's Great Society on down. In the process, it
committed America to unsustainable public expenditures that set the
stage for the economic troubles of the Seventies, and helped drive the
backlash of the Eighties that replaced tax-and-spend Democrats with
borrow-and-spend Republicans. By the time Galbraith died in 2006, he was
treated by most economists with that dismissive fondness reserved for
proponents of failed ideologies.

The Affluent Society has been much critiqued by those economic thinkers
whose faith in the omniscience of the free market rivals a medieval
peasant's trust in the miracle-working powers of the bones of the local
saint, but it seems to me that the book's major flaw has been missed by
these writers. Ironically, Galbraith in The Affluent Society fell into
the same trap he critiqued in The Great Crash: the belief that economic
reality had changed and the old rules no longer applied. He was quite
correct to note that America in the 1950s had become stunningly wealthy,
but he was quite wrong to think that this wealth was more than a
temporary phenomenon.

Two factors gave postwar America the longest period of sustained
economic expansion in its history. First, the accident of geography that
put nearly all the battles and air raids of the Second World War on
other nations' territory left the United States in a unique position at
the war's end. Every other industrial power on the planet had had its
factories and cities pulverized by enemy action; America, and only
America, was left with its industrial plant intact. For more than a
decade after 1945, as a result, America dominated the world's markets
for most industrial goods, and profited mightily as a result. By the
time The Affluent Society saw print, though, this dominance was already
fading, and within another decade it would be a thing of the past.

Just as important as America's industrial predominance was its role as
the world's largest producer of crude oil. In 1950, for example, the
United States produced as much petroleum as the rest of the world put
together. Its huge market share allowed it to prosper in the same way
that oil sheikdoms are prospering today. By the end of the 1950s,
however, the vast American thirst for cheap energy had turned the United
States into a net importer of oil; by 1970, US petroleum production
peaked and began its irreversible decline as America's oil reserves
began skidding down the far side of Hubbert's peak. All this made the
opulence of the Fifties a passing phase, and turned Galbraith's
prescription for a better society into an expensive flop.

Behind both these failures, it seems to me, is the besetting sin of
modern economics, the failure to ground economic factors in their
historical and ecological contexts. The index of The Affluent Society
contains no entries for "energy", "coal", or "petroleum"; while
Galbraith briefly raises the issue of resource depletion at the end of
his book, he presents it purely as a challenge that could be solved with
an adequate supply of scientific talent. The role of contingent
historical events in launching American society on its trajectory
through affluence and out the other side gets equally short shrift in
Galbraith's book. Neither of these faults is unique to Galbraith; they
pervade the entire discipline of economics, which has consistently tried
to impose timeless laws on the grubby historical realities of economic
life, and has just as consistently ignored the role of natural systems
as a primary source of economic value.

It's for these reasons, I've come to think, that a society guided by
economic ideas treats pollution as an amenity problem, rather than a
factor that can reduce the Earth's ability to support human societies,
and treats resource scarcity as something that can be solved by
investing more money, rather than a hard limit to growth. On a larger
scale, it's for these reasons that the three-hundred-year boomtime of
industrialism looks normal to so many people today. Looked at with an
eye tempered by the cycles of history and the principles of ecology, it
takes on a very different shape; its similarity to a speculative bubble
is hard to miss; its dependence on reckless, unsustainable exploitation
of half a billion years of stored photosynthetic energy, in the form of
the Earth's fossil fuel reserves, becomes just as visible as the
dependence of the late housing bubble on wild overestimates of how much
future buyers would pay for homes.

Thus the last three centuries of industrialism have given us, not an
affluent society, but an effluent one: effluent in the literal sense -
one that pours out its waste on the living Earth that supports it - and
also in the deeper sense of its Latin roots, ex-fluere, to flow out or
away. By ignoring its own dependence on functioning natural systems and
the nonrenewability of the resource base that allows it to function, it
is causing the historic and ecological conditions that allowed it to
emerge and flourish to trickle away out of reach. The history of
industrial humanity may therefore turn out to be a repetition, on a much
larger scale, of the same sequence of bubble and bust that is heading to
its normal conclusion in the world's financial markets right now; it's
pleasant to think that a future equivalent of John Kenneth Galbraith
might someday write the history of that larger boom and bust for the
edification of our descendants.

_____

John Michael Greer has been active in the alternative spirituality
movement for more than 25 years, and is the author of a dozen books,
including The Druidry Handbook (2006) and The Long Descent (2008). He
lives in Ashland, Oregon.

http://thearchdruidreport.blogspot.com/2008/09/effluent-society.html


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