Poverty/Unemployment and Sustainable Economics

[Behrouz]

Optimal personal finance management requires knowledge of the short and long-term economic trend.  How we allocate our life energy and resources individually and collectively will affect our quality of life and survival.  But we do this necessarily through an economic system – and not by choice.  Economic systems like everything else in life have a life-span.  Although some of us would love one system to end and another one (more suitable to our needs) begin, that is not how history works.  Our lives run around the limits of the system not the other way around and each system typically lasts many generations (centuries).  But each comes to an end as another one is born and it is important to understand the dynamics and the driving force behind these systems and transformations as they affect virtually every aspect of our lives (from our survival to our world views) including our personal finance decisions.

When considering changing the way we live (i.e., our lifestyle) especially at a global level (e.g., within the sustainability movement) this issue takes a center stage.  Capitalism has long been criticized and chastised for its many ills that have only worsened exponentially more recently (from endless wars and oppression to global warming, etc.).  This speaks volumes to its dysfunctionality and the need for its ultimate demise.  However, it is the fundamental economics of the system in relation to sustaining human life (principally in the short-term) for the majority of the population (i.e., globally) and not its morality that determines its staying-power (resilience and longevity). 

So where is capitalism with respect to its demise and where is the new system with regard to its birth.  The answer to this should influence each of us in how specifically we plan our lives – i.e., from career and investment decisions to our lifestyle, living conditions, and relationships.  With regards to the sustainability movement it would mean whether it would succeed or not, and more importantly what exact shape it would take.  But to get an accurate answer we need to know much about economics in a scientific way (analytically, comparatively, historically, geographically or cross-culturally, transparently, avoiding private funding and bias) to understand its dynamics of change.  Obviously, the answer(s) will be controversial due to the class division in society but it will help those truly interested in sustainable change to sharpen their focus and energies especially in regards to the specific goals and means derived.  This understanding will help to balance the level of change necessary (e.g., slow and incremental vs. rapid and massive), with the possibilities (e.g., using means within the system or helping to create a new system with different means appropriate for the task), and the will required (e.g., wish/want/desire vs. responsibility/sacrifice).

It comes down to whether we find a direct relationship between the environmental disasters we face today to the global crisis of capitalism (i.e., global depression) and whether we consider this crisis temporary or terminal.  If temporary (i.e., like the 1930’s) then we should try to work within the system respectful of its ownership and production models by various names (e.g., “green” businesses and corporations, venture “green” or “local” capital investments, anonymous money and commodity exchange) basically relying on individual efforts and initiatives with intentions of reducing environmental damage but without undermining the profit motive (the heartbeat of capitalism).  If terminal however we should try to prepare for a new economic system (i.e., a new way of production, exchange, distribution and specially ownership) in which the society is reorganized with “individual”, “corporation”, and “state” (various forms of an exclusive entity) ownership and its various institutions removed permanently and not replaced with any other exclusive entities with a different form or name.  Sustainability initiatives will necessarily take a different format but in either case they always fall within the greater economic imperatives / fundamentals of each system.

I welcome the chance to add to this debate in the future with a goal of carrying out specific scientific / experimental projects but wanted to highlight the larger issue of the global economic system and the huge fork in the road that we are facing including within the sustainability movement with regards to sustainable economics.

Consider the pie charts in this article (http://currydemocrats.org/in_perspective/american_pie.html) which is from a Democratic Party site.  The data being from the establishment is if anything an underestimate.  The American Pie chart is based on data from 2007 and with the current “depression” where the very rich always add to their riches mostly based on their insider market advantage the gap is likely significantly worse.  Accordingly the top 20 percent own more than 90% of financial wealth with the top 1% owning more than 40%.  I also know some recent data indicated that the bottom 20% own about 1% of financial wealth.  Also consider “off-the-charts income gains for the super-rich” bar graph showing rising inequality since the 1970’s.  I would say likely rising inequality for the super-rich for a much longer time than that (several centuries now) but no doubt accelerating with the modern capitalist financial extraction derivatives not to mention the ultimate supremacy of capitalism due to globalization.  Underestimations also apply to the unemployment rate which by some measures are at least double the stated 9 percent (especially considering those that have stopped looking for work, and underemployed, not to mention employed but without living wages).

To highlight some of the disconnect between the current sustainability initiatives and the reality of the current economic crisis I quote Patricia another TW member who couldn’t have said it better: “It's hard to talk about sustainability with people who have been unemployed for many months or years (since 2009 for some people) because they'll take any job even if that job is not balanced with the environment.  You can't really blame them.  They have families to feed. Low income housing is a a premium now (hard to get), and charities are overspent and unable to help anyone out besides people in the worst kind of trouble (addiction, single mothers who are pregnant, drug users and mentally ill people).”  On a more personal level where are you with respect to the established economy?  How do you see the trend developing and what is your evidence (how solid are your resources such as your job / assets / health / social resources /food, water, and personal security/etc.)?  Is the system in a temporary depression or a terminal one and how does that affect your personal prospects and priorities as far as your involvement in the sustainability movement?  In what ways does the movement need to change / evolve to stay or rather become more relevant?

Connecting means of addressing sustainability issues with means of addressing the global economic crisis of capitalism (including poverty and unemployment, etc.) is an important challenge, one that demands serious investigation of the relation between the two and is at the heart of the future direction / organization / relevance of the sustainability movement.  A sustainable environment can only be based on sustainable economics.

[Judith Culver]

Behrouz, welcome to the Personal Finance workgroup and thanks for the essay.  I see there have been 15 views and no comments.  I think this is an indication that people are really busy harvesting and preserving at this time of year.  This group has been focusing on getting people to move their money out of Wall Street and the big banks and bring it back to Whatcom County.  Also we are starting to invest our resources in local farms and businesses. 

Personally, my husband and I are retired and our goal is to prosper regardless of what happens to the monetary system.  We need assets to continue in this system or to thrive in a collapse scenario.  As you mentioned we are focusing on food, water, personal security, and maintaining good health.

A note about these discussions:  it's been my experience that the only people who receive email notice of discussion comments are the one who have commented on that discussion.  You might get a better conversation going if you post this as a Transition Whatcom discussion instead of limiting it to this group.

 

 

[Behrouz]

Judith, I understand the purpose of this group.  However, the reason I wrote the article is that we should question the assumption that putting our resources into "local businesses" will be necessarily a better alternative because the local businesses ("green" or not) work under the same economic imperatives of profit that got us here.  Please note that almost all big and giant corporations started as "local" businesses sometime in history and through competition ("eat or be eaten") got to their current state.  We have to understand that capitalism is based on growth.  It is in the nature of capital to want to be accumulated as much as possible due to the competitive process.  It is focused on its survival in the short term.  If the people under its command thought of tomorrow they would be competed out, i.e., destroyed.  So the leanest and the meanest and the most crooked and "smart" gets to rule, i.e., the ones that generate the most capital.  This does not just happen out there but also locally - because locals also are part of the same system.  But since capital is a product of theft (i.e., the productivity of labor that is not distributed among the workers but rather pocketed by the capitalist) it is consequently and directly linked to poverty.  This is especially true when you consider that the technology labor produces is more and more (in an exponential measure) used to render him superfluous thus leading to increasingly massive unemployment (and other forms of it e.g., underemployment, employment without living wages).

 

Thus, labor is in a perpetual battles of defeat as the history of the union movement has shown. 

With unemployment and poverty on perpetual rise globally while production is much easier and efficient than previous generations we have to realize the screaming reality that it is the private ownership of the means of production that is the ultimate root of this global catastrophy - one that touches all aspects of our lives including our health / environment / climate change.  We cannot ignore the massive numbers of the unemployed and poor that are increasing greatly by the minute due to the above internal contradictions of capitalism.  We cannot also dictate to them how to live as their desperate lives will turn more and more of them to turn against the environment, each other, and us (and indeed eventually even the very rich) in our relative comforts.  Furthermore, we must take heed and realize that no matter how comfortable a life you may have today, and no matter how off-the-grid or disconnected you are living from the larger global society, you will not be immune to its consequent disasters (crime, epidemics, wars, witch hunts, weather events, pollution, pests, etc. etc.).  It behooves us to realize that we are tomorrow's poor / unemployed / otherwise ravaged.  The historical experience of "The Great Depression" speaks volumes to this not to mention the more recent grotesque examples in more impoverished lands of the "underdeveloped" world not to mention pockets of such economically devastated areas like Detroit and New Orleans.  Indeed understanding the internal contradictions of the capitalist economic system helps to predict the epic scale of the destruction yet to come.  That is unless a new economic system with more harmonious i.e., communal / cooperative means of production, exchange, distribution, and above all ownership (i.e., common / social ownership) replaces the current private / competitive / predatory / selfish /  short-sighted / speculative and virtual / destructive ways on a global scale.  "The Great Recession" will turn into "the Greater Depression" and "The Greatest and Endless Depression" (the "developing world" e.g., China /Russia / India / Brazil to quickly join in).  We should not be surprised to see more and more Hoovervilles, and tent/trash towns prop up with utter pollution and destruction of the environment and wildlife as the desperate poor resort to desperate measures especially against the more vulnerable, e.g., wildlife / environment, children / elderly / immigrants.  In a desperate move to keep up the profit margins banksters and their corporations increasingly sideline pollution / climate-change concerns as they claim hurting jobs while they use further privatization and technology sidelining more and more workers again for the almighty profit - the heartbeat of the system.  On a desperate attempt new escape goats used as pretext for grotesquely macabre "creative destruction" measures (e.g., perpetual world war, real or created epidemics, etc.) will be invented with increasing use of fear for control.  The fastest growing fields will be in the technology and crowd-control (military and judicial industrial complexes with comprehensive surveillance and control measures).  The scale of climate-change events and habitat change will reach the range of "colony collapse" level for the human species in many parts of the world.

There is no escape.  It is only a matter of time before this affects the rest of us.  Because we are all interconnected.  Just like the ecological concepts many of the TW members espouse.

 

Sustainable economics is necessarily the foundation of a genuine sustainability movement and a sustainable environment.  We must get our priorities straight.  We must consider tending to our species in a comprehensive manner in the forefront of our efforts to help the environment and other creatures we depend on.  Only a sustainable economic system that does not pin us against each other in a competitive battle of survival, one that rather forces us to act cooperatively, can be expected to also help the environment. Sustainable environmental movement would only be sustainable if it becomes a sustainable economic movement.  This requires finding viable solutions for inclusion of the poor / unemployed / otherwise ravaged with collective / cooperative production, exchange, distribution, and above all ownership.  Only a true community ('unity through commonness i.e., sharing') can be expected to commune with nature.  Our personal finance choices must not overlook these essential fundamentals.

P.S. Thank you for the advice on posting on the discussion board.  I will follow through.

[David MacLeod]

Behrouz,

 

You make many good points. However, personally I am not ready to make capitalism / competition the whipping post onto which to direct all blame.  I don't have time to write a long post, but I note that competition and growth exist in natural systems, and "Obtain A Yield" is a permaculture principle.  To put it in simple terms, growth is natural when resources are abundant.  The problem comes if the system doesn't reorient itself towards more cooperation when resources become scarce, and shift towards a steady state operation.  The problem comes when growth becomes growth for growth's sake, and turns into a cancer. I believe we have come to the end of growth in our culture, and we need to quickly reorient toward descent / compression. Even so, for me that doesn't necessarily mean the end of all competition or efforts to obtain yields.  I believe there is a healthy balance to strive for between competition and cooperation and between the permaculture principles of "obtain a yield" and "apply self-regulation" (Holmgren calls one the gas pedal, and the other the brake).  All the while keeping in mind the ethic of "share the surplus".

 

I think the Personal Finance Group has chosen a wise path of starting with addressing personal and community financial security via moving money out of big banks, while they also push at the margins of questioning some of the bigger picture issues regarding long term cultural/economic arrangements.  Asking questions, but not purporting to have all of the answers.

[Behrouz]

David, 

Please do not feel obliged to respond as I know that as a longer-term member you are busy in your other activities and other boards.  My responses are not necessarily directed to you but the larger audience and I would hope that you do not take my comments personally.  I do not have much time myself but feel obliged to respond in great length to avoid being misunderstood especially when I express opinions that are hardly mainstream even in such a site / forum - even more so when talking about a new economic system and paradigm.  I am by no means "anti-capitalist" per se.  However, I recognize that capitalism has outlived its usefulness as an economic system providing for the species for a long time and is past its reform stage - i.e., terminal malignant cancer / irretrievable.  Instead of spending massive resources of humanity and our planet to save a lost cause / dying old body I would rather invest it in a new one based on more harmonious principles appropriate to the reality of our global species and environment with all the huge problems it is facing.  

 

The myriad of solutions proposed by many in the Personal Finance so far under "local money" or helping "local businesses" are nothing new and have been tried for at least two centuries.  All with hardly any long-term success while the fundamental conditions for their success (the population base needed to support it) have deteriorated sharply with the evolution of capitalism.  These measures are in general individualistic / defensive and unrealistic in that they assume that capitalists can apply "self-regulation", whereas being in a competitive system they cannot.  Capitalism is in fact the antithesis of permaculture and ecologic principles.  Capitalists are themselves slaves to capital / profit and have no choice but to concentrate their efforts on the short-term because otherwise they get competed out in the short term and cannot accomplish their long-term goals.  Bankruptcies are in continuous rise http://www.bankruptcyaction.com/USbankstats.htm and the success rate of new businesses drop sharply in the first few years http://www.moyak.com/papers/small-business-statistics.html.  "Local businesses" tend to be less well capitalized with a smaller knowledge base and political clout and thus more vulnerable to failure especially during sharp and / or protracted financial crises that have accelerated in recent years globally.  This situation has turned even successful businesses more defensive i.e., less willing to spend / "hoarding cash" with more and more of the investments going to technology and more of the cost-cutting measures in down-sizing and reduction of fringe benefits, leading to increased unemployment and poverty.  In other words, there is no room to "apply self-regulation" and "share the surplus" - i.e., the laws of capital / commodity exchange are dictated / imposed by the market.  Only growth of capital (i.e., profit / theft of uncompensated labor) is rewarded.

 

Furthermore, as most people in Finance will tell you the growing competition and the difficulty to turn a profit (especially for smaller businesses) has turned most investors (the life-blood of the businesses) into traders (i.e., investing for the short-term).  This is then reflected in the way businesses (from small to the largest of corporations, from locals to multinationals) have to operate - i.e., based on the rules set by the market.  This short-sightedness in the economic front is then reflected in politics and all the other institutions (the superstructure) being ultimately reflected in individuals' lifestyle / worldview / personality and behavior.

 

I follow the scientific (i.e., analytical / experimental) approach because of its superior objectivity over the traditional capitalist approach of "reasoning" / rationalization.  Accordingly, I do not have all the answers either.  But my search starts with a thorough search through history and across geography / globally subjected to detailed analysis attempting to learn the right lessons from the experiments / experiences of others before suggesting new proposals.  Following the scientific principles, I try to keep an independent mine questioning the assumptions / the evidence / and the validity of conclusion of other activists avoiding influence by any established gurus / peer pressure / other private interests biasing my reflections as much as possible.  Drawing from a large knowledge base and a variety of life experiences subjected to scientific analysis certainly helps as real life problem solving often requires interdisciplinary approaches.  I then try to assess the local resources and engage others locally interested in solving problems.  Of course, I prefer a collective method where the experiment from its early phases of data gathering / analysis to feasibility studies, design and actual implementation is shared both in effort and potential rewards (means justifying the end, collective means for collective ends).  The idea is that of a scientific proof of concept, collectively designed and implemented.  

 

It is important to note some of the lessons learned from modern (large industrial-scale) global capitalism.  One of its greatest achievements (one that still could be improved significantly) is proving the immense advantage of collective / cooperative production.  This type of planned production was by far more efficient / cost-effective than the smaller scale manufacturing which it supplanted based on the more cooperative aspect of labor alone (i.e., everything else equal) - proving the sum larger than individual parts i.e., synergy.  This also underscores one widely misunderstood notion about capitalism.  It is not capitalism's production model that is the greatest problem rather it is its type of ownership - i.e., private ownership and appropriation.  This of course then leads to private exchange and distribution providing the conditions of class structure - privatizing the benefits while socializing the damages.  Another of the superior aspects of of modern globalized capitalist production is its use of global human resources - again a cooperative internationalist aspect with significant dividends in production quality and efficiency.  These are just a few lessons.  So it is important not to use a wide brush on anything and learn the right lessons for the task at hand.  The advantages and disadvantages (what is kept and what is discarded) must be based on a scientific detailed analysis of the necessity / possibilities / and the specific source of dysfunction posed by the de facto economic system.  

 

Accordingly, we should understand another source for failure of smaller businesses with their inferior productivity edge related to smaller "collective" size of their operations.  We could apply this to smaller farms and a myriad of other "local businesses" as people consider that just buying locally and starting or supporting "local businesses" would somehow provide an achievement in our path to sustainability.  Within the private ownership model of production, exchange, and distribution market conditions quickly expose the "idealism" or impracticality of such efforts as they have for a few centuries now involving thousands of similar experiments throughout the world.  It may be more worthwhile to do more research and find out about any successful examples that have lasted and thrived for at least 10-20 years.  I have studied a number of such experiments and am genuinely interested in any successful ones that I may have missed.  "Success" has to be carefully defined of course.  A few "successful" "green" / echo-friendly local businesses operating for a few years do not qualify for "success".  It must mean based on the overall impact affecting the lifestyle of an engaged / interactive "community" with average (i.e., no extraordinary) use of private resources and proof of significant independence, stability, or "growth" as it relates to the survival potential over at least a 10 year period (i.e., proof of viability).  In other words, not an example that would be difficult to replicate and maintain elsewhere.