Article By: Dr Joel Magnuson
Joel Magnuson outlines the paradox of our current crisis: the twin spectres of global warming and the Great Recession. Just as commentators were truly beginning to realize the spiraling danger of global warming, the Great Recession appeared and with it a call for ever more growth, which in its turn leads to further global warming. These problems can only be solved through the evolutionary transformation of the deeper structure of institutions and culture. This, however, is also predicated on an evolutionary transformation of an even deeper level of human consciousness. In other words, global warming and global recession are, to a large degree, anthropogenic crises that stem from institutionalized patterns of destructiveness that are deeply woven into cultural fabric and the collective consciousness of capitalistic societies.
We humans have a penchant for self-destruction. Our historical record shows that we have consistently invented and reinvented ways to bring about our demise. In his recent book, Collapse, evolutionary psychologist Jared Diamond chronicles this record with an impressive list of examples of this from every corner of the world. His examples reveal consistent patterns in which entire societies collapse as a result of human destruction of the ecological habitats that would have otherwise sustained life. Though Diamond mainly focuses on ecological conditions, humans have found many other ways to destroy themselves including warfare, economic chaos, or the slow death of poor nutrition and obesity. In keeping with this legacy, global warming and global economic collapse now loom as the paramount crises of the 21st century. These crises are inseparable and are caused by patterns of destructive human behavior, particularly patterns in the economic activities of production and consumption. Until now, we have been living in a kind of collective denial about these destructive patterns and dismiss them fatalistically as an unfortunate but inevitable aspect of human nature. To do so is concede that we are hard-wired to destroy and cannot be changed. If we accept this as our fate, then we are committing ourselves, our human nature and all that that means, to certain extinction.
Trying to define human nature is something that has, and will be, subject to endless debate. Yet what is less debatable is that we have a demonstrated tendency to act in ways that are destructive to ourselves and other species. At the same time, we do demonstrate creative tendencies as well and these should not be denied either. Perhaps a more constructive inquiry is to accept that the seeds of both destructive and creative behavior in within us all, but to also look carefully into how we socially allow these destructive tendencies to grow and overtake our more beneficial, creative side. In other words, global warming and global economic meltdown can be seen as symptoms of societies in which the seeds of destructive economic behavior have grown to become widely institutionalized.
Combating destructive behaviour by developing holistic economic approaches
The institutionalization of destructive human behavior remains largely unexamined in mainstream economic discourse. Predatory, greedy and other forms of destructive behavior are viewed as axioms of the 'rational economic man' in mainstream economic discourse. They are seen as necessary evils that somehow, paradoxically, lead to social benefits by driving the economic growth and prosperity that is so often sublimated as the great triumph of capitalism. Rarely, if ever, is such growth seen as destructive or pathological—a source of pathos or suffering—like growth in cancerous cells. By rationalizing them in this way, greed and predation remain largely unexamined by orthodox economists as institutionalized phenomena. Yet the storms of global warming and financial meltdown have gathered, and the failure of mainstream economics to adequately address them is highlighted. The formerly marginalized voices of heterodox economists that might prove more helpful are now beginning to be heard.
One such heterodox approach, the approach taken here, is the Institutionalist approach. This is a holistic approach that examines ecological and economic crisis on multiple levels. One level is on the surface. This is the level at which policymakers in government are trying to deal with the problems of global warming and global recession. Carbon cap and trade systems and stimulus plans are being implemented to deal with these problems without significant changes in our institutions or systems. Some measure of effectiveness can be achieved at this level, but by leaving the underlying causes unchanged they will ultimately be for naught.
We now find ourselves trapped between two epic problems whose causes are the 'toxicities' created by human economic activity. At the center of this current economic crisis are toxic banking assets created by human financial institutions. The central cause of global warming is the toxins spewed into the atmosphere by human institutions of economic production and consumption. In most ways, the measures that need to be taken to deal with these crises are contradictory. Political and business leaders are calling loudly for dramatic increases in consumer spending to sustain growth and avoid 1930s style depression. Yet elsewhere others are calling for dramatic reductions in consumer spending to reduce our damage to the environment and fight global warming. The principal reason these problems seem to have contradictory solutions is that they are formed within a myopic, and fragmentary frame of reference.
Evolutionary transformation of the deeper structures
With the Institutionalist view, we see that these problems can only be solved through the evolutionary transformation of the deeper structure of institutions and culture. This, however, is also predicated on an evolutionary transformation of an even deeper level of human consciousness. In other words, global warming and global recession are, to a large degree, anthropogenic crises that stem from institutionalized patterns of destructiveness that are deeply woven into cultural fabric and the collective consciousness of capitalistic societies.
One of the principal founders of the Institutionalist school of economics, Thorstein Veblen, argues that both the creative and destructive tendencies in human behavior are 'instinctive'. He uses the term 'instinct' in an unconventional sense. Rather than seeing behavioral patterns as stemming from a hardwired or biological drive, he sees them as socially molded habits that rise to the surface from a much deeper volition to simply act in the world. People are driven to act in the world and in the Marxian sense this could mean actively engaging in material production as part of our species being. For Veblen, people are simply driven to do something, but how and what they do is primarily a social construction. Socially constructed habits of human behavior are the substance of social institutions. Using this institutional framework, we can see that institutions can evolve over time to become either creative or destructive, and these institutions guide human behavior accordingly.
We do not have to accept these dire conditions of global warming and economic meltdown as are our fait accompli. Thus Veblen and other Institutionalists assert that we are only hardwired to act in the world and whether our actions are directed toward creative or destructive ends depends on institutional forces and habits of the mind. This means that we must mobilize armies of people who are consciously striving toward building institutions and a new consciousness that foster creativity and care, rather than predation. This work must be done at all levels if we plan to survive the paramount crises of the 21st century: global warming and global economic meltdown.
Global Warming and Global Economic Meltdown
Between 2006 and 2009, print and broadcast media became filled with coverage of global warming and global recession. As the banking crisis quietly began to unfold in 2007, media attention was captured by new scientific reports on the unexpected severity of global warming and its human causes. Then, around mid September of 2008, the lid came off Pandora’s jar and every dismal thing one could imagine exploded into the global economy. Now known as 'The Great Recession', the economies of the US and much of the world have since plunged into the worst economic crisis since the 1930s. The numbers of people affected and the monetary values of these crises are staggering and promise to be every bit as profound as those affected by global warming.
Global warming is not the only process whereby we are destroying our ecological habitat. To name just a few, large-scale agricultural production is ruining topsoil and depleting fresh groundwater. Species loss and the decline in biodiversity is the most severe since the Cretaceous-Tertiary extinction event that eliminated most of the dinosaurs over 65 million years ago. Clear-cut logging and deforestation are contributing topsoil erosion and producing larger concentrations of atmospheric carbon dioxide, the principal greenhouse gas that is responsible for global warming.
This destruction is being carried out partially because we are constantly trying to extract more and more resources and energy from it in order to sustain economic growth. We need to extract these resources because we need to produce more and more products, and we need to produce more and more products because we need to generate more and more profits to sustain returns to capitalist investors. While we are extracting resources from the planet we are also putting garbage back into it and releasing toxins into the atmosphere. Driven by their internal imperative for continuous growth in production and consumption, capitalist economic systems around the world are creating unprecedented levels of environmental destruction, and rapidly depleting both renewable and non-renewable resources on a global scale. Though the entire world is playing a role in exhausting world oil supplies, the United States is leading the way and China, since it has developed capitalistic institutions—is rapidly following.
Population growth certainly plays a role in resource depletion. As much as population control needs to be addressed in every international forum on global warming and resource depletion, it will be a meaningless dialogue if it is not also tied to the pressures to grow that do not stem from population increases. As capitalist institutions have spread around the planet, so has the appetite for profit making and financial returns – a voracious appetite that has grown far above the capacity of the planet to feed it. The rate with which oil and other resources are used up is far above the natural processes that replenish them. Fossil fuels like oil and coal developed over very long periods of geologic time and cannot be replaced during the span of human generations or lifetimes. They are not renewable. For decades we have been aware of the imprudence of being so heavily dependent on irreplaceable resources, yet our systemic need for more growth requires that we use more energy each year.
In 2009, the US Department of Energy released its annual report. The report projects a rapid decrease in future oil production and a scramble to shift to other energy sources. The Energy Department’s outlook has taken a very pessimistic turn compared to previous reports, which is significant because it usually comes up with somewhat overly optimistic assessments of resource availability. It is also significant because their outlook has now become more in line with most other geologists who for years have been warning about global peak oil production, subsequent production decline and the economic troubles that will inevitably follow.
The economic danger of this is that most economies of the world have become habitually reliant on cheap and abundant oil to sustain their manufacturing, transportation, and agricultural sectors. As we refuse to break the fossil fuel habit and burn away oil supplies, we pass on a habitat that is more resource poor and more toxic to future generations. Nearly 2,500 years ago, Shakyamuni, the person said to be the original Buddha, warned of the suffering caused by over-consuming resources in one of his earliest teachings, “Discourse on the Son’s Flesh.” He related a parable in which a young couple found themselves and their small child lost in the desert. The parents drew the grim conclusion that all three would face a certain death unless they killed and ate their little boy. Of course, the suffering caused by this atrocious act is unbearable. Most people are largely unaware of the extent of the suffering they will cause as they over-consume resources and cannibalize future generations’ ability to survive. If they were, they would find little joy in their lifestyles. As a result, they remain trapped in a consumerist culture and mindset, which is also a state delusion and denial. Delusion has an important function as depletion of resources has become a normalised practice of pursuing economic growth. Economic growth is insulated from criticism and voracious consumption is institutionalized.
While oil reserves are being depleted, economic systems must find other energy sources to sustain continuous growth. Burning natural gas and coal is likely to increase as they are still relatively easy to use and remain somewhat inexpensive. Geologists estimate that the natural gas will be depleted over the next two centuries at current consumption levels. But as a replacement for oil, the lifespan of natural gas would fall to somewhere between 50 and 100 years. Coal is still relatively abundant and current consumption levels could be sustained for several centuries. Like natural gas, however, if coal were to be used to replace oil, its lifespan would be severely shortened. Of greater concern with coal is that its effluents are extremely toxic. If coal use increases to replace dwindling oil supplies, then, more toxins will spew into the atmosphere exacerbating the problems of acid rain and global warming.
The amount of carbon dioxide we release into the air has grown exponentially over the last two centuries. This growth is in part due to population growth and in part to the growth in industrialization that is based on the extensive use of fossil fuels. Coal burning electrical plants and petroleum-based transportation systems created an extended epoch of economic growth. Throughout that epoch, there has been a steady elevation in global temperatures. The most extreme increase occurred in the last 50 years during which both economic growth and carbon dioxide emissions soared tremendously.
Most of the information we have about global warming has been developed by the Intergovernmental Panel on Climate Change (IPCC). The IPCC is a body of hundreds of scientists originally brought together by the United Nations in 1988. Since 1990, the IPCC has produced four reports covering the group’s research on climate change that is caused by human activity. In their fourth report, 'Climate Change 2007: The Physical Science Basis', the IPCC concluded ambient Earth temperatures will rise by 1.6 to 6.4 degrees Celsius (2 to 11.5 degrees Fahrenheit) by the year 2100.
The lead author of the report, Chris Field asserted nearly two years after the report was published that the IPCC underestimated the magnitude of global warming. Field reflected that they have a better understanding of the impacts of global warming and that the effects are likely to happen more quickly and more severely than they originally thought. According to Field, the IPCC now has data showing that from 2000 to 2007, greenhouse gas emissions increased far more rapidly than we expected, primarily because developing countries like China and India saw a huge upsurge in electric power generation, almost all of it based on coal.
IPCC scientists are warning that we will have to deal with the global warming crisis on multiple fronts. Government institutions are already making preparations for dealing with an onslaught of crises that will unfold with global warming. These crises will include massive floods, sudden and extreme weather changes, drought, hurricanes, crop failures, food shortages, migrating populations and ultimately violent conflict. The US Department of Defense has raised concerns that these climate changes and declining energy resources, will result in a food crisis that could easily develop into national security problems. The IPCC report outlines a possible sequence of events such as rising seawater levels by anywhere between 7 and 23 inches and flooding of coastal regions including many highly populated urban areas, changing weather patterns, warmer ocean temperatures, arctic conditions developing in some temperate climates, drying trends, falling crop yields, and drought.
One of the most extreme consequences of global warming is the melting of polar ice caps. As the ice continues to melt, the runoff water will flood into the Gulf Stream disrupting the northward flow of warm water and air from the tropics. This will cause a severe cooling trend in northern temperate climates and change them to into arctic climates similar to present-day Alaska or Siberia.
Avoiding the critical threshold: the point of no return
IPCC scientists are particularly concerned about crossing a critical threshold after which a series of feedback processes will be set in motion. The threshold is a point in time in which warmer temperatures will cause more greenhouse gasses to be released into the atmosphere regardless of the level of human activity. These gasses will cause the planet to get warmer still and will automatically release more gasses leading to more warming and so forth. Currently it may not be too late and people might have the ability to reverse the warming processes by reducing carbon emissions, but if we fail to do so, we will lose this control and global warming will be set off on a pattern of escalation of its own momentum.
One of these automatic processes is a drying trend in the tropical forests caused by warmer temperatures. As the forests get drier, they become more susceptible to wildfires. As the forests burn, they will release tons of additional carbon dioxide into the atmosphere. Moreover, the carbon dioxide is more likely to concentrate in the atmosphere as a greenhouse gas because there will be fewer trees to absorb the carbon. As carbon dioxide increases, the planet gets warmer, the forests drier, and so on.
Another feedback process occurs with the melting of permafrost in the Arctic tundra. Permafrost is essentially frozen topsoil that covers most of the land mass in the artic region. As it melts due to warmer temperatures, tons of carbon dioxide that have been trapped in the frozen soil will be released into the atmosphere. This will cause more warming, more permafrost thaw, more atmospheric concentrations of carbon dioxide, and more global warming. Warming seawater and melting frozen tundra, or permafrost, will release methane that has been trapped in ice for thousands of years. Methane is also a major contributor to global warming. Methane release acts as a kind of global warming supercharger because it does not come from burning fossil fuels; it is simply released into the atmosphere as the planet gets warmer. This sets in place an unstoppable vicious circle – as the planet gets warmer, more permafrost will melt, more methane will be released, and with an increased amount of methane comes more global warming, and so on.
Once we have crossed this threshold, massive amounts of carbon will be released automatically regardless of what we humans do. We will tragically lose our ability to reverse this process that we started ourselves and the damage to human habitat will be massive and profound. Future IPCC reports will doubtlessly begin to focus on how to cope with these situations rather than how to prevent them.
Potential political and social consequences of global warming
Though governments are anticipating having to deal with these problems, perhaps an even more daunting prospect is that there will be many other problems rising to the surface that we have yet to imagine. We are uncertain what exactly will be all the consequences of global warming, the severity of those consequences, or when they will occur.
One of the things that make global warming particularly difficult to confront is that its causes and effects are not limited to a single society or nation. The entire world plays a role in creating this condition – though some countries obviously contribute more than others – and the entire world is feeling its impact. Global warming threatens to destroy the foundation of humanity’s collective existence. One of the immediate impacts is that entire low-lying coastal areas will be submerged under rising sea water. This is already happening in different places, suffering irreplaceable property damage meaning that millions of people are also displaced. More damage will escalate with intense heat waves, drought, desertification of arable land, and increasingly severe hurricanes – all of which will displace even more populations. Where will these people go? And what kind of conflicts will they engender in the new places where they settle?
The potential for such conflict has the attention of the US Department of Defense. Yet, the government’s position up to now has been that the growth imperative of capitalism overrides serious natural disasters caused by global warming. Political appointees at the Environmental Protection Agency and the Departments of Interior and Agriculture have been tied to powerful oil, mining and forest products industries, and have been methodically removing information or concerns about global warming from their reports. Moreover, as political favors to their corporate supporters, these agencies are overturning regulations and relaxing enforcement actions directed at reducing air pollution. With their friends in the media, government and corporate institutions have served to create a culture of denial about global warming. Yet the people are not entirely free from responsibility. The deceiver and the deceived both play a role in the deception that global warming is not a real-time ecological disaster, but rather is an arcane theory subject to endless debate and political wrangling. Caught in their consumerist mindset, it there is less discord for people to see global warming in this way – it keeps them off the hook.
From global warming to 'Great Recession'
That capitalist growth has become the overriding concern became clear when the economic crisis hit in the fall of 2008. By that time awareness of global warming as a scientific reality was just beginning to make inroads into mainstream media. Perhaps the single most important contribution to this effort was the award-winning documentary, An Inconvenient Truth, directed by Davis Guggenheim, that was released in the spring of 2006. The film is based on the work of former Vice President, Al Gore, as he sought to draw attention to the harsh realities of global warming. The film and Gore’s companion book were enormously popular and seemingly overnight global warming shifted in the popular media from an obscure science topic mired in controversy to an alarming scientific problem. Widespread concern about global warming was being felt in Washington and the federal government felt the need to respond. Though only a two years after the film was released, the topic of global warming was pushed aside to make room for the media’s new obsession – the Great Recession – and global warming all but vanished from the public eye. The need to restore the economy back to growth clearly became the national top priority and all other concerns have taken a back seat.
In every corner of the global economy the pain of the Great Recession has been being felt. Like all the other major economic crises that have occurred in human history, this one is a complex problem. On one level, the surface, it is a cyclical problem in which nearly all of the major economies of the world have been sliding in a downward spiral of recession. As the economy slows down causing people and institutions experience layoffs and cutbacks, they are forced to spend less. With less spending, the economy slows even further and the recession deepens. Such recessionary phases in the surface-level undulations of business cycles are fairly common. But the magnitude of the Great Recession suggests that at another layer below the surface are much deeper structural or systemic problems that are much more difficult to solve.
The structural problem is the same as the key contributor to resource depletion – the need for ongoing economic growth. The capitalist growth imperative makes it necessary for businesses to find ways to concentrate capital in larger and larger amounts. The growth imperative pushes businesses to become bigger, and getting bigger requires capital. This, therefore, necessitates building financial institutions that can pull together ever larger amount of finance capital to be used for ever larger capital investments. Wherever financial institutions develop the instruments and organizations for raising this capital, speculative greed follows like a shadow. The greater amount of financing that is concentrated by banks and other institutions, the more the buying and selling of stocks and bonds resemble gambling as they attract speculators like filings to a magnet. Speculation is the leading cause of banking and financial market instability.
Speculation as institutionalized 'greed'
The speculative process of 'buying low and selling high' and taking profits stems from a fascination with easy money that is cultural attribute of capitalism. Yet the expectation that people can make money without performing productive work and merely by buying and selling in markets is strangely delusional. For the accumulation of money to be meaningful to the person who has it, it must have the power to purchase real things. This means that some people must be doing productive work, just not the speculators. If we see this clearly, then it is also clear that speculation is merely greed-inspired, predatory behavior in which the speculators exploit every opportunity, bit of information, and other people to make their easy money.
Yet this speculation has become a permanent fixture in financial systems. It is so deeply entrenched and ubiquitous that people do not even seem to notice. Speculative gains have come to be expected by people who have their savings in pension funds, mutual funds, and virtually all other forms of financial investments. The greater the percentage gain, the greater the 'performance' of the fund. To find the right instrument or the right technology that will yield the highest returns is the object of the game of speculation. So when an instrument emerges and reveals some promise, massive amounts of money can be mobilized from any other sector and bets get placed like at a gambling casino. This stirs up more greed and attracts more money, and before long a speculative boom, or 'bubble', is under way. Bubbles occur when the market prices of the instruments rise far above any reasonable level. Bubbles are also notoriously unstable because they always pop and the instrument prices collapse. When this happens widespread, manic greed turns to widespread panic and crisis. Financial crises easily spread to a much wider economic crisis – bank failures, business failures, unemployment, and so on.
It was this institutionalized greed – deeply embedded in the structure of capitalist systems – that led to the way to the Great Recession that began in 2008. The pattern of speculative boom and busts in the financial sector followed by a deep recession in the rest of the economy is one that has been repeated in the US and elsewhere with some regularity. Nonetheless, most people are largely blind to it because they have come to expect a share of the bounty that stems from predatory speculation. Predatory speculation has become a more palpable enterprise as it is diffused into various institutional forms: pension funds, mutual funds, or foundations. This is evidence of yet another layer to this crisis – a crisis of human consciousness. How people think about things is not separable from how they do things, and how people do things is not separable from the institutions that guide their behavior, and the types of institutions that guide behavior are not separable from the systems in which they are nestled. Institutionalized greed as manifest in financial systems is so prevalent and so deeply ingrained into contemporary culture and mindset, it has become invisible.
The reach beyond destruction: towards a mindful economy
It seems evident that the survival of the human species hinges on institutional transformation at all levels. Governments around the world have committed enormous resources to combat the downward spiral of economic recession and financial meltdown. This work must not be allowed to merely work on the surface to restore the economy back to its predatory impulses. It must be directed toward stabilizing communities where good, healthful, stable work is valued. An honest attempt to reverse the trend of global warming must also include deep institutional change. This includes not only practices on the surface level where we create new policies designed to curb greenhouse gas emissions and to stabilize our financial systems. It also requires the development of a much deeper awareness of the underlying structure of institutions that perpetuate these problems and keep people in denial and delusion.
Most governments tend to resist real institutional change because their institutions are necessarily anchored to established structures of power. For centuries governments and corporations have co-evolved in the West to form extremely powerful structures, or systems, of institutions that are geared toward a single overarching imperative: continuous growth and profit accumulation. This means that institutional change is a necessary but not sufficient condition. Change must be seen in a broader, holistic sense. The institutions that control economic activity and are bringing about destruction are all structured together in a kind of mutual support network. For this reason, our work of institutional change must be guided by a vision of system change; that is, we set out to build a new and alternative mutual support network – an alternative system.
Vast and complex systems like an entire economy are virtually impossible to change. They can, however, evolve intentionally with a series of mindfully organized perturbations as localized, smaller-scale institutional transformation. This kind of localized development is at the core of the mindful economics movement. With time, practice, and reflection, people can see a mindful economy begin to flourish and eventually evolve into a full-fledged system. In a mindful economy, households are still locked together with these businesses through a network of markets. But unlike the pathological activities of capitalism—endless growth, financial speculation, and consumerism—they are brought together by shared values and a commitment to principles of wholesome livelihoods. Monetary and banking systems can be re-created to be democratically controlled in local community-based financial cooperatives that are also infused with principles of wholesome livelihoods. Unlike the predatory impulses of Wall Street institutions, the financial system of a mindful economy serves the true needs of the community by providing financial services for economic development, homes, public works projects, education, and stability. Over time, this could evolve into a full-fledged system that might actually let us survive.
Any measures we take to rectify these pathological conditions will fail unless we also take measures to transform our own consciousness. How we act in the world and how we think about the world are necessarily bound together. Global warming and global recession are not only ecological and economic pathologies stemming from institutional behavior; they are crises of institutional consciousness. Long term, systemic change necessarily requires a restructuring of consciousness that necessarily goes in hand with restructuring of institutions. How we conceptualize our activities and how we carry out those activities are inseparable phenomena.
At the surface level of institutional reform and the deeper level of systemic change, the mindful economics movement requires a network of autonomous groups working toward real change. The key challenge is to manage and coordinate these networks without watering the predatory seeds. This requires a vision of a commonwealth system that transcends the impulses of self aggrandisement that is rampant in both capitalist market systems, corporate institutions and centralized states. This also requires spiritual practice and deep introspection.
The aim of the mindful economics movement is to provide a holistic analytical framework that allows us to both identify the roots of pathology and to evolve toward a new commonwealth. The commonwealth is social system of production that effectively coordinates a plurality of interests that can also coexist in a state of mutuality. People in their communities do this work of introspection and cultivate compassion and wisdom, as well as working outwardly toward institutional reform with the self-same compassion and wisdom. Institutions can and, under such circumstance do, develop from a common set of values engendered through compassion, insight and wisdom. This is our hope.
Joel Magnuson is author of Mindful Economics: How the US Economy Works, Why It Matters, and How It Could Be Different, published by Seven Stories Press, New York, 2008. He is currently a professor of economics in Portland, USA, specializing in non-orthodox approaches to political economy. He is also an active member of an international research group based in Europe, Thailand and the US that is working toward new philosophical foundations for economic theory and practice, and he is an international advisor to the editorial board of Interconnections published by Anglia Ruskin University.
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