Our market-based global economy as currently managed is in trouble. The market does many things well. It allocates resources with an efficiency that no central planner could even imagine, much less achieve. But as the world economy expanded some 20-fold over the last century it has revealed a flaw— a flaw so serious that if it is not corrected it will spell the end of civilization as we know it.
The market, which sets prices, is not telling us the truth. It is omitting indirect costs that in some cases now dwarf direct costs. Consider gasoline. Pumping oil, refining it into gasoline, and delivering the gas to U.S. service stations may cost, say, $3 per gallon. The indirect costs, including climate change, treatment of respiratory illnesses, oil spills, and the U.S. military presence in the Middle East to ensure access to the oil, total $12 per gallon. Similar calculations can be done for coal.
We delude ourselves with our accounting system. Leaving such huge costs off the books is a formula for bankruptcy. Environmental trends are the lead indicators telling us what lies ahead for the economy and ultimately for society itself. Falling water tables today signal rising food prices tomorrow. Shrinking polar ice sheets are a prelude to falling coastal real estate values.
Beyond this, mainstream economics pays little attention to the sustainable yield thresholds of the earth’s natural systems. Modern economic thinking and policymaking have created an economy that is so out of sync with the ecosystem on which it depends that it is approaching collapse. How can we assume that the growth of an economic system that is shrinking the earth’s forests, eroding its soils, depleting its aquifers, collapsing its fisheries, elevating its temperature, and melting its ice sheets can simply be projected into the long-term future? What is the intellectual process underpinning these extrapolations?
We are facing a situation in economics today similar to that in astronomy when Copernicus arrived on the scene, a time when it was believed that the sun revolved around the earth. Just as Copernicus had to formulate a new astronomical worldview after several decades of celestial observations and mathematical calculations, we too must formulate a new economic worldview based on several decades of environmental observations and analyses.
The archeological record indicates that civilizational collapse does not come suddenly out of the blue. Archeologists analyzing earlier civilizations talk about a decline-and-collapse scenario. Economic and social collapse was almost always preceded by a period of environmental decline.
For past civilizations it was sometimes a single environmental trend that was primarily responsible for their decline. Sometimes it was multiple trends. For Sumer, it was rising salt concentrations in the soil as a result of an environmental flaw in the design of their otherwise extraordinary irrigation system. After a point, the salts accumulating in the soil led to a decline in wheat yields. The Sumerians then shifted to barley, a more salt-tolerant crop. But eventually barley yields also began to decline. The collapse of the civilization followed.
Archeologist Robert McC. Adams describes the site of the ancient Sumerian civilization on the central floodplain of the Euphrates River in what is now Iraq as an empty, desolate area now outside the frontiers of cultivation. He says, “Vegetation is sparse, and in many areas it is almost wholly absent….Yet at one time, here lay the core, the heartland, the oldest urban, literate civilization in the world.”
For the Mayans, it was deforestation and soil erosion. As more and more land was cleared for farming to support the expanding empire, soil erosion undermined the productivity of their tropical soils. A team of scientists from the National Aeronautics and Space Administration has noted that the extensive land clearing by the Mayans likely also altered the regional climate, reducing rainfall. In effect, the scientists suggest, it was the convergence of several environmental trends, some reinforcing others, that led to the food shortages that brought down the Mayan civilization.
Although we live in a highly urbanized, technologically advanced society, we are as dependent on the earth’s natural support systems as the Sumerians and Mayans were. If we continue with business as usual, civilizational collapse is no longer a matter of whether but when. We now have an economy that is destroying its natural support systems, one that has put us on a decline and collapse path. We are dangerously close to the edge. Peter Goldmark, former Rockefeller Foundation president, puts it well: “The death of our civilization is no longer a theory or an academic possibility; it is the road we’re on.”
Among other things, the situation in which we find ourselves pushes us to redefine security in twenty-first century terms. The time when military forces were the prime threat to security has faded into the past. The threats now are climate volatility, spreading water shortages, continuing population growth, spreading hunger, and failing states. The challenge is to devise new fiscal priorities that match these new security threats.
We are facing issues of near-overwhelming complexity and unprecedented urgency. Can we think systemically and fashion policies accordingly? Can we move fast enough to avoid economic decline and collapse? Can we change direction before we go over the edge?
We are in a race between natural and political tipping points, but we do not know exactly where nature’s tipping points are. Nature determines these. Nature is the timekeeper, but we cannot see the clock.
The notion that our civilization is approaching its demise if we continue with business as usual is not an easy concept to grasp or accept. It is difficult to imagine something we have not previously experienced. We hardly have even the vocabulary, much less the experience, to discuss this prospect.
One thing is certain—we are facing greater change than any generation in history. What is not clear is the source of this change. Will we stay with business as usual and enter a period of economic decline and spreading chaos? Or will we quickly reorder priorities, acting at wartime speed to move the world onto an economic path that can sustain civilization?
Source: http://www.earth-policy.org/books/wote
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