Depressive Economics…


The one idea for the future that still keeps getting pushed is that economic growth is the only measure we need to look at.

Get the economy growing, there’s more money going around, everyone gets richer. Mechanize more, automate still more, make things more efficient, profits will grow and things will get cheaper. Win-win: the very-rich get richer, the majority can still go shopping and drown in stuff. So, even those falling on hard times have an easier time keeping their same standards of living. And remaining able to drown in stuff means you’re really doing quite well. Oh, and food has remained cheap, as long as you keep accepting what you’re being fed as “food.” Just don’t try to buy what has been food for pretty much all of human history, for those are expensive, luxuries – if not impossible to come by if you don’t have a car and a big-enough supermarket (or a Whole Foods and a farmer’s market and the wherewithal to shop there).


Fact is, we aren’t doing well. We may still have it comfortable enough compared to how things have been for most of human history, but that comfort barely covers how we no longer know and feel that we have a grip on our life, but only feel comfortably numb and better off avoiding thoughts of worse.

The Industrial Revolution was quite a revolution... That doesn't say we have to stop there, though. (Source: Kheel Center)
The Industrial Revolution was quite a revolution… That doesn’t say we have to stop there, though. (Image from Kheel Center, flickr)

Increasingly, it doesn’t even take a look at the usual suspicious “environmentalist Cassandras” to fear future problems and hear preachings of brimstone. It’s even the, still-growing, economy for the growth of which we are supposed to bring sacrifices now, even as we don’t exactly seem to be gaining anything from doing so. In fact, lives aren’t exactly getting easier and more secure. “We’ll never have it so good again,” is what things feel like.

It looks like we have entered a “post-employment economy,” but not in the sense of Keynes’ dream that higher efficiency would have us make a living without much of any work, freed to follow better, more distinctly human pursuits. Rather, it’s that we’re still being told that we just have to choose the right specialization, change our skills as the market demands, and we’ll get rich. Except that, as Sarah Kendzior wrote:

“We live in the tunnel at the end of the light.

If you are 35 or younger – and quite often, older – the advice of the old economy does not apply to you. You live in the post-employment economy, where corporations have decided not to pay people. Profits are still high. The money is still there. But not for you. You will work without a raise, benefits, or job security. Survival is now a laudable aspiration.”

The Slump

This situation is unlikely to just be a little “slump,” but it is likely to be “permanent,” as even Paul Krugman, who recently wrote of that, finally noticed. In fact, the economy was not working for the majority of people even before the financial crisis, during the time of a bubble.

“[T]he evidence suggests that we have become an economy whose normal state is one of mild depression, whose brief episodes of prosperity occur only thanks to bubbles and unsustainable borrowing.”

Of course, economist that he is, he manages to argue that debt can’t buy a glorious future (“unsustainable borrowing”), but promptly goes on to suggest that

“we’re going to be living under the looking-glass rules of depression economics — in which virtue is vice and prudence is folly, in which attempts to save more (including attempts to reduce budget deficits) make everyone worse off — for a long time.

I know that many people just hate this kind of talk. It offends their sense of rightness, indeed their sense of morality. Economics is supposed to be about making hard choices (at other people’s expense, naturally). It’s not supposed to be about persuading people to spend more.”

The man does not seem to have seen too many advertisements recently, which are all about “persuading people to spend more,” just as long as it increases corporate profits. If that were the problem, maybe the usual thinking regarding economic ups and downs would apply, at least, but he misunderstands that the industrializing and industrialized era, and especially the baby-boomer decades which typically seem to be taken as contemporary yardstick of how things ought to be, were the aberration, not the ‘normal’.

As Richard Heinberg points out, Krugman’s only suggestions are the true vice:

“One of the key solutions to our ongoing economic crisis must be to get people to spend more, presumably to buy more stuff, even if they don’t need it and can’t afford it. By implication, I suppose we should also try to persuade people to have more children (shouldn’t we at least try to get our population growing again?).”

We are not back there yet, or at least it doesn't look like it.
We are not back there yet, or at least it doesn’t look like it. (Image by National Media Museum UK, via Wikimedia Commons)

Population growth, growing demand, increasing innovation in consumer goods, and with them rather stable employment and  rising wages, combined with easy oil and other resources, made things seem easy during that time of the baby-boomer decades (for the comparatively few people worldwide who profited from that situation, anyways).

Things are a little different in a world of 7+ billion people (with population declines in many a rich and increases mainly in poor countries) with diminishing energy return on energy extracted (i.e., with fossil fuels getting more difficult and costly to extract), resource and especially ecological limits closer, and the innovation that can push them further out or make us remain well within them not happening because the next generation of smartphones and gaming consoles and throwaway fashion items need to be created and brought to their buyers instead.

“His essay suggests that Krugman does not understand resource limits. He does not understand population limits. He does not understand why our economy is not growing, and he doesn’t know what we should do to adapt to converging limits.” (Richard Heinberg again.)

Indeed. Supposedly, “virtue is vice,” saving (or living within means) is wrong in the depressed economy we are living in, and if only we’d all quit doing that, we’d be “back” to growth and letting the good times roll. Infinite growth on a finite planet, in ways that are destructive of people and planet? Who cares, it’s the economy that matters and will go on. Because the economists say that it will and indeed has to.

In the meantime, see above: “corporations have decided not to pay people. Profits are still high. The money is still there. But not for you. You will work without a raise, benefits, or job security.” (And not even Krugman is telling the corporations to maybe consider that not paying living wages is truly a vice, and one they ought to consider changing so that demand could go up.)

Still, just work harder, spend more that you don’t have, keep that economic juggernaut rolling. Remember, there’s no other way but to hope that growth will get jump-started, and the rising tide won’t just make the water get up to and over your neck this time, but raise your boat, too.

Well, trying to do things like that is one way. In an economy like China’s, it still seems to be working – at least, if one only looks at the numbers that show rising GDP and economic growth, but the reality is a little different from this ‘simplet.’

Ready for a Change?

Something good could also come of all that trouble: Maybe, if only we realize what makes for good living, this convergence of crises, economic and ecological, is just the push we need to change things for the better.

The need to change because of ecological limits hasn’t exactly struck a chord or impacted us, in daily life, quite strongly enough yet to really be brought home.
The need to change in order to not just “recover” into jobs and consumption but into the hard work of living, and living multiply better, isn’t nearly as alluring as the seeming security and ease of life in a growing economy.

Maybe the combined disappearance of what employment and jobs have recently looked like in favor of an unreal economy and the limits this is pushing against because of ecological matters will be enough, especially if we can also come around to seeing the potential to do, and in doing, things differently. Doing them better, in multiply ways.

Time for a reminder of the writing about “emergency entrepreneurship,” and for a look forward from there, from making money to making a living and crafting a better life…


4 thoughts on “Depressive Economics…

  1. There is nothing new in mankind being at the brink of extinction, many civilisations have come and gone since we are walking upright on this planet.Why did it happen we are not too sure, most of the reasons given are pure speculation, nothing else. Despite this uncertainty there seems to be a kind of a pattern emerging: whenever a population reached a certain standard of living – a way to cope with nature’s un-predictability – the ability to master it’s own-made difficulties – those civilisations disappeared. Not without traces, but without leaving enough behind so we could draw conclusions from their mistakes, and hopefully learn form them.

    There are indications of localised civilisations disappearing at different times all over the globe. In stark contrast to this we are now experiencing difficulties effecting all of us, with probably very few exceptions, if any, all over the globe.Those threats to mankind are largely, if not solely, of our own making. Without going into details why we have reached “the edge” the main question is: are we ready for drastic and unprecedented changes to ensure our continued presence on this planet or is it already too late ?

    It has often been said “ …..(that) there is enough for everyone’s need but not for everyone’s greed…” To follow this line of thought we would have to make changes far beyond our wildest imagination. Whether that will or can happen remains to be seen. It would shake all the pillars our society is depending on: education – capitalism – democracy – religion and much more. We need a re-definition of humanity, for example, what it means to us collectively, but also to each of us individually because any change can only come if we decide on the “right “ actions to support the change of the whole……….No easy way ahead, that’s for sure !

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