Why Things Are Going to Get Worse…and Why We Should Be Glad by Michael Roscoe
Oxford: World Changing/New Internationalist, 2014
Review by Eric Laursen
Ask 50 people when the capitalist era began, and you’ll probably get close to 50 different answers, ranging from Italy in the 15th century to England in the 18th. Curiously enough, you’re likely get much less disagreement on the most prominent features of this comparatively brief period of human history: aggressive exploitation of the earth’s natural resources, an implacable search for greater efficiency and lower cost of labor, and ever greater production of stuff to satisfy ever more affluent consumers. If you think this is all good and a sign of divine favor, congratulations—there’s a job waiting for you as an economic analyst at Goldman Sachs. If not, you’ll have to look harder for employment. But you’re probably also wondering how long the global economy can keep hurtling in one direction without hitting some kind of natural barrier.Drawing on a mix of economists, from Karl Marx to the free-market purist Ludwig von Mises to the Keynesian John Kenneth Galbraith, plus his own extensive calculations, Michael Roscoe, a longtime British financial journalist, offers an answer in his new book, Why Things Are Going to Get Worse…and Why We Should Be Glad.
Roscoe believes we—the human race—are close to hitting several walls, and in his book, he tells us how we got to this point and what it will take to resolve our predicament. The “walls” he identifies include the debt piling up due to government improvidence and successive economic bubbles; the decline of an economy based on productive work—mostly, manufacturing—and its replacement by a service economy that doesn’t create enough wealth to guarantee a higher standard of living; and rising inequality triggered by the decline of manufacturing and the increasing dominance of the financial services sector, with its intense focus on raising short-term profits by cutting costs to the bone.
But the most formidable barrier facing our hyper-capitalist economy is the unsustainability of a system based on extraction of fossil fuels—both because climate change will make the globe unlivable, and because there’s less and less fuel available to extract easily (the fracking boom notwithstanding). The most startling part of Roscoe’s analysis—I urge you to explore his book if only for this—is what it reveals about the role of energy in the modern economy, and especially in the U.S. Wealth comes from two places, he argues—human labor applied to natural resources—and “oil extraction has brought more wealth into the world than any other resource.” Roscoe calculates that “around 60% of all the wealth ever created in the world originated in the earth’s gas and oil fields.”
That’s partly because oil and gas are so much work to extract, and partly because they’ve powered the expansion of so many other industries. “The rapid growth of the U.S. economy throughout the middle decades of the 20th century coincided with the development of its domestic oil industry…. It was oil that made possible the quick development of its massive industrial base during and after the Second World War. The boom of the 1950s and 1960s (the ‘golden era’) was fueled by oil. The growth of the U.S. automobile industry and the rapid construction of its highway network, the huge defense and aeronautical industries; the general feeling of optimism and prosperity that spread throughout the economy: all this wealth had its origins in the earth in the form of ‘black gold.’ Without oil, it wouldn’t have happened.”
No wonder the economic elite in the U.S.—and other countries—are so reluctant to wean us off oil: it was the goose that laid the golden egg. Converting to solar and wind energy and other renewables is certainly an imperative if drastic climate change is to be avoided, but Roscoe’s essential point is that these sources are more efficient and less expensive, after the initial capital investment is made. Therefore, they won’t generate the same burst of wealth-generating capital spending that oil and gas brought forth. Rather, they contribute to the long-term trend toward greater efficiency and productivity—and away from labor-intensive activities that generate jobs—leading to the permanent rise in the “reserve army of the poor” that Marx predicted.
Ever since the U.S. ran out of relatively easy sources of new oil production in the 1970s, Roscoe argues, the current economic model has been living on borrowed time as an increasingly powerful financial services industry has engineered one asset bubble after another, notably in consumer spending, internet stocks, and real estate. But employment in the real economy, which manufactures food, clothing, shelter, and other essentials for living, has languished (give or take a housing glut), as so much manufacturing has either moved to places like southeast Asia or else shifted to automation. The fossil fuel economy is on the way out, and the boom-bust economic cycle is increasingly brutal—but how to get past them to a new model? Journalist-activist Naomi Klein recently complained that climate change and the upheavals in the global economy since the 2007-08 crisis, which together place humanity at a crossroads, have remained separate conversations. Roscoe is one of the few who attempts to explain how we can solve both problems at the same time.
What he offers is a very different model of economy and governance, but one that’s well short of revolutionary. It starts with investing in renewables and sustainable agriculture, but also in “ecologically sound construction,” which he expects would generate more jobs. He’d like governments to resurrect the goal of full employment, end tax havens and other financial trickery, create a “global authority” to bring order and fairness to the world economy, direct the shift to renewable energy, and scale back the bloated financial sector. He’d introduce a global central bank and currency to remove the “distortions” wrought by the dollar’s role as the key reserve currency, while introducing a “process of debt forgiveness and restructuring” to pull national economies out of their post-2008 funk. And he would strengthen democracy by eliminating private funding of political parties and devolving more power to local levels of government.
The aim would be to create the best possible conditions for a post-growth world with an economy more focused on jobs and less on productivity, such that more of the wealth that is created flows to people rather than to corporations. Roscoe doesn’t want to abolish banks—only to shrink them—or markets, and he envisions a system that’s a mixture of private business, cooperatives, and state-owned companies. Developing nations “will gradually close the gap on the rich world through a combination of continuing moderate growth on their part, accompanied by a decline in overall wealth levels in much of the rich world.” A policy of full employment would mean that work falls more lightly on everyone’s shoulders—perhaps a 30-hour week would become the norm—and consumption would moderate in the “rich world,” further alleviating climate change.
Roscoe is vague on the details, however. With governing power pushed down to the local level, how could his “global authority” be kept from becoming a global tyranny, or from falling under the control of big banks and shadow financial institutions, as national governments are at present? While he insists that markets are essential for valuing goods and services, he also makes a strong case that prices often fail to predict the true value of labor and natural resources and the hidden cost of environmental destruction. So how are we to divvy up the job of “predicting” those values? And speaking of labor, Roscoe says nothing on the subject of racism, sexism, and other forms of bigotry that keep wages down by pitting one group of workers against another. He also runs down several disturbing blind alleys in Why Things Are Going to Get Worse. Invoking von Mises, he buys into the obsession with “sound money,” missing the point that strong currencies can strangle exports, putting manufacturing workers at risk—and only benefiting bankers whose loans are then worth more than they were before. He falls hard for conservative arguments about the evils of public debt, complaining about leaders who “act like shopaholics…plundering the wealth of its own children and grandchildren.” That sounds like an argument for the kind of fiscal austerity that’s kept developed-world economies from bouncing back since the 2008-09 recession. He even endorses the discredited conservative claim against common ownership of resources—“the tragedy of the commons”—arguing that “people become more responsible for their own property and take good care of it.” Tell that to communities struggling to compel companies to clean up their brownfield sites. More troublingly, he calls for “resettlement” of people from more populous areas to areas of “underdeveloped farmland,” for example in Russia. That sounds a lot like colonialism and an opening for ethnic conflict.
It’s hard to argue with Roscoe’s vision of a more egalitarian, environmentally friendly, directly democratic future. The problem is that he doesn’t offer a clear road map to get there. Instead, he falls back on the argument that change is inevitable, “because even if we don’t end up with mass rebellion, there is likely to be a revolution of sorts as the problems become harder to ignore.” The U.S. could lead the way here, he says, as it did after World War II, if we “appeal to the better natures of the corporate elite, the real power brokers of this world.” Yet it seems to me that our economic and political elites have seldom been as confident as they are today in their ability to control, manipulate, and neutralize working people—they’ve just weathered the most severe economic crisis since the Great Depression with their power and privileges intact. That suggests revolution may be a necessity, not an option.
Still, Roscoe is correct in his fundamental point—that climate change and the never-ending quest for greater productivity are leading the industrial world toward a reckoning. As the American economist Herb Stein famously said, “If something cannot go on forever, it will stop.” Roscoe is right to be asking how this will occur; his book underlines the need for us to figure out what we’ll do then.
Z
Eric Laursen is an independent political journalist and activist. He is co-author of Understanding the Crash. His writings have appeared in the Nation, Indypendent, and the Village Voice.