December 20, 2007

The Challenge of Limits

Martin Wolf has an interesting and important article about one of the especially knotty problems facing humanity. Namely, the increasing liberalism of the past two centuries were based on the fact that for most people, their living standards improved and this rise in living standards was tied directly to the cheap and abundant energy. Note that the rise in living standards was true all over the world even though Americans gained lots more than those in Africa. It was having enough that changed the political dynamics for societies such that the old zero-sum game was transformed into a positive sum world economy.

What is less widely understood is that they have also transformed politics. A zero-sum economy leads, inevitably, to repression at home and plunder abroad. In traditional agrarian societies the surpluses extracted from the vast majority of peasants supported the relatively luxurious lifestyles of military, bureaucratic and noble elites. The only way to increase the prosperity of an entire people was to steal from another one. Some peoples made almost a business out of such plunder: the Roman republic was one example; the nomads of the Eurasian steppes, who reached their apogee of success under Genghis Khan and his successors, were another. The European conquerors of the 16th to 18th centuries were, arguably, a third. In a world of stagnant living standards the gains of one group came at the expense of equal, if not still bigger, losses for others. This, then, was a world of savage repression and brutal predation.

The move to the positive-sum economy transformed all this fundamentally, albeit far more slowly than it might have done. It just took time for people to realise how much had changed. Democratic politics became increasingly workable because it was feasible for everybody to become steadily better off. People fight to keep what they have more fiercely than to obtain what they do not have. This is the “endowment effect”. So, in the new positive-sum world, elites were willing to tolerate the enfranchisement of the masses. The fact that they no longer depended on forced labour made this shift easier still. Consensual politics, and so democracy, became the political norm.

Now we know that the earth can't afford to have humanity emitting carbon at the rate we have been by exploiting the abundant energy in the earth. And in fact, the carbon that we've emitted during the past century is close to being the death of the world as we know it. We can no longer assume there no limits and that we can just do whatever we want regardless of the impact on the health of the planet.

If the positive-sum world economy led to a more liberal and more democratic world, what will happen when we once more have to live within the limits imposed by the planet?

The biggest point about debates on climate change and energy supply is that they bring back the question of limits. If, for example, the entire planet emitted CO2 at the rate the US does today, global emissions would be almost five times greater. The same, roughly speaking, is true of energy use per head. This is why climate change and energy security are such geopolitically significant issues. For if there are limits to emissions, there may also be limits to growth. But if there are indeed limits to growth, the political underpinnings of our world fall apart. Intense distributional conflicts must then re-emerge – indeed, they are already emerging – within and among countries.

The response of many, notably environmentalists and people with socialist leanings, is to welcome such conflicts. These, they believe, are the birth-pangs of a just global society. I strongly disagree. It is far more likely to be a step towards a world characterised by catastrophic conflict and brutal repression. This is why I sympathise with the hostile response of classical liberals and libertarians to the very notion of such limits, since they view them as the death-knell of any hopes for domestic freedom and peaceful foreign relations.

The optimists believe that economic growth can and will continue. The pessimists believe either that it will not do so or that it must not if we are to avoid the destruction of the environment. I think we have to try to marry what makes sense in these opposing visions. It is vital for hopes of peace and freedom that we sustain the positive-sum world economy. But it is no less vital to tackle the environmental and resource challenges the economy has thrown up. This is going to be hard. The condition for success is successful investment in human ingenuity. Without it, dark days will come. That has never been truer than it is today.

My question is how do we change from a consumption based society to one where humans find their value for their service to each other and learn to live with respect and generosity for their fellow humans and other living creatures? It is indeed a daunting, yet ennobling challenge we face.

Posted by Mary at December 20, 2007 03:47 AM | Economy | Technorati links |

Bush cloned shoe bomber

Posted by: ccoaler at December 20, 2007 02:04 AM

Sarkozy the blessed

Posted by: ccoaler at December 20, 2007 06:21 AM

Ted Gurr of the University of Maryland wrote a 1985 paper in which he contends that elites tolerate redistribution in cases where they believe limits to be temporary, but that they seek to roll back or prevent redistribution in cases where limits are believed to be permanent.

If Wolf is as right as he thinks, he doesn't make much of a case as to why humanity should survive at all.

Posted by: Huskarl at December 20, 2007 02:20 PM

Bush cartoon: budget/Iraq

Posted by: ccoaler at December 21, 2007 06:26 AM

I don't in any way welcome these conflicts, and I don't know that I fit into his classic liberal category. Society rarely gets better once fighting breaks out, and anyone who believes otherwise is staking their hopes on a vanishingly low probability of success.

For all that Wolf seems correct about the problems we face, I don't know of anyone who thinks that they're going to be of benefit to humanity.

Posted by: natasha at December 22, 2007 09:27 AM

I think Wolf is misguided in using the term "positive sum" economy. The economy can be considered to consist of three factors; Labor, Capital, and Land. So instead of capital squeezing labor, we still have a zero-sum game in which the capital/labor conflict is attenuated by both of these interest groups squeezing land. Since the end of the feudal class, land has no 'interest group' per se.

more to follow, I'm on the road right now

Posted by: Huskarl at December 22, 2007 10:33 AM

ruffleruffleskreeekrip ah yes, here we are-

"so long as [ecological] decline is seen as temporary, advantaged groups are likely to accept policies of relief and redistribution as the price of order and the resumption of growth. Once it is accepted as a persisting condition, however, they will increasingly exert economic and political power to regain their absolute and relative advantages."

Gurr, Ted R. 1985. On the political consequences of scarcity and economic decline. International Studies Quarterly 29:51-75

Posted by: Huskarl at December 25, 2007 04:28 PM

This writer has a good article on the role that growth plays in the economy, and of what we may look forward to as it slows.


n.b. - I value methods more than labels and I read this for the content, not for the title.

Posted by: Huskarl at January 2, 2008 12:51 PM