Flooding in Pakistan, smoldering peat fires in Russia shrouding Moscow in thick smoke, and drought in Europe. Is this what climate change looks like? US income inequality growing, profits rising as a share of national income, unemployment staying high, the stock market up 70 per cent from last year’s lows. Is this the face of a Marxian collapse of capitalism? The answer to both questions is: it’s too early to tell until it’s too late. That’s the nature of complex systems.
The climate is a complex natural system which is why scientists have not been able to come up with precise forecasts of the effects of increased human emissions of greenhouse gases. Skeptics who claim that the inability of climate models to forecast next year’s weather do not understand this. Because the atmospheric system interacts with complex terrestrial and oceanic systems and the effects of those interactions are then visited upon a complex human system, it is not possible to predict what ills society will suffer. And because this is a singular event without precedent, probabilities are guesswork. It would seem to be prudent to avoid the worst predictions of the effects of climate change but governments are unable to act and individuals are ineffective. The system is too complex to be pushed around by bickering politicians; possible policy changes are meaningless. Only a change in the underlying ethic of the system or the ideas and beliefs in the heads of the mass of individuals can have any useful effect.
The underlying ethic of the system is capitalism and something similar is happening in the wholly human world of money. In the US (and many other rich countries) income inequality is growing and wealth is increasingly concentrated in the hands of the few. The great mass of the population have less to spend so they in the last two decades they have borrowed more and remain tapped out. Poorer people have a higher marginal propensity to consume than rich people who save more of their income which is why extending unemployment payments has a greater effect on consumption and incomes than reducing taxes for the rich. Therefore, if the rich increase their share of national income, consumption should decline. Consumers only were able to increase consumption from 63% of GDP to 70% by borrowing heavily and that cannot last forever as we have seen in the last two years. Meanwhile, corporate profits continue to grow their share of national income. Just between Q1 2008 and Q1 2009 profits grew from 23.55% of national income to 25%. If corporate profits continue to grow and the rich continue to get rich, who will be buying? Marx warned that an excessive accumulation income and wealth by the capitalist class must inevitably lead to insufficient consumption to support production, leading to a collapse of production and profits. The rich who are powerful in a capitalist society cannot help themselves. Only a few got hurt in the economic collapse of 2008-2009 while millions living payday to payday lost their jobs. But will they suffer when consumption, the engine that drives the US economy, fails to continuously increase and production and profits fall? Will the economy collapse from insufficient demand or will it just limp along for years?
Neither climate not capitalism is susceptible to the sort of easy fix that politicians can sell and voters can understand. If not doomed to massive changes in climate or economic collapse, we are doomed to more of the same including fiercer storms, more drought and floods, and greater economic volatility.
