There’s not a lot of economic good news out there at the moment, and even after the current credit-crisis passes us by, the storm-fronts of peak-oil and climate change look set to keep the economic weather looking bleak. In economic bad-times the essential nature of capitalism, the political choices that buttress it, the social costs it imposes on the most vulnerable, are much harder to gloss over and ignore – even in the societies of the rich-world.
Ironically, that is the good news, because it means a time of new choices – for compassion, fairness, for a sustainable future, for an end to poverty and oppression – is perhaps nearer than it has been for a long time. When we understand that we have a choice, we can make a choice.
Until now, three critical factors helped the world weather soaring oil prices. First, China, with its enormous productivity increases – based on high levels of investment, including investments in education and technology – exported its deflation. Second, the United States took advantage of this by lowering interest rates to unprecedented levels, inducing a housing bubble, with mortgages available to anyone not on a life-support system. Finally, workers all over the world took it on the chin, accepting lower real wages and a smaller share of GDP.
That game is up.
“Stagflation cometh”, Joseph E. Stiglitz (Columbia University, USA)
Also at Real-World Economics Review, Marcellus Andrews explores how climate change will force us to confront some of the brutal aspects of capitalism, but also offers some examples of the positive, compassionate, choices our societies can make, when we realise that we have a choice:
I want to explain why climate change will force the United States, and every other market society, to abandon the practice of creating disposable classes of persons whose primary function is to serve as blood and bone buffers who absorb the risks of life at the cost of their bodies and souls.
First, climate change destroys market fundamentalism by showing why market based inequalities necessarily lead to hierarchies of pleasure and suffering where the well-off regularly sacrifice the well-being and lives of the poor and vulnerable. Second, climate change poses such severe collective risks to societies that polities must explicitly choose whether to reorient national and local economic policy in ways that share these risks in an egalitarian manner or to deliberately shift these risks to the bottom of society
“Risk, inequality and the economics of disaster”, Marcellus Andrews (Barnard College, USA)