But things are changing. Longer-term shifts—such as declining middle-class jobs, a continued fallout from the global financial crisis, but also a shrinking global workforce—are shaping labor markets worldwide. Whereas the problem today seems to be a glut of workers, in coming years the global labor force will shrink. These shifts could constrain growth, but they should also help correct some of the current labor market imbalances that have prevented workers from sharing in productivity gains. The beneficiaries, however, will mainly be high-skilled workers. The prospects for lower-skilled workers are less hopeful, which is bad news not only for them, but for efforts to reduce inequality.
Ekkehard Ernst, The Shrinking Middle, Finance & Development, International Monetary Fund, March 2015, Vol. 52, No. 1. Accessed September 19, 2015.
“It has become clear that we are really dealing with a different kind of economic recovery than anyone has experienced since World War II,” says Mr. Hammond, chief executive officer of Hammond Power Solutions Inc., a Guelph, Ont. company that makes electrical transformers for industrial clients around the world. … “This is far different from any recession I have seen.” … Seven years after Europe and the United States slipped into what would become the one of the deepest global recessions in history, and five and a half years since the North American economy returned to growth, the recovery remains a perplexing, inconsistent and frustratingly elusive work in progress.
David Parkinson, Richard Blackwell and Iain Marlow, The 7-year slump: Why the global economy can’t seem to get started. The Globe and Mail, January 23, 2015. Accessed September 19, 2015.
Many have characterized the U.S. economy’s inability to grow robustly as an expected after- effect of a severe cyclical downturn. Such interpretation is well past its sell-by date. It’s time to recognize that globalization has brought with it issues that defy cyclical economic prescriptions.
Daniel Alpert, Why the US economy can’t seem to shake off the Great Recession, BusinessInsiDer.com, May 21, 2015.
Climate change threatens to provoke a new ecological panic. So far, poor people in Africa and the Middle East have borne the brunt of the suffering. … Climate change has also brought uncertainties about food supply back to the center of great power politics. China today, like Germany before the war, is an industrial power incapable of feeding its population from its own territory, and is thus dependent on unpredictable international markets.
Timothy Snyder, The Next Genocide, New York Times, Sept. 12, 2015. Accessed September 19, 2015.
Together with his team of designers and engineers, Dutch artist and innovator Daan Roosegaarde is working on a prototype of a Smog Free Tower, that would create a clean air zone outside. … This smog solver is meant to move to other major cities too. So everyone can get acquainted with it. This way, Roosegaarde wants to bring NGO’s, concerned citizens and designers together in smog-free bubbles, to work on healthy cities around the globe.
Daan Roosegaarde’s clean air zones, Rotterdam City Blog, July 28, 2015. Accessed September 19, 2015.
The paper contends that we have already crossed four “planetary boundaries.” They are the extinction rate; deforestation; the level of carbon dioxide in the atmosphere; and the flow of nitrogen and phosphorous (used on land as fertilizer) into the ocean.
Joel Achenbach, Scientists: Human activity has pushed Earth beyond four of nine ‘planetary boundaries’, Washington Post, January 15, 2015. Accessed on August 27, 2015.
An abundance of good jobs is one of the core features of societal prosperity and it is an article of faith for most of the peoples in affluent societies that capitalism is the engine of growing prosperity.
However, it is quite clear to almost everyone that global capitalism is malfunctioning. Economists who write for the media and journalists who cover economic matters routinely refer to the fact that the world economy has still not recovered from the financial traumas of 2008 and that global employment trends are not good one.
There is much more to the problems afflicting the world economy than a cyclical downturn and poor national policy choices. The world economy has entered an era of declining wealth accumulation that is irreversible. Without increasing prosperity, the world economy will not be able to generate the growing stock of good jobs for the world’s working people.
The few good jobs the world economy has to offer are found almost exclusively in the affluent cities and nations in the world economy. And even in those affluent areas very large proportions of workers are consigned to jobs that pay low wages and benefits, expose them to health risks, and offer no employment security.
The reason is straight forward: good jobs are expensive to create and maintain. Not only do good jobs garner premium wages and benefits, they also require high cost work environments (expensive machines, high volumes of consumable supplies, expenditures on training and workplace safety), and expensive public and private oversight and enforcement activities. Thus, for the world economy to continue to produce and maintain good jobs, the wealth of the world’s people must continue to grow. But, it can’t. The world economy has hit a wealth production wall.
We typically use the word ‘wealth” to refer to human made goods and services, yet we know, at least intuitively, that such things as the oxygen rich air we breath and zones of moderate temperature that support agriculture are forms of wealth that nature produces. What we have yet to fully acknowledge is that these two worlds of wealth creation are inextricably interconnected.
The capitalist world economy is the human part of an inclusive world economy that includes nature’s wealth production processes. The human world economy is a massive economic machine that takes forms of wealth produced by nature and converts them into different forms of wealth – the goods and services that define affluent society. In so doing, the capitalist world economy extracts and uses flows of energy and stocks of living and non-living resources that nature would otherwise use in its own production processes.
As a totality, this inclusive world economy of humans and nature is a single economic system. The only real input is the energy from the sun (discounting the miniscule meteorite contributions to the mass of the earth). We can process one form of wealth (say soil and water) into another form of wealth (crops), but we cannot make net additions to the earth’s total store of wealth.
The point here is that the human part of the inclusive world economy grows at the expense of the natural part. Conversely, the natural part expands at the expense of the human part (in the forms of rust, rot, and natural disasters). Human economies have always used nature, just as all living things do, but the capitalist world economy is the first human economy to press against the fixed stock and regenerative limits of the entire earth. This is a crucial and overlooked reason the human world economy is trapped in dysfunction.
The capitalist world economy grew and thrived on an earth where yet another pristine forest, yet another stock of game fish, yet another unspoiled river, yet another abundance of fertile land, yet another source of cheap labor, was just an explorer and a military conquest away. It was an era in which yet another technological innovation would solve a problem and increase human wealth. That was the era in which some parts of the world became extraordinarily affluent and good jobs were created.
Fossil fueled industrialization was the driving force in that period. It provided the means for accelerating the diversion nature’s supply of energy and resources into human economic activities and it provided the means by which certain parts of Europe and North America incorporated the rest of the world into the world economy, primarily as suppliers of labor and resources and more often than not through economic and military coercion. Affluent European, North American, and allied nations became more affluent and good jobs became abundant and set the standard for the world’s people.
That limitless earth disappeared over the course of the 20th century. The era of global geopolitical economic incorporation of “foreign” lands and peoples has come to an end. It is no longer possible for human wealth to increase as it did in the past. Thus, it is no longer possible to add to the stock of good jobs in the world economy and maintain them all.
The scale of the human world economy is now so enormous that the costs for maintaining human wealth are demanding an increasing proportion of the productive capacity of the world economy.
First, the scale of damage done to nature’s wealth production by the human world economy has become enormous and keeps growing, so more and more of our human economic activities must be devoted to repairing the damages and compensating for the damages we can’t yet repair (industrial cleaning of air and water because nature’s regenerative capacity has been overwhelmed). Second, the massive stock of human wealth (including people – human capital) that we have accumulated over the last several centuries gets older every day and, as we well know, with age comes deterioration and death. A large and growing proportion of human economic activity must now be devoted to maintaining this large stock of wealth and to replacing those items of wealth that are lost to rust, rot, and irreparable damage.
As the world’s population continues to grow and the world’s rulers continue to invest in massive urban infrastructures, the energy and resource conflicts between the human and natural parts of the inclusive world economy will increase. Our technologies will not save us because they were and continue to be designed to divert evermore energy and resources from nature’s wealth production processes. Nature will prevail and force an irreversible decline in human wealth and a loss of good jobs as that happens.
The world’s leaders continue to talk about restoring global economic growth and moving more and more of the world’s people into good jobs, but the actual trends in both parts of the inclusive world economy expose this as empty rhetoric. The leaders of affluent nations have already begun to dismantle the stock of good jobs available to their peoples and most people in the poor areas of the world know they have almost no chance of ever working at a good job.
The kind of affluence and the configurations of good jobs the peoples of the west became comfortable with in the 20th century can no longer be offered to the rest of the world; nor can they be retained for the majority of people in the now affluent nations. We must invent a new definition of affluence and a new kind of good job for a new kind of world. We won’t do that until the world’s economists and policy leaders acknowledge that the world has hit the ceiling on net wealth growth and incorporate this knowledge into economic and policy theory.