Category: Global Crises

Future of Stock Market Investments and Jobs

Stock markets are places for investing money with the expectation that stock values will increase over time.  If the values increase, a person can withdraw their money from the stock markets at a later date and realize a substantial increase in wealth.  That increase in wealth is a share of the profits the companies listed on the stock markets are able to earn.  Those profits, in turn, are dependent on the total increase in wealth that the whole economy has produced.  Thus, the long term growth in stock market values depends on the long term growth of sharable real wealth. 

The historical trend in sharable real wealth growth is strongly related to the long term growth in the consumption of energy by humans.  It has also been strongly dependent on the ability of producers of wealth to discard waste cheaply and avoid paying for the damaging unintended consequences of expanding wealth production.  For sharable real wealth to continue to grow, both the energy trend must continue and the downside costs to producing wealth must continue to be cheap.  Energy production can certainly continue to expand, but the downside costs of using that energy to produce more sharable wealth are rapidly rising because managing climate change damage, resource depletion, ecosystem destruction, and popular anger is taking a bigger and bigger bite out of total wealth production.

If we are not already at the end of the era of expanding real wealth production in the world-economy, we are getting close.  As a result, the stock markets have or are about to enter a cul-de-sac from which there is no escape in the foreseeable future.  Middle class people around the world are making more and more demands on their governments to protect their wealth from extreme weather events, resource depletion, ecosystem destruction, and civil unrest, and to restore the wealth they have already lost to those destructive forces.  In these circumstances, company profits cannot grow as fast as they did in the past unless real wealth production increases more rapidly or the demands from middle class people are not met.  Accelerating wealth production also accelerates climate change, resource depletion, ecosystem destruction, and popular anger.  It rapidly adds to the costs of managing all the damage, especially popular anger (via policing and military spending).  On the other hand, assigning a greater share of the wealth being produced to meeting the demands of middle class people has to cut into the profits of the companies listed on the stock markets.  Down either path lies the stagnation of profits and the resulting stagnation of stock values. Down either path are real losses for the world’s middle classes.

Various governments are grappling with this stock market cul-de-sac by coupling an immediate reduction in middle class and working class standards of living with promises of great times yet to come.  In the U.S., the Trump administration is taking this short term fix to its extreme – inflicting immediate economic pain and possibly inducing a recession that will wipe out wealth for millions of middle class and near middle class families while calling the economic pain necessary medicine that will pay off handsomely for Americans. 

Much of the wealth loss is showing up, and will continue to show up, in the deteriorating wages, benefits, and conditions of work.  Attacking unions and reducing U.S. federal government jobs and programs is undercutting standards of work, workplace safety, wages, and benefits, all of which give companies more wiggle room for protecting profit rates for a while longer.  So does reducing taxes and regulations on corporations and the wealthy.  The Trump administration strategy may help corporations and investors avoid hitting the brick wall at the end of the stock market cul-de-sac for a few more years, but the collision is inevitable.

Fading Middle Class Jobs and Decline of Representative Democracy

The institutions of representative democracy and middle class jobs are deeply entwined, so much so that the diminishing of one is accompanied by the diminishing of the other.  This entwinement is rooted in the rise of middle class populations in Europe and North American over the course of the Industrial Revolution (roughly 1700s through 1900s).  The rising affluence of those middle class populations shifted the balances of power between and among ruling class populations and middle class populations and gave rise to the formation of new nation-based political coalitions. 

When the Industrial Revolution kicked off in England in the early 1700s (with the invention of a usable steam engine), achieving affluence became available to a growing proportion of England’s population.  Expanding populations of owners of capital, agricultural lands and new industries and expanding populations of agricultural, manufacturing, industrial, service, and government workers created new flows of income and new and expanding stocks of modern wealth.  Demands for and conflicts over the expanding flows of income and wealth spread and intensified.  Representative democracy was an institutional compromise among the ruling classes and the emerging classes of middle affluence worker/consumer populations.  The royalty gave up a bit of their claimed total control of wealth and the rising middle class populations obtained institutional mechanisms for redressing grievances and making demands.

As the wealth producing technologies and cultural practices of the Industrial Revolution spread to the Americas and then other parts of the world, the world’s middle class populations formed, diversified, and grew in more and more nations, eventually to include populations of high wage industry, government, and science workers.  Popular demands for participation in the high level decisions about producing and distributing wealth came with those trends.  Middle class populations that formed in the world’s colonies not only agitated and fought for representative democracy institutions they also agitated and fought for national independence.  By the middle of the 20th century, demands for representative democracy were global and almost every government on the planet claimed to be a representative democracy, even though many of those claimed democracies were clearly shams and worse.  Despite the growth of popular demands for participation in government decision making, well functioning representative democracies never became the dominant forms of government for the world’s people. 

The Accumulating Costs of Representative Democracy

As middle class populations gained representational footholds in national governments, the costs for maintaining well functioning representative democracy institutions increased and increasingly fell on ruling class populations.  The expenses tied to assembling representatives and paying their salaries and expenses are not a problem for ruling class populations.  Those costs are easily passed along to the middle and poverty class populations in a nation.  Rather, the major expenses for ruling class populations are the income and wealth redistributions required to maintain the contentment of the very large populations of middle and poverty class populations represented in the institutions of government while still holding onto sufficient control over wealth production and distribution institutions (including government institutions) to ensure that their shares of income and wealth meet their growing expectations for income, accumulated wealth, domestic and geopolitical power, and status enhancement.  Satisfying these two competing worlds of expectations is enormously costly, so only the more affluent nation-based ruling class populations have been willing to tolerate a functioning representative democracy for very long.[1]

The Decline of Representative Democracies in the 21st Century

It is widely observed that the institutions of representative democracy are in trouble, not only in the weaker nations where they have always been fragile, but now in the affluent nations of Western Europe and North America.  Given the association of the growth of middle class populations (and the increasing affluence of those populations) with the spread of representative democracies since the 1700s, this should not be surprising.  The world’s middle class populations are no longer growing and most of the existing middle class populations are no longer obtaining real improvements in their standards of living.  A growing number of those populations are experiencing net losses of income and wealth.[2]  The response of many in those populations is not unusual in the history of the modern world-economy: a turn against the time consuming practices of democracy and to the promises of a quick restoration of income and wealth growth made by proponents of authoritarian rule.  Needless to say, the spread of those promises is paid for by the ruling class populations that have only tolerated the institutions of democracy and now see that if they actively and successfully subvert popular belief in democracy, they won’t have to.  

Just as the Great Depression intensified conflict over incomes and wealth that resulted in governmental upheavals (e.g., the New Deal in the U.S. and fascism in Germany, Italy, Spain and elsewhere in Europe), the expanding domain of necessary expenses relative to incomes and wealth for the world’s middle class populations has intensified conflict and governmental upheavals in our own time.  However, unlike the income and wealth recoveries of middle class populations after the Great Depression and WWII and the return to a long phase of growth of middle class populations in the world, no such recoveries will happen this time. 

The Earth’s Inescapable Growth Limits and the Impoverishment of Middle Class Jobs

The period in the history of the modern world-economy we are now entering will not be like the long period of recovery and renewal from the 1950s into the 1990s.  A fundamental characteristic of middle class jobs – the growth of income and wealth faster that the rising costs of living and working and the routine deterioration of tangible wealth (homes, cars, workplaces, equipment, etc.) cannot continue for all middle class populations.  In fact, that characteristic of middle class jobs is already history for large numbers of the world’s middle class people.  The inescapable reason is that the earth-system conditions that allowed the Industrial Revolution to produce increases in incomes and wealth by exploiting earth-system processes and shunting away costs over such a long expanse of time and over so much of the earth no longer exist. 

The carrying capacity of the earth-system is finite and global economic activities are now up against some of its most formidable carrying capacity limits.  Before the last quarter of the 20th century, those limits were generally thought to be finite supplies of resources such as oil, arable land, and certain rare minerals.  We have managed to outmaneuver those kinds of limits by deploying technological fixes and can probably continue to do so for a while longer.  However, technological fixes have brought us more rapidly up against much more intractable earth-system limits: the earth-system’s slow rates of processing the vast waste flows from human economic activities (e.g., carbon, industrial chemicals, spent nuclear fuel).  Those limits are not as easily overcome through the deployment of technological fixes.  Over time, successes with such fixes will become increasingly difficult to achieve because they add to the waste flows earth-system processes already cannot handle.  Rather than decreasing the number and scale of human encounters with earth-system limits, deploying those kinds of fixes add to their exponential growth. 

The Fate of Representative Democracies

The repercussions from our encounters with the carrying capacity limits inherent in the earth-system are rapidly rising expenses relative to the incomes and wealth savings of middle class populations.  Extreme weather events, more frequent and more devastating forest fires, massive rainstorms that generate instant floods, species kill-offs due to diseases (e.g., bird flu devastation of commercial chicken populations in the U.S.), losses of arable lands, and forced adaptations to changing agriculture conditions are adding rising costs to the costs of living for everyone faster than incomes can keep up.  Inevitably, standards of living are declining for many of the world’s populations, including middle class populations.

As costs are rising, ruling class populations are forging ways to shift those costs away from themselves.  They are doing this, in part, by taking advantage of the growing insecurities of middle class populations to organized ruling class-middle class coalitions of support for authoritarian government policies.  In general, most middle class people find it very difficult to accept the reality that adapting to earth-system limits requires middle class life to have fewer modern forms of comfort and convenience and to include more physical work both on the job and at home.  Consequently, those who are finding themselves on the slippery slope downward are susceptible to the arguments for authoritarian policies that accelerate government decision making and exclude certain populations from voting, access to good jobs, and rights to government assistance programs.  As always, the leaders of ruling class populations divide and conquer by identifying populations to include and exclude using identity characteristics (race, gender, nationality, religion, residence status, dialect, etc.) and promising the included populations that they get the spoils of the ensuing political battles while the excluded take the brunt of the general decline in living standards.

All is not lost.  While middle class jobs and representative democracies are very unlikely to survive in their current forms, ruling class authoritarian governments can only protect some middle class populations from rising costs and dramatic job changes over the short term.  During that time, the excluded populations will grow and become better organized and more powerful.  The domestic and geopolitical upheavals we are now experiencing will continue and probably become more widespread and intense.  Many will be very violent (like the wars in Ukraine, Gaza and the Democratic Republic of Congo) or marginally violent (like the political skirmishes with injuries and some deaths we have seen recently in affluent nations).  Eventually, the excluded populations will become well enough positioned to counter the power of ruling populations and create new forms of democracy and new forms of work that are well aligned with earth-system limits.

[1] The world’s ruling class populations are organized into numerous industry factions and nation-based coalitions.  The more affluent of those nation-based coalitions are the ones that have tolerated representative democracy institutions most successfully.  Being the most economically successful, they have been more inclined to accept the high costs required for representative democracies to function well.  Less affluent nation-based ruling class coalitions strenuously and often violently resist representation concessions because such concessions threaten their smaller shares of global income and wealth.

[2] Restoration phrases like Build Back Better and Make America Great Again recently used in political campaigns in the U.S. are not just political slogans, they are acknowledgements that middle class conditions of life are not meeting expectations. 

Lesson from COVID19: the Work of Today and Tomorrow is Constructing a Way of Life for a New and Different Historical Era

In our memories of recent jolts to daily life, the 9/11 attacks, the 2008 financial meltdown, the Fukushima nuclear disaster, the 2004 tsunami that killed more than 230,000 people across 14 countries, the destruction of life and property by hurricane Katrina along the coast of the Gulf of Mexico, and many others, stand out.  COVID19 stands out differently.  All the others were massive jolts to particular people in particular places.  COVID19 is the only one that has swept up everyone on the planet.  It is the only one that seems to be a massive jolt to the entirety of our modern way of life.

Some observers are calling COVID19 a black swan event, meaning that it is very rare, and try to reassure us that things will eventually go back to normal.  In its particulars, COVID19 is a rare event, but it is best to see it as only the biggest so far in an accelerating wave of devastating events that is sweeping across the modern world.  Each disaster in its particulars is a rare event, but they happen within and are shaped by the conditions of our modern way of life, conditions that have never existed on this planet before.  The real black swan rarity is an earth that is dominated by a species (humans) with such enormous appetites for energy and materials and space, and with such enormous powers to feed those appetites that this species is undermining the biological and social infrastructures of its own existence.  The wave of disasters that is breaking upon us is very much a part of this unprecedented black swan rarity.

COVID19 is revealing with great clarity that our capitalist world of work is all wrong for this unfolding era in human history.  Over the last several centuries the modern world of work was created to serve two interlocked priorities: maximizing the comfort and convenience of an expanding middle class and maximizing the hoarding of wealth and power by the modern version of royal families.  The global conditions in which those priorities were tenable are now gone.  On a fully populated planet bound together by transportation and communication technologies into a single societal entity where a disaster for one people becomes a disaster for all peoples and with the juggernaut of climate change growing bigger and more menacing with every month, those work priorities are no longer tenable.  It is no longer tenable to sacrifice the natural and human made infrastructures of existence in one part of the world, to subsidize the royal families and their middle class enablers in other parts of the world.  It is no longer possible for the affluent and rich of the world to escape the consequences of the conditions that the feeding of their appetites creates.

The world that capitalism made has been moving deeper and deeper into crisis for decades.  Efforts by the world’s rich and the world’s affluent to hold out for a return to better times, especially by Americans, have piled up weapons systems, piled up mountains of public and private debt, and underfunded the maintenance of vital infrastructures.  These efforts to save the conditions of historically extreme comfort, convenience, and elite wealth are futile.  Human history shows us many examples of peoples who have tried to resist the multiplication of forces that make a particular way of life no longer possible.  Those efforts always failed.  In fact, those efforts made the inevitable deaths of those ways of life more destructive and devastating and the construction of a new way to live more difficult.

The American version of capitalism, which is practiced in many parts of the world, is no longer tenable.  The priorities that now drive the world of work have to go.  They will go.  In one way or another, they will disappear.  The best we can do is to not resist the inevitable death of much of modern life, but to accept that it is happening and has to happen.  The best we can do is to thoughtfully manage the death of the American version of modern life and replace it with priorities and ways of life that reconstruct and sustain the infrastructures necessary to human existence.  Sacrifices will be made; they are already being made.  Our task is to manage the forms and distributions of those sacrifices. Failure to do so will not prevent sacrifice; it will only make it more likely that annihilating wars for survival among groups organized along the classic dividing lines of modern life will determine who sacrifices and what they sacrifice.

Jobs in the Era of the Politics of Apocalypse

SOURCE ITEMS

This is a time of the politics of the apocalypse — an all-or-nothing view of the difference between winning and losing an election and of holding power or not holding it. There is no middle ground on what winning or losing means. This has been on the rise for a long time. But it has intensified of late. No one really knows how to roll it back. Politicians say that it is time for the country to come together. But on whose terms?

Dan Balz, Bomb scares and the politics of the apocalypse, Washington Post, October 24, 2018.

COMMENTS

Back in Cold War times many smaller nations tried to be non-aligned, not on either side of the conflict between the U.S. and the Soviet Union or China.  Neither the U.S. or the Soviet Union would allow that.  Political money and weapons poured into small nations to force a choice.  That was the geopolitical dynamic of conflicting ideologies and programs of all or nothing.  It was inescapable; it was unresolvable until one or the other side was beaten into submission.  After that, the world’s nations had only one choice.

This is the dynamic of the politics of apocalypse in the U.S. and across much of the world.  Decades ago, here in the U.S. many middle class Americans chose non-alignment through third party movements and political disengagement.  Back then, this was a politically affordable luxury facilitated by the continuing weakness of the extreme right wing.  But, that shift to non-alignment and disengagement gutted the moderate wings of both the Republican and Democratic parties.  The right wing was becoming less affluent and more militant while the left wing continued to enjoy much offered by middle class affluence and remained relatively passive – until it was too late.  We have now entered into a state of affairs in which non-alignment and disengagement are no longer viable choices.  The right wing has engendered a long march for all or nothing which can only be satisfied by the capitulation of the left.  To my knowledge when such apocalyptic challenges have arisen, such as the clash over control of the formation of new states in the western territories and the spread of the institution of slavery in the 1850s in the U.S., the left has never capitulated.  Nor has the right ever capitulated.  The only outcome now possible is apocalyptic victory for one side or the other.

So, what does this mean for jobs?  If you check out the employment reports put out monthly by the U.S. Bureau of Labor Statistics, you will have noticed that most job growth is in services and a big chunk of those jobs are in social services and health care.  This is to be expected.  Suicide, family crises, workplace accidents, random acts of violence, epidemics of depression, violence, and preventable diseases are to be expected in times of apocalyptic political polarization.   Overwhelming stresses drive immediate emotions to the front, short-circuiting the intellectual capacity to look down the road behind us and up the road in front of us.  People become overly oriented  to the here and now , which makes us more susceptible to ideological scammers who take advantage of emotional vulnerabilities and more limited understandings of our situations.

So, workforce growth is now being forced into two complementary paths: jobs causing destruction (both legal and illegal) and jobs assigned the work of repairing the destruction to everyday life (both paid and volunteer).  Take a look at the massive number of personnel that was deployed in Pittsburgh to deal with one event of destruction and consider the enormous volume of costly equipment involved.  Multiply  that response by a thousand times a day across the world.  Throw in the industries and business support services required to create and maintain the military and policing forces and social and health services required to respond to these destructive events.  Now allow yourself to accept that the scope of the global conflict will continue to escalate as the extreme right wing assault on democracy and human rights continues to grow, as right wing governments take control of more and more of the world’s military and policing forces, as more non-violent and violent acts of resistance are mobilized, and safe havens from the conflict continue to disappear.

The world of work is not separate from these trends.  It is being polarized right along side the polarization of our politics.  More and more our work choices are between those that create destruction and those that try to prevent destruction and those that involve repairing and replacing what has been damaged and destroyed.

All of this, of course, has to be understood in the context of the ending of the era of real growth in wealth.  That real growth was fueled by growth in the use of fossil fuels to augment human labor and to power technologies that require an intensity of energy flows that cannot be match by massing together armies of workers.  We are still pumping more and more fossil fuel energy into the world economy, but monitoring and repairing the destructive side effects (current and cumulative, environmental and geopolitical) now require the consumption of more wealth than the increase in fossil fuel use produces.   Thus the politics and jobs of apocalypse are very much the politics and jobs of a world of people trying to protect themselves from the losses of wealth that are happening all around them.  The wealth losses take many forms.  Some, like the loss of quietness in the night and open spaces where a person can seek solitude, we only notice when we try to take account.  But, the emotional toll is still very real and very costly.

Work and the Transition to a Solar Future: A Perspective

Societal change is an unavoidable constant.  The totality of humans, other species, and physical earth systems constitute a single economy (the Inclusive World Economy) that is continuously evolving.  This global process of change is driven by the constant flow of energy from the sun.  Energy must do what it does: change the materials it interacts with and change the forms in which it presents itself.  Materials must do what they do: interact with the flows of energy, be changed, and facilitate the transformation of energy forms into different energy forms. As part of this enormous configuration of processes I call the Inclusive World Economy, the world of work must continuously become different and we must become different in dynamic association with this process — but not necessarily in the ways or at the speed we expect or want.

We humans are among the vast array of material instruments through which the flow of solar energy drives change.  Work is the primary way in which we are instruments of change.  In the last several centuries we have vastly expanded and continue to expand the human role in the processes of change in the Inclusive World Economy.  We did this by borrowing solar energy from the past (stored as fossil fuels) and adding it to the flow of solar energy that daily fuels earth’s myriad systems.[1] This dramatic daily increase in the flow of energy through the Inclusive World Economy accelerated and continues to accelerate the global processes of societal and earth systems change, has changed and continues to change the way societal and earth systems change takes place, and has transformed and continues to transform us and almost everything about our planet.

We already know that we can’t keep increasing the use of fossil fuels to augment the daily flow of solar energy.  We have to dramatically limit our borrowing from past solar energy income.  More unsettling is the possibility that we must learn to share the budget of current solar energy flow with other species and with various earth system processes – such as cleansing water through solar powered processes – to a much greater extent than we now think.  We just do not know how much solar energy we can divert from other species and processes in the Inclusive World Economy without generating a new round of system level changes that are both massive and destructive to human wellbeing.

In a large, complex, and dynamic system, system level change can remain evolutionary even while subsystems are going through deep and far reaching change and components are being created and destroyed at a rapid pace.  This is what is now happening in the Inclusive World Economy.  Species are being destroyed; whole communities of people are losing their ways of life; institutions that have been central to our wellbeing are losing there effectiveness and new institutional arrangements are popping up; planetary threats that we have never encountered before have emerged.  The effects of climate change, species loss, limits to vital resources like fresh water and arable land, and conflicts over these things are multiplying and coming faster and faster.

Not surprisingly, the world’s institutional arrangements, which we took for granted only a few decades ago, are becoming dysfunctional in various ways and being subjected to mounting attacks from various quarters.  This is happening to the world of work, where big changes are under way and conflicts over these changes are growing.  The pay and benefits associated with high end jobs are disappearing; protections against harmful work environments are being weakened; more and more jobs involve the work of repairing the damages inflicted by climate change, wars, and illegal business operations.  The world’s stock of wealth (including its people) is growing older, forcing us to devote much more of our work activity to fighting the ordinary ravages of time.

Everything in the Inclusive World Economy is connected, so this is a very dynamic situation.  No one can escape this global upheaval, so everyone is or will be forced to respond to and manage the specific forms in which these massive and life-altering global crises visit us.  As we take actions to respond, every other part of the Inclusive World Economy will change in response to our actions.   Ironically, as we do more to respond to the crises by exerting more technological control over other species and earth systems rather than adapting our own activities to the laws of the universe as they operate in the Inclusive World Economy, the more we accelerate the intensification of the crises.  Unwittingly and carelessly, we have pushed the Inclusive World Economy into a new and dangerous era of change.

In this increasingly hostile global environment, many of us are already struggling with life-altering consequences of these global crises.  Where this is happening, working people are experimenting with old and new ways of making a living and old and new ways of protecting their work opportunities. They have no choice.  But, some of these efforts only work for the short term because they propagate effects through the dynamic processes at work in the Inclusive World Economy to intensify crises and create new ones.

The future of work is uncertain, but at the moment bad outcomes look more likely than good outcomes.  Rising support for authoritarian governments that divide the world’s workers into categories and help one category by taking from the others is accelerating the destruction of the very institutions we need to respond to global crises effectively.  Much more importantly, though, the world’s leaders continue to strongly embrace the idea that the economic growth “miracle” of the last two centuries has no end in sight.  If only we make the right policy choices,  they continue to claim, the material riches of the world can continue to grow, everyone can enjoy a share of those riches, and the crises will wither away like so many storm clouds.

From the perspective of the Inclusive World Economy, the end of the material growth miracle is right in front of us.  The era of fossil fuel energy is coming to an end, the world’s material riches are beginning to diminish, and the world of work is changing quickly.  A shift to solar energy, no matter how successful and complete, will not sustain the material wealth miracle created by massive fossil fuel energy flows.  The only choice before us is how we make the shift to a world of less.  For now, a democratic and equitable shift seems very out of reach, but an authoritarian and inhumane transition is not inevitable.  An inclusive perspective, attention to the limits of a solar future, and hard and careful political work can move the world in the direction of a much more desirable future than the one now looming darkly on the horizon.

[1] In economics we borrow from future income to augment current income.  In the case of energy, however, we can borrow from past solar energy income.