Rent, Profit, and Degrowth – A Postscript to “Capitalism and Climate Collapse”
In Capitalism and Climate Collapse, I argued that catastrophic climate collapse cannot be avoided under capitalism because capitalism requires economic growth, economic growth requires energy growth, energy growth requires extensive burning of fossil fuels, and extensive burning of fossil fuels causes catastrophic climate collapse. To avoid collapse, we need to shrink the economy – that is, degrowth – to a sustainable level with respect to energy requirements, and then switch to a steady state economy to stay at that level. What exactly that sustainable level is is debatable, but regardless of whether it’s closer to one third of current closer...
Capitalism and Climate Collapse
The claims that capitalism is the cause of climate change and that catastrophic climate collapse cannot be avoided under capitalism are as obvious to some people as they are nonsensical to others, but really they are neither. They are probably true, which implies that they are not nonsensical, but their (probable) truth is not obvious. They are not obvious, because these claims depend on four other claims that are themselves non-obvious: (1) capitalism requires economic growth; (2) economic growth requires energy growth; (3) energy growth requires extensive use of fossil fuels; and (4) extensive use of fossil fuels causes climate...
Rent, Debt, and Power
In 2009 Rolling Stone published an article by Matt Taibbi about Goldman Sachs. Taibbi writes: “The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” The statement is rather unfair to vampire squids, but aside from that detail the characterization is quite appropriate and, moreover, equally applicable to the finance, insurance, and real estate (FIRE) sector as a whole. In Killing the Host, Michael Hudson describes the FIRE sector as parasitic. He writes that “instead of creating a mutually beneficial symbiosis with...
A Toy Model of Production Costs and Supply
In Economics as Malignant Make Believe I showed that the derivation of the supply curve in mainstream (neoclassical) economics is nonsense because production costs are nothing like they are assumed to be. This made me wonder, however, what would happen if you’d use a more realistic model of production costs – What would production and supply look like then? This isn’t that hard to model, so I built a simulation model on a free afternoon. In the following, I will first explain the model and after that I will discuss the results of running the model at different settings as...
Economics and Psychopathy
This is a lightly edited excerpt from my book/pamphlet The Hegemony of Psychopathy. * * * The reorientation of political ambitions after the Second World War from power and territory to wealth changed the relation between economics and the ruling elite. The “science” of economics, which already had been more influential and prestigious than any of the other social sciences, now gained an effective monopoly as the official supplier of government plans and policies, putting it in the center of power, and changing its status and what was (and is) expected of it. For one thing, politics demand(ed) “closure” —...
On Free Trade Ideology
According to conventional “wisdom” free trade leads to prosperity. Usually the idea is based on a version of David Ricardo’s (1817) theory of “comparative advantage” which is taught in most high-school economics classes. There is, however, a fundamental problem with that theory, as was shown by Frank Graham in 1923, and unfortunately that problem tends to be ignored. In the following, I will briefly summarize Ricardo’s theory and Graham’s correction thereof, and discuss why the latter is ignored and the effects and implications of that neglect. Ricardo’s model Assume a world with two countries, “country A” and “country B”, and...
Greece, Europe, and the Hegemony of Psychopathy
Question: Why can’t Greece repay its debts? Answer: Because its economy is in shambles. Question: Why is its economy so bad? Answer: Because the EU destroyed it. That’s the short answer. It’s not the answer you’ll read in most newspapers or hear on the TV – those will tell you that it’s all the Greeks’ own fault. Their incompetent politicians and low productivity are too blame, they’ll tell you, or something similar. While it is undoubtedly true that Greece – like most other countries, by the way – has had its share of incompetent politicians, the story the mainstream press...