Capitalism: The right to extract wealth

"When we buy stock we are not contributing capital: we are buying the right to extract wealth."

(Marjorie Kelly,The Divine Right of Capital, 2001)

The legitimacy of capitalism rests on two arguments, closely related to each other.

The first is a system that in a rational way, through peoples’ self-interest, efficiently organizes production and consump­tion, with little or no government control. This system creates increasing wealth. Although this system has created enormous wealth and a tremendous increase in useful as well as useless ‘things’, the wealth is very unevenly distributed, resulting in enormous gaps in society. It has also not made people more satisfied. Meanwhile, it has created havoc in nature, from pollution of a local water source to disruption in life-supporting cycles such as the carbon and nitrogen cycles. ‘As efficient as markets may be, they do not ensure that individuals have enough food, clothes to wear, or shelter,’ says Stiglitz (2002: 222). There is a need for constant government intervention to correct all so-called market failures. It is wise to exempt large parts of society as well as nature from the logic of the market. Most people who are essentially positive towards capitalism and market economy realize that.

The second argument is a moral defense both for the accumulation of capital and for making profit. Even if it can appear a bit unfair, these mecha­nisms are needed to stimulate innovation and development. In the long view, everyone will benefit. The sometimes absurd profits are explained—and defended—by Schumpeter (1942) as follows: Spectacu­lar profits, much bigger than needed to motivate the action, are gained by a very small group of winners. The possibility, the dream, of these enormous gains stimulates normal business more efficiently than if everybody got only a very modest profit. They overestimate the possibility for the big win in the same way as a poker player or a lottery-ticket buyer. In Schumpeter’s view, one should agree to these giant profits, and the thereby associated differences in income and wealth, because it is the best way to stimulate development. This is the essence also of others’ defense for capitalism, even if modern propo­nents mostly express themselves a bit more politically correctly than Schumpeter did. Let us study this argument a bit more in depth and how well it passes the test of reality.

Capitalism doesn’t require limited companies, but it is the institution that most clearly epitomizes capitalism. Take the example of a small limited company. It has existed for 10 years and its total revenue over 10 years is in the range of US$ 30 million. The start-up capital invested in stocks was US$ 60,000. The shareholders have got small dividends over the year, just corresponding to a typical interest rate; they wanted to keep the profits in the company to allow for rapid growth. Through accumulated profits, the company is now worth some US$ 500,000; that is, the value of the ‘investment’ has increased eightfold in 10 years. This is nothing exceptional but all in all it is a reflection of a moderately successful company.

During the 10 years of existence, some 10 people have been working in the company. They have had a good salary; they even have been part of a profit-sharing programme. One now wonders why the ones who invested the original capital 10 years earlier should be the owners of the whole company. Isn’t it the fruits of the 10 people who work that has made it what it is today? The original capital, representing less than 1 person-year of work in value is now worth more than the 100 person-years of work dedicated to the company over the years. Strangely, this is accepted as the most natural thing.

The stated purpose of limited companies is to supply their owners with profits. This is motivated by the owners supplying the capital that is needed to start and invest in the operations. This is also the reality when many companies start. The bulk of the trade in stocks is not about company start-ups, however, but about stocks that are bought and sold purely speculatively. In the period 1900–1953, new stocks contributed less than 5% of the needed capital for business in the United States. At the end of the 1990s, only 1% of the value of the stock that was bought and sold reached the companies, the rest was only transfer between stockowners (Kelly 2001).

As the system is now, the stockowners have the power over compa­nies and the exclusive rights to profits. Not the total right actually; the other power centre in society, the state, has ascertained its share of the profit through company taxes, in almost all societies. One can also see this as a payment for the services companies get from society, such as an educated work force, health system, legal system and protection. The employees, the clients, the local community or the environment have no right to a share in profits. Between 1987 and 1997, the stocks in the Dow Jones index went up 300%. In the same period, real wages in the United States dropped 7%. That can hardly be fair, reasonable or even efficient. As Schumpeter (1942) noted, when companies are not managed by entrepreneurs but by professional managers, and owned by investors, the whole idea of ownership and entrepreneurship is destroyed.

In a limited company, the owner has unlimited rights to the profits of the company, but only limited responsibility for the losses. This is the essence of limited companies; 200 years ago this didn’t exist. It is an innovation and a privilege extracted by the rich in the same way as the nobles saw to it that their rights were enshrined in law. There were shareholding companies earlier, but the owners were personally responsible. The emergence of limited companies is the first example, and one of the clearer examples, of how the wealthy class tries to privatize gains and socialize losses, something that became very apparent during the financial crisis of 2008/2009 where a trillion of dollars or more were used by governments just to prime the financial markets because they were not willing to take any risks; the same markets that claims the legitimacy of their mere existence with that they are needed to provide businesses with risk capital!

It is an undisputed fact that capitalism is very good in making business out of innovation, but that doesn’t mean that most ground­breaking innovations in society have been made by private companies. On the contrary, most big innovations have taken place in very different arenas. Automobiles, television, radio, nuclear power, antibiotics, wind power, sailing, electrification and the Internet are all examples of groundbreaking technologies that were driven primarily by governments or by curiosity and the ‘wish to know’ rather than by capitalist innovation (Hourihan and Atkinson 2011). When a big leap in technology has already been made, entrepreneurs find commercial uses for the new technology. The Internet is a very good example of this. Entrepreneurs are also very good at moving those technologies out to the people.

Technological development was rather slow before capitalism, and one of the reasons was that there were few incentives for people to improve efficiency. The rich could extract value added by serfs, tenants or slaves and didn’t need mechanization and the poor had neither resources nor real possibilities to turn any innovation into business. Having said that, there is certainly no reason to believe that innovation will cease without the profit motive. To make the job easier or more entertaining is a driver for innovation as well. Human nature is curious and innovative and that will be the case also without profit motives. To do something new, something good, not only for oneself but for the whole community can be a forceful driver, and it is also something that could be highlighted and emphasized more in a way that it renders more status.



(Extract from Garden Earth: from hunter and gatherers to global capitalism and thereafter
Available from Create Space, Amazon.com , Amazon.de, Amazon.es, Amazon.fr, Amazon.it, Amazon.co.uk and most book retailers)

The frog that jumped out!

Communicating climate change: may the force be against you!

Posted by Ugo Bardi

Yoda's three fingered force push - from Star Wars.

Don't you have the impression, sometimes, that the force is against you? Every time you try  to say something about the dangers of climate change, you see people literally being pushed away from you by an invisible force. It feels like being Star War's Yoda, pushing away enemies with "the force". Read more


This is to spread the word about a new blog initiated by Ugo Bardi and others.
It presents itself like this:

Telling the truth is not enough

This is a blog dedicated to communication in climate change. 

We are a group of concerned people who believe that the risks involved with climate change are clear enough that it is time to act.


So far, however, the task of communicating the urgency of the climate problem has not been successful. Telling the truth turned out not to be enough to spur people into action. We need to do way better.

This is what we want to discuss in this blog. We need to learn how to communicate. It means to learn how to tell the truth on climate in a way that doesn't scare people  but, on the contrary, stimulates them to action. It is possible, but we need to do it right.

We chose the image of the boiling frog as a reminder of the human situation on planet Earth. We hope it is to be intended as meaning that we are (or should be) more intelligent than frogs. We can still jump out! 

 

Another inequality measure - airmiles

Sometimes images are telling a lot. The picture below is from worldmapper and shows the flights in kilometers from different places. It says something about carbon foot print and it certainly says something about inequality in the world. Especially inequality between the countries.


"In 2000 civilian aircraft flew a total of 25 billion kilometres. If someone flew this distance they could circle the earth more than 630 000 times. If the total distance flown by all aircraft passengers was divided equally between everyone living in the world, we would each fly 317 kilometres a year. In fact some people fly thousands of kilometres a year, whilst others have never been in an aeroplane. The people flying the most kilometres tend to be from island territories. On the other hand, people from Haiti and the Dominican Republic, also island territories, are amongst those flying the smallest number of kilometres per year."

Growth is gone - welcome steady-state

Perhaps we should stop discussing whether growth is good or bad and just conclude that it is ending...
Clearly, growth has stalled the last decade. Of course, some still put their faith into that growth will restart again, and they have all kinds of ideas what societies should do to re-start growth. Many, including myself, question the growth paradigm itself. Well, perhaps we don't have to discuss it anymore - growth is declining.



This is particularly apparent if we look at GDP per capita which adjust for population growth. In most rich countries the number of people working in the economy is declining and with them economic growth - Macrofugue Analytics talks about Peak Capitalism. In most parts of the world, we have reached Peak Child. For a while those countries, such as China will go through a period of growth stronger than ever before and ever after, but gradually growth will subside. While we will not run out of fossil fuels, there is no doubt that new sources are much more expensive to extract and has lower EROEI than earlier finds and therefore contributes less to growth. 

It seems to me that young people in Europe or North America today can not assume - as my generation did - that things will be better and better. And this is even without the drama of climate change taken into account. Youth unemployment in Spain has reached 56 percent these days.

So, instead of arguing if growth is good or not, perhaps we should instead discuss how we will manage a society without growth. Also those that are in principle in favour of continued growth might find it wise as a safeguard - a contingency planning.

It seems to me that we need to re-think a lot in our societies if growth is not there. One apparent thing is of course pensions. We can already see a pension squeeze in many countries. Intra-generational conflicts might increase when the cake is not constantly growing. Many business models are built on assumptions of growth and many peoples' housing "careers" are built on ideas of ever increasing house prices - assumptions that already have proven wrong and dangerous. 

As a matter of fact it might be the case that our entire system requires growth. But then we would have to revisit the system rather than desperately trying to incite new growth, with higher and higher social costs.

The religious belief in constant progress needs to be revisited.


read also:
Lagom is good enough
We get richer also without growth
Aging populations will end growth
Japan: post growth and post-peak-oil works?

 

 

Can we shop our way to a better world?

When you buy a cup of coffee for €2, the farmer gets 3-4 cents for the coffee in that cup. If you buy a cup of organic and fair trade coffee, you may have to cough-up €2.50 and the farmer will get 4-5 cents. The farmer’s income will increase by an impressive 20-25 percent. Looking at it from another perspective, it seems that you will need to spend 50 cents to increase the farmer’s income by 1 or 2 cents. This example throws up the question whether the market mechanism is efficient in transforming consumers’ willingness to pay for direct or indirect benefits of a product.

Voluntary sustainability standards (VSS) such as fair trade, organic, and eco-labels have emerged as part of a number of converging – and associated – trends such as:

- emphasizing the market and consumer choice as important tools to accomplish ethical, economic, environmental or social goals;

- facilitating government de-regulation, which leaves more self-regulation to the industries;

- holding those that bring products to the market place accountable for the quality of the products, a responsibility that extends to the suppliers of the products, and their suppliers in turn;

- introducing a stiff global competition which makes differentiation in the market place an essential survival strategy to escape ‘commodity hell’;

- organizing production into so-called value chains where each link is taken care of by independent companies that are under the constant threat of being exchanged, constantly competing with others.


Let me expand a bit on this last point.

In the movie The Godfather, Vito Corleone, the mafia boss played by Marlon Brando, is asked by his godson Jonny Fontane to help secure a film role that will boost his fading career. The head of the film studio has previously refused to give Fontane the part. The Godfather tells Johnny, "I'll make him an offer he can't refuse." One morning the studio director wakes up to find the head of his expensive racehorse on his bed. Fontane is subsequently given the part.

This is basically what the chain leaders, i.e. supermarkets or corporations, have done; given suppliers an offer they can't refuse – follow the standard. Suppliers in the chain, all the way to the farmers, and sometimes even the suppliers to the farmers, should follow the standards developed by the chain leaders. In many cases, the standards also shift the costs away from the chain leader to the suppliers. In order to enforce compliance, suppliers have to use verification mechanisms, normally private certification bodies, authorized by the chain leaders or auditors from the chain leader.

At a point in time, NGOs realized that consumer activism could be a tool to accomplish goals. This first took shape as boycott, that is refusal to buy products from companies because of their behavior. When companies tried to get away from their responsibilities by outsourcing, NGOs pointed out that those chain leaders had responsibilities for the whole chain. In some cases, this led to the NGOs initiating sustainability schemes, either in partnership with an industry or alone.

We don’t have VSS for social conditions for labour in Scandinavia – but there is a Food Justice Certified scheme developed in the USA now. Why? Because it is needed in the USA but not in Scandinavia (at least not in the same way as in the USA). VSS has emerged in the space between that well regulated by the markets and by the governments respectively. If we view their existence as a result of “policy failure” or “market failure”, it means that if the markets and governments did their job properly they would not be needed at all.

The example of the coffee cup shows that the market mechanism is not a particularly efficient tool for accomplishing non-market goals. Let me give a few more examples.

VSS is often presented as an option for small-scale farmers, but they are oversold in this regard. In general, only a small proportion of the farms will be able to participate in the new value chains. The sustainability schemes constitute one factor among many discriminating small producers, be it farmers or food processors. Farmers with more resources are able to capitalize more on the opportunities. The processes of certification also, almost inevitably, favor the rich over the poor, both in developed or developing countries.

I started an organic farm in 1977 in Sweden. From 1985 onwards, organic farms have been certified to voluntary standards. The number of organic farms in Sweden has grown from a few hundred in the early eighties to nearly 12,000. The market share has gone from 0 to 4-5 percent. Around 17 percent of arable land is organic. So this is a real success story. However, growth has slowed down despite the fact that a totally overwhelming majority of the population says that they want to eat organic food. Also, many farmers go organic mainly because of the compensation for environmental services that they get from the European Union and the government and not because of market demand. Looking at the bigger picture, the growth of the organic sector has done nothing to curb the rapid decline of farming in the country. The number of farms has halved in the same time that the organic market has developed.

Most VSS in the agriculture sector have regulations that production can't be approved if it is established on land that until recently was rainforest. If certified production becomes important, however, the net effect will be that the certified producers will buy existing land and other producers will continue to exploit the forest frontier with the money they get from selling land to the certified ones. This process has been ascertained in Brazil, where soya production – now certified as forest-friendly – push cattle ranchers to the forest zone. In reality, the impact of these standards is almost zero on deforestation, compared to government regulation. They do make consumers feel good, though.

They also are problematic to apply in situations caused by the sum of individual actions: for e.g. it is almost impossible to ascertain whether one farmer uses groundwater sustainably; it is the sum of water used by all farmers in the catchment area that will determine whether it is used sustainably or not. VSS in management of commons has existed for millennia, e.g. in the management of fisheries, forests, irrigation or pastures. But the modern sustainability schemes are based on the market and individual companies, which is contrary to the foundations of the long standing method of management of the commons.

When discussing the impact of a certain standard, it is often contrasted against a worst case scenario. The producers that first go for a VSS are, to a very large extent, those that have production already close to compliance, which is why there are many organic smallholders producing coffee, but almost no organic flower producers in the market place. Meanwhile, proponents of the schemes mostly contrast their affiliated production with worst cases of non-certified production.

I tell this not to make the case that organic farming and other VSS have failed, but to make the case that using the market and consumer purchase to accomplish policy goals is often less efficient than government regulations, direct subsidies, ban etc.

In general, VSS is not particularly efficient in dealing with problems that are rooted in fundamental structures of society, the market and the economy. They do normally work well when they are about a simple substitution of a technology, e.g. chlorine-free paper or CFC-free fridges. But things like that can – and should – be accomplished by mandatory regulations.

Ultimately, whether VSS delivers or not may be a sub-set of the bigger question, “Can we shop our way to a better world?” While I do think that we should buy organic and other products that are a better choice here and now – and to pay a bit more for them –I also firmly believe that this will only have small effects.

In State of the World 2013, Annie Leonard (the person making the excellent video Story of Stuff) points out that the focus on sustainable consumption “distracts us from identifying and demanding change from the real drivers of environmental decline…. Describing today’s environmental problems and solutions as individual issues also has a disempowering effect, leaving people feeling that their greatest power lies in perfecting their daily choices.” I couldn’t agree more.

The Rise of Africa - a fairy tale?

During my recent trip in East Africa, I saw a frenzied building activity in Dar es Salaam, Nairobi and Kampala. I saw an industrial park outside Kampala, and even between Mwanza and remote Tabora in Tanzania a new road was built. Oil drilling is set to commence in Uganda and gas pipelines are built from gas fields off the coast of Kenya and Tanzania. It seems like a lot of money is spent and investments are high. So far you could say that I witnessed the Rise of Africa – an increasingly popular narrative. 

Africa is now sometimes referred to as the New China. Africa’s booming economic growth fuelled by a rigorous focus on government and citizen accountability will boost poverty reduction and prosperity, according to the World Bank’s latest Africa’s Pulse, the twice-yearly analysis of the economic trends and latest data on the continent.

“The broad picture emerging from the data is that Africa’s economies have been expanding robustly and that poverty is coming down,” says Shanta Devarajan, the World Bank’s Chief Economist for Africa, and lead author of Africa’s Pulse. Throughout Sub-Saharan Africa, the report found, economic growth remained strong at an estimated 4.7 percent. Excluding South Africa, the region’s largest economy, the remaining economies grew at a powerful 5.8 percent—higher than the developing country average of 4.9 percent.”

This "Africa Rising" narrative has been recently also been taken up by cover stories in Time Magazine and The Economist.

And as I said, there is building going on. But....

To compare Africa’s current development with China’s is nonsense in my view. China was always an industrial powerhouse – its GDP was much bigger than the whole of Europe before European imperialism. It has just undergone a temporary slump. In contrast Africa was never industrialized and it has been plundered for centuries, most importantly of its biggest resource – its people. Colonization certainly didn’t help.

For how long have you seen “made in China” on products you buy in the shop? And how often do you see “made in Nigeria/Kenya/Uganda/Zambia” on anything you buy? Even in African countries themselves, most industrial goods are imported from China, Thailand, India, USA or Europe. South African supermarkets are increasingly dominating the shopping scene in East Africa, and in their shelves most stuff is imported. And all those wonderful East African textiles – made in Bangladesh.

The industrial park I saw outside of Kampala seems to house mainly import/export companies. And looking in my own field of expertise, agriculture, it is still mainly dependent on manual labour with very low productivity.

Africa attracts a lot of investments  now. Part of it is from the African diaspora. Foreign remittances are said (of course data here is extremely fuzzy) to be bigger than total aid. Of course, all this money pouring in will have to be spent. Of course it will trigger economic growth, but there is no guarantee for a lasting development.

 “The idea of development as industrialization has been completely abandoned in the last few decades. Free market economics has come to advise poor countries to stick with their current primary agriculture and extractives industries and "integrate" into the global economy as they are. Today, for many champions of free markets, the mere presence of GDP growth and an increase in trade volumes are euphemisms for successful economic development. But increased growth and trade are not development”.

writes Dick Rowden in Foreign Policy.

The data behind the Rise of Africa narrative is also questioned. Morten Jerven’s research, Poor Numbers, in various Anglo-phone African nations suggests that the data supplied by national records and statistical offices are highly unreliable, with figures that substantially misstate the actual state of affairs.

Also, an economic growth rate of 5% per year is not so impressive when it is put in relation to the growth of the population. After all it is the growth per capita that counts when it comes to poverty reduction. Again, compare China with a 8% economic growth with almost no population growth with Sub-Saharan Africa with a population growth that is almost as big as economic growth. Between 1980 and 2010 GDP per capita in 2005 International dollars increased only from 1,800 per person to just above 2,000, albeit with a drop down below 1,500 in the early nineties (source).

Some are terrified by the growth of population in Africa, but by and large Africa is not much populated compared to Europe and Asia. Perhaps, this population growth also holds a promise for the future. The biggest shift in Africa’s demography resulting from the population boom is the increase of the working age population. In 2010, 34 per cent of Africans were aged between 25 and 59. They represent 34 per cent of the population or 353 million people. By 2050 this number is expected to reach 892 million people, representing 45 per cent of the population. This would represent a dramatic shift in the world’s labor force, with Africa likely to replace China as the biggest contributor to the global workforce.

Historically, a big work force has been one of the major drivers for economic development. But historical relations might no longer hold: in an industrial development with increasing automation the importance of the size of the workforce will perhaps be less pronounced. We already see that industries are to some extent coming back to the USA and Europe. In general, it seems like industries are going the same way as farming, a constant over-production as a result of that increase in productivity is quicker than growth of demand. This means that the industrialization path for development will be increasingly narrow and hard to go for newcomers.

Of course, there will be spots and pockets than can thrive without either industrial development or agriculture productivity growth; living on tourism or mining for instance. And there are countries which can – and have already – developed industries. After all Africa has 54 countries with varying conditions. But for a large scale development of Africa it needs both agriculture growth and industrialization. And both seem hard to get.

Peak Child - Peak capitalism?

The ideal family is no longer big

World population continues to grow, but the number of children in the world has now reached its peak. In 1960 we were 1 billion children below 15 years of age and we were 35% of the world population. Now there are 1,9 billion children in the world, but they are but 27% of world population. In 2050 there will still be an estimated 1.9 billion kids. http://esa.un.org/unpd/wpp/unpp/p2k0data.asp

The good news is that populations are actually stabilizing. We doubled global population between 1960-1990 – but this will most likely never happen again.


In all major rich countries – with the USA as a remarkable exception – population is stabilized or would even fall were it not for immigration. In many other countries birth rates have plummeted. Remains a number of poor countries with still very rapid rates – just come home from East Africa which is one of the regions with still increasing population. It is worth noting that population growth rates in Africa are still not as rapid as they have been in Asia.

http://esa.un.org/unpd/wpp/Analytical-Figures/htm/fig_2.htm

The era of colonization of the globe of human kind is rapidly coming to a close, with nature resources sucked up and population now filling space after space. With this closing, our economic system is also bound to change. 

Capitalism as we know it can’t manage a steady-state economy and it has also big problems to work with a stable population as things look like. After all, growth is the lifeblood of economic system and in that sense it probably doesn’t matter much if the growth is from increased consumption per capita or by increased population.

Perhaps "Peak child", "Peak oil" and "Peak soil" don't spell the end of capitalism, but they at least form "Peak capitalism". 

Anything too big to fail is too big!

Why on Earth is it Eaarth with an extra ‘a’? Perhaps it is a smart trick to draw attention to the book: Eaarth: Making a life on a Tough New Planet. However I do realize that Bill McKibben has chosen this to convey a very serious message—the message that the blue-green grand oasis we have seen on the pictures taken from Apollo 8 has become a very different planet; our old familiar globe is suddenly melting, acidifying, flooding, and burning in ways that we never experienced before. “It’s a different place. A different planet. It needs a new name. Eaarth”, he says.

In the first half of the book McKibben makes a strong effort to justify this dramatic expression. He does that well, I must say. The ice caps are melting, species are becoming extinct, wildfires are raging, record heat is being recorded every season and strong storms and floods are growing more frequent and severe, washing away our roads and bridges. He says that even “on the old stable planet” we are falling hopelessly behind. Today, one in every four bridges in the United States needs major repair or upgrades. And it's all going to get worse, even if we curb emissions today–which we clearly don’t.

Like many modern writers, McKibben focuses a lot on the connection between energy and economic growth. The more you produce the more energy you need and the more energy you use, the more things you produce. I believe this link is now well established.

Some people think we shouldn’t paint too gloomy a picture of the situation, as it may make people depressed and thereby passive. McKibben is clearly not in this camp. Neither am I. But even my appetite for doomsday meets its match here. I am afraid that spectacular weather events are somewhat overused to prove that global warming is here and that it is going to be hell. He claims that the “great boreal forest of North America is dying in a matter of years”. I remember that I sat crying in my spruce forest some 30 years ago when we had a rapid dying of forests in Sweden and other parts of Europe. The whole forest would be wiped out we were told. Today we have more trees than ever before!

It takes a few examples like these to undermine the story. But I don’t want to do that. McKibben is basically right, even if he might be wrong in some details, and uses too many “events” and not enough science to build the case.

Perhaps he is also overemphasizing on climate change being the single most pressing issue for our civilization. He does point to peak oil and a few other indications to show that the system has reached its limits, but climate change stands out as clearly the number one issue to be solved. While I dread climate change, I do think human civilization can survive it. But it will cost. And when energy is scarce and many other resources are depleted, we might not be able to afford the things we need. Having said that, climate change is certainly a threat that needs immediate action and attention.  

On page 99 he shifts attention to “after the flood”. Because there will be an after.

”the trouble with obsessing  over collapse, though, is that it keeps you from considering other possibilities...There is no real room for creative thinking....The rest of this book will be devoted to another possibility – that we might choose instead to manage our descent. That we might aim for a relatively graceful decline.” From there McKibben tries to explain how such a new civilization would look like and how we would reach there.

And it is this part of the book that is most interesting—at least for someone who no longer needs to be convinced of global warming. While our current civilization heralds risk, speed, complexity and expansion, the new world will be built on robustness, dependable technologies, locality, and resilience. McKibben builds a credible case for how the local, slow and close will help us out, “we’re talking walk or trot or jog, not canter or gallop”, comparing the shift with the difference between a thoroughbred and a workhorse of sturdy build.

Written in the aftermath of the biggest bail-out in history (the book was first published in 2010), McKibben says that anything too big to fail is by definition too big, advocating smaller units and less complexity. His own small state of Vermont, small scale farming, farmers markets and distributed power (people producing their own power from wind, sun, biogas etc.) are examples of how smaller units can work well—and bring other qualities. For instance, on average, people visiting a farmers market have ten times as many conversations per visit than those visiting a supermarket. The change will partly be driven by us choosing to do things, buying local for instance, and things we are forced to do such as repairing the local road because the central government can’t afford it, or fixing a local power source when the central supply has collapsed.  

Bill McKibben sees mostly good things with the transition that will come, the transition that has to come regardless of whether we want it or not. But he is not immune to the advances of contemporary society and its value.

”... our national and global project has been about more than accumulation and expansion, more than cars and factories. It’s also been about liberation – the slow but reasonably steady progress of valuing more and more people....The process that made us anonymous to our neighbors carried real benefits not just costs”.

The Internet is the savior here; it is both a global project that knits us together and something that allows restless globetrotters such as McKibben and myself keep in contact with the rest of the world without necessarily accruing air miles. But is the Internet really so resource saving? I have my doubts about it.   

Much of what McKibben advocates make sense. My main concern is that he overlooks the effects of the enormous inequalities in societies and the logic of the capitalist economy. The models of communities working nicely together are not applicable for a civilization where one percent has fifty percents of the assets and where half of the population shares a mere one percent of all wealth. Capitalism is both a cause and a result of this unprecedented period in history and it seems unrealistic to believe that capitalism can survive the descent into a steady-state economy with a smaller footprint. And it seems even more unrealistic to expect that it will bring us there! Without addressing this, the graceful descent is not likely to come true, or at least not be graceful.

It is worth reading on both sides of the Atlantic, on both sides of the Pacific as well as at the shores of the Indian Ocean.  

Check out Bill McKibben's Official Site for much more information about Eaarth.

Bill McKibben (born 1960) is an American environmentalist, author, and journalist who has written extensively on the impact of global warming. In 2010, the Boston Globe called him "probably the nation's leading environmentalist" ^[3] and Time magazine described him as "the world's best green journalist."^[4]

In 2009, he led the organization of 350.org, which organized what Foreign Policy magazine called "the largest ever global coordinated rally of any kind," with 5,200 simultaneous demonstrations in 181 countries.

(Wikipedia)

There is someone out there listening

Update: The number of readers continues to increase - 5,600 page views in April

The number of readers of the blog is increasing rapidly -page views reach 4,800 in March.

I like to believe it is a combination of that I have something to say and that the book Garden Earth has been published. The special web site for the book, www.gardenearth.info/en, also has many visitors. On my Swedish blog, Trädgården Jorden, the visits are increasing, albeit not at the same rate.

Number of page views per month reached 4500 in April 2013

Tomorrow is April fool's day, and I can't possibly post anything - or?

The future is already here

Economic growth in most mature economies, such as Western Europe and Japan, has slowed down considerably. This should not be seen as a problem but as an opportunity. In most of them, and of course contributing to it, populations are no longer growing; in fact, popula­tion is decreasing in many countries or is stable or grows just because of immigration. This also means that these countries will be more positive towards, or will be coerced to accept, immigration.

Important technological developments, compatible with a sustain­able society, are already in the pipeline and will continue. Organic farming is already practised widely in Europe, up to almost 20% in Austria and Sweden. Even poor countries like Moldova, Bhutan and Rwanda are keenly adopting organic agriculture and consumers are responding by buying more and more. Wind energy is rapidly expand­ing and solar energy is finally close to a massive breakthrough. Some countries are increasing their use of biomass, without threaten­ing nature; for example, Sweden uses close to 40% renewable energy, of which biomass is a substantial part. Ecological houses or villages, passive houses (i.e. those without any active heating or cooling) and chimney-free or effluent-free factories are spreading.

Another interesting, and perhaps surprising, experience is the return of (some) wildlife to urban environments. There seem to be more deer in suburbia than in the wild. The Peregrine falcon breeds in London. Plants crack the asphalt and birds adapt their song to the noise of the city. New ecological niches are developed. Rabbits, raccoons, muskrats, skunks, and other small mammals, red-tailed hawks, ospreys, kestrels and other birds of prey are often spotted in densely packed neighbourhoods in New York. In 2007, a beaver was caught building a dam on a river in the heart of the Bronx, marking the animals’ very first return to the area since the end of the fur trade (Greenwire 2010).

The Internet and globalization have brought people closer; free­dom and human rights have become more or less global values. The respect for the environment is growing all the time and so is the awareness of our dependency both on the environment and on each other. The realization that some problems need global solutions is widespread.

Most people in high-income countries have already understood that a constant chase for more will not make one happier; most know that relationships and society are more important for the well-being of humankind than increased consumption. Human actions still follow mostly old patterns, but soon there will be a dip in Christmas shop­ping, not caused by economic crisis and/or guilt, but simply by lack of interest in more shopping. Gradually, people seeks to reduce risk, consumption and expansion and value safety, stability and proximity more.

The ever-increasing size and concentration in corporate businesses is already now counterbalanced by small-scale solutions, most visible in the food sector. On the one hand, the giant companies get bigger in terms of production, whole sales, processing and retail. On the other hand, as a counter reaction partly from consumers and partly from producers that are left behind in the process, new markets are created for speciality products. It is hard to know whether these local products will continue to be niche products. The strength in the ‘local’ is that it supports local economic development and that there is clear identity and responsibility for the production. It is rather the scale and the relationship that matter and not the distance as such; tightly knitted social networking on the Internet, in that sense, can also give the same feeling as shopping from the local farmer. It is more about connected­ness than about physical proximity.

Movements such as the Transition Movement, initiated in the early 2000s in the town of Totnes in the United Kingdom, primarily focus on the process of ‘energy descent’, the transition that is seen as inevitable after reaching peak oil and to counter climate change. The initiative spread quickly, and, as of May 2010, over 300 communities are recog­nized as official Transition Towns in the United Kingdom, Ireland, Canada, Australia, New Zealand, the United States, Italy and Chile. Transition US has the vision ‘that every community in the United States will have engaged its collective creativity to unleash an extraordinary and historic transition to a future beyond fossil fuels; a future that is more vibrant, abundant and resilient; one that is ulti­mately preferable to the present’ (Transition US 2012).

Local currencies are also spreading. The idea is to build strength and interdependence in the local economy by keeping money circulat­ing in the community and building new relationships. Apart from being an economic project local currencies also have a symbolic power, taking power from both nation-states and global markets into the hands of local communities. The association Jord Arbete Kapital (JAK) in Sweden operates an interest-free bank since 1965 with 37,000 members. It expanded rapidly in the early 1990s when Sweden underwent a serious financial crisis—as a result of a real estate crash—with interests soaring at 500%. ‘If my sister wants to borrow money, she can borrow it without interest,’ says JAK in a film.

I believe that all these initiatives are laudable by themselves, but they are not enough. Ultimately, one has to change the logic of the economic system, and here I speak about what influences the daily choices of individuals as consumers, labourers or companies. Future develop­ment is largely shaped by those choices. To educate consumers and companies in sustainable or fair consumption or production is good. To change the system that determines the incentives is even better.

(Extract from Garden Earth-from hunter and Gatherers to Global Capitalism and Thereafter)

Energy-efficient food production – sure but within reason

The forest was burning and the area was in a smoky haze when I visited Pedro. He and the other farmers were clearing land for farming at the edge of the mighty Amazon forest. This was the first time I had visited a farmer practicing swiddening, or slash and burn agriculture. I’d arrived with the idea that swiddening was a primitive method used only by ignorant farmers. I  had this image from my school days, the media and from my own love of forests. Clearly, it must be wrong to burn a forest just to grow crops for a few years. After this visit to Pedro, several other farm visits and a good deal of reading, I realized I was wrong. Partly, at least.

Swiddening is a good example of a method of farming that is rational from the perspective of the farmer. It is also environmentally benign if practiced in a limited extent. Fire is part of nature, and also pristine forests have burnt. Human use of fire has shaped many of the most impressive landscapes in the world, including the savannah and the prairies but also most forest landscapes. However, when population grows, or forest resources dwindle, what was once a good practice becomes negative.

The success of a species is mainly about its ability to capture energy

We get a confusing array of messages about food and diets. Now and again we are advised to eat local, to become vegans, to eat raw food etc. In many of these messages, ethical, environmental and nutritional messages are mixed – and mixed up. Unfortunately it is quite possible to eat ethically produced or procured but nutritionally disastrous food! It is equally possible to eat environmentally benign foods that score badly on animal welfare.

This post is mainly about energy. The reason is that regardless of all other considerations, energy comes first. The whole ecological system is built on energy levels, and the success of a species is mainly about its ability to capture energy. The enormous ‘success’ of humans can, to a large extent, be seen as an ever increasing command over energy resources. 

When we were hunters and gatherers, we captured the energy in game, fish, leaves and plants. While expending energy for hunting or digging, we got energy—in the form of food. When we lived by ‘capture’, we could only skim the surplus of nature. We had to capture as much food-energy as possible from the system to produce and reproduce. Reproduce not only children, but also the small society, the band, to which we belonged. This also included taking care of the elderly and sick, throwing the odd big party to keep spirits high, diverting energy to rock paintings, hair braiding, nose ringing and other cultural expressions. This is the real iron law of human civilization:

A society must command sufficient energy to reproduce itself and its members. 

When we started using fire to cook, we made food more palatable. Some claim that we started getting20–25% more energy from cooked food and that this also allowed our brain to grow (In other words, we were smart to discover fire, and that discovery led us on to become even smarter). The energy contained in the wood we burned largely surpassed the increased energy uptake from the food we cooked. It is important to note that this also meant that at that point, we already developed an energy-deficient food system.

Some capturing societies did manipulate their environment a lot in order to ’”produce’ more of the kind humans like (such as bison) and less of those that humans don’t like (wolves and tigers). Some dropped nuts in fertile soils to have more nuts to collect, and cleared the bush that threatened to crowd out that mouth-watering herb. Some had a tame dog as part of the hunting party.  

Initially there was no distinct line between capturing societies and agrarian societies. A major shift happened when agrarian societies began to manipulate nature to serve man, and dramatically shifted the composition of plants and animals to those desired by man. Domestication of animals and plants to use them for directly servicing us were key steps in this shift. Some level of preparing the land was also part of this. Fire came in handy in this. My visits to farmers practicing slash and burn in Latin America, Africa and Asia taught me that burning down trees is one of the easiest ways to prepare land for farming.

Swiddening allows farmers to save on labor which is why farmers stick to this practice even today, regardless of how much environmentalists complain. However, the energy wastage is enormous. If we assume that about 100 cubic meters  of wood per hectare of land is burnt and that the land is used for farming for three years, it would mean that about 35 cubic meters of wood is ‘used’ per year. That would correspond to the energy of about 3 cubic meters of oil, which would mean appalling energy efficiency, worse than most industrial systems.

Even if agriculture is no longer the key source of income for most people, it still represents the main livelihood for at least one third of the planet’s population. Expenses on food and all its associated items is the key expenditure for perhaps half of the world’s households and it constitutes a big part of the household budgets of even the wealthy. Food and the consumption of food are important social institutions and social markers—tell me what you eat and I will tell you who you are!

Finally, agricultural landscapes now cover more than half of the earth’s land surface. This means that to a large extent, how we manage agriculture is how we manage the ecosystems of the land. Agriculture is also the key contributor to climate change after the energy sector. And if we count the whole food chain, including all ancillary energy use and emissions of all sorts in the chain, food and agriculture is even more important.

Therefore, how we farm and feed ourselves is still of utmost importance. And when food prices rise, which they did in 2008 and again in 2012, it worries even the rich parts of the world.

There is no coincidence that when oil prices soar, food prices follow suit.

When oil prices soar, food prices normally follow. There are many reasons for this:

“Farming uses energy in many different forms: diesel for tractors and pumps; electricity for pumps, fans and indoor machinery such as milking machines, etc. Fertilizers represent a big energy use. Energy represents 90% of the production costs for nitrogen fertilizers, 30% for phosphorus fertilizers and 15% for potassium fertilizers. For production in the United States, energy costs represented 22–27% of the production costs for wheat, maize and cotton and 14% of the production costs for soybeans. These figures do not include embedded costs in buildings, machinery, etc., so the actual share of the costs is substantially higher. In Argentina, energy costs were calculated to 43% of production costs in 2006. [...] Increased energy prices influence food prices:

·     by making the production more expensive;

·     by making biofuel more interesting to produce and, therefore, reducing the production of food, leading to higher prices;

·     through increased transport costs that directly reflect on food prices; and

·     through reduced competition in the food sector (increased transport costs means that the pressure of global competition is reduced).

(Garden Earth, Gunnar Rundgren 2012)

Energy plays a big role after the farm gate as well. As a matter of fact, energy use is much higher after the farm gate. This is particularly marked in industrialized countries. For example, the whole food chain consumes around 16% of the total US energy use. Farm operations consume only 14% of the total energy in the food sector while handling, processing and retail on the one hand and preparation on the other, use more or less equal shares of the rest. 

As we saw earlier, considerable quantities of energy is used in cooking in agricultural societies as well. “Cooking represents more than a fifth of the total energy consumption in Africa and Asia and up to over 90% of household energy consumption in some countries. Another observation is that energy used for cooking is more than the total energy in food. So while farming in developing countries and by traditional systems is energy efficient, cooking is not.” (Garden Earth, Gunnar Rundgren 2012). Some figures point towards the fact that consumers in rich countries use less energy for food preparation. Admittedly, the food industry in these nations has a large proportion of pre-cooked food in the markets.

The United States Department of Agriculture (USDA) estimates that to deliver the average American’s 2,000 Calorie diet requires nearly 32,000 Calories of energy inputs (Energy Use in the U.S Food System, Canning et al., 2010).

Horrified by this, Eric Ganza wrote an interesting essay, In Pursuit of an Energy-Positive Food System, in which he calls for “the need to adopt a food system with a positive energy balance”. I believe this is overshooting the target. Also in the old days, there were several steps in the food chain that used more energy than they produced. Water or wind mills used a lot of energy to grind the grains into flour. Baking is not very energy efficient when compared to making porridge. And not to mention  the enormous expense in terms of both money and man-power to get spices from the East Indies to Europe.

That our food system has a bad energy ratio by itself is not an argument that it is fundamentally wrong. If that were so, all human civilization would be fundamentally wrong. Well, even life is wrong as plants are highly inefficient as well.

Approximately 130 Joules of energy per square centimeter reaches the earth as solar radiation. Some of this energy is absorbed by the atmosphere directly or is reflected. Of the 91 J reaching the surface of the planet, 18 J is reflected, 31 J is radiated as heat, 36 J is used for the evaporation of water, 6 J heats the soil and only about 1 J is locked by plants as chemical energy. It is this little part, less than 1% of the sunlight that reaches the earth’s surface that is the plants’ share of solar energy. And it is this tiny fraction that is used for food, fodder, fiber and biofuels. Or rather, it is only a part of this tiny fraction as the whole plant is rarely used. If one calculates backwards from the crops actually harvested, we find that in 1993 harvested products represented only 0.4% of the solar energy reaching the fields. Of this 0.4%, only 61% was actually used; that is, real use was only around 0.25% of the solar energy reaching the ground.

Therefore, when seeking alternatives to today’s food chains, to have net energy production as a prerequisite might lead us in the wrong direction. Even worse would be to say that we should not use any ancillary energy in the farming system. Additional energy is not always wrong. For example, a smaller quantity of water for irrigation, such as in a nursery or at a critical period of the growth of the crop, can make an enormous difference in yield. Cooking remains an essential part of human life even if it is “a waste of energy”.

The problem today is more with the scale and quantity. As I write in Garden Earth:

“...the total energy harvested per hectare can increase with increased use of ancillary energy; one can increase yield per hectare fivefold with the use of more energy. This energy can be in the form of better (and more timely) soil preparation, irrigation, fertilizers, etc. The ratio between energy output and energy input (i.e. efficiency in use of energy) seems to be fairly constant to a certain level after which it rapidly deteriorates. In industrial farming systems, the optimal use level has since long been passed”.

Energy ratios in agriculture present an interesting perspective but conclusions can’t be taken to the extreme. First we are, at least not yet, in a situation where we have to equalize energy in food and energy in oil, nuclear power and hydro-power. At first glance, one might even consider such comparisons absurd. And they are absurd, if we think that there will be unlimited supplies of energy in the future. Not too many believe that any more. All staple foods (i.e. the foods that provide the bulk of nutrition) are foods with a positive energy balance in their traditional way of production. If that were not the case, they would never have been staple foods in the first place. Second, calories alone don’t give value to food. In such a case, it would be best to stick to sugar (and sugar cane is one of the most energy-efficient crops). Vegetables will always be inferior to grain when it comes to energy ratios. They contain a lot of minerals and vitamins, however. Meat is not primarily consumed for its energy content but for its protein content. Finally, some food is eaten simply because it tastes good or for religious or cultural reasons.

 Bon appetite! 

Market i Vang Vien, Lao PDR Jan 2012

You can download the article in pdf format here.

Web site for Garden Earth - the book

From now on, information about the book Garden Earth will be posted on the web site, http://gardenearth.info/en/

Below, you can read the concluding short chapter of the book.

– 33 –
Garden Earth
You may say that I’m a dreamer
But I’m not the only one
I hope someday you’ll join us
And the world will live as one
(John Lennon, ‘Imagine,’ 1971)

Hunters and gatherers lived in a wild nature, although they manipulated it more than most are aware. Their values, religion and society were shaped by their environment and ecological niche. A small fraction of the primary production of ecosystems was taken care of by human beings. With agriculture, it all changed. A part of nature, gradually growing, was occupied fully by the human species, cleared from undesired species and put directly, and uniquely, in our service. In this way, we maximized our share of the biological production, and favoured those species that produced what we needed. Because of more intensive use, buffers were smaller and agrarian society was thus vulnerable to disturbances and shocks, such as climatic events, disease of crops and animals as well as of ourselves. Soil erosion was an ever-present threat and a cause of societal collapses or simply slow decline. Our relationship changed not only with nature but also with each other and with the society that was established to manage this new system. Human society changed from a basically egalitarian society of small bands to agglomerations of authoritarian lordships, kingdoms and empires, and from a society with very limited division of labour to a stratified society where each had his or her well-defined role.

With the Industrial Revolution, based on fossil fuel, human control and reach expanded even more, to almost all nooks and corners of the globe. Humankind went further, climbed and flew higher, dived and dug deeper—all in the effort to find more resources to exploit. More and more parts of the living as well as the dead were put in direct service of humanity. Industrialism also brought new impetus to farming. The first stage brought tools and the power to extend the land under plough, but gradually also more and more machinery to in¬crease productivity per labourer. This was stimulated by an increased use of fossil fuel so that farming from being a net producer of energy became a net consumer. Chemical fertilizers, extracted, manufactured and shipped from far away, were a step towards freeing agriculture from the limitations of the site, to manipulate life processes. These changes were also accompanied by increased use of pesticides and medicines. Now, when the rich supply of genes in nature doesn’t suffice, or there are natural barriers for combining them as desired, genetic manipulation is used.

At the same time as we are dependent on more and more of the bio-geosphere, people live lives increasingly more distanced from it. The warmth doesn’t come from wood that we cut in forests, but from distant power plants, district heating or oil and gas pumped from far away. We rarely touch the soil; the green plants most touch are retarded, tamed and flower-induced pot plants, if they are not plastic. We rarely feel the hot wind on our cheek, the rain in our hair or the bitter cold in our marrow. Still, we are more dependent on nature than ever before. Nature doesn’t care for humankind because it will survive well without it, but humankind has to care about nature.

Modern society has been successful in delivering personal wealth and economic growth, for a few people, that is. It has also broken down old prejudice and expanded human rights, freed people from bonded labour and other oppressive institutions. It has come a long way in ending discrimination of women and other groups often victimized, and been extremely successful in producing more things for the health, comfort and joy of human beings. The system, however, has not been successful in replacing the old system with a new one that gives people a feeling of meaning. Personal wealth and growth have become ends in themselves to such an extent that they remind of cancer.

The economic system and society have reached a critical limit through population explosion, unscrupulous and reckless exploitation of natural resources and constantly increasing energy use. For some resources, the limits have been passed already, which puts increasing pressure on societies, the global community of human beings and the foundations for human existence. We hunt for more and more things and satisfaction through consumption; the enormous choices haven’t made anyone happier. Unprecedented wealth is created, but it has not spread to most citizens of the world, despite everyone living in the same global economy. The gap between the rich and the poor is widening. Despite constant increased productivity leisure time doesn’t increase; contrarily, one’s leisure time and private sphere are invaded by the capitalist paradigm and behaviour patterns—to consume becomes a compulsion as strong as to work.

The capitalist system is a system of colonization, bent and suitable for geographical, physical and economic expansion. Society has now reached a stage of saturation; there is nothing left to colonize. The behaviours that were appropriate or at least acceptable for a species in rapid expansion are not the ones suitable for a life in balance. In some ways humanity seems to adapt to it—how else would one explain population ceasing to grow in developed countries? Organic farming, passive heating, electrical bicycles and solar energy represent technological developments better adapted to ‘householding’ societies with regenerative economics. The wild finds new ways of cohabiting with human beings and human beings find new ways of interacting with the wild. Cooperation within civil society has increased tremendously globally and is revived locally. There is a shift in values, where more and more people want to jump off the treadmill and seek that which gives ‘real’ well-being. This maturity is reinforced by the population ageing. The values of older people are adverse to risk and expansionism, and are more reflective and caring.

In the discussion about growth and limitations for human use of natural resources, it should not be forgotten that the poorest third of humanity needs to increase its use of natural resources, while the rest of humanity takes a break and enjoys life. This increased use is certainly not decoupled from direct exploitation of resources; it is the development of very real things such as electricity, houses, roads, water and sewage. Still, many old and new technologies can be deployed to make this growth less wasteful than previous modernization; these technologies include solar energy, distributed power, separation of water toilets from other water use, or buildings made from adobe, etc.

Most people have not yet realized the extent of the change required; humankind needs a completely new economy, a new society. Another society has to be built on values and conditions other than those of the capitalist society. It is a society oriented to closing gaps—gaps between people, between man and woman, between ruler and ruled, between ‘we’ and ‘them’, between one country and another and between man and nature. It is about unifying the many divisions that currently exist—division of labour, division between production and consumption, between work and leisure, between the individual and society, between economy and society and between beauty and efficiency.

As an alternative vision to the capitalist ideology, I offer Garden Earth.

• Where capitalism sees self-interest as the major human driver, Garden Earth is built on human needs satisfied in many ways and with voluntary cooperation.
• Where capitalism is based on private property, the foundation for Garden Earth is stewardship of common resources.
• Where capitalism sees nature as commons free to exploit, to mine and to use as a dumping ground, Garden Earth sees nature as our home.
• Where capitalism sees specialization and division of labour as something very good, Garden Earth sees it as a potential evil, a risk that needs to be limited and its effects on individuals and society mitigated.
• Where human energy in capitalism is used for salaried labour that a few profit from, in Garden Earth people work for their satisfaction and for doing something for the community.
• Where technology in capitalism is developed and chosen to maximize some peoples’ profits, in Garden Earth it is selected to make life more enjoyable or transcend resource limitations.

We need each other and the existing form for our cooperation is what is called society or community. It is ruled by laws of nature, ecological conditions, human laws, norms inherent in our culture and values. The human being is part of society and vice versa. The well-being of humankind and society is intricately intertwined forever. Markets, the state, civil society and the private have roles to play in the future society. It is about expanding liberty and the notion of liberty to include also the capabilities of the individual and to resolve the false contradiction between the freedom of the individual and that of society.

We simply have to go back to the Garden of Eden. But we can no longer do so as the hunters and gatherers who were driven out. Humankind is no longer equal to the giraffe, the carrot or the sheep, even less to the stone. Man is part of nature; thus, the well-being of human beings and of other species is intertwined. Because of the numbers, intelligence and development of the human species, we have a special responsibility for the survival of other species and for the relative stability and productivity of the earth’s ecosystems. Whether or not we like it, the survival of not only the human species but also many other species is in the hands of the human being.