"System change is now inevitable. Either because we do something about it, or because we will be hit by climate change. '...

"We need to develop economic models that are fit for purpose. The current economic frameworks, the ones that dominate our governments, these frameworks... the current economic frameworks, the neoclassical, the market frameworks, can deal with small changes. It can tell you the difference, if a sock company puts up the price of socks, what the demand for socks will be. It cannot tell you about the sorts of system level changes we are talking about here. We would not use an understanding of laminar flow in fluid dynamics to understand turbulent flow. So why is it we are using marginal economics, small incremental change economics, to understand system level changes?"

Friday, November 21, 2008

The Worst Noel: Celebrating Recession

One thing that's always disappointed me about the growth imperative is how the Christmas season is described based on gross sales. OK, that's sad enough in itself but consider that a season is described as "disappointing" if it grows less than the average growth rate. As far as I know, none of the recent "disappointing" Christmases has actually amounted to a decrease in economic activity over the previous year. As far as I know, there has been positive growth in US Christmastime sales for as long as the growth imperative has been in place.

Maybe I will be the first to say this publicly, but probably this Christmas will be different.

Because the growth imperative flies in the face of reality, the time will come when the "disappointing" Christmas will actually amount to a retreat. Likely we are entering that time at this very moment. It will be interesting to see badly we cope; how badly we are dependent on our growth addiction. Oil addiction is just a symptom; we have blundered into a situation where the unsustainable is a core of our social organization.

Maybe the stupidity of the financial sector has done us a service by hastening the day of reckoning. We need to cope with sustainability. This is not that big a deal for most individuals (I think we'll still have individual competition and individual wealth) but its a radical change for the society as a whole.

Will anybody be talking about this if the first "terrible" Christmas is upon us?

1 comment:

Alastair said...

I agree with your sentiments that we need to stop growth but, from what I can gather, it is necessary for a stable capitalist economy.

I am quite willing to live next year with an income 10% lower than this t year, but that is not the way the system works. The 10% saving that has to be made is not equally shared. 90% of the population take no sacrifice and the remaining 10% become unemployed (and lose their homes.)

Even if you introduced a tax where everyone lost 10% of their income, the subsequent reduction in spending would drive many marginal businesses to the wall, creating a snowball effect which would also lead to unemployment.

Perhaps Obama has the answer, but I fear he will not live up to my expectations.