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Global Uprisings and the Failure of Modern Economics and Modern Politics

Media reports often fail to connect recurring demonstrations in Greece and Spain with those in the Middle East and North Africa (Tunisia, Egypt, Syria, Yemen, Libya, Bahrain). After all, the MENA demonstrations are ostensibly about democracy, while European countries already have functioning electoral systems. Protestors in Greece and Spain are instead decrying austerity programs resulting from governmental efforts to rein in deficits and debt burdens.

At the core, though, all of these uprisings are about the simultaneous failure of modern economics and modern politics—even though systems differ somewhat from country to country. People in all of the nations mentioned have one thing in common: crushed expectations. Economists and politicians have promised jobs and growth, but instead citizens are seeing spreading unemployment, rising food and energy prices, and increasing economic inequality. Nowhere are there realistic prospects for a political remedy to worsening economic conditions. Thus, while unrest seems destined to spread and intensify in the months and years ahead, it has no clear long-term strategy or goal.

Consider Spain. Unemployment for the populace as a whole is running at about 20 percent, but among young people the jobless portion approaches half. Even many employed Spaniards find rising food and fuel prices impossible to keep up with. Meanwhile, there is only austerity to look forward to now that a real estate bubble has burst and years of government overspending and imprudent bank lending are bearing bitter fruit.

It’s easy to understand why youth would be populating street encampments and leading demonstrations: they have nothing to lose and little to look forward to. Young people have led revolts before throughout history, though the current instance marks a strong contrast with a fairly recent comparable example—the youth revolt of 1968: then young people rose up because they could afford to; now they’re doing so because they can’t afford not to.

The frustrations of the demonstrators cannot adequately be framed in traditional left-right political rhetoric. In Spain, the uprisings have led to the election of a center-right government—not because that’s what demonstrators want, but because incumbent socialists had failed to head off worsening economic conditions. In Yemen, demonstrators are battling an entrenched right-leaning monarchy for much the same reason. Everywhere, the demand is essentially simply to throw out the old parties and start over.

And that means throwing out the old economy and starting over. Implicit in many uprisings is a demand to divorce the debt and refuse the banks. Of all nations hit with a banking crisis, Iceland has come closest actually to doing this, and has emerged relatively well off as a result. For Greece and Spain, however, similar actions would inspire a contagion of default throughout the EU and beyond, so efforts in this direction are being strongly discouraged by the IMF and other EU countries.

The prospects for substantive change elsewhere, leading to genuine improvement in economic conditions, are similarly dim. In Egypt, after a coordinated youth-led revolt succeeded in unseating long-time strongman Mubarak, the army is in charge until elections later this year, while the Egyptian economy appears to be teetering on the verge of collapse. Dictators in Bahrain, Syria, and Yemen are fighting ruthlessly to maintain control of their countries, leading some commentators to speak of a summer of counter-revolution (following the spring of uprisings). In Libya, Muammar Gaddafi’s eventual replacement will almost certainly be hand-picked by the CIA; meanwhile, however, that nation appears to be fracturing permanently, so that it may never again comprise a single coherent entity. A similar fate may await Yemen.

The difficulty of finding solutions reflects the enormity of the problem. Much of humanity has spent the past century and more living on one-time-only jolt of cheap fossil energy. We used cheap energy to speed up and intensify the extraction of renewable and non-renewable resources of all kinds—from cod to copper. Our population has dramatically and rapidly expanded to take advantage of temporary abundance. We redesigned our monetary systems so that money could be loaned into existence in any quantity desired—and we trusted that quantities being borrowed would always increase, so that interest on existing debt could always be repaid. Politicians (whether elected parliamentarians or hereditary dictators) promised that consumption levels would continue to rise, and that investors would continue to enjoy high rates of return.

After the 1970s, growth in the real economy began to stall in the older industrial nations (the US and Europe), and so politicians and investors encouraged continued growth through debt expansion—at all levels of society, from household mortgages to securitization and derivatives, to government borrowing. This shifted the cost of today’s consumption binge onto the backs of tomorrow’s taxpayers and debtors. Now the game is nearly up—and no one knows where the money will come from either to pay the debt for the last three decades of consumption, or to pay for today’s continued consumption.

In the short term, and especially in the cases of Greece, Ireland, and Spain, hounding politicians from office is unlikely to yield much real change. After all, politicians are merely doing what bankers are demanding—with a metaphorical gun held to the head of the hostage economy. Bankers and investors expect to be made whole for debt that cannot in fact be repaid. Protestors are right to insist that their nations simply stiff the banks, which will then be forced to write off tons of bad debt now rather than later. Better to get the defaults over with and keep what’s left of national treasures that would otherwise be auctioned off to make a few desultory payments under doomed IMF restructuring agreements. Next step: Replace debt-money systems controlled by private banks with currencies issued by the government or state-owned banks. Downsize the economy fairly.

That will all be difficult enough. But what comes after is the real clincher. All of this will only buy time unless national economies are fundamentally redesigned to become sustainable in the face of ongoing global resource depletion. Renewable resources must be used at less than the rate of natural replenishment. Non-renewable resource extraction rates must decline, and materials must be recycled wherever possible. Waste from industrial processes must be food for other industrial processes or natural systems. These essential principles are simple enough that a child can understand them. Economists and politicians ignored them in decades past, though that meant passing a burden to future generations. Now the bills are coming due and facts must be faced.

Adjusting to a world of limited resources and starkly lower consumption levels will be hard. The key is to make the adjustment fairly. If we do this, we can get through this difficult historic transition peacefully. The social principle that must guide us is every bit as axiomatic as the ecological principles mentioned in the preceding paragraph: Those who will be impacted by social change must have a voice in shaping it.

Today Damascus and Athens, tomorrow Washington and Beijing. The trends for energy, resources, debt, and politics are inexorable. The only really relevant question is, how will the inevitable transition be handled—with peace and fairness, or bloody repression?


Perhaps things will go more smoothly if protestors and politicians at least know what is at stake, what the larger constraints are, and what may be possible within them.

By. Richard Heinberg

Source: Post Carbon

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  • Anonymous on June 23 2011 said:
    Regardless of what protestors and politicians know, there isn't enough to go around. In the short run appetites have outrun efforts, and in the long run population increases will put an end to the fantasies that the know-nothings running and advising our goverments are trying to sell to the voters.You mention economists. We have just started to get the kind of information and analyses that should have been in circulation decades ago - information that you and I and a few others have in our books and articles and lectures. It may however be too late.Incidentally, I don't see what Athens has to do with any of this.
  • Anonymous on June 26 2011 said:
    It is a waste to turn oil into plastic or even dig for oil when bio fuel can be planted by ANYONE.It is worse to have homeless costing the state millions in dependency without subsistence land, when millions of acres held by the state are refused to these CITIZENS.It is worse to have a contractor enriching/profit oriented prison system for victimless crimes like growing your own hash or cosuming hash, while CIA type agencies or the CIA itself profits off the 'prohibition'.

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