Today’s way of life: should it be taken for granted?

Keynes - What is economics all about?

🎙Post no 2 –  13 July 2021

The COVID-19 pandemic has disrupted profoundly the way of life worldwide. A cry for ‘return to normal’ is becoming a consistent recurrent plea for returning to daily activities, preoccupations, and behaviours as before, as if such conceived normality is immutable. The fear of change and the desire to connect, to be with family and friends, to be diverted are all understandable. The rush, however, now that the constraints imposed by the pandemic ease, to shopping centres, to driving and flying, the lifestyle fostered by the rise of mass consumption, mass tourism, and entertainment, as it has developed in the last few decades, is unwise. Current global economic development is neither viable nor economically compatible with sustainable development. It is not conducive to a healthier planet, nor does it contribute to better human sanity. Climate change, resource depletion, ecosystems undermined, brain-drain displacement, international labor migration dislocation are all factors that threaten this very lifestyle. Without drastic changes in the attitudes toward modes of production and consumption, limits on massive public spending to boost aggregate demand, and curtailments on investment drives for a more tech-leveraged economy to sustain growth as before, there is the likelihood that a re-enactment of such growth will affect the well-being of all and aggravate disparities, polarization, and discords.

Of concern is therefore the global corporate capitalism that has sustained world economic growth in the last decades.

Most of the advanced economies have in the 21st century reached a level where the source of their GDP is now equally divided between the service sector and all other sectors. Global capitalism preys on both halves of this economy through corporate finance, which controls credit and makes it readily available, on the one hand, to concentrated enterprises, and on the other, to the masses for consumption, proliferating in both ways an economy of rent. Big corporations, whether in retail or manufacturing, in services or information technologies, compete to obtain ever greater market share and to supply ever larger volumes of production. Engaged in competition among themselves, they rely on focussed financial markets for credit, both for predatory take-overs and for the fuelling of further unproductive consumption, by fostering household debt for the benefit of shareholders. In manufacturing, for example, the pressure to generate higher returns drives investment toward accelerated capital-intensive production. In the service industry, economies of scale are introduced to make up for smaller marginal gains, in that nurturing unproductive mass consumption generates ever smaller per capita financial returns.

Traditional liberal as well as planned economies are equally under the grip of global financial corporate capitalism. It subjugates societies subliminally to herd mass consumption that dictates a way of life that many decry and yet most are unwilling to give up. Accumulation of financial capital and concentration in the retail and service sectors, where credit manipulation feeds that appetite for consumption, actually exercise control over individuals’ needs as well as choices. Further still, the economic environment subsumes political governance, in that it influences the legalisation of its own institutional setting, circumventing the political will of the large number.

The fruits of corporate capitalism are the sustaining and the aggravating of social and economic disparities. The wonders of technological change have mushroomed in the last five decades. They have allowed for enormous labor-saving. They have liberated employees from hard work and afforded them more leisure time. The large-scale supply of conveniences has made the life of the collective almost effortless and pain-free.

The capitalist economy does generate abundance, albeit with waste, a strain on natural resources, and the underemployment of human capabilities. The creation and promotion of mass consumption, combined with the fostering of engineered obsolescence, have led industries to dump ever more goods onto the market, leaving behind the lingering side-effects of disposables and pollution. Progressively, the process is rendering labor ever more redundant (particularly in the production of society’s basic needs — food, clothing, shelter, and transportation). Thus, while global corporate capitalism offers prospects to some, given its uneven opportunities, ever less can be contributed by labor, specifically in relation to what labor expects as its return.

The world of the last half century has been compelled and energized by an appetite for consumerism. Growth sustains the addiction to spending, which itself generates more craving for satisfying material wants and more pressure on the means of producing to satisfy the demand. This is a dependency trap, which, despite appearances, reduces freedom and self-reliance and thrashes common sense. The financial capital needed for this inertia of economic growth – just as for the present massive Covid bailout – is filtered through the financial institutions, which process encourages more concentration of capital accumulation and of power in the hands of ever fewer, who thus have decisive influence on how and where investment is directed.

More strikingly, this capitalism has proliferated an artificial leisure environment, at psychological cost for all: a way of life that keeps society on edge. There is stress, anxiety, and often anger, as each one endeavours to make sure to be part of the crowd that is suffering insecurity and fear. Whether driven by conspicuous consumption or simply by the need to make ends meet, there is a trend of being worried, drained by uncertainty, and constantly wondering what tomorrow will bring. It is also obvious that people, while dependent on each other, are even more so on the State, having made themselves reliant on its help to safeguard their economic daily life.

Current global economic development is unfit for either the health of the planet or the sanity of humanity. The Covid crisis has exacerbated the angst that the world is on a destabilizing path.

Might one not have to create a different world after Covid …

The exploited, polluted planet would be better off — if there were fewer cars on the road, fewer planes in the sky, no super-cruisers on the water — if there were slowdowns on building super infrastructures and malls — if there were the return of unexploited land back to the wilderness, off-limits to motor craft and vehicles. With fewer conveniences available, there would be no need for mobility restrictions; there would be reduction of the buzzing of humans to every corner of the world.

For such a change to happen, there must be reassessment of promoting the idea that ‘the grass is always greener elsewhere’ and that ‘bigger is more beautiful’ as well as of providing the means to satisfy needs so induced. There must be re-consideration by those wishing to exploit and capitalise for the benefit of rent-seekers on those in anticipation of the launch of the next phone or other gadget, just to trash the one rendered obsolete. There must be a rethinking of the idea that the only path to prosperity is economic growth based on tourism, entertainment, and even post-secondary education and their reliance on the service industry that counts for, on average, about 50% of the GDP and sustains the employment of probably more than 50% of the labor force. There must be re-evaluation of the political jargon which gives prominence to the well-being of the middle class over the other lesser classes, raises the importance of “good jobs” over other jobs (as if they are less relevant), and contributes to sustaining disparities and polarization.

Are there any available means to alter the current economic growth path? There are indeed institutional reforms that could affect the investment that drives the economic inertia and could effectively redirect current growth to use resources differently, including labor.

One solution is to seize on the pandemic-induced crisis and to use some of the government-assistance funds to entice industry to adjust itself, guided by legislation, to a production moratorium, at the existing volume, on cars, planes, ships, bulldozers, earth-movers and all mass manufactured goods, such as refrigerators, computers, phones, power tools, and any other gadgets. Imposed would be the additional requirement on all manufacturers to buy back, for every unit of product put into the market, a used one, which becomes recycled and its components thus an integral part of their production planning. This would prepare industry for the post-Covid re-entry of labor back into the workforce.

The reutilization stage of production would become an activity that requires both new vocational training and the development of engineering knowledge for handling, transforming and adapting used materials. The processes of use and reuse will require labor in the re-production phase as in the production phase. Thus, to the existing labor force conceiving, producing, assembling and distributing new manufactured goods, there will be an almost equivalent number of new employees engaged in recouping, dismantling, re-claiming and re-transforming used items and materials. Cost effectiveness associated with the reutilization stage may even push for the reversal of the practice of engineered obsolescence in initial production. A revolving approach to production, coupled with perpetual recycling in industries of mass production, will have the potential to generate the momentum required to keep numbers of people occupied in a livelihood in which resorbing cast-offs and maintaining a clean environment become the sequel of consumerism. The production circuit will therefore internalise the costs of a given standard of living, one with all the recognized undesirables, such as health hazards, waste, disposables, pollution, degradation of the environment, garbage littering and contamination of land, water and space.

Are national goals and changes toward sustainability along these lines achievable under current economic circumstances? Structural changes affecting the practices of a spoiled population, whether imposed or due to unforeseen circumstances, are not always accepted. To reshape economic activity in order to impact growth requires changing expectations and behavioural habits around what and how to produce, and sharing the cost of the undesired by-products, in such a way that the outcome is beneficial for both individuals and the collective. How can the by-products be used? Who should bear the cost of creating a new use? What are the economic forces that can induce these changes, and who should be the decision-makers?

On the Aggregate Demand side, it is unlikely that individuals on their own will voluntarily give up the conveniences they enjoy and take for granted, in exchange for a reduction in global adverse effects which impact the collective. Whether it is a US President using Air Force One to fly off to play golf, thousands of vacationers marvelling at the collapse of Arctic ice walls, millions of flight passengers in search of pleasure elsewhere or car commuters going to work, for most, if not all, the last thing on the mind is whether one’s own activity has anything to do with global warming or pollution or the eco system at all. What Covid has demonstrated is that the masses are little concerned with global problems and resist any change to their relatively advantageous lifestyle. Most are pressed to get back to the pre-COVID-19 normal. Thus, on the one hand, given the state of global income distribution, to rely on voluntary change to redirect the course of growth, through Aggregate Demand, is a chimere. On the other hand, to attempt to achieve these goals through coercion and/or regulation is a challenge that could lead to more resistance, disparities and polarization.

Conversely, on the Aggregate Supply side, given the state of global competitiveness, it is improbable that corporate industry — deeply-rooted in Wall Street culture, whose interests thrive in the proliferation of the economy of rent — will give in to any course of growth which might jeopardize its advantages. Unless they are lucrative, social costs, in terms of waste, health hazards, pollution, environmental degradation, over-exploitation of resources, climate change, etc., do not enter into balance sheets. To believe that corporate industry voluntarily would internalize by-product costs into its balance sheet is wishful thinking.

For the good of all then, what can be done? Whenever, more convenient material means, which make life both easier and more comfortable for individuals, are made available, they come with a cost and perhaps some adverse effects. When, however, the sum total of undesirable side-effects accumulates and grows into a problem or threat to the collective, then they become an issue left to others. Is there nothing that can be done, if the individual contributions required to slow down the degradation of the planet and to reflect some human sanity are resisted on the demand side and discarded on the supply side?

Read more in Post 3.

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