Friday, August 31, 2012

Economic crisis and what to do about it

This little animation (complete with Australian accent) is a great summary of one narrative gaining steam in certain circles. It outlines an analysis of economy, energy and environment that draws a picture of three converging crises as shaping the coming decades in quite dramatic ways that are likely to take the form of a global sustained Greater Depression, complete with economic deflation, energy supply constraints and political instability. As a positive response it suggests re-localisation, social resilience, trust building, and power-down innovation (such a permaculture). This is what the Transition Movement is all about and this animation is in many ways one accessible and cogent expression of that movement.

I am very attracted to certain elements of this account. I accept that there are grave threats in these systems (though I would characterise some of them differently) and that they could interact in complex ways. I also agree that rebuilding local communities of trust is a critical part of a health response to our present predicament. Where I'm perhaps most hesitant about an account like this is that I feel it is somewhat naïve about the likelihood of larger political events overwhelming merely local efforts. That is, very often such localism involves an explicit ignoring of national and international entities as doomed to fail anyway. I think that while such entities gain their legitimacy through acts of collective imagination (and so a widespread adoption of re-localist principles would indeed see them hollowed of clout), the path from here to there is never going to be smooth. Government and corporate powers hold sufficient cards to make life very difficult for localist movements if and when they are perceived as growing to a point where they might begin undermining their legitimacy. And even beyond such deliberate opposition, the capacity of a globalised economy and wounded ecological order to deliver sudden and catastrophic blows to a local community is easily underestimated.

So let's get serious about nurturing local communities of trust, about adjusting our expectations away from high energy consumption, about building resilience into our economic and social systems. But let's not take our eye off the ball of the macro-scale political and economic order or abandon the field to the plutocrats, deniers and techno-optimists.


Unknown said...

I’m interested in your thoughts on Bitcoin, I’m assuming you have heard of it. If not it is a decentralised crypto currency that has a fixed number of possible coins, therefore the value of a ‘coin’ will increase with time. In a sense it is going back to the gold standard. Fiat currencies decrease in value if held, therefore it is better to take a risk on buying shares in companies than to sit on the money. With this capital companies compete to produce more for less to reward share holders and attract more investment. I wonder what the effect on the environment will be if Bitcoin grows to become the dominant reserve currency? Would it stop development and production for the sake of avoiding having your wealth evaporated away through inflation. Some people cite the paradox of thrift as a consequence of a non inflating currency. There are other potential advantages of Bitcoin such as taking the ability to manipulate the monetary system away from governments and bankers. Interested to hear your thoughts.

I have commented before about how charging interest drives inflation which drives overconsumption, but can’t find the comments.