The combination of the Enlightenment, which freed Western humans to explore explanations outside of the framework of religion; the availability of cheap energy; the exploitation of natural resources; and capitalism and free markets, as a framework for the productive allocation of savings and resources, has been profoundly successful in elevating the material condition of humanity. The three hundred years since the beginning of the Industrial Revolution and the evolution and maturation of modern capitalism have created incredible increases in lifespans and wellbeing, a profusion of consumer goods and a dramatic reduction in poverty. Human existence, at least for the developed world, and increasingly for the developing world, has been transformed from being “solitary, poor, nasty, brutish and short,” to encompassing technology, the arts, travel and myriad avenues of self-fulfillment, education and communication, all within a significantly longer lifespan.
I do not know whether I am related to the great 19th century statesman and orator, Daniel Webster. However, I was strongly influenced by a story about him in which he successfully defended the defendant in a trial and then successfully prosecuted the appeal on behalf of the plaintiff.
From that time forward, I have been determined to understand an issue such that I could argue it from either side.
I have spent a lifetime pursuing the goal of attempting to understand. I began by learning about the physical universe, based on my masters of electrical engineering degree. I then turned my attention to humans – to history, philosophy, religion and psychology - to attempt to understand human behavior. I have read hundreds of books on these subjects over the decades and have attempted to integrate the knowledge I gained into a conceptual framework about the way humans, in the aggregate, have created cultures, institutions, nations and empires. Since essentially all the many humans, cultures, institutions, nations and empires of history no longer exist, that conceptual framework must include an understanding of why almost all are gone, except for those which have been relatively recently created. (Interestingly, it is some religions which have persisted the longest. Hinduism, which has evolved over time, goes back into the mist of pre-history, Judaism perhaps began around 1800 BCE and Buddhism dates from the sixth century BCE.)
My studies and decades of work life gave me some success in my understanding of the physical world. However, I despair of ever understanding the incredible complexity and variety of human behavior. I did, however, begin to gather some broad generalizations that describe human behavior at a high level. These thoughts can best be considered as a framework within which to contemplate human behavior and therefore the evolution of human institutions. These thoughts revolved around the following principles.
Before I detail the principles, I would like to list fundamental, underlying axioms about the physical world:
Resources are scarce.
Over a reasonable timeframe, life is, at best, a zero-sum game. The ecosystem is bounded and the second law of thermodynamics exists. Until and unless we can incorporate other planets into our resource base, we are depleting a closed system.
Life is not fair. There are outsized returns to the strong, the swift and the cunning. And to the small and numerous, such as viruses and bacteria.
Humans have increased in numbers and in their ability and inclination to consume and transform resources to the point that they have become a plague species – a proposition we will explore in detail in Part II of this book.
An extraordinary amount of physical resources and energy are required to keep reality at bay.
Following are my “laws” that provide a framework for thinking about human nature:
Humans are very creative, but will take all trends to their extremes. In pursuit of progress and novelty, each chain in a trend or process becomes the foundation for building the new and the novel in an endless progression. These extremes are not sustainable and facilitate the destruction of cultures, institutions, countries and empires. This profound tendency is captured in quotes, such as Eric Hoffer’s “Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket,” and Karl Marx’s “history repeats itself, first as tragedy, then as farce.”
In a Jungian sense, everything we have created is a projection of our inner nature – governments, institutions, cultures.
All human endeavors and creations have “good” attributes and “bad” attributes. When creating a culture, it is important to determine what its values and goals are and to understand the implicit and explicit tradeoffs required in the decision-making toward achieving those goals. There is no decision that does not include tradeoffs.
The average human has an IQ of 100; half the human race has an IQ of less than 100. According to the Myers-Briggs classification of human communication (which may or may not be entirely valid, but is indicative), approximately 40% of humans think employing an analytical component, approximately 27% include a conceptual component and 10% include both. Not only do the vast majority of humans not understand complexity and nuance, they cannot understand complexity and nuance.
You cannot do just one thing. Every decision can affect multiple people and institutions. Unintended consequences of every action are inherent in most human decisions.
The most important question in decision-making is, what are my goals and objectives? The second-most-important question is, compared to what?
Contrarianism is a useful rule of thumb. Whenever a large majority of a group strongly holds an opinion, it is either wrong or will change significantly.
The road to hell is paved with good intentions. Humanity’s desire for the good and the nice – for puppies, unicorns and rainbows – is at odds with the “brutality” of nature, variations in human behavior and the reality of the laws of thermodynamics.
Humans will not agree, and are genetically and culturally disposed to be different in a significant variety of ways. This sets up a perpetual, unstoppable dynamic of change in culture and institutions and disagreement among its participants. This change is well expressed in the Hegelian, thesis, antithesis, synthesis (however, as a process, without teleology). Or in the concept of yin, yang and the resolution of opposites. At times, it is expressed in riots, revolution and war.
Because humans have differing and often opposite opinions, there is a social and political version of scientist Isaac Newton’s third law. His third law of motion is, “for every action there is an equal and opposite reaction.” The social / political equivalent is, every political or social act will meet resistance; the larger, more forceful or more meaningful the act, the greater the magnitude of the resistance.
History unfolds in cycles and not in straight lines. However, as Mark Twain is said to have noted, “History does not repeat itself, but it often rhymes.” This rhyming is the expression of human nature in the context of a changing history, technology and social structure.
One of those historical cycles is from rational to romantic and back again. We are in a romantic age during which justification is primarily based on feelings and not facts.
Humans require and make myths. Myths are stories that need not be factually true, but which embody eternal truths. (The loss of traditional myths in the modern age and their replacement by politics represents a profound change in the foundations of human behavior.)
A quest for novelty becomes an increasing component of human motivation as income, security and leisure time increase.
In the short term, and often in the medium and long terms, denial and reality avoidance significantly contribute to peace of mind and quality of life, making them dominant in human thinking and behavior. Reality avoidance is primarily facilitated by wealth.
There are times when things fall apart and humans fall into dark ages and world wars. Although homo sapiens is a violent species, extreme collapse and widespread, extreme violence are the exceptions.
Not every problem has a solution.
The point of these thoughts is to lay the foundation for a discussion of why capitalism is past its sell-by date and to consider what comes next. Capitalism is, after all, a set of human principles and practices, and therefore subject to these “laws.”
As a result of this thought process and after having laid the groundwork in the 70s and 80s, I began developing a view in the early 1990s that the U.S. would enter a cyclical, and potentially a secular, decline in the early 2000s. I began an email list and later a website. You can join me at http://www.pastsellbydate.com to discuss and help to further develop these thoughts.
In the late 1990s, I read The Fourth Turning by Strauss and Howe, which expressed some of my thoughts much better than I could (although I was not, and am not, developing my thoughts in the context of generations as Strauss and Howe did). Strauss and Howe developed our mutual themes that trends lead to extreme excesses that must be resolved prior to a rebirth or regeneration, creating a new cycle – a new First Turning in their view. But also that the current Fourth Turning, which began in 2008 and should last about 20 years, will be a time of destruction of the old, and an exceedingly dangerous period of time. While not the way to bet, the probability of calamity and war increases during a Fourth Turning as the old is destroyed, cultures and institutions become unstable and the new is created.
The advent of the Covid-19 pandemic has created a Fourth Turning on steroids and arguably accelerated many of the trends that were already under way.
This book, on the end of capitalism, was born during the process of writing a different book.
I write to “find out what I think.”
In the 1970s I read The Limits to Growth, and was profoundly affected by its portrayal of a future in which we humans will bring catastrophe on ourselves by unrelenting increases in population and consumption of resources. Then I lived through the 80s and 90s, a time of incredible economic growth that seemed to have no limits. I began to believe that the authors of Limits were like some environmentalists - overstating problems upon which action must be taken NOW.
Sometime in the 90s I first heard about climate change, back when it was global warming. The sound bites in newspapers and on television just did not add up.
I was dismayed by the misinformation around the subject of climate change, the incomplete explanations from the media, and by books that presented only one side of the issue.
All of the focus was on the bad things that would result from climate change, with no discussion of the tradeoffs associated with fighting it. Since there are no decisions without downsides and there are always unintended consequences of significant actions, there was a great deal not being said by the popular press, movie stars and politicians.
I wondered why, if fighting climate change was going to be easy and positive for the economy, we did not just do it.
Then climate change became politically correct and the probability of getting unbiased analysis from politicians and the popular press fell to close to zero.
I spent more than a decade reading everything I could find on the subject, from scientific papers to books to internet rants - from Al Gore to Rush Limbaugh - in order to understand the issues around climate change for myself.
As I began writing a book on climate change and following the facts and data to discover what I thought, I came to a completely unexpected conclusion, albeit one that was reached in The Limits to Growth: climate change is a symptom of an underlying disease. We are trying to fix symptoms while leaving the underlying problem alone. We are trying to manage a fever with aspirin while the underlying cancer continues to grow.
Climate change is a symptom of a more profound, underlying disease.
I became aware that something more fundamental, more existential than even climate change, is at stake. While my interest in climate change was primarily academic, my expanding thoughts on population and consumption grew into a compelling concern. Ultimately, it became important that I directly address THE underlying problem: capitalism has enabled too many people to consume too many resources, exhausting the Earth’s resources and nature’s ability to cleanse and renew itself. This underlying problem manifests itself in several symptoms, one of which is climate change.
If all energy were renewable tomorrow and the problem of climate change were solved tomorrow, we would still face the existential problem of the limits to human population and to the consumption and depletion of global resources. The associated crisis will likely begin within the next 40 years, however it probably has already begun.
Capitalism and its consumerism variant have been too successful in turning natural resources and energy into humans and goods. They are now reaching or have reached their natural limits.
Then, it seemed that the Great Financial Crisis (GFC) marked the beginning of the current Fourth Turning (with which Howe agrees), and I wrote a book about the GFC in order to fundamentally understand what it was and why it happened.
It is important to realize that news provided by the media, particularly in an era of political correctness and significantly divided political opinions, does not provide an adequate basis for the understanding of complex subjects. And nothing is more complicated than the non-linear, multifaceted, complex system that is the political economy. These social and political divisions lead to not only inadequate discussions, but also inaccurate and biased discussions of, among other things, climate change, capitalism and sustainability.
My book on climate change led to thoughts on the subject of sustainability, which led to thoughts on the viability of capitalism.
You can read my book on climate change, which was described by Dr. David Collum, professor at Cornell University, as “a fabulous 110 page write-up on global warming, more moderate than my own but right on the maximum in my opinion,” for free at http://www.tenthingswarming.com .
I have been a life-long, free-market capitalist and have held the positions of Chief Executive Officer, President and Chief Financial Officer in various privately- and publicly-held companies. It is clear to me that capitalism, while having its challenges (remembering that everything has both “good” and “bad” characteristics), provides the most efficient allocation of resources to, in turn, provide the highest standard of living for the most people. There are no words sufficient to describe capitalism’s ability to deploy savings, energy and natural resources to elevate the lives of many, and recently, the vast majority, of humans.
And that is the problem. That trend – deploying ever-more resources to the world’s rapidly-expanding population - is now creating the excesses that are providing the foundation for the end of capitalism. The primary excesses from capitalism today are inequality, crony capitalism, regulatory capture and the demise of environmental sustainability. By far, the most important and existential challenge is environmental sustainability, which is a primary topic of this book.
The critical importance of environmental sustainability to a discussion about capitalism makes this a difficult book for me to write.
I have two objectives to achieve within this book. The first is a general discussion of the strengths and weaknesses of capitalism, leading to the conclusion that it is a trend that has been taken too far. The second is to establish that a primary result of capitalism, the loss of sustainability, is a part of our current reality and is an existential challenge.
While sustainability is an occasional topic of discussion, it generally does not receive widespread coverage. To the extent serious attention is paid to environmental issues, discussion is usually framed in terms of climate change and loss of biodiversity. Essentially no one is making the case that, in effect, the economic successes enabled by capitalism are leading to catastrophe relating to sustainability. Perhaps the most recent, influential book on the subject was Naomi Klein’s This Changes Everything. Ms. Klein’s book primarily addresses capitalism’s effect on climate change.
Those that do discuss sustainability generally do not address the difficult issues associated with fixing the problem. Instead, they forecast a coming together of humanity that will generally pursue intangible, spiritual and social improvement as opposed to material improvement. A spontaneous, global outbreak of “kumbaya.”
I will make the case that sustainability is no less than the primary challenge facing humanity. Sustainability is a challenge primarily because capitalism enables the efficient taking, use and re-formation of the Earth’s resources.
Because the case for sustainability is not part of popular discussion, I will spend some time establishing the details and urgency of the loss of sustainability.
This book addresses the end of capitalism, first by reviewing capitalism’s successes, challenges and end game, and second by undertaking a comprehensive discussion of the state of, and implications for, sustainability. Accordingly, this book is divided into two parts: an examination of capitalism, generally, concentrating on the trends which are bringing about its significant change, if not demise, and a detailed examination of the principal trend due to capitalism, which is the loss of sustainability. The book ends with a discussion of a particularly non-capitalistic, no growth world, which is the end game of re-attaining sustainability through a no-growth economy.
I will contemplate humanity’s future on the “other side” of capitalism, and it is not pretty. The excesses have become extreme, and we have severely compromised our future, economically and environmentally. We have become accustomed to unsustainable standards of living, which will be very difficult to give up.
Importantly, as capitalism is dismantled as the culture demands more equality, “fairness” and social responsibility, standards of living will decrease for most in the West, reinforcing the demand for change. Standards of living will decline for several reasons, one of which will be that we are at the boundaries for sufficient cheap energy and for inexpensive materials. Another is that whatever economic system is adopted will unlikely be able to generate the material returns of capitalism.
Capitalism is a juggernaut, transforming all before it at an increasing rate, utilizing energy to turn the Earth’s natural resources into humans, infrastructure and goods.
And that is the problem.
Peak capitalism will coincide with the current Fourth Turning, which is occurring now. There is an argument to be made that the Great Recession of 2008-2009 and the continuing economic and social issues, including the election of former president Donald Trump, the pronounced increase in credibility of socialist ideas, increasing rates of suicide and opioid use, and extensive social unrest, are the first symptoms of a world that is reaching its limits beyond climate change and the loss of biodiversity. This is a world that has become unsustainable and is beginning to fray around its edges.
The challenges associated with adequately addressing sustainability are daunting. In summary, the average citizen of the U.S. must decrease their levels of consumption by approximately 75%.
This book is not intended to be either a critique or defense of capitalism. The objective of this book is to examine the logical results and implications of capitalism as we have implemented it.
I will address very complex, interconnected ideas, each of which could be the subject of its own book. I will do so in such a way as to make this book widely accessible by simplifying complexity.
Importantly, I will address all issues head-on. The chips are allowed to fall where they may. Uncertainty is ok, so long as it reflects the state of current knowledge. Further, this is a judgement-free zone. Too many create innuendo and guilt by association which are not supported by facts or evidence. Too many environmental and social justice texts use negative adjectives, such as “unfortunate” or “destructive.” My view is that we need to dispassionately review where we are, use the facts and evidence at hand, consider alternatives and tradeoffs, and then select the best future we can have.
While I will not intentionally be confrontational or negative, the conclusions of this book are negative, so that if you require a trigger warning, consider yourself warned.
I will use a number of graphs to illustrate ideas. However, the key points from each graph will be explained in the text, so you can ignore the graphs, if you wish, and not lose track of any of the discussion and debate. There is very little math.
Finally, I would like to note that I am uncomfortable predicting gloom and doom, particularly following a lifetime of believing in continually-improving progress. I have lived an exceptionally wonderful life by being able to live in the United States at the pinnacle of capitalism. I want our son to be able to have all I have had and more.
Unfortunately, I cannot ignore the facts and data which have asserted themselves during my research and contemplation.
Here are those facts and data, together with some of my thoughts, for you to use in forming your opinion.
Join in the conversation on my website, http://www.pastsellbydate.com and on Twitter at @KitWebster.