Collapse You Say, Part 9: Unintended Consequences of Industrialization

Sunset Over Lake Huron

In my last post I looked at some of the factors that made industrialization possible, and with it the huge growth in consumption that now threatens the continued survival of our civilization.

During the industrial age all those factors interacted in complex and unpredictable ways, producing not just the intended results (more wealth and power for the already rich and powerful), but also a variety of unintended, and in many cases unwelcome, consequences. So much so that at this point the switchover to fossil fuels as an energy source, and the industrialization that it enabled, is starting to seem like a mistake for all but the small number who have profited the most from it. Unfortunately, while many people are beginning to have an inkling that something isn't right, very few have any idea what it might be.

Some of these unintended consequences are contributing to collapse in general, others are specifically related to the issue of overconsumption. So as not to lose sight of the big picture, I am going to talk about both.

Resource Depletion, declining surplus energy

When it came to fossil fuels and various other mineral resources, we used the low hanging fruit first. That is, the highest quality and easiest to access resources.

Those days are over and, while there are still large quantities of hydrocarbons in the earth's crust, they are, for the most part, in forms and locations that are much more difficult to access and which provide less surplus energy. Starting in the 1970s our economy has been confronted, for the first time since we started using fossil fuels, with reduced availability of surplus energy. Despite everything governments and central banks have been able to do, real growth has slowed. This has caused problems for our financial system, as we'll see in more detail in a moment.

Fossil fuels were a one-time windfall of abundant surplus energy. That is now gone and there's no going back to the way things were. We used that windfall in such a way as to leave relatively little in the way of a positive legacy. All the available alternative, renewable energy sources have a significantly lower EROEI, providing much less surplus energy. Not enough to sustain economic growth of the sort we have become accustomed to. Probably not even enough to maintain our high tech civilization.

Depleted reserves of many important minerals are also going to make it difficult to maintain that civilization.

Depletion of non-renewable resources is a very serious problem which we hardly take seriously at all. Economists assure us that we can always find substitutes for anything that is becoming depleted, but they are flat out wrong. There are many things for which there just aren't any practical substitutes—fossil fuels, copper, and phosphorous being high on the list.

There are many things we can do to reduce the rate at which such resources are being depleted, but eventually we will still run out. It seems to me that this will necessitate significant changes to our supposedly non-negotiable lifestyles.

Resource depletion is, of course, a result of overconsumption, rather than a cause.

Climate Change, Ocean Acidifcation

When fossil fuels are burned, carbon that was trapped underground million of years ago is released back into the atmosphere as carbon dioxide (CO2). CO2 is a greenhouse gas and increased amounts of it in the atmosphere are leading to a variety of changes in our climate—mainly heating, but also shifting of rainfall patterns and more and heavier storms. CO2 is also strongly absorbed by the oceans, resulting in ocean acidification, with negative effects on many of the oceans' ecosystems.

Methane (CH4, natural gas) is also a significant greenhouse gas. Quite a lot of it leaks into the atmosphere between the well head and where it is finally used. And higher temperatures release methane from where it is currently trapped in permafrost and undersea deposits of methane clathrates.

The effects of climate change, such as rising seas destroying shoreline properties and agriculture suffering from heat and drought are going to be very hard to cope with in the years to come, and will be a major factor in the continuing collapse of our civilization.

Climate change is also a result of overconsumption, rather than a cause. Many of the negatives effects of overconsumption actually show up as climate change.

Pollution, Habitiat Destruction, Ecosphere Damage

Of course greenhouse gases are a form of pollution, but there are many other types of pollution resulting from industrial activities, which have had negative effects on the planets ecosystems and will continue to do so for a long time yet.

The spread of mankind across the globe and more recently the spread of the large scale agriculture and forestry needed by our population, has resulted in the destruction of habitats for many species, and a decrease in biodiversity.

Elsewhere in this series I have said quite a bit about the carrying capacity of the planet and how growth of human population and consumption has resulted in our overshooting that capacity. The important thing to understand is that when we overuse the services provided to us by the biosphere, the biosphere suffers and it's carrying capacity decreases, making the overshoot even worse.

Pollution, habitat destruction and biosphere damage from overuse are all effects of overconsumption.

The "New" World

The so-called "new" world was, of course, not empty. The history of the European colonization is largely a story of the oppression, and in some cases outright genocide, of indigenous people by Europeans. While it is convenient to pretend otherwise, this is still going on and has a destructive effect on societies that continue to let it happen. This too is an effect of overconsumption, albeit somewhat indirectly.

The Financial System

The financial sector of the economy provides services to do with managing money. But what is money, anyway? If you've studied economics, you were told that money is used as a medium of exchange, a unit of account and a store of value. That's more or less true, but the most important thing about money is that it can be used to make more money. That's how businesses operating in the financial sector make their profits. It's also what drives growth, or perhaps "necessitates growth" would be a better way of putting it.

In a rapidly growing economy there is a great demand for money to build new infrastructure. Existing money is insufficient, so that demand can only be provided using credit, and "fractional reserve banking" is the solution. This simply means that banks are allowed to lend out more money than they have on deposit, usually by a factor of ten. Money is created (out of thin air, basically) when a bank makes a loan. So, in one very important sense, money is debt. Today that is the only way that new money enters the economy. In order to make a profit, banks require debts to be paid back with interest, using money to make money. And by the way, when a loan is paid off, the money essentially disappears, back where it came from.

Where does the money to pay the interest come from? Well, you might say, if a business is profitable, it will be earning more than enough money to pay the interest. True, but where does the money it earns come from? From other businesses and people, who have taken out loans which also have to be paid back with interest. And of course, the money for that interest comes from yet more loans.

As long as the economy is growing, this works just fine. But if growth slows a point is reached where profits fall off and businesses struggle to make loan/interest payments. They are understandably hesitant to take out new loans and banks are reluctant to issue them. If this goes on, eventually businesses can't get credit to finance their day to day operations, and with no new money entering the system they can't pay the interest on their loans. Businesses start to default on their loans and if enough loans are in default, banks themselves start failing.

Banks can reduce their interest rates to allow for lower rates of economic growth, offering cheap credit to stimulate growth, but when interest rates have been reduced close to zero, little more can be done. Over the last few decades the robust economic growth we had previously experienced was replaced by market bubbles (fake growth) and the crashes that happen when those bubbles burst.

All this is why financiers, business men, politicians and even many working class people are so concerned about maintaining economic growth. But economic growth means growth in consumption, and has lead to our current overconsumption problems. It seems that in order to address those problems we will have to stop economic growth and actually experience "degrowth", until our consumption reaches a level that the planet can support on a sustainable basis. In order to do this, we need a financial system that doesn't break when growth stops.

It is important to understand that, despite all this talk of money, what really drives the economy is surplus energy. It seems ironic to me that, after forcing growth in the economy for the last few centuries, the financial system is now struggling because of reduced surplus energy, a situation brought about by overconsumption caused by growth. So, clearly, the financial system is one of the causes of overconsumption.

Throughout the history of the blog I have been talking about these three factors: resource depletion (including Peak Oil), environmental degradation (including Climate Change), and a financial system that drives growth, and can't cope with degrowth, as being the main causes of collapse. I could stop here, but it has become clear to me that overconsumption is also contributing to collapse and there are a number of other factors that cause overconsumption. We need to have a closer look those factors if we are going to figure out how to get them under control.

Capitalism and Industrialization

Industrialization was achieved largely using a system called capitalism. It consists of an upper class who own the means of production and a working class who do the work involved in the production.

Based on their ownership of the means of production, the upper class claims the right to the majority of the profit from that production, even though they do very little of the work involved. The working classes are paid either a wage based on the time they spend working or a piece rate based on the quantity of production they do. In either case, the owners try to pay as little as possible in order to maximize their profits, and since the working class has no other way of making a living, they can co-operate or starve.

Capitalism and Industrialism as a cause of over consumption

The main goal of capitalism is to facilitate the accumulation of further wealth by the upper class. Unfortunately, "enough" is not a concept that enters into it, as capitalists are always looking to grow their enterprises and increase their wealth. Indeed, in modern public corporations, stockholders are liable to object if growth is not speedy enough. And, of course, as I said in the last section, the way our financial sector is organized forces capitalists keep to growing their enterprises.

Industrialization has allowed us to produce ever more goods ready to be consumed. As long as there is a demand for those goods, the economy will grow. I suspect that at the start of the industrial age, when most manufactured goods were still made slowly and laboriously by human muscle power, there was a good deal of pent up demand for those goods. As we industrialized, factories were able to make goods more cheaply and in great quantities. It wasn't long before there was a problem of over production, or under consumption, depending on how you look at it.

In addition to that, the nature a factory is to produce large amounts of one particular thing, and once you've invested in a factory, there had better be a market for that thing, whether anyone really needs it or not. This results in the "supply push" model of business, driven by the need to pay off investments in production equipment, and of course, to accumulate more wealth.

Many strategies have been devised to increase consumption, so as to keep up with production, and ensure the flow of wealth into the capitalists pockets. Today these include, but aren't limited to, the following:

• consumerism, where people are encouraged to see themselves defined in terms of what they buy, and to justify their existence by buying more
• marketing, or the manufacturing of demand, especially for new and supposedly better goods
• fads, fashion, collecting
• planned obsolescence
• frequent technological upgrades
• deliberate waste
• greed seen as a good thing

All these strategies to drive consumption have messed with our heads to the point where most of us consumers have a very strange world view. For example, when discussing how to consume less, many of us are liable to start by asking what we need to buy in order to do that. I mean, how else would you solve a problem than by buying something?

Initially, working class people were underpaid and weren't a major force of consumption. It took a long time and a great many strikes to stop the upper classes from thinking of the working class as anything but workers. Sometime in the middle of the twentieth century, working people, at least in the developed world, finally came to be seen as consumers as well as workers, and in some cases were even paid enough to consume effectively. Of course, this only increased our overconsumption.

But even so, capitalists are still their own best customers, the champions of consumption. Globally speaking, the upper classes, the top 10% by income, do about 60% of the consuming. The bottom 50% of people by income only do a little over 7% of the consuming. So it is clear where any attempts to curb overconsumption must focus. Lest we get too smug, though, it is sobering to remember that the top 10% includes about 800 million people—most of the people in the developing world, including most middle class people and even many working class people.

This is also why it would do no good to get rid of poor people, even those whose population is growing quickly. They consume so little that they simply aren't a factor in our overshoot problem.

In any case, we all must do our part to stop goods piling up at the output of factories, and to keep service providers busy. The way the system is set up, failure to do this leads to the shutdown of factories, layoffs, unemployment and, worst of all, reduced profits for the owners. (Sarcasm, yes, but also factual.)

So, capitalism is the driving force behind overconsumption, and as such is causing the slow collapse we've experienced over the last 50 years or so. But capitalism has other negative effects on society as well.

Negative Effects of Capitalism on Society

Under feudalism there was a web of obligations flowing in both directions. Yes, serfs had to work for their lords. But since there was no other way of getting the work done, the lords had to provide the serfs with a way to feed, clothe and house themselves. This mainly consisted of providing access to a "commons", where serfs could grow crops and graze livestock for their own use, gather firewood and so forth. The level of use of the commons was closely regulated, either by the feudal lord or the community that relied on that commons, so there was no "tragedy of the commons".

Under capitalism there is no such web of obligations. The commons was soon enclosed by capitalists who saw it as an under used resource, and proceeded to over use it (a real tragedy). The only way remaining for working class people to satisfy their needs was to buy them from the capitalists using money they earned working for the capitalists. If the capitalists overproduced and the demand for labour went down, workers got laid off and the owners had no obligation whatever to support them.

Capitalism can't even attempt to solve problems where the solution doesn't involve making a profit. Such issues are ignored or, at best, left for government to solve. Even providing what is needed by the populace is only an indirect result of capitalistic production, and if it becomes unprofitable, capitalists stop doing it.

Capitalists feel entitled to an ever growing slice of the economic pie. As long as the economy was growing fast enough, they could have that and everyone else could see some improvement in conditions as well, since the whole pie was growing. But for the last few decades while economic growth has slowed and capitalists have still insisted on taking a growing slice of it, what remains for the rest of us has continually decreased, and economic inequality has increased significantly.

To be clear, all of us in the developed world are going to be consuming a lot less, either deliberately in an attempt to get overconsumption under control, or unintentionally because we've refused to recognize the reality of collapse and it has continued whether we like it or not.

But with the capitalist fixation on economic growth it is certainly a lot harder to do anything effective about over consumption.

Government

During the industrial era many countries switched from aristocracies to some form of representative democracy. Government of the people, by the people, for the people. But this did not make as big a change as one might think.

Because of the need to fund election campaigns politicians find themselves very much beholden to the rich (mainly capitalists). Not only are capitalists incapable of addressing any problem who's solution would stop them from making a profit, but they make sure that government doesn't try to implement any such solution. These plutarchs, hidden behind representative democracies, are short sighted enough that they are unwilling to do anything to slow growth or reduce consumption. The difficultly we are having in implementing any real solutions to climate change is just the most obvious example of this.

Other countries have ended up under totalitarian dictatorships, which tend to be poor and in need of financial support. So the same thing happens, with those who lend them money actually in charge.

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To sum up what I've been saying today about overconsumption—it is not a result of innate greed, not a failing of the human race as a whole, but rather caused by a capitalistic upper class bent on maintaining economic growth and the accumulation of wealth at all costs, with no thought of the negative consequences that await us down the road. They have convinced most of us, and themselves as well, that growth and consumption can go on forever on a finite planet.

There are still a few loose ends from the sections on finance and government, but we'll deal with those next time. That discussion will lead us into the main thrust of my next post—what to do about overconsumption.

Links to the rest of this series of posts: Collapse, you say?

• Collapse You Say? Part 1, Introduction, Tuesday, 30 June 2020
• Collapse, you say? Part 2: Inputs and Outputs, Wednesday, 30 September 2020
• Collapse, you say? Part 3: Inputs and Outputs continued, October 7, 2020
• Collapse, you say? Part 4: growth, overshoot and dieoff, January 2, 2021
• Collapse, you say? Part 5: Over Population, January 8, 2021
• Collapse, you say? Part 6: Over Population and Overconsumption, Februrary 21, 2021
• Collapse, you say? Part 7: Needs and Wants, Human Nature, Politics, March 8, 2021
• Collapse, you say? Part 8: Factors which made industrialization possible, May 13 , 2021
• Collapse, you say? Part 9: Unintended Consequences of Industrialization, May 20 , 2021
• Collapse You Say? Part 10 / Time for Change, Part 1: Money, January 5, 2022
• Time for Change, Part 2: Hierarchies, Februray 16, 2022
• Time for Change, Part 3: Without Hierarchies? April 23, 2022
• Time for Change, Part 4: Conclusions June 22, 2022