Sunday, April 18, 2010

The Civilization Bubble

There have been many financial and real estate bubbles during the past few hundred years, and there have been empire bubbles, but never before has there been the global civilization bubble in which we are now in. The bubble will collapse within a few decades. It will be the end of civilization, and will result in world-wide violence, deaths, and chaos.
Empire bubbles can last several hundred years, as for example the Mayan civilization or the Roman Empire. What brings down empires is invasion, bad economic policy, environmental exhaustion, or weakened tyranny. The Soviet Union, for example, was a statist bubble that was brought down by economic decay and weakened tyranny.
Most of the world is now in a global civilization. There are two enemies of this global order. One enemy is terrorist pseudo-religious supremacists. They could bring down the global civilization with electromagnetic bombs that would wipe out the storage and transmission of data that the world’s economy depends on. Very little is being done to protect the global electronic infrastructure from attack, thus the bubble.
The other threat to global civilization is internal, or as scientists say, endogenous. Global civilization is rushing towards an environmental collapse. There are hints of this in the plastic contamination of the oceans, the depletion of fresh water, the destruction of fish and corals, the eradication of forests, and possibly accelerated climate change. What will most likely bring down global civilization is the plundering and poisoning of the natural infrastructure of the earth.
The global civilization bubble began with the industrial revolution of the 1700s. The model that was adopted world wide was the extraction of material natural resources, processing them into products, and spewing the waste and pollution into the air, water, and soil, with no compensation for this trespass. The old English common law concept of nuisance was swept aside by government in order to subsidize industrialization. Witness developing countries following that same model today.
The economic policy that would avoid environmental destruction is to charge polluters the social cost of their use and abuse of the environment. Sustainable public finance includes public revenue from the natural rent of land, from the rental generated by public services, and from the dumping of pollutants into the environment. Sustainable public finance would also abolish the taxation of labor, capital, and trade, as these taxes create economic and therefore also environmental waste. Compensation for use and damage would minimize the harm, as the payments would shift production towards less damaging products and methods.
Interestingly, the beginning of the industrial revolution was accompanied by the development of the theory of efficient, equitable, and sustainable public finance by the first organized school of economics, the Physiocrats of France. Adam Smith was influenced by their theory of free trade and the single tax on the surplus that is land rent. Classical theory culminated in the works of Henry George during the last decades of the 1800s, as George integrated moral philosophy with economics in a policy of free trade and public revenue from rent.
The environmental aspect was nailed down in the early 1900s by the economist Arthur Cecil Pigou, who theorized on what came to be called the Pigovian policy of charging for significant externalities such as pollution. Complementary to pollution charges and land value taxation is marginal-cost pricing, which was thoroughly analyzed by the Nobel-prize winning economist William Vickrey. Pigovian policy should not just be applied to pollution, but also to the exhaustion of natural resources such as fresh water as well as to traffic and parking congestion.
The political question is why governments world-wide are allowing industrialists to unsustainably pollute the planet and not enacting the solutions provided by economics. For that, we turn to political science and the economic theory called ”public choice.” The model of voting that evolved in the United Kingdom and is now spread world wide is that of mass democracy, of masses of individuals voting for candidates about whom they know next to nothing. Voter ignorance and the inherent demand for campaign funds provides an incentive to rent-seeking special interest such as the polluters to provide support to government chiefs in exchange for privileges.
The model of democracy that would remedy special interest subsidies and plunder was developed interestingly enough by anti-statist anarchists. Their vision was small voluntary communities which would elect representatives to higher-level associations for mutual aid. Bolshevik communists adopted this plan, and proposed a union of “soviets,” which means “councils” in Russian. Their slogan was “all power to the soviets!” But when the revolution came, power in the Soviet Union instead became concentrated in the Communist Party, and the anarchist model of small-group bottom-up democracy was lost to global civilization.
Global civilization is therefore now like an ancient Greek tragedy, as it moves inevitably towards a tragic collapse of its environmental foundation. Although many people are aware of the impending doom, their warnings and calls for reform are futile, because mass democracy prevents any significant change. Almost nobody is calling for a reform of democracy, and so we are like boats in a fast-running river headed towards a waterfall of global environmental collapse with no way to stop the boats or get off.
What may save humanity is the existence of a few small primal societies in the jungles of the Amazon or Africa or pockets of Asia which are not yet in the global civilization. As the rest of the world dies in starvation and conflict, these remnants would survive, but the earth will after that never be same jewel of natural richness that humanity enjoyed before the rise of agriculture.


Blogger Paulo Roberto de Almeida said...

The prospect for a total collapse of current civilization, and the death of hundreds of millions by starvation, with some primitive people remaining as the saviors of the humankind is not only exaggerated but somewhat ridiculous.
Neither a terrorist attack on computer systems, nor environmental disaster would represent a sudden collapse of civilization as we know it.
Catastrophists and prophets of the doom are being continuously proven wrong, as humankind is much more clever than the assumptions you make.
Paulo Roberto de Almeida
Shanghai, China

10:55 AM  

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