[p2p-research] An End to Economic Growth

Kevin Carson free.market.anticapitalist at gmail.com
Mon Aug 24 22:24:33 CEST 2009

An article by Richard Heinberg at The Oil Drum, "Temporary Recession
or the End of Growth?", http://www.theoildrum.com/node/5638 suggests

<blockquote> that the economic crisis is not simply a cyclical
downturn, but a permanent structural change:  we've reached a limit to
growth.  In so doing, he not only treats energy as "enabler of growth"
but equates growth itself to the increased consumption of resources.

 On the P2P Foundation email list, Michel Bauwens pointed out:

 <blockquote> But it is only a particular kind of growth that has
become impossible, the kind that neoliberalism and friedmanism
promoted that refused to take into account any externalities. A steady
state economy, that recognizes that any input has to recycled back
into the system to the degree that it depletes physically limited
resources, has tremendous 'alternative growth' potential.

 Compare this to Jeff Vail's excellent post on improved technics as
the way to maintain or improve material standard of living in the face
of reduced energy inputs.

 The question of whether "growth" can continue is meaningless until
the neoclassical conception of what "growth" itself means is pinned to
the board for a thorough dissection.

 Since conventional measures of economic output and GDP reflect
primarily the economic value of inputs consumed, they are largely
irrelevant.  The GDP consists largely of the cost of Bastiat's "broken
windows" and of the cost of waste.  The more superfluous steps are
added to the Rube Goldberg mechanism of material production, and the
more tribute we have to pay for proprietary design and content, the
higher the GDP--even if we're just working longer hours to pay for the
same stuff.

By way of analogy, in the cost-plus culture that prevails under the
standard GAAP accounting rules for inventory absorption that prevail
in Sloanist mass-production industry, all the inputs wastefully
consumed are incorporated into the “value” of the goods that are
“sold” to inventory.  So all consumption of inputs is the creation of
value, just like under a Soviet-era Five Year Plan.

A drastic reduction in inputs required per unit of output, and the
disappearance of the price mechanism altogether for much of what we
consume, would register in conventional econometric statistics as a
catastrophic economic collapse.  But it would be entirely compatible
with a radical increase in actual material standard of living.

The growing irrelevance of conventional measures of economic output to
our actual material conditions of living has been a recurring theme in
recent years.

A good example is Michel Bauwens' work on the untenability of
capturing value from the cognitive realm, and the failure of cognitive
capitalism http://blog.p2pfoundation.net/can-the-experience-economy-be-capitalist/2007/09/27
(the cognitive capitalist model is essentially what Tom Peters is
celebrating, by the way, when he gushes that "intellect" and
"ephemera" rather than parts and labor are some 90% of the price of
his Minolta camera).

More recently, there has been speculation that the current “jobless
recovery,” http://www.progressive-economics.ca/2009/08/07/recession-far-from-over/
with its combination of stagnant total employment levels with rapidly
rising levels of self-employment, represents a major shift toward
value creation outside the cash nexus.

Obviously, this reinforces the growing inability of the old corporate
framework to capture value.  As Rushkoff pointed out, when the
prerequisites of production in the information realm become easily
affordable to the individual, and even the tools of physical
production are imploding in cost, venture capitalists find that nobody
has any need for about ninety percent of the available investment
funds they're sitting on.
 So corporate capitalism's crisis of value realization reinforces the
tendency toward overaccumulation and the shortage of profitable
outlets for investment capital.  The only way to circumvent these
tendencies is through “intellectual property” and other forms of
monopoly that artificially inflate the amount of capital that must be
invested for a given unit of output, and protect high-cost and
high-overhead producers from market competition.  That is, it depends
on protecting the large appliance manufacturers from small shops and
open-source manufacturing networks mass-customizing modular
accessories and generic replacement parts for their platforms, and
from outsourced supplier networks deciding to produce the platforms
themselves without the brand-name markup.  As soon as enough small
producers decide to ignore the “intellectual property” laws and become
so dispersed as to be below the state's enforcement radar, the
corporate dinosaurs will sink beneath the tarpits.

 Charles Hugh Smith, likewise, has associated the collapse of wage
labor and the collapsing profitability of investment capital with the
collapse of taxable value.

 This was also a major theme of the first part of Cory Doctorow's
*Makers*, serialized as *Themepunks* at Salon.Com (now being
serialized again in anticipation of the novel's release).
The exploding productivity of desktop manufacturing technology and the
collapse of the proprietary information and technology business model
meant that the Fortune 500 were bleeding red ink and headed for
bankruptcy about as fast as, say, the Soviet Empire in 1990.  A
precipitous decline in average hours of employment at wage labor was
accompanied by a massive shift of production to the basement and
garage workshop.

 In the past, cyclical downturns in employment and industrial output
led (as Michael Piore and Charles Sabel argued in The Second
Industrial Divide) to the enlargement of the craft periphery at the
expense of the old mass-production core.

But starting with the stagnation of the 1970s and 1980s, it has become
a permanent, structural trend.  The growth of local networked
production in Emilia-Romagna arose in that environment.  So did the
networked lean production model of Toyota (in which increasing shares
of production are undertaken by networked suppliers in small shops
using general purpose machinery to switch between production runs) and
the cruder Nike model (retaining control of finance and marketing and
the brand name, and outsourcing everything else to a global
archipelago of sweatshops).  In both cases, actual production is
increasingly carried out by a distributed network, and the corporate
headquarters is just a redundant node to be bypassed.  See Pollard.

 Likewise, economic downturns of the past have always seen a partial
shift of production from wage employment to the informal and household
sectors, and a turn to barter organizations and cooperative
arrangements for exchanging labor.  That was reflected in the
Owenites' organization of production for barter by unemployed
craftsmen in the depression of the 1830s, the many local currencies
and barter networks (some of them, in California, hundreds of
thousands strong) in the Great Depression, and the “hoarding of
labor-power” and use of the household  as income-pooling unit
described by James O'Connor in the '80s in Accumulation Crisis. But
with the increasing tendency to "jobless recoveries" over the past
twenty years, the cyclical tendency has tended toward a structural
change.  And with what we're experiencing likely to be the mother of
all jobless recoveries, we can expect the total level of employment as
a percentage of the population to remain at record lows indefinitely.

Kevin Carson
Center for a Stateless Society http://c4ss.org
Mutualist Blog:  Free Market Anti-Capitalism
Studies in Mutualist Political Economy
Organization Theory:  A Libertarian Perspective

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