Monday, March 23, 2009

Collapsing demand

The current global recession is manifested, we are told, by a collapse in "demand". That is to say: less products and services are being sold; business is slowing down; less profit is made, and therefore less is spent. Companies go bankrupt; and people are laid off. Economic hardship takes on different forms: for the few, it means less champagne and oysters; for the many, it means real suffering. For example in Ukraine, where hot water supply to homes was unavailable this winter.

The flip-side of the global recession is that the "environment" is getting a break from our frontal assault. The most obvious thing is the use of fossil fuels, which fell in the last year after growing for decades. Atrocities such as the Canadian tar sands projects suddenly appear not-so-profitable; the ethanol industry is struggling. On the other hand, the recession contributes to environmental degradation, for example, less refuse gets recycled as demand for raw materials is sluggish. So more rubbish goes to landfills. But overall, there could be little doubt about the balance. Less cars manufactured; less miles driven; less trees felled for paper: yes, the recession is green.

Going back to the issue of "demand", a simple and obvious observation is that "demand" has little to do with what people really want or need, it is about what keeps this machine going. Demand for what? It doesn't matter, as long as there is someone with cash to buy. So the term is neutral; there is nothing good or bad about demand, except for the fact that "demand" creates jobs, and without jobs, economies will collapse, people will starve. This is no small thing at all.

And so, "make do and mend" is the wrong message. The principle of "Re-use, Reduce, Recylce" is at odds with the fundamentals of this economy, which is about: buy more, use once, and throw out, and so you will provide employment for a dozen people at least. It is easy to tout green slogans. It is also not so difficult to point out that this system cannot survive beyond a few decades. But in the meantime people have to eat. Is it possible to envisage a different system, which does not cannibalise its living environment? Perhaps. But the transition cannot be smooth or painfree.

In normal times the contradictions between thrift and prosperity are not so obvious. That is to say, the system lives with a high level of contradictions; all systems have built-in paradoxes, which in time lead to their demise. But we are far from that moment; the current crisis was not brought by the absurdity of perpetual growth in a closed system. It has nothing to do with resource depletion or environmental degradation, it was brought by the perversities of financial deregulation and a credit bubble. And so the problems with "demand" are not yet on the horizon: for the time being, the song stays the same, more, more, more.

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