Capitalism’s Chain Letter by George Drake

Last time I promised to give my take on some of the possible solutions to the observation that capitalism itself is nothing more than a Ponzi scheme. On the evening of the inauguration, I was talking with a friend who’d read my last report and it was clear he’d misunderstood what I was trying to say. To some extent, although not as strongly, I suspect the same is reflected in the comments to the first post I made on this subject.

The Ponzi scheme I’m talking about isn’t about money at all. How can a critique of capitalism not be about money? Well, exactly as the observation that the booze chain letter (see my last entry) wasn’t about booze. Behind the booze was money, true enough. But behind the money of capitalism is the environment. That’s what this Ponzi scheme is about.

Capitalism’s driving force is growth. Not growth in the form of “more money to be made,” but in the form of “more stuff to be purchased.” The money flow follows that assumption. We get a hint of how that works when the economy grinds to a halt as people stop buying stuff. That’s what’s happening today, as people all over the world have suddenly decided they don’t need that nice item they see on the shelf.

If you haven’t lost your job, or, as in my case, your pension, there’s no rational reason for your decision about that item to be any different than it was six months or two years ago. It’s only your fear of the future that weighs in. You may feel you can’t afford it, but it’s not about your income. Of course, when everyone is afraid they might lose their jobs, you can’t argue that there isn’t a logic to it: if stuff isn’t selling, a lot more people lose their jobs than normal. Those people truly can’t put money back into the system, driving the crisis closer to your job. Classic downward spiral.

This is exactly what Roosevelt was talking about when he admonished our fear. When people aren’t buying, the whole capitalist system freezes up. Just like when people aren’t buying the booze chain letter.

Capitalism is selling “stuff.” Commodities. The good life. Luxury. Consumption. Waste. Excess. Money is just how we keep score. The third world countries are the ones that are waiting for the letter to reach them. They’re counting on getting their piece of the vast booze supply that promises to come their way, just like the ones who already bought the booze letter have to go through a period of waiting before they “hit it drunk.”

The flaw in the plan of capitalism is exactly like the flaw in the booze letter, despite the apparent differences in the appearance of the collapse. With the booze letter, you just run out of people to sell the letter to. When that happens, the letter dies, and those who haven’t been paid back just eat the loss.

With capitalism, you run out of stuff. Oh, you get glitches, like the current one, where people stop buying altogether, and the scheme pauses. But, sort of like the booze letter would be if buyers lined up to buy into the original letter again at the Martin Luther King holiday, and then again at President’s day, and so on, you wouldn’t lose out. In such a scenario, the original letter would just keep on going and none of those who bought in late at Christmas would lose any investment, for, if they didn’t score at Christmas, then the letter’s success at MLK day would save them. Or, at worst, President’s day.

But if you think on it, and understand exponential laws, it’s obvious that even that scenario won’t work forever. The power of the booze letter is in its exponential growth. If the letter persisted, before long (maybe about Memorial day or so) the supply of hootch would run out. You wouldn’t be able to find any, and that would be the end of that letter. A collapse, actually, more certain and severe than the mere absence of buyers.

And that’s how environmentalism and capitalism will reach an inevitable nexus. We’re already running out of stuff. The stuff that’s at the heart of those items listed above that we prize so much; items we might not realize are at the heart, but are. Cheap energy, a perfect climate, plentiful clean water, and vast open, fertile, spaces. Peak oil has already been reached. Global warming is altering the climate. India and China and places all around the world already know the lack of clean water. And desertification promises to be one of the next great problems confronting human sustenance.
The problem of breaking away from “capitalism’s chain letter” presents one of the greatest conundrums mankind has ever confronted. It is, basically, the same problem that confronts someone who realizes too late that he’s bought into the booze letter rather late in its circulation. Is there any better solution than just taking our lumps as we switch over to whatever economic system succeeds capitalism, if and when such a transition takes place? I think it can go without elaboration that such a transition will be very traumatic, involving, at the very least, severe and prolonged economic depression.

To me, the difficulties can be illustrated by the current energy crisis. Few arenas so clearly illustrate how we are pushing past the barriers of over-exploitation of our resources. Oil is on the way out, for the simple reason that it’s become too expensive to extract and the supply is diminishing so fast that the current system clearly will not be sustainable long. But changing to alternative options has numerous problems associated with each potential fuel. Biomass pushes fertile lands toward producing non-edible commodities just as they’re most needed for that purpose. Coal is even dirtier than oil, when what is most needed is a clean fuel. Nuclear power is frightening in several ways. Renewable energy from wind, sun, and water movement is incompatible with the current infrastructure.

Or so some say. The biggest complaint about turning over the grid to renewables, besides the heavy investment in generation, is the lack of power lines running to the places where most of this energy would be generated: wind is best in the open spaces of the west, same with solar energy, and the oceans are the best places to collect the energy from the movement of water in the form of wave action.

This strikes me as an attempt on the part of the power companies to control the direction this debate takes. We don’t need to prop up the power companies. What we need to do is return to the decentralized approach to energy production and distribution that once pervaded this country. One step in that direction is the current effort to force the power companies to accept input to the system from individual’s electrical generation, when that generation exceeds the individual’s consumption.

A greater potential, though, would be encouragement of removal from the grid altogether. Small, Earth friendly, generators that allow a conservation conscious household to be totally independent of an external energy source should, I think, be encouraged by every policy available to governments (not just American). Everything from insulation in buildings to low power light fixtures, to improved batteries, to generators that can be run with minimal light, wind, water flow, or even stationary bicycle power. No power lines would be called for. The main characteristic would be that the infrastructure would be aimed at decentralization, not the corporate model that fits so nicely into the capitalistic ideal that’s driven us t the tragic condition we find ourselves in.

We need to modify the entire way we visualize the economy.

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