Chapter 14:
than the revenues they are generating for the employer. The laid- off workers no longer have the money to buy the products, even though they are about 50% percent cheaper. In the end, despite more goods being available with less effort, the money to buy those goods doesn’t get to the people who could use them. Leisure has increased all right;— it is called “unemployment,”— and the results are catastrophic:— a rapid concentration of wealth, deflation, bankruptcies, etc.and so on as
described in Chapter 6.
The ensuing socioeconomic calamity can be averted in two ways: wealth redistribution, or growth. To accomplish the former, we could simply take money away from the employed and give it to the unemployed, or subsidize firms in keeping superfluous employees, or pay everyone a social wage regardless of whether they work or not. These redistributive policies diminish the relative wealth and power of the holders of money. The other solution, in the above scenario, would be to double demand so as to keep everyone employed.
Since, generally speaking, the rich are in control of things and don’t want their wealth to be redistributed, the traditional solution to the problem of over-production and underemployment is to somehow generate economic growth, which means increasing demand for new goods and services.
One way to do that is through exports; obviously, this solution cannot work for the planet as a whole.
Another way to increase demand is, as I have abundantly described, to colonize the non-monetary realm—to make people buy what was once free. Finally, we can simply destroy excess production through war and waste. All of these measures keep everyone hard at work when natural demand has been sated.
The ideology of growth, the ssStory of Ascent, says that natural demand can never be sated, that it is infinitely (upwardly) elastic. It assumes an endless supply of new markets, new needs, and new desires. But as I have observed, the only object of desire that knows no satiety is money. The assumption of limitless needs and therefore limitless demand drives the insanity we see today—and the economic logic that justifies it.167
167Infinitely elastic demand, for example, justifies eternal deferment of a leisure economy based on the so-called “lump-of-labor fallacy.” I shall rename this the “lump-“lump-of-labor fallacy fallacy,” because this specious “fallacy” says that the amount of labor needed by the economy can always grow; therefore, improvements in technology won’t allow us a shorter workweek or less time devoted to production.
A similar argument, Jevon’s Pparadox, rests upon the same foundational assumption. Jevon’s Pparadox says that improvements in efficiency don’t lead to less resource use (including labor), but rather to more. For example, if lighting becomes cheaper, we will use more of it. If we switch to compact fluorescent bulbs that use one-fifth the electricity, we’ll install five times more of them. Since they are so cheap, maybe I’ll install some new ones in my back
yardbackyard in case we have a party next summer. Applied to the degrowth factors I described above, Jevon’s Pparadox says that cheaper advertising will mean even more of it. But this, again, assumes an infinite upward elasticity of demand. It assumes that our capacity to use lighting, advertising, and so on is infinite. A more sophisticated version of this argument would say that even if demand is fully saturated in one area, any improvements in efficiency will free up money that will be applied toward some other area. So the assumption is that overall needs are infinite.
In the past we always had a choice of what to do with gains in efficiency: work less, or
consume more. Compelled by a growth-dependent money system, we consistently chose the latter.
Instead of working less hard to meet existing needs more easily, we have constantly created new needs to meet, or, more often, have transferred needs from the gift into the money realm, or sought to fulfill infinite needs with finite things. Such has driven our ascent, the development of our gifts of hand and mind. Though the cost to nature, culture, spirit, and humanity has been high, this development is not without its rightful purpose. Today, as the natural and cultural commonwealth is exhausted, the context of our choice—work less or consume more—is changing. The age of ascent is winding to a close, and we seek to apply the gifts we have developed toward their true purpose in a new
relationship to Earth. The age of growth is over. J.M.John Maynard Keynes expressed a premonition of this epochal shift in Economic Consequences of the Peace (emphasis mine):
On the one hand the laboring classes accepted … a situation in which they could call their own very little of the cake that they and Nature and the capitalists were co-operating to produce. And on the other hand the capitalist classes were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. The duty of “saving” became nine-tenths of virtue and the growth of the cake the object of true religion. There grew round the non-consumption of the cake all those instincts of puritanism which in other ages has withdrawn itself from the world and has
neglected the arts of production as well as those of enjoyment. And so the cake increased; but to what end was not clearly contemplated. Individuals would be exhorted not so much to abstain as to defer, and to cultivate the pleasures of security and anticipation. Saving was for old age or for your children; but this was only in theory—the virtue of the cake was that it was never to be consumed, neither by you nor by your children after you.168
On the collective level, not consuming the cake means choosing growth over leisure. More efficient production technology allows us either to work less, or to work just as hard and produce more stuff. Our economic system requires and embodies the latter choice. But despite today’s association of “Keynesian” economics with fiscal stimulus, Keynes himself never saw stimulus as a
Accompanying that assumption is another: that there is no limit to the amount of nature, culture, etc.and so on that we can bring into the money realm. In earlier times, it indeed seemed as though nature’s resources were unlimited, but today the limits are obvious.
The economically- educated reader can apply a parallel logic to other concepts of classical economics, such as Say’s Llaw, the Bbroken Wwindow Ffallacy, and so on. All partake of the story of Ascent: that our rise to dominion over nature will continue forever.
168Keynes, Economic Consequences of the Peace, (1920), p. 20; emphasis mine. I was alerted to this passage by the website www.lump-of-labor.org.
permanent solution. As a society, we have been artificially stimulating demand now for seventy years, through military spending, highway construction, and subsidies for accelerating extraction,
construction, consumption, and imperialism. Attempting to uphold economic growth and keep the marginal efficiency of capital ahead of interest, we have trapped ourselves in a pattern of more and more production, whether we need it or not. Adapting to this trap, economic theory, with its
assumption of infinite wants, says we will always “need it,” always need to produce more and more, if not in one industry then in another. I have described this process differently: as a depletion of first one realm and then another of natural, social, cultural, and spiritual capital. Keynes did not state it so explicitly, living as he did in the ideological context of Ascent, but he clearly intuited it. His use of the past tense in the above passage suggests, at least to me, that one day it would be time to eat the cake: to choose less work over more stuff.
A positive risk-free interest rate is the economic aspect of the “exhortation” Keynes described to “cultivate the pleasures of security and anticipation,” or, in my language, to mortgage the present moment to the future, to choose security, or a semblance thereof, over freedom. You see, the
economic logic I have described has a personal dimension as well. For the past age, we have had an incentive to choose work over leisure, even when we didn’t need the money, because interest
promises that our money will be able to buy even more leisure in the future. By abstaining from pleasure and leisure, —and indeed, all too often—, , from our best impulses—, we might even attain the economic version of heaven: early retirement. But as often with religion, the promise of heaven only serves to keep us in chains. The time of our servitude, though, is over. The condition of the planet now urgently demands that we turn our attention away from “growing the cake.”