PRESENT STANDARDS OF LIVING ECOLOGICALLY UNSUSTAINABLE

       In this third e-mail interview with The Nation, US-based historian Eric Zencey looks at the future of capitalism in the wake of the global economic slowdown. The topic was discussed at the Nation Conference yesterday on "Asia: Road to New Economy" with Dr Jomo KS, assistant secretary-general for economic development from the United Nations in New York, as one of the speakers.
       All of this brings to mind the question of the future of |capitalism in driving the world economy. How do you see this evolving? Is the financial crisis pivotal to the change we are witnessing?
       I've written recently about how this financial crisis is a manifestation of our society's environmental crisis. Briefly: debt is a claim on the economy's ability to produce wealth. We let debt grow astronomically, but the real, physical wealth that that debt has a claim upon can only grow in two ways: by increasing the efficiency with which we use matter and energy from nature, or by using more matter and energy.
       Increasing the throughput of these resources increases the economy's ecological footprint, and destroys natural capital. At some point, trying to grow the economy through growth in throughput has to hit a limit. When debt grows exponentially but wealth doesn't, eventually some trigger leads to a spasm of debt repudiation. People who hold debt as an asset - creditors - have to lose some of their assets. Debt repudiation takes a variety of forms: bankruptcy, foreclosure, default, stock market crash, inflation, the disappearance of paper assets in any form.
       Back in March, Larry Summers told an audience at the Brookings Institution that by his count, we have a crisis every 2.3 years, and he allowed that "we've got to do better". We're not going to do better unless we address the underlying cause of these crises of debt repudiation: our system allows debt to grow a lot faster than we can grow the means of paying it back. Ultimately, we'll have to limit growth in debt to the amount that real wealth can grow sustainably.
       Policy planners aren't talking about this. They're not talking about debt repudiation as the underlying cause of recurring crisis, and I wish they were. Still, there's reason for hope. There are signs that this downturn-and-recovery is leading us in the direction of a "greener", more ecologically sustainable relationship to the planet. Recovery money spent on building renewable energy and energy conservation infrastructure - windmills and mass transit and geothermal energy, all of that - is wisely spent. We have it in our power to build a thing never seen before in the quarter-million year history of humans on the planet: an ecologically sustainable society that has a high standard of living that is widely and equitably shared among the human population.
       Our present industrial civilisation, built on fossil fuel, gives us a high material standard of living that is widely shared - not as widely as many people would like, but more widely than any other previous kind of civilisation. The problem is, it's not ecologically sustainable. I hope that as we come out of this crisis we build the infrastructure we'll need for such a society.
       And the future of capitalism? Well, I like to quote Oystein Dahle: "Socialism failed because it did not let prices tell the economic truth. Capitalism will fail if it does not let prices tell the ecological truth." Getting our basic index of economic well-being right is one part of getting prices to tell the truth.
       How did you come to be interested in this subject and are you doing research in it?
       As an undergraduate back in the 1970s, I lived through the US gas crisis, as it was called then - after US domestic oil production peaked in 1971, Opec exercised its new-found market power and set a market-demand exploration for oil that raised its price significantly in the US. It was, for some Americans, the first clear intimation that energy isn't just another commodity and that there are limits to our ability to exploit past solar energy - fossil fuel - to make wealth in the present.
       Another formative experience was majoring in politics and economics, which at my university were housed in different departments, different colleges. In studying those subjects I was trying to understand what we were doing to the planet and what we were thinking of while we did it - the idea being, we need to change the way we think if we're going to have an ecologically sustainable society.
       I pursued those two questions through graduate school and have been thinking and working in this field since then. Currently I'm working on my next book "Factory Planet: Preserving Democracy in an Era of Ecological Constraint". The American political and economic system is built on the assumption that we can have infinite economic growth, and when we come up against limits, as we are, it's clear that some things have to change. So I'm trying to do Green Political Economy - showing where and how our theories in politics and economics, and the institutions built on that thinking, have to change as we recognise that we can't have infinite economic growth on a finite planet.
       Eric Zencey is associate professor of historical and political inquiry at Empire State College, State University of New York. He is the author of 'Virgin Forest: Meditations on History, Ecology, and Culture', and a novel, 'Panama'. This is the third and final of a threepart series.