Witnessing the unraveling of the global financial system, I find myself gripped by contrasting emotions. While part of me feels like heading for the hills and hoarding cans of sardines, another part of me is giddy, almost celebratory. The tyrannical rule of Wall Street is ending, along with the self-serving free market ideology of Neoconservatives. The massive amounts of fictitious capital created by our corrupt financial system must be destroyed, so we can address our immediate situation on this planet.
I feel sorry for the millions of people who may suffer during a transition that will be extremely difficult. On the other hand, our rapacious economic system is destroying the integrity of the biosphere, threatening our future as a species. Taking a wider perspective, we can see a new social structure that creates sustainable patterns of behavior is necessary, if we want our descendents to continue on the earth.
In my last book, I looked at many predictions of systemic financial dissolution at this time. I discussed the possibility that a financial H-bomb could melt down the economic system while leaving the "tangible assets" — people, infrastructure, land — still standing. I suggested this could be the best thing to happen to our world. Such a systemic collapse is a tremendous opportunity to change the direction of our society. Those who believe civilization can be run according to different principles — humane, equitable, and collaborative ones — need to step forward now with concrete proposals and put ideals into practice.
Several factors made the collapse of the global financial system inevitable. One problem with capitalism is that it is not self-sufficient, but depends on the constant availability of new markets, forcing expansion by creating ever-increasing amounts of debt. We now have a globalized world market, so exploitation of new territories can no longer take place. As Naomi Klein analyzed in The Shock Doctrine, this led to a policy of "disaster capitalism," where cataclysms like hurricanes and terrorist acts were seized as opportunities to redevelop internal markets. Such a practice is inherently unsustainable.
Another crucial element that is rarely discussed in the media is the connection between the current financial meltdown and peak oil. Just as our debt-based economic system needed new markets to penetrate, it also required an ever-increasing supply of cheap energy to fuel its expansion. The decreasing supply of fossil fuels relative to global demand has brought the second law of thermodynamics into play, breaking the delusionary spell cast by the financier-sorcerers, who decoupled financial value from real value back in the early 1970s. When we consider the permanent reduction in the supply of cheap energy combined with the lack of new markets, it is obvious the amassed debts will never be repaid.
Over the last decades, we have suffered through a massive transfer of financial assets from the poor and middle class to a tiny elite of the extremely wealthy. By a recent count, 691 billionaires had a combined net worth of $2.2 trillion. At the same time, an estimated 2.8 billion people survive on less than $2 a day. In the United States, fewer than 7,500 individuals control "almost three-quarters of the nation's industrial (nonfinancial) assets, almost two-thirds of all banking assets, and more than three-quarters of all insurance assets," according to Thomas Dye's Who's Running America? Members of this tiny group are found in the top echelons of our most exclusive law firms, investment banks, federal government posts and military commands. Our current system is one of financial apartheid that rewards the most ecologically destructive and sociopathic behavior.
We face the possibility that money will soon lose its value as a medium of exchange. Given this, we will need to develop alternative ways of creating, exchanging and sharing value. One interesting option is the potential for digital networks based on trust and reputation to replace many of the services now provided by our dollar-based economy. We may return to local currencies. Bernard Lietaer's proposal for a negative-interest currency linked to tangible assets that could act as a global trading medium should be taken seriously as an option.
In the near term, we face an increasingly turbulent and dangerous situation in the U.S. Demagogues may attempt to control the situation with force. Some form of martial law is a real option. However, any attempt to impose martial law will only accelerate the collapse of our financial system. The ruling elite faces insoluble paradoxes. There is the potential for a triggering event similar to the nonviolent populist revolt that overcame the Soviet Union in 1989, surprising political experts and think tank analysts.
Despite the financial meltdown, the decline of resources and the acceleration of climate change, we do not have to undergo a cataclysmic collapse. Through the new social technologies we have developed, we could quickly reorganize our society to allocate resources rationally. We could create collaborative networks that support a rapid evolution of collective intelligence. We could shift from oligarchy to a true democracy, the "rule of all by all," developing a society capable of rapid adaptation and resilient response.
This article originlly appeared in Conscious Choice.
Photo by canonsnapper, courtesy of Creative Commons.