I’ve been reading a lot lately on the interconnected themes of
- Economic growth – and its unsustainability
- Steady state economics
- The financial melt down and its relationship to the crisis of capitalism
- The relationship between economic growth and household debt
- The relationship between debt and growth
- The cuts in public expenditure
- The relationship between economic growth and capital accumulation
But I’ve yet to find anyone who is putting them all together, because they certainly do interconnect.
So here is my first attempt – done in the form of a set of theses or propositions.
As ever, comments, suggestions, counter-arguments and additions would be really helpful.
Theses on debt, economy and ecology
1. Economic growth is unsustainable since it requires absolutely increasing material throughput. This throughput creates devastating pollution of the ecosystem, most notably through greenhouse gas emissions. It will also be constrained by resource limits.
2. Economic growth is a result of capitalism, a system that requires the incessant expansion of capital.
3. Capitalism is beset with recurrent internal crises. It resolves these through fixes of various kinds including technological and spatial.
4. Periodically capitalism moves into a mode of expansion characterised by the creation of speculative bubbles. Most recently this has been seen in the hyper-development of finance capital relative to industrial capital.
5. Since the 1970s there has been a downward pressure on wages. The impact of this on consumption has been offset by the increase in household debt via easy credit. It is the bundling of various forms of debt in ultimately unsustainable pyramids that has precipitated the collapse of the current financialisation phase of capitalism.
6. States (which serve the interests of capital) have attempted three strategies to keep the motor of capital accumulation, and hence economic growth, running. The first was the bail out of failing financial institutions – the transfer of public wealth to private finance capitalist firms. The second was fiscal stimulus via cuts in interest rates and the printing of money. Both these were funded by borrowing money via the issuing of government securities (gilts in the UK). The third strategy has been to cut the government debt by cutting public spending and raising receipts, including taxes (themselves reduced through the reduction of economic activity in the recession).
7. This third strategy, by reducing incomes will further increase household debt (already three times government debt in the UK).
8. By borrowing, and paying interest, households subsidise capital accumulation by increasing the level of purchases above the level of earnings paid by the capitalist economy. This represents a third source of capital accumulation (the first is the theft of surplus labour, the second the theft of common assets).
9. Therefore the economic crisis involves a restructure of the relations between public assets (public services, government spending, government debt), household debt, and private profit (for capital accumulation). The crisis allows the state to re-stimulate capital accumulation and hence economic growth using a combination of rescue of banking services (and the availability of credit), fiscal stimulus of consumption and private borrowing. Reduction of incomes through public sector cuts and economic recession is a necessary component of that strategy whereby short run reductions in demand are traded off against the longer term reinforcement of the accumulation engine.
10. The economic crisis creates an opportunity to renovate the motor of capitalist accumulation and thereby restore economic growth.
11. State strategies, whether in the form of bank rescue, fiscal stimulus or reduction of government debt, all damage the environment by restoring economic growth.
June 27, 2010