Jason Hickel
Jason Hickel

The madness of capital

Last month the Associated Press reported that the income gap in the United States broke a new record in 2012, with the 1% grabbing a greater share of total household wealth than ever before in history. This news follows on the heels of the fact that the 1% not only captured all of the income gains during the first two years of the recovery, but also stole a portion of the already-existing incomes of the 99%, causing median household income to decline despite overall economic growth.

The American people have not been silent in the face of this injustice. The fall of 2012 brought the biggest protest movement that the nation had seen in decades, with countless sit-ins, rallies, marches, and petitions across the country. How did the government respond to this unprecedented wave of democratic expression? First they curtailed our freedom of speech and used “counterterrorism” units – in collusion with Wall Street banks – to coordinate military force against us. Then they proceeded to do exactly the opposite of what we asked.

Our voices have been heard loud and clear. Yet America’s elite, and the political class that serves them, have moved in the past few years to siphon not less of our nation’s collective wealth, but more.

What is so interesting about this continuing heist is that it has been so brazen. There has been little attempt to hide behind the usual justifications. Why? Because no one really believes them anymore. We all know that trickle-down economics is a farce. We know that outrageous CEO salaries are not only unnecessary but actively wasteful. We know that raising minimum wages does not cause unemployment. We know that the bank bailout was an inside job, and, after the Citizens United ruling, we can all see how our political system has been captured by corporate interests.

These are now open secrets. The game is rigged, and we know it.

In a well-known passage from Capital, Marx summarises his theory of false consciousness in the following phrase: “sie wissen das nicht, aber sie tun es“; “they do not know it, but they are doing it”. His claim here is that ideology relies on a sort of collective naiveté; that people accept a set of illusions that obscure how the system really works. According to Marx, capitalism persists because of this false consciousness.

But our culture today is much more cynical than this. Slavoj Zizek suggests that a more accurate twist on Marx’s words might read: “They know very well what they are doing, but still, they are doing it.” Zizek means for this to describe the general population, but it seems to me that it more accurately describes our economic and political elites. No one has any illusions about how destructive their pursuit of profit has become. Yet they show no signs of changing course.

Nowhere is this clearer than in the debate about climate change. We have known the math for a long time. We know that we have to keep global warming below 2C if we want to avoid catastrophe. To keep from tipping over this threshold we can only emit another 300 gigatons of carbon globally. Yet right now the world’s proven oil and gas reserves contain about 2,700 gigatons. That’s how much the 1% are presently planning to burn. If we continue at our present rate of consumption, we will blow through our allotment in about 15 years.

There are a number of very vocal people who deny the science behind climate change despite the overwhelming evidence at hand. Yet far more dangerous, and far more illustrative of the cynicism of our times, are those leaders and policymakers who accept the science but nonetheless have no plans to do anything about it. We’ve watched climate summit after climate summit spin by – Copenhagen, Cancun, Durban, Doha – without any binding plan of action.

In fact, our governments are doing exactly the opposite of what they should be doing. Instead of investing seriously in alternative energies, they are subsidising the global fossil fuel industry to the tune of nearly $2 trillion per year. We have been watching Arctic sea ice melt with astonishing speed, but instead of recognising this for the disaster that it is, states and corporations are rushing to extract the fossil fuels that are becoming accessible as a result.

There is a certain madness to our present age. The 1% is so devoted to serving the imperatives of capital that they are willing to sacrifice all basic reason. As John Lennon once so famously put it, “our society is being run by maniacs for maniacal ends”.

Behind the madness of the 1% in the face of climate change lies another open secret that they are unwilling to face: the contradictions of GDP growth. Since the recession began we have been bombarded with the message that we need to rev the global economy back up to at least 3% GDP growth per year. Anything less and economists tell us we’re in crisis. But what is this indicator that has come to occupy such a central place in our operating system? What does it measure?

Introduced only in the late 1940s by American economists, GDP measures the total market value of all of the natural resources and human labour turned into commodities and sold for money. So if you cut down a forest and sell the timber, GDP goes up. But GDP includes no cost accounting. It does not measure the cost of losing the forest as a future resource, as a home for endangered species, or as a sinkhole for CO2. In other words, GDP tells a story that reflects only a very narrow set of interests.

As long as we continue churning nature and humans into products, and as long as we do this more each year than the one before, then, according to the world’s most dominant measure of success, we’re doing well.

But, as David Korten has put it, using GDP as the standard of economic well-being “makes no more sense than taking the rapid expansion of one’s girth as an indicator of improved personal health”. It’s a shallow measurement, and it doesn’t measure the right things. Not only does it leave out what is bad, it also leaves out much of what is good. When you take care of your elderly parents, when you grow your own food in a community garden, when you set aside land as a biodiversity preserve – none of this contributes to GDP.

We know that there is something wrong with the logic of this arbitrary measure. Yet our entire political system is organised around it, obsessed with increasing GDP growth each year in perpetuity. Even at only 3%, that means finding more than $2 trillion worth of new investments every year. Consider the sheer scale of the production and consumption that this requires. Each year we have to add the equivalent of the size of the entire global economy of 1970 just to be able to say that we’re “progressing”.

To imagine that we can continue on this trajectory indefinitely is to disavow the most obvious truths about our planet’s material limits.

Yet this model holds such sway among policymakers that even the most supposedly progressive and compassionate factions uphold it, as we can see in the case of the international development community. The UN high-level panel for the new Millennium Development Goals, for instance, has called on the world’s governments to eradicate global poverty by 2030. This is a noble goal indeed, but the means by which the panel hopes to get there – namely, through economic growth – relies on some very scary mathematics.

Assuming the existing ratio between GDP growth and the income growth of the poorest, eradicating poverty with this strategy would require that we increase global production and consumption by more than 12 times. And that’s using a poverty line of $1.25 a day, which is really more like a starvation line. A more realistic poverty line is about $5 a day. But in order to accomplish even this most basic feat we would need to increase global production and consumption by 175 times.

Even if this was physically possible, what would the consequences look like? Economist David Woodward has pointed out that “There is simply no way this can be achieved without triggering truly catastrophic climate change – which, apart from anything else, would obliterate any potential gains from poverty reduction.”

The growth paradigm – the code at the heart of our system that calls for constant expansion and constant accumulation – is so riddled with contradictions that it beggars belief. During the height of modernist optimism in the 1950s we might have explained devotion to this model as a kind of false consciousness. But today, given what we have come to know, we can only describe it as madness – a sort of wilful self-delusion.

Ultimately, the persistence of this reality – which has been fabricated by elites – relies on the willingness of populations to buy into it. We are now seeing signs all over the world that this consent is straining to breaking point, that people have grown weary of the mad logic of capital and are eager to push their imaginations beyond the limits that have been set for them.

Will this be enough? We must make it so. We need to find each other. We need to abolish our fear. We need to believe that something else is possible.

There are sparks of hope out there. A number of countries have already begun to reject the dominant economic paradigm. Ecuador’s path breaking new National Development Plan, for example, refuses the tired call to rev up growth and exploit people and nature in favour of an economy based on the principles of sharing, commons, and bien vivir, or “good living.”

In the West, the New Economics Foundation has outlined policies for a zero-growth economy, something even Keynes knew we would someday have to achieve. There is also a growing movement to abolish GDP and replace it with a more realistic indicator, such as GPI, which allows economists to account for resource depletion, C02 emissions, and income distribution when measuring economic well-being.

Imagine: what if we elected politicians on the basis of their plans to maximise bien vivir or improve GPI?

This is not a radical position. On the contrary, the radical position is to imagine that we can carry on as we are. It’s a simple point, really. Yet, as George Orwell knew so well, “to see what is in front of one’s nose needs a constant struggle”.

*This article originally appeared in Al Jazeera.

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    • Mr. Direct

      The “1%” just seems too conspiracy theory….

      People like Warren Buffet and Bill Gates suggest that rich people are not necessarily evil, as your article seems to suggest.

      But in saying that, there needs to be a shift in thinking as I do not think the income gap is sustainable.

      Some countries consider implementing a maximum salary for top managers based on a ratio of the lowest company salaries. It means that if the need / deserve more, they need to do this in line with the junior staff. If done, the implementation will be interesting.

      In addition I think that Governments need to start working together, instead of competing for the attention of big business by offering tax incentives. This competition has given them far more power than the citizenry…

    • http://www.aspo.org.za Yaj

      a brilliant intelligent article. The same madness obtains in this country amongst the1% and the ruling elites here. Perpetual endless growth on a finite planet is impossible and insanity.
      what we need is fundamental monetary and banking reform . This would entail:
      1. replacing fractional reserve banking with 100% reserve banking,
      2.public or social credit and
      3.universal basic income.

      New money may only be issued debt-free by a public institution and only to fund essential renewable energy and public infrastructure.

      this is the only way of achieving a steady-state economy and a fair distribution of wealth.
      http://www.casse.org
      http://www.publicbankingsolution.com
      http://www.positivemoney.org.uk

    • Futureherenow

      The one percent is not a conspiracy, although the one percenters will do their damndest to make you think it is.
      Credit Suisse last week published figures that in Russia 110 billionaires own 35 percent of Russia’s $1.2 trillion in household wealth. 93.7 percent of the population owns $10,000 or less, and 5.6 percent own between $10,000 and $100,000.
      That’s Russia.
      Globally the top 10% own 41% of the worlds wealth. South Africa, the worlds most unequal nation the top 10% own 54% of our wealth. Of the estimated 2600 highest net worth individuals (assets above R75 mill) in South Africa, only 360 are registered taxpayers.
      No conspiracy, simply reality.

      Looked at the other way the bottom 75% of South Africans owned just above 20% of the total wealth (2008 figures, so that means that things have probably got worse since then).

      Bottom line, capitalism sucks, it is a failure in almost all respects. Unless you are rich, and that remains relative too.

    • Sterling Ferguson

      @Mr. Direct, I don’t see any problem with people taking risks and making a profit from their business. It was observed by Plato in ancient Greece that the division of labor creates inequality. As a matter of facts, a society profit from having gifted people that will roll up their sleeves and start businesses. You should read Adam Smith’s “Wealth of a Nation”

    • http://M&G Nononsense

      The 1% are also the most charitable – check Gates and Buffet
      You should read The Rational Optimist

    • Mr. Direct

      @Sterling

      I agree, profit is fine, working hard to achieve it, also fine. But at what point does skill and risk justify taking from the poor?

      For example, the company I work for is listed, but the original owner has majority shares in the company. During the shareholders meeting, profits are described, and the board proposes a 6.5% increase in dividends, which is accepted. The very next day management inform the staff that no increases can be paid as the payroll is “too high”. Sure, I could leave the company, find another place to work, but I would think that the same thing happens everywhere….

      We all know that charging banks for any of our social ills because of their poor decisions causing a global financial meltdown will only end in the common people paying more for bank services, or paying more interest, or receiving less interest.

      We all know that healthcare companies charge what they want for medicine that they have researched and developed. For us, either medial aid accepts or rejects to pay it. The poor end up not receiving these medicines. Is profit is more important than health in this case?

      Apple manage to avoid paying tax on $65Bn revenue because of tax loopholes. How can it be that the USA search the globe looking for tax dodgers when one of their iconic brands does not pay as much as they should?

      At what point do we draw the line? And for sure there is a line to be drawn somewhere.

    • Heinrich

      Interesting article. I still cannot understand how government salaries and perks can be included in the GDP definition.

      So, if all of us go and work for the government, this country will be seen to be extremely prosperous.

      I agree that prosperity should have another ( longer term ) standard of measurement, incorporating both value added as well as value subtracted (extracted).

    • http://spytik.blogspot.com Spyti.k

      Your article, which I did not read all the way, is based (like Marxist theory) on the erroneous assumption that there is a voluntary human interaction where someone comes off second best; this is simply not true. In any voluntary economic interaction between two persons, one gets a need fulfilled while the other receives currency as recompense. In a barter economy, for example, both would receive a product/service that would fulfull a need that they have and that’s what economics is, the study of how to fulfill an infinite amount of needs with a finite amount of resources.

      Will you now please explain to me the grounds on which you want those who are more succesful in generating these interactions to be punished? Also, if you consider Ayn Rand’s Pyramid of Ability, you’d find that inventors and entrepeneurs are vastly underpaid for what they do. The man who invented the rock drill, for example, receives no recompense for the increase in productivity that the operator receives due to his invention, while the operator is renumerated at a level that is way above his natural ability. If we were truly fair here, the inventor of the rock drill should receive all the money that the users of his invention earn that is above their natural ability, but this does not happen or have you paid Bill Gates or Steven Jobs for the increase in productivity that your computer or iPhone has granted you?

    • http://www.bolobolo.co.za Aragorn Eloff

      Great piece, although I’m not as optimistic about stuff like Ecuador’s NDP (which is nice on paper but, as exemplified by the disregard for the ‘rights of nature’ enshrined in this document, doesn’t really seem to translate into practice: http://upsidedownworld.org/main/ecuador-archives-49/4442-ecuador-the-rights-of-nature-threatened-in-yasuni-national-park). To me it feels like more Bolivarian mythmaking: heavy on the rhetoric, same old exploitative practices on the ground.

      I also wonder if it’s not a case of what some people (e.g., Mark Fisher, in his book of the same name) term capitalist realism – the complete incapacity to imagine anything beyond GDP, progress, the growth paradigm, etc.

      As one contemporary anti-capitalist eloquently puts it: “it has been said that ‘today it is easier to imagine the end of the world than the end of capitalism’ (Turbulence 2008: 3). We have reached a stage where it is easier to think of the total annihilation of humanity than to imagine a change in the organisation of a manifestly unjust and destructive society. What can we do?” – John Holloway, Crack Capitalism

      I suspect one way to begin is to follow Holloway’s suggestion and start to explore, defend, expand and connect all the cracks within capitalism – the possibilities of challenging its false horizon of possibility by doing-otherwise in order to prefigure another way of life.

    • http://www.thoughtleader.co.za/jasonhickel/2013/10/16/the-madness-of-capital/ proactive

      All so…. and too true! How to tackle this dilemma in a controlled way?

      Let’s worry and target only the “huge excesses”, abnormalities & manipulations! The huge global aquarium with it’s overfed & diabetic fishes, not the small fry business of a Dick, Thabo & Harry!

      The “big price”- the “winning solution” to correct this present global madness with something better- without inviting bigger disasters in the process- should be the aim, honored with a Nobel price! A World contest with only the brightest available academic brains- the biggest think tank ever assembled world wide (sorry, it excludes all politicians & hangers on automatically!) Organized by the UN and all 193 UN member states under the motto “Save the World from Disaster”- a new UN Forum!

      Why not tackle it democratically- without an old fashioned barbaric revolution.
      It’s outcome has to be democratically agreed on and implemented by all 193 governments- no exceptions allowed! Uncooperative politicians straight to the ICC!

      It has to be possible to make the global 1%, all the Wall & Fleet street casinos owners, all infamous Banksters & Traders addicted to suicidal risk, all these super clever but ruthless & greedy CEO’s and all corrupted “his Honorable” politicians to heel and curtail their reckless game!

      All IQ’s over 180- or should we make it 200?- please come forward to save the world!
      A dream only?

    • Maria

      Great article, Jason! Just such a pity that, judging by the numbers, TL readers are more interested in penises and c*nts than in sound economic argument!

    • Yendys

      You think you are progressive and revolutionary but the opposite is true. You are of a type and predictable. You have a basket of beliefs that come as a package ( less inequality, the rediculous COP circus, no doubt a Greenpeace fan and course anti-Israel). Also the arrogance to think your NEW way is better.
      The Wall Street protestors or the 1% protestors were a bunch of middle class losers looking for someone to blame for their misfortunes and have fizzled out. Economic disasters are no different from natural disasters….some people survive and some do not.
      Now this emphasis on equality is a red herring born out of envy. It is not productive and from a practical point of view , any restrictions on top earner will affect those lower on the ladder more. What is important to anybody( apart from rebel rousers who talk about inequality ) is one’s absolute not relative situation. Would you rather have 10000 when the top guy has 1000000 or 5000 if you could reduce the top guy to 500000.

    • http://paulwhelanwriting.blogspot.com Paul Whelan

      One explanation of why it is impossible to imagine a better form of society is that no account or example of one exists that is convincing to the reason rather than the imagination.

      The majority of what are patronizingly called ‘ordinary people’ thus know in their bones it is not the ideal but getting to it that is the rub, especially as the heaviest burden involved in all previous attempts was always carried by them.

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    • http://necrofiles.blogspot.com Garg Unzola

      Shame, the poor 99% of people who tweet occupy from their Apple products. They must be having a tough time being so bored on the opposite end of the umbilical cord of capital.

      Short and sweet:

      “Whoever claims the “right” to “redistribute” the wealth produced by others is claiming the “right” to treat human beings as chattel.”

      http://aynrandlexicon.com/lexicon/redistribution_of_wealth.html

    • http://www.thoughtleader.co.za/jasonhickel/2013/10/16/the-madness-of-capital/ proactive

      @Garg

      …could there be some misunderstanding by the meaning of “redistribution” read into this article? Surely you know better! It is hardly the language of radicals echoing here- only some very much and other extremely concerned folks!

      If a small elite group gains so much influence and power to virtually exempt themselves from taxes, change laws & regulations, manipulate markets, even common sense and policies to the detriment of the global economy, the environment and the “99%”, just to suit their greedy agenda- that is when the siren should go off!

      The world evolved through various systems- today most of the “99%” are no longer uneducated, blind, owned and prescribed by Landlords, Kings or mental CEO’s, Queens, dictators, bandits, or mad politicians!

    • http://necrofiles.blogspot.com Garg Unzola

      @Proactive:
      Semantics. If it’s a numbers game, then look at the living standards of the 99% and how their lives have improved over the course of the last century. This is all due to the work of a small elite who have given us the industrial revolution, the green evolution and inoculation.

      Sticking with the numbers, look at the make-up of the 1% and see how much the membership of that elite club chances from year to year. Just look at Warren Buffet’s fortune and you’ll see that, while he is amongst the richest in the world, his fortune has also taken knocks.

      Perhaps his involvement with that other rich lout, Bill Gates and their Bill & Melinda Gates Foundation work is just a crafty way to dodge taxes?

      And how, pray tell, did the 99% of us come to be educated, all-seeing, free people who aren’t prescribed to any longer? I disagree with that, I think we just choose our own leaders now and we do a crummy job if one considers the kind of public intellectuals who get attention. Especially the heroes of the 99% – they are not indicative of much enlightened thought on the part of their supporters.

      I was merely raising the issue of entitlement. I do not believe that I am entitled to a single cent of Bill Gates’s money, regardless of how much worse off I am.

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