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Expired · 28th June 2009
Ray Grigg
The good news about the global financial crisis of 2008 is that it has inspired an honest and searching examination our modern free-market economic system. The bad news is that some of the questions being asked do not have comfortable answers. Consider, for example, the comments of Henry Kissinger, a former US Secretary of State and now a recognized advisor on international affairs, who recently contributed an article, The End of Hubris, to The Economist magazine's predictions for 2009. Although Kissinger probably didn't intend to do so, he makes three principal points that are directly relevant to environmental issues.

First, he writes of "the delusion that the economic system could sustain itself via debt indefinitely." In simple terms, the balance sheet is the final arbiter – spending must be constrained by income. In ecological terms, we humans are now consuming about 25 percent more of the biological production than the planet can replace. Our global economic system is running at a deficit by borrowing from the biota of future forests, soils and fish to maintain present consumption. Unfortunately, our planet is a finite place; it has no exterior banking system. We cannot borrow from elsewhere to support our debt. When the system is overdrawn, it cannot be rescued. When the debt comes due, we pay.

Second, as Kissinger writes, "Any economic system, but especially a market economy, produces winners and losers. If the gap between them becomes too great, the losers will organize themselves politically and seek to recast the existing system – within nations and between them". Translated into environmental terms, the inherently competitive character of our free-market system perceives nature as another opponent to be subdued, controlled or defeated. Economics has a pervasive attitude that places us in an adversarial rather than a cooperative relationship with our planet. Politically, as Kissinger predicts for market economies, "the losers will reorganize themselves". Environmentally, nature will use a mechanism such as climate change to "reorganize" itself and "recast" its existing system. From the perspective of a thinker such as James Lovelock, Gaia is altering itself to a hotter condition that will exclude the competitive economic system which is upsetting its equilibrium. A planet that is 4°C or 6°C warmer than this one will neither sustain our economic system nor most of us.

Third. "Now that the clay feet of the economic system have been exposed," Kissinger writes, "the gap between a global system for economics and the global political system based on the state must be addressed as a dominant task in 2009." In other words, a fundamental anomaly exists between the self-interest of individual countries and the global environment. Pollution knows no boundaries. On a single, self-contained planet, everything is connected to everything else. Just as the subprime fiasco in the US affected the world's economy, carbon dioxide emissions from China or Canada affect everyone else on the planet. This is why the Kyoto Protocol was so important and its successor, proposed for finalization in Copenhagen at the end of 2009, will be critical. Political borders do not exist with global warming, rising seas or ocean acidification. We live or die together on spaceship Earth.

A free-market economy, it seems, is a very efficient economic system but a very poor model for operating a planet. It provides us with short-term gain but long-term pain. The elevation of the individual over the collective – in the largest sense of both terms – is the antithesis of the motto of the Three Musketeers. "All for one, and one for all" in a free-market competitive system has become "All for one, and none for all."

"Nobody can do everything", goes the old aphorism, "but everybody can do something." The problem with free-market economics is that it turns this sensible principle upside-down. When anybody can do anything – the implicit understanding in the rules of competitive engagement – this excuses everybody from being responsible for anything. The result is a war-like system that leaves winners winning, losers losing, and the battlefield of nature pillaged and wrecked as the economy pursues its self-interested objectives. Environmental degradation is the "collateral damage" of an economic system that functions without a sense of perspective.

While it is true that we each live in the present of each unfolding moment, it is also true that we each live in the continuum of history. If we do not understand the vast flow of circumstances in which we move, then we will not fully understand the now that occupies so much of our attention. Comprehensive awareness gives relevance and meaning to the present; awareness of time and change is the likely distinction that separates us from the other animals of the planet. In James Lovelock's understanding, we are Gaia aware of itself.

So we have a sense of past and future, of action and consequence. And this is why we need to understand economics, the system that we have made into the foremost of all our systems. Economic necessity has become the justification for most of our collective behaviour, the rationalization that excuses the atrocious abuses we have been inflicting on our planet.

However uncomfortable the evidence may be, our free-market system seems to be winning the battle of materialism but losing the war of survival. The worldwide pace and scope of our present economic activity is not ecologically sustainable. Think of the financial crisis of 2008 as a moment of insight that allows us to glimpse an unwanted destination. May such an epiphany allow us to choose a wiser course into the future.