Fleeing Vesuvius. Gillian Fallon
the globalizing economy grows, increased population, wealth and integration opens up the possibility of greater economies of scale and more diverse productive niches. When new technologies and business models (solutions or sets of solutions) emerge, they co-adapt and co-evolve with what is already present. Their adoption and spread through wider networks depends on the efficiencies they provide in terms of lower costs and new market opportunities. One of the principal ways of gaining overall efficiency is by letting individual parts of the system share the costs of transactions by sharing common infrastructure platforms (information and transport networks, electric grid, water/sewage systems, financial systems), and integrating more. Thus there is a reinforcing trend of benefits for those who build the platform and the users of the platform, which grows as the number of users grows. In time, the scale of the system becomes a barrier to a diversity of alternative systems as the upfront cost and the embedded economies of scale become a greater barrier to new entrants, especially where there is a complex hub infrastructure. The lack of system diversity is not necessarily due to corporate monopolies. There is vigorous competition between mobile phone service providers but they share common information plat-forms and depend on electricity networks and the monetary system, both of which have little or no system diversity.
Our operational systems are integrated into the wider economy. Expensive infrastructure and continual need for replacement components mean that economies of scale and a large number of economically connected people are necessary to make them viable. For example, the resources required to maintain the IT infrastructure on which we rely for critical services demand that we also buy games consoles, send superfluous text messages and watch YouTube. In other words, our non-discretionary needs and the critical systems that support them are affordable because they are being cross-subsidized by discretionary spending, which itself depends on further economies of scale being generated by the globalized economy that provides us with our discretionary income in the first place.
From this perspective, asking about the resource requirements for individual products of the economy (a computer or my morning coffee, say) is akin to asking about the resource requirements for your finger; it only makes sense if the rest of the body is properly resourced.
Each new level of infrastructural complexity implies a new fixed cost in terms of energy flows and resources required for maintenance and operation, and an economy of scale that can support such flows. It also locks into place codependence amongst components of our critical infrastructure that integrate the operational fabric. For example, if our IT platform failed, so too would our financial, knowledge and energy systems. Similarly, if our financial system collapsed, it would not take long for our IT and supply-chains to collapse too. The UK-based Institute of Civil Engineers acknowledges that the complex relationships between codependent critical infrastructures are not understood.7
Finally, as new infrastructural platforms become established, legacy systems are left to shrink or decay. Thus, if suddenly we all were to lose the communications infrastructure introduced over the past ten years, we would not return to the system we had before that infrastructure was introduced. Instead, most of us would be left without any fallback communication system at all.
The Global Economy has Bounded Resilience
An isolated, poor and self-sufficient community is vulnerable to severe risk of a general failure of food production due to flooding or pestilence, say. Even comparatively rich France had 18 general famines in the eighteenth century and hundreds of local ones.8 Without access to money, weak transport links, markets and communications, surplus production from elsewhere could not relieve local starvation. The growth in the interconnectedness, infrastructure and institutions of the globalizing economy meant local risks could be shared over wide networks, and this enhanced local resilience.
One of the great virtues of the global economy is that while factories may fail and links in a supply-chain break, the economy can quickly adapt by fulfilling its needs elsewhere or finding substitutes. This is a measure of the resilience within the globalized economy and is a natural feature of a de-localized and networked complex adaptive system. But it is true only within a certain context. There are common platforms or “hub infrastructure” that maintain the operation of the global economy and the operational fabric as a whole, and the collapse of such hubs is likely to induce systemic failure. Principal among these are the monetary and financial system, accessible energy flows, transport infrastructure, economies of scale and the integrated infrastructures of information technology and electricity.
Our Freedom to Change Can Be Limited by Lock-In
Lock-in can be defined broadly as an inability to deal with one problem by changing a sub-system in the economy without negatively modifying others upon which we depend. For example, our current just-in-time food system and agricultural practices are hugely risky. As the current economic crisis tightens, those involved in food production and distribution strive for further efficiencies and economies of scale as deflation drives their prices down. The lower prices help maintain welfare and social peace, and make it easier for consumers to service their debts, which in turn supports our battered banks, whose health must be preserved or the bond market might not show up at a government auction. As a result, it is very hard to do major surgery on our food systems if doing so required higher food prices, decreased productivity and gave a poor investment return.
However, the primary lock-in process is the growth economy itself. We are attempting to solve systemic ecological problems within systems that are themselves dependent upon increasing resource depletion and waste. We are embedded within economic and social systems whose operation we require for our immediate welfare. But those systems are too optimized, interconnected and complex to comprehend, control and manage in any systemic way that would allow a controlled contraction while still maintaining our welfare.
The problem of lock-in is part of the reason why there is no possibility of a managed degrowth.
The Global Economy’s Adaption to Ecological Constraints Displaces and Magnifies Stresses
Peak oil is expected to be the first ecological constraint to impact significantly on the advanced infrastructure of the globalized economy. However, it is only one part of an increasingly integrated web of constraints including fresh-water shortages, biodiversity loss, soil erosion and reduced soil fertility, shortages of key minerals and climate change. As a result, it makes little sense to compartmentalize our focus as we do through the UN Framework Convention on Climate Change, for example. The interwoven nature of our predicament is clearly shown by the Green Revolution of the 1960s that supposedly “solved” the increasing pressure on food production from a growing population. Technology was marshalled to put food production onto a fossil-fuel platform, which allowed further population overshoot and thus a more general growth in resource and sink demands. The result is that even more people are more vulnerable as their increased welfare demands are dependent upon a less diverse and more fragile resource base. As limits tighten, we are responding to stress on one key resource (by, say, reducing greenhouse gas emissions or getting around fuel constraints by using bio-fuels) by placing stresses on other key resources that are themselves already under strain (food, water). That we have to do so demonstrates how little adaptive capacity we have left.
Our Local Needs Depend on the Global Economy
Our basic and discretionary needs are dependent on a globalized fabric of exchange. So too is our ability to exchange our labor for the means to pay those needs. The conditions that maintain our welfare are smeared over the globe.
We have adapted to the stability of globalizing growth over the decades. Our skills and knowledge have become ever more refined so as to contribute to the diverse niches within the global economy. The tools we interact with — computers and software, mobile phones, machines and payment systems — maintain our productivity. So too do the supply-chains that feed us, provide inputs to our production process and maintain the operation of the systems we depend upon. Our productivity also depends upon the global economy of scale, not just those reaped by our direct customers, but also the conditions that support their economic activity in the wider economy. We are all of us intertwined. For this reason we can say that there is no longer any wholly indigenous production.
Money and Credit Integrate the Global Economy
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