When the next round of academic studies are published on the development of environmental literature, they will doubtless note the rise of pessimism and doom in the outlook of scientists and commentators during the last five years. This is a complete reversal of the self-imposed mandates of earlier days, when environmental writers on climate change were exhorted by marketing experts to nail a “hopeful” spin on the end of their chronicles of gloomy assessments and disturbing trends. Generally, experts and advocates complied, although the appended “messages of hope” looked increasingly out of touch with reality.
It was perhaps the COVID pandemic that brought about the modern turn to full-throated doomist literature. During the shutdown the natural (i.e. non-anthropocentric) world showed signs of healing some of the scars of human civilization. For a brief few months a few hopeful souls dreamed that a managed COVID recovery could both restart human society and encourage healing of planetary ecosystems. Of course, nothing of the kind happened: post pandemic greenhouse gas generation and resource stripping accelerated to make up for lost time. Ironically, the first major bills for biospheric destruction have started coming due as unprecedented storms, floods, and fires impact more and more regions. In the face of deteriorating conditions, the ruling classes across the globe are showing remarkable levels of ineptness and incapability. Even before COVID, decades of bureaucratic churning and 33 global UN conferences had produced no progress in slowing the annual growth of greenhouse gasses and other pollutants in the atmosphere. Small wonder that now any realistic assessment of the climate crisis draws an inevitable conclusion that we’re all on the “rocket sled ride into the abyss”, as Mike Duncan (History of Rome podcast) described the final years of the Western Roman Empire. An expression used with increasing frequency is “polycrisis” to describe the multiple environmental and social issues competing for attention. The best description of the polycrisis might be a climate analogy to Tolstoy’s unhappy families: a general crisis going badly but made up of individual crises, each going badly in its own way.
Two recent articles highlighted in Green Social Thought are emblematic of the new strains of pessimism over the coming collapse. Richard Heinberg, writing in Resilience at the end of 2024, provides a quick review of the failures of the modern growth economy, the necessary changes that need to be made, and the complete failure of human society to make any of the needed adjustments. He concludes that “The fact is, humanity has made its choice, just as American voters have: the latter were swayed by an empty promise to “make America great again,” when in fact the national and global economy are at their apex of size and speed, and it’s all downhill from here. The decision is in: the future be damned. We’re going down the hard way.” (Envisioning a Livable Future – resilience https://www.resilience.org/stories/2024-11-21/envisioning-a-livable-future/). Ted Trainer (https://www.resilience.org/stories/2024-12-10/some-thoughts-on-richard-heinbergs-envisioning-a-livable-future/) agrees with Heinberg’s general narrative, but calls for a tighter focus on how the economy, and how economists, are undermining the needed responses to our degrading biosphere.
Trainer, and many like-minded activists, are basically correct in calling out the many dysfunctions of the modern economy. On this topic, a book that is entirely too little known is “Killing the Host: How Financial Parasites and Debt Destroy the Global Economy” by economist Michael Hudson (available from the usual online booksellers, and also free at archive.org and elsewhere). In “Killing the Host” Hudson focuses on the issue of rent-seeking and debt creation by banks, other financial institutions, and corporations, and he shows how it has almost completely absorbed the world economy. The well-known (to us) ideology of perpetual growth has combined with more recent ideas from the Chicago School like “shareholder value” to produce the Neoliberal Dispensation: that the entire point of economic activity is to increase the wealth of the richest segment of the population.
Hudson is very specific about how this has happened. In a nutshell, private bankers and other financial operators gained control first of governments, then of governmental functions, and have proceeded to destroy public activities and replace them with private rent-seeking. In the post WWII years, the ideology of rent-seeking and private debt took over university economics departments, which began drilling into their graduates that there is no moral or societal difference between making money collecting rents and debts, versus making money from selling actual things, or providing real societal benefits. This debate began in the late 19th century between classical economists like Mills, Smith, and Marx versus proto-Neoliberals such as Ricardo and his supporters, The development of post-WWII capitalism along with multinational private banking, combined with a takeover of academic economics by the likes of Milton Friedman, has produced an economics of perpetual growth based on perpetual rent extraction, with no acceptance of any physical reality. This, in turn, has stoked out-of-control incendiary social breakdown, as well as a literally burning planet. It’s not called the Great Acceleration for nothing!
Rather than a lengthy recount of the many details in Killing the Host, I’ll begin with a specific case where out-of-control rent-seeking is degrading both society and the planet’s ecosystems. Housing affordability is an urgent issue almost everywhere, both in this country and world-wide. North Florida is typical: housing developments proliferate featuring replicas of early 20th century factory town row housing at $300,000 a pop. Do the increases in home prices reflect corresponding increases in quality and durability of construction? Of course not. Neither do they reflect an “accidental misalignment of markets”. Real estate is now a carefully construxcted scheme of asset bubbles to extract as much money as possible from people needing shelter. Of course some landlords have always used dodgy methods to maximize their income, but the current housing crisis can be traced back to the repeal of the Glass-Steagall Act and other laws “freeing up” the financial sector. Bankers now make inflated loans taking no account of the value of the houses, or the buyer’s ability to pay. Elimination of the rules that governed how much cash a bank had to have on hand to cover its loans, and elimination of regulations on moving loan paper ensured that banks could inflate asset values as much as they wanted, palm off their dodgy paper on naive counterparties, and suffer almost no consequences when the whole debt edifice crashed. As it did in 2008. The costs of the 2008 meltdown to ordinary people and the political system have been extensively reviewed; less so the environmental costs when huge tracts of land and vast quantities of natural resources were ploughed into wasteful “developments” to keep the Real Estate Ponzi scheme alive and all the speculators happy. The take-home lesson here is that despite all the arm waving by activists and virtue signaling by the occasional government officials and corporate PR bureaucrats, there will be no real affordable housing on any meaningful scale. How could there be when “affordability” goes directly against an economy entirely dedicated to maximizing unearned income?
Another well-known case is the devolution of US health care, caused by the rent extraction of insurance companies and the machinations of Big Pharma and corporate health providers. There have been enough studies of medical practices and public health institutions being bought up and looted by private equity and other rentiers that I see little need to reiterate them here. However, like Real Estate, the principal economic activity in health care field is consortia of oligarchic interests privatizing access to a good that everyone needs (health and life, in this case), then raising fees and rents to access that good. At the moment there are still active government and private watchdogs keeping a lid on blatant gouging by the medical and drug oligopolies; but have you noticed how much political effort is made to “roll back stifling regulations”?
A critique of growth economics I sometimes see is that the bad actors are pursuing “growth for the sake of growth”. They are not. The rentier oligarchy is not at all interested in growth as some sort of metaphysical ideal. As the two cases above illustrate, growth is for gathering in more unearned income, privatizing more public assets, and creating innovative ways to create more fees to collect from hapless people not part of economic elites. That’s the story we need to be telling.
Hudson does not often comment specifically on the planet killing aspects of the rentier economy, but his chapter 4, “The all-devouring ‘Magic of Compound Interest’”, concisely explains the mechanics of how exponential growth kills economic systems, and can easily be extended natural resource issues. He explains and diagrams the “Rule of 72” which is the handy but under-used way to measure how quickly “money can grow” (= how quickly debt grows), and to appreciate the logistic growth curve when applied in ecology. All economic systems based on compound interest will eventually spiral into destruction, if some form of government intervention does not restore some form of balance. Hudson concentrates on how economic systems handle, or collapse from, compound interest; we see the same effect of logistic growth in the biological realm when poorly regulated systems collapse into overshoot.
“Killing the Host” goes a long way to explain why, after decades of urgent warnings, we are as far as ever from curbing global heating, greenhouse gas pollution, and any practical transition away from fossil fuels. The kind of changes climate advocates envision can’t be mapped onto an economy of and directed by the rentiers, however many contortions we may make. The first iteration of the Green New Deal had all the characteristics of the giant, highly leveraged construction projects that the World Bank foisted on tropical countries in the 1980s. The airy fantasies of WWII levels of industrial mobilization completely ignored side effects, and a world where local communities are no longer particularly willing to destroy their surroundings for First World Green Overshoot consumers. As the practical drawbacks of the original Green Growth visions started to sink in, a lot of psychic energy of the Green Commentariat was ploughed into a new fantasy: decoupling, or pretending that perpetual economic growth could happen in the absence of physics and chemistry. This too, is proving nothing but a pipe dream, and now the general gloom is setting in, as Heinberg and Trainer have observed. The schemes of both the techno-optimists and the the small commutarians founder on the same reef: the rent-seeking oligarchs who have captured both government and academia don’t want anything to interrupt, or even slightly lower, their ever-growing inflows of compound interest driven unearned income. They can be counted on to undermine any competing economic activity.
In a section of Killing the Host called “There is an alternative” (contradicting Margaret Thatcher), Hudson proposes ten reforms to economic policy to dilute the power of the rentier class and lower economic inequality. The full list is given below:
1. Write down debts with a Clean Slate, or at least in keeping with the ability to pay
2. Tax economic rent to save it from being capitalized into interest payments
3. Revoke the tax deductibility of interest, to stop subsidizing debt leveraging
4. Create a public banking option
5. Fund government deficits by central banks, not by taxes to pay bondholders
6. Pay Social Security and Medicare out of the general budget
7. Keep natural monopolies in the public domain to prevent rent extraction
8. Tax capital gains at the rates levied on earned income
9. Deter irresponsible lending with a Fraudulent Conveyance principle
10. Revive classical value and rent theory
Some of the reforms deal with government policies and require specialized legislative action. (Re-activating Glass-Steagall and eliminating the Clintonian “liberalizations” would go a long way to correcting government coddling of the rentier class.) Hudson aimed #10 at university economics departments and their Critical Rent Theory biases. Points 2, 3, and 8 are directly relevant to the biosphere polycrisis; they address ways to take the profits out of massive leveraged resource extraction schemes, which enable some of the worst fossil fuel and Big Ag environmental outrages.
As things stand now, Hudson’s reforms will fare no better than the commutarian remedies Trainer and Heinberg propose, when they all run up against the bankers and billionaire bros who are massively uninterested in anything that interrupts their current upward wealth transfers. The oligarchy has created a vast propaganda edifice to sell us the current rentier system, which is like the bastard child of Dr. Pangloss and Margaret Thatcher: the best of all possible worlds, and there is no alternative. Many reforms advanced in the voluminous environmental literature are technically quite good, and, when put into practice, often show small-scale improvements to local environmental problems. However, The financialized growth propagandists will jump in to choke off any Catalan Cooperative or Land Institute ideas that threaten to spread into the general consciousness. On the face of it, Heinberg, Trainer, Tsakraklides, Carana, and many other commentators would seem to be right about humanity’s slim survival chances. But when we engage the economic system on its own terms, we aim at the wrong target. Hudson’s “Killing the Host” shows us what the rapacious global oligarchy does, how it does it, and who the major players are. It is here that we need to focus our activism and resistance. If we do it right, we can pick up many supporters, since the kleptocrat rentier class is hollowing out the middle, working, and even the PMC classes as vigorously as it is eliminating the forests, waters, and clean air. We don’t need a better narrative of a hazy vision of radical transformation; we need a better monkeywrench.
While many current and recent acts of resistance are creative and effective on small scales, we seem to be losing the public argument over what kind of economy is required for human survival. Political consultants have been telling Democrats to emphsize “pocketbook issues” to recoup their sagging popularity. We might take a similar tack, although our “pocketbook” issues are more like the hands of bankers, mortgage companies, insurance companies, utility companies and other rent-seekers in our pockets, scooping out our money to benefit their growth. A couple of ideas for arguing with the growth propagandists:
Messing up the Growth Brand. Herman Daly has spent many years pushing back against the Ponzi “brand” of perpetual economic growth. Despite this, odes to perpetual growth are still pumped out by academic economics departments, mainstream media outlets, and local Chambers of Commerce copy writers. Arguments against perpetual growth have traditionally been based on concepts of biological and physical reality, which fail to move many people because they have never been exposed in school to basics of biology or physics. A more convincing counterargument to the perpetual growth pushers might be to remind everyone how allegiance to “growth” and “markets” always seems to benefit the top economic plutocracy while leaving the rest of us with worse services, worse living conditions, and, of course, less money. We can scale down this type of analysis to the local levels: inflated real estate, crappy health care privatizations, thefts of public lands and natural resources. The Rule of 72 should be raised to refute demands for high (as in above 0) growth levels, showing how quickly public spending will have to increase just to maintain current standards of living.
They don’t mean what you think they mean. Hudson points out that rentiers and growth cheerleaders use words and concepts in ways quite different from their ordinary meanings. “Free markets” are a prime example. We see it all the time in economist propaganda and we assume it means something positive for us in our day to day buying and selling activities. However, when bankers, monopolists, and assorted oligarchs call for “free markets”, they mean freedom from any government regulation of their activities. The rentier’s free market wet dream is a world where they can charge any interest rate they feel like, impose any fees they can dream up, and where things like consumer and environmental protections are non-existent.
Another obfuscation baked into the economic system is the double-entry effect of “investment”. Brilliant rates of investment return for one Homo economicus are often a crushing debt load for another H. economicus. This, combined with the inexorable overshoot of compound interest, means that perpetual growth economics will cause havoc in human society even before the inevitable environmental collapse begins.
Some feel that we need economists to do research on alternatives to growth. Yet, with the exception of Hudson, Daly, and a handful of other “renegades”, the vast majority of economists are fully imbedded in the rentier economic matrix; their research might occasionally suggest some interesting marginal tweaks, but they will never advance a real substitute for the dead end status quo. Heinberg and Trainer are undoubtedly right when they express doubts about the human race’s ability to swerve away from the polycrisis abyss, and also in their agreement that the only salvation will be a “profound change in ideas and values, away from the quest for wealth and property towards concern for the common good”. Hudson’s analysis of the parasitic core of the current global economy shows us why that change hasn’t happened, and won’t happen as long as central banks, government banking regulators, “Big Finance”, university economics departments, and local Chambers and developers go unchallenged. Hudson gives us the facts we need to challenge the rentier classes; it’s up to us to start lighting the fuses.