Missing the point about 'growth'

The consequences of the sudden eruption of global crisis in 2007-8 took many by surprise. Amongst those struggling to incorporate these dramatic changes into their overly fatalistic views are the growing number of people concerned about the depletion of resources and changes in climate.

David Holmgren is the leading advocate of permaculture, a design philosophy which has evolved since its inception in the 1970s as “an integrated, evolving system of perennial or self-perpetuating plant and animal species useful to man”, in other words “permanent or sustainable agriculture”.

Its current all-encompassing vision is one of “permanent or sustainable culture” covering all of human activity, which is divided into seven domains guided by a set of ethics and design principles. Permaculture is defined as an approach to designing human settlements and agricultural systems that mimic the relationships found in natural ecologies.

Holmgren’s views are seminal for many, including those active in the Transition Initiative, who have come to realise that we humans cannot continue to live on the planet, producing in a way which depletes resources and destroys the ecosystems we depend on.

In his latest essay, Money vs Fossil Energy: the battle for control of the world, he tries, as he says, to “provide a framework for understanding the ideological roots of the current global crisis”.

Holmgren finds common cause with many who attribute the current problems to a society that pursues the myth of the possibility of continued economic growth but adopts an approach that is as confusing as it is misleading. His one-sided obsession with growth fails to realise that capitalist society has always been like a roller-coaster. It alternates between periods of growth which reach the limits of credit-fuelled overproduction, alternating with ever-worsening periods of contraction and destruction.

For much of his explanation, Holmgren relies on what he presents as two counter posing camps – the money people, those who believe that wealth is the result of human ingenuity or “human brilliance”, versus those who believe that wealth comes from nature, the oil people.

However hard you look, you won’t find a definition of “wealth” itself in Holmgren’s essay. And it’s this omission that’s at the heart of his pessimistic, fatalist, survivalist conclusion. The best we can hope to achieve, he argues, are “resilient and relocalised economies that will grow at the margins abandoned by the dinosaurs of the declining global industrial culture.”

Holmgren’s one-or-the-other explanation excludes the reality that what we produce – including the reproduction of ourselves – is actually the result of humans applying their ingenuity to the nature that they are part of.

Marx’s investigations led him to the inner dynamic of social evolution to unravel the contradictory opposites of use-value and exchange-value. Use-values are the outer, physical form of commodities, the things we can and do actually use. Exchange value constitutes the amount of socially-necessary human labour expended in the production of the use-value.

Capitalist production is driven by the pursuit of the profits extracted from the production of intangible exchange-value, destroying the ecosystem in a way which arises almost accidentally out of the alienation of present social relationships. A truly global society that supersedes capitalism will consciously organise its social relations to identify and produce what is needed – use-values – in a way which is consistent with maintaining the conditions for life on the planet.

Evidence is mounting that the phony recovery brought about by torrents of credit imagined into existence to prevent financial and economic Armageddon has run out of steam and the feared “double-dip recession” is well under way. Holmgren leaves capitalist society to continue on its path of destruction Surely our task is to replace it.

Gerry Gold
Economics editor

The real costs of the price of oil

The price of a barrel of oil reached and passed $115 yesterday. It has doubled in a year. As the price of oil goes up so must everything else, as everything that is produced, distributed and consumed depends on it in some way. The higher the price of oil goes, the deeper will be the global economic slump.

There are many reasons for the soaring price of oil. Despite attempts to stave off financial meltdown, banks are failing and the US economy is diving into recession. The value of the dollar is falling against other currencies, so speculators are looking for safer options, like gold, food and oil. The more they exchange dollars for commodities, the faster the dollar falls. The pound sterling is falling for similar reasons. The lower the dollar, the higher the price of oil. It’s a vicious spiral.

In a period of inflation, many price rises aren’t due to an increase in their value – which is measured by the real cost of production – but by the falling value of the money in which the price is expressed. But for oil the situation is different. The oil companies are finding it more and more difficult to extract. The cost of production is increasing. So the value is increasing as well. And that contributes to the sharply increasing price.

As the oil price feeds through into other products, the effect is to dampen consumer demand even further. Think about it. US consumers already began to run out of credit in 2005. That triggered the mortgage crisis and a lot more. Thousands of stores are now closing, taking their suppliers and hundreds of thousands of jobs with them. The closure by JJB of 72 sports shops with the loss of 800 jobs is a sign that the crisis is now hitting the UK. Meanwhile, investment bank, JP Morgan is predicting that the credit crunch could cost up to 40,000 jobs in London’s financial services sector during 2008 and 2009, further cutting purchasing power.

All this is against the background of “peak oil”, as production peaks and begins to fall. Earlier this week Leonid Fedun, vice-president of Lukoil, said that last year’s Russian oil production of about 10m barrels a day was the highest he would see “in his lifetime”. Russia is the world’s second biggest oil producer. Fedun compared Russia with the North Sea and Mexico, where oil production is declining dramatically. Because the entire capitalist economy depends on oil, and there is no substitute, in an editorial entitled “Preparing for the age of peak oil”, the Financial Times is pushing to offset the decline in output urging Russia to “press on with privatisation of state-controlled assets”.

Movements like the Transition Initiative are on a different track. It is a fine, rapidly-growing movement focusing on unleashing the creative genius of communities to discover ways to reduce energy use to overcome falling oil production and climate change. So far, however, it has sidestepped the corporate ownership of oil and the capitalist, for-profit pressure to maximise its extraction and use. Reducing the reliance on fossil fuels depends on them ceasing to be exploited for profit. And that means bringing the era of capitalist corporations to an end through a process of democratising their ownership and control.

Gerry Gold
Economics editor