Blog

04
Dec

Distortions of the Anthropocene

For the first time in earth’s history, a species through its own self-centered behavior, is responsible for ending one geological epoch, the Holocene, and initiating another, the Anthropocene.

The Holocene, which began roughly 12,000 years ago with the end of the Pleistocene ice age, is generally associated with a globally warming climate and the rapid spread of the human species as more parts of the earth became habitable. To many scientists the Antropocene grew out of the Holocene with the onset of the 19th century industrial age: a time when humanity’s extractive enterprises (mining, forestry, agriculture, fishing), expanding use of fossil fuels and accumulating non-biodegradable wastes (many of them toxic) began to radically alter earth’s chemistry and climate. Further, as the industrial age progressed, improvements in healthcare and living standards produced a population explosion with cities, factories, transportation grids, dams and other man-made developments replacing natural habitats – causing the sixth mass extinction since complex life first appeared on the planet 540 million years ago during the Cambrian era.

An important episode of the Anthropcene is the time, roughly three decades ago (early 1980s), when the world economy entered ecological overshoot by using up earth’s biological resources faster than they could be replenished. Since that time, humanity’s deficit spending of renewable and non-renewable resources – used to maintain our lifestyles – has taken up the resources of more than one and a half earths. Like overdrawing our checking accounts, which is only feasible so long as we have good credit, there is a limit to how long this overshoot can continue.

This essay is written primarily from the perspective of a historian with a keen interest in markets and human behavior. From a historic perspective, it looks on the ecological overshoot of the Anthropocene as a consequence of humanity’s self-centered (anthropocentric) behavior, which has ancient roots going back to Genesis and beyond. It also attributes some of the more extreme excesses of the Anthropocene to the hubris of those in positions of power. Looking ahead, it places humanity at a crossroads, where we have essentially two options:

  1. Continue business as usual, believing we can finagle our way out of the spreading ecological/economic disaster by manipulating Nature, markets, data, news and each other via clever uses of money and technology; or
  2. Reinvent human enterprise in a way that mimics life in structure and operation, recognizing that we are inseparable from the biospheric web of life. (Organizations that have pioneered this reinvention have done exceptionally well by seeking harmony with, rather than domination of, Nature and society.)

In our opinion, option (1) leads to disaster. By treating symptoms rather than causes, we perpetuate the doom loop of ecological and economic decline. In systems thinking, such a scenario is called a “shifting the burden archetype.3

The more hopeful scenario (2) has already taken hold in some sectors. We describe it as a renaissance of thinking based on the primacy of life. In business, companies leading this renaissance are more profitable than those doing business as usual.4

Emerging Era of Scarcity

According to the McKinsey Global Institute, prices for agricultural goods, energy and metals have, since the year 2000, begun to rise sharply due to the increasing depletion of “essential” commodities relative to the rapid growth of populations and human appetites. McKinsey contrasts this to our experience of the 20th Century when there was little change in prices after adjusting for inflation.5

Since 2000, for example, nominal food prices have risen by almost 120 percent (6.1% average annual rate) primarily due to declining yields in ocean fisheries, depleted croplands, the rising cost of energy used in food production and transportation, increasing demand of a growing population, supply-side shocks due to climate change and declines in global buffer stocks.

At the same time, nominal energy prices have increased by 260 percent (10% average annual rate) and nominal metals prices have increased by 176 percent (8% average annual rate) due primarily to the rising cost of supply and rapid demand expansion in non-OECD countries. These increases, of course, feed through to food prices, through the costs of fuel, chemicals and equipment used in harvesting and transporting food commodities.

The prices of non-food agricultural goods have also risen sharply since 2000. Rubber prices, for example, have increased by more than 350 percent because supply has been constrained at a time when demand from emerging economies for vehicle tires has surged.

Because our expectations and beliefs are grounded in earlier centuries – before the possibilities of ecological overshoot and peak energy were recognized – we continue to believe/behave as if we can manage our way through this era of increasing commodity scarcity via technological and financial fixes. The tragic flaw in this belief is that living (biological) systems upon which all life depends cannot be regenerated or restored by non-biological (engineering) interventions.

Tragedy of the Commons

By throwing money and technology at problems that can only be solved by natural biological means, we create a tragedy of the commons. This occurs when individuals, acting independently and rationally according to each one’s self-interest, deplete critical resources despite their understanding that such behaviors are contrary to their long-term best interests.

“Commons” in this case includes earth’s atmosphere, oceans, rivers, aquifers, fish stocks, croplands and forests – the biological systems, processes and diversity needed to support all life, which includes, of course, humanity’s food supplies, drinking water, fresh air and important industrial materials (lumber, paper, pharmaceuticals, phytochemicals, etc.).

As we so often see in modern agriculture and fisheries, this tragedy becomes self-reinforcing by the command-and-control methods and disruptive technologies we use to leverage economic output. Consider, for example, the heavy equipment, chemicals and large scale monoculture planting we use to improve crop yields, which end up compacting and depleting the soil; or the high-tech fishing fleets we use to increase catches, which accelerate species decline by over-fishing. As these aggressive farming and harvesting methods degrade agrarian and marine eco systems, their continued “success” requires the use of more aggressive techniques until the systems collapse.

The tragedy also has feedbacks, where extractive behavior in one commodity group affects many others. The best example of this is global climate change, brought about by the excessive burning of fossil fuels, which has been linked to droughts in key grain growing areas, depletion of fresh water supplies, forest fires, ocean acidification, and the shared costs of restoring violent storm damage (via government disaster relief, catastrophe insurance, etc.).

Deepening the Tragedy

As the catastrophe of the commons builds, economies are placed under increasing stress. To cope with these stresses and maintain a sense of normalcy, governments, companies and households have borrowed heavily since the mid-1980s, when the earth went into ecological overshoot, causing debt ratios to accelerate from cycle to cycle.

The US government’s explicit debt ($17.08 trillion), for example, is 12.4 times larger than it was 30 years ago in 1983 ($1.38 trillion). When we add to this its implicit debt, which represents the net present value of unfunded liabilities, its fiscal year 2012 deficit came to $85.4 trillion: a number that was 5.5 times larger than GDP.6

These two increasingly correlated phenomena – commodity depletion and rising debt ratios – have become a growing drag on the world economy and investment markets. In real terms, US equity markets have lost money since the year 2000 in spite of massive money printing by the world’s central banks.7

It should be noted here that money printing further deepens the tragedy of the commons by masking the symptoms of ecological stress, over-borrowing and economic destabilization: conditions that would normally inform us of approaching danger. As a result, we now find ourselves in a tightening squeeze of deflating economic potential and debt fatigue on one hand plus inflating commodity prices on the other.

According to the latest US Census data, the number of people receiving means-tested government benefit programs in the fourth quarter of 2011 (108,592,000 people) was nearly eight percent higher than those with full-time year round jobs (101,716,000). Yet, in spite of this deflationary economic drag, the costs of food, fuel, education and healthcare inflate.

This deflation/inflation trap plays out in most of the world as rising populations deplete essential resources and aggressive money printing pushes commodity prices up. Rather than adapting to this worsening situation as other species do by having fewer offspring and consuming less, we humans have done the opposite: overpopulating already stressed areas and redoubling our efforts to continue business as usual. That hubris, that blind faith in human exceptionalism so prevalent in our command-and-control structures, is a defining attribute of the Anthropocene.

Governments – usually under pressure from corporations and other economic elites – are naturally reluctant to recognize the damages we have done to the biosphere and our economies because it undermines their credibility as representatives of the people. So, to maintain a sense of normalcy, they have increasingly engaged in market (and data) manipulation from cycle to cycle.

Likewise, the US Federal Reserve and other world central banks today manipulate interest rates and the value of currencies via quantitative easing and by suppressing the price of gold via leasing bullion to short sellers – actions that create deeper economic distortions by sending erroneous price signals into the market.

Because of these distortions we now have a harmful reinforcing cycle where: corporations are afraid to hire; governments run deficits and print money to keep unemployment from getting worse; and the majority of people (who suffer from inflation and job loss) can’t spend enough to keep real GDP growing.

According to the economic consultancy Shadowstats.com, which uses more consistent accounting methods than the continually “adjusted” ones used by the US government, the deleterious effects of this reinforcing cycle are clear. Real unemployment (defined as workers without full time jobs) is today roughly three times higher than official numbers; inflation is significantly higher; and GDP is shrinking rather than expanding.9

In the meantime global financial markets – especially Wall Street – have become casinos with manipulative algorithmic trading, opaque securitizations, and roughly $700 trillion worth of derivatives outstanding10 (a sum that is 10X world GDP). On top of this, Wall Street banks now write much of the legislation that regulates their industry, most recently one that would regulate derivatives trading. Such privileged access, of course, contributes to the widening income and wealth gap between economic classes.

“The U.S. House just passed a bill called H.R. 992 – the Swaps Regulatory Improvement Act – that was literally written by mega-bank lobbyists. It repeals the laws passed in 2010 to prevent another meltdown like the one that crashed our economy in 2008.”
– Represent.us blog, November 5, 2013

Given the cyber-spying that now exists in the name of national security, the composite picture we get is one of Orwellian manipulation. As weakening ecosystems threaten economic and financial systems, our political and economic leaders compound the problem by manipulating data, spinning news, intervening in markets, buying legislation and spying.

In brief, just as ecological and economic conditions have become more extreme over the past few decades so too has human behavior. It’s a classic endgame, where those most vested in the dying system go to extremes in trying to preserve it.

The important word here is “endgame.” It recognizes at once the dying throes of a failing system and the possibilities of an emerging new one. Just as the 14th Century European Renaissance grew out of the corruption and failures of the theocratic feudal system, a new renaissance appears to be emerging out of the corruption and failures of the industrial capitalist system. If anything, the urgency for reform is greater today because information about ecosystem decline, climate change, fresh water shortages and other threats to human existence travel in microseconds.

The Emerging Renaissance

Like the European Renaissance, the one emerging today will in many respects be the opposite of the prevailing norm. Just as in the 15th and 16th Centuries, where there were massive shifts from theological beliefs based on faith to more secular beliefs based on science, today we see the beginnings of new belief systems based on the primacy of life as distinct from the industrial capitalist belief in the primacy of non-living capital assets.

As described elsewhere on this blog, the emerging renaissance of bio-centric thinking is a reaction to the distortions of the Anthropocene – an expression of humanity’s survival instincts when faced with imminent danger. We see examples of this emergence in local communities via the Transition Town movement, in academia via systems analysis, in business through companies that mimic life and in countries like Denmark with fast evolving sustainability cultures.

The question before us today is whether this new renaissance will mature in time to reverse the ecological overshoot of the Anthropocene. It will be a race against time, which is fast running out. But we humans already have much of the knowledge we need to live more harmonically with the biosphere and each other: renewable energy systems, zero energy buildings (ZEBs), local food networks, water saving techniques, mass transit, advanced recycling methods, eco-industrial parks and the like.

This is not to suggest that the emerging renaissance can negate the impacts of the Anthropocene. Humanity has already profoundly changed the earth’s biosphere and climate. However, we can learn to live more sustainably with what remains and, perhaps, even restore some of the damages we have done.

JHB
November 6, 2013

Exhibit One: Humanity’s Ecological Overshoot
Exhibit Two: Growth of US Federal Obligations vs. GDP
Exhibit Three: Fudging the Numbers on Economic Decline
Exhibit Four: Stock Market Returns Adjusted for Inflation
Exhibit Five: Shifting the Burden Archetype

________________________________________________________________________________________________

1 Ref: Exhibit One
2 According to verse 1:26 in the Book of Genesis: “And God said, Let us make man in our image, after our likeness: and let them have dominion over the fish of the sea, and over the fowl of the air, and over the cattle, and over all the earth, and over every creeping thing that creepeth upon the earth.”
3 Ref: Exhibit Five.
4 The Global LAMP Index® is a list of life-mimicking companies that have outperformed conventional global equity indices by significant margins. See: www.lampindex.com
5 McKinsey Global Institute, “Resource Revolution: Tracking global commodity markets,” September 2013
6 Ref: Exhibit Two.
7 Ref: Exhibit Four.
8 Source: http://www.census.gov/ See: Survey of Income & Program Participation (Table 2) and Annual Social & Economic Supplement (Table PINC-07).
9 Ref: Exhibit Three. http://www.shadowstats.com/alternate_data.
10 Source: Bank for International Settlements (http://www.bis.org/statistics/dt1920a.pdf). The true notional amount of derivatives outstanding is likely much higher than that reported by the BIS because a substantial portion of derivatives trading is done in opaque unregulated markets.

 











XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

*