THE ECONOMY: OVERPRODUCTION AND UNDEREMPLOYMENT

We have entered the age of large consequences.  This is not surprising since human activities have been on an increasingly large scale.  Because of human population growth and improvements in industrial and electronic technology, we have seen destruction of natural resources, climate change and economic near-collapse.  The present big economic crisis seems to be a good time to ask some big questions and seek some big new directions.
 
We have dug ourselves into a deep hole of over-production and underemployment. When we ask political leaders and captains of industry how to get out of the deep hole of over-production and underemployment, they reply, “Dig deeper … produce more …down-size more.” Surely if you are stuck in a deep hole, the first thing to do is to stop digging.   The models recommended be legions of economists during the last few decades seem to have promoted colossal failure.
 
From Paleolithic times until World War II we have been striving to improve production.  We have done remarkably well in that department.  In fact, in the industrialized world we have too much inventory of almost everything that we produce and we have over-capacity in most fields of production.  Idle capacity is a growing problem.  What we lack are customers who can buy the stuff.  This, of course, is because of the lack of meaningful work (which obviously, in turn, at least partly, is due to increased efficiency in production.)  E. F. Schumacher was a well-known British economist of the mid 20th century.  He said, “Next to family it is work and the relationships established by work that are the true foundations of society.  If those foundations are unsound how can society be sound?”  Solving the disappearance of meaningful work is a huge economic and political problem.
 
The majority of voices from economic experts that were listened to for many decades said, “Growth is good.  Full steam ahead and damn the torpedoes.”  This was a popular message but the torpedoes were real and they have done a lot of damage.  What were the Chinese and Indians thinking when they placed such dependency on American greed and growth?  Surprise, surprise, Chinese manufacturers and Indian call centres are losing business.  Did they think the Americans could be great customers with decreasing meaningful work?  Is self-reliance no longer a virtue?
 
In spite of the blind optimism and short-sighted vision of mankind, especially in modern times, there is such a thing as limits … limits to human abuse of land, air, water and other species.  Technology has allowed us to do an end run around reality but this cannot go on forever.  It is obvious that continuous accelerating growth is impossible over time.   This is clearly true in the case of human population.  There is much evidence that even Canada has too many people.
 
I sense that we are at the beginning of a new era.  If we are not, we should be.  With wise leadership we could have an orderly readjustment.  With unwise leadership or business-as-usual, we are headed for unrelenting damage and chaos.  Countries such as Japan and those of western Europe seem to worry about their lack of population growth.  From the point of view of the planet this is a desirable state.  We don’t need more green consumers, we need fewer consumers, yet how can we re-arrange the economy for fewer consumers, more full employment and still take care of an aging population?  This is the burning question for the future of the planet.
 
Every university and “think tank” should have a department or at least a chair exploring ways to reduce growth and consumption without causing disastrous hardship.  The sooner we start to change direction of this “Titanic” trend, the easier it will be.
 
Peter Victor of York University (Toronto) is one of the few who tackles this problem in his Managing Without Growth research.  His work has proposed models of low growth or no growth that can reduce poverty, unemployment and greenhouse gases while maintaining or improving the quality of life in Canada.  Instead of the constant refrain that growth is good, we need much more open discussion on the topic of the virtues of no growth.
 
E. F. Schumacher wrote a book Small is Beautiful that bucked the trend.  His holy trinity was Health, Beauty and Permanence.  We might be better off today if we had followed his wisdom.  He said, “The real problems facing the planet are not economic or technical, they are philosophical.  The philosophy of unbridled materialism is now being challenged by events.”  That was in the mid 20th century and look at the events today!  How do we get out of the overproduction, underemployment hole?

Robert Bateman
Feb 23, 2009

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