We Need the Greatest Economic Transformation in History, in the Shortest Timespan—Or Else It’s Lights Out
See that picture above? That’s the Foreign Minister of Tuvalu, Simon Kofe, giving a speech to COP26, while standing in the ocean. You know why? Because his country is sinking.
You might be forgiven for tuning out what’s going on at COP26, the latest UN Climate Change Conference. Like many, you’re probably tuning out because you know the score: countries get together, some announce goals that are lauded as “ambitious,” though they’re not nearly enough, and then, fast forward a few years later, not even that much has been delivered. Meanwhile, the rest of us who have to live on planet earth are hit by climate catastrophe, intensifying year after year.
Shrug. Who cares? Another day, another failure.
If it feels like there’s an elephant in the room, which all those Prime Ministers and Presidents and pundits aren’t discussing, that’s because there is. There is a very good reason that this theatrical spectacle — let’s save the planet, whoops, we didn’t do much of anything — plays out year after year dismal year.
That reason is the macroeconomics of climate change. Or, if you like, the macroeconomics of our civilization. They’re the same thing. Everyone should know them. They should be a litmus test for being a sane, thoughtful person. Sadly, nobody much does know them. I’ll come back to why. First, let me teach them to you, and why they’re the elephant in the room of climate catastrophe.
Our resources are at their limits. We don’t have sky or sea left to pollute.
When we think about economics — any economics, of any institution, city, town, country, or in this case, our civilization — a good place to begin is by understanding the division between investment and consumption. You can invest, or you can consume a given set of resources — but not both. So the investment versus consumption ratio tells you a very great deal. Is a given institution doing enough to invest in the future? Is it consuming too much? Is it investing too little? Is it predatory, and focused almost solely on consumption? Like I said: every great insight into the future of a system or institution begins right here.
So what’s the investment to consumption ratio of…well…us? Our civilization? At a civilizational level, we consume about 80% of our resources, year after year. And we invest just 20%. If those numbers strike you as dismal, they should. Because that ratio is too low. Far too low. For what?
Let’s begin with consumption. The 80% consumption rate of our civilization is incredibly high. America has that consumption rate as a society — and it’s infamous for a certain set of values that come along with it: indifference, narcissism, stupidity, guns having more rights than women, self-interest, greed, all the rest of it. You could say that a consumption rate of 80% is the living expression of the predatory values of greed and individualism and so forth.
Worse, at that 80% consumption rate, we’re already using the resources of about two planet earths. How can that be? Because that insight is based on biocapacity, or the planet’s capacity to regenerate. So we’re not just consuming 80% of this planet…we’re consuming more than 100% of it.
You can see that in plain sight. We’re now in the midst of the first human-made mass extinction. It’s the first one for millions of years. Vast numbers of species are dying off. It’s not just those at the bottom of the food chain — we’ve annihilated mammals on this planet, apart from our livestock, too: we’ve killed off more than 80% of wild mammals on the planet. The idea that we are consuming more than a planet’s worth of resources isn’t some kind of fantasy — it’s very, very real, profoundly so.
You can also see that in biotic matter. The way the oceans are polluted with plastic junk, the way that rivers are drying up, the way that the skies are full of carbon. All of these are consequences of a single cause: we overconsume as a civilization. Our consumption rate is 80% of two planets. No wonder the only we have is dying.
We are depleting our resources, chewing through them at incredibly savage rates. The worst thing to happen to life on this planet — at least the rest of it — was and is us. We’ve been doing that since the industrial age. And there have been minds which have long warned of the consequences — like John Ruskin in the 1800s, or the ecological movements of now, which began in the 1970s. The moment they all warned of is finally here, though: our resources are at their limits. We don’t have sky or sea left to pollute. Kill off a few more species — who knows how many — and bang! There go our food and water and medicine, too, right along with them.
We are impoverishing ourselves as a civilization through overconsumption.
So what does it take to not consume your way to depletion, poverty, and ruin? Investment. First I want you to understand this — really understand it — in the abstract, and then I’ll make it concrete. My father-in-law, the farmer, knows this principle deep in his bones. He looks at our civilization and chuckles. His principle isn’t 80% consumption and just 20% investment. It is balance. Balance with the aim of replenishment.
What does that mean in practice? It means that if he chops a tree down, he must plant another one. If he harvests a field, he must plant one anew. If he loses or harvests a cow or horse or pig, then another must take its place. Balance. Replenishment.
Take Out, Put In
Now let’s put that in mathematical terms. My farmer father-in-law’s principle is equal parts consumption and investment. In other words, a consumption to investment ratio that’s 50/50. Perfect balance. He knows that if his consumption rate rises above that, he won’t have a farm, an institution, a little system at all anymore. A few seasons for him where consumption rose to 60% and investment dipped to 40%? Pretty soon there’d be no fields or animals left to harvest. He’d have overconsumed and underinvested himself to ruin.
Just like we are.
My father-in-law is a better economist than all the Prime Ministers and Presidents and pundits and even professional economists put together. Those figures don’t seem to understand the fatal macroeconomics of our civilization at all. My father-in-law does though. He grasps the deadly imbalance between consumption and investment that is the cause of everything from climate catastrophe to mass annihilation to ecological ruin. Take a tree, plant one. Take a life, give one back. He knows it in his bones. Maybe that’s because he’s seen the soil turn into dust before. But I digress.
What does that mean for us, for our civilization?
It means that we need the greatest economic rebalancing in human history, in the shortest timespan thinkable. We have to alter the economics of our civilization in a transformational way, at a global scale, on a level that has never happened before. And we have to do it fast. Our consumption rate has to drop from 80% to less than 50%, while our investment rate has to rise from just 20%, to around 50%. In other words, roughly, our consumption rate has to halve, while our investment rate has to double.
That is an immense, immense, incredible challenge. We are talking about the greatest economic transformation in human history. Greater even than the one from hunting and gathering to agriculture. We are talking now at a civilizational scale. Most civilizations, when confronted with economic changes of this scale and scope, simply can’t manage them. They cannot handle, produce, or even figure out how to produce transformational changes to their economies. Hence, they die.
Think about what it means for a consumption rate to halve, while an investment rate doubles, in your own life, given your own simple home economics. It’d be painful. Probably, you’d just give up after a while. And that is exactly what is happening with us. Remember that predictable cycle? Grand promises at this conference or that — while we all know nobody much is ever going to deliver on them? We are a civilization confronted by the need for the greatest socioeconomic transformation in human history — and we are mostly just giving up, because, well, it’s hard. Maybe too hard.
The answer to all this, though, is the answer. I don’t mean that in a solipsistic way. I mean it in a realistic one. Our investment rate has to double. We need the greatest wave of investment in human history. Now. Or else.
What does that mean, in the real world? Well, now we come to the brutal geopolitics of climate change. It means that rich countries — who have all the capital — have to invest history and world-changing sums in all the facets of calamity now before us. We need green power grids, obviously, and clean power sources. We need green steel, cement, and glass — we don’t even have those. Yet those are the easy challenges.
The hard ones? We need to repair all the planet’s collapsing ecosystems. We need to stop the mass extinction we’ve caused. That’s not some kind of moral goal of mine. It’s a matter of civilizational risk, too. The insects turn our soil, the fish clean our rivers, the trees breathe out our air. Living things provide all our basic resources, from food to water to medicine and beyond. They die, we die.
But we have no idea — none — how to repair systems like that. Know how to stop an ecology imploding? How to fix a dying rainforest? I didn’t think so. Nobody does. So we need investment — huge, huge waves of it — at a basic level, in research, exploration, discovery.
Rich countries have to do all that. And they have to do it around the world. Poor countries don’t have the money to build clean power grids and whatnot. They’re barely getting by as it is. Why is that? Because they’re in debt. To whom? To rich countries. For what? For…nobody knows. Poor countries have just been in debt since they were created. And that is the fault line along which our world is now breaking down. Poor countries are looking to rich countries not just for empty promises — but for investment. Rich countries, now falling to a wave of nationalism, or like in America, outright fascism, are making grand promises, instead of actually investing, in poor countries, or themselves.
As a result, the entire process of fighting climate change has simply stalled. It’s hit the dismal place we can all see — grand proclamations, next to no results, meanwhile, every year, the seasons grow more catastrophic, fast.
See how complex all this is? On one level. But on another level, it’s simple. We need the greatest wave of investment in human history. That is because our civilization’s economics are fatally imbalanced. And so are our civilization’s outcomes. Most of the world is still poor, while just a fraction of it is rich — the very fraction which colonized and enslaved the now poor part for centuries. That isn’t fair — and we’re not going to be able to address climate change without a fairer world, either, one where capital flows back from rich countries to poor ones, instead of from poor to rich ones, leaving them perpetually “indebted” for no apparent reason. If the world doesn’t cooperate, and that means if rich countries don’t lead the way by investing in poor ones and themselves, bang, it’s game over, for all of us.
If you’re still with me, and you’re thinking, “Wow, the chances look pretty slim”…you’re right. They are. Most civilizations can’t handle changes of a few percent in their fundamental economics. Consumption falls by a little bit here — bang, fascism arrives. Investment falls for a decade — bang, poverty fuels collapse. Our civilization faces a far, far more dramatic plight than all that. Let me sum it up, and let me emphasize: everyone should know what I’m about to say. Nobody does, because we are still not educated well about the real economics of our civilization, which are disastrous, leading us to collapse and ruin now.
Our civilization needs the greatest economic transformation in human history. We have to halve our rate of consumption and double our investment rate. That is a fact everyone should know, children should be taught at school, which should make headlines every single day.
Because that is an incredibly, incredibly difficult challenge. It is our equivalent of a world war, or massive meteor strike, only even more severe, tougher, greater, harder. It is our moonshot. We need to all feel the sense of urgency and slap across the face of the reality of those brutal, striking numbers. Most civilizations can’t cope with change even a fraction that intense and immense, and so — wham!! — they collapse. We need to begin understanding the true scale and scope, the nature, of what lies ahead for us. Transformation — or faster and harder collapse.
This essay first appeared on Medium.