Nothing to Lose But Credit Cards

The influential Spanish sociologist and network society researcher Manuel Castells paraphrased the famous quotation from Marx’ and Engels’ Communist Manifesto in a very interesting way: “Proletarians of all countries, unite! You have nothing to lose but your chains!” became a sentence about today’s citizens of Europe, “They have nothing to lose but their cancelled credit cards!”. It is an expression meant to symbolize the failure of two intermingled societal constructs: financial capitalism and consumer society.

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The Myth of Decoupling

It is something probably every junkie dreams of – to be able to keep taking drugs and feeling free, careless or just high, but without all the unpleasant side-effects like health issues, financial ruin, destroyed social networks etc. This, however, is illusion and no reasonable person would deny that it is. It is therefore astonishing how many otherwise reasonable persons fall prey to this illusion with regard to the great societal addiction – economic growth. They invoke the idea of decoupling GDP growth from resource use, environmental pollution and the like. But decoupling growth has nothing to do with reality, it is a myth.

Where Does the Compulsion to Grow Come from?

There has been much writing here, in this blog, about the limits to economic growth – both ecological and social. It is not yet consensus that growth is a “bad thing” but there are many proponents of this stance and the debate has been going for some 40 years already. However, capitalist economies have been growing all the time – and if they didn’t, in times of crisis, they struggled terribly. The consequence mostly was unemployment and other unpleasant effects. This leads to the speculation that the current economic system is dependent on growth. There are numerous sources for this dependency. In the following post I would like to present one simple but deeply compelling explanation for where the compulsion to grow comes from.

Two Frequent Errors in Capitalism Critique

Actually, there are three major flaws in how many (“Leftists”, “Greens”, “Anti-” or rather “Alterglobalists” and however else they – we – have been pigeon-holed) criticize the current societal and economic system. I am going to discuss two of them here – the assumption that capitalism is in some sense “transcendent” of the society, and that “we are right”. But first I have to avoid making an “overarching error myself and explain what I mean by “capitalism”.

Social Limits to Growth

There has been much talk and controversy about ecological limits to growth (in GDP or related measures), at the least since the famous Limits to Growth report to the Club of Rome was published in 1972. However, much less (if any) attention has been given to other possible sources of limits to growth. The reason is not that none have been identified – indeed, as early as 1976 Fred Hirsch, an Austrian-British economist, wrote his pathbreaking but largely ignored book on Social Limits to Growth, in which he pointed out to social scarcities that effectively impose limits on economic growth. He argued that so-called positional competition that is promoted by growth leads to ever more frustration within the allegedly ever better off society.

Capitalism or Distributional Justice?

Sometimes when one does not have a clear opinion on something, it is helpful to ask others. Today I am in this situation, and therefore have decided to ask for help. What do you think?

The full question is the following (it is too long for Polldaddy): Isn’t it a contradiction to expect people both to act in a self-interested way in their market behaviour (since this is believed to lead to greatest possible efficiency) and to embrace policies directed toward a redistribution of thus acquired wealth (out of an ethical recognition of the inability of the market to provide societally “just” outcomes)?

You are welcome to add further explanations of your answer via comments.

The Self-enforcing homo oeconomicus

The main foundation of contemporary economics and, for that matter, of modern capitalism, is the assumption of homo oeconomicus – a “rational”, i.e. strictly self-interested, (own) utility maximizing individual who is able to reasonably assess the consequences of her own doings (expressed inter alia in the assumption of full consumer sovereignty) and reveals its (unchanging) preferences through her consumption decisions. Homo oeconomicus is the core of successful economic activity (at least according to neo-classical economists) and, so the argument goes, a good simplification of human behavior. While there is much criticism of the accuracy of this model (see, e.g., Amartya Sen’s “Rational Fools” paper), my question here shall primarily be whether it is possible that the homo oeconomicus is a kind of a “self-enforcing prophecy”.