The Carbon Lie, part one

Officially, the United Kingdom has been stunningly successful in reducing its carbon footprint. Despite green-lighting fracking and the expansion of Heathrow, Britain’s CO₂ emissions have fallen by 38% since 1990 and are now as low as they were when Oscar Wilde’s The Picture of Dorian Gray was published in 1890.

However, this is a lie. Not in the sense the UK government is fiddling the figures, though many claim that emissions from major infrastructure projects are deliberately miscounted, but because the UK has only achieved this reduction in emissions because it has outsourced them to other countries.

Britain has gone through rampant and conscious deindustrialisation over the last three decades. When Margaret Thatcher came to power in 1979, manufacturing made up 30% of the economy and employed 6.8 million people. By 2010, at the end of the last Labour government, it had shrunk to 11 per cent of GNP and had a workforce of just 2.5 million.

However, people have not learned to live on fresh air. Many of the products that were once made in Britain are now imported. This increases CO₂ emissions in two ways – one because the manufactured products and commodities may be made or extracted under worse environmental conditions than might have been the case domestically (though still often under the aegis of western-based multinationals) and two because they have to be transported thousands of miles across oceans, usually by container ship, to their end markets.

Embodied emissions between China and the UK, for example, increased by 333% between 1995 and 2015. The kind of products traded in this manner includes both industrial goods – steel and cement for example – but also consumer items such as toys, trainers, clothes and office equipment.

Thus, while the UK’s territorial carbon emissions have been slashed, primarily because of domestic deindustrialisation, the overall carbon footprint that the UK is responsible for, which includes so-called embodied or traded emissions, has not. According to a report on the ‘Carbon Loophole’ from August 2018:

The UK’s territorial CO₂ emissions have been declining for decades, and it has been one of the few countries able to report a decline in absolute emissions. However, considering the embodied carbon in imports, this apparent success is partly reversed. The total carbon footprint, inclusive of embodied CO₂ in imports, has slightly increased since 1990.

Clearly, the UK is not alone, though its rate of deindustrialisation, and thus reliance on trade, is extreme. In the US, for example, embodied carbon imports grew rapidly from the 1990s onwards but declined following the 2008 financial crisis and have plateaued since then. The EU and Japan paint a similar picture. Thus, while the advanced capitalist countries officially claim they are mitigating climate change, they are in fact doing the opposite. As the report says:

Remarkably, in all cases, changes in emissions embodied in imports are comparable to or larger than changes in domestic emissions. Thus, under a consumer responsibility principle, developed countries have not recorded a decrease from 1990 levels, but rather an increase.

This deception arises from the fact that when countries report their greenhouse gas emissions they do so on the basis of their territorial emissions only. The emissions generated in the production of goods for trade go towards the territorial emissions of the country they are produced in (say China or India). And the emissions generated by transporting the products to developed country markets are not counted at all. This is an unfortunate oversight considering that emissions from shipping are predicted to double or even triple by 2050 (see executive summary).

The recent Intergovernmental Panel on Climate Change (IPCC) report that caused a sweeping gnashing of teeth for almost 48 hours stated that unless greenhouse gas pollution was reduced by 45% by 2040 and by 100% by 2050, coastlines would be inundated by rising seas and droughts and food shortages would become rampant. The IPCC said there was “no documented historical precedent” for the economic transformation that is required. Tragically, such an economic metamorphosis is even more difficult if the nature of the problem is misunderstood in the first place – if we are labouring under the misconceptions of, in Naomi Klein’s words, “a vastly distorted picture of the drivers of global emissions”.

What lies at the root of these misconceptions is an obdurate belief in the beneficence of global trade. International trade, in the dominant liberal-capitalist mind-set, is seen as both the wellspring of wealth and prosperity and a guardian against the dark forces that will be unleashed if it is impaired.

Unfortunately, the Left, too, seems woefully under-prepared for the scale of the transformation that is called for.

Which will be the subject of Part Two of this post.

Will automation spell doom for capitalism?

Capitalism is doomed and, you’ll be pleased to hear, will go the way of the dinosaurs sooner than you think. That’s the conclusion of one of the essays in the book, Does Capitalism Have a Future? The author, Randall Collins, predicts the demise of capitalism in the next 30 to 50 years. So if you’re 20 now, by the time you hit late middle age you may well be living through a tumultuous, revolutionary period or possibly inhabiting a post-capitalist economic system.

The culprit is not one of the usual suspects – not financialisation leading to deeper and more frequent economic crises or a declining rate of profit – but something simpler and even more inexorable. The force in question is automation and Collins says it will seriously eat into ‘communicative labour’ in the near future – his essay is called, ‘The End of Middle Class Work: No More Escapes’.

Mechanisation – labour-saving innovations that enable businesses to produce more at lower cost and thus reduce the need to employ people – has decimated skilled working class jobs over the past forty years, says Collins. Manufacturing employment in advanced capitalist countries has declined from an average of 40% of the workforce, to just 15%.

The Robots are coming

But mechanisation has now been joined by robotization and computerization, which have the potential to automate away not just repetitive, manual tasks, but cognitive work as well. Thus managerial and professional jobs, the provinces of people who have largely benefitted from the changes of the last 40 years, will start to crumble.

Computerization is still in its youth, says Collins, but as it develops the process of technological displacement of jobs will ‘become more extreme with each passing decade’. In time we will see the arrival of ‘humanoid robots that would take over upper working class and middle class skilled work, and then displace managers and expert professionals as well.”

Such developments will cause structural unemployment of 50% or more. In these circumstances governments will undergo a fiscal crisis (a vanishing number of people will be paying income tax of any significance) and there will be mounting pressure for a ‘revolutionary overturn of the property system.’ A tiny elite of robot owners will receive all the profits ‘leaving the great bulk of the population to scrap among themselves for jobs servicing the elite and their machines.’  This won’t be, in John Major’s immortal phrase, a ‘society at ease with itself’.

Will Basic Income come to the rescue?

The lion’s share of Collins’ essay is concerned with rebutting various escape routes from technological displacement that have worked in the past but aren’t going to in the future. These include the replacement of the lost jobs with new ones in different sectors, globalisation or the endless expansion of education. Interestingly, one escape route that Collins doesn’t consider is Basic Income. But Basic Income is precisely the solution that will be tried in the face of technological onslaught. Indeed, it is being advocated now, and not just by itinerant thinkers but by Silicon Valley overlords.

However, there is one conspicuous obstacle that will dog Basic Income if the robot scenario sketched by Collins comes to pass. To actually ensure that this hi-tech future doesn’t turn into a dystopian nightmare, the basic income would have to get at a far higher level than many currently think feasible.  As Collins says, if middle class jobs going to be lost, then so is the income that goes with them. This implies, if it is going to substitute for the vanished spending power, a basic income ‘max’ set at £25/£30k a year or maybe even more.

But that will mean an increased financial burden on the government at a time when its revenue from income tax is being severely curtailed because all the middle class jobs are disappearing. To make that burden bearable, and to avoid the governmental fiscal crisis that Collins says historically has always presaged revolution, the robot-owning corporations would have to be willing to be subjected to extremely high tax rates. This is still the case even if the governments of the mid-21^st century develop the spines so obviously lacking now and close down the zero per cent tax havens that currently harbour $32 trillion.

This is possible; enlightened self-interest may hold sway. But it’s also conceivable that the small number of corporations that lay down the law in this future society (and given the capitalist tendency to monopoly, we can safely assume it will be a few behemoths) may decide that it’s in their financial interest to simply repress, through massive police forces and surveillance, the vast majority of people. 

They will be left, as Collins imagines, to ‘scrap among themselves’ for jobs servicing the elite. And kept in line, should they think of rebelling, by state and private security forces controlled by massive resource-rich corporations. There is no guarantee this option won’t be chosen. You don’t have to look into history for long to find examples of slave states that lasted thousands of years.

But the mere fact that the elite running this future society will have this kind of choice before them indicates, to me, a flaw in basic income scenarios. Basic income is usually conceived as a kind of painless balm that is applied to society in order to stop the disastrous scenarios – of mass destitution caused by the disappearance of well-paid work – that would come to pass if things were left develop freely. That is, basic income, of itself, does nothing about vast inequality of wealth and ownership that exist now and will, if trends continue, become ever more extreme. It merely, hopefully, nullifies their effects.

The mirage of capitalist competition

Collins regards the transition to a non-market based, centrally-planned economy in the mid-21^st century as almost dictated by circumstances. Reality will ultimately come to govern whatever wayward desires people have. “All the ethnic, religious, lifestyle and other conflicts will only be so much noise, stringing along the crisis until finally an alignment of mobilized political forces comes about that solves the crisis by post-capitalist transition,” he says.

Short of jettisoning capitalism, this looming confrontation cannot be averted. “There is no intrinsic end to this process of replacing humans with computers and other machines,” Collins writes. “The displacement of human work will go on not just for the next twenty years but the next hundred, even the next thousand years – unless something extrinsic happens to change the underlying mechanism driving technological displacement of work: capitalist competition.”

However, there is one problem with this scenario. Far from steaming ahead, as it theoretically should be, technological advancement is crawling along. Productivity measures output per worker and were automation to be busily rewiring the entire economy, productivity would be shooting ahead – machines (if they are ready to be utilised in the economy) being far more efficient than the average human. In fact the opposite is the case. Productivity growth in advanced economies is currently a risible 0.3% a year, compared to 1% before the 2008 crisis, which in turn pales next to the 5% attained in the 1960s and ‘70s. In the UK, productivity fell by 0.5% in the first three months of 2017. Capital investment, often the precursor to productivity growth, is likewise feeble. It collapsed after 2008 and has been falling steadily for the past three decades in any case.

Which leads to a subversive question – if technological advancement, the hallmark of capitalist competition, isn’t happening, are we actually living in a capitalist economy?

Part two to follow

Twenty-something things they don't tell you about our glorious economic system, part one

I realise I haven’t posted for a while. I’m currently engulfed in reviewing two books on Marxian economics, The Endless Crisis and The Failure of Capitalist Production – which is a bit of a challenge. In the meantime, I thought that, as this blog was originally intended to review books about capitalism in an in-depth way, I’d share some counter-intuitive and little known facts I’ve encountered along the way.

 1 Between 1980 and 2007 the global labour force grew from 1.9 billion to 3.1 billion, a rise of 63%. 73% of the labour force is located in the developing world and 40% in China and India alone. This has happened primarily because of ‘depeasantisation’ – peasants leave or are forced to leave the land and urban slums expand dramatically. 46 million workers join the labour force, across the world, every year.

2 In every region of the world, economic growth was higher between 1950 and 1973 than between 1973 and 2008. Growth more than halved in Western Europe, Latin America and Africa. Overall world growth stood at 2.9% between 1950 and 1973 and 1.8% between 1973 and 2008. (This data is gleaned from a table on page 53 of Andrew Kliman's The Failure of Capitalist Production)

3 Due to the expansion of credit, in the four years before the financial crisis (2003-2007), global growth averaged 4-5%, higher than at any time since the 1960s.

4 The 2008 crash was the second largest economic crisis in history, after the Great Depression of the 1930s. Without government bail-outs and stimulus, it would have been the largest.

5 Depression is now the condition most treated by the National Health Service in the UK. According to the UK government in 2000, one in six adults was suffering from a neurotic disorder, usually depression or anxiety or both. 

6 7-8% of the labour force in Brazil and 9% of the labour force in Egypt are employed as domestic servants. In England and Wales it is 0.3%. 30-50% of the non-agricultural workforce is self-employed in developing countries, in developed countries it is 12.8%. But as proletarianisation is increasing in the developing world (see point one) and self-employment increasing in the developed world, this balance will likely change.

7  35% of the workforce in Britain in the early 1970s worked in manufacturing. Now it is just over 10%.

8 0.1% of the Chinese and Indian populations are thought to be psychopaths. In Britain and America it is between 2 and 4%. 

9 “The Anglo-Saxon model of capitalism” is on MI5’s (Britain’s state security service) list of targets to be safeguarded against subversion.

10  Life expectancy for civilians increased in Britain by twice as much during the First and Second World Wars, as it did during the rest of the twentieth century.

11 Trade union membership peaked in Britain at 13.5 million in 1979. By 2009, it was down to 6.7m.

12 Had the share of GDP going to wages in the 1970s been maintained, UK consumers would currently have an extra £100 billion at their disposal, and US consumers £500 billion.