Capitalism is defined as a political-economic system where all or most of the means of production are owned as private property. It is also a historical specific stage of development of socio-economic relations amongst human beings. It was undoubtedly most advanced economic production society by 19th century and since then claimed the credit of enormous ‘development’ in many parts of the world.
“Show me the tools being used by any society and I can tell you what state of socio-political development it is in”, said Karl Marx, one of the most controversial political-economist off all times. He might have grasped and explained various historical stages of social development correctly but one his most divisive theory about the fall of Capitalism (and imperialism as its highest stage) and rise of Socialism didn’t turn out the way he predicted.
Marxist hypothesis was that capitalist system is based on exploitation of labour and its growth will alienate the vast majority of working class masses from the means of production and concentrate the wealth in the hands of a tiny population of capitalists. This, he argued will lead to clash between these two antagonistic classes and working class, due to its shear numbers strength, will eventually win. There has been lot of skirmishes at lot of places between these two classes in the last two centuries with Capitalism in the winning league so far. At least that is the predominant view.
The final decisive battle of haves and have-nots may or may not happen the way Marx envisaged over a century ago but something else is happening without being noticed by majority of populace. It is the process of burning of the fossil fuels and its impact on the present and future of capitalism.
Fossil fuels are simply the solar energy stored as Hydro-Carbon deposits under the crust of earth over a period spanning millions of years. We homo-sapiens, currently the most dominant animal specie of this planet, have extracted and burnt more than half of the total fossil fuel stocks, especially the easily extractable ones in the last two centuries alone.
No one is denying that we humans are consuming fossil fuels at such a rate that can’t be replaced in our few thousand generations time frame. The only difference of opinion between various researchers is whether the left over stock is enough for 30 years or 50. This 20 odd years difference is simply because their computers don’t know how much Saudi Arabian, Iranian or Russian government is lying about their national oil and gas reserves.
This is not to suggest that there will be no oil or gas left somewhere deep underground in the next few decades, but it is to say that it will not be economical to extract it any more. In other words, we might need to burn two drums of oil to extract one. Very much like Ethanol production fantasy in the USA
The stored quantity of fossil fuels is limited in nature by the physical size of our planet and the fact that it can only exist up to a certain depth due to temperature and pressure restrictions. Today if you know the fossil fuel reserves of any ‘developed’ country and its current consumption rate, one can easily determine the time left before the inevitable collapse of industrialised economy from that part of the world.
At the heart of capitalism is capital wealth, which Marx defined as a result of exploitation of surplus labour accumulated by the owner of the means of production. It may sound logical on the surface looking purely at exploitation of labour. Wealth is only created when labour’s output is more than its input, or simply when you produce more than what you use as input in dollar terms.
For thousands of years our forefathers were merely leading a life of survival, incapable of producing any surplus of their essential needs. Their entire capital wealth was mostly comprised of some stone tools and animal skin coat. There were some social divisions amongst tribal and feudal societies and consequently some unequal distribution of wealth but it was negligible as compared to accumulated wealth of contemporary societies. All this changed spectacularly in the last few hundred years. Our capacity to produce surplus increased hundreds of times over in the course of few generations.
Was it a result of industrial and technological revolution, conveniently proclaimed as a built-in feature of capitalism or was there another factor crucial in creating this production boost? When we analyse the current industrial production system from a different paradigm based on energy input, the common beliefs start shattering. We note that the surplus production capacity of any society is directly proportional to the amount of energy consumed by it, both animal and fossil.
The most fundamental laws of thermodynamics state that the energy can be changed from one form to another but cannot be created out of nothing. It also describes that at every transformation step, there is inevitable loss of energy. When we apply this law to observe any modern mechanised production process, it will be quite obvious even to the qualified economists, that we are playing a game of net energy loss. It is only when we humans bring ancient solar energy deposits to the party and use them in the form of coal, oil and gas in modern agricultural or industrial production, that it gives us enormous material wealth in the shape of food, houses, cars and other material possessions.
Era of Capitalist growth could broadly be marked between year 1775, when James Watt’s coal fired steam engine was deployed somewhere in mines near the city of London and year 2008, when staff at Lehman Brothers packed their personal belongings for one last time before leaving their famous office building in the city of New York. With world peak oil extraction achieved once and for all in the first decade of 21st century and is in a permanent decline from here onwards. Very much like a retiring decorated soldier with lot of war medals on his chest but unfit for redeployment.
The energy released by burning this ancient stock of saved fuel was the prime-mover of growth of Capitalism rather than any magic recipe or formula of theory of capitalism. To test the validity of this hypothesis, one can conduct a simple test. (Caution: do not try this experiment at home, even with adult supervision as it could be fatal). Just do a mental exercise. Imagine living your normal life but without using any oil, gas, coal or electricity generated by these sources. Anyone can do this thought experiment at individual, family or even at country level. You wouldn’t need a university degree to understand the severity of the situation we are in without fossil fuels at our disposal. In fact, more educated you are, more daunting it would be for you.
Extraction of fossil fuels and its burn off at the current rate is very unique to present times. It has never happened before and it may never happen again in the life time of human specie. In the process of creating capital wealth since the beginning of industrial revolution, not only we have consumed the past savings but we have mortgaged the future generations as well.
All of the known and well established benchmarks of superiority of Capitalism will soon fall apart in matter of hours. Whether it is our high standard of living based on imported consumer goods, choice of food procured from various continents, high rise air-conditioned steel-concrete office building or sports utility vehicles, they all become obsolete the moment we start thinking in the direction of oil-less-ness.
Everything wouldn’t be bad though. There will be some winners as the state control fades away. The police can’t chase you everywhere without their fleet of super cars. For a change you can afford to skip your tax bills as there is no way tax office can enforce their rules without the help of police, sheriff or jail staff, most of them can’t even show up on their job without fuel in their car tanks let alone come after you.
Even the military can’t go too far from their bases to visit other parts of the world like Iraq and Afghanistan
Many scientists and most politicians always try to provide solutions to any problems faced by their contemporary societies, be it Global Warming or Global Financial Crisis. In nature some problems simply don’t have solutions. Imminent collapse of Capitalist economy reliant on unlimited supply of limited fossil fuels is probably one of those problems. May be Collapse is the only solution. All we can do is to guess its timing and watch the spectacle.
It is not easy to imagine or predict how it will turn out once continuous growth based capitalist model collapses with the inevitable exhaustion of cheap fossil energy sources. But once it collapses under its own weight, it won’t be end of the world. It will just readjust to sustainable energy levels in the absence of fossil fuels.
The mainstream political parties of all industrial nations, capitalist and communist alike; have committed themselves to the path of continuous economic growth at the ever increasing use of fossil fuels and other mineral resources. Capitalism doesn’t provide them with any suitable tool to handle the situation where the GDP stops increasing from the last quarter. Torchbearers of free capitalism don’t like the freedom of markets to correct their past errors anymore then they like freedom of Banks to go bankrupt.
The noble laureate economic advisers tell their respective governments to adjust the throttle, pull some levers, tweak the fuel injector and it will be all right again; at least for the current term in the office. What they don’t know or don’t admit is that this time a minor service will not fix the car and they should avail another opportunity called ‘Cash for Clunkers’. One can recover from fever, a common cold or even a mental depression but I haven’t seen anyone recovering from death. My grand parents and all the generations who lived before them may be still trying to bounce back from death. No amount of stimulus can revive them. It seems that we have reached the pinnacle of capitalism and it may be the time for Nirvana of Capitalism.
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