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Posted on January 16, 2025 | 47 Comments
Just a brief post to thank readers here and on Substack for a bunch of great comments and recommendations under my last post. I’m in book-writing overdrive at the moment so apologies for not responding. However, today I finished the first draft of Chapter 6 so I thought a quick peep over the parapet would be in order.
The basic structure of my life has been pretty simple of late. Get up. Eat something. Light the (sustainable) woodstove. Check on the (sustainable) sheep. Write. Eat something again. Write some more. Eat some more. Read. Go to bed. Recently we had a couple of snowfalls and, unusually for these parts, the temperature stayed around zero or below for about a week, so I’ve been looking out of my window onto an enchanted snowy landscape. Our resident barn owl has been flitting around the house, along with a green woodpecker that seems to have an endless fascination for the ground just outside my window, while flocks of goldfinches come and go, feasting on the teasels. In the evening I’ve watched the orange glow from the woodstove reflecting in the snow outside, and felt that life is pretty good. When it comes down to it, I’m just hopelessly cottagecore.
While the basic structure of my life has been pretty simple – well, the writing, not so much. But that’s a whole other story. Which hopefully you’ll be buying from your local bookshop in the autumn.
In relation to themes of interest to me regarding the book to put out here for comment, I’m still interested in discussions about modern monetary theory and related matters. Thanks also to Chris for this comment. My interim conclusion at the moment remains ‘close, but no cigar’. But further thoughts welcome.
I’m also still interested in agrarian futures in the US Midwest. That’s one helluva lot of farmland you’ve got there. But … water, climate, politics … where’s it all gonna lead?
I’m continuing to track the great farm inheritance tax debate on social media. One such conversation went something like this:
Non-farmer: You’re telling me that your land has a paper value of £3 million, but you’re only earning £30k annually from it? Don’t lie!
Farmers: We’re not.
Non-farmer: Then you’re crazy. Sell the land and invest the £3 million. You’ll be much better off.
Farmers: Yeah, but someone needs to produce food.
Non-farmer: Oh, get off your high horse.
I know this is a bit simplistic, but I can’t help feeling that the disparity between the £3 million and the £30k gives a little quantitative fix on roughly how unsustainable the present economy is. Thoughts?
Tomorrow, I’m giving myself a day off from writing and will be felling the lower part of our Italian alder windbreak next to the nut orchard, partly as a grey squirrel defence strategy (I hate to be protectionist, but damn those American imports!) Also to replant with hybrid willows as a firewood pollard rotation. Good for (sustainable) firewood, but not good for monetizing land productivity. Thoughts? Oh sorry, same question.
Also, I just enjoyed reading Ashley Fitzgerald’s essay In defense of cronyism, which has a lot of resonances. Thoughts? (Different question this time).
I may not pop up again for a few weeks, but thanks as ever for reading and commenting, and I hope to meet you here again soon. I’ll leave you in a moment with the list of current books I’m reading, re-reading or have just read, most of them suggested by you lot. Who needs a book club, when I have you? But just to say, I enjoy hosting practical discussions here about things like nitrogen volatilization from urine in compost toilet systems, even while my head is mostly in abstruse political matters … and thankfully not in the head. My wife has recently been doing a standup comedy act focused mostly around our compost toilet, but she’s yet to work the issue of nitrogen volatilization into the gags. Weird, because it can certainly make you gag. Ciao.
Stephanie Kelton The Deficit Myth
Jem Bendell Breaking Together
Marshall Sahlins The New Science of the Enchanted Universe
Manon Steffan Ros The Blue Book of Nebo
Brenna Bhandar Colonial Lives of Property
Claire North Notes from the Burning Age
Ralph Adams Cram Walled Towns
David Graeber & Marshall Sahlins On Kings
Larry Siedentop Inventing the Individual
Alasdair MacIntyre After Virtue
Aristotle (surname needed?) The Politics
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I think John got the idea of MMT about half right in comments on your previous post. MMT states that money is created, in a fractional reserve banking system, by the act of extending a loan. Money is only worth anything — it’s only money at all — if it can be exchanged for goods and services in a lawful market. Create more money and you create claims on goods and services. Goods and services come from physical resources and from labour; physical resources are finite (some may be plentiful, but they are necessarily still finite), and labour can only expand so fast — our ability to increase labour (to reproduce ourselves and, in so doing, make more labourers) is constrained by physical resources. It’s all well and good creating money, but money still represents a claim on resources. If you create the money faster than your economy can extract or generate goods and services, you get inflation.
That means it matters, quite a lot, what the “created money” is used for. If it’s used to build housing that will immediately or eventually end up in the hands of private speculators that’s a very different thing than if it’s used on housing that stays publically-owned. If it is used to finance bailing out corporate entities when they fail that’s a very different matter than it being used to finance benefits for disabled people. The question is: are we financing the creation of value or the purchase of rents?
Of course, all of this is also true if the government does not “create money” through borrowing (or lending?) but instead raises revenue through taxation. So MMT is technically correct, but it doesn’t actually matter that it is.
I feel like MMT is often used to justify government spending as inherently good, or (slightly better) to point out that austerity policies that hurt the poorest in society are counterproductive when the state really could “just” decide to fund good things. But our politicians and the political system in which they operate are thoroughly captured and compromised, and explaining MMT to politicians in hopes that they will do the right thing (whatever one has decided that is) pre-supposes that the problem is that the politicians don’t understand economics and if they just understood MMT they would start properly resourcing those things which benefit the common good. I believe this presupposition is false. It’s not that I believe our politicians are all economically literate — though some clearly are. It’s that even if they understood MMT they would still be oriented more to what is profitable for them and their friends than to what is right for the rest of us.
Ashley’s attempt to rehabilitate the word “crony” is somewhat awkward in light of this. She seems to be describing enlightened self-interest, and a childhood where previous union action and state regulation contributed to a world in which a couple of blue-collar parents could raise their kids, even if they had to take some side gigs to do it. But I would posit that whether it is apparent that Tommy is “trying” in a “good faith effort” to get back on his feet is only partly relevant to whether Tommy deserves and needs resources to help him do so. Working with people society has already decided “aren’t really trying” and witnessing how our current systems are stacked against them can be eye-opening in that regard, and I would encourage Ashley to seek out opportunities to participate in local and practical mutual aid efforts; I’m sure there must be a Chicago chapter of Food Not Bombs.
There is a rhetoric in some parts of the right that state provision of any kind of help for people is a Bad Thing because it prevents local people from really getting to know each other and working together, since they no longer need to when the state is providing a safety net instead. In late 2009 I started volunteering with a local emergency night shelter in winter, working on the breakfast shift. We had capacity for thirty people but rarely had more than ten or twelve. When we re-opened in autumn 2010 we had numbers into the high 20s and by early 2011 we were regularly having to turn people away. I’m not sure I buy the argument that it is state provision of basic needs that prevents people from acting compassionately toward their neighbours.
Similarly, it would be lovely if so few people experienced desperate poverty that it didn’t take so many organised volunteers and a bunch of fundraising — some of the funds coming from the state — for us to feed them at church, though. I’d love to go back to “someone from the congregation can buy or make some soup and a local shop donates a few loaves of bread they probably won’t sell anyway and about ten people come and have some soup and bread” as a model, it was lovely. But we can’t do that, because so many of our congregation died or had to move away during the early years of the pandemic, and the remaining ones cannot possibly support the eighty families (or however many — I am not currently on top of the numbers) who turn up twice a week, or not without help.
It’s possible to respond to occasional and exceptional food insecurity by informal means, but structural hunger requires a more organised approach.
I see the atomisation and team-picking Ashley describes as the result of a very intentional divide-and-rule strategy by corporate interests, as well as a side effect of social media environments where our continued attention is how owners get rent from advertisers. The podcast “Your Undivided Attention” is very good on the latter.
I can’t help feeling that the disparity between the £3 million and the £30k gives a little quantitative fix on roughly how unsustainable the present economy is. Thoughts?
There are certainly a lot of urban houses “worth” £1 million where there’s no way you could make £10k/year with just the products of the land and your labour. The retail value of my allotment and foraged produce this year is still in four figures — but that’s the retail value if I tried to purchase the same or similar-quality food from shops, not the amount I could earn by selling the produce (if I were allowed to do so), which would be much, much less. Land is over-valued, because it is easy to use as a speculative investment asset for rent-seeking, especially if you can first prevent people from making their livelihood on it in other ways (i.e. enclose it). Food is under-valued, because you eventually have to just eat it, so options are limited.
Arguably, industrial monocropping farmers aren’t making their living with only land and their labour, either, given things like the energy for tractors and grain drying apparatus, chemical fertilisers, and various poisons. But I think most would argue that they would have even less income without those inputs….
On a slight technical issue. I think fractional reserve banking no longer exists.
Banks have work out ways of creating limitless loans without the need for reserves to back up the loans. (Mortgage backed securities for example) That’s how we have ended up with huge debts and the crash of 2008.
On a broader point……….
It’s is the duality of money that will be a problem in degrowth.
Money as a store of value and money as a means of exchange.
If all that money squirreled away in off-shore banks was spent in one go, there isn’t enough goods and services to spend it on. Inflation would spike big time. So wealth is partly an illusion.
In a degrowth scenario, there are going to be less and less goods and services to purchase, but lots of money locked away in those off-shore accounts.
Wealthy people will be able to dip into their savings in order to still purchase essentials long after the poorest have run out of money.
Those with little or no saving will find it increasingly difficult to purchase essentials as inflation erodes the purchasing power of money.
The less well off will starve long before the wealthy run their coffers dry.
In order for there not to be mass starvation, rioting and societal breakdown, an alternative to “money” will need to be created and more evenly distributed that can not be horded and is only a means of exchange.
For this to happen, there will have to be a limit on how much of “essentials” an individual can buy over a given time period. Making hording of the “new money” pointless.
How we get from here to there is going to be the tricky bit. Those with vast “wealth” aren’t going to want to see their “pots” become worthless. And they control the strings of political power.
“In order for there not to be mass starvation, rioting and societal breakdown, an alternative to “money” will need to be created and more evenly distributed that can not be horded and is only a means of exchange.”
ration coupons are the easy technical solution. Finding justification besides a world war is the difficult part. Shifting to rationing without a good enough cause is acknowledging failure.
Hello!
I’ve been reading your book and this blog and it’s very inspiring stuff, looking forward to the next one!
Just wanted to recommend another book for your reading, if you’re not swamped already.
I find Jason Hickel’s book “Less is More” a great description of how to navigate the coming times, and I’m curious about your thought on it!
@Albin – hello & welcome! Glad you’ve found my writing of interest! I’ve read quite a bit of Jason’s stuff, though not that book. Generally I’m impressed with his critiques of current structures and not quite so persuaded about his alternatives, somewhat along the lines of the MMT discussions here. But if I get a chance I’ll try to take a look at that one.
@Kathryn – thanks for that, informative. Yes, agreed on MMT. I’m finding Stephanie Kelton’s book useful. She uses the metaphor of a ‘speed limit’ for the economy. Not sure how well it really works, but to go with it the MMT approach seems to say something along the lines of “in present conditions the appropriate speed limit is 70mph – going at 60mph or 80mph causes problems for people”. But in terms of earth systems and probably social systems too we probably need to be going at 20mph, and MMT has no account of how to get there. Also, if people have access to the means of production, they might choose to go at 10mph in a 20mph economy which could be even better – for them, and for ecological integrity.
In relation to Ashley’s post, my main take-home was the need for mutual aid to be grounded in specific communities – not necessarily ‘natural’ communities, but specific ones … including ones of the kind you’re helping to create. That needn’t imply people’s problems aren’t structural. But your point about the inability of our political systems to deal with structural problems in your MMT critique surely bites at this point. I take your point about the negative way the story about Tommy can go, but it’s not necessarily about desert or moralism. I don’t think there’s any one answer to where responsibility lies for Tommy getting back on his feet (if he wants to … and if he doesn’t, the implications are quite complex), but I agree with Ashley’s critique of the often over-generalised left-wing emphasis on structural change overseen by bureaucratic centralised government, especially when it involves waving away specific local community commitments.
In a way, my small farm future argument is that almost all of us (certainly including me) are Tommy – we’re out on our feet, over-reliant on unsustainable structural supports and ‘not really trying’ to do better. I think it’s possible to look at we Tommys with compassion, but also critically.
Giving people access to the means of production is a good idea, I think.
I think I agree somewhat about the necessity of mutual aid to be grounded in specific communities, but I would also like communities that are struggling or have been overwhelmed to be able to access aid from further afield — Los Angeles certainly needs both right now, and so does Gaza, and it remains the case that sometimes (but not always!), the cheapest way to pay for something is with money. In trying to figure out exactly how to make that integration of local and global aid work, I risk re-inventing the concept of subsidiarity.
I think such integrated mutual aid would look substantially different, though, if commerce were grounded in local communities — with some limited global trade, sure, but if people had access to the means of production they might not optimise their output for global markets, and that would be an improvement for many people, including those in bullshit jobs in the West. (Access to land for producing food has certainly been an improvement for my household.)
Part of the issue with Tommy is that our definition of “back on his feet” often equates to “producing well for the benefit of the owners of capital”. It’s quite reasonable to reject that. I don’t want to get into too much discussion of addiction, here, because it is a complex issue very often tied up with trauma and neglect, but if I were sleeping on the street in London I would probably end up on drugs too.
As for responsibility, my faith tradition has a few things to say about questions like “Am I my brother’s keeper?” and “Who is my neighbour?” and these lead me to believe that the answer is along these lines: I may not be responsible for single-handedly saving the Tommys (Tommies?) of this world, but I am responsible for participating in efforts to help improve the situation in some way. Those efforts should be communal.
I’m not necessarily against a centralised bureaucratic state attempting to make structural changes for the common good. I’m quite fond of the NHS, and of things like ramped kerbs so wheelchair users can get around more easily, and the concept (if not always the implementation) of things like food safety standards, a national minimum wage, free school meals, and human rights law. I am not convinced that only a centralised bureaucratic state can provide these things, though currently the only other real contender would be corporations, which are almost certainly even worse. I am, however, extremely skeptical that a state captured by financial interests is even capable of making structural interventions for the common good.
Do let us know how you get on with the Alistair MacIntyre!
Re: agrarian futures and big ag … I don’t see it collapsing anytime soon. So long as the average Walmart shopper has bumper stickers reading “farmers feed cities” and Trump supports “farmers” we all know who this supports, not the smallholder at the farmers market, they have to go it alone.
On my 10 acre farm, when we purchased it was a corn/soy rotation. We bought it and have taken time to heal it… planting food forest, sheep on pasture, meadows. But because we weren’t commoditizing it, the government declassified it from farming. After 7 years of, no more poisons, rewilding, we now want to sell some fruit, and go to reclassify as farm. In doing so, the value of our land dropped 20%. The government still sees a corn/soy operation as more valuable than what we have done, disparaging it as ‘hobby farming’. No value in soil, ecology, carbon sequestration.
Hi Mike,
If I may – what is your interest to “reclassify as farm”?
It sounds to me like you’re in the U.S. and referring, in some way, to the USDA definition of a farm. I think their definition is based on income and not on acreage or crop mix. There is (or once was) a two acre farm in Ohio making their income from vegetables and they qualified.
Corn and soy do hold a prize place in U.S. ag, as well they might given the enormous hold they have on the landscape. Five acres of sweetcorn and another 5 of leguminous veg like peas and beans could form a rotation that could earn enough to meet the definition of a farm.
Last month The Economist published a piece on world dairy and the potential of improvements available to the sector. see: https://www.economist.com/international/2024/12/12/what-has-four-stomachs-and-could-change-the-world Sort of pay walled, but I think you can get access one time.
In short, more milk per cow reduces the potential damage from burps and farts… (gas emission per liter of milk produced goes down). Not all the remedies are from genetic efforts on the cow. Small holder farms throughout the Global South have the most to gain.
As I have said before we live in two economies , on where a farmer can sell 30,000 pounds worth of goods but a bank will magically produce thirty million pounds out of thin air to buy the farm , that thirty million could easily be thirty billion or thirty trillion it costs the bank the same fat finger to invent it out of thin air , they are no longer interested wether you can pay the loan , only that they have a “asset ” on their books worth thirty million !
The mid west grain growers without irrigation are in trouble , before irrigation farmers worked on the principal of one year in three made money ( one years decent rain two years drought ) that was the normal principal ( droughts in the Midwest are normal ) . economics now demand profit every year which is provided by deep wells and electric pumps , they are BIG pumps , I know of one off grid well that uses a 200 horsepower six cylinder diesel and 18 inch pipes with a drive shaft reaching down 500 feet to the pump . the water table is now too deep for wind mills to work and it would take a lot of solar panels to power a 180 Kw pump .
Left to its own devices the land would revert to prairie in a decade or so , some would revert to alkali desert .
As with oil water is finite and it is certain both will run out .
“I enjoy hosting practical discussions here about things like nitrogen volatilization from urine in compost toilet systems”
It has already been suggested that one should keep the urine separate from other wastes and I concur. I use a bucket with a snap on toilet seat for urine only.
Dilute the urine in water during deposition (NH3 is very hydrophillic) by filling the 5 gallon urine bucket about 1/3 full with water. There will be little smell (the main evidence of volatilization) for a couple of days depending on temperature (I’m in the tropics, sort of). If the smell gets noticeable, snap on a tight lid lid and start a new bucket.
Further dilute the urine with water prior to application to augment penetration of the urine below the soil surface. This will minimize loss of N from volatilization in the field. I actually doubt that anyone apples undiluted urine to soil or plants, but it shouldn’t be done. A high-carbon mulch, like wood chips or straw should also help prevent loss of nitrogen, but the main thing is dilution with water.
Buckets of diluted urine are heavy. I move around about 5 buckets (25 gallons) of it with the bucket of my tractor. For those who hate tractors, a wheelbarrow will work, but it’s hard to fit many round buckets in a conventional barrow. It also depends on how far you have to go with the buckets.
I think the other question involved peeing into a bucket of biochar and composting that, rather than applying urine directly to the soil.
Yes. My last question on the subject, on the previous urine/biochar thread was…….
Does sprinkling a cover of biochar over urine in my bucket act as a “lid”?
It certainly cuts down on the smell and if smell is an indicator of volatilization……..?????
I find it surprising but also reassuring that there are people out there actually doing experiments on all this stuff!!!!!
@Joe Clarkson: “it’s hard to fit many round buckets in a conventional barrow”
Yes, so true! But one of my proudest innovations solves this problem, sort of.
Unbolt the sloping bucket from your wheelbarrow and in its place bolt on a shopping cart that has been liberated from its wheels and frame.
You’ll have nice square corners to the new container, and it might fit (3) 5 gallon buckets. More if stacked. Also, this is the perfect tool for moving around piles of leaves or garden trimmings.
@Chris
Just another thought on MMT.
If evidence is required on the claims of MMT, then look no further than COVID and lockdown.
The government “borrowed” £billions to fund furlough and business loans.
It didn’t sell the bonds to the usual financial markets. (The amounts were too great and the bailouts were partly to prop up financial markets in the first place!)
(Neither did the government increase taxes to fund the spending.)
The government “sold” the bonds to………………The Bank of England.
The BoE paid for the bonds by creating/printing the money to pay for them.
So in effect, one branch of government (BoE) created funds and gave another branch of government (The Treasury) the money.
So…….the BoE holds a big chunk of government debt. But will The Treasury ever have to pay the interest on the bonds or the original sum on maturity??????
What does the BoE need with the interest on the bonds????? It’s a money creating mechanism after all. Will the interest ever be paid on the bonds? I think not. Is it really a debt?
The selling of bonds was all a mirage to continue the illusion that government doesn’t have any money of it’s own. That it has to “borrow” from the markets or raise taxes to finance government spending, just isn’t true.
What actually happened was that government self financed it’s spending.
Now……there are limits on how much a government can create without causing inflammation.
Taxes have a role to play but not to finance government spending. But those are other stories……………
Not to be too crude but they all piss in the same pot .
The UK gov bought us ” bonds ” the us gov bought UK ” bonds ” , ” our credit as good we can borrow money” . just a string of zeros and ones and a fat finger . The whole western economy is just smoke and mirrors .
Re your recent mention of Vikings, I just chanced across this snippet in a booklet about water, relating here to the Medieval Warm Period:
“And yet the period between the 9th and 13th century, which was markedly warmer than the 20th century, appears to have been the best in Europe from today’s climatic-historical point of view. Vineyards were cultivated on a commercial basis 300 to 500 kilometers north of the limits of their cultivation in the 20th century, and the Vikings settled Greenland.
Also coincidentally, there are some interesting short articles over on medievalists.net concerning winter songs, winter blues, peasant work in winter etc, though it seems you get one read before you are asked to subscribe.
Hello Chris
Long time lurker.
A suggestion for your doomer reading list, though this is an account of historical events.
‘Aftermath’
Life in the fallout of the Third Reich.
by Harald Jahner
Translator Shaun Whiteside
Publisher WH Allen 2021
I have not read this book as of yet, its on my pile of waiting to be read books, but it has good reviews. It is an account of life in Germany after the fall of the Third Reich, then the military occupation and the slow recovery from a collapsed economy and society. Not fun reading, probably why its still in my waiting to be read pile.
I look forward to the new book.
Regards Philip hardy
Thanks Philip for the book suggestion. It looks good. I’ve ordered it.
And thanks for all the other comments too folks.
There’s a good debate about MMT going on here and under my previous post. I’ll try to collate it soon if I get the time. Or more likely at a later date. But do please keep talking…
In general, money theories, modern or not, do little to explain how the economy works. The economy is run by the application of natural resources, labour and machinery, this can happen also without any money at all. I believe it is more constructive to work from there rather from the monetary superstructures.
Of course in real life, money does play a prominent role, but it hard so see that there is any dramtic difference between bank money and government money in this regard. Taxes is another story as it is a means to redistribute, or steal, resources from those that pay them.
If there is any inquiry into money needed, I believe it is more in the field of the link between the financial economy (the money swooshing between various “investments”, which means objects of speculation) and the real economy (the one that makes up the GDP), as well as how debt and the GDP are linked. Many, such as Tim M claim that one can create growth by debt, but I fail to see how that is possible. I also fail to see how the economy at large can be based on debt as all debt is someones assets, so in the aggregate it should not be possible that we are all in debt (apart to God/Nature…).
GDP is a measure of the financial value of goods and services produced in a country over a period of time. These “goods and services” include rents paid on assets, so asset speculation is automatically folded in to GDP. This means GDP is not an accurate measure of the material economy.
David Graeber wrote a book on debt which is worth reading for a better understanding of how debt relates to economic growth.
Financial values and increase of wealth are not a components of the GDP. Neither has the inflated prices of housing any impact on the GDP. The only impact on the GDP by those activities is the fees to agents or services. Rents or profits impact the GDP when they are invested in businesses. The main driver of the GDP is labour and the increase in REAL capital, which certainly is very material. I did read Debt, but it is not really engaging in the link between debt and growth, only the link between money and debt. But money and growth are two different things.
Kathryn mentioned that “goods and services include rents paid on assets, so asset speculation is automatically folded in to GDP”, and I found confirmation of this in multiple sources.
For example, housing rents are included in GDP, and when global capital investments bid up the housing values, the typically higher rents which result would add to the GDP. Even if someone owns the house they live in, the market value of the equivalent rent they would be paying is “imputed” and added to the GDP.
From a US Government website:
“Imputations approximate the price and quantity that would be obtained for a good or service if it was traded in the market place. The largest imputation in the GDP accounts is that made to approximate the value of the services provided by owner-occupied housing. That imputation is made so that the treatment of owner-occupied housing in the GDP is comparable to that of tenant-occupied housing, which is valued by rent paid. That practice keeps GDP invariant as to whether a house is owner-occupied or rented. In the GDP, the purchase of a new house is treated as an investment; the ownership of the home is treated as a productive activity; and a service is assumed to flow from the house to the occupant over the economic life of the house. For the homeowner, the value of that service is measured as the income the homeowner could have received if the house had been rented to a tenant.”
https://www.bea.gov/help/faq/488
Although if the GDP is adjusted for inflation, some effects of rent inflation (driven up by cheap-debt-fueled investments in the housing market, for example) could be removed from the GDP, in theory at least.
You are right Steve, I was sloppy. In the larger scheme rents on housing is a very small share of financial speculation, and as noted that only goes as far as GDP is adjusted for inflation.
And at least in Sweden, housing rents are not high enough to cover the construction of new houses, which is one reason for shortages and why there are so few rental apartments available. Admittedly the linkage between the financial economy and the real economy is a topic that merits a lot of further exploration.
@Gunnar
“Admittedly the linkage between the financial economy and the real economy is a topic that merits a lot of further exploration.”
Surplus Energy Economics blog does just that.
“Many, such as Tim M claim that one can create growth by debt, but I fail to see how that is possible. ”
In a cheap energy world you borrow currency and with that invest in something like a factory ( new electric motors to replace a water wheel / steam engine ) by borrowing you have cut your costs , which used to work .( borrow $1 and get $5 worth of extra products ) the latest figures I have seen in the USA you have to
borrow $9 to get a $1 return , the yield has inverted , borrowing only gets you more debt not production .
Well, it is still only labour and capital that make up the growth, and “capital” means a factory, machines etc. They are not created by debt, but again by labour and earlier accumulation of capital. Debt, money and wealth will only play a role for the distribution of the investment and not really for the level of investment, put a bit simplisticly. Which is also why governments always fail when they try to “create growth” by public spending. There are of course some situations where the economy for some reasons has jammed, when such a strategy might work.
Links between debt and growth are discussed in this article, “The Impact of Public Debt on Economic Growth”. Increasing debt levels were found to “have a positive impact on growth” up to some threshold of debt (expressed as a percentage of GDP), and debt levels above some threshold had a negative impact on growth.
“Topal (2014) explores the relationship between debt and growth and whether there exists a nonlinear threshold or multiple thresholds within the sample of 12 eurozone countries… the study finds that debt levels up to a ratio of 71.66 percent [of GDP] have a positive impact on growth. Beyond this threshold, debt has no statistically significant impact on growth, and, beyond a second threshold of 80.2 percent [of GDP], the growth effect turns negative…”
“As both advanced and developing countries continue to increase their debt ratios, this literature survey offers policymakers some valuable lessons—namely to be cognizant of the negative growth effects that result from increasing public debt ratios. To avoid these negative growth effects, advanced countries should aim to keep their debt ratios at sustainable levels, preferably below 80 percent of GDP, while developing countries should aim to keep their debt ratios below 60 percent of GDP.”
https://www.cato.org/cato-journal/fall-2021/impact-public-debt-economic-growth
I believe there is a question about causality here. In my analysis debt and profit are basically reflections of each other. Investments are as much the result of profit (i.e. capital growth) as its cause. Credit, like money, are just tools in this circuit.
Having been in both sides of this debate before I have no real desire to rehash it but it’s worth noting Cato is a front for Koch money that just wants to cut government spending if it’s not handouts to the Koch brothers and the debt ceiling is a political lever to do that. They also published an article several years ago that said more CO2 is great because tomatoes in hot houses love the extra carbon and rising sea levels aren’t bad because some plants can grow despite salt! So I might just have a personal grudge against people who don’t understand growing food.
The link between debt and GPD growth is disputed over the longer term for example:
https://www.imf.org/external/pubs/ft/fandd/2014/06/pescatori.htm
That said I also don’t think GDP growth in high income countries is good or even helping people at this point so whole thing is talking about layers of abstraction on top of layers of abstraction.
europeanconservative.com/articles/interviews/why-brussels-wants-farmers-to-disappear-an-interview-with-mp-jan-krzysztof-ardanowski/
Interesting take on EU farming controls .
I’d like to recommend ‘Arboreality’ by Rebecca Campbell. It won the Ursula LeGuin prize in 2023 but doesn’t seem to be well known.
It’s a slender book of linked stories set in the Vancouver area undergoing the lingering effects of a pandemic and the creeping inundation caused by climate change. It doesn’t feel like an apocalypse book despite its setting. The stories are about small actions taken by normal people, from saving books, helping along ecological succession in an almost abandoned suburb, to making a violin from the last ancient Sitka spruce for a child prodigy.
The stories are humane, poignant and lovely and leave you feeling hopeful. I’d like to find more like this.
This discussion of economy is interesting, and as people are saying, although these theories are likely to be overtaken by events, understanding what a constructive economy might look like is important. The frankly evil nature of the debt economy was first articulated to me by ‘Positive Money’ who have advocated for the Bank of England issuing us all (in the UK) an account that would permit a UBI. The various possible structures of an economy that can value our living world have been explored in Eisenstien’s ‘Sacred Economics’, which explores currencies that ‘decompose’ in value.
There is something in the structural and symbolic object and process of Money- as store and as exchange that stands in the way of social trust and relationship. There are I think a great diversity of money economies in the world right now, all nesting in one another like a perverse facsimile of the ecologies and flows within the living world. Fraud and corruption are rife at every level as the master model, or grand narrative is the modern pseudo science of economics.
We are taking part in an insane paradigm that no end of theories can make remotely logical, the present way of living is itself a denial of reality and the unshakeable laws of thermodynamics. This relates to the Farmers, and the tax, that they can be the fore front of agrarian localism, sharing land access, inviting people onto the land, securing there future in trust with the local community. These new ways of relating, lets not call it economy, are the eye of the needle we will have to pass through, not the ‘nice idea – now lets get back to reality’ , this is literally the only way. Lol.
More on money, Brian Czech formulated the trophic theory of money, which is quite interesting, even if I am not 100% sure that its tenet that “the trophic structure of the human economy is such that GDP — in concert with real money supplies — is an excellent indicator of biodiversity loss, pollution, ecological
footprint, and other aspects of environmental impact.” holds. https://steadystate.org/wp-content/uploads/Trophic-Theory-of-Money.pdf
Thanks for the comments & recommendations. Apologies I’m too much at the writing coalface atm to participate much.
Yvonne, Philip – thanks, good recommendations, I’m looking at both of those books. I’m enjoying ‘Arboreality’ (I’m about halfway through), partly because I lived in that part of the world for 18 months, so it’s especially evocative. Also, I like the way she describes a world that’s crumbling rather than collapsing, as discussed on this site in the past.
Appreciate also the MMT discussions, which I’ve found informative. Chris N’s banking points surely connect to the growth/expansionary framing of the wider global neoliberal political economy. We here & the wider literature seem in broad agreement that it doesn’t have to be this way, but I’m not convinced that different reality would be quite as gentle a change as is implied by writers like Stephanie Kelton or the degrowth folks. I like Gunnar’s points about bringing it back to real labour & capital – and also about investments as the result as much as the cause of profit. BTW, what’s the book you’re writing, Gunnar?
Anyway, back now to editing: Chapter 3, version 3…
My current book project (which might end up being just research for fun, I have no contract, but also not looked for one) is about recoupling the economy and the material world, both empirically and theoretically. In the world of Adam Smith et al economics is about pins, iron, wine, wheat cotton and other tangible things and human labour of course. I want to see if we (I) can explain the current global economy in terms of such real stuff again.
Say biophysical economics and social ecology and you are on track.
https://m.youtube.com/watch?v=-lFTMvgPQrM
Interesting .
I hope was able to contribute something of value to the Midwest/Plains futures discussion in a previous comment. It’s something that’s occupied a lot of my mind the last few years but honestly I don’t know that it’s at all certain which way things break and that uncertainty is probably what’s driving my deluge of comments here. Though I’ve read your blog for at least a half-dozen years now so I hope I’m not too much of a stranger barging in. In my better moments I hope that since there should still be way to grow food here, people will be able to figure out how to live here in a way that’s no more particularly intolerable than anywhere else in the future.
It seems we might also have some different conceptions of the Midwest. For me the area I am familiar with is Kansas, Missouri, Nebraska, Oklahoma, and Iowa, specifically the eastern parts which are tall grass prairie/savannah. It’s a very different prospect when thinking about getting water from 60ft to pasture a half dozen animals and the kitchen garden vs pumping from 600ft for 100s of acres of corn when it doesn’t rain for a month. An event that does happen and will probably happen more often. Even grouping all those states together doesn’t seem right as the forested Ozarks hills are completely different from the Platte River plains!
Your figures are about spot on for modern farming. From having driven hundreds of miles (I’m sorry about the emissions) across KS,NE, and MO looking for land a few years ago I’ve basically concluded that land is currently “worth” about 100x the profit one can make on the land. It varies a little but the multiple is so high it’s not really worth quibbling over. That fact alone means that you must either pay cash, inherit or work a non-farm job for decades to farm. The fact this is the same all over the modern/Western/High Income? World shows how global flows of capital are pretty good about equalizing the whole world.
http://www.breitbart.com/europe/2025/02/01/great-reset-tenth-of-england-farmland-needs-to-be-rewilded-to-meet-green-agenda-says-govt-report/
To be hoped that food can be found on the world market and transported thousands of diesel powered miles to feed the population
Chris, I read your book some time ago, and I’ve read your commentaries on Resilience.org. Just wondered if you’ve ever read, Jane Jacobs’, Cities and the Wealth of Nations?’ ( Only about 200 pages, small paperback). She convinced me that a lot of economists get things wrong, and so do the politicians, a case of not diagnosing the world correctly, and therefore implementing the wrong solutions. I live in the Delaware Valley, USA.
“The social technology was right there in my own upbringing. You show up for people, become indespensible, make others feel comfortable and welcome.”
“In defense of cronyism”–An ironic essay given Fitzgerald’s own commitment to the culture war on X (formerly Twitter). As an example, dragging a stranger posting a picture of themselves wearing a respirator. Or a thread seemingly endorsing the vandalism of speed cameras. The quoted eigenrobot tweet downplaying the possibility of fascism (or similar), however, was the chef’s kiss. For me, eigenrobot pretty much epitomizes the anti-social cancer I believe will be our undoing–more insidious, I feel, than overt far right politics. (Not to mention, while not exactly the Great War, the US has active deployments producing a steady stream of traumatized veterans–whose benefits, incidentally, Trump/DOGE are working tirelessly to unwind.)
Ad hominem aside, regarding “movement building”: it is commonplace that the left or social justice movements should stop being performative/doing critique and instead emulate X–where X is most often religious institutions or trade unions. However, religions institutions (in anything like their present form) appear just as endangered by present social/political/ecological turbulence as DEI or those legislative victories won in the wake of the Civil Rights Era. At the same time, the NLRB appears to have preemptively conceded its own unconstitutionality, casting further doubt on salvation via a reinvigorated labor movement.
Ultimately, I think leftism is a statist project (Hobbesian even), and sinks or swims with that ship (Colin Drumm has been an important influence in this regard–also worth reading his book, [the Difference that Money Makes](https://drive.google.com/file/d/1IZy2o238Ef3zOIfI724dt95UqookVe0b/view), if interested in criticism of MMT or Marxist theory of value). The social justice question is more complicated, but as hinted above, has not merely been performative/critique, but had clear, tangible victories particularly leveraging the legal apparatus (the kernel or reality underlying the anti-CRT panic). That those gains are now being actively assaulted underscores the irrelevance of the eigenrobot tweet–the state (and key private interests) is already onboard with and actively collaborating in the far right’s project (Project 2025 if you like), in spite of there not being Brown Shirts or whatever (John Ganz is [worth reading](https://www.unpopularfront.news/p/gold-and-brown) on this err front).
Unfortunately, I don’t really have a positive suggestion with respect to what Michael Albert dubs the “stickiness problem”. I suspect movement affinity is mostly a function of circumstance–desperation even–and difficult intentionally make happen. At any rate, I think it is mostly a case-by-case situation. Not a X good/Y bad divorced of context question. The complex role played by religions institutions in Latin America since contact a case in point. Saying that, I broadly agree with Fitzgerald’s (as well as [Last Farm’s](https://thelastfarm.substack.com/p/an-eco-socialist-education-agenda) principle that movements should offer something tangible.
Regardless, abolishing social media might not be the worst idea in an effort to curb the anti-social speed run we seem engaged in.
Thanks for that Peter – very interesting, although some of it is a bit too outside my UK-based wheelhouse to fully understand.
Writing in haste, guess I’d say that these are confusing times that require of us a lot of political rethinking. In that process, it’s good when people point out overlaps between one’s own position and other positions with troubling implications. So I found the Ganz piece informative. But ultimately I think he’s trying to recuperate a traditionalist left-statist position and is too concerned with demonising alternatives. This seems to me to be a problem with too much contemporary political analysis (not only on the left).
I agree with you that leftism is a statist/Hobbesian project. I think that ship is sinking and is now beyond the point of no return, hence the need to strike out for alternatives while trying to retain the positives from the old hulk. Acknowledging some of the failings of the old project that have led us here seems necessary to me – something that Ganz doesn’t do. Anthony Galluzzo let’s rip on this front in vintage Anthony style: https://substack.com/home/post/p-156883406
I’m less oriented to theoretical and left writing these days, and more oriented to agrarian and populist or broadly I guess ‘civic’ responses to the meta-crisis – however, I agree with you that these aren’t necessarily in great shape.
I’m hoping to publish a brief post in the next day or two looking at Adam Greenfield’s ‘Lifehouse’ where all this is a propos – thank you
https://thehonestsorcerer.substack.com/p/averting-collapse-is-no-longer-profitable
A direction I had not thought of yet it is seen everywhere , pot holed roads , maintenance deferred or forgotten about and the general unkempt appearance of just about everywhere .