Inequality and economic crisis leaves democracies open to totalitarianism

The central assumption of the neoliberal economic model that material consumption and industrial expansion can continue without devastating political and environmental consequences is known to be false. Yet, every politician on Earth is pushing for further material growth which in a time of resource scarcity only leads to rapidly increasing income inequality. This in turn undermines the stability of society. And vulnerable societies that suffer major economic downturns are known to elect dangerous people and do some crazy stuff.

Overexploiting and degrading both ecological and social capital to gain ephemeral financial capital is the pathway to collapse of a society. Anthropological and agent-based modelling studies have shown that any society that undermines its ecological base runs into declining marginal returns from further material growth. When a threshold is passed, and net energy starts to fall, society can no longer afford to maintain its social organisation and infrastructure and starts to decay. If the ruling elite refuses to give up on trying to push the economy to grow the remaining resources will simply be swallowed up by the resource sector and benefit only a small minority of rich elites while the majority grows poorer over time. This will of course cause political turmoil as even the middle class starts to voice their dissatisfaction. And the entire process makes any democracy open to totalitarianism, a form of government in which the state has no limits in authority and does whatever it wants.

Full collapse from over-depletion and high levels of inequality. Source: Castro et al. 2014

“Democracy is first and foremost about equality: equality of power and equality of sharing in the benefits and values made possible by social cooperation” (Sheldon Wolin, 2010, p. 61).

Most societies have no mechanisms for sharing power and the benefits of cooperation in a time of involuntary degrowth, which we are currently in. Every government policy since the 1970s have only worsened the issue by promoting the enrichment of the capital owning class over the worker class through financialisation. Giving out cheap credit has masked the systemic issues and kept the middle class happy for a while, as they get to continue consuming resources in the moment, but its a giant ponzi scheme that will collapse eventually. Meanwhile, the working class has only suffered since the 70s, with falling living standards and increasing poverty, and thus started to heavily mistrust the ruling elite.

Furthemore, wealth equalizing institutions, such as income taxation, has become ineffective in a globalised world. Big corporations and rich individuals can escape national laws and continue to enrich themselves at the cost of everyone else and nature. The world's richest 1 percent now owns as 82% of global wealth, while the poorest 3.7 billion people saw no increase in their wealth in 2018.

When people are desperate for change, ideology becomes a powerful weapon. If people have no way to influence the political system, no equality in control of the instruments of persuasion, other than voting every four years it cannot be called a true democracy. Private control over the media and higher education are examples of public loss of instruments of persuasion.

Rising inequality opens up a power vacuum that is easily filled by leaders of business or populistic parties in order to extract what they want from the system. The rich business elites usually claim the “trickle down” doctrine or that “government is the problem” to justify deregulation and tax cuts for the rich. While populistic parties (left and right) exploit the working class hate of elites and fuels polarisation and division in society while arguing for a centralised strong government. We see this type of development all over Europe and in the US.

The only way to combat this negative development, as I see it, is to promote decentralization of power and strengthening local economies with circular resource flows that stay within certain boundaries through for example a local currency. And promoting self-sufficiency. Also trying to even the playing field by offering alternative stories through online platforms when the mainstream media is failing. I know that many instead are calling for global governance to reign in multinational corporations but that won't be possible in a resource constrained world and it's certainly not what people are going to vote for. 

If no credible options are put forward as the old story breaks apart there is a high chance that people will turn to “strongman” governance in their desperation for change. With potentially catastrophic consequences for peace and security. It's now 100 years since the end of World War I and we are again living in very dangerous times. Europe is so fragile that it feels like any shock could trigger something major, especially if we have a major financial collapse. Unfortunately, such a financial crisis looks increasingly likely as the global debt bubble has started to unravel. I hope there is still some sanity left among people to resist another major war.


Out of the ashes into the fire

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