1759. On Externalities: Peak Meaninglessness

By John Michael Greer, The Aarchdruid Report, March 4, 2015

Last week’s discussion of externalities—costs of doing business that get dumped onto the economy, the community, or the environment, so that those doing the dumping can make a bigger profit—is, I’m glad to say, not the first time this issue has been raised recently.  The long silence that closed around such things three decades ago is finally cracking; they’re being mentioned again, and not just by archdruids.  One of my readers—tip of the archdruidical hat to Joe McInerney—noted an article in Grist a while back that pointed out the awkward fact that none of the twenty biggest industries in today’s world could break even, much less make a profit, if they had to pay for the damage they do to the environment. 

Now of course the conventional wisdom these days interprets that statement to mean that it’s unfair to make those industries pay for the costs they impose on the rest of us—after all, they have a God-given right to profit at everyone else’s expense, right?  That’s certainly the attitude of fracking firms in North Dakota, who recently proposed that  they ought to be exempted from the state’s rules on dumping radioactive waste, because following the rules would cost them too much money. That the costs externalized by the fracking industry will sooner or later be paid by others, as radionuclides in fracking waste work their way up the food chain and start producing cancer clusters, is of course not something anyone in the industry or the media is interested in discussing. 

Watch this sort of thing, and you can see the chasm opening up under the foundations of industrial society. Externalized costs don’t just go away; one way or another, they’re going to be paid, and costs that don’t appear on a company’s balance sheet still affect the economy. That’s the argument of The Limits to Growth, still the most accurate (and thus inevitably the most reviled) of the studies that tried unavailingly to turn industrial society away from its suicidal path: on a finite planet, once an inflection point is passed, the costs of economic growth rise faster than growth does, and sooner or later force the global economy to its knees. 

The tricks of accounting that let corporations pretend that their externalized costs vanish into thin air don’t change that bleak prognosis. Quite the contrary, the pretense that externalities don’t matter just makes it harder for a society in crisis to recognize the actual source of its troubles. I’ve come to think that that’s the unmentioned context behind a dispute currently roiling those unhallowed regions where economists lurk in the shrubbery: the debate over secular stagnation. 

Secular stagnation? That’s the concept, unmentionable until recently, that the global economy could stumble into a rut of slow, no, or negative growth, and stay there for years. There are still plenty of economists who insist that this can’t happen, which is rather funny, really, when you consider that this has basically been the state of the global economy since 2009. (My back-of-the-envelope calculations suggest, in fact, that if you subtract the hallucinatory paper wealth manufactured by derivatives and similar forms of financial gamesmanship from the world’s GDP, the production of nonfinancial goods and services worldwide has actually been declining since before the 2008 housing crash.)

Even among those who admit that what’s happening can indeed happen, there’s no consensus as to how or why such a thing could occur.  On the off chance that any mainstream economists are lurking in the shrubbery in the even more unhallowed regions where archdruids utter unspeakable heresies, and green wizards clink mugs of homebrewed beer together and bay at the moon, I have a suggestion to offer: the most important cause of secular stagnation is the increasing impact of externalities on the economy. The dishonest macroeconomic bookkeeping that leads economists to think that externalized costs go away because they’re not entered into anyone’s ledger books doesn’t actually make them disappear; instead, they become an unrecognized burden on the economy as a whole, an unfelt headwind blowing with hurricane force in the face of economic growth. 

Thus there’s a profound irony in the insistence by North Dakota fracking firms that they ought to be allowed to externalize even more of their costs in order to maintain their profit margin. If I’m right, the buildup of externalized costs is what’s causing the ongoing slowdown in economic activity worldwide that’s driving down commodity prices, forcing interest rates in many countries to zero or below, and resurrecting the specter of deflationary depression. The fracking firms in question thus want to respond to the collapse in oil prices—a result of secular stagnation—by doing even more of what’s causing secular stagnation. To say that this isn’t likely to end well is to understate the case considerably. 

In the real world, of course, mainstream economists don’t listen to suggestions from archdruids, and fracking firms, like every other business concern these days, can be expected to put their short-term cash flow ahead of the survival of their industry, or for that matter of industrial civilization as a whole. Thus I propose to step aside from the subject of economic externalities for a moment—though I’ll be returning to it at intervals as we proceed with this sequence of posts—in order to discuss a subtler and less crassly financial form of the same phenomenon. 

That form came in for discussion in the same post two weeks ago that brought the issue of externalities into this blog’s ongoing conversation. Quite a few readers commented about the many ways in which things labeled “more advanced,” “more progressive,” and the like were actually less satisfactory and less effective at meeting human needs than the allegedly more primitive technologies they replaced. Some of those comments focused, and quite sensibly, on the concrete examples, but others pondered the ways that today’s technology fails systematically at meeting certain human needs, and reflected on the underlying causes for that failure. One of my readers—tip of the archdruidical hat here to Ruben—gave an elegant frame for that discussion by suggesting that the peak of technological complexity in our time may also be described as peak meaninglessness. 

I’d like to take the time to unpack that phrase. In the most general sense, technologies can be divided into two broad classes, which we can respectively call tools and prosthetics. The difference is a matter of function. A tool expands human potential, giving people the ability to do things they couldn’t otherwise do. A prosthetic, on the other hand, replaces human potential, doing something that under normal circumstances, people can do just as well for themselves.  Most discussions of technology these days focus on tools, but the vast majority of technologies that shape the lives of people in a modern industrial society are not tools but prosthetics. 

Prosthetics have a definite value, to be sure. Consider an artificial limb, the sort of thing on which the concept of technology-as-prosthetic is modeled. If you’ve lost a leg in an accident, say, an artificial leg is well worth having; it replaces a part of ordinary human potential that you don’t happen to have any more, and enables you to do things that other people can do with their own leg. Imagine, though, that some clever marketer were to convince people to have their legs cut off so that they could be fitted for artificial legs. Imagine, furthermore, that the advertising for artificial legs became so pervasive, and so successful, that nearly everybody became convinced that human legs were hopelessly old-fashioned and ugly, and rushed out to get their legs amputated so they could walk around on artificial legs. 

Then, of course, the manufacturers of artificial arms got into the same sort of marketing, followed by the makers of sex toys. Before long you’d have a society in which most people were gelded quadruple amputees fitted with artificial limbs and rubber genitals, who spent all their time talking about the wonderful things they could do with their prostheses. Only in the darkest hours of the night, when the TV was turned off, might some of them wonder why it was that a certain hard-to-define numbness had crept into all their interactions with other people and the rest of the world. 

In a very real sense, that’s the way modern industrial society has reshaped and deformed human life for its more privileged inmates. Take any human activity, however humble or profound, and some clever marketer has found a way to insert a piece of technology in between the person and the activity. You can’t simply bake bread—a simple, homely, pleasant activity that people have done themselves for thousands of years using their hands and a few simple handmade tools; no, you have to have a bread machine, into which you dump a prepackaged mix and some liquid, push a button, and stand there being bored while it does the work for you, if you don’t farm out the task entirely to a bakery and get the half-stale industrially extruded product that passes for bread these days. 

Now of course the bread machine manufacturers and the bakeries pitch their products to the clueless masses by insisting that nobody has time to bake their own bread any more. Ivan Illich pointed out in Energy and Equity a long time ago the logical fallacy here, which is that using a bread machine or buying from a bakery is only faster if you don’t count the time you have to spend earning the money needed to pay for it, power it, provide it with overpriced prepackaged mixes, repair it, clean it, etc., etc., etc. Illich’s discussion focused on automobiles; he pointed out that if you take the distance traveled by the average American auto in a year, and divide that by the total amount of time spent earning the money to pay for the auto, fuel, maintenance, insurance, etc., plus all the other time eaten up by tending to the auto in various ways, the average American car goes about 3.5 miles an hour: about the same pace, that is, that an ordinary human being can walk. 

If this seems somehow reminiscent of last week’s discussion of externalities, dear reader, it should. The claim that technology saves time and labor only seems to make sense if you ignore a whole series of externalities—in this case, the time you have to put into earning the money to pay for the technology and into coping with whatever requirements, maintenance needs, and side effects the technology has. Have you ever noticed that the more “time-saving technologies” you bring into your life, the less free time you have? This is why—and it’s also why the average medieval peasant worked shorter hours, had more days off, and kept a larger fraction of the value of his labor than you do. 

Something else is being externalized by prosthetic technology, though, and it’s that additional factor that gives Ruben’s phrase “peak meaninglessness” its punch. What are you doing, really, when you use a bread machine? You’re not baking bread; the machine is doing that. You’re dumping a prepackaged mix and some water into a machine, closing the lid, pushing a button, and going away to do something else. Fair enough—but what is this “something else” that you’re doing? In today’s industrial societies, odds are you’re going to go use another piece of prosthetic technology, which means that once again, you’re not actually doing anything. A machine is doing something for you. You can push that button and walk away, but again, what are you going to do with your time? Use another machine? 

The machines that industrial society uses to give this infinite regress somewhere to stop—televisions, video games, and computers hooked up to the internet—simply take the same process to its ultimate extreme. Whatever you think you’re doing when you’re sitting in front of one of these things, what you’re actually doing is staring at little colored pictures on a glass screen and pushing some buttons. All things considered, this is a profoundly boring activity, which is why the little colored pictures jump around all the time; that’s to keep your nervous system so far off balance that you don’t notice just how tedious it is to spend hours at a time staring at little colored pictures on a screen. 

I can’t help but laugh when people insist that the internet is an information-rich environment. It’s quite the opposite, actually: all you get from it is the very narrow trickle of verbal, visual, and auditory information that can squeeze through the digital bottleneck and turn into little colored pictures on a glass screen. The best way to experience this is to engage in a media fast—a period in which you deliberately cut yourself off from all electronic media for a week or more, preferably in a quiet natural environment. If you do that, you’ll find that it can take two or three days, or even more, before your numbed and dazzled nervous system recovers far enough that you can begin to tap in to the ocean of sensory information and sensual delight that surrounds you at every moment. It’s only then, furthermore, that you can start to think your own thoughts and dream your own dreams, instead of just rehashing whatever the little colored pictures tell you. 

A movement of radical French philosophers back in the 1960s, the Situationists, argued that modern industrial society is basically a scheme to convince people to hand over their own human capabilities to the industrial machine, so that imitations of those capabilities can be sold back to them at premium prices. It was a useful analysis then, and it’s even more useful now, when the gap between realities and representations has become even more drastic than it was back then. These days, as often as not, what gets sold to people isn’t even an imitation of some human capability, but an abstract representation of it, an arbitrary marker with only the most symbolic connection to what it represents. 

This is one of the reasons why I think it’s deeply mistaken to claim that Americans are materialistic. Americans are arguably the least materialistic people in the world; no actual materialist—no one who had the least appreciation for actual physical matter and its sensory and sensuous qualities—could stand the vile plastic tackiness of America’s built environment and consumer economy for a fraction of a second.  Americans don’t care in the least about matter; they’re happy to buy even the most ugly, uncomfortable, shoddily made and absurdly overpriced consumer products you care to imagine, so long as they’ve been convinced that having those products symbolizes some abstract quality they want, such as happiness, freedom, sexual pleasure, or what have you. 

Then they wonder, in the darkest hours of the night, why all the things that are supposed to make them happy and satisfied somehow never manage to do anything of the kind. Of course there’s a reason for that, too, which is that happy and satisfied people don’t keep on frantically buying products in a quest for happiness and satisfaction. Still, the little colored pictures keep showing them images of people who are happy and satisfied because they guzzle the right brand of tasteless fizzy sugar water, and pay for the right brand of shoddily made half-disposable clothing, and keep watching the little colored pictures: that last above all else. “Tune in tomorrow” is the most important product that every media outlet sells, and they push it every minute of every day on every stop and key. 

That is to say, between my fantasy of voluntary amputees eagerly handing over the cash for the latest models of prosthetic limbs, and the reality of life in a modern industrial society, the difference is simply in the less permanent nature of the alterations imposed on people here and now.  It’s easier to talk people into amputating their imaginations than it is to convince them to amputate their limbs, but it’s also a good deal easier to reverse the surgery. 

What gives this even more importance than it would otherwise have, in turn, is that all this is happening in a society that’s hopelessly out of touch with the realities that support its existence, and that relies on bookkeeping tricks of the sort discussed toward the beginning of this essay to maintain the fantasy that it’s headed somewhere other than history’s well-used compost bin. The externalization of the mind and the imagination plays just as important a role in maintaining that fantasy as the externalization of costs—and the cold mechanical heart of the externalization of the mind and imagination is mediation, the insertion of technological prosthetics into the space between the individual and the world. We’ll talk more about that in next week’s post. 

1758. None of the World’s Top Industries Would be Profitable If They Paid for the "Natural Capital" They Use

By David Roberts, Grist, April 27, 2013

The notion of “externalities” has become familiar in environmental circles. It refers to costs imposed by businesses that are not paid for by those businesses. For instance, industrial processes can put pollutants in the air that increase public health costs, but the public, not the polluting businesses, picks up the tab. In this way, businesses privatize profits and publicize costs.

While the notion is incredibly useful, especially in folding ecological concerns into economics, I’ve always had my reservations about it. Environmentalists these days love speaking in the language of economics — it makes them sound Serious — but I worry that wrapping this notion in a bloodless technical term tends to have a narcotizing effect. It brings to mind incrementalism: boost a few taxes here, tighten a regulation there, and the industrial juggernaut can keep right on chugging. However, if we take the idea seriously, not just as an accounting phenomenon but as a deep description of current human practices, its implications are positively revolutionary.

To see what I mean, check out a recent report [PDF] done by environmental consultancy Trucost on behalf of The Economics of Ecosystems and Biodiversity (TEEB) program sponsored by United Nations Environmental Program. TEEB asked Trucost to tally up the total “unpriced natural capital” consumed by the world’s top industrial sectors. (“Natural capital” refers to ecological materials and services like, say, clean water or a stable atmosphere; “unpriced” means that businesses don’t pay to consume them.)

It’s a huge task; obviously, doing it required a specific methodology that built in a series of assumptions. (Plenty of details in the report.) But it serves as an important signpost pointing the way to the truth about externalities.

Here’s how those costs break down:

The majority of unpriced natural capital costs are from greenhouse gas emissions (38%), followed by water use (25%), land use (24%), air pollution (7%), land and water pollution (5%), and waste (1%).

So how much is that costing us? Trucost’s headline results are fairly stunning.

First, the total unpriced natural capital consumed by the more than 1,000 “global primary production and primary processing region-sectors” amounts to $7.3 trillion a year — 13 percent of 2009 global GDP.

(A “region-sector” is a particular industry in a particular region — say, wheat farming in East Asia.)

Second, surprising no one, coal is the enemy of the human race. Trucost compiled rankings, both of the top environmental impacts and of the top industrial culprits.

Here are the top five biggest environmental impacts and the region-sectors responsible for them:

UNEP

The biggest single environmental cost? Greenhouse gases from coal burning in China. The fifth biggest? Greenhouse gases from coal burning in North America. (This also shows what an unholy nightmare deforestation in South America is.)

Now, here are the top five industrial sectors ranked by total ecological damages imposed:

UNEP

It’s coal again! This time North American coal is up at number three.

Trucost’s third big finding is the coup de grace. Of the top 20 region-sectors ranked by environmental impacts, none would be profitable if environmental costs were fully integrated. Ponder that for a moment: None of the world’s top industrial sectors would be profitable if they were paying their full freight. Zero.

That amounts to an global industrial system built on sleight of hand. As Paul Hawken likes to put it, we are stealing the future, selling it in the present, and calling it GDP.

This gets back to what I was saying at the top. The notion of “externalities” is so technical, such an economist’s term. Got a few unfortunate side effects, so just move some numbers from Column A to Column B, right?

But the UNEP report makes clear that what’s going on today is more than a few accounting oversights here and there. The distance between today’s industrial systems and truly sustainable industrial systems — systems that do not spend down stored natural capital but instead integrate into current energy and material flows — is not one of degree, but one of kind. What’s needed is not just better accounting but a new global industrial system, a new way of providing for human wellbeing, and fast. That means a revolution.

1753. The Externality Trap, or, How Progress Commits Suicide

By John Michael Greer, The Archdruid Report, February 25, 2015

I've commented more than once in these essays about the cooperative dimension of writing:  the way that even the most solitary of writers inevitably takes part in what Mortimer Adler used to call the Great Conversation, the flow of ideas and insights across the centuries that’s responsible for most of what we call culture. Sometimes that conversation takes place second- or third-hand—for example, when ideas from two old books collide in an author’s mind and give rise to a third book, which will eventually carry the fusion to someone else further down the stream of time—but sometimes it’s far more direct. 

Last week’s post here brought an example of the latter kind. My attempt to cut through the ambiguities surrounding that slippery word “progress” sparked a lively discussion on the comments page of my blog about just exactly what counted as progress, what factors made one change “progressive” while another was denied that label. In the midst of it all, one of my readers—tip of the archdruidical hat to Jonathan—proposed an unexpected definition:  what makes a change qualify as progress, he suggested, is that it increases the externalization of costs.  

I’ve been thinking about that definition since Jonathan proposed it, and it seems to me that it points up a crucial and mostly unrecognized dimension of the crisis of our time. To make sense of it, though, it’s going to be necessary to delve briefly into economic jargon. 

Economists use the term “externalities” to refer to the costs of an economic activity that aren’t paid by either party in an exchange, but are pushed off onto somebody else. You won’t hear a lot of talk about externalities these days; it many circles, it’s considered impolite to mention them, but they’re a pervasive presence in contemporary life, and play a very large role in some of the most intractable problems of our age. Some of those problems were discussed by Garret Hardin in his famous essay on the tragedy of the commons, and more recently by Elinor Ostrom in her studies of how that tragedy can be avoided; still, I’m not sure how often it’s recognized that the phenomena they discussed applies not just to commons systems, but to societies as a whole—especially to societies like ours. 

An example may be useful here. Let’s imagine a blivet factory, which turns out three-prong, two-slot blivets in pallet loads for customers. The blivet-making process, like manufacturing of every other kind, produces waste as well as blivets, and we’ll assume for the sake of the example that blivet waste is moderately toxic and causes health problems in people who ingest it. The blivet factory produces one barrel of blivet waste for every pallet load of blivets it ships. The cheapest option for dealing with the waste, and thus the option that economists favor, is to dump it into the river that flows past the factory. 

Notice what happens as a result of this choice. The blivet manufacturer has maximized his own benefit from the manufacturing process, by avoiding the expense of finding some other way to deal with all those barrels of blivet waste. His customers also benefit, because blivets cost less than they would if the cost of waste disposal was factored into the price. On the other hand, the costs of dealing with the blivet waste don’t vanish like so much twinkle dust; they are imposed on the people downstream who get their drinking water from the river, or from aquifers that receive water from the river, and who suffer from health problems because there’s blivet waste in their water. The blivet manufacturer is externalizing the cost of waste disposal; his increased profits are being paid for at a remove by the increased health care costs of everyone downstream. 

That’s how externalities work. Back in the days when people actually talked about the downsides of economic growth, there was a lot of discussion of how to handle externalities, and not just on the leftward end of the spectrum.  I recall a thoughtful book titled TANSTAAFL—that’s an acronym, for those who don’t know their Heinlein, for “There Ain’t No Such Thing As A Free Lunch”—which argued, on solid libertarian-conservative grounds, that the environment could best be preserved by making sure that everyone paid full sticker price for the externalities they generated. Today’s crop of pseudoconservatives, of course, turned their back on all this a long time ago, and insist at the top of their lungs on their allegedly God-given right to externalize as many costs as they possibly can.  This is all the more ironic in that most pseudoconservatives claim to worship a God who said some very specific things about “what ye do to the least of these,” but that’s a subject for a different post.

Economic life in the industrial world these days can be described, without too much inaccuracy, as an arrangement set up to allow a privileged minority to externalize nearly all their costs onto the rest of society while pocketing as much as possible the benefits themselves. That’s come in for a certain amount of discussion in recent years, but I’m not sure how many of the people who’ve participated in those discussions have given any thought to the role that technological progress plays in facilitating the internalization of benefits and the externalization of costs that drive today’s increasingly inegalitarian societies. Here again, an example will be helpful. 

Before the invention of blivet-making machinery, let’s say, blivets were made by old-fashioned blivet makers, who hammered them out on iron blivet anvils in shops that were to be found in every town and village. Like other handicrafts, blivet-making was a living rather than a ticket to wealth; blivet makers invested their own time and muscular effort in their craft, and turned out enough in the way of blivets to meet the demand. Notice also the effect on the production of blivet waste. Since blivets were being made one at a time rather than in pallet loads, the total amount of waste was smaller; the conditions of handicraft production also meant that blivet makers and their families were more likely to be exposed to the blivet waste than anyone else, and so had an incentive to invest the extra effort and expense to dispose of it properly. Since blivet makers were ordinary craftspeople rather than millionaires, furthermore, they weren’t as likely to be able to buy exemption from local health laws. 

The invention of the mechanical blivet press changed that picture completely.  Since one blivet press could do as much work as fifty blivet makers, the income that would have gone to those fifty blivet makers and their families went instead to one factory owner and his stockholders, with as small a share as possible set aside for the wage laborers who operate the blivet press. The factory owner and stockholders had no incentive to pay for the proper disposal of the blivet waste, either—quite the contrary, since having to meet the disposal costs cut into their profit, buying off local governments was much cheaper, and if the harmful effects of blivet waste were known, you can bet that the owner and shareholders all lived well upstream from the factory.  

Notice also that a blivet manufacturer who paid a living wage to his workers and covered the costs of proper waste disposal would have to charge a higher price for blivets than one who did neither, and thus would be driven out of business by his more ruthless competitor. Externalities aren’t simply made possible by technological progress, in other words; they’re the inevitable result of technological progress in a market economy, because externalizing the costs of production is in most cases the most effective way to outcompete rival firms, and the firm that succeeds in externalizing the largest share of its costs is the most likely to prosper and survive. 

Each further step in the progress of blivet manufacturing, in turn, tightened the same screw another turn. Today, to finish up the metaphor, the entire global supply of blivets is made in a dozen factories in  distant Slobbovia, where sweatshop labor under ghastly working conditions and the utter absence of environmental regulations make the business of blivet fabrication more profitable than anywhere else. The blivets are as shoddily made as possible; the entire blivet supply chain from the open-pit mines worked by slave labor that provide the raw materials to the big box stores with part-time, poorly paid staff selling blivetronic technology to the masses is a human and environmental disaster.  Every possible cost has been externalized, so that the two multinational corporations that dominate the global blivet industry can maintain their profit margins and pay absurdly high salaries to their CEOs. 

That in itself is bad enough, but let’s broaden the focus to include the whole systems in which blivet fabrication takes place: the economy as a whole, society as a whole, and the biosphere as a whole. The impact of technology on blivet fabrication in a market economy has predictable and well understood consequences for each of these whole systems, which can be summed up precisely in the language we’ve already used. In order to maximize its own profitability and return on shareholder investment, the blivet industry externalizes costs in every available direction. Since nobody else wants to bear those costs, either, most of them end up being passed onto the whole systems just named, because the economy, society, and the biosphere have no voice in today’s economic decisions. 

Like the costs of dealing with blivet waste, though, the other externalized costs of blivet manufacture don’t go away just because they’re externalized. As externalities increase, they tend to degrade the whole systems onto which they’re dumped—the economy, society, and the biosphere. This is where the trap closes tight, because blivet manufacturing exists within those whole systems, and can’t be carried out unless all three systems are sufficiently intact to function in their usual way. As those systems degrade, their ability to function degrades also, and eventually one or more of them breaks down—the economy plunges into a depression, the society disintegrates into anarchy or totalitarianism, the biosphere shifts abruptly into a new mode that lacks adequate rainfall for crops—and the manufacture of blivets stops because the whole system that once supported it has stopped doing so. 

Notice how this works out from the perspective of someone who’s benefiting from the externalization of costs by the blivet industry—the executives and stockholders in a blivet corporation, let’s say. As far as they’re concerned, until very late in the process, everything is fine and dandy: each new round of technological improvements in blivet fabrication increases their profits, and if each such step in the onward march of progress also means that working class jobs are eliminated or offshored, democratic institutions implode, toxic waste builds up in the food chain, or what have you, hey, that’s not their problem—and after all, that’s just the normal creative destruction of capitalism, right? 

That sort of insouciance is easy for at least three reasons. First, the impacts of externalities on whole systems can pop up a very long way from the blivet factories.  Second, in a market economy, everyone else is externalizing their costs as enthusiastically as the blivet industry, and so it’s easy for blivet manufacturers (and everyone else) to insist that whatever’s going wrong is not their fault.  Third, and most crucially, whole systems as stable and enduring as economies, societies, and biospheres can absorb a lot of damage before they tip over into instability. The process of externalization of costs can thus run for a very long time, and become entrenched as a basic economic habit, long before it becomes clear to anyone that continuing along the same route is a recipe for disaster. 

Even when externalized costs have begun to take a visible toll on the economy, society, and the biosphere, furthermore, any attempt to reverse course faces nearly insurmountable obstacles. Those who profit from the existing order of things can be counted on to fight tooth and nail for the right to keep externalizing their costs: after all, they have to pay the full price for any reduction in their ability to externalize costs, while the benefits created by not imposing those costs on whole systems are shared among all participants in the economy, society, and the biosphere respectively. Nor is it necessarily easy to trace back the causes of any given whole-system disruption to specific externalities benefiting specific people or industries. It’s rather like loading hanging weights onto a chain; sooner or later, as the amount of weight hung on the chain goes up, the chain is going to break, but the link that breaks may be far from the last weight that pushed things over the edge, and every other weight on  the chain made its own contribution to the end result

A society that’s approaching collapse because too many externalized costs have been loaded onto on the whole systems that support it thus shows certain highly distinctive symptoms. Things are going wrong with the economy, society, and the biosphere, but nobody seems to be able to figure out why; the measurements economists use to determine prosperity show contradictory results, with those that measure the profitability of individual corporations and industries giving much better readings those that measure the performance of whole systems; the rich are convinced that everything is fine, while outside the narrowing circles of wealth and privilege, people talk in low voices about the rising spiral of problems that beset them from every side. If this doesn’t sound familiar to you, dear reader, you probably need to get out more. 

At this point it may be helpful to sum up the argument I’ve developed here:

a) Every increase in technological complexity tends also to increase the opportunities for externalizing the costs of economic activity;

b) Market forces make the externalization of costs mandatory rather than optional, since economic actors that fail to externalize costs will tend to be outcompeted by those that do;

c) In a market economy, as all economic actors attempt to externalize as many costs as possible, externalized costs will tend to be passed on preferentially and progressively to whole systems such as the economy, society, and the biosphere, which provide necessary support for economic activity but have no voice in economic decisions;

d) Given unlimited increases in technological complexity, there is no necessary limit to the loading of externalized costs onto whole systems short of systemic collapse;

e) Unlimited increases in technological complexity in a market economy thus necessarily lead to the progressive degradation of the whole systems that support economic activity;

f) Technological progress in a market economy  is therefore self-terminating, and ends in collapse. 

Now of course there are plenty of arguments that could be deployed against this modest proposal. For example, it could be argued that progress doesn’t have to generate a rising tide of externalities. The difficulty with this argument is that externalization of costs isn’t an accidental side effect of technology but an essential aspect—it’s not a bug, it’s a feature. Every technology is a means of externalizing some cost that would otherwise be borne by a human body. Even something as simple as a hammer takes the wear and tear that would otherwise affect the heel of your hand, let’s say, and transfers it to something else: directly, to the hammer; indirectly, to the biosphere, by way of the trees that had to be cut down to make the charcoal to smelt the iron, the plants that were shoveled aside to get the ore, and so on. 

For reasons that are ultimately thermodynamic in nature, the more complex a technology becomes, the more costs it generates. In order to outcompete a simpler technology, each more complex technology has to externalize a significant proportion of its additional costs, in order to compete against the simpler technology. In the case of such contemporary hypercomplex technosystems as the internet, the process of externalizing costs has gone so far, through so many tangled interrelationships, that it’s remarkably difficult to figure out exactly who’s paying for how much of the gargantuan inputs needed to keep the thing running. This lack of transparency feeds the illusion that large systems are cheaper than small ones, by making externalities of scale look like economies of scale. 

It might be argued instead that a sufficiently stringent regulatory environment, forcing economic actors to absorb all the costs of their activities instead of externalizing them onto others, would be able to stop the degradation of whole systems while still allowing technological progress to continue. The difficulty here is that increased externalization of costs is what makes progress profitable. As just noted, all other things being equal, a complex technology will on average be more expensive in real terms than a simpler technology, for the simple fact that each additional increment of complexity has to be paid for by an investment of energy and other forms of real capital. 

Strip complex technologies of the subsidies that transfer some of their costs to the government, the perverse regulations that transfer some of their costs to the rest of the economy, the bad habits of environmental abuse and neglect that transfer some of their costs to the biosphere, and so on, and pretty soon you’re looking at hard economic limits to technological complexity, as people forced to pay the full sticker price for complex technologies maximize their benefits by choosing simpler, more affordable options instead. A regulatory environment sufficiently strict to keep technology from accelerating to collapse would thus bring technological progress to a halt by making it unprofitable. 

Notice, however, the flipside of the same argument: a society that chose to stop progressing technologically could maintain itself indefinitely, so long as its technologies weren’t dependent on nonrenewable resources or the like. The costs imposed by a stable technology on the economy, society, and the biosphere would be more or less stable, rather than increasing over time, and it would therefore be much easier to figure out how to balance out the negative effects of those externalities and maintain the whole system in a steady state.  Societies that treated technological progress as an option rather than a requirement, and recognized the downsides to increasing complexity, could also choose to reduce complexity in one area in order to increase it in another, and so on—or they could just raise a monument to the age of progress, and go do something else instead.

The logic suggested here requires a comprehensive rethinking of most of the contemporary world’s notions about technology, progress, and the good society. We’ll begin that discussion in future posts—after, that is, we discuss a second dimension of progress that came out of last week’s discussion.