The Coming Crisis: political economy and the ‘other crisis’

Martin Craig  - Research Fellow at SPERI 

If the cost of these basic commodities were to rise (perhaps due to diminishing supplies or increasing expense in their production/extraction) the result would be rising production costs more generally, creating pressures on economic growth, the movement of capital into more profitable but speculative financial channels, and growing distributional conflict within and between nation states over the diminishing proceeds of such growth as is obtained. If left to intensify indefinitely the result would be recession and economic collapse. In other words, the dynamic would constitute an economic and political crisis with huge implications for future economic growth, employment, equality, Eurozone integrity, financialisation and international relations – in short, it would impact upon all of the political and economic crisis tendencies already pointed to in this series.

Capitalist political economies thus have an important commonality: as well as a habitable biosphere, their ‘ecological conditions of possibility’ include access to rising flows of low-cost materials, food and energy in order to stave off political and economic crisis. Paradoxically, however, the ways in which these increasing flows have been secured have themselves proven crisis-inducing. Global warming (related to the ways that rising flows of low-cost energy have been accessed via fossil fuels) and biodiversity loss (caused, among other things, by the erosion of habitats through high-productivity agricultural practices) pose a threat to Earth’s capacity to support present societies. Socio-ecological crisis thus arises from the interaction of capitalist political economies’ ecological conditions of possibility and their ecological consequences.

Whilst there is little ambiguity that contemporary political economies do face a socio-ecological crisis, there is much greater uncertainty as to its precise nature, and thus on how to address it. One interpretation sees the challenge of resolving socio-ecological crisis as one of rapid technological change in a political-economic context of entrenched institutions and interests that favours continuity with environmentally impactful practices. Its proponents argue that new materials and techniques already exist that could mitigate the environmentally damaging impacts of rising materials, energy and food production whilst keeping their costs low, allowing capitalist political economies to continue to grow. The difficulty lies in devising effective strategies to navigate and ultimately displace those forces that favour continuity with impactful practices, prominent among them being impactful industries that are of high significance to particular national or regional growth models.

Restructuring contemporary growth models in less impactful ways is no small task considering the costs involved and the political challenge of ensuring they are distributed in a just manner. Yet this framing does not represent the most intractable interpretation of the socio-ecological crisis. A second asserts that capitalist political economies are already facing rapidly increasing difficulties in accessing their ecological conditions of possibility. The reason is a lack of technologies able to simultaneously release expanded flows of low-cost materials, energy and food whilst also addressing the degradation of the biosphere. If this is indeed the case then an adequate prescription points towards radically different forms of social organisation.

One variant of this argument centres on recent trends in food prices and agricultural productivity, holding that the impactful techniques comprising the so-called ‘green revolution’ have now peaked as a method of expanding food production without a corresponding increase in the unit price of food. As evidence, proponents cite the global stagnation in the yield growth of staple crops since the 1970s, the thus-far lacklustre impact of biotechnology on the yield potential of cropland, and the erosion of diminishing productivity gains through invasive species and pesticide resistant ‘super weeds’.

An end to ‘cheap food’ poses a fundamental challenge to capitalist political economies because of its implications for wages. Food prices dictate the point of subsistence, providing an absolute floor beneath which wages cannot be pushed without provoking starvation and a legitimacy crisis. In a world in which agricultural productivity fails to keep pace with population growth or neoliberal capitalism’s demand for ever-cheaper labour, the capitalist core would either have to force wages below subsistence level (intensifying distributional conflict and ultimately impacting on growth), or appropriate supplies of food that would otherwise be consumed in the periphery (provoking who knows what manner of international crises in the present uneasy global context).

Of course, there are various short-term ‘fixes’ that might be proposed to secure a rising supply of cheap food even in the absence of a technological revolution (insects, we are told, may soon be on the menu). However more complex variants of the same argument can be constructed with reference to a range of commodity and fuel price data. All point to plausible uncertainties concerning contemporary capitalism’s future access to flows of low-cost basic commodities upon which growth depends.

This amounts to an ecological inflection of a much older theory of capitalist crisis – ‘over accumulation crisis’, characterised by ‘too much investment capital chasing too few profitable investment opportunities’. In this view, financialisation and neoliberalisation reflect barriers to capital accumulation in the productive economy. This contrasts with implicitly post-Keynesian ‘under-consumptionist’ approach of many political economists, for whom the present economic malaise reflects neoliberalisation and financialisation, and for some of whom green restructuring represents a means to simultaneously promote economic growth and address socio-ecological crisis.

This debate has played out among political economists for over a century. My intention here is not to endorse either interpretation, but to highlight its ongoing relevance of the debate as we apprehend the coming socio-ecological crisis. A failure of diagnosis risks proceeding with an inadequate response, and that is indeed a reason to be anxious.

The Coming Crisis SPERI blog series: In next week’s blog – published on June 8th – Nicola Phillips on the political-economic landscape in southern Europe and how this interacts with the idea of the ‘coming crisis’.