A Political Education

It's pretty obvious by now (at least, I think so) that modern capitalism is in the process of failing. There are a number of good reasons for this, some to do with greed and short-sightedness, others to do with the strange idea that infinite growth is possible. That latter has always been a strange idea to me; not just unintuitive, but demonstrably wrong. However, the major concern now seems to be that money is essentially fictional, on a worldwide basis.

For most of human history, money - currency - has represented something real. Sometimes it was gold, sometimes grain, and there have been currencies backed by things as diverse as beef and beer. Modern money, though, is backed by... nothing much. Agreement, between national banks, that we might as well jst pretend there's something there, and as long as nobody stops pretending, we're all fine. The trouble of late seems to have been that many of the people working in and around these banks had too much imagination, and a truly stupendous amount of pretend money went into circulation.

There was an occasion last year in the US in which the imaginary money had to be reined in. Had it not, we're told, the US economy would have completely vanished down an equally imaginary plughole, leaving rather a vaccuum - all, essentially, by agreement.

Anti-globalist protestors have been pointing out the flaws of modern capitalism for more than a decade now. The main trouble seems to be that nobody has been able to suggest anything to replace it - nobody seems to be able to conceive of a global system that will work, be reasonably fair, and not subject to abuse by any party involved. I'm beginning to suspect that this is because we're looking in the wrong places - or, rather, the wrong place.

We're not finding a global solution because there is no global solution. We need local solutions, and each local solution needs to be able to negotiate exchanges with other local solutions, situation by situation. Different areas worldwide have widely different priorities. 

Look at real estate, for instance. In Ireland, despite recent falls in house and land prices, you still need to go into debt for, essentially, the rest of your life in order to own a piece of ground. There are exceptions; I know of a site in Wicklow which you could probably have for about 33% of a year's average pre-tax salary, rather than the 1000% you'd pay for a house near Dublin. Unfortunately, it's boggy, isolated, you can't buy it unless you have ancestors who were born in Wicklow, and in any case, planning permission will never be granted on it becase it's right beside the Wicklow Way.

On the other hand, in Detroit, you can buy a house - with some land - for less than a month's take-home pay. At the moment, these two situations exist in the same economy. There are all kinds of reasons for this, but look: it makes no sense. It's perfectly reasonable for land prices to vary based on location, quality, accessibility, and even historical notability, but these places in Detroit are not very different to the ones in Dublin that are selling for more than three hundred times the price. The prices are instead determined by... the prices, in a self-referential spiral.

It would make a lot more sense to decouple these. If you break the global system up into national, or even regional chunks, deliberately isolate them so that they have to make sense internally first, and only then permit an interchange, there will be more stability. No region, having to keep its own books straight first, is going to tangle with regions who don't have things settled - and that's good.  

Let me pull out an analogy here. If you need a huge amount of computing power, you don't try to build a single supercomputer. Nobody has tried to do that in years. Instead, you build hundreds of smaller, reasonably powerful computers, and then connect them together sensibly. You get a lot of computation, your whole system can no longer break down at a single point of failure, and the whole thing works better. And, obviously, anyone attempting serious computing with imaginary cycles is going to crash into reality rather quickly - as should have happened to the global economy years ago.

The best thing about this idea, I think, is that it will probably happen on its own. Sooner or later, some nation or region is going to look at its own economy, and say "Look, we can basically be self-sufficient. Take your fictional debts and credits and shove them; we're going our own way for a few years, and you can come back and talk to us when you have real goods and services to trade." Certainly, they'll need to import things - I don't think there's anywhere in the world that produces all the raw goods it needs, and very few regions can produce all the pharmaceuticals their population requires. But as long as the trade for such goods happens in real rather than imaginary terms, it will work.

Ireland officially entered a recession a couple of months back. So far, this has made little enough difference in areas immediately visible to me - one friend was made redundant, another was refused a car loan, and that's been about it. But assuming this continues - and it almost certainly will - there will be changes in the local economic landscape. The main one, I think, is not going to be in terms of money coming in, but in terms of what you can get for it, and how much what you can get costs.

I grew up in a recession, one in which Ireland was, to all intents and purposes, a second-world country. I didn't actually realise this until I was in my twenties; it was just how things were. There were a few things that were markedly different about that era and now, and some of them will return. First and foremost, we have access today to a vast range of goods. Many of these goods are imported. I'm not going to look at consumer goods or clothes here, just food. For an agricultural country, Ireland imports a frightening amount of food. Second, we don't have to go far to get those goods. Most people in Ireland, even in rural areas, can buy Parmesan cheese and out-of-season strawberries within, say, five miles of their homes. I'm pulling that figure out of the air, but considering Ireland's population density, and the distribution of Spars, Centras, Supervalus, etc, it seems reasonable.

These two things are going to change. First, importing food is expensive. It may not look like it, but that's because each step in the process has been optimised until it can't be optimised any more. To get to your table, the following things have to happen to food: it has to be grown, harvested, transported to a storage facility, if imported it's flown or shipped to another storage facility, distributed to the retailer, and then you go in, buy it, and bring it home. Each stage of that process involves a cost - in many cases, it's the cost of fuel, but there's also rental on storage locations and shelf space, and the credit facilities that all the companies involved make use of. Fuel costs will rise. Rentals will rise. Credit facilities will not be available. Each of these will impose an increase in the eventual retail price of food. And when food prices rise, and people cut down on what they can buy, retailers will go out of business.

The result of this will be that people will have to travel further to get their food, and when they get there, they'll get less for their money. As a corollary, fuel prices may rise enough that running cars becomes too expensive for everyday use, and then people are confined to the walkable (or cyclable, or ridable) distances - but that's outside the scope of this current set of thinking. 

So, what can people do to cope with these new circumstances? Here's a list of things my folks did when I was a kid.

Store Cupboards: When you DO get to a retailer, buy large amounts of storable food. Bread goes off within days, but flour keeps for months. Fresh vegetables are unusable after a few days as well, but canned goods last for years. Smoked fish and meat keeps longer, and frozen goods will last better as well, assuming you can rely on not having many power cuts. Rice and pasta keep better than potatoes. 

Grow Your Own: My grandfather grew about an acre of vegetables every year. I don't know if we ever bought vegetables; they certainly don't appear on the lists of groceries my mother kept. There's been a movement toward growing food lately anyway, for entertainment and health reasons more than economic ones, but it still works. I don't have an acre, but I'm willing to bet that will careful planning, I can supply all the vegetables we use for about 75% of the year from the space I do have.

Local Co-operatives: Somewhere near you (unless you're right in the middle of Dublin, and sometimes even then), there is someone who has the space and knowledge to keep a couple of pigs, and a number more who can keep chickens, ducks, or even quail. If you can offer some money to contribute to feeding these, or vegetables in exchange, you're on your way to having meat that hasn't come through the retail chain. It may involve a local retailer, certainly, but the butcher may well be happy to deal with the raw materials in exchange for a share.

Planning: This is something that plenty of people do anyway, but more of it is needed if you have limited resources. You can't rely on buying what looks good when you do get to a stocked supermarket; you need to go out with a list of goods, and a set of planned meals that will last until you're next out. If the market is offering special deals, you can adjust your plan on the fly, but arriving home with goods that won't last you until the next trip, or will go off before they can be used, is no longer a viable option. You can only change the plan if you have a plan to begin with.

Deliveries: For something that's seen as a bit of a luxury now, deliveries will become a lot more useful. In plain old cost terms, both in time and money, it's a lot more efficient for a retailer to send out one driver with boxes of goods on a round trip to multiple customers than it is for each customer to drive in, select their own goods, and drive back again. Deliveries work well with planning.

There are a few things that are going to make things easier, though, than it was in the 80s. First, we have computers,  the internet, and mobile phones. This makes many things easier - planning, deliveries, running a co-op, and managing your stores. Second, we have better public transport now, and that's going, of necessity, to see more use. Thirdly, more people can work from home now than ever before. And fourthly, the whole how-do-I-deal-with-all-this question is much easier to answer when you can hit the internet for information than when you were reliant on books and occasional phone calls.

So - am I overthinking all this? Or do you agree, and have more coping strategies in mind? Or do you think that none of this is going to happen? Let me know, in comments or emails.