CAN WEALTH AND ORDER SURVIVE?
Foreword
According to a recent BBC report, some of America’s wealthiest men are, or might be, investing in bunkers, or, as the article’s headline puts it, “doom prepping”. Author Zoe Kleinman goes on to mention just one of the many reasons why bunkers may be an impractical idea:
“I once met a former bodyguard of one billionaire with his own “bunker”, who told me his security team’s first priority, if this really did happen, would be to eliminate said boss and get in the bunker themselves. And he didn’t seem to be joking”.What’s much more interesting, though, is why anyone might seek the dubious safety of underground self-incarceration. Fears of nuclear conflagration, or of environmental catastrophe, might, perhaps, answer this question. The worry emphasised in Kleinman’s article is the potential advance of artificial general intelligence (AGI) or artificial super intelligence (ASI).
The real motives for “doom-prepping”, though, have nothing to do with conflict, climate or a takeover by autonomous technologies. The wealthiest must know that today’s extremes of wealth are abnormal, and might know, too, that the unfolding ending and reversal of material economic growth further stacks the odds against the continuation of this anomaly.
They might be uncomfortably aware, as well, that there is no form of wealth that can be guaranteed to survive extremes of economic, social and political turbulence.
As the economy contracts and the financial system fractures, any wealth contained in stocks, bonds, real estate or even money itself is at existential risk. The merit of gold is limited to being ‘less bad than’ other forms of wealth storage, whilst the energy-aware will be fully conversant with the frailties of crypto.
1
Even if you studied it at university – which very few of us have – the word “revolution” is likely to evoke passé images of beret-wearing Che posters on students’ walls, re-runs of Citizen Smith or Monty Python’s Life of Brian, and the endless tedium of debates about the minutiae of Marx, Engels, Lenin, Trotsky, Gramsci and Mao.
In short, the very idea of “revolution” has come to seem, not just outdated, but positively outlandish.
But conditions are, in reality, increasingly trending towards the breakdown of the established order. Inequalities of wealth and incomes, already extreme, are being leveraged by economic contraction into matters of growing importance, and the essential, if vague, concepts of “merit” and “fairness” are very much in play.
Contemporary radicals might not be following any old-style Marxist-Leninist play-book, but anger with “the powers that be” is undoubtedly intensifying.
Whilst today’s highest-profile challenges to the status quo are essentially counter-revolutionary – even nostalgic – in character, we cannot expect this situation to continue, as hardship widens, and anger and cynicism deepen.
The redistribution of wealth from a minority to the majority has played little role in the Western political discourse over many decades, but conditions suggest that this contentious topic may soon return to a leading place in the debate.
Revolution – meaning ‘the rapid replacement of one regime with another’ – requires a combination, not just of unstable social and economic conditions, but of revolutionary ideas as well. In the absence of such ideas, revolution, thus defined, may seem unlikely.
But a chaotic collapse of order is all too possible. The guiding ideal of Western economies – an ideal not shared by China or Russia – is the sanctity of private profit. But the logic of profit may be a growth-dependent concept, and wholly unsuited to a post-growth economy.
The best ideas on offer might be those of “reform”, involving a voluntary retreat from extremes of inequality. This would be a retreat motivated, not by altruism, but by “fear of something worse”. Economic contraction will involve the redundancy of the big and centralised, and a revitalisation of the small and local, a context potentially favourable for reform.
The clincher, though, might be the impossibility of maintaining any form of concentrated wealth amidst the financial consequences of involuntary and unpreventable economic contraction.
2
There are, broadly, three courses that the development of society might follow. These can be called “reform”, “revolution” and “autocracy”, though these labels cover a mass of interconnected complexities.
“Reform” references a managed retreat towards lower levels of inequality. “Revolution” might mean the forcible replacement of one regime by another, or it might mean a less formal descent into disorder.
“Autocracy” might be invoked to head off revolution, or it might be imposed after the established order has collapsed into chaos.
3
Rebel forces, landing in the “soldier’s hour” before the dawn, were divided into three task-groups. The first took the presidential palace (and the adjacent guards’ barracks) entirely by surprise. The second seized the treasury with equal ease. Only at the radio station was anything more than purely token resistance encountered. By 9 am, the republic had a new government.
This, of course, is the stuff of a thousand thrillers, and the reference to the radio station places it in the middle years of the twentieth century.
But it does define the three things that any insurgency must seize, and over which any incumbency must retain control. These are executive power (including the security forces), money and information, the latter obviously including technology as well as the conventional media.
It seems unlikely, under current conditions, that any – say – Marxist-Leninist insurgency could seize control over these three critical levers of power.
But this isn’t to say that the incumbency couldn’t lose these critical levers in conditions of generalized disorder.
4
What this means is that we need to draw a clear distinction between “revolution” and chaos. The former seems an unlikely occurrence, but the latter outcome is all too plausible.
Chaos occurs where instability of conditions is abundant, but a nucleus of progressive ideas is absent.
Policing by consent has long been the preferred Western model for the maintenance of order, because policing by coercion is vastly more difficult, and drastically more resource-absorbing.
Likewise, the West has, hitherto, largely managed to combine government by consent with the preservation of wide differentials of wealth and income.
The prevalent logic has been that of merit – those who, gifted with greater abilities and greater energies, have accumulated wealth should be entitled to retain, and to pass on to their successors, the benefits of their own efforts.
The problems now arising include a delegitimization of wealth. In past times, wealth could be credited to the efforts of its possessors, but this connection is ceasing to persuade.
Policies have been adopted which, whether intentionally or not, are perceived to have severed the connection between affluence and merit.
5
What needs to be understood here is that, for reasons connected to energy and resource depletion, economic growth started to decelerate at least as far back as the “secular stagnation” of the 1990s.
The favoured tool for combatting this deceleration was credit expansion. This led, inevitably and in relatively short order, to the global financial crisis of 2008-09.
This was a moment at which a critical choice needed to be made. If the authorities had maintained a commitment to the principles of the free market, the over-extended (and the simply unfortunate) would have been wiped out. Opportunities would have opened up for new (and predominantly younger) economic entrants, with new ideas.
Instead, the decision was taken to prop up the system with the “monetary adventurism” of QE, NIRP and ZIRP, and to continue with these policies long after some form of stability had been restored.
The statistical effect has been to create an enormous bubble across multiple asset classes, but the social effect has been extraordinarily divisive.
Anyone who already owned assets in 2008 – or who worked in one of those sectors, mostly financial, in which incomes are linked directly to asset prices – has profited mightily from these policy choices.
But many others have suffered from rising rents, the insecurities of the casualised (“gig”) workplace, increases in the costs of necessities, and incomes that haven’t kept up with the broad level of systemic inflation.
6
In essence, a wedge has been driven between wealth and the nebulous (but powerful) concept of “fairness”.
It can be argued, in their defence, that decision-makers have been tied to an arc of inevitability – economic deceleration drove a recourse to “credit adventurism”, which led on to the GFC, and hence to the adoption of the “monetary adventurism” of those ultra-loose policies which in turn created a socially-divisive shift in the relationship between asset prices and incomes.
This, though, doesn’t give us much guidance on what happens next. When asset prices start to correct back towards a material economic floor far below current levels, do the authorities try to intervene – yet again – to prop up existing wealth-versus-income differentials?
Do they seriously believe that technological advances and monetary innovation can, together, hold back the tide of post-fossil economic contraction?
Or can a system that has already ceased to be “market capitalist” – and has become instead a post-capitalist expediency (PCE) – try to find new ways of defying the forces of economic and financial gravity?
7
Here’s a question for any historically-minded person reading this article:
Was Nicholas II overthrown in 1917 because Russians had been reading Marx, or because hardship and injustice had reached extremes at which the monarchy was no longer sustainable in the face of widespread popular discontent?
This poses a critical question in revolutionary theory, which is the comparative importance of ideas, and of material economic and social conditions, in the making of a revolution.
Lenin, of course, had clear views on this question. The first was that, whilst the rural oppressed (the “peasantry”) cannot make a successful revolution, the urban discontented (the “proletariat”) most certainly can. The second was that a revolution depends on the guiding hand of a “party”, a condition which presupposes a nucleus of ideas.
What Lenin was describing, though, was “revolution”, defined as the relatively rapid replacement of one regime by another. Though outside interference dragged things out until 1923, the Bolsheviks secured effective control of Russia itself within months of the downfall of the Romanovs.
Events were far more chaotic in France. Order was not restored until Napoleon took power in 1799, fully ten years after the revolution itself. Again, foreign interference played a major role, with counter-revolutionary and counter-imperial wars lasting from 1792 until 1815.
The French Revolution also reinforces Lenin’s emphasis on the “proletariat”. The only spontaneous revolt of the “peasantry” was the counter-revolutionary rebellion in the Vendée. No dominant party had an effective blueprint for a post-monarchical state at the time when the Ancien Regime was overthrown.
8
Though such assertions are all too often dismissed as propaganda, the Chinese authorities do remain wholly committed to Marxist-Leninist precepts, as modified for local conditions by Mao.
The Deng reforms did not, in any meaningful way, convert China to Western ideas. Behind Deng’s “two cats” allegory was a clear determination that, whilst capitalism might be allowed to serve China, China would never serve capitalism.
Beijing’s highest priority is the maintenance of high levels of urban employment, a challenge intensified by mass migration from the countryside to the cities.
Private profit is barely a consideration at all for the Chinese authorities. If losses and subsidies are required for the attainment of important national objectives, so be it.
Something not too dissimilar can be observed in Russia. The rise of the “oligarchs” was a feature of the country’s grim experiences in the 1990s. With those experiences confined to the past, billionaires are not required for the ongoing economic resilience of modern Russia.
The very different attitudes to private profit – largely disregarded in China, almost worshipped in the West – are critical to competition between the two leading economic powers. It’s at least arguable that the pursuit of profit is only possible under conditions of economic expansion.
The West in general – and the United States in particular – may be entering a profoundly different era with exactly the wrong set of ideas.
9
In its determination to maintain the central role of private profit, then, the West may be trying to board a train that has already left the station.
SEEDS analysis indicates that material economic prosperity – for which money is no more than an operating proxy and a symbol – is likely to be about 14% lower in 2050 than it is today. Based on current population trends, this would make the World’s average person about 31% poorer than he or she is now.
This average person’s woes will be greatly exacerbated by continuing rises in the real costs of necessities, and by soaring indebtedness, as and if the authorities continue with futile efforts to stave off material economic contraction using monetary tools.
But this “average” person is something of a statistical fiction, because dividing the numerator of aggregate prosperity by the population denominator takes no account of inequalities of incomes and wealth, inequalities which are extreme in the contemporary West.
At the more meaningful level of the median, huge numbers could be condemned to the desperation of destitution were current levels of inequality to be maintained under conditions of severe economic contraction.
Whilst it cannot necessarily be said that the Western authorities set out to create today’s extremes of inequality, these extremes are, as we have seen, products of long-standing policy choices, and inequality remains an issue that few Western leaders are minded to identify and address.
10
It would be relatively easy to reach depressing conclusions after this brief canter over the social, economic and political turf.
In essence, conditions are becoming conducive to a collapse of the existing order, whilst no intellectual blueprint yet exists for the channelling of discontent into the kind of ordered change-of-the-guard described, by Lenin and others, as “revolution”.
But the possibility of “reform” does exist. The template for this is the Britain of 1832, a society in which fewer than 180 people effectively controlled a country in which barely 4% of the English and the Welsh – and just 0.2% of Scots – were entitled to vote.
Though its passage was only enabled by proximity to “the verge of revolution”, the Reform Act of that year put the United Kingdom on a course which steered the country clear of the revolutionary ferment that plagued much of the rest of Europe during the following hundred years.
Essentially, Britain’s leaders opted for reform when the only alternative seemed to be the guillotines and the Phrygian caps of 1789.
Such an outcome might seem hopelessly optimistic until we recognise that economic forces are pushing towards a choice between chaos and managed change.
Centralised organisations are likely to be succeeded by localist alternatives as the burdens of central overheads become ever more unsustainable.
There is no form of stored wealth that can be relied upon to survive economic contraction.
The myth of a technological “rescue” from economic contraction might not long retain its plausibility.
Perhaps most importantly, a West which retains the ideal of personal profit is already being out-prepared by countries which do not.