You can’t not have noticed, by now, what they’re calling a “supply chain crisis.” Prices are up, inflation’s spiking — and it’s becoming harder and harder just to get stuff. What’s the deal? What’s really going on here? I have some bad news, and I have some more bad news.
It’s not a supply chain crisis. It’s the end of the economy as we know it. Yes, really.
The way that the story’s being told is this – it’s a “supply chain crisis,” because ports are backed up, distribution networks are struggling, while there’s been a huge spike in demand, now that COVID’s over. Sorry, but – and you probably already feel there’s something wrong with this story – none of it’s true.
There’s no huge spike in demand, really. People aren’t consuming more things – what there is is inflation. There’s a very big difference between those two things: people consuming higher quantities of stuff, versus paying more for the same amount of stuff. We are in the latter situation.
That matters, because it begins to explain why this isn’t just a “supply chain crisis.” The idea in that story is that the pandemic is ending, so people are buying things madly, more than ever before, more than they did before the pandemic, which is snarling supply chains, who can’t keep up with this explosion in demand. In fact, none of that is true. The pandemic isn’t remotely ending, and people aren’t buying more things than ever before, in some kind of relieved, joyous mania of consumption. They’re just paying more for the same stuff.
Does that mean that supply chains aren’t snarled? Sure they are, but it’s not because they can’t keep up with demand. It’s for a very different reason – the polar opposite. A lack of supply.
What does a lack of supply mean? Those are anodyne words we economists use, but in this case they’re very troubling indeed. They mean that our global economy can’t supply things at the same level that we’re used to.
One way of life – artificially cheap, easy, thoughtless, mindless consumption – is coming to an end.
Maybe, though, you think I exaggerate.
Let’s go through a small list of goods for which supply is now crashing.
The shortage of computer chips you probably know about – but maybe you don’t know that it’s in large part a climate change effect. Three factories which produced most of the world’s microchips – one in Texas, one in Taiwan, and one in Japan – were hit by blizzard, drought, and fire, respectively. Bang. Cars are backed up at ports because there aren’t enough chips to finish them.
One way of life – artificially cheap, easy, thoughtless, mindless consumption – is coming to an end.
Then there’s coffee. Coffee yields are way, way down. Why? Because fields got hit by frost and drought. Climate change again. Bean prices have nearly doubled in the last few months. Have you had trouble getting your favourite kind of coffee? I have. Now you know why. But coffee’s a pretty basic staple of everyday life. Prices are going to rise severely over the next… well, how long? Forever, more or less – maybe there’ll be good years, but on a planet that’s now experiencing rapid, maybe runaway heating, good luck getting your morning coffee.
Lumber prices, too, are soaring. Why? Well, just think about what happens on a planet facing a situation like ours. Whatever short term factors there are – this month people want to build sheds or whatnot, this month they don’t – we’re not going to be able to supply lumber the way that we used to. Bang. Prices rise – and keep on rising.
I could tell you similar stories about nearly every kind of good in the economy, from sugar to cars to electronics to fruit and vegetables. The truth is a dirty one – all of the stuff that we consume is made of nature. All of it. And there’s not enough nature left to keep on supplying us in the way we’ve become accustomed to. We have depleted it and killed it off.
Now we face, as a civilization, a turning point. There’s not enough supply to go around the way that it once did. Necessities are becoming luxuries. Prices are skyrocketing for basics like food, water, and energy, coffee and sugar, fruit and vegetables. Now maybe you get what I meant when I said: one way of life is coming to an end. Mindless, thoughtless consumption – me, me, me, I get what I want whenever I want it, shop till you drop, buy the latest fancy shiny thing – is over.
A historic turning point
The Age of Consumption is now coming to an end. You are beginning to live through it. Shortages and inflation are the result of a massive, historic turning point – we have hit the limits of global supply, of what the planet can supply to our civilization. Prices are now going to rise and keep rising, and shortages are going to keep intensifying, for everything.
This gargantuan supply shock we are now just beginning to experience is going to be one of the greatest economic events in human history – it is going to define the decline of our civilization, and its probable collapse, too. So what happens to countries, systems, people, societies, economies? They are going to go through a Big Crunch. Countries and people are going to have to learn, for the first time in post-war history, to make do with less.
Our civilization has a consumption rate of 80%. That’s an incredibly, incredibly high consumption rate. It means that for every dollar we earn, we spend 80% of it, and save or invest just 20% of it. If you consume 80% of what you’re producing, and invest or save just 20%, you’re probably not even going to break even. Why? Because it’s going to take more than 20% invested to keep the farm going. Sooner or later, you’re going to eat your way through your seedcorn. And that’s where we are as a civilization now.
The whole idea of civilization is about investments – collective ones. The Greeks had the agora. The Romans, the forum. Even more ancient civilizations had canals and waterways and temples and roads and farms and so on. Civilization is about investing, together, in things that raise living standards for all.
But what happens if you consume too much, and don’t invest enough? Your civilization falls apart, like so many have before.
We haven’t built a single system that elevates or educates anyone, or bonds people together, at global or planetary scale. Not one. All that we really did was sign a bunch of “trade deals,” which basically gave a handful of countries permission to rip the planet apart in the name of consumption.
But that approach – the neoliberal approach – to globalization we can now visibly see was catastrophic. It was OK to plunder the planet in the name of profit, hence the “trade deals” mostly written by mega-corporations. But it wasn’t OK to build any working systems or institutions at a planetary scale to actually take care of anyone or anything – from human beings to animals to trees or rivers or oceans. A consumption rate of 80% is doom for any civilization foolish enough to attempt it. It leads to collapse, by way of inequality, indolence, stupidity, and, eventually, poverty.
There’s not enough nature left to keep on supplying us in the way we’ve become accustomed to. We have depleted it and killed it off.
Growing poorer as a civilization
The hard truth that I’ve tried to lead you to is this.
We are now growing poorer as a civilization. That is what all this means, and is about. You’re not used to it – most people aren’t. They’re used to us getting richer as a civilization, unless they’ve had the misfortune to live in failed states where life rarely improves. That’s because the overall trajectory of our civilization has been to get richer. Prices have dropped, and goods became more abundant. It’s been that way for centuries now. Once, sugar was a luxury. Coffee was a marvel. A house was something only for the “noble.” We’re used to the slow, sure trajectory of a civilization getting richer, which means prices fall, goods become more abundant, and yesterday’s luxuries become today’s necessities. We’re so used to that path, that way, that story, that we don’t even think about it.
But now we are going to have to. Because what widespread shortages and inflation mean is, in the end, something very simple, brutal, and most of all, different.
Things have changed. We crossed a threshold. The Age of Consumption and Abundance is over. It was always fake to begin with – never accounting for the costs of killing a planet, sustaining democracy, being decent to each other.
The shortages are here to stay. So is the inflation. It means that people, even in the rich West, will have to make do with less. See the way that you have actually begun to think about what you consume, because now prices are skyrocketing? And maybe you can’t get certain kinds of things at all? Now you have to be much more measured, considerate, careful. You can’t be a mindless consumer anymore – or at least not for much longer. You are learning what it means to get poorer. You have to weigh your choices carefully now – because there is less to go around every day, for all of us.
That, in turn, will have catastrophic effects politically. Sudden poverty tends to create the social conditions in which fascism takes root – it’s hardly a surprise fascist movements are resurgent across the globe at precisely the instant our civilization reaches the turning point from getting richer to growing poorer. That trend will worsen, and boil over into very real chaos and conflict and violence, like it is in America.
Let us then try – though it’s hard for a mind to hold it – to learn the lesson of all this. Our civilization – the first human one at global scale – is failing now. It is beginning to collapse. It has finally, after centuries, crossed the line from getting richer to getting poorer. We are living through one of the most important and momentous turning points in human history.
But a civilization getting poorer means also that mindsets and attitudes and values – poisonous ones, of greed and narcissism and indifference and self-absorption – will finally have to change. That could be a good thing. It would be better for all of us to invest more in each other, in living things, in trust and community and bonds and intellect and art and science, than in dumb, mindless consumption. Because that is where happiness comes from. It is what civilisation is.
Umair Haque earned a degree in neuroscience at McGill University, and his M.B.A. at London Business School. He is the author of Betterness: Economics for Humans and The New Capitalist Manifesto: Building a Disruptively Better Business. This piece was originally published on Eudaimonia & Co
