Why our economy 'required' the Gulf oil spill
Earlier this month, environmental and clean energy activists, as well as coastal communities breathed a much needed sigh of relief when the Obama administration reversed last spring’s reckless decision to open up new offshore areas to oil drilling. Now, thankfully, the coastlines of the Pacific, Atlantic and the eastern Gulf will be spared the same fate as the Western Gulf into the foreseeable future. In a year of oil disasters and energy policy failures it’s a much needed cause for celebration. But on the eight month anniversary of the Deepwater Horizon spill, as we enjoy this rare bit of good news we shouldn’t let ourselves forget that the American offshore oil industry is still growing – over 10,000 wells in the Gulf and counting – and that growth is an imperative that it will stop at nothing to obey.
That should be the major lesson that we take away from the gulf spill. Tougher industry rules are needed, but there is no way to effectively regulate an industry that has grown so large, and that is driven to keep growing and growing. 10,000 wells mean 10,000 opportunities for blow out preventer failings, 10,000 opportunities for human error – 10,000 chances for another catastrophe. And those risks only multiply as the rigs push into deeper and deeper water under the gun of consumer and investor demand for more.
Unfortunately though, as with so many of the other crises caused by capitalism from the recent financial crisis, the popular narrative ignores profound systemic problems to focus on the actions and failings of a few companies or individuals. Public villains like Tony Hayward or the Wall Street bankers allow us to wrap up complex issues in tidy packages and avoid confronting inconvenient truths. Even claims about lax regulatory systems, while true, distract us from the bigger picture.
But if we take just a few steps back, that bigger picture quickly emerges with startling clarity: we see that to end the spills, we need more than regulation; we need to take away the growth imperative. And not only because the industry has grown too big to regulate, but because regulation is a limit that it is systemically designed to circumvent. Just as sharks can never stop moving, under our current economic design, corporations have to grow in order to survive. Stock market speculators won’t tolerate a corporation or an economy that’s simply big enough, or even too big. It has to be ever bigger. Indeed, according to growth economists a “healthy” global economy has to maintain a constant rate of three-percent annual compound growth. In an infinite world where resources aren’t scarce and markets don’t get saturated with surplus dollars, such an approach might work. But we live in a world where resources like oil are rapidly dwindling, and where markets that produce real goods have become so saturated that speculators have few frontiers left where they can keep that three percent ‘healthy’ growth going.
In such a world continued growth depends on the invention of fictions. So with no real markets left that could produce the desired profit margins, Wall Street invented a fictitious market in mortgage assets. Similarly, the oil industry has run out of easily accessible reserves; only it doesn’t have the luxury of creating fictitious ones – though it sometimes tries. Instead, to get bigger, big oil has had to push drilling into ever riskier and costlier environments and invent the fiction that this can be done safely and profitably without cutting corners.
Unfortunately reality has a way of catching up with these fictions and smacking them down with devastating force, as we’ve learned the hard way with the biggest recession since the Great Depression and the worst oil spill in U.S. history.
And herein lies the really frightening truth about our growth economy: because fictions are essential to its continuation, the crises those fictions unavoidably create are also essential to its continuation. In other words, oil spills, recessions and high unemployment are necessary evils that we must accept if we want to maintain the fiction of endless growth.
To stop the crises, we have to shift to an economic system that’s based in reality. And, again, it won’t be enough to try to try to limit growth capitalism, since that system is programmed to bulldoze its way through regulatory limits. Even a carbon cap won’t be enough to check the oil companies in a growth economy. Such retail fixes need to be pursued, but they won’t be effective until we’ve committed ourselves to a wholesale shift away from the growth model.
Fortunately, it turns out that the best alternative to the growth fiction – the steady-state economy – won’t just spare us the crises of growth, but help us build the truly prosperous global society that growth has been unable to deliver. As outlined in the Center for the Advancement of the Steady State Economy’s (CASSE) recent report Enough is Enough, the pathway to a steady-state economy will be paved with an array of policies that will benefit us economically, environmentally and socially by dramatically reducing debt, stopping population growth, securing employment, distributing income and wealth, reforming the monetary system and limiting resource use and waste production among other things.
It’s a tall order, no doubt, but even though the odds may seem to be currently stacked against such a wholesale transformation, it turns out that the opportunities to realize it will eventually be handed to us by growth capitalism itself. The basis for such hope was, ironically enough, articulated well by one of the ultimate high priests of growth capitalism, Milton Friedman:
Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.
If there’s one thing that we can count on, it’s that capitalism is sure to hand us another crisis before long. In the meantime, to ensure change, we simply have to do our best to pack the many cracks in the growth edifice with the ideas of a steady state economy. So when that edifice finally collapses under its own weight and we start to sift through the rubble, those bright ideas of the steady state will be lying everywhere, beckoning to be picked up.