Shadowlands: Ireland Election 2011

As we go to the polls a UN Food and Agricultural Organisation index measuring the price of a basket of food commodities surpasses the 2008 record and oil prices flirt again with $100 a barrel.  This is in the context of a battered world economy and a credit crisis that far from being resolved, has merely been displaced. Food and energy prices are pushing popular revolutions in the Middle-East, deposits are haemorrhaging from Irish banks, and debt re-structuring may be just around the corner. Yet we are not in a crisis, but at the edge of one.

As the election approaches, prospective politicians will claim a solution for a predicament that cannot be solved. They will claim a level of insight and dominion over systems they can barely intuit and over which they have little and declining control. 

The electorate assumes there must be a solution to get us out of recession, a way to reverse what we have come to call 'austerity'. More than that they will demand the right to the realisation of their expectations- their pensions and purchasing power, jobs and savings, health and education services.

The electorate and politics share a common perception of the world, and each will expect the other to reflect and confirm it. That perception or world-view has been formed in the context of our past experience, particularly that of economic growth. We have become accustomed to the reassuring thought that at the end of every recession, no matter how deep or long, growth and prosperity will again take off. There is a sense that economic growth, though sometimes wayward, is the natural order of things. It is a powerful idea both redemptive and optimistic.

It is the glue that holds together the social contract between the rich and poor, and between citizen and state. It stands behind our faith in technology and progress. It acclimatised us to increasing wealth, both personal and in the goods and services we expect from society and the state. It shaped our identity as the anxious consumer and choosy lover. We have become so habituated to growth's freedoms and promise, that we have barely noticed how its ties have bound us. 

Yet that growth is coming to an end, there will be no recovery. Ireland may lead the downward slide, but ultimately the prudent Germany and the workshop China will tumble also. This process, the collapse of the globalised economy is re-enforcing, a fall prompts a further fall and so on.

While we in Ireland have understandably focussed upon our own indebtedness, we are but one small but prominent casualty of an unprecedented credit bubble that still has the power to drive the global economy into a depression. This depression has the potential to be deeper and longer than the Great Depression, not just because of the size of the credit bubble, but because of the complexity and globalised nature of economies today.  The only possible way to avoid this is a wholly  unprecedented and rapid period of economic growth. This would require a major increase in energy use, particularly oil. This is because the only true laws in economics are the laws of thermodynamics.

But global oil production has been almost flat for five years. We are, according to diverse and respected analysts at the peak of global oil production now. The global economy is straining against limited supply, and prices are rising. Soon the amount of affordable oil available to the world will begin to decline. This constraint is already undermining our financial and monetary systems which are dependent upon growth, and exposing the effective insolvency of the global economy.  It will undermine the discretionary wealth and economies of scale that secure our employment. It will undermine food production and access. It will challenge the cost effectiveness and maintenance of our critical infrastructure.

Already we are seeing essentials such as food, energy, and debt servicing becoming more and more expensive. This is at the same time as the money we have to pay for such things continues to decline. Our consumption is being caught in a tightening  vice.  All the while jobs will be lost in the parts of the economy that provide non-essentials - and in developed economies this is where the the large majority of people work.

Growing bad debts and the accelerating decline in the credit money needed to facilitate the working of the economy is likely to lead to asset price falls, bank failures and bank runs, sovereign defaults, currency re-issues and freezes in international trade. Ireland may be first, but global contagion is coming.

We could see major drops in demand, oil and other energy prices may fall. But by then we will be much poorer, there may be gluts of oil on the market, credit will not be available for energy investment, and energy infrastructure will be harder to maintain.

So in this electoral period we are likely to witness the beginning of a process in which our world-views crash against a fundamentally unstable financial system and ecological constraints. A localised economy will no longer be something environmentalists aspire to develop, rather it will be forced upon us as bank failures, monetary uncertainty, and lost purchasing power sever links in the web of the global economy. But we no longer have indigenous economies to fall back upon. Our national economies, including our purchasing power, accessible food, jobs, and the maintenance of our critical infrastructure exist by virtue of their integration with the globalised economy.

Yes, we can and will build a largely local economy out of the ruins of a collapsed globalised one. It will be a much poorer one, and one where we will have lost much of what we take for granted. It can also provide a good life, where our basic needs are met,  where meaningful lives can be lived, and a rich texture of experience found.

But in the interim we face a huge resilience gap between the basic welfare and social needs once provided by integration with the globalised growth economy and what is available without it. We need to prepare for sudden shocks such as freezes in the banking system, and its effect on food access say, and the more strategic changes we require in agriculture, monetary systems, employment, and governance.

The problem with such preparations is that in many cases they are likely to be too late. This is  because the risk of severe financial shocks is rising all the time, and the issues are complex and often unclear. In addition real preparation would require a new and wide consensus on the nature of our predicament. But the emergence of such a consensus would lead to people and institutions taking rational action such as withdrawing deposits from banks, cashing in financial assets, or the refusing of credit. Such action would begin the re-enforcing process of a financial collapse.

So it seems we are in a real bind. What can we ask of ourselves and politics this election time? Maybe is is not about whether to choose one set of deluded policies over another, rather it is a question of character. Events are likely to surprise and disorient both politics and society over the coming electoral term. We need to try as well as we can to choose those who can respond to crisis which at the moment they scarcely realise might be possible. We need to choose those who might be steady and wise in a storm when all they have ever experienced was a light breeze.

The gap between expectations and what can be realised is historically a major source of popular anger, and can ignite a cycle of fear, violence, scapegoating, and authoritarian leadership from either left or right. It can give the avaricious the power and cover to appropriate wealth that should be used for collective welfare. Our politics will be better served by the modest, those who try to tell us the hard truths, and who admit where they are uncertain, rather than those who point to the easy way out.  As the stakes rise and the the decision arena becomes more complex, we will need people who can make bold and unpopular decisions in the interest of our collective welfare. And we must accept that sometimes such decisions will fail in their desired effects. We will need politics, but with a new realism about its limits.

For those of us who accept these risks, we need to appropriate responsibility that once might have been seen as the concern of government. We need to anticipate both the risks approaching and how we can prepare for such contingencies. We need to network, persuade, plan, collaborate and execute.

We should avoid letting the imagined fears of the future cloud the real pleasures of the present. We are entering the shadowlands,  embarking on a great adventure, the most important of causes, where we all have a role and much work to do. 

David is a physicist and human systems ecologist. He is a member of Feasta, The Foundation for the Economics of Sustainability, and director of Risk-Resilience.