The Big Crash

It’s Not Just You. We’re Living Through The Worst Breakdown Since the 1930s (and Our Systems and Institutions Need Radical Reinvention.)

If you’re alarmed by the way things are going in the world…you should be. It feels to me as if we’re living through a Big Crash. What I mean by that is that the world’s great systems are broken. They can’t be mended. They need to be reimagined and redesigned and reinvented. But so far — there seems to be as little will to do that as there as in insight into it.

Hence, an age of paralysis, despair, trauma, and backlash. Your anxiety is very real, it means something — your gut is telling you all the above, just like mine is.

The fundamental system that’s broken is the global economy. That’s not a surprise — America designed and invented it, and the global economy has come to reflect America’s bizarre and grotesque economic outcomes. America is now a country of a tiny number of ultra rich, who effectively own everything, and one of something very much like neo serfs — the average American will die in debt, which means he’ll never (in net terms) own, earn, or save anything. Anything.

That shattering inequality has gone global, as a natural consequence of the global economy America built. It fought war after war and destabilized nation after nation to put together a capitalist world — or at least as capitalist a world as was possible. “Free trade” deals (freedom for corporations), floating currencies, speculation, privatization, stock markets, and so forth. The consequence is that inequality is skyrocketing across the globe. But that’s an anodyne phrase. We don’t often stop to think about what it means.

What it means in hard terms is that the middle class is imploding in society after society. Even the vaunted Canadian and European middle classes, better protected by generous social contracts, are beginning to decline. The working class is fast becoming something like a caste of digital serfs, roaming from on demand gig to on demand gig, scavenging the landfill of prosperity for today’s ride, task, job, detritus.

Money is hoarded at the top. So much of it that the ultra rich, banks, and corporations literally don’t know what to do with it. All the yachts and designers wardrobes have been bought.

So they shovel it “offshore”, into hidden accounts, where their loot is stashed away for a rainy day. Keynes would have called all these “imbalances” — in his day, they emerged between countries. In our day, they have re-emerged between classes, across countries. Because money is hoarded at the top, it doesn’t flow through the rest of the economy…and the result is stagnation for everyone else. Life becomes a bitter struggle, as your bills perpetually rise — but your income doesn’t. (Hence, incomes are flat in every rich country — a fact that predicts more, not less, extremism.)

In technical terms, we might say something like “capitalism is causing a collapse of the social structure (by creating a lack of demand.)” In plain English, that means that the structure of a healthy society — a small number of rich (not extremely rich), a large, stable middle, and a small, shrinking, number of poor…all that is imploding. Instead of creating a healthy, stable, enduring middle class, optimistic about its future, securely anchored in place, instead of creating a small, ever shrinking number of poor…the class that global capitalism really created was a global ultra-rich (and vast armies of the precarious, broke, and powerless to serve them.)

So now society is beginning to revert to something much more like a premodern structure — a tiny number of people so wealthy they are in a different caste, and a very large number of people who serve them. Think of the days of aristocracy — the aristocrats owned more or less everything under the sun — huge chunks of cities like London and Paris, huge swathes of land in the countryside, palaces that made today’s mansions look like shanties. They gave themselves grand titles and wore ornate uniforms and created strange myths that they had “noble” blood to trick everyone else into believing all that was just and fair. Hence, that system prevailed for centuries.

Think of the difference between a gentle bell curve — and a pair of pincers. A neofeudal caste society what that capitalism — unable to sustain itself — built, in country after country, not the kind of broad, stable social structure of shared prosperity that so much depends on. Like what? Like democracy, trust, meaning, and happiness.

As a result of the global economy failing, polities are, too. What happens when there is such tremendous inequality? The first thing that happens is that the rich who have become ultra rich try to purchase polities wholesale to defend their gains. That’s what happened in America. The ultra rich funded extremist movement after movement, to (literally) eviscerate the government, which was the only force in society that could check and restrain predatory capitalism. They succeeded. Corruption follows inequality as naturally as the moon orbits the earth.

But that’s not the only way in which a broken global economy is producing a failed politics. What happens when middle classes collapse? Nationalism, authoritarianism, and fascism, all do. When people begin to live at the edge, when they are constantly teething on the razor’s edge of mere subsistence, they become easy meat for demagogues, who blame an economy’s problems on anyone even more powerless still. Immigrants, refugees, gays, women — anyone who is outside the in-group, the dominant tribe.

All that’s a solution to the problem of stagnation. The pie is shrinking. How are we to have more — just like we were promised? We will take some from them. Those dirty, filthy subhumans. They are the reason we are poor. If we can just cleanse ourselves of them — and take all they have, too — we will be Great Again.

It’s the story of Weimar Germany imploding into Nazi Germany. And today, it’s — scarily — beginning to play out across the globe. There’s America, run by literal white supremacists. There’s China, imprisoning a million people. There’s India, where an aggressive nationalism rules. Even in gentle Canada, extremists have carried whole provinces.

But none of this is a coincidence. It’s a consequence of middle classes who are either imploding, like in America, or who are struggling, like in India, China, and Canada. Those economies might be “growing”, it’s true — but they are not for anyone who isn’t ultra rich at this point. Even in places like India and China, the cost of living is far outpacing gains in average income. The result is stagnation for everyone below the 90% threshold. And when economies stagnate, social structures collapse — and the rise of extremism is as predictable as the sun coming up tomorrow. (Hence, even in places like India and China, which American economists point to as great successes, intolerance and hate and hardcore authoritarianism are beginning to rule.)

The three great problems of this century — inequality, stagnation, and social collapse — are all linked in this way. The linchpin holding them all together is capitalism. The fourth and fifth great problems of this century — climate change and mass extinction — are forms of inequality and social collapse, too — we still just don’t see trees and rivers and bees as members of our society, just as objects, so we don’t make that mental link yet. But one day we will: we’ll say that just as capitalism ate through the middle class, it ate through the forests and oceans, too.

When we write the history of this troubled century — or at least a troubled beginning to it — the verdict will be both clear and unanimous. Capitalism failed — and failed catastrophically — as a global economic system.

It wasn’t able to produce equitable outcomes for even the countries which it “lifted up” (they did the lifting, my friends.) It wasn’t able to produce the health social structures vital for the functioning of a democracy — a stable middle class, a small, shrinking number of poor — but precisely the opposite: the rich became ultra rich, the middle imploded, and the poor grew, as a new neofeudal caste society of haves and have-nots emerged. And it let democracy be bought lock, stock, and barrel by those new ultra rich, who soon enough cleverly used the institutions of democracy to destroy itself, as in Brexit or Trumpism, so they could defend their gains. As if all that weren’t enough to deal with, capitalism ate through the planet, too. It left the environment devastated. The climate began to change, as the planet warmed rapidly. Life as we know it began to die off. Later, we’ll describe these as forms of stagnation and inequality, too — for the natural world, for other beings, for all the things that we depend on.

The country that built the global economy — its destiny shows us the fate of the rest of the world, too. No matter how rich or powerful a nation gets, if its run the way America is, the result isn’t a healthy society — it’s a caste society of the broke, powerless, and impoverished serving the ultra rich. And more and more nations are following precisely that path, falling like dominoes.

America was to be the bellwether for the global economy it had built. That was only natural — it was the model it wanted the world to follow. But it’s collapse was a microcosm of all the implosions the world was going through, too. American cities didn’t have clean water. They didn’t have decent food. It’s people lived and died in poverty — no matter how hard they worked, or how much they tried to save and invest. Its super rich decimated its polity. And in the end, the people — enough of them — turned to extremists to protect them. At this point, they were like little children — literally. They had been traumatized into infantile regression. Their adult minds weren’t working anymore. Who could blame them? Living on the edge of life and death everyday has that effect. Trauma shuts down the adult mind. And so Americans sought safety in the strong, comforting arms of extremists — who told them to build concentration camps and walls and Gestapos.

American collapse teaches us the future that awaits the world at the end of the Big Crash. If we don’t reimagine and reinvent our broken system — now, beginning this minute — more and more countries will end up going that route, no matter how rich or successful or powerful they ever become. If a country of broke, impoverished, traumatized people, kids getting shot at school, unable to ever save a penny, whose adult minds don’t work anymore, fleeing to Trump dynasties, snarling at little immigrant babies, happily building cages to torture them in…if all that sounds like good news to you, then think again, my friend.

These are the days of the Big Crash. We had better get serious, fast, about building a better future. Because what will happens to us if we don’t is crystal clear, and it’s called America.

All Rights Reserved for Umair

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