The inherent vice of capitalism is the unequal sharing of blessings – Winston Churchill 1945.67
It is commonly asserted that the average contemporary Westerner enjoys greater affluence than the kings and emperors of the pre-industrial era. Certainly an investigation of the palace of Suleiman the Magnificent in Istanbul is instructive: While between 1520 and 1566 he led an empire controlling much of South Eastern Europe, Western Asia, the Caucasus and Northern Africa, Suleiman’s personal lavatory, for example, although lined in marble may as well have been of concrete. It essentially consisted of a hole in the floor. He possessed no transport apart from that which meandered at the pace of a horse or with the lassitude of sail. He knew nothing of flight, except that of birds, bats and insects. He communicated at a distance only by messenger.68 His entertainment was necessarily live and his literature limited.
This chapter discusses the relationship of affluence to human well-being and the importance of nature in the provision of wealth. It argues that the economics of capitalism have distorted humanity’s relationship with the natural world and how alternative forms of measurement, if genuinely adopted by important institutions, may clarify that bond.
While it may be true of affluence and the average Westerner, it is probably not true of the average Southerner that she is better off than an ancient emperor. Her lavatory will not be lined in marble. It will at best be a hole on the floor. There may well be no floor. It will probably not be a flushing system connected to a sewer. It may be at some distance from her dwelling, or not a facility at all. It may be dangerous for her to even venture there for fear of violence (McCarthy 2014). She may know of crowded trucks and buses (especially in Africa) and trains (especially in India). Aircraft may be seen far above in the sky. She may possess a mobile phone and watch films using a communal diesel generator to power the DVD player. Neither, however, will protect her from the risk of death in childbirth or from infection by malaria, tuberculosis or HIV. She may well be one of billions who are vulnerable to multi- dimensional poverty (UNHDR 2014, p. 19).
The affluent Westerner and the impoverished Southerner are contemporary extremes in geography as well as recent history. Arguably they depend on each other: As Marshall McLuhan (1964) famously wrote, “affluence creates poverty”, meaning that the poor are poor because the rich are rich; wealth depends on the exploitation of others. However, the observation that the sun causes poverty does not hold throughout history. Ancient Egypt, the Khmer empire, and the Mayans were all civilisations of immense wealth, yet arose in tropical settings. Arguably all three failed to adapt to changing circumstance; the Egyptians failed to innovate,69 the Khmer did not cope with degradation of their irrigation system and Mayan agriculture failed to cope with drought (Diamond 2003). Today, the tropical city-states of Singapore and Hong Kong are icons of wealth. If it was not the sun that caused the poverty of the South, then what is it that causes the wealth of the West? Perhaps it is that the ‘North
67Churchill’s pointed corollary was “The inherent virtue of socialism is the equal sharing of miseries”, House of Commons, 22 October 1945.
68 The system of semaphores originally implemented by Claude Chappe shortly after the French Revolution could transmit messages more quickly and was a significant advance on the horse. However, it required the construction of towers and equipment, was subject to the vagaries of weather, and lacked privacy as well as linguistic subtlety.
wind made the Vikings’, or that overexploitation of natural resources − the denuded forest − led to the use of coal, in which power is concentrated (Nef 1977, pp. 140-141).
In stark contrast with people of the South, it was only during the twentieth century that it became possible for the majority of ordinary people in the West to enjoy unprecedented affluence – on a scale unimaginable before the modern era. This was an affluence free from past abject drudgery and the daily struggle for survival. It was an affluence that included the near universal availability of flushing lavatories. For the first time in human history it was possible for vast numbers of people to live fully rather than subsist, to freely exercise desires for leisure, for art and for knowledge beyond that of immediate need for food, shelter and companionship. Although interrupted by war and economic depression, this new widespread affluence was a product of three key factors – a new economic system, the exploitation of energy reserves and mass production.
The new economic system was based on “the lure of gain” for individuals effected through the market system, “the most important revolution, from the point of view of shaping modern society, that ever took place” (Heilbroner 1983, p. 17). This society-wide economic system – capitalism – was the third form of societal organisation that has evolved. The first was traditional (and largely agricultural), in which societies’ tasks were allocated according to custom, where son followed father, daughter followed mother, where occupation was often attached to caste. The second form was through command, the whip of authoritarian rule, whereby the pyramids were built and in more recent times, Soviet farms collectivised. Neither of these economic systems necessarily involved the transfer of money throughout society. But it was this third new system that introduced the novel idea of individual gain that, with widespread use of money both as wages and as wealth, could build upon earlier gains and involve whole societies in the advance of affluence. The reinvention of money during the Middle Ages was critical in this new system because, instead of barter, money required acceptance of the concept of value. Once this abstract concept was established, it led to its expression in a market that could be leveraged and exploited (Sattin 2014).
The exploitation of energy reserves remains central to this new economic system and to the affluence it has created.70 During the nineteenth century, the primacy of coal was established in fuelling new secondary industries, which could be located where labour was cheap, rather than where waterwheels could be powered (Klein 2014, p. 172). The conversion of coal to heat allowed steel production, mass transport (railways), mass electrification and new factories producing affordable consumer goods. During the twentieth century, oil and gas made individual autonomous transport (cars) and aircraft feasible. This fossil-based energy is highly concentrated, considerably more so than primitive windmill, waterwheel or animal power. Accordingly, without the extensive use of concentrated energy, modern affluence would not be possible. Metals, electricity and consumer goods cannot be provided on a mass scale by a horse plodding around the axis of some crude turbine. Rather, billions of tonnes of coal and billions of barrels of oil71 – or their equivalent – are needed each year to enable the elements of mass affluence.
Mass production techniques involved new factories producing affordable consumer goods. When applied to complex manufactures and use of the assembly line, this technique became
70 Indeed, one US physicist asserts that the maintenance of societal wealth is directly proportionate to the generation of energy (Garrett 2014).
71 According to the International Energy Association (IEA), global coal consumption in 2012 was about 7.7 billion tonnes, while oil consumption was about 32 billion barrels a year or 90 million barrels a day.
known as ‘Fordism’, after Henry Ford the car manufacturer,72 a term coined by Antonio Gramsci in his 1934 essay Americanism and Fordism. But the most important aspect of Fordism was its virtuous re-cycling of profits through increased workers’ wages, that then enabled the workers to buy the cars they made, that then enabled higher production, enabling lower unit costs through economies of scale and so on. Gramsci was sceptical about this virtuous cycle and questioned “the so-called ‘high wages’ paid by Fordised and rationalised industry”, rather suggesting that Fordism was “the ultimate stage in the process of progressive attempts by industry to overcome the law of the tendency of the rate of profit to fall” (Gramsci 1999 [1934], pp. 562-563). Growing affluence based on reducing the relative costs of new complex manufactures remains with us today. However, much of the lower costs of, for example, cars, apparel and homewares in the West is now due to exploiting the lower wage structures and economies of scale of the East, foreshadowed by Gramsci as part of an ‘international division of labour’ (Ibid, p. 607).
There are parallels between the economies of the early twentieth and early twenty-first centuries. In both eras the prices of iconic items continually fell while quality improved, due to the effect of scale:
Economies of scale allowed the robber barons to keep reducing prices and improving quality. Henry Ford cut the price of his Model T from $850 in its first year of production to $360 in 1916. In 1924 you could buy a much better car for just $290. The silicon sultans performed exactly the same trick. The price of computer equipment, adjusted for quality and inflation, has declined by 16 per cent a year over the five decades from 1959 to 2009. Each iPhone contains the same amount of computing power as was housed in MIT in 1960 (The Economist 2015a).
Definition
The word ‘affluence’ appeared in English around the mid-fourteenth century, according to the Oxford English Dictionary, and derives from the Old French affluence and Latin affluentia, "a plentiful flowing, an abundance, rich, copious", including a sense of ‘wealth’ from about 1600, from the notion of "a plentiful flow" of the gifts of fortune. The word ‘wealth’ is from the mid- thirteenth century Middle English ‘wele’ or ‘well-being’ and is based on the analogy of ‘health’. In economics, ‘wealth’ means ‘the sum of all goods and services that have an exchange value’ but it originally meant ‘happiness’, as well as its contemporary meaning of ‘prosperity in abundance of possessions or riches’. The association of affluence with wealth and thus with happiness may have been lost as a meaning because objectively the connection is in fact, not entirely clear. Rather, it is more of a paradox:
the happiness - income paradox is this: at a point in time happiness varies directly with income, but over time happiness does not increase when a country’s income increases (Easterlin & Angelescu 2009, p. 2).
This finding is based on an analysis of responses to questionnaires about life satisfaction and income in 37 countries in different stages of development.
The same study shows that people are more dismayed about loss of income than we are elated by an equivalent gain (Ibid. p. 12). In a similar vein, at the intersection of economics and psychology, there is also the profound observation that affluence is relative as much as it
72 The Ford Motor Company was one of the first multi-national corporations (MNCs). After incorporation in 1903 it expanded production to Canada in 1904, to Europe in 1917and to Australia in 1925.
is absolute. It is distressing if we are less affluent than our friends and neighbours and comforting if we are wealthier, irrespective of absolute levels of affluence (Veblen 1899, ch. 4, Solnick & Hemenway 1998, pp. 380-381). Thorsten Veblen, who coined the term ‘conspicuous consumption’, detailed the display behaviours of the wealthy that both symbolised and underscored their relative material superiority during the Golden Age of the late nineteenth century. 73 However, the abundance now generally enjoyed in the West is conspicuous relative to the scarcity of the South. And it appears to be built on fragile foundations.
At the individual psychological level, western affluence has also produced a dysfunctional behaviour known as hoarding. Cherrier & Ponnor (2006, p. 26) make a distinction between collectors, functional hoarders and non-functional hoarders. While collectors enjoy societal approval for their organised collections based on aesthetic or historical value, functional hoarders risk disapproval of family and friends because they find it difficult to part with many useless items for sentimental reasons or perceptions of wastefulness. Non-functional hoarders, however, risk not only societal intervention but also their own well-being and safety as a result of compulsive accumulations of valueless items. There is evidence that some of this hoarding behaviour may be due to perceptions of resource shortage originating, for example, during the Depression, during rationing in the 1940s or during the oil crises of the mid-1970s. Nevertheless, it is facilitated by affluence. Basic material goods in the twentieth and twenty- first centuries are cheap and diverse. In many cases they are made to be disposable, but instead, this stuff is hoarded as a form of psychological security. Sometimes its manifestation is extreme:
The Collyer brothers, for example, died in the United States in 1947 due to over- cluttered space. It is reported that their house contained 136 tons of refuse. One brother was buried alive when piles of rubbish collapsed on him, leaving his blind brother starving to death (Ibid, p. 6).
The world’s first shopping mall, ‘Southdale’ near Minneapolis in Minnesota, started in 1954 in a building complex purpose-designed by Victor Gruen and “spread like an epidemic across the USA and the rest of the world” along with convention centres, sports arenas and indoor theme parks. Such malls are an embodiment of mass consumerism, and despite the current prevalence of online shopping continue to exert a powerful attraction throughout the world. The term ‘Gruen transfer’ refers to the sense of disorientation many people feel when they first enter these spaces such that they forget their original intentions and buy more than initially planned (Sloterdijk 2005, p. 274).
Stuart Jeffries points to the stress associated with too much material choice that consumerism encourages:
Once upon a time in Springfield, the Simpson family visited a new supermarket. Monstromart’s slogan was “where shopping is a baffling ordeal”. Product choice was unlimited, shelving reached the ceiling, nutmeg came in 12lb boxes and the express checkout had a sign reading, “1,000 items or less”. In the end the Simpsons returned to Apu’s Kwik-E-Mart (Jeffries 2015, para. 1).
Aristotle viewed wealth as either ‘unnatural’ if it were attained through trade, or ‘natural’ if attained through “skilful management of house and land”. Trade is unnatural because it involves using things for other than their natural purpose, and because it involves money,
73 Although he was largely anticipated by Adam Smith (1776, p. 202): “With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches”.
which has no real use other than exchange. Thus the most hated, most unnatural form of wealth is that produced from money itself – usury the lending of money at interest (Aristotle 1952 [c. 330BC], 1258b).
Aristotle may have only been reflecting his class interests, however. Throughout history debtors have disapproved of interest while creditors have the opposite attitude. Because Greek philosophers were aligned with the landowning class who were often in debt, they did not like usury (Russell 1980 [1946], p. 198). Nevertheless, Aristotle presented a more profound insight: wealth of the household is limited, but monetary wealth, the spurious kind, has no limit and nor has the desire for it. As “money supplants other values and becomes their only measure”, no matter how affluent a person becomes, there is always a desire for more (Harvey 2014, p. 277).
Nonetheless, as far as the relationship between affluence and sustainability is concerned, there are several key dimensions. These include how affluence is measured, created and distributed, and how it relates to the environment, including its effects on resources, energy, species and habitats.
Measurement
While the invention and widespread use of money enabled the easy storage, measurement and accumulation of wealth, only since the 1930s were detailed national accounts constructed for government policies, especially in the UK and US, due to pressures of the Depression and in preparation for the Second World War (Van Dieren 1995, p. 39, Coyle 2014, p. 12). Up until that point, ‘the economy’ was essentially the private sector only. Government was excluded because it had minimal input into production. It was only since the Depression and the supporting General Theory of J.M. Keynes (1936)74 that government became significant in economic growth, especially in the US, Europe and the remainder of the West. In the Communist states of course, government was already pre-eminent.
The universal use of GDP to measure national wealth and economic growth is even more recent. While the measure was formally established in 1953 through the UN statistical system, its universal use did not occur until towards the end of last century. Up until then GDP was one of several similar but competing concepts, in particular Gross National Product (GNP), which measures the net wealth generated by national citizens and corporations, irrespective of their location. GDP, however, is the market value of everything produced within a country’s borders. With GNP, a US corporation operating in say Botswana, would have its profits counted towards US GNP. Conversely a foreign firm operating in the US would not have its profits counted towards US national figure. Gross National Income (GNI) is the same concept as GNP but uses an income rather than a production measure. One reason for the persistence of GNP and GNI as a measure of national economic output in the US, may be that unlike most countries, US income tax is payable irrespective of in which country its citizens reside. At the global level of course, all three measures are theoretically equal since total exports75 should equal total imports and production is accounted for but once in each system.
74 Keynes’ The General Theory of Employment, Interest, and Money was published in 1936, some years after Franklin Roosevelt’s practical application of demand creation through New Deal government spending on infrastructure, employment and welfare programs.
75 In practice however, total global exports tend to be higher than imports, probably due to political pressures to produce favorable statistics. Interplanetary imports and exports (soil, rocks, spacecraft, solar-powered robotic cars) are not usually ascribed a monetary value, but may have to be in the foreseeable future as their volume and total value increase.
The gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that