"Why Things Are Going to Get Worse and Why We Should be Glad" by Michael Roscoe

Richard Smaby
Figure 3 from "Why Things Are Going to Get Worse.."
Figure 3 from "Why Things Are Going to Get Worse.."
BOOK REVIEW

Michael Roscoe writes clearly and accessibly in "Why Things Are Going to Get Worse.." about the impending demise of the current capitalist economic system. He proposes a simple model of wealth based on natural resources and the labor and ideas that convert them to usable goods. He contrasts it with the false wealth derived from speculation in financial markets. He uses this model to give a detailed critique of current economic practices and propose a solution. He backs his critique up with 130 accessible charts well matched to the points he is making. His arguments are persuasive and have clarity that provokes the reader into considering counter arguments – something that fosters informed debate!

His critique comes at a time when we are ready to hear it. We watched as financial markets melted down because of greed and short-term thinking inherent in large corporations unregulated by government. And we are watching a jobless recovery leading to a depressed economy.

He uses the word 'real' a lot: real wealth, real labor, real money, real work, real industry, real value, real demand, as exemplified in "the lack of demand is caused by the reduction in real wealth of the majority of the population, which is linked to the shortage of real jobs and the related decline in real wages." [p 55] Fortunately, he explains what he means by 'real' in each instance.

He sees competition among corporations and countries as a significant cause of the decline of the world’s economies. Corporations focus on reduction of the work force to reduce cost and gain advantage in price in the market. Technology with its attendant increase in productivity has accelerated this decline. He argues (heresy to some) that in the long term it makes more sense to emphasize full employment and tolerate higher prices, so that workers have money to buy the goods being produced.

Technology has also enabled corporations to exploit the environment with unbridled efficiency. The consequence is that we are eroding potential for future real wealth.

He sees easy money and debt as other causes of economic decline. He points to credit bubbles as evidence for this. Easy credit and debt create false wealth and lead to a devaluation of real money that represents real labor.

He lays preservation of the environment, regulation of financial markets and competition squarely at the foot of government, since corporations by their nature are incapable of managing these themselves.

We can debate his arguments. The distinction of real labor versus non-real labor can lead to a slippery slope. For example, consider the manufacture of an automobile. The physical parts of the car clearly come from the earth originally. The labor needed to turn the raw materials from the earth into metal and glass parts fits the his idea of real labor. With the many parts that now include computer programs a car has ideas among its parts. So, it would seem that computer programmers are doing real labor. So far, so good. How about the marketing specialists, who help develop the requirements that drive the design?  Then there is the advertising group tasked with creating in the mind of the customer the need for the latest style and performance factors, which encourages consumption. And what about the investing done by the financial arm of the corporation that allows it to take risks with innovative automotive design?  Is there a clear line here?

We can criticize isolated points in his argument for a more sensible economic system. However, we must acknowledge his audacity and clarity in proposing a systemic change integrating the natural world, labor, ideas and government policy.

He spends the lion’s share of his book on the historical record, perhaps disappointing the reader who expected more about why things are going to get worse and why we should be glad. He is a rather mild mannered revolutionary, by his own admission, hoping for a course correction as opposed to sinking the ship. He does provide a host of predictions in the form of graphs extrapolating the historical data decades into the future – something that graphs are particularly good at showing. These graphs do indeed show things getting worse: the U.S. debt rising out of control; oil, coal and natural gas being used up, global CO-2 emissions continuing upwards; huge imbalance in population trends in terms of where resources are located; healthcare spending out of control.

His argument about why we should be glad relies on the assumption that things can only get so bad before a course correction must necessarily happen. When the rich begin to feel the financial pain and revolt threatens the wealthy suburbs, they will agree to more government regulation. He also offers hope for international change, such as occurred historically when nations cooperated at the Bretton Woods Conference at the end of The Second World War to create the International Monetary Fund and the World Bank.

It is not a bad thing to spend the bulk of the book on the historical record. It is just that the title doesn't reflect the main content of the book. Perhaps the following title would be more accurate: "World Economies in Disarray – How We Got Here and What We Need to Do About It – Soon!"

In the conclusion he lists "Ten steps towards a better world." Sharing the wealth more fairly works better for all socio-economic classes. Full employment is a goal that enables the sharing of wealth, in contrast to the race to the bottom in cutting costs and numbers of employees. We need to reduce competition among nations so job creation can occur everywhere, not just where labor is cheap. A global authority is needed to regulate the global marketplace. Tax havens and offshore accounting lead to unfair benefit to the few and to less sharing of wealth and should be ended. The global authority should create a global central bank that oversees debt restructuring and introduces a global currency linked to a commodities index that would end speculation in currency exchange rates. In general we need to restore responsible finance practices through government regulation. We need to keep taxation systems simple to reduce tax loopholes. Strengthening transparency in government goes a long way toward reducing undue influence and corruption and strengthening democracy. We need to invest in renewables, sustainable agriculture and construction.

Even if critical readers don't completely accept Roscoe's model of an economy based on natural resources plus labor and ideas, they will find it a brilliant method to organize and invigorate the discussion on how to solve our current economic, environmental and political problems.

The motivated reader can consult data resources he uses, which are available to every one. Among them are the following.

Not everyone has the patience and skill to sift through all the data available and come up with a coherent picture. We have to thank Roscoe for that.