The stock market took another stumble downward yesterday. The press attributed it to a struggling global economy and especially the "debt crisis" in Europe. But there is an idea that is being seriously discussed in parts of the blogosphere, but which gets no mention in any mainstream press at all. The idea is that the world economic system as we know it is about to violently shake apart, because it is absolutely not designed to survive a contraction in the Global Economy.
Most people don't understand that economic growth is not just a happy by-product of our current capitalistic system, it is the crucial underlying ingredient. To the extent that any of our wealth is counted in dollars or yen or euros - as opposed to beans or goats or clean shirts - the "value" is only and solely determined by what other people are willing to believe it is worth. So far, fine, that's basic market economics. But we have taken things one step further and built our economy of value on what we think things are going to be worth in the future. If we think there is going to be more wealth in the future, then it makes sense to invest your money in something that will return your capital plus a bonus - or if there isn't a clear investment opportunity handy, to lend it to someone who can invest it. You eventually get back your capital plus a bonus. In fact those loans themselves, that empty spot in your wallet, since they are supposed to gather the bonus to itself, become valuable things themselves, to be sold or used as collateral to borrow more money to create more debt, more bets on the future.
However, if there is no growth, if there is stagnation or contraction, then those interest-accruing debts become burdens, whose value is shrinking rather than growing. Investments become losses. A stock market loss of 5% means that trillions of dollars in wealth that people thought they had - just vanished. Next week trillions more may disappear.
The main difference between the mass media and the blogosphere is that the mass media (which are all embedded in vast multi-national corporations wedded to the status quo) speak as though perpetual economic growth can be regained and sustained. In the blogosphere you hear serious and well-articulated doubts. Many economists and environmentalists have tried for decades to point out that our system wasn't sustainable over the long term - that physical and environmental limits (or just incompetence) would eventually bring growth to an end.
But the coming decline in fossil fuel accessibility could itself bring an end to growth. So to could the disruptions of climate destabilization or the acidification of the oceans. Even an expansion of unrest among the poor and dispossessed of the world could be enough to put an end to growth. Because, when the fall of global finance happens, a vast amount of imagined wealth is going to go with it - and people are not going to have the things they thought they did.