Read Online The End of Growth: Adapting to Our New Economic Reality by Richard Heinberg - Free Book Online

influential economist of the 19th century, a philosopher named Karl Marx, had thrown a metaphorical bomb through the window of the house that Adam Smith had built. In his most important book, Das Kapital , Marx proposed a name for the economic system that had evolved since the Middle Ages: capitalism . It was a system founded on capital. Many people assume that capital is simply another word for money , but that entirely misses the essential point: capital is wealth — money, land, buildings, or machinery — that has been set aside for production of more wealth. If you use your entire weekly paycheck for rent, groceries, and other necessities, you may occasionally have money but no capital. But even if you are deeply in debt, if you own stocks or bonds, or a computer that you use for a home-based business, you have capital.
    Capitalism , as Marx defined it, is a system in which productive wealth is privately owned. Communism (which Marx proposed as an alternative) is one in which productive wealth is owned by the community, or by the nation on behalf of the people.
    In any case, Marx said, capital tends to grow. If capital is privately held, it must grow: as capitalists compete with one another, those who increase their capital fastest are inclined to absorb the capital of others who lag behind, so the system as a whole has a built-in expansionist imperative. Marx also wrote that capitalism is inherently unsustainable, in that when the workers become sufficiently impoverished by the capitalists, they will rise up and overthrow their bosses and establish a communist state (or, eventually, a stateless workers’ paradise).
    The ruthless capitalism of the 19th century resulted in booms and busts, and a great increase in inequality of wealth — and therefore an increase in social unrest. With the depression of 1873 and the crash of 1907, and finally the Great Depression of the 1930s, it appeared to many social commentators of the time that capitalism was indeed failing, and that Marx-inspired uprisings were inevitable; the Bolshevik revolt in 1917 served as a stark confirmation of those hopes or fears (depending on one’s point of view).
    20th-Century Economics
    Beginning in the late 19th century, social liberalism emerged as a moderate response to both naked capitalism and Marxism. Pioneered by sociologist Lester F. Ward (1841–1913), psychologist William James (1842–1910), philosopher John Dewey (1859–1952), and physician-essayist Oliver Wendell Holmes (1809–1894), social liberalism argued that government has a legitimate economic role in addressing social issues such as unemployment, healthcare, and education. Social liberals decried the unbridled concentration of wealth within society and the conditions suffered by factory workers, while expressing sympathy for labor unions. Their general goal was to retain the dynamism of private capital while curbing its excesses.
    Non-Marxian economists channeled social liberalism into economic reforms such as the progressive income tax and restraints on monopolies. The most influential of the early 20th-century economists of this school was John Maynard Keynes (1883–1946), who advised that when the economy falls into a recession government should spend lavishly in order to restart growth. Franklin Roosevelt’s New Deal programs of the 1930s constituted a laboratory for Keynesian economics, and the enormous scale of government borrowing and spending during World War II was generally credited with ending the Depression and setting the US on a path of economic expansion.
    The next few decades saw a three-way contest between Keynesian social liberals, the followers of Marx, and temporarily marginalized neoclassical or neoliberal economists who insisted that social reforms and government borrowing or meddling with interest rates merely impeded the ultimate efficiency of the free Market.
    With the fall of the Soviet Union at the end of the 1980s, Marxism ceased to have much of a