The Spiritual Dimension of the Economic Crisis

"The worst financial crisis in a century." In his victory speech on election night, that’s how our President-elect, Barack Obama, described the financial crisis which has swept across the country and the world this fall with breathtaking depth and rapidity.

Did I hear that right? The worst financial crisis in a century? This is 2008, a hundred years ago it was 1908. That hundred year period covers not only the oil shocks of the 1970's, but also the Great Depression, when we had an unemployment rate of 25%.

At first it may sound as if Obama made a rhetorical slip; things aren’t that bad yet, are they? But basically, he’s right. The reason is that this economic crisis is not fundamentally about housing speculation, interest rates, or anything like that. It’s about the environment: we have hit the limit of the abilities of the earth to support our profligate lifestyle. With that, the era of economic growth — based on fossil fuels — is about to come to a crashing close, in a more or less apocalyptic fashion depending on our response.

We might ask a corresponding question: is this the most serious environmental crisis in a century? Actually, it’s the most serious environmental crisis in 65 million years. That’s how far back we’d have to go in earth history to find a parallel to the extinctions going on today. That was when a gigantic meteorite hit the earth, kicking up a cloud of dust into the atmosphere, leading to a global cooldown and the extinction of the dinosaurs, and about 75% of all other species as well. Estimates vary about current rates of extinction: some estimate that every 40 years 10% of all species go extinct, others say that within 100 years, 50% of all species now here will be extinct. All of this is a symptom of how massively and destructively humans have dominated almost every square inch of the earth.

What can spiritual groups do about this? In this country, this question applies primarily to Christianity, since that’s the dominant religion in this country, but it also applies to Buddhist, Hindus, Jews, Moslems, whoever. This is not a crisis about "how do we get the economy to work." It is not even at its root an environmental crisis, although resource depletion is the immediate reason that the economy isn’t working. It is a spiritual crisis that goes to the heart of what it means to be human.

Simple living is one of the most fundamental teachings of Jesus. Jesus says "you cannot serve God and money"; tells the rich young man to sell everything he has, give it to the poor, and follow Jesus; and advises us not to be anxious about what we will eat, drink, or wear.  The early followers of Jesus shared everything in common and "there was not a needy person among them." 

Is the meaning of life just about accumulating more and more material possessions? Does this mean that we ought to loot and pillage the environment to do so? The answer seems obvious: of course not.  Surely this does not require profound philosophical thought.  But not many people propose a way of implementing it.  That’s the problem, and it is a problem that few political leaders can touch without encountering public wrath. I am not faulting political leaders as such; but there are practical limits to what a political leader can do. The last President to ask for meaningful sacrifices from the American public was Jimmy Carter, who was run out of office in a Reagan "it’s morning in America" landslide.

It has something to do with oil

Environmentalists have been warning for decades that our unsustainable use of irreplaceable fossil fuel resources cannot go on forever. But the day of reckoning was always thought to be comfortably in the future — something our children or grandchildren would have to deal with. Well, surprise, surprise, that day is here. Despite a dramatic surge in oil prices, eventually leading to $147 a barrel this summer, oil production barely budged. It has remained essentially flat since 2005, despite every economic incentive we had to produce more. This is because we are near the limit of human ability to extract oil from the earth; there’s only so much oil to go around, and at some point we will reach the maximum point of oil production for the entire world — "peak oil."

In 1956, M. King Hubbert predicted that U. S. oil production would peak in the year 1970. He was widely ridiculed, but turned out to be right on the money — U. S. oil production did peak in 1970. Will the world oil production also reach a peak some day? There are many respected petroleum geologists who are now saying that the world oil production will peak by 2015. Chris Skrebowski, editor of Petroleum Review, says it will be in 2011. Ken Deffeyes says that it already arrived, in 2005.

Because there are different definitions of "crude oil" and statistics are being revised, whether 2005 is still the current peak is unclear.  But the differences between 2005 and 2008 are so minimal that for most practical purposes it doesn't matter; oil production has been essentially flat during this time.  The day when supply cannot meet demand has already arrived, and the result has been "demand destruction" — people are not consuming oil just because the economy is in the tank.

The important thing is that we are hitting the geological limits of oil supply very soon, and that already it hasn’t been able to keep up with what people wanted. That is what is behind the current economic crisis.

People will object, "what about the housing mortgage crisis? What about predatory lenders? What about bank failures and the $700 billion bailout? Doesn’t this have something to do with the current economic problems?" Certainly they do. But, in the first place, the economic loss from the rise in energy prices probably has had more of an immediate impact on the economy than the housing loans gone bad. Jeff Rubin, chief economist at CIBC World Markets, stated that

"By any benchmark the economic cost of the recent rise in oil prices is nothing short of staggering. A lot more staggering than the impact of plunging housing prices on housing starts and construction jobs, which has been the most obvious brake on economic growth from the housing market crash. And those energy costs, unlike the massive asset writedowns associated with the housing market crash, were borne largely by Main Street, not Wall Street, in both America and throughout the world."

In the second place, the housing crash was in large part caused by the escalation of oil prices. Bankers made dubious loans, and people bought oversized houses, because they thought the housing market was going to go up forever. They thought that the housing market was going to go up forever, because they thought that the economy was going to expand forever. But the economy can’t expand, at least as long as it has hit the edges of resource limits.

Others may object that the price of oil has now come down significantly — it has shed over half of its value of just months ago. That, however, is a product of the recession (or depression) that we’re entering into. Oil consumption in the United States has dropped 9% in the last 12 months. If this had happened in 1998, the world would have gasped in amazement at the environmental consciousness suddenly emerging among Americans. Of course, this drop has nothing to do with environmental consciousness: it’s because the economy has collapsed. When the economy starts to recover again, we will once again encounter this upper limit on the ability of supply to meet demand.

It has to do with the rest of the environment, too

There is no clear path out of this downturn. We probably needed to act 30 or 40 years ago, but we didn't. If we try to restart the economy by stimulating further use of fossil fuels — and notice that most of our economy is based on fossil fuels — this is just going to make the ultimate economic collapse even worse, because the supply of oil is not getting any more plentiful.

We could change our source of energy, but that is considerably more difficult than it sounds. The world is burning almost 1000 barrels of oil a second, and it is going to take a lot of wind and solar power to make up for that. U. S. energy is 85% from fossil fuels; and most of the remaining 15% comes from nuclear, hydroelectric, and wood, none of which can be easily expanded.  We hear a lot of talk about solar power and wind power; but solar PV, wind, and geothermal combined today still come to less than 1% of U. S. energy. Even with a command economy, a conversion could take decades; with a chaotic economy subject to a public that doesn’t understand the seriousness of the crisis, it is not clear that it can be done at all.

Moreover, oil is only one of the many environmental constraints we face. Oil is what we’re starting to encounter shortages of first, because it’s so marvelously useful and so widely used.  In a way, we are blessed that it is oil that we are encountering shortages of and not some other more critical resource.

Our lifestyle also wastes water, coal, natural gas, wood, forests, metals, and indeed all the natural resources humans rely on. "Peak coal" could be in another 15 or 20 years, "peak natural gas" is probably closer than that. So we shouldn’t think that even if we can find some "substitute" for oil (which would be quite an accomplishment in itself), that this is the end of our problems.  And if that substitute turns out to be another fossil fuel, the consequences of global warming could be even worse than that of declining oil supplies.  

Soil erosion may be the most serious obstacle to human expansion: soil used by humans for agriculture typically erodes 10 times faster than it is formed through natural processes.  It is even worse than this in much of Africa and Asia.  Because human population has been less than 10% of what it is today for 97% of the history of agriculture, this has not really mattered that much until today, when humans cover the globe. 

Livestock agriculture is tremendously wasteful; 90% of all agricultural land in the United States goes to livestock agriculture (all of the grazing land, and about 2/3 of the crop land).  It takes 5, 10, or more times as much land, water, and energy to produce meat as it does to produce an equivalent amount of plant food.  

Spiritual groups are in a unique position to contribute to this discussion. They do not have to run for reelection. People need to know, and indeed want to know the truth. Churches and other spiritual groups can say simple and important truths such as:

1. The current crisis is caused by overconsumption, environmental destruction, and depletion of natural resources.

2. We have in fact hit the limits to physical and material growth.

3. The situation demands that we will have to make sacrifices in our standard of living, which will in fact decline.

Good News

Does this mean that we are faced with gloom and doom? It may be gloom and doom for the economic system, but that does not mean it is gloom and doom for us as human beings. While we certainly should be concerned about people who will lose their jobs or go hungry -- and while we should certainly do something about it -- in fact there is some good news here. Here are a few ways in which our world should get better:

If industrial civilization slows down and contracts, the animals and plants on the earth will breathe a huge sigh of relief. Humans, and human activities, now blanket the planet. Humans almost regard it as a sin if they are not productively using every last square inch of the planet. The collapse of industrial civilization has to be regarded as good news for every non-human species on the planet.

If the United States had made the 1939 standard of living the goal point of material wealth, then between 1939 and 1964 we could have used our increased productivity and technology to reduce the work week from 40 hours to 20 hours with no cut in pay (John Kenneth Galbraith, The New Industrial State, second edition 1971, pages 272, 365).  We could probably have made further reductions since then. The 1939 standard of living in the U. S. was one of the highest in the world at the time, and in fact is still one of the highest in the world. We need to shift to an economy where we work less and consume less.

3. We’ll be healthier.

One of the expected results of a contraction in industrial activity is the decline of industrial agriculture, which today relies on high inputs of energy, water, and land, to create meat and animal products for the more affluent people in the world. If this supply were restricted, we’d probably be a lot healthier. In Denmark in the First World War, because of the Allied blockade of the continent, food supplies were restricted. The entire country went on a lacto-vegetarian diet. The result? Mortality dropped by 30%. When the war ended, people went back to their old ways of eating, and the mortality rate went back up. The same thing happened in Nazi-occupied Norway in the Second World War, when death due to circulatory diseases dropped by 40%. This is because many, or most, of the diseases which Americans face are the "diseases of civilization" such as heart disease, cancer, stroke, obesity, and diabetes — mostly caused by too many animal products.

4. We’ll have more friends.

Any kind of future in which we consume less and have more time on our hands will most likely mean that we’ll have more friends. Since there won’t be as much to go around, we’ll have to work together and share things.

Is the meaning of life (in the mundane, everyday sense) just to accumulate as many toys as possible? Are the churches really going to go along with this? Isn’t the message of Jesus precisely the opposite?

It’s impossible to turn on the TV without being bombarded by a whole way of consciousness that emphasizes consumption and material wealth. It’s not just the advertisements, which have been continually increasing ever since it was "deregulated" — it’s also the programming itself, which shows what wealthy people do, how they spend their time, and what their problems are — and how much happier they’d be if they just had a few more things. Our infrastructure encourages consumption as well. If I want to drive my car to church, someone will be there to sell me the car, loan me the money to buy it if necessary, build a parking lot at the church, and provide gas stations all along the way in case I need to buy gas or repair the car. If I want to ride my bicycle, I will have to dodge cars in traffic, fix my own flats, and be in shape. Society does not encourage simple living, and in fact makes it as complicated as possible.

Some Practical Things to Do

We are social creatures and there are limits to what we can do at once.  The example of how to get to church sustainably, which I just cited, is one example.  Here are some suggestions for individuals:

1. Ride a bike or take the bus.  I'm not expecting everyone to bike to church, but we should be thinking about it, and examining practical ways in which we could make this easier for everyone to do. 

2. Become a vegetarian.  This is probably the easiest way for an individual to have an immediate and significant effect.  Again, I'm not expecting everyone to become a vegan overnight.  There are a range of possibilities, either eating less meat, being a "conscientious carnivore," lacto-vegetarianism, all the way to veganism.  But at the least we should be thinking about it and asking ourselves, "what, in a practical way, stands in the way of this, and what can we do about it?"

3. Go solar, and superinsulate your house. Again, this is pretty expensive, so I'm not expecting everyone to do this, but if you can, you probably should.  We need to reduce the carbon footprint of our houses if we are going to have a hope of coping with this crisis.  We could also adopt other solutions, like moving in with each other, which would decrease the "ecological footprint" of our houses. 

4. Help your friends.  As the economic crisis deepens, we'll see an increase in homelessness.  I'm not expecting everyone to take in strangers in off the street.  But most of the homeless are not the mentally ill, permanently homeless people that we often think about (and who should be taken care of), but people who are in an uncomfortable transition.  We need to take care at least of our friends.  Again, we should ask, "what, in a practical way, stands in the way of this, and what can we do about it?"

And here are some suggestions for societies and governments.  This is not a complete list or a definitive list, but summarizes some key points.  Obviously, we need to stop building a high-energy infrastructure and start building, quickly and massively, a green infrastructure.  This probably means raising taxes among other things.  If that also means drafting everyone in the country into civilian service so that we can feed and shelter everyone and build renewable energy, then that's what we need to do.  

We need to acknowledge that we're all in this together. You can't implement massive social changes with a top-heavy, elitist economic structure; and that means most likely a steep progressive income tax. The difference between the highest and lowest salary in the nation probably should not be much more than 10 to 1.  

W e need to shift to electric power, and strengthen the grid; land transportation should be mostly rail and mostly electric, unless it's bicycles.  Al Gore's proposal to go to a 100% renewable electric grid in 10 years is a good starting point, but it needs to go further, because we need to shift a lot of transportation to electric. We should quickly shift most transportation of goods from trucking to rail, which should be electrified.  Bicycling should be encouraged.  People can also be transported by light rail within cities, and by "heavy rail" between cities.  Where's Amtrak?

Shift towards an organic, vegetarian agriculture. Three reasons: (1) Livestock agriculture is tremendously wasteful of natural resources; 90% of all agricultural land in the United States goes to livestock agriculture.  This would dramatically reduce our footprint on soil, water, and forest resources and human dominion over the earth.  (2) This will also do wonders for our health care system, people are sick mostly from "diseases of civilization" from eating high-fat animal products and processed and refined plant foods (corn syrup, trans fats, etc.).  (3) We may need to prioritize agricultural exports for the rest of the world some of which may be in an even worse mess, instead of feeding it to our own cattle.  (Probably not fruits and vegetables, but things that can be efficiently shipped like grains and beans). 

Control population.  This means putting an emphasis on nonviolent birth control.  Everyone's reproductive habits, unfortunately, do affect what happens to the rest of us.  

As soon as we figure out how to do all of the above, export whatever know-how we have to the rest of the world.  The rest of the world is going to be in a mess and they will need our agricultural exports, which is one reason why we need to move towards vegetarianism and be helpful in this respect.  Information is free and if we've got any, we should make it available for everyone. 

In summary

This fairly short and probably over-simplified list of "things to do" is daunting enough.  But the key problem does not lie with how to do any of them.  The key problem is our idea that humans are happier the richer they are. 

As long as we do not deal with this idea of what it is to be human, we will never know peace. If we persist in encouraging consumption, then even if we replaced oil with lots of renewable electricity and electric cars, we’d still face insurmountable problems. It would be soil erosion, lithium shortages, deforestation, or something else, that would be the next crisis.  

Our fundamental problem is neither economic nor technical. It is spiritual. It’s not a question of either "when will peak oil hit?" or "how can we build more wind turbines and solar panels?" Rather, it is a question of what do we want out of life? Do we want to accumulate more and more material possessions? Of course many of every generation have rejected materialism in different ways, whether it was the "beats" of the 1950's, the "simple living" movement of today, or those who, disgusted with the materialism of the churches, fled to the deserts to start the monastic movements of the fourth and fifth centuries.

But today "simple living" is not just a lifestyle choice: we have to live not only with the consequences of our own actions, but the actions of those around us. Even if we choose simple living, if everyone else chooses a materialistic lifestyle, it is our shared environment which suffers catastrophic degradation. The need for the message of Jesus has now achieved apocalyptic proportions; saving the planet is not a question of individual salvation.

There are a lot of religions, ethical systems, and philosophies on the planet, and many people (even if nominally religious) do not pay that much attention to religion anyway.  The message of simple living is not peculiar to Jesus; it can be found in many traditions — Buddhism, Islam, Judaism, Hinduism, whatever. So go forth and preach your own tradition. 

It is also true that we need scientists to help out.  We'll need economists, ecologists, physicists, just about everyone. We cannot ignore the secular realities. But just to have science on your side is not enough, as the prophets of global warming have discovered — we’ve known the science for a long time, and we’ve disregarded it. 

The essential problem that we face is a spiritual one.