The future of an affluent society - the case of Canada - Part Two

Economics

Economics like most of the disciplines into which we have divided modern knowledge (sociology, and psychiatry, for instance) has been built up on the basis of the examination of but a minute fraction of man's total experience on this planet - basically, that of the industrial era, no more than 150 years out of 3 or 4 million. What is more, this period is quite atypical of all other previous periods, and also non-recurrable -since its main features are dependent, among other things, on the consumption of a limited reserve of fossil fuels which have taken 300 million years to accumulate (since the end of the Carboniferous period), and which we shall have largely burned up in 300 years - the most valuable part, i.e. the oil, in less than 50.

Karl Polanyi, [73] George Dalton [74] and others have convincingly shown that modern economics simply does not apply to pre-industrial and, in particular, tribal peoples. One finds among the latter no trace whatsoever of the ‘homo economicus' who tries to maximise the return on various factors of production such as capital and labour. Instead, things, are grown, manufactured and distributed to satisfy kinship obligations, for ritualistic purposes, and in general to conform to socially approved norms and thereby to favour the acquisition of social prestige.

The more we examine the economic behaviour of primitive people, the more it becomes apparent, in fact that the principles of modern economics, rather than being of universal application, as we have been led to believe, apply at best, to but a specific period in our history - what is more, one that is fast drawing to an end.

Economics as an autonomous process

Underlying economics is the notion that the production-consumption process occurs in a closed system. [75] This is implicit to Marxist Economics, which regards labour as the only factor of production and hence as the rightful beneficiary of all the fruits of the industrial process. It is also implicit to capitalist economics, which, though it recognises that there are other factors of production - including land and resources for instance - prices them in accordance with their immediate value to the economic system only.

From the point of view of the economic system, their value is determined by supply and demand. To acquire value, something must thereby first enter into the production-consumption process and also it must become scarce. As Samuelson states,

"if there is no scarcity there is no economics, since the main justification of this discipline is to enable people to make the logical choice between benefits with different marginal utilities." [76]

The value of commodities increases when, to use the jargon of the economists, their marginal utility increases, which is simply a way of stating the law of supply and demand. Seen slightly differently, the more there is of a commodity, as Samuelson puts it,

"the less the relative desirability of its last little unit becomes, even though its total usefulness always grows as we get more of the commodity. So, it is obvious why a large amount of water has a low price. Or why air is actually a free good despite its vast usefulness. The many units pull down the market value of all units."

Since ‘cost' must imply reducing the value of something, it is not surprising that economics does not provide any formal means of taking into account the effect of the economic process on the biosphere, in other words ‘biospheric costs.' These are external to the economic system, functioning in a closed system as it is supposed to, and are thereby referred to as ‘externalities'. When it becomes impossible even for economists to ignore them, however, they can be ‘internalised', but no methodology is available for determining how this ‘internalisation' can be achieved. What is certain is that as economists are progressively forced to internalise biospheric costs, so does the economic process become even less viable. Janice Tait points out how this process has characterised the economic history of the last century:

"The history of nineteenth century industrial expansion can be viewed as a long and bitter struggle to internalise external costs. In Britain, the social upheaval following the Enclosure movement and the rise of the factory towns completely changed the lives of rural agricultural workers. Factory owners on the other hand worried about the cost of raw materials, plant and a cheap labour force." [77]

Five-year-olds were particularly welcome in the mines where they could penetrate the narrower seams: women too because - you guessed it - they were hired for lower wages than those paid a man.

"By 1830, dispossession from the land, factory slums without amenities, and inhuman working conditions had brought Britain to the brink of social collapse. Certainly the price of goods such as bread, cotton cloth, dishes, went down; but the cost in terms of human well-being was devastating. These costs were externalised to society as a whole and paid for in innumerable ways: constant threat of cholera epidemics, overflowing public poorhouses, and a legacy of class bitterness that continues to this day. The history of the Labour Movement in Britain and elsewhere in the last 150 years has been an unconscious process of struggling to force producers to internalise the whole cost of maintaining a labour force in reasonably good physical health from birth to death.

"When industrial accidents became rationalised by the development of the Theory of Probability their status changed from that of miracles or ‘acts of God' to predictable events. The comforting title of externality was then no longer applied to industrial accidents. Internalising the costs of diseases produced by industrial processes has taken longer because the causal connections of working with lead, coal, mercury, asbestos, herbicides, pesticides, PCB's vinyl chlorides, taconite tailings, radioactive materials, etc. is harder to establish. But nevertheless, in principle, it is now generally acknowledged that the costs of industrial diseases should be internalised.

"Which brings me to the costs of environmental protection - the most aggravating of the externalities now waiting to be internalised. It is obvious that this internalisation is going to be at least as long and painful a struggle as the others. In the nineteenth century people were expendable; today birds, fish, animals, green space, trees, tundra, fresh water, clean air, arable land, oceans, perhaps even our life-support systems are being sacrificed at the altar of economic growth. Not only that, but we also plan to bequeath to our descendants, carefully wrapped packages of radioactive waste with a half-life of 10,000 years." [77]

The result of adopting so totally misguided a system of accountancy is that for decades it has been possible to indulge in economic activities that caused the biological, social and ecological degradation with, it appeared, total impunity.

Needless to say the economists' view of the production-consumption process is very misguided. Rather than occur in a closed system, it is a process directly affecting the biosphere, from which it derives the resources it makes use of, and to which it consigns the wastes it must inevitably generate. The technosphere, or world of human artefacts, which these resources are organised to constitute, is thereby parasitical to the biosphere. It is in competition with it. The expansion of the one can only be to the cost of the other. Economic growth can thereby only be regarded as biospheric contraction.

The more cities, factories, housing estates, airports, reservoirs, motorways, parking lots, even the more farms we carve out of the world's remaining forests -the smaller must be the expanse and the more degraded the structure of the biosphere.

Since we are very much part of the biosphere, since, in fact, we evolved in our present form over millions of years so as to be biologically and socially as adapted to it as possible, the notion that we can destroy it, in order to replace it with the crude and rudimentary world of our own design and manufacture, must rank as one of the most preposterous notions ever entertained by man. Yet it is this notion that provides - implicitly at least - the rationale for the economic process to which all biological, social and ecological considerations are mercilessly subordinated.

What it is essential to realise, however, is that as the biosphere is methodically degraded, so must we incur corresponding biological, social and ecological costs. These were supportable for a long time, for our numbers were smaller, our activity on a more modest scale and of a less destructive nature. Today, this is no longer so.

We are, in fact reaching the point where the impact of our activities on the biosphere must, among other things, affect its ability to provide the materials required for the industrial process - the land, food, timber, water, fuels, minerals etc. Since the depletion of these resources does not constitute economic costs (that is until they are properly internalised), our accounts reflect their consumption at a price that is very much inferior to their replacement cost - which, in normal business practice is a sure road to bankruptcy.

Similarly, as the biosphere becomes increasingly saturated with ever increasing quantities of pollutants which we consign to it, so are the biological and ecological costs of pollution becoming translated into economic ones. Stunted plant growth, reduced fish catches, the corrosion of buildings, pollution-induced diseases such as cancer, together with the ever greater cost of the technological installations required to limit such damage, are beginning to constitute an increasing drain on a society's resources - and must continue to do so as industrialisation proceeds.

One can see this occurring in Canada in many areas. Thus, according to the Science Council, ‘sulphur dioxide from Sudbury smelters has had widespread effects. Severe tree damage has been detected up to 30 miles from the emission sources; vegetation has been stunted within a 720 square mile area; and, in a ten year period (1953-1963), the loss in production of white pine in this area is estimated to have been $1, 717,000. Within a radius of up to at least 50 miles from Sudbury, there have been radical changes in the past decade in the acidity of the soft waters of the lakes. As the lake waters have become acidified, various species of fish have been exterminated; there are now no fish of any kind in at least 33 lakes, and soon they will be gone from at least 38 more. [78]

If one looked at accounts which figured the true costs of the Sudbury smelters - those that reflected the damage they did to all the different natural systems in their vicinity, and which would inevitably one day be reflected in economic costs to be paid partly by the company that caused it, but much more by others who have nothing to do with it - then they would look very different indeed from those that are audited by the company's chartered accountants.

Eventually too, the disintegration of the family and the community - the basic units of social organisation - under the impact of all the urban stresses to which they are subjected in an industrial environment must also be reflected in a veritable constellation of pathological social manifestations - crime, delinquency, vandalism, drug-addiction, alcoholism, suicide and general demoralisation and helplessness, whose incidence must give rise to ever less supportable economic costs.

Eventually too, the increasing intrusions into the functioning of ecological systems must lead to corresponding economic costs. Thus, when the banks of the Mississippi River were narrowed and lined with concrete, and its flood-plains built on, ecological costs were thereby incurred. It may have been necessary to wait for a period of heavy rains for the river to burst its banks and do $400 million worth of damage, but it was simply a question of time for this to happen - for ecological costs, in fact, to be translated into economic costs. (79)

Such considerations should lead us to formulate what should be one of the basic laws of a new economics: All biological, social and ecological costs incurred by our activities must one day be translated into economic costs. They should thereby be considered from the start as long-term economic costs. This means that what our economists today regard as costs - those that are taken into account in the ‘cost benefit' analyses on whose conclusions so many important decisions are based - are but immediate economic costs - the tip of the iceberg, so to speak -while the great bulk of costs incurred still linger beneath, waiting for the appropriate conditions to emerge on an unsuspecting economy, which, on the basis of accepted economic indices, appears to be in perfect health.

What is more, these costs differ from those we are used to taking into account in one important respect. As we shall see, they are, in the short or medium term, difficult - in some cases impossible - to reverse, except by phasing out the offending economic activity.

This has a dramatic implication - it means that a rise in the price of a commodity affected will not necessarily trigger off an increase in its supply, for rigidities have unexpectedly appeared on the supply side. Thus, if a country's main sources of fresh water are polluted with DDT, or radio-active wastes or mercury, a rise in its price will not necessarily result in an increase in its supply, because there is no practical way of removing these poisons in the short or even medium-term.

If soil erosion and urbanization so limit the amount of agricultural land available that food production slumps, higher prices may not suffice to increase supply because the top soil that has thereby been destroyed may take several hundred years or more to be reconstituted.

An increase in the price of non-renewable resources, such as oil or minerals, would undoubtedly lead to an increase in their availability - at least for a time, since it would permit the exploitation of sources that were previously uneconomic. However - and it is this that is important - the price rises which may eventually be required to increase their availability will not be indefinitely compatible with a growing economy.

The same of course would be true, in many cases, for the supply of such basic commodities as fresh air or fresh water. Pollution-control measures which could provide us with these commodities would, in many cases, be so expensive as to render uneconomic the enterprises generating the pollution and thereby responsible for the shortages.

Let us look at the implications of this new situation. Economic growth has been based on the systematic substitution of capital and non-renewable resources for human labour. Why should this have been so advantageous? The answer is that it was cheaper. The possibility that it might, one day cease to be cheaper, and hence cease to be advantageous too, does not seem to have occurred to our economists. Yet, if the price of obtaining key resources increased sufficiently, while at the same time there were a surplus labour supply, because the economy was not growing fast enough to provide jobs for all those seeking to enter it, then a point would eventually be reached when it would cease to be economic to substitute resources for labour.

According to the law of supply and demand, when this occurs, the reduced demand for resources will cause their price to fall until such time as it becomes economic to use them once more. This would be true if the increased price of the resources were in fact reversible, as would be the case if it were due to the sort of inefficiency that occurs with the general euphoria of an economic boom. It is no longer the case, however, when the higher price of resources reflects the increased cost of extracting them from lower grade ores, or from less accessible areas, for it would no longer be economic to provide them at a lower price.

In many cases, resources may still be available, but this would be of academic interest only, for they would no longer be at an economic price, which would mean that, from the economic point of view, they would have ceased to be ‘resources'.

In the case of commodities that have been made totally unavailable as the result of an irreversible process we are faced with rigidities on the supply side. (The demand can go up but the supply cannot follow.) In the case of commodities made unavailable at an economic price we are faced with rigidities of the demand side. (The supply can go up but the demand cannot follow.)

What is more, it is not difficult to imagine the latter type of rigidity spreading fairly generally to affect all manner of capital goods. Why, for instance, would a company buy capital equipment if it becomes more economic to replace it with labour? Why too should a woman buy domestic appliances designed for saving a few hours' work in the home when, to earn the money required for purchasing them she must work far longer every day in the factory?

The result of this increase in effectively irreversible costs is to create yet another situation which cannot be understood in terms of modern economics: a depressed economy with large scale unemployment and yet, at the same time, a high rate of inflation, previously only associated with an economic boom - ‘stagflation', as it is coming to be called.

The truth of course, is that today's inflation is different from any we have come across before. The price rises are increasingly due to resource depletion and the translation of biospheric costs into effectively irreversible economic costs.

Against such a problem, economic expedients that have proved effective in the past are ineffective. One can no longer reduce unemployment by expanding the economy as this, in the new conditions, is proving increasingly difficult and would, in any case, give rise to further inflation. Nor can one reduce inflation by further depressing the economy so as to reduce effective demand, as this would but further exacerbate the unemployment problem.

In the new conditions, inflation, economic depression and unemployment are the result of the same basic phenomenon: the increase in the cost of sustaining the industrial way of life.

This, in addition, has a further consequence: a constant increase in government expenditure reflecting the need to devote an ever greater proportion of GNP to combating the side-effects of the economic process, and to undertake an increasing number of functions that are no longer sufficiently economic for them to continue to be assumed by the private sector.

In the US, where there is no ideological commitment to expanding Government activities, Government expenditure nevertheless continues to rise regardless of the Government in power. In 1962 it was no more than 100 billion dollars, in 1977 it is expected to be 400 billion dollars, while at the current rate it will attain 574 billion dollars in the period ending 30 September, 1980. It is increasingly difficult for Government revenue to keep up with expenditure and the Government deficit is likely to go up at the current rate to a maximum of 77 billion dollars in 1980. [80]

In the UK, Government expenditure now accounts for nearly 65 percent of GNP. What is more, in spite of the fact that inflation is now regarded as the country's most serious problem, all efforts to reduce this highly inflationary level of Government expenditure are being strenuously resisted.

As ever more money is required by the Government to provide the massive technological infrastructure needed to control the increasing deterioration of biological, social and ecological systems, one can easily foresee a time when there will be very little left to finance the production and consumption of consumer goods whose general availability is supposed to constitute one of the principal justifications for our industrial society.

As this occurs, so the price we will eventually have to pay for them will become prohibitive. Consumer foods and services whose general availability everybody now takes for granted would become luxury items, as many of them were in the past. Already in the UK we are seeing this happen, as every year less and less people can afford to pay their telephone and electricity bills.

Inflation without economic growth - stagflation can also simply be regarded as a measure of general impoverishment, and hence, as reflecting the fact that conditions are becoming ever less favourable to the industrial process.

In the UK, at the end of the eighteenth century, conditions were at their most favourable. The necessary natural resources were available from all over the Empire. There was no problem in getting rid of wastes generated by industrial activities. The rivers, the seas and the sky seemed limitless in their capacity to absorb them. There was no difficulty in finding markets for finished products. Britain had no competitors. She was the ‘workshop of the world.' What is more, subject people could be forced, if necessary, to buy British goods. Britain killed the textile industry of the Indian villages so as to favour the export of textiles from Lancashire. She declared war on the Chinese when they refused to buy opium from British merchants in India.

What is more, and this aspect of it must not be underrated, the changing psychological climate was particularly favourable to the industrial process. As Weber [81] showed, the non-conformist world-view actually provided its rationale and led people to enter into it with quasi-religious fervour, while social conditions, as Hagen [82] has since pointed out, favoured the spread of these attitudes among the population at large.

Today, these conditions are ever less well satisfied. To sustain industrial society is an increasingly exacting feat. It is this that is reflected by the increasing costs of this enterprise - which we must now look into more carefully.

The Cost of Energy

The unprecedented spurt in economic development that occurred after the last World War was largely made possible by the exploitation of cheap Middle Eastern oil. As it has now come to be accepted that this will have been largely exhausted by the end of the century, and in any case, as even the richest industrial countries are finding it increasingly difficult to finance its purchase in the ever increasing quantities in which they require it, and at an ever rising price, one has witnessed in the last few years a veritable scramble for alternative sources of oil and a frantic search for alternative types of fuel.

In the US, the scramble for oil is proving relatively unsuccessful. Oil exploration is yielding ever poorer results. Thus, from 1860 to 1920, the average amount of oil discovered per foot for each 100 million feet of exploratory drilling in the United States was 194 barrels; the amount then rose to a maximum of 276 barrels per foot and then underwent a precipitous decline to about 35 barrels per foot by the end of 1965.

Even in other areas, exploration has been increasingly disappointing, so much so that according to North "less than 5 percent of remaining proven oil reserves is in basins opened up since the end of the 1950's." [83]

At the same time, when it is found it tends to be further afield in the frozen North of Canada and Alaska, or in offshore deposits in deep and stormy seas off the Scottish coast. The cost of these new developments is thereby predictably high. To finance the British sector of the North Sea, for instance, has been estimated by BP at $42 billion.

In the meantime, industrial countries have made no efforts of any consequence to economise this precious substance and marginal producers facing a short-term or medium-term oil shortage, like Canada and more recently the UK, have exported it whenever they could to help subsidise their unrealistic standards of consumption for yet a few more years. Canada's policy in this respect is particularly short-sighted, as was pointed out at the time notably by North (84) and by Hurtig. (85) According to the former, oil exports went up during the sixties to such a level that by 1972 Canada was selling in one year 5 percent of its total known reserves to the US - a policy until recently sanctioned by the National Energy Board.

Non-conventional oil sources like the Athabasca tar sands are not going to solve the world's growing energy sap, and what is more their development and generating costs are likely to be ruinous. A syncrude plant costs about $1 billion to set up. To make Canada independent of OPEC oil would mean setting up some 17 such plants at a cost of a minimum $20 billion. This has been recommended by Hermann Kahn, who suggests that manpower problems should be overcome by importing 30,000 to 40,000 South Korean workers, and social ones by implementing the War Measures Act for the duration of the enterprise - a suggestion that has actually been taken seriously by certain Alberta politicians.

Professor North [86] points out the insuperable logistical and financial problems that would be involved.

"Such a programme would over-saturate Canada's access to capital markets and our ability to fabricate or purchase steel, cement or electrical components. It would require the services of more engineers, construction crews and machinery than we could possibly manage. No other major engineering undertaking of any kind could be attempted during the duration of this construction, which would bring in its wake terrifying social, economic and environmental consequences." [87]

Even with a syncrude plant a year, according to North, [88] Canada would still have a net deficit of a million barrels a day by 1981 - which it would increase with further economic growth. This, of course, would mean further increasing her annual deficit with OPEC.

Other industrial countries would, needless to say, be even worse off. It is difficult to see, for instance, how the US can avoid spending some $30,000,000 a year within the next five years on imported oil. In the meantime, according to a study done by the Chase Manhattan Bank, the Oil Industry as a whole will have to invest some $500 billion between now and 1985, of which $200 billion will have to be raised externally.

(Traditionally, the oil industry has financed exploration and the majority of capital expenditure from internally generated funds, but over the past 10 years, increased costs and government intervention have altered this pattern. A study carried out by the Chase Manhattan Bank shows this trend very clearly. In the early 1960's a group of 12 major US oil companies provided roughly 90 percent of their own finance - by 1973, this proportion had dropped to below 70 percent and is expected to be less than 50 percent by 1980.) [89]

Oil will be providing an ever smaller share of the energy required to power an expanding world economy and hopes are still largely pinned on nuclear power. Their construction, however, is a daunting task, whose cost is likely to be stupendous.

Because of all the problems involved, the cost of putting up nuclear power stations has been rising dramatically, more than twice as fast, in fact, as that of building coal-fired generators. In the US in 1967 the price for a kilowatt of installed capacity was about $100. By 1972 it had risen to above $300. Today it stands at about $800 and is expected to reach $1,135 by 1985.

"The cost of breeder reactors, without which nuclear power has a limited life expectancy, is extremely uncertain. Cost estimates for the small Clinch River Breeder Reactor in the US have grown from an original estimate of $700 million to a current guess of $2 billion." [90]

Because of all sorts of snags the total estimated cost of the breeder reactor programme in the US has recently doubled in the space of two years. [91] As a result of president Carter's recent initiative it now looks as though this programme will be abandoned.

What is more, these calculations are misleading on a number of scores. The US nuclear energy industry, as Lovins points out, benefits from $2 billion worth of research supplied free of charge by AECL, and a legal dispensation from having to carry full accident insurance. [92] Insurance costs for nuclear reactors are artificially held down by a legislated ceiling on liability.

In the US this 184 percent of what the Government regards as the cost of the worst possible accidents, an estimate that critics regard as unreasonably low. If nuclear power were to bear the normal insurance expenses, its cost per kilowatt would be very much higher. [93]

Furthermore, ‘installed capacity' is a misleading measure of a nuclear power station's effectiveness -since, largely because of technological snags, they tend to function well below this capacity. Thus, the capacity factor of US nuclear reactors (kilowatt hours produced divided by potential capacity) was 58.4 percent in 1973, 52.4 percent in 1974 and 54.9 percent in 1975, while, as Lovins points out, the nuclear vendors continue to base their economic analyses upon an 80 percent capacity factor. [94]

Hayes points out that during the first three years the capacity factor is very low as mistakes are discovered and slowly corrected. For the next three years it is much higher, attaining perhaps 70 percent. Then corrosion, fuel leaks, component fatigue, and similar problems of ageing occur. Since by this time much of the reactor contains high levels of radioactivity, repairs are of necessity slow. Indeed thousands of workers have had to participate in the repair of a single plant so that no single worker should exceed his maximum permissible radiation exposure. It seems that the same problems have arisen in all other countries. In fact, the capacity factor in 1974 varied from 76 percent in Switzerland to 20 percent in Sweden. [95]

In addition an average of ten percent of output is lost during transmission, and four to seven percent appears to be required to power other parts of the fuel cycle. [96] Also, as Edwards points out,

"Among the hidden costs of nuclear power, one must include the decommissioning of nuclear reactors, the perpetual surveillance of stored radioactive wastes, and the security measures which will be deemed necessary to protect reactors, shipments, and reprocessing plants from sabotage. Decommissioning a reactor is not as easy as it sounds, because of the radiation levels inside the building." [97]

A calculation of real costs would also have to take into account the damage that must inevitably be done in the long run by the systematic release of low-level wastes into the waterways and the sea. Some students of the situation, such as Polikarpov, [98] consider that enough has already accumulated, if we are to avoid long term damage to marine ecosystems and also if we are to prevent the inevitable increase in cancer and mutations that must occur among human populations eating fish in which radioisotopes have concentrated.

The real costs of the release of high-level wastes stored in containers that must corrode long before radioactivity levels have been significantly reduced is likely to be even higher, as is likely to be that of the accidents that must inevitably occur to generators, re-treatment plants, and to vehicles transporting radioactive materials. Let us not forget that there is no such thing as an accident-proof technological device. Even a typewriter or a washing machine must occasionally go wrong.

Up until now, accidents have been of a tolerable nature. Even when a passenger aeroplane developed a serious fault, it would only have led to the death of 100 or so people. This is not the case of accidents occurring to nuclear installations, which could, and in the long-run will, lead to disease, intense suffering and death over wide and often highly populated areas.

All of these factors are likely to conspire to bring about further serious increases in the price of the nuclear programmes envisaged by major industrial nations. There is yet another such factor and one which may play the determinant role. A considerable proportion of the immediate costs of nuclear power is that of the massive amount of energy required for the construction of the reactors. This means that as the cost of fossil fuels goes up, so must the cost of nuclear power. What is more, the actual amount of net energy it produces over and above that consumed during construction, still remains very much in doubt, and may in fact be very small indeed, especially if one takes into account the factors already mentioned which cause output to fall so radically below installed capacity.

In Britain, apparently thorough studies of this question have been done by Chapman and Price. [22] They conclude that there is a significant net energy output, but that during the exponential stage of a nuclear-power building programme, most of it would be required for building more generators - so that it would contribute relatively little to satisfying all the other insatiable needs of a growing economy - the less so the greater the rate at which the generators are being built.

In the UK, with a reactor population proposed to double every 4.3 years or so, and assuming high-grade uranium ores .. only about a third of the energy which the programme is supposed to produce would actually be left over for general use after reinvestment in the programme!

As Bunyard points out, this further increases by as much as three times the capacity that must be installed if it is to attain that which, other factors being taken into account, is actually required. In other words, "a unit of installed capacity will cost about three times as much as has been claimed." [100]

These calculations, however, assume that high-grade oil is used. With uranium from low-grade ores such as Chattanooga shale, it is likely, according to Chapman and Price

"that a sustained programme of SGHWRs (the type of reactor adopted in the UK), with a 4.3 year doubling time, would always be a net consumer of energy: the more reactors we build, the more energy we would lose." [101]

In other words, the availability of that form of energy on which we count to power our industrial machine, once oil ceases to be available at an economic price, is totally dependent on the availability of such oil.

Whether such studies have been done to calculate the net energy output of CANDU reactors, and hence the energy cost of Canada's nuclear power programme, as well as the other real costs involved, I do not know. Clearly, however, they are necessary, and what is more, it seems unlikely that any valid reasons would be found for supposing that they would fare very much better than those envisaged by other industrial nations.

It is in the light of all these considerations that we must consider the implications of the US's ‘Project Independence' - that massive programme of energy development that would enable that country to achieve its desired independence from OPEC oil importations. As is becoming increasingly evident, the massive logistical problems involved in the implementation of this programme are just about insuperable.

As Professor North [102] points out, it means - among other things - building over half a million new oil and gas wells (more than doubling the present number) involving 2,700 new land rigs, 278 drilling platforms, 230 offshore rigs, 73,000 rig personnel, and 87 million pounds of drill pipes;

• "more than 60 new oil refineries, requiring 10 million tons of steel and 41,000 man years of engineering and technology;
• an equal number of plants for oil-shale development and for coal gasification and liquefaction;
• more than 30 new nuclear plants each year;
• more than 140 new coal mines in the east and more than 100 new strip mines in the west;
• plus thousands of miles of new pipelines, both on land and offshore, and half a dozen superports;
• apart from the most incalculable costs and trained manpower needs that may be beyond solution, political and environmental obstacles."

As Lovins writes,

"this ten year US energy programme will cost, in constant dollars of today, about one trillion dollars or a current GNP year. Over those ten years, on average, the US energy sector will therefore require not a quarter as now, but more like three-quarters of all US net private domestic investment. In other words, during the decade half of all the money society has available to spend on houses, schools, hospitals, roads, National Parks, factories -everything except the energy sector - would disappear into the maw of the energy sector . . . There simply wouldn't be enough money left over after building the power stations to build the things which were supposed to use all the electricity. And out of that trillion dollars, I mentioned, three-quarters would go for electrification, even though its energy share would be much smaller. So rapidly do power stations burn money, that at that margin, the US could save in ten years some $140 billion of its energy investment just by reducing the electrical growth rate from 6½ to 5½ percent per year." [103]

To what extent could Canada come to the US's help? Even were it desirable for this country to become further involved commercially with the US, to which already more than 70 percent of exports are directed, and from which more than 70 percent of imports are derived, Canada's contribution in this direction would be minimal.

To quote again from Professor North,

"Our total, known, remaining reserves of conventional oil represent less than 15 months of current North American consumption. The proven reserves of the tar sands, those accessible to strip mining, the only established technology for their exploitation, represent for North America an extension of reserve life of four years - not several hundred years, as many people seem to imagine. Canada's total known reserves of natural gas, including those in the Arctic which may never be made available, constitute a supply of about thirty months at present North American consumption rates. The reserves of gas so far known in the Mackenzie Delta, after nine years of drilling, would keep the proposed 48 inch pipeline filled for four and a half years." [104]

As Mel Hurtig suggests, [105] the most desirable form of co-operation that could be entered into between Canada and the US would be to co-operate on a plan for reducing energy use.

Total costs

The total cost of energy developments until 1985 has been estimated by OECD at between $1,200 and $1,600 billion - and this is considered by many students of energy economics to be very conservative indeed.

Where, it might be asked, is this enormous sum of money supposed to come from? The OPEC countries? This is unlikely as their surplus is likely to be far less than estimated. Several are busy building up industrial societies of their own, which will soon suffer from the same problems which inevitably affect others and towards whose ‘solution' an increasing amount of capital will have to be diverted. They are also busy building up large modern armies whose appetite for capital-intensive equipment seems almost limitless.

Iran has already had financial difficulties and will undoubtedly have more. The greatest danger, however, stems from the fact that the immigrant population of many OPEC countries is fast building up, and it can feel no allegiance to the traditional autocratic regimes under which they now live. Equally dangerous is the development of a large student population, which is being nurtured on the ‘progressive' ideas which will lead it to regard such regimes as ‘antiquated' and ‘reactionary.'

The elements favouring a revolution of the type that has dislodged traditional regimes throughout the world in recent times are likely to be increasingly present - in fact, it would seem extremely unlikely that a revolution could be avoided in the majority of the OPEC countries, in the coming years. What would be the investment policy - or any other policy for that matter - of the revolutionary governments likely to take over, is a matter of conjecture - but there is no reason for optimism on this score.

In any case, in order to satisfy short-term political exigencies, a large proportion of the present OPEC surplus is being used by the West to finance the maintenance of present unrealistic consumption standards and in particular the plethora of institutional services provided by central and local governments, to whose reduction (especially in the UK) there is considerable resistance. This clearly means that ever less money is likely to be available for the massive investment programme required to sustain industrial society in the next decades, much of which will have to come from government sources. [106]

Assuming that the US economy grows at something approaching 6 percent which appears necessary to reduce unemployment to an acceptable level, the US capital needs from now to 1985 could exceed the available supply of savings by $650 billion - according to a series of studies by the New York Stock Exchange. Companies, according to these studies, will probably have to raise $250 billion by issuing new shares and are likely to fail to do so by as much as $70 billion. [222]

What then is likely to happen? The first development is clearly likely to be an increase in the price of petrol and electricity and indirectly of those consumer goods and services in whose production they play a particularly important role. These price increases cannot proceed indefinitely especially in a period of economic depression, without triggering off a positive-feedback process towards economic contraction.

Certain California utilities, as Lovins said in a recent talk in Toronto, are already telling their customers that the price of electricity will triple between 1980 and 1985. People will simply have to buy less electricity. The utilities will be in trouble. No one will buy their bonds, the price of electricity will rise again, further reducing demand. [107]

The lesson for Ontario is clear, according to Lovins.

"If Ontario Hydro persists in rapid growth in a world which has fundamentally changed, I foresee the Province, not too long from now, getting into the same mess as New York State; people buying Provincially backed Hydro bonds will look through the backing to Hydro and will decide that Hydro can't be counted on to service its own debt. Thus, the Provincial Treasury will have to be emptied to bail out Hydro. I think that the down rating of Hydro's bonds after the failure of last year's flotation is the first of many warning signs." [108]

The answer is for Ontario to stop trying to bring about any further increases in electricity generating capacity, and as he says, "now is the right time to start", with the 38 percent reserve margin in electricity which will jump to around 50 percent when Bruce and Wesleyville come on stream. [109]

However, to fully appreciate the logistical and financial problems involved in providing the industrial world with the energy it requires in the next decade, one must try to see them in the light of all the other logistical and financial problems which our industrial societies will have to face.

Pollution costs

Ten years ago, no one would have considered pollution as providing one of a country's major financial problems. The point has been reached however, where the capacity of the natural systems which make up the biosphere, to go on absorbing with impunity the ever increasing quantities of the 2 million or so pollutants we are continuously exposing them to, is being severely strained.

The damage done, let us not forget, is cumulative, over and above the rate of natural recovery, which is, in relation to the damage, minimal. What is more, the problem is no longer purely a local one, it is becoming increasingly global. Throughout the world, mainly by annihilating fish populations (especially in inland waterways), by reducing fresh water supplies, by stunting plant growth, by corroding buildings, and significantly contributing to the development of a new set of diseases of which cancer is the most widespread and the most devastating, it is visibly beginning to affect the nature and extent of human activities and hence that of the economic process to which they are increasingly geared.

What is important to realise is that the costs involved must be paid for one way or another, either directly or indirectly in the form of expenditure on pollution-control installations. Most of it, as it happens, is likely to be paid in the former way, because pollution-control is not that effective and also because the capital to pay for it is unlikely to be made available in anything like the amounts required.

For this there are two obvious reasons over and above the general shortage of capital.

Firstly, pollution still ranks low in the average man's preoccupations, and hence among Government priorities. Neither growing affluence, nor increased knowledge of environmental problems seem to influence governments to spend more on pollution-control than is essential to keep the economic machine functioning and to take the air out of the sails of the more clamorous environmentalist movements.

Consider for instance that neither Hull nor Montreal are equipped with any sewage treatment plants of any kind - and that the excrement of their inhabitants is simply released as raw sewage into the nearest waterway. Seen in the light of the latter's megalomaniac extravagance, in building a complex of tunnels and motorways which make its approaches more daunting than those to Los Angeles, in constructing the biggest airport in the world, and in putting up the most ambitious installations of all time to accommodate a one-off sporting event, this can only be regarded as truly scandalous.

Secondly, many industries simply could not support the full cost of really effective pollution control. This appears to be true of feedlot operators, who very often cannot get rid of animal wastes, save by dumping them in the nearest waterway.

It appears to be true of the asbestos industry. The fibres most closely associated with asbestosis and lung cancer seem to be the smallest ones - which can only be detected with an electron microscope and which it is unlikely to be economic to control.

It is certainly true of uranium mining, in which the casualty rate from lung cancer among miners must remain inordinately high (as much as 50 percent in some mines, it appears).

It is so of the nuclear industry in general, which has not found a means of reducing the exposure of its workers to levels as much as thirty times higher (5 rems which is the new proposed annual limit in the US) than that at present judged acceptable (0.17 rems) for the general public, nor of separating its wastes from the biosphere for anything like the time they will remain highly toxic to most forms of life.

In general, it must be so of all those industries making toxic synthetic substances which cannot be effectively recycled by life processes such as PVCs, PCBs, organophosphate and organochlorine pesticides, etc. whose general use, as Commoner has so convincingly shown, has been responsible more than anything else for the radically increased pollution of the last decades. [110] There is probably no economic means of preventing these substances - when in general use as they are today - from causing serious biological damage, save by not producing them. Since this would mean correspondingly reducing economic activity, it is not today acceptable.

In spite of this, pollution-control in the US, according to the Council on Environmental Quality (CEQ), is likely to cost $194 billion in the decade 1973 to 1982 with peak spending in 1976 amounting to $320 per family of four. This means an expenditure of nearly $20 billion per year. It is admitted that even this will not effectively cut down pollution damage. According to CEQ, it will lead to a general improvement in air pollution. Water pollution problems, on the other hand will probably get worse. There is likely to be little progress in land use planning, and pesticide production is likely to continue growing.

The total costs are likely to be very considerably higher - and, at the present stage of the art, largely unquantifiable. Several attempts, however, have been made to calculate some of the biospheric costs of pollution, and to show how they must eventually be reflected in economic costs.

Watt considers this problem with respect to four Californian counties, two of which, Santa Barbara and San Luis Obispo are relatively air-pollution free, while the two others, Riverside and San Bernardino, are close to Los Angeles, and hence highly polluted. [111] He found that the incidence of respiratory diseases is 2 - 5 times less in the former than in the latter. He considers that clearing the air pollution would reduce the death rate by 38 percent. Further material from both the US and the UK, according to Watt, suggest that this is an underestimate and that 50 percent would be more realistic. He considers that the direct costs are so high that "almost any expenditure to control air pollution in big cities would be justified".

Zerbe calculated that in 1965 air pollution costs in Canada were $52.46 per head, $70.94 in Ontario and $93.98 in Toronto. [112] On the basis of these calculations, Pollution Probe estimate that by 1980 these figures would be respectively $115.38, $156.78 and $207.70 - assuming that pollution levels will increase in proportion to economic activity and population trends. This would mean total costs by 1980 of over $4.2 billion for Canada as a whole, nearly $2 billion for Ontario, nearly $1.8 billion for Toronto.

These figures only take into account a fraction of the probable total costs, direct or indirect. No value is assigned, for instance, to human suffering or death, aesthetic costs or ecosystem damage - all of which in a variety of ways, must eventually be translated into economic costs.

In general, the real costs incurred by industry in polluting our natural environment have only just begun to be internalised and as this proceeds, which indeed it must do, so will the viability of industrial enterprise be correspondingly reduced.

Consumerism

If the public is beginning to awaken to the cost of pollution it is also beginning to feel that its interest as consumers does not always coincide with that of the producers. This new awareness, whose flames have been fanned by the activities of the indefatigable Ralph Nader, is giving rise to a very considerable increase in the costs of regulating industrial production so as to assure that consumer products conform to the ever more exacting new standards set by Government in answer to ever more vocal consumerist agitation.

In the estimation of President Ford $130 billion - or $2,000 per family - are spent every year just in enforcing these standards. Their cost to industry is, needless to say, considerably higher.

As a result of the pressure applied by the Consumer Products Safety Association, the price of a $100 lawnmower is said to have gone up to $185, [113] that of automobiles so as to meet current safety as well as pollution standards by $320 [114]. Tyre manufacturers complain that safety standards have increased their costs by $150 million [115] while Federal Drug Standards are said to cost consumers $200 - 300 million a year.

The regulations established by the Occupational Health and Safety Administration (OSHA) are said to have increased costs in all by as much as $3.12 billion [222] and these, it is expected, will rise very considerably once new noise standards are established.

Particularly significant is the result of a public survey which showed that 56 percent of Americans want even more government regulation and only 45 percent want less, which seems to reflect the growing mistrust of industry. It suggests that these new costs will have to be met if the public is to be persuaded to accept the industrial way of life; and indeed, as awareness grows concerning the real costs of industrial activity, they can but increase still further.

Social costs

In a traditional society, the functions of social control are assumed by the family and the small community at no financial cost. The reason is that both these basic units of social organisation are self-regulating, as are the other natural systems - biological organisms, ecosystems etc - that make up the biosphere.

A mother does not have to be paid to look after her children, nor to assure the proper functioning of her household. Nor does a husband have to be paid to assure his family's material sustenance and protect it from the various challenges to which it may be subjected.

This is also true of the small community when left to itself. The members of an African tribe, for instance, all participate in its government simply as a matter of course. It is their duty to do so, and also their cherished prerogative. The same is still true of those few communities in Europe where participatory democracy is still practiced, for instance in a number of the more rural Swiss Cantons.

It ceases to be the case, however, once the functions normally fulfilled by the family and the community have been usurped by an institution that is external (asystemic) to these natural systems, thereby rendering them redundant and assuring in this way their inevitable disintegration.

This, however, gives rise to two sets of costs: firstly those involved in paying for the institutions that attempt, rather inadequately to take over; secondly those involved in controlling the pathological symptoms of social disintegration, which must inevitably manifest themselves in different forms.

Thus, the educative function of the family and the community has been largely usurped by the state, which has given rise to the ever increasing cost of putting up and operating a plethora of educational establishments. Increasingly, things that were once learned during the course of growing up within the family and of everyday living within the community, must be formally taught with the aid of increasingly elaborate technological devices, in specialised educational institutions of some sort, and the cost is rapidly getting out of hand.

At the same time this means a reduction in family and community responsibility. It also means that youth is correspondingly submitted to socially random influences, i.e. influences that are not designed to help them fulfil their family and community functions which is what education, in traditional societies, is all about. [117] The result of this is further social disintegration and further institutional costs.

The economic functions of the family, in particular, have been usurped by the developing cash economy. Such functions as tending the vegetable garden, baking bread, cooking the family meals and making the clothes for the different members of the family, contributed to its cohesion and assured that it remained a real unit of behaviour. Increasingly, today, both husband and wife must go out to work to pay for the growing number of material goods and services required for the purposes of everyday living.

Very few activities occur in the home - which is largely empty except at night. Food is bought in supermarkets - convenience foods at that, requiring the minimum of preparation in the home, while clothes and other material goods are all bought in shops. Even entertainment is provided from the outside in the form of radio and television programmes.

Just as people increasingly live in dormitory suburbs, they now also live in dormitory homes - lifeless shells - that provide an ever less adequate social environment for their members.

The economic functions of the community that once contributed to making it a viable social unit have been largely usurped by large commercial concerns. The very shape of a modern settlement is that which best favours the functioning of such concerns; social considerations being regarded as almost irrelevant and people being moved from one community to the next in accordance with the requirements of their work - which prevents the establishment of any durable social bonds. It is said that in the US, less than 15 percent of people live in the area in which they were born.

The welfare function of the family and community have also been usurped - largely by state institutions. Day-care centres are increasingly exempting women from the duty (and the pleasure) of bringing up their children, while old people's homes exempt them from those of caring for the elderly, and vast free state-run hospitals make it unnecessary for them to look after members of their family who should happen to fall sick.

Once the family and community have been effectively destroyed in this way, people become entirely dependent on state welfare. As this occurs, a veritable new social class comes into being, which Jordan [118] refers to as the "Claiming Class". Its development in industrial countries is noticeably giving rise to a right-wing reaction among the working classes, who despise the claimants and resent their ability to obtain, by various bureaucratic stratagems, all sorts of financial benefits for very little work. This, together with a similar resentment for foreign workers and immigrants of different ethnic groups, is probably the most important new factor in the politics of many industrial countries.

The social control function of the family and the community has also been usurped by increasing government control of almost every aspect of people's lives. Public opinion, reflecting traditional values, has always been the only really effective instrument of social control. There is little social deviancy in an African tribe, nor even in a rural village - to the extent that it has succeeded in remaining outside the orbit of the larger conurbations.

The cost of replacing this self-regulating mechanism by external institutions - the police force, law courts, prisons, and every type of institution for caring for those who have resorted to some form of retreatism in an effort to escape from the intolerable social environment - is increasingly exorbitant, as is the direct cost of the damage done by these different types of deviants. These are all the social costs of economic growth and, as they increase, so do they render industrial activity that much less viable.

A measure of family disintegration in the US is provided by the following facts. In 1973, there were 913,000 divorces in a single year, one for every four marriages. [119] In 1974, 6.6 million families were headed by women (one out of every eight, a 50 percent increase since 1955) many of whom, indeed a greater proportion than ever before, had never married. [120]

In Britain there were 621,000 single women struggling to bring up 1,080,000 children [121] - who will thereby all be subjected to different degrees of family deprivation and will grow up to display a correspondingly pronounced tendency towards some form of social deviance.

It must be noted that this situation could not occur in a traditional society, in which firmly entrenched cultural patterns strongly backed by public opinion prevent a situation arising in which children could be brought up in an unsatisfactory family environment of this sort.

What makes matters worse is that divorced women are finding it increasingly difficult to obtain support from their husbands, of whom, according to a study in Wisconsin (1972) 20 percent were in arrears on payments after one year, and 42 percent were paying nothing at all.

What is more, in general the women concerned must work full-time which means that their children are not only deprived of a father but, during most of the day of a mother as well. [122]

A further measure of family breakdown in the US and the UK is the increasing violence within the remains of the family unit. Battered wives have suddenly emerged in the UK, and also in the US, as a major social problem. In many US cities, domestic violence often leads to death, and is indeed responsible for a high proportion of all murders.

Another measure is the number of runaway or ‘throwaway' children, which is increasing very rapidly. In 1975, it was expected that the figure for the USA would increase by 50 percent over the 1974 figure. [123] Their fate is generally unpleasant. Among other things, they provide the principal source of prostitutes in most large American cities.

A further measure is the increased abandonment of old people, who tend to be confined to institutions, where they are ‘stored' at very considerable cost - often under heavy sedation - until they die. In Britain, the cost of maintaining the aged is said to absorb nearly 45 percent of the country's total expenditure on welfare, a figure that is expected to grow with the predicted further increase in their number in the next decades.

In the US, the fund established to provide old-age and disability payments is proving insufficient to do so. By 1990, it is expected that the system will be running a deficit of $20 billion a year. There just will not be enough money collected in the future to pay off all the benefits that people have been promised (whose cost has gone up from $300 million in 1945 to $68.9 billion in 1975 (estimated). [124]

Alcoholism

The number of alcoholics in the United States nearly doubled between 1958 and 1971, while that of alcoholics as a percentage of the population has more than doubled (from 2 percent to 4 percent). [125]

The cost of alcoholism in terms of loss of wages and productivity alone has been estimated at $10 billion - which, if one takes into account the cost of treatment, the associated crime and delinquency and vandalism, the family and communal tension and deprivation that it contributes to, must be but a fraction of the real cost.

Suicides

The number of suicides in the US has risen by 50 percent between 1955 and 1973. In 1973, 24,440 people are reported as having committed suicide. Only a proportion of suicides are registered as such. If all were registered it is estimated that suicide would rank as fourth or fifth among the causes of death. It is estimated that between 70,000 and 80,000 young people between the ages of 15 and 24 will attempt suicide in the US this year and between 3,000 and 4,500 will succeed. [126]

In Canada, as is apparent from Figure 8, the suicide rate has doubled in the 49 years between 1921 and 1970. The cost of this, the ultimate form of retreatism, has, as far as I know, yet to be estimated.

Crime

Crime can be intimately linked with all the other symptoms of social disintegration. As Murphy, President of the Washington Police Foundation, writes:

"We have to face facts. There is too much instability in our cities. As long as we have unemployment, underemployment, broken homes, alcoholism, drugs, and mental health problems, we are going to have crime."

And along with the rest of these problems, crime has risen in the US and the UK in the most dramatic fashion. In the US, the number of crimes rose in the 10 years from 1963 to 1973 from 314,230 to 861,000, while aggravated assaults during the same period rose from 172,250 to 412,000.

According to the FBI, in 1974, $42 million were stolen in robberies, $1.2 billion in burglaries and $816 million worth in larcenies. These costs are expected to go on increasing. [127]

What is more, theft is constantly taking new forms. Arson for profit, for instance, is now said to be an established business, and according to insurance experts, 100,000 fires were set in 1974 to collect insurance, the cost exceeding $350 million. One of the side-effects, of course, is to bring about a corresponding increase in insurance premiums, which further affects economic viability.

According to a firm of brokers [128] specialising in channelling funds into the thriving crime-control business, the economic impact of crime and related expenditures - including police, corrections, the courts, prevention services and equipment - exceeded $21 billion in 1971. This figure, they regarded as "only indicative and does not include the value of loss or damaged lives and/or property, or the cost of the fear and suffering generated by the impact of crime."

One must also take into account that all crimes are not reported to the police, indeed it would appear that in the US less than half are. According to the Law Enforcement's Assistants Administration, the number of crimes committed in some cities is more than five times the number reported. [129]

The same trends are visible in other industrialised countries. Thus, in Sweden, the crime rate has jumped 90 percent in a decade. In the UK a recent report estimates that the cost of crime in Britain in 1974 was at least £1,670 million and this does not take everything into account.

"Many crimes are not reported for instance and figures of losses from arson do not take into account the disruption of business and employment, the loss of overseas markets, etc. It is estimated that in 1975 the cost will be about £2,000 million." [130]

Visible trends in our industrial world undoubtedly favour further increases in the crime rate. The large-scale introduction of women into the cash economy, for instance, has led to a massive increase in female criminality. In the US, between 1968 and 1973, the arrest of women for serious crimes ranging from car theft to murder went up 62 percent compared with only 8 percent for men.

Vandalism

Another measure of social disintegration is the increasing vandalism in industrial countries. It is particularly high among youth in the larger cities. In the US the damage done to schools by vandals in the academic year 1972 / 3 was estimated to be $500 million, working out at about $10.87 per pupil, or about the same as the amount spent on textbooks that year.

The total cost of vandalism to the nation is hard to estimate. According to the police, only one case out of three gets reported. What is certain is that it is colossal and increasing every year. [131]

Health

If an industrial society provides an unsatisfactory social environment for its members, it is biologically equally unsatisfactory - so much so that it is giving rise to a new range of diseases - the so-called diseases of civilisation.

These include most forms of cancer, ischaemic heart disease, diabetes, diverticulitis, peptic ulcer, appendicitis, varicose veins and tooth caries. Their incidence appears to increase very much in line with per capita GNP, and their human costs are rapidly coming to be reflected in economic costs. Health costs are also increasing very radically in line with general demoralisation and alienation. Psychological problems are multiplying as are prescriptions for sedatives and tranquillisers.

Modern medicine, depending as it does on the use of medicines of increasing biological potency (such as antibiotics and corticosteroids), tend to give rise to all sorts of side-effects. Iatrogenic diseases are, in fact said to account for a high proportion of current disease. Various figures have been quoted. At the recent meeting of the British Association, it was suggested that they accounted for perhaps 20 percent of all disease, "and this may only be the tip of the iceberg". [132]

Its efficacy in reducing the incidence of the diseases it is designed to deal with has been overrated, as it is primarily concerned with treating their symptoms. Its inability in the long run to control infectious diseases has already been pointed out.

For these and other reasons, economic growth must lead to a continual increase in the cost of disease and its control. So much so, that in 1975, the US spent $118 billion on health services, which is $547 for every man, woman and child. This represents a 13.9 percent increase from $104 billion two years ago. [133] If medical costs were to go on increasing at this rate, it would reach a stupendous $500 billion by 1985 - or half today's Gross National Product.

It goes without saying that none of these trends towards ever increasing expenditure on counteracting the biological, social and ecological destruction caused by economic growth can continue to be met for very long.

This is yet another set of trends that cannot be projected into the future. Regardless of their ideological commitments, governments will have to cut down ever more drastically on every sort of expenditure - in particular, on that designed to maintain all those institutional services that are expected of a welfare state. This must be the only way to make available more capital for investment in capital goods - energy installations, factories etc. Since governments will still be short of capital for this purpose, investment in the production of all but the apparently essential consumer products will slowly be abandoned. In any case, with the growing inflation and reduced economic growth, ever fewer people will be able to afford them.

All this means an implicit abandonment of the philosophy and goals both of the welfare state and also of the consumer society. It means, in fact, that we are now entering, at best, a period of economic contraction, at worst one of economic and social collapse.

Which it is to be depends very largely on decisions that must be taken now - that should, in fact, have been taken some five years ago, when the issues involved were first presented in concise form to the decision makers and the general public.

It depends on whether we decide to adapt to the new conditions that are unmistakably emerging, or obstinately cling to ever more obsolete socio-economic forms which must inevitably be eliminated by the brutal and unsparing hand of natural selection. It depends, in fact, on whether we assume responsibility for the necessary adaptations, or alternatively, as we put it, in A Blueprint for Survival, we decide to "delegate to disaster."

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Part Three.