Pessimism rules the day

The world today is dealing with a polycrisis. Our economic and environmental systems are reaching limits we have not crossed before in human history. We can group these crises/emergencies in the following broad categories: A) population and migration, B) climate and sustainability, C) inequality and democracy. Sometimes these crises are seen as distinct problems that have little in common other than the chance occurrence of happening at the same time. Politicians and a number of social scientists prefer to see each field of problems by itself, each requiring handling without reference to any overarching issues or uniting themes. However, what is becoming increasingly apparent is that there is a common thread of which these are all specific manifestations—the workings of our current economic and social system. To put it more emphatically, the underlying cause is the capitalist order of society in its current stage of development.

In this short article I will try to address the issue of the polycrisis from an optimistic angle. Focusing on J.M. Keynes’s Economic Possibilities for Our Grandchildren I will try to see how we can use the crisis as an opportunity for blue-sky thinking for a better future. The established practices our current order has come up with are inadequate for even starting to chart a viable solution—new ideas, radical rethinking, is necessary. Keynes gives a description of the state of capitalism in the 1920s which, although 100 years ago, seems astoundingly modern in its depiction of the problems and possibilities that we are faced with today. In another of his tracts, How to Pay for the War (1940), in which Keynes discusses the issue of preparing the UK economy for WWII and its economic demands, we find tools that can help with a transition economy. Speaking on the 23^rd of May 1939 about how preparations for the war created the need for increased employment, Keynes memorably said “Good may come out of evil. We may learn a trick or two, which will come in useful when the day of peace comes, as in the fullness of time it must”. Today as humanity, and with it the planet, moves into uncharted waters, we should hope again that good will come from the destruction we have already created and that opportunities to make good the wrongs of the past will become the pressing priority that they are.

Polycrisis Redux 

Is it alarmist to call the current state of the world a polycrisis? Let us briefly review the evidence. First, we should consider the question of population growth and migration. In what is a new occurrence since the advent of the Industrial Revolution, the world may soon be moving into negative population growth. The 2022 UN report, World Population Prospects, expected the global population to crest before 2100 and to start declining rapidly afterwords. The 2024 projection revised the figure downwards, expecting the world population to reach a lower maximum sooner and start decreasing faster. Population decline is the reality in most countries with a high GDP per capita and will soon be the case in most middle- and lower-income countries. Europe is already declining, soon to be followed by Asia and Latin America. Only Africa retains a strong population growth and even there, there are regions where the rate of growth is declining fairly fast.

At the same time migration is reaching new global heights. The 2024 World Migration Report noted the planet had 150 million international immigrants in 2000, with this number rising to 281 million by 2024. This is not only an absolute increase but also an increase in the proportion of the world’s population who are immigrants – from 2.8% in 2000 to 3.6% in 2024. These figures represent not only a rise in international refugees but also an increase in internally displaced persons. The reasons for this change are complex, but climate change and war/conflict conditions stand out as the main sources. A main reason is that extreme environmental events have contributed to food insecurity globally. The report notes that the number of people worldwide considered to be experiencing food insecurity and in need of urgent assistance rose to 257 million in 2022, a 146% rise since 2016. Climate change drives both short-term bursts in migration movement and long-term migration trends, since both sudden events and the slow onset of climate hazard create conditions for migration.

In fact, migration can be seen as the good news, a positive response to crisis and food insecurity. It shows people have enough savings to finance a hazardous and expensive trip to find a new home. In more deprived regions that are more heavily impacted by climate change, lack of funds may make migration impossible. A local crisis can develop into one of far worse outcomes for the population, as we are currently observing in Sudan and its humanitarian crisis.

This increased migration movement coincides with a right-wing turn in most western democracies. Populist politicians blame decreasing incomes for middle and working classes to immigration. If at one end, western societies are ageing rapidly, something to which immigration is the obvious solution, at the other they are exhibiting new levels of inequality. Inequality within-country has increased since the 1980s and now accounts for most inequality globally. As the 2022 World Inequality Report indicated, inequality is not as much as before attributable to differences between advanced capitalist countries and developing ones, but is, to a large part, derived from the widening income differences within countries. There is clear evidence that a global elite is amassing huge wealth, increasing inequality within all countries and forming a global class of its own, detached from national boundaries and local communities.

All this at a time in which global CO₂ emissions, and with it the global climate, is moving into uncharted territories. Huge swathes of the planet are affected both by extreme weather events (like the January 2025 fires in California) and an increase in the median temperature prolonging heatwaves in areas that are already vulnerable, making them almost unliveable. The world is caught in multiple spirals: needing more energy consumption to fight climate change through the use of air conditioning units and, by this means alone, making the planet less liveable.

But it isn’t only that the planet’s ecosystem is fragile and at a tipping point; the financial structure built by western democracies after WWII is not ready to deal with these new realities. For example, the US housing market depends on private insurance against natural disasters to secure mortgages and safeguard properties. Now private insurers are abandoning in droves even affluent crisis-prone areas like California and Florida, making lower- and middle-class owners there vulnerable to increasingly destructive events.

This points to the very nature of our current troubles and the core issue of the polycrisis. Our democracies together with the current financial system are as fragile as the planetary environmental system. All these different systems appear to be robust and able to withstand any shock, but in reality they have reached their limits. These problems are inevitably aspects of the same root cause: a social and economic system that has lost its purpose and adds at an alarming rate to the problems it has itself created.

Can we still be optimistic?

From Keynes’s perspective, being fatalistic is a luxury we cannot afford. So what alternatives are there? At one end there is a kind of optimism that runs in the face of all current evidence: the belief that capitalism will solve our problems through technical innovation and market competition, a conviction that for many of the economists who believe it is based on the fact that the market system has produced the unprecedented growth of the last two hundred years. But this growth hasn’t come at zero cost nor can we expect that technical innovation will always be there, in time, to save the day. Furthermore, there is no established natural tendency for technical innovation to solve other social problems, such as inequality.

Here Keynes’s perspective is valuable. He argued that we need to start thinking afresh, leaving aside old modes of thought and established viewpoints. He memorably noted:

For I predict that both of the two opposed errors of pessimism which now make so much noise in the world will be proved wrong in our own time. The pessimism of the revolutionaries who think that things are so bad that nothing can save us but violent change, and the pessimism of the reactionaries who consider the balance of our economic and social life so precarious that we must risk no experiments.

As we return to questions on the fundamentals of social life it is important to rethink our priorities both as individuals and as a society. Our society is built on the demands of consumers without any overarching principle that classifies these demands or puts them in any hierarchy, other than individual willingness to pay. But this is part of the problem. Keynes wrote:

Now it is true that the needs of human beings may seem to be insatiable. But they fall into two classes—those needs which are absolute in the sense that we feel them whatever the situation of our fellow human beings may be, and those which are relative in the sense that we feel them only if their satisfaction lifts us above, makes us feel superior to, our fellows. Needs of the second class, those which satisfy the desire for superiority, may indeed be insatiable; for the higher the general level, the higher still are they. But this is not so true of the absolute needs—a point may soon be reached… when these needs are satisfied in the sense that we prefer to devote our further energies to non-economic purposes.

Once we realise that absolute and objective needs for comfortable survival have been fulfilled and that what we labour to fulfil is artificial needs created by our societal structure and mores, we realise something even more fundamental, namely that “the economic problem is not–if we look into the future–the permanent problem of the human race.”

From a resource perspective, Keynes noted that we will soon reach a point of sufficiency for the world population, but this doesn’t mean that the system will naturally stop expanding, as it will focus on artificial needs. Nor does it mean that reaching that point of sufficiency will immediately change human society. Humans have been conditioned to think of the problem of insufficiency of resources to fulfil basic needs as the perennial individual and social problem. Even when the problem of sufficient resources to cover needs is solved, we will keep going on as before, as our mind frame will latch on to what it knows from experience. As Keynes puts it “if the economic problem is solved, mankind will be deprived of its traditional purpose.” This leads to an existential crisis. It is natural for the system to continue in its current logic and put artificial needs in the place of necessities for life. The system will continue, for some time, to operate as if needs are yet to be fulfilled and individuals will labour on the personal struggle for success or survival based on their position in society. And even if capitalism can produce enough to fulfil the basic needs of every person, there is no natural tendency for it to gravitate towards a fair distributional outcome. Distributional issues will always cloud this demarcation line between having as a society approached a solution of the economic problem (as Keynes saw it) and the private struggles of individuals to fulfil basic needs in an unequal system.

Keynes noted that we would reach a time when we would need a change to social mores. The mores of avarice that have guided capitalism thus far will stop being useful and the return to older moral values, those of living a life of restraint and intellectual pleasures, should become again the basis of our social system. He writes, pining for a past that was not as ideal as he paints it, but which has features that we need to return to today:

I see us free, therefore, to return to some of the most sure and certain principles of religion and traditional virtue—that avarice is a vice, that the exaction of usury is a misdemeanour, and the love of money is detestable, that those walk most truly in the paths of virtue and sane wisdom who take least thought for the morrow. We shall once more value ends above means and prefer the good to the useful. We shall honour those who can teach us how to pluck the hour and the day virtuously and well, the delightful people who are capable of taking direct enjoyment in things, the lilies of the field who toil not, neither do they spin.

Keynes was optimistic that this change will happen by itself over time, as society will naturally evolve to respond to the new needs and possibilities of reality. But perhaps he was too optimistic. It is possible that society destroys itself and the planet with it before this natural and gradual transformation takes place. What can be done to avoid this?

Keynes dealt indirectly with this problem in his pamphlet on How to Pay for the War, written at the dawn of WWII. There he poses the question, what happens when the feelings of the individual and the needs of society at large are in conflict? The answer is that the two are only superficially in conflict, as the survival of society is the survival of the individual. In situations such as these a plan in common would mean gains in common:

What is to the advantage of each of us regarded as a solitary individual is to the disadvantage of each of us regarded as members of a community… Here is the ideal opportunity for a common plan and for imposing a rule which everyone must observe.

What is necessary is to start changing individual behaviour by impacting social mores, and at the same time finding the resources necessary to foster a cleaner, safer environment through a green transition. This transition could be organised on the same lines to that of a war economy, where the pressing social needs for armaments take precedent over the individual consumption of luxuries. In our current state, the focus would be a war on wasteful luxuries and the habits of the past, and the creation of capital that is safe, clean and can provide for a sustainable planet.

Thus, what is needed is change in the financial system to prioritize and fund green production technologies and consumption patterns that align with this social agenda. There is a very good reason why this process of transformation should be funded through government-led schemes and social types of investment with wider participation: it is that the benefits of such a green transition would also lead to less unequal societies. It is important to connect gains from this transition to the issue of inequality. For the green transition to be lasting and successful the problem of inequality and the change of social mores must happen hand in hand with the transformation of society towards greener energy. If this transformation happens through our current market system, where the concentration of wealth is substantial and this determines the shape of future growth, it will increase inequality and at best, only delay the instability that the system is naturally prone to. Keynes’s message at its core is that capitalism as practiced from the middle of the 18^th century had a birthday and also has an expiry date. We wouldn’t be where we are today without the phenomenal growth that the system of avarice created. However,  this doesn’t mean it is going to solve our future problems or can deal with today’s social and environmental needs. Time for the drawing board and, time for change.