These crises, especially the underlying general resource crisis, will generate hitherto unknown kinds of inflation and recession. Until a year or two ago, generally, inflation used to be caused by high wage demands of trade unions and/or rapidly rising demand for consumer and investment goods, while supply could be raised only slowly. The remedy was simple: persuade the trade unions to make modest wage demands and/or reduce the tempo of rise in demand for consumer and investment goods by means of monetary and fiscal measures. From now onwards, however, prices will continue to rise even if labourers do not demand too high wages, even if demand for goods and services stops rising. It will be so because the given geological and geographic conditions under which today raw materials are being extracted are becoming ever more difficult entailing ever rising production costs. The cost of extracting oil from beneath the Arctic Ocean is simply much higher than that of extracting oil, say, from beneath the sands of Kuwait.
When raw materials become ever scarcer and all prices continue to rise, demand will not only stagnate, but will begin to fall, because people will simply not be able to afford more. Moreover, processing less raw materials means less production. And when this happens, there will be a new kind of recession that will continue until sometime in the future the economy, now based mainly on renewable resources, will reach a steady state.
All these are fundamental crises, unlike the harmless ephemeral ones mentioned earlier, which in the past could be overcome more or less easily by changing the relevant policies. The present-day crises are fundamental in the sense that their roots lie in the essentials of the system – the capitalist and industrial system – and overcoming them call for radical changes in the system: in the way we live and produce goods and services, in our numbers, in our economic and political system, in our resource use pattern, in the way we react with nature, in the way we organise our social relations etc. etc. In other words, these crises cannot be overcome in the framework of the present social, economic and political systems, i.e. in capitalism.
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