The Rational Case for Panic - Postcapitalism: A Guide to Our Future - Paul Mason

Postcapitalism: A Guide to Our Future - Paul Mason (2015)

Part III

Chapter 9. The Rational Case for Panic

Wherever I go, I ask questions about economics - and get answers about climate. In 2011 in the Philippines, I met landless farmers living in rural slums. What had happened? ‘The typhoons,’ came the answer. ‘With more typhoons the rice doesn’t grow as well. There are not enough days of sunshine between planting and harvesting.’

In Ningxia Province, China, walled off from the Gobi desert by barren mountains, I met sheep farmers who’d become reliant on chemical pellets as the grassland died around them. When, back in 2008, scientists trudged the mountains to find out what had happened to the 144 springs and mountain streams marked on the map, they reported: ‘With climate change and deterioriation of the environment, the southern mountainous areas have no springs and no mountain streams.’1

In New Orleans, in 2005, I watched the social order of an already fragile modern city, in the richest country in the world, disintegrate. The proximate cause was a hurricane; the underlying problem was the failure of the city’s infrastructure to deal with a change in weather patterns, and the inability of the poverty-stricken social and racial structure of the city to survive the blow.

There’s a pointless argument between economists and ecologists over which crisis is more important - the ecosphere or the economy? The materialist answer is that their fates are interlinked. We know the natural world only by interacting with it and transforming it: nature produced us that way. Even if, as some supporters of ‘deep ecology’ argue, the earth would be better off without us, it is to us that the task of saving it falls.

In the world of suits and climate summits, a complacent calm rules. The focus is on scenarios for ‘what will happen’, the climate catastrophe that awaits if we allow global temperatures to rise by more than two degrees Celsius above pre-industrial levels. But in the edge-places of the world the catastrophe is happening already. If we listened to those whose lives are being destroyed by floods, deforestation and encroaching deserts, we would better understand what is coming: the total disruption of the world.

The IPCC’s fifth report, published in 2013, states unequivocally that the planet is warming. ‘Since the 1950s,’ say the world’s most respected climate scientists, ‘many of the observed changes are unprecedented over decades to millennia. The atmosphere and ocean have warmed, the amounts of snow and ice have diminished, [the] sea level has risen, and the concentrations of greenhouse gases have increased.’2 The IPCC is confident that this is primarily caused by human beings using carbon to fuel economic growth - so much so that in this report it upgraded from ‘likely’ to ‘very likely’ the probability of hotter temperatures, more frequent hot days and more frequent heatwaves being caused by humans. Scientists do not use such terms lightly; they are the equivalent of a qualitative increase in their degree of certainty.

Because our ecosystem is so complex, we can’t trace every disruption of the climate to a human cause with 100 per cent certainty. But we can, says the IPCC, be fairly certain that extreme weather - hurricanes, floods, typhoons, droughts - will increase in the second half of the century.

In its 2014 update, the IPCC warned unequivocally: failure to stop the rise in carbon emissions would increase the likelihood of ‘severe, pervasive and irreversible impacts for people and ecosystems’. This, remember, is from a report by scientists. They do not sign off on words like ‘severe, pervasive and irreversible’ before weighing them carefully.

If you’re a mainstream economist, what’s coming will feel like an ‘exogenous shock’, an extra source of chaos within an already chaotic situation. For peasants in the Philippines, African-Americans in Louisiana and the people of Ningxia Province, the shock is already happening.

Climate policymakers and NGOs have produced numerous scenarios for what we need to do to stop it. But while they model the earth as a complex system, they tend to model the economy as a simple machine, with inputs/outputs, an energy requirement and a rational controlling hand - the market. When they speak of ‘transition’, they mean the phased evolution of energy policy towards burning less carbon, using a modified market mechanism.

But the economy itself is complex; just like the weather during the hurricane season, it is prone to reactions that accelerate uncontrollably and to complex feedback loops. Like the climate, the economy moves through a mixture of long- and short-term cycles. But, as I have shown, these cycles lead to mutations and ultimately to breakdown over timescales of fifty to 500 years.

In this book, I’ve avoided ‘building in’ the climate crisis until now. I wanted to show how the clash between info-tech and market structures is, on its own, driving us towards an important turning point. Even if the ecosphere was in a steady state, our technology would still be pushing us beyond capitalism.

But industrial capitalism has, in the space of 200 years, made the climate 0.8 degrees Celsius hotter, and is certain to push it two degrees higher than the pre-industrial average by 2050. Any project to move beyond capitalism has to shape its priorities around the urgent challenge of climate change. Either we react in time and confront it in a relatively orderly way, or we don’t - and disaster follows.

It has become common to laugh at the absurdities of the climate-change deniers, but there is a rationality to their response. They know that climate science destroys their authority, their power and their economic world. In a way, they have grasped that if climate change is real, capitalism is finished.

The real absurdists are not the climate-change deniers, but the politicians and economists who believe that the existing market mechanisms can stop climate change, that the market must set the limits of climate action and that the market can be structured to deliver the biggest re-engineering project humanity has ever tried.

In January 2014, John Ashton, a career diplomat and formerly the British government’s special representative on climate change, delivered the blunt truth to the 1 per cent: ‘The market left to itself will not reconfigure the energy system and transform the economy within a generation.’3

According to the International Energy Agency, even if all the announced emissions-reduction plans, all the carbon taxes and all the renewables targets are achieved - that is, if consumers don’t revolt against higher taxes, and the world does not de-globalize - then CO2 emissions will still rise by 20 per cent by 2035. Instead of limiting the warming of the earth to only a two-degree increase, the temperature will rise 3.6 degrees.4

Faced with a clear warning that a 4.5-billion-year-old planet is being destabilized, those in power decided that a 25-year-old economic doctrine held the solution. They resolved to incentivize lower carbon use by rationing it, taxing it and subsidizing the alternatives. Since the market is the ultimate expression of human rationality, they believed it would spur the correct allocation of resources to meet the target of the two-degree cap. It was pure ideology and it has been proved plain wrong.

To remain under the two-degree threshold, we - as a global population - must burn no more than 886 billion tonnes of carbon between the years 2000 and 2049 (according to the International Energy Agency). But the global oil and gas companies have declared the existence of 2.8 trillion tonnes of carbon reserves, and their shares are valued as if those reserves are burnable. As the Carbon Tracker Initiative warned investors: ‘they need to understand that 60-80% of coal, oil and gas reserves of listed firms are unburnable’5 - that is, if we burn them, the atmosphere will warm to a catastrophic degree.

Yet rising energy prices are a market signal. They tell energy firms that it’s a good idea to invest in new and more expensive ways of finding carbon. In 2011, they invested $674 billion on exploration and development of fossil fuels: tar sands, fracking and deep-sea oil deposits. Then, as global tensions increased, Saudi Arabia decided to collapse the price of oil, with the aim of destroying America’s new hydrocarbon industries, and in the process bankrupting Putin’s Russia.

This, too, acted as a market signal to American drivers: buy more cars and do more miles. Clearly, somewhere, the market as a signalling mechanism has gone wrong.

Look at it as an investment problem: either the global oil and gas companies are really worth much less than their share prices indicate, or nobody believes we’re going to cut our carbon use. The stock market valuations of the top 200 carbon burners totals $4 trillion; much of that could be lost if we persuade ourselves to stop burning carbon. This is not just scaremongering by excitable climate NGOs. In 2014 the governor of the Bank of England, Mark Carney, warned the world’s insurance giants that if the two-degree target is significantly breached it would ‘threaten the viability of your business model’.6

The lesson is: a market-led strategy on climate change is utopian thinking.

What are the obstacles to a non-market-led strategy? First, the lobbying power of the carbon burners. Between 2003 and 2010, climate-denial lobby groups received $558 million from donors in the USA. ExxonMobil and the ultra-conservative Koch Industries were major donors until 2007, when there was a tangible shift to funds channelled through anonymous third parties, under pressure of journalistic scrutiny.7 The outcome? The world spends an estimated $544 billion on subsidizing the fossil fuel industry.8

But that’s just the most obvious part of climate lunacy. After the failure to agree a global path to the two-degree target at the 2009 Copenhagen Summit, energy companies realigned their efforts in order to pressure national governments for specific outcomes, always with the aim to slow the introduction of carbon targets, or to exempt specific firms.

Yet strong, positive action can work. In Germany, the sudden shutdown in 2011 of the nuclear programme after Fukushima, combined with heavy investment in renewable energy, has done to the power utilities what any hard application of carbon targets would do to market forces. It has shattered them.

In the German system, wind, solar and other renewable generators get the first opportunity to supply energy. If there’s sun, and a healthy breeze, as there was on 16 June 2013, they can generate half of all demand. On that day, the gas and coal producers - who cannot easily adjust the output of their power stations, only switch them on and off - were forced to pay the German electricity grid €100 per megawatt to take unwanted electricity off their hands. The price of carbon energy had gone negative. As The Economist magazine put it: ‘For established utilities … this is a disaster … you cannot run a normal business, in which customers pay for services according to how much they consume, if prices go negative.’9

In many countries, energy policy is paralysed - not just by the lobbying power of oil and gas, but also by the difficulty of forcing behaviour change using market forces - e.g. higher prices - rather than by undertaking a rational redesign of the whole system.

For the advocates of green capitalism, it is easier to imagine the end of the world than to imagine a non-market, low-carbon economy.

So we need to imagine better.


Climate science tells us that, in order to keep the temperature rise to around two degrees, we need to halve the amount of CO2 we burn by 2050. The IEA spelled out the importance of the timing: ‘If emissions do not peak by around 2020 and decline steadily thereafter, achieving the needed 50% reduction by 2050 will become much more costly. In fact, the opportunity may be lost completely.’10 The later emissions peak, the harder it is to halve them.

In response, various campaigns and research units have designed scenarios to show technically how this 50 per cent reduction might be achieved. Though they all differ as to the mix of alternative energy types and the way they model energy efficiency, they have one thing in common: nearly all of these scenarios conclude that it will be cheaper in the long term to go low carbon, than not.

The IEA’s Blue Map Scenario, which halves CO2 emissions by 2050, sees the world spending $46 trillion more on energy investments than it would if nothing changed. But because the scenario involves burning less fuel, even by the most conservative estimate it still saves $8 trillion.

Greenpeace, whose Energy Revolution Scenario is taken as a reference point in the wider industry debate, wants to achieve the target with no new nuclear power plants and less emphasis on carbon capture and storage, so that by 2050 85 per cent of all energy is produced from wind, wave, solar and biomass technologies. Even here, however, with much higher upfront investment costs and a bigger social change, the world saves money in the end.11 In all the scenarios where carbon burning is halved, there is a spin-off benefit because the transition creates new jobs. Building and maintaining machines to generate electricity from wave, wind and solar power is a more technologically advanced solution than burning gas or coal.

Saving the planet, then, is technologically feasible and economically rational, even when measured in cash terms. What stands in the way is the market.

This is not to say we have achieved nothing. If you discount China - which distorted the global figures by building hundreds of coal-fired power plants in the 2000s - the amount of generating capacity coming online from renewables outstripped that from fossil fuels in 2009. This is a clear signal that state intervention into the market - through financial incentives for renewables and targets for reduced carbon emissions - can work.

The problem is, first, that the market-led transition is too slow and too vulnerable to pressure from consumers (who naturally want cheap energy) and from fossil-fuel producers. Secondly, as political pressure on governments rises, energy turns into geopolitics. Germany’s move against nuclear energy came at the cost of giving Russia the power to hold the German economy to ransom during the Ukraine crisis. America’s turn to fracking - in addition to its environmental impacts - altered the global balance of power so significantly that Saudi retaliation has in the space of a year collapsed the price of oil by more than half.

Seen against the rising geopolitical tensions, the prospects for a deal at the COP (Conference of Parties) in Paris, in December 2015, do not look positive. More and more, the climate talks conducted in these conferences come to resemble the peace treaties that paved the way to the Second World War.

Meanwhile even radicals in the environmental movement are confused about markets. Greenpeace, for example, compares China with Europe as follows: China’s determination to fuel economic growth with coal boosted emissions, while privatization in Europe and the USA drove their switch to gas, which is less harmful than coal. This they see as proof that a market achieves better carbon outcomes than centralized control.12

However, to meet the critical emissions targets we are going to have to use some centralized control. Governments - at state and regional level - will need to take control, and probably ownership, of all big carbon producers. As the energy distribution grid becomes ‘smart’, using technology to predict and balance supply with demand, it makes sense for the grid to be a public resource.

If a state-influenced price mechanism can’t achieve the right mix of investment in renewables, nuclear energy and residual carbon burners, then it will have to be done using state ownership, direct control and targets. This is the ultimate conclusion we have to draw from John Ashton’s comments quoted above: if the market is not working then, given the urgency, state allocation must be tried.

Technically, if you use planning rather than market incentives, it will be easier to create a mix of ‘base load’ power generated by nuclear and cleaner carbon, with the rest coming from renewables: according to scenarios from Greenpeace to the IEA and other variants, that is what is needed to achieve the two-degree target.

The attempt to create a non-market economy and a low-carbon system are clearly interdependent. But while there are many routes to a postcapitalist economy, the potential variants of what we can do to address the climate emergency are limited.

There is, in short, a rational case for panic about climate change - and it is compounded when you consider the interrelatedness of climate and the other great uncontrolled variant: population.


Being old was a privilege denied to most of our ancestors. If you take an urban history tour - whether in Manchester, Chicago or Shanghai - it’s worth remembering, as you peer into the old industrial dwellings, that the life expectancy of those who lived there was forty years or less.13 Go to a steel or mining town, from West Virginia to northern China, and you will see forests of gravestones marking the deaths of working-class men in their fifties - not in the distant past but in the post-1945 era. In the early years of capitalism, it was unsanitary urban life that killed you. In the twentieth century, it was chronic industrial diseases, stress, bad food and pollution.

Now though, we have a new problem: demographic ageing. There are no activists to drop banners from buildings to protest against ageing, there are no ministries for ageing, no prestigious scientific panel or global negotiations. Yet it is potentially as big an external shock as climate change - and its impact will be much more immediately economic.

The UN’s projections are not disputed. The world’s population, currently above 7 billion, will rise to 9.6 billion by 2050, with almost all growth occurring in the global south. By 2050, there will be more people in developing countries than there are people on earth right now. So the future story of humanity is mainly going to be told in cities like Manila, Lagos and Cairo.

Globally, the proportion of older people to those of working age will increase. In 1950, 5 per cent of the world’s population was over sixty-five; by the mid-twenty-first century it will be 17 per cent. But it’s in the rich world where the problems of ageing will turn into a shock.

Here, the crucial problem is the age-dependency ratio: the number of retired people compared to the number of those of working age. In Europe and Japan, there are currently three workers for every one retired person. By 2050 the ratio will be one-for-one. And though most developing countries will continue to have mainly young populations, China bucks the trend due to its one-child policy. By 2050 China will be the ‘oldest’ of the big economies in the world, with a projected median age of fifty-three.14

The growing age imbalance is irreversible. It’s not just caused by people living longer due to better healthcare and higher incomes; the main driver of the imbalance is falling birth rates, as women gain control of their bodies through contraception, and as education, advances in human rights and urbanization give them greater independence.

The UBS economist George Magnus says rapidly ageing societies ‘present us with an existential threat to the social and economic models we built after World War Two’.15 In the developed world, demographic change will create stress in three critical areas of economic life: financial markets, public spending and migration.

During the post-war boom, private, corporate and state-mandated pension schemes grew massively. Though they sometimes included only a minority of the workforce, these schemes - in which savings deducted from wages were matched by company contributions and invested in the stock market - became the mainstay of the financial system. Before globalization, such schemes typically invested in their own country’s debt and in the shares of major companies on their national stock exchange, with a small portion allocated tactically to meet projected needs. With tax breaks on the profits, and mandatory membership in some countries, it was the ultimate form of what Marx had called ‘capitalist communism’.

But in the age of fiat money things changed. The repeated use of interest rate cuts when growth slowed made investing in shares a one-way bet, continually hiking the value of the stock market. The result was that, even as the demographic problem loomed, fund managers calculated that the financial system would still meet its commitments. Some even declared the projections were so positive that it was safe for the employer to take a ‘contribution holiday’ - leaving only the workforce to put money in.

The first country into the boom-bust vortex was Japan. The Nikkei 250 index of major companies trebled in value between 1985 and 1990. Then a crash began, and over the next ten years its value halved.

In the West, with above-average GDP growth in the late 1990s, stock markets surged again. The FTSE rose from 3000 in 1995 to peak at 6930 in December 1999. America’s S&P 500 trebled in the same period; Germany’s DAX index quadrupled. If you call up these indices’ long-term charts since 2000, you will see a picture of three spiky mountains with steep sides. In the space of fifteen years, share prices have twice gone through boom and bust, with the current recovery - even though fuelled by trillions of confected dollars - pushing them barely above where they peaked in 2000.

The dotcom crash was the wakeup call. Where they could, companies scrambled to reduce their pension liabilities: transferring future pensioners to lower benefits, closing schemes to new workers - and sometimes going bust under the strain. In the search for higher returns on their investments, pension funds now diversified, pushing money into hedge funds, property, private equity and commodities. The aim in all cases was to make up the shortfall. We know the outcome. From the spectacular hedge fund implosions that started the credit freeze of August 2007 to the commodity price rises that triggered the Arab Spring, these big institutional investors collectively became - sometimes unwittingly - crucial drivers of instability.

In the aftermath of the crash, the typical big pension fund invests 15 per cent of its money in alternatives to shares (i.e. property or commodities) and lends more than 55 per cent of its money to governments in the form of bonds, which under quantitative easing pay zero or negative interest.

Overall, about $50 trillion is held in pension funds, insurance funds and public pension reserves across the OECD countries, well above their combined annual GDP. For all the reasons surveyed in chapter 1 - namely, a busted economic model on life support - the most recent survey describes the risk to that money as ‘high’ and pension liabilities as ‘increased’.16

The problem is not the current position of this $50 trillion. The problem is that an ageing population means a smaller potential workforce, lower growth and lower output per head. Though the picture varies from one country to the next - with some smaller developed countries such as Norway extremely well provided for - the global situation is bleak: either the retired elderly must live on much less, or the financial system must deliver spectacular returns. But to deliver spectacular returns it must become more global and take more risks. If more pension provision could be moved into the public sphere, paid for with taxation, the impact of this dilemma would be softened. Instead, the opposite is happening.

The second area in which we are certain to face the stress of ageing populations is government debt. An ageing population boosts demand for spending on health, public pensions and long-term care. In 2010, Standard & Poor’s calculated that unless governments across the world reined in public pension provision, their debts, by 2050, would sink the world.

Since then, governments have indeed slashed their pension liabilities: eligibility has been tightened, retirement ages raised and the link to inflation eroded in many countries. When, after this carnage of obligations, S&P recalculated the potential damage, it found the median net debt of developed countries was projected to be 220 per cent of GDP by 2050, with the big developing countries running average debts of 130 per cent. Japan still tops the league in 2050, at 500 per cent (compared to 250 per cent now) and America will be looking at a debt pile three times the current $17 trillion.

In this projection, demographic ageing is set to make state finances unsustainable all across the developed world. S&P’s analysts predict that by 2050, even with pension cuts, 60 per cent of all countries in the world will have credit ratings below investment grade: it will be suicidal for anybody who does not want to risk losing their money to lend to them.

Are you panicking rationally yet? The scariest bit is coming up.

More than 50 per cent of all private pension money is currently invested in government debt. Furthermore, typically two-fifths of it is in foreign debt. No matter how safe a company pension fund looks now, if 60 per cent of all countries’ bonds become junk - so that to lend to them becomes a crazy proposition - the private pension system will not survive.

Meanwhile, the social impact of the measures taken to date, says S&P, ‘has already put the relationship between the state and the electorate under strain and severely tested social cohesion’.17 All over the world, states have ripped up the last part of the implicit deal they made with their citizens during the post-war boom: that either the market or the state would provide a decent living for those in their old age. The impact of this broken promise will be felt over decades, not years. When governments claim they’ve stabilized their finances by raising the retirement age, or de-linking pensions to inflation, it is like congratulating yourself on buying a diet plan. The pain comes in the implementation.

The end result, as IMF economists put it, is ‘unlikely to be socially and politically sustainable’.18

We have not yet considered the impact of migration. In 2013 I travelled to Morocco and Greece to hear the stories of migrants trying to move, illegally, to Europe. From Morocco, they were attempting to scale a three-metre-high razor wire fence into the Spanish enclave of Melilla; in Greece, they were enduring months of homelessness as they stalked the ferry ports in search of a ride to northern Europe. The insecurity of their daily lives made them prey to extortion, assault, sexual violence and extreme poverty. At the moment of attempted crossing they often risked death.

I asked them why, in the face of these hostile transit routes and the racism they would find in Europe, they were prepared to persist in trying to cross for months or years on end. They were incredulous: it was a stupid question. Compared to the lives they had left behind in the countries they came from, living on a concrete floor in a Tangier slum, or sleeping five to a room in a clandestine bunk-house in Marseilles was unequivocally better.

What I saw that summer, though, was nothing compared to what is coming. By 2050, there will be 1.2 billion more people of working age in the world than today - most of them living in the kind of circumstances those migrants were fleeing.

In Oujda, Morocco, I met two bricklayers from Niger in their early twenties, squatting on open ground, living on handouts from a mosque. Niger is a country so underdeveloped that you do not often meet its inhabitants on the roadsides of the world. When I talked to them, and looked at the UN’s projections for their country, the scale of what’s coming became clear.

By 2050, the population of Niger will have grown from its current 18 million to 69 million. Chad, the country they’d come through, will see its population treble, to 33 million. Afghanistan, whose troubles have sent its citizens into the people-trafficking systems that criss-cross Greece, Turkey and Libya, will rise from 30 to 56 million.

A stunning half of all the projected population growth between now and 2050 will take place in just eight countries,* six of which are in sub-Saharan Africa.19 To find jobs, people from the population-boom countries will migrate to the cities; the land, as we’ve seen, is already under stress from climate change. In the cities, many will join the world’s slum-dwelling population, which already stands at a billion - and increasing numbers will attempt illegal migration to the rich world.20

The World Bank economist Branko Milanovic, surveying the huge and growing inequality in developing countries, calls this a ‘non-Marxian world’ in which location, not class, is responsible for two-thirds of all inequality.’21 His conclusion: ‘either poor countries will become richer or poor people will migrate to rich countries’.

But for poor countries to become richer, they must break out of the so-called ‘middle-income trap’ - where countries typically develop to a certain point and then stall; both because they have to compete with the old imperial powers and because their corrupt elites strangle the emergence of functional modern institutions. Only thirteen countries out of 100 labelled ‘middle-income’ in 1960 had become high-income by 2012. These were mainly the Asian Tigers, led by South Korea, which ignored the development regime imposed by the global system and relentlessly built up their own industry and infrastructure with nationalist economic policies.

As George Magnus of UBS writes, the obstacles are more than economic: ‘It gets progressively more difficult to raise income per head once you are a middle income country, and … doing so is not about drawing lines from spreadsheets, but about the economic benefits generated by continuously evolving, inclusive institutions.’22 But the countries where population growth is biggest are the countries with the most corrupt and inefficient institutions.

If climate change, demographic ageing and a jobs-drought in the developing world were not interacting with a stagnant, fragile economic model, the problems might be solved separately. But they are. And the result is likely to place the whole global system under strain, and puts democracy itself in danger.


‘Ours is essentially a tragic age so we refuse to view it tragically. The cataclysm has happened, we are among the ruins … We’ve got to live, no matter how many skies have fallen.’23 D. H. Lawrence was describing the English aristocracy after 1918, its ideology shattered, retreating into a world of stately homes and archaic manners. But the description could apply equally well to the modern elite after the catastrophe of 2008: a financial aristocracy determined to go on living as if the threats outlined above are not real.

In the late twentieth century, a generation of entrepreneurs, politicians, energy barons and bankers grew up in what felt like a friction-free world. Over the previous century or so, their predecessors had to watch a finely crafted order disintegrate, together with its illusions. From Imperial France in 1871 right through to the fall of Vietnam and the collapse of communism, the first lesson of statecraft for those born before 1980 was: bad stuff happens; events can overwhelm you.

By the year 2000 it felt different. It might not have been the ‘end of history’, but to the generation that built the neoliberal order it seemed as though history had at the very least become controllable. Every financial crisis could be met with monetary expansion, every terror threat obliterated with a drone strike. The labour movement as an independent variable in politics had been suppressed.

The psychological byproduct in the minds of the policy elite was the idea that there are no impossible situations; there are always choices, even if some of them turn out to be tough ones. There is always a solution, and it is usually the market.

But these external shocks should be the alarm call. Climate change does not present us with a choice of market or non-market routes to meeting carbon targets. It mandates either the orderly replacement of market economics or its disorderly collapse in abrupt phases. Ageing populations run the risk of tanking the world’s financial markets, and some countries will have to wage a social war on their own citizens just to stay solvent. If that happens it will make what happened in Greece after 2010 look like just a few bad summers.

In the poorest countries, the combined impact of population growth, institutional corruption, skewed development and climate effects will create, for certain, tens of millions of landless poor people whose most logical choice will be to migrate.

You can see the defensive reflexes already in the developed West: the razor wire and the push-backs at the Spanish African enclave of Melilla; the violation of law by the Australian navy as it deals with migrant boats from Indonesia; America’s breakneck charge into fracking in order to become energy self-sufficient; Russia and Canada’s rival preparations to deploy military forces in the Arctic; China’s determination to monopolize the Rare Earth metals vital to modern electronics. The common themes of these responses are withdrawal from multilateral collaboration and attempted self-sufficiency.

We have come to see the danger to globalization as economic nationalism, where the population of one or more advanced economy cannot take austerity and forces its political class - as in the 1930s - to pursue a ‘beggar thy neighbour’ solution to the crisis. But the external shocks create a dimension of instability beyond pure economic rivalry. The pursuit of energy self-sufficiency is creating regionalized global energy markets. Russia’s diplomatic standoff with the West over Ukraine and its continued threat to deprive Europe of gas will, even if it does not blow up, lead Europe to seek its own self-sufficiency.

Meanwhile, the balkanization of the global energy market is mirrored by a similar process on the internet.

Already nearly one in five human beings has to put up with having their information filtered through the farcical controls erected by the Chinese communists. A politician is arrested for corruption? Naturally his name disappears from search engines. If that name happens to rhyme with the word for instant noodles (as was the case with Zhou Yongkang in 2014), the word for noodles disappears too, and so does the most popular noodle brand.24

Now the internet stands in danger of further fragmentation, as states react to the revelations of mass cyber-surveillance by the American National Security Agency. In addition, 2014 saw several governments, including Turkey and Russia, try to suppress dissent by forcing internet companies to register as entities under their domestic legal systems, opening them up to formal and informal political censorship.

So the first phase of the breakup of the global system is manifest through the breakup of information and the breakup of energy. But state-level fragmentation is on the agenda too.

I covered first-hand the Scottish independence referendum of 2014. Contrary to media myths, this was not a nationalist surge but a left-inclined plebeian movement. Handed the opportunity to break away from a neoliberal state committed to austerity for the next decade, the Scottish people came very close to doing so and breaking up the world’s oldest capitalist economy in the proces. As the Spanish political system enters crisis, the momentum for Catalan independence may gather (it is stemmed currently by the sudden rise of Podemos). And we are just one political accident away from the collapse of the EU project itself. When a far-left party won the election in Greece, all the EU’s institutions attacked it as white blood cells attack a virus. At the time of writing, the Greek crisis is in full swing - but it will look like small fry if, as is entirely possible, the far right comes to power in France.

In Beijing, Washington and Brussels, the next five years are likely to see the old rulers try one last time to make the old system work. But the longer we go on without calling an end to neoliberalism, the more its contingent crises will begin to collide and merge with the strategic ones I’ve outlined here.

On its own, the rise of info-capitalism would have offered a range of outcomes. You could - just - imagine a stagnant Western economy kept alive with high debt, bailed-out banks and printed money, were it not for the demographic crisis. You could - without climate change - imagine a postcapitalist transition path led by the gradual, spontaneous rise of non-market exchange and peer-production alongside a system faltering under its internal contradictions. More Wikipedias, more Linux, more generic drugs and public science, the gradual adoption of Open Source forms of work - and maybe a legislative curb on the info-monopolies. This is the airport book scenario for postcapitalism: a good idea, implemented in a crisis-free environment, at a pace determined by ourselves.

But the external shocks call for action that is centralized, strategic and fast. Only the state, and states acting together, can organize such action. The starkness of the climate target and the clarity of the technical ways of responding to it mean it will require more planning and more state ownership than anybody expects or even wants. The possibility of a world in which 60 per cent of states are bankrupted by the cost of their ageing populations means we need structural solutions, not financial ones.

But the illusions bred during the past twenty-five years feed our paralysis. Confronted by emissions targets, we offset them, paying for trees to be planted in someone else’s desert rather than changing our own behaviour. Confronted with evidence that the world is ageing, we spend $36 billion a year on cosmetic surgery.25 If you placed the levels of risk evidenced in this chapter before any CEO, any software genius, any stress team in an engineering workshop, any quantitative analyst in a bank, they would say: act now! Mitigate the risk urgently.

If you used the method engineers use - root cause analysis - to ask why three systemic disruptions are happening at once (financial, climatic and demographic), you would quickly trace them to their cause: an economic system in disequilibrium with its environment and insufficient to satisfy the needs of a rapidly changing humanity.

Yet to say ‘act now’ on climate, the warped finance system or the impossible arithmetic of public debt is deemed revolutionary. It punctures the reverie of the Davos elite, poisons the atmosphere in Mediterranean yachting ports and disturbs the silence in the political mausoleum that is the Chinese communist HQ. Worse still, it destroys the illusion held by millions of people that ‘everything is going to be OK’. And for activists it means something they are rightly scared of: engagement with the mainstream, involvement with political strategy, an enduring structural project more concrete than ‘another world is possible’.

Faced with this situation, we need ‘revolutionary reformism’. Even to say the words out loud is to realize how deeply they challenge both sides of political reality. Say it to a social democrat in a suit and watch them wince; say it in an Occupy camp and watch the activists wince - for exactly opposite reasons.

Panic would be rational faced with these challenges but the social, technological and economic changes underway mean we can meet them, if we can understand postcapitalism as both a long-term process and an urgent project.

So we need to inject into the environment and social justice movements things that have for twenty-five years seemed the sole property of the right: willpower, confidence and design.