The Grandest Ponzi Scheme and The Great Disruption

In his recent column “The Inflection Is Near?,” New York Times columnist Thomas Friedman raises the question:

What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.”

Friedman references physicist and researcher Joseph Romm, who writes at In “Is the global economy a Ponzi scheme, are we all Bernie Madoffs, and what comes next?,” Romm describes the global economy as “the grandest of Ponzi schemes, whereby current generations have figured out how to live off the wealth of future generations.”

If that’s not sufficiently gloomy for you, Friedman also references environmental activist Paul Gilding’s article “The Great Disruption,” in which he maintains that in 2008 the world entered a period that he calls The Great Disruption:

Our whole global political and economic system has been built on incessant growth, so this crisis will strike at the heart of society. Growth is the underpinning policy focus and strategic assumption of all governments, central banks, corporations and investment funds. It is never questioned and anything less leads to intervention to restart it. So when growth stops, things get very difficult. People throw out governments, shareholders throw out Boards and Boards throw out CEOs. So we can expect all that before we face up to reality – we have a system design problem.

However, Gilding refers to himself as an optimist. Although the crisis will “herald an unparalleled era of system stress, economic stagnation and social tension,” he believes that during that time “we’ll evolve a new economic model and then rebuild”:

This disruption will drive a transformation of extraordinary speed and scale. It will leave in the dust all other major global changes we’ve faced – those driven by war, technology or globalising markets. It will be an exciting and ultimately positive transformation, with great innovation and change in technology, business and economic models alongside a parallel shift in human development. It could well be, in a non-biological sense, a “great leap forward” for humanity with a move to a higher stage of evolution and consciousness.

AB — 18 March 2009