What is a “luxury economy,” really?

“I’ve long argued that the likeliest long-term future for humanity in the face of climate, energy, water, soil and political-economic realities will involve a turn to low-energy, small-scale agrarianism geared to local material needs. This future could be quite congenial or incredibly grim, depending on how it manifests. In my opinion, the sooner humanity takes active steps to manifest it positively rather than ignoring it so it happens by default the more congenial it’s likely to be.”— Chris Smaje, Beyond rescue ecomodernism

I’m really not the sort of person who ought to be throwing my gauntlet down near the feet of the entire profession of economics, but then hardly anyone noticed when I did so last year in October—, by radically redefining the phrase “luxury economy”. Here’s what I said then.

I define a luxury economy as an economic mode of access to livelihood which depends upon luxury goods and services in order to avoid economic and social collapse.1

Normally, both ordinary people and economists think of the phrase “luxury economy” as designating that sector of the economy which “caters to consumers with a high level of disposable income and a desire for premium and exclusive products and experiences,” says ChatGPT. That’s just a common sense understanding. And I meant to suggest there’s a better and more useful application for the phrase, one which acknowledges that energy and material use in “the economy” both must and will decline on a per capita use basis in the rich countries over the next decade or two. Energy and materials flows must (a normative and ethical claim) shrink to avert worst case scenarios of anthropogenic climate disruption. And they will shrink in this time frame due to increasing resource scarcity. And so my proposed definition of “luxury economy” was meant to facilitate the contemplation of the meaning of the word luxury in light of these facts about energy and materials in the economy.

My reframing of the phrase “luxury economy” was intended to point out some rather dramatic transformations in our economy (or, rather, the economies of the richer countries — a.k.a., the global North) which both will and must occur in the very near future.

In today’s dominant mode of economic activity (technological, industrial, capitalist consumerism), energy is right at the center, so much so that GDP / GWP and energy consumption are tightly coupled. Increases and decreases in energy use on a graph line follow the same curves as GDP / GWP. Materials use is also deeply intertwined with energy use, and likewise follows a pattern similar to that of energy. And 84% of world energy use remains fossil fuel sourced, so I’m basically saying that if energy consumption shrinks, so will what we call “the economy”. And when “the economy” shrinks, luxury goods and services shrink at a greater rate than necessities — e.g., food, shelter, clothing, etc.

These observations have everything to do with what I want to call The Future of Livelihood. And they are the basis of my argument that we’re soon to enter a global counterurbanization demographic trend. This deurbanization trend will, in my opinion, be most obvious in the world’s richest countries, because it is in these countries that there is the greatest dependence upon “the luxury economy” as I have defined it.

“… skimming its flows rather than mining its stocks”

In the year 2008, a milestone in a great global demographic shift was announced. This was the year that more than half of the world’s human population lived in cities. Currently, about 56% of the world’s population, or 4.4 billion people, live in cities. This number is expected to increase to 68% by 2050, according to the supposed experts who like to predict the future on the basis of past trends. I’m here today to add my voice to a growing number of voices who believe the trend will very soon begin to move in precisely the opposite direction.

The first of such voices in the “the future is rural” camp to come to mind is Dr. Jason Bradford, Board President of Post Carbon Institute, who in 2019 published a PCI report titled The Future is Rural: Food System Adaptations to the Great Simplification. But Dr. Chris Smaje’s name leaps up alongside Bradford’s. Smaje, after studying and  then teaching and researching in social science and policy, in 2007 became a small-scale commercial veg grower in Somerset, southwest England. He has since published two books, one of which is widely considered a foundational contribution to the contemporary “the future is rural” discourse concerning future livelihood in a low carbon and low energy future. That would be A Small Farm Future: Making the Case for a Society Built Around Local Economies, Self-Provisioning, Agricultural Diversity and a Shared Earth.

It’s no surprise, then, that these two men know one another’s work. In a passage in his blog, Smaje says this:

Deurbanization, on the other hand, runs more with the grain of human desires as city infrastructures flounder. And with the grain of creating a human ecology that’s renewable in the long term because it embeds livelihood-making in the cycles of the natural world, skimming its flows rather than mining its stocks, as would be necessary in a high-energy urban world. In many cases it may not even involve huge relocations, just a reorientation of small towns and cities to more populated hinterlands. What’s certain is that in the future people will move whenever they can towards prosperity, as they have in the past. And it seems probable that in the long-term prosperity will generally be found where people can grow food and fibre locally. As Jason Bradford puts it, ‘the future is rural’.

Smaje, Bradford and myself share a common nemesis in the form of ecomodernism, a strange but popular recent permutation of “environmentalism” which oddly presumes that the future is not rural, but very urban indeed — and also very technocratic… to the point of a perverse anti-rural authoritarianism.

In a review of Smaje’s most recent book, Saying NO to a Farm-Free Future, Bradford writes …

One of my pet peeves is ecomodernism. Ecomodernist authors have a knack for adeptly elucidating the polycrisis, and then offering nothing useful for dealing with it. Even if you are unfamiliar with the terms ecomodernism/ecomodernists, you are likely aware of their schtick, as it has come to dominate contemporary environmentalism. It is a groovy eco-philosophy that tells mostly urbanized, highly educated, white-collar folks that although the Earth is in danger, their lifestyles are not. Perfect for inserting a do-gooder vibe into political and business circles, and then fundraising.

Now, I could go on and summarize Bradford’s PCI report, with quotes and footnotes…, and do the same with Smaje’s work, but instead I’ll just encourage the reader who is interested to explore these works for themselves. And I could dig up the names and writings of others who share our perspective that, indeed, the future is rural, not urban (for the most part). But instead I’ll make my own argument in my own way. And there is no better way to begin to make my argument than to reference the graph which accompanied my essay, Energy Transition & the Luxury Economy.

In 1840, 70% of Americans were farmers. Today, about 1.3 (just barely over one percent!) of Americans are farmers. So what happened when mostly technological transformations in agriculture displaced such vast numbers of workers? Where did all the farmers go? Well, most of them didn’t shift from one form of provision of necessary goods and services to yet another sector providing necessary goods and services. Rather, most of these farmers entered into “productivity” within a luxury-based, luxury-dependent mode of economy — which didn’t even exist in 1840 at any scale, and which grew in leaps and bounds between then and now. And the whole kit and kaboodle of the emerging luxury economy depended and depends, directly and indirectly, upon abundant and cheap (financially inexpensive) fossil fuels. (Never mind the non-monetary, ecological costs of fossil fuels which we obviously can no longer afford.) The world’s luxury economy, in simple terms, utterly and completely depends upon cheap and abundant energy. And if fossil fuels can’t provide this, then — say the ecomodernists — “renewable” energy tech will have to do the job. But the evidence for this ecomodernist premise just doesn’t come anywhere near to stacking up into an actual argument. That argument has been picked apart by the best minds in my specialty field — the study of energy, ecology and economy in relation to one another. Call us the EEE club, if you like. Our job is to find out what our realistic future material culture and economic opportunities really are, then to report on what we’ve learned. And the actual EEE experts have torn the ecomodernist premises to embarrassing shreds, to put it bluntly. If our Grand New Future (Brave New World?), bright as honey and gold, requires us to “mine the stocks” rather than to “skim the flows,” our job is to call bullshit on that narrative.

All — without a single exception — versions of a future economy which skim the flows, rather than mining the stocks, are economies which will use enormously less energy and materials than folks in the “developed world” have come to expect as natural and normal.

By some estimates, Global emissions must drop by 50% by 2030. That’s greenhouse gas emissions mainly associated with the burning of fossil fuels. If you’ve been reading attentively, you’ll understand that this means we have to basically halve the global economy (GWP) by 2030. And we can’t do this by simply replacing fossil fuels with so-called “renewables” — for about ten reasons against which there are no plausible arguments. Nope! There will be no such “energy transition” as that. That story has been a public relations stunt meant to distract us from what we really must do if we’re to both care for human needs and dramatically reduce ghg emissions. Please keep in mind that a dramatic increase in build-out of so-called “renewable” energy infrastructure will (a) require more minerals and metals than we have, (b) burn more fossil fuels over the next crucial decade than we can afford to burn, and [c] take more time than we have to do this in.

And my point is?

The luxury economy is about to end. Period. Full stop.

That means that more than half of the jobs now present in urban settings will dry up and blow away. There is no avoiding this conclusion if we examine the facts carefully while presuming that we’re not going to just go ahead and “mine the stocks” rather than to “skim the flows”. But to continue to “mine the stocks” will mean an end to — likely — more than half of whatever integrity the biosphere presently has remaining. Which means mining the stocks is a path straight into the bowels of hell. So our only really meaningful path forward will be a path of radical transformation of the means of access to livelihood, since if more than half of all city jobs disappear those displaced people will have no option other than to flee the city for a life in a rural village context — even if they merely live near, rather than directly in, a rural village setting.

A very low energy needs-based economy requires more land access (acres, hectares) per capita within walking distance than presently exists in most urban settings, to say the least (understatement). That is, access to livelihood needs to be just outside your front door, not miles and miles away.

There are those who will respond to all of this with that “Well, I know a bunch of rural-dwelling folks who are constantly commuting to work in their distant urban workplace, and commuting to shop for groceries and entertainment as well.” But this is a flimsy argument, and I’m growing rather weary of it, as it is either ignorant or disingenuous. A rural village life in a viable rural village economy requires the rural village person to stay put, not commute to work, play and shopping. Odds are, he or she will not own a car at all (though he or she — in the near term — may borrow a car from the village car co-op once or twice a month).

What will become of global tourism, and mass airline travel, then?

It will dry up and blow away.

What will become of the automobile manufacguring and maintenance industry, the road construction and maintenance industry?

It will dry up and blow away.

Will there be trains, then, so folks can travel longer distances sometimes?

I sure as hell hope so!

What about McMansions?

Gone. All gone. More than half of our present mode of economic life will simply disappear. But there will be bicycles, and streets in towns and villages will be friendly to bicycles again.

Just try to imagine running the world on half as much energy and materials, and then see for yourself if such a way of life will be compatible with half or more of the human population living in cities. I think the answer is rather obvious. What on Earth would city dwellers do for access to livelihood? They’d be able to do very little indeed, but if they were to move to a rural village and stay put, they could spend the working portion of their days growing food, creating and maintaining shelter, making shoes and clothing, canning and storing food, and meeting their most basic needs within a short walk of their little casita.

Self-provisioning of our basic needs requires rural, not urban, living. It requires land access. Access to livelihood for most people in the future will require significant land access at a short distance from home — walking distance.

It won’t be an all bad life, really. And the best part is that it won’t require starving slowly in the city.

If my argument isn’t persuasive, do let me know. I can further develop it in future posts. What are your questions? What important points did I miss? And what have I gotten wrong?

1 See – https://www.resilience.org/stories/2022-10-31/energy-transition-the-luxury-economy/