The global economic crisis is not just a financial crisis. It is a crisis of western capitalism in its post-industrial, post-modern form. The debt-fueled hyper-consumption that has driven growth in the West for the last two decades has come to its inevitable terminus.
This process had to end at some stage, either through the contradictions built into the financial system (endless growth based on easy credit can't go on forever) or through the contradictions between the economic system and the limits posed by the natural environment.
Despite the wishful thinking of the world's politicians and business leaders, climate change and the broader environmental crisis always would have halted this mode of production at some stage. The question was whether the system's own contradictions and instabilities would preempt the greater calamity of environmental crisis. Only the scale and rapidity of the systemic collapse of the post-modern capitalist model is truly surprising.
Most of the politicians of the world, Australia's included, have predictably and unfortunately shown themselves once again to be men and women of limited vision. Their solutions reveal them to be devoid of imagination. They are bound by what they have known rather than animated by what could be.
The outcomes of the G20 meeting in Brazil demonstrate this clearly. The differences between the Europeans and the Americans, emphasised in many media reports, amounted to little more than the precise placement of the deckchairs on the Titanic. They neither fundamentally questioned the endless growth model, nor acknowledged the scale of the environmental crisis and its ramifications for global economic recovery.
We should not portray governments as white knights coming to the rescue of a failing system. Nor should we target bankers as greedy and irresponsible, as if they were somehow different from the rest of us.
We all had a stake in this system. The bankers were merely at the pinnacle. They oiled the machinery of easy credit that fueled rampant house price increases. We could all then feel so much wealthier, encouraged to go out and buy big Tvs and new lounge suites to fill our ever-expanding houses — all on credit, of course.
Governments such as Australia's provided subsidies for home buyers that simply drove house price inflation: they subsidised the housing industry, not home owners. Tax cuts of all sorts further encouraged unsustainable asset price increases and the diversion of resources into unproductive speculation in property.
They also encouraged unnecessary and environmentally-destructive consumption. All this at a time when the resources of the nation needed to be harnessed to deal with the great challenge of climate change.
Through our superannuation contributions we have all participated in the great expansion of the global financial sector. Our retirement savings only added to a massive pool of footloose capital whose controllers were schooled in the shibboleths of neoliberalism.
They directed these savings, not to where it has been most needed — dealing with the environmental crisis, building education, eradicating poverty, improving infrastructure — but into the stock and property markets. There it created a massive bubble that only served to destabilise the economic system as a whole.
And when this crazy system collapses, what is the response of governments like that of Kevin Rudd? Our PM, trying desperately to seem statesmanlike, cautious and responsible, announced that he would spend half the government surplus. It would not go to change a system that is rotten to the core, but to prop it up with more of the same. The tragedy is that he persuaded most commentators that he was responsible.
He will pump billions of dollars into the economy to keep people investing in real estate and buying more and more consumer goods. He will also pump more money into the banks so that they can continue to offer credit and continue the whole process of living on the never-never.
Thus the economic system that has brought us to the brink of a second Great Depression will not be restructured. If Rudd and his counterparts in Europe and North America can get people to spend their way out of this current crisis they will only have sown the seeds for an even greater calamity in the future.
This model, based on never-ending consumption and growth, will finally run up against the limits of resource depletion and environmental degradation— if its own untreated contradictions don't intervene first.
The election of Barack Obama aroused a universal hope that maybe, just maybe, politics could be different, that we might recognise that we don't live in the best possible world, that change is necessary.
There are encouraging signs from the President-elect. Seizing the chance that Kevin Rudd seems determined to miss, he has promised to spend billions to develop a renewable technology industry, improve health care and restructure US industry. These are positive first steps, although there is still no fundamental acknowledgement of the limits to growth.
Just imagine what we could have achieved in Australia with half of the budget surplus if we used it to redirect the Australian economy on to a low carbon, low resource-use path instead of more of the same work-borrow-consume madness. Imagine all the new jobs in renewable energy, public transport, electric cars, sustainable housing construction.
Imagine preparing ourselves for the coming environmental crisis whose impact on the economy will make the current turmoil look like a golden age. Imagine if we could mobilise the world's politicians, decision makers and resources to deal with climate change in the same way that they've been mobilised to deal with this self-inflicted economic crisis.
Imagine using our national and global resources to deal collectively with the challenges that we will eventually have to deal with as societies, not as isolated individuals hoping for another tax cut.
Imagine a different future. It is up to us to do so, because our politicians certainly can't.
Colin Long lectures in cultural heritage at Deakin University.