I recently read this essay. http://richardheinberg.com/221-economics-for-the-hurried It is a long one, and you may not have the time or inclination to read all of it, but I found it very informative. I have a few excepts below. The reason I post this here is that it comes from a website that links to the Post Carbon Institute, but the essay focuses on the instability of the global financial system. I wonder how closely it aligns with your analysis, Karl.

Below are paragraphs lifted from the essay.

In theory, the Market [in the 18th and 19th century] was a beneficent quasi-deity tirelessly working for everyone’s good by distributing the bounty of nature and the products of human labor as efficiently and fairly as possible. But in fact everybody wasn’t benefiting equally or (in many people’s minds) fairly from colonialism and industrialization. The Market worked especially to the advantage of those for whom making money was a primary interest in life (bankers, traders, industrialists, and investors), and who happened to be clever and lucky. It also worked nicely for those who were born rich and who managed not to squander their birthright. Others, who were more interested in growing crops, teaching children, or taking care of the elderly, or who were forced by circumstance to give up farming or cottage industries in favor of factory work, seemed to be getting less and less—either proportionally (as a share of the entire economy), or often even in absolute terms. Was this fair? Well, that was a moral and philosophical question. In defense of the Market, many economists said that it was fair: merchants and factory owners were making more because they were increasing the general level of economic activity; as a result, everyone else would also benefit . . . eventually. See? The Market can do no wrong. To some this sounded a bit like the circularly reasoned response of a medieval priest to doubts about the infallibility of scripture. Nevertheless, despite its blind spots, classical economics proved useful in making sense of the messy details of money and markets.

Beginning in the late 19th century, social liberalism emerged as a moderate response to both naked capitalism and Marxism. Pioneered by sociologist Lester F. Ward (1841-1913), psychologist William James (1842-1910), philosopher John Dewey (1859-1952), and physician-essayist Oliver Wendell Holmes (1809-1894), social liberalism argued that government has a legitimate economic role in addressing social issues such as unemployment, health care, and education. Social liberals decried the unbridled concentration of wealth within society and the conditions suffered by factory workers, while expressing sympathy for labor unions. Their general goal was to retain the dynamism of private capital while curbing its excesses.

There is a saying now in Russia: Marx was wrong in everything he said about communism, but he was right in everything he wrote about capitalism.

The ideological clash between Keynesians and neoliberals (represented to a certain degree in the escalating all-out warfare between the U.S. Democratic and Republican political parties) will no doubt continue and even intensify. But the ensuing heat of battle will yield little light if both philosophies conceal the same fundamental errors. One such error is of course the belief that economies can and should perpetually grow.

In a larger sense our entire economy has assumed the characteristics of a bubble—even a Ponzi scheme. That is because it has come to depend upon staggering and continually expanding amounts of debt: government and private debt; debt in the trillions, and tens of trillions, and hundreds of trillions of dollars; debt that, in aggregate, has grown by 500 percent since 1980; debt that has grown faster than economic output (measured in GDP) in all but one of the past 50 years; debt that can never be repaid; debt that represents claims on quantities of labor and resources that simply do not exist.

there are now as many Americans employed in manufacturing as there were in 1940, when the nation’s population was roughly half what it is today—while the proportion of total U.S. economic activity deriving from financial services has tripled during the same period. And speculative investing has become an accepted practice that is taught in top universities and institutionalized in the world’s largest corporations.

Which brings us to a key question: If the financial economy cannot continue to grow by piling up more debt, then what will happen next?