What a Wonderful World (16 page)

But, though the market is complex and ill understood, people are nevertheless adding gratuitous complexity to the market. A good example is the creation of complex financial instruments, which played a significant role in triggering the global financial crisis of 2008. One of the most dangerous, according to Chang, was the Collateralised Debt Obligation, or CDO. This bundles together thousands of risky investments such as loans for the purchase of houses by people with little prospect of being able to pay them back. To make this ‘Voodoo process’ even more risky, says Chang, CDOs themselves have been bundled together in their thousands to create an even more complex product known as a CDO-squared. ‘The level of unnecessary complexity is staggering,’ says Chang. ‘To understand such an investment typically requires reading in excess of 1 billion pages of documentation.’

Greenspan has said that such products are ‘too complex to regulate’ because nobody understands them. In fact, says Chang, they are designed to be opaque, to obscure. ‘Then, if they go wrong, it is impossible to determine why or to determine who is responsible.’ This was particularly true of the 2008 crisis, in which hardly anybody has put up their hands and accepted blame.

Chang believes it is irresponsible and dangerous to introduce gratuitous complexity into the market. He makes a comparison with drugs, which the pharmaceutical industry must rigorously test, often for many years, before they can be safely released into the world. He believes that there should be a similar rigorous testing of financial instruments or any schemes that increase complexity of the market. Only then would we be confident they would not destabilise the market.

But, actually, the malaise with the market system might go deeper than the complex financial instruments that played such a role in destabilising everything in 2008. Proponents of the market system talk of it being a natural state, the economic analogue of the web of life created by Darwin’s theory of evolution by natural selection. But this, according to the Hungarian economist Karl Polanyi, is the biggest myth of all. In his influential book,
The Great Transformation
, he made the case that the market system is a relatively recent innovation.
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The laws and regulations that made it possible were introduced by the governments of modern states beginning in the late eighteenth century. Laissez-faire was planned. It was an integral part of the industrial revolution. Before this time, claimed Polanyi, many financial transactions were as much about gaining social status or reinforcing social bonds as about making money. ‘Land, labor and money itself were not regarded chiefly as commodities to be bought and sold,’ writes David Bollier, author of
Silent Theft
. ‘They were “embedded” in social relationships.’ In other words, people were motivated by the interests of a family,
clan, or village rather than by mere self-interest, the defining feature of a market economy.

According to Polanyi, the Great Transformation turned land, labour and money into abstract commodities and encouraged the belief that they could be exploited without limit to deliver eternal growth. Such growth is measured by Gross Domestic Product, which is the monetary value of the production of all goods and services in an economy. However, if an economy is continually to grow, people must continually spend, which is possible – for a while – only if people borrow money so their debts accumulate on a massive scale. Perpetual growth is of course unsustainable. And the consequences of trying to achieve it are serious. ‘Because markets treat nature as essentially limitless and human beings as commodities, they are always pushing human societies and nature to the breaking point,’ says Bollier. This pursuit of profit without concern for the consequences has brought the planet to the edge of ecological disaster.

According to Polanyi, the Great Transformation also encouraged the belief that the free market is pure and divorced from society, which ignores the fact that labour involves people, who have lives and loves, hopes and dreams. In 2013, across Europe and America, human talent and industry is being wasted on a huge scale as governments employ austerity measures in an attempt to pay for the excesses of the market system. ‘We need to enlarge the scope of political conversation to include such questions as: how shall we re-integrate market forces into society so that they can be constructive and not disruptive?’ says Bollier.
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‘Nowadays people know the price of everything and the value of nothing,’ Oscar Wilde observed in the nineteenth century.
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A common refrain in the twenty-first century is ‘Capitalism killed
Communism. Now it’s coming for Democracy.’ But human social behaviour is motivated by more than profit and self-interest. ‘I shop therefore I am’ does not define a human being. Adam Smith envisioned the free market as the servant of humanity not its slave master. Patrick McGoohan, playing the lead role in the cult 1960s TV series
The Prisoner
, could have been speaking for millions of ordinary people today when, in exasperation, he cried out, ‘I am not a number! I am a free man!’

The world has not always been the way it is. This is one of the most powerful and revolutionary insights in history. It spawned a new science – geology – and it inspired Charles Darwin to recognise that all creatures on Earth have diverged from a
common
ancient ancestor.

The evidence that the Earth is not static – that it was not made in its current form by a Creator – is subtle. For instance, on Madeira, a volcanic island off the north-west coast of Africa, fossil seashells are commonly found more than 6,000 feet up on the summit of the tallest mountain. How did they get there? The obvious but mind-blowing answer is that the mountain began its life beneath the sea and rose skyward.

Mountains do not rise by a noticeable amount in a human
lifetime
. Consequently, it must have taken a huge number of human lifetimes for Madeira’s tallest mountain to have risen from beneath the sea to a height of more than 6,000 feet.

‘A huge number of human lifetimes’ is not exactly precise. Fortunately, other subtle evidence exists that can provide the precision. Scientists in the eighteenth century could see mud accumulating at the bottom of lakes, deposited there by the rivers and streams. They could also see cliffs and other exposed rocks that looked remarkably like mud, piled thin layer upon thin layer. The suspicion grew in their minds that the rocks had been made by mud settling to the bottom of an ancient body of water. Such
a process was extremely slow – in a century, it would deposit no more than a fraction of an inch of mud. The unavoidable
conclusion
was therefore that the rocks must be hundreds of millions of years old – created over
millions
of human generations.

For the first time in history humans contemplated Deep Time, compared with which their existence was as transient as that of a firefly in the night. The Earth is not just old, it is
beyond-
human-comprehension
old
. ‘There is no vestige of a beginning, no prospect of an end,’ said Scottish scientist James Hutton in 1788.
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Today, we know from the radioactive dating of meteorites, the builders’ rubble left over from the formation of the Solar System, that the Earth is about 4.55 billion years old – that is 4.55
thousand
million years.

Mud becomes mudstone after it is deposited on the bed of a body of water, then compressed by the layers of mud deposited on top. The creation of such sedimentary rock illustrates another profound insight.
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The past, contrary to novelist L. P. Hartley’s famous opening sentence, is not a foreign country; they do not do things differently there.
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The processes that have changed the Earth’s surface are nothing more than the processes that are going on today – weathering, volcanic eruptions, and erosion by water and wind. Working away over mind-cringing spans of time, they can literally move mountains – or grind them into
microscopic
dust.

Two mountain ranges that illustrate this are the Himalayas, which today are rising skyward, and the Caledonian mountains of Scotland, the eroded stumps of a Himalaya-like chain born about 500 million years ago. Both ranges have been created by an identical process – the titanic collision of giant chunks of the Earth’s crust. The evidence for this can be seen in both locations
in the form of huge folds created by layers of colliding strata rucking up over each other.

The fact that chunks of the crust can collide like this leads to another revolutionary insight. Although the early geologists believed that the surface of the Earth merely moved up and down, creating features such as mountains, in fact, the surface also moves
sideways
.

As far back as 1620, Francis Bacon, poring over the first
semi-accurate
maps of the world, noticed a remarkable similarity between the coastlines of Africa and South America. Like two giant jigsaw pieces, they appeared to fit together. This was considered no more than a curiosity until the early twentieth century. Then, a German geologist suggested an idea so controversial that he would die unrecognised, having convinced essentially no one of its truth.

Alfred Wegener’s extraordinary idea was that the continents
move
. The reason the coastlines of South America and Africa fit is that long ago they were
joined
. They then split and drifted apart. Wegener’s evidence of such continental drift was that not only are the rocks on either side of the join the same but so too are the fossils.

The main reason no one believed Wegener’s idea was that he could provide no mechanism for continental drift. Also, South America and Africa were separated by thousands of kilometres of seabed. How in the world could they have crossed such a
substantial
and solid barrier?

What changed everything was the surveying of the seabed of the Atlantic. The laying of transatlantic telephone cables had
revealed a curious ridge in the mid-Atlantic.
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Sonar surveys by the US Navy in the 1960s revealed it was more than a ridge. It was a stupendous mountain range that bisected the Atlantic, stretching 10,000 kilometres from Iceland down to the Falklands. What was it doing there?

A key piece of evidence came from measurements of the
magnetic
field of the rocks on the seabed. Those rocks were originally spewed out as lava by ancient volcanoes. When the lava was liquid, its atoms were free to align along the direction of the Earth’s north–south magnetic field of force; when the lava solidified, the atoms froze for all eternity in the direction of the ancient field.

The magnetism of the seabed rocks revealed an extraordinary pattern. On either side of the mid-Atlantic Ridge were symmetric stripes of magnetism: first rocks were magnetised in one
direction
, then in the opposite direction, over and over again. What did it mean?

Actually, measurements of the magnetism of rocks on the land had already shown such magnetic reversals. The Earth’s magnetic field is pretty much like that of a bar magnet, and at intervals it flips direction. What was the north magnetic pole becomes the south magnetic pole, and vice versa. To this day, nobody is quite sure why this happens. But the stripes of rock, magnetised first one way, then the other, gave the geologists of the 1960s a powerful tool. Dating the rock of the stripes showed that the oldest were furthest from the mid-Atlantic Ridge while the youngest were closest.

Suddenly, it became clear what was happening. The
mid-Atlantic
Ridge was
manufacturing crust
. About 120 million years ago, South America and Africa had indeed been joined at the hip.
Then a huge crack in the Earth had opened, spewing forth lava. Water had flooded in. Year after year, century after century, millennium after millennium, lava had gushed out of the
tremendous
fissure in the Earth’s surface, creating ever more crust, which pushed the two continents further and further apart.
Something
like this is happening today at Afar in Ethiopia, where not two but
three
chunks of the Earth’s crust are pulling apart and a new ocean is being born.

Wegener’s critics were wrong to ridicule him. It was not necessary for South America and Africa to cross a vast expanse of solid seabed to reach their current positions. At the outset there had been
no seabed.
It grew between the land masses, in the process pushing them remorselessly apart.

The figures are impressive. The mid-Atlantic Ridge pumps out about 5 cubic kilometres of lava
every year.
This is twenty times as much as Mount St Helens, which in its mighty volcanic
eruption
of 1980 spewed out a paltry 0.25 cubic kilometre of rock. Mid-ocean ridges – and they are not found only in the Atlantic – are crust factories. Globally, they make about 30 cubic kilometres of new crust every year.

But it is impossible to create ever more crust on a ball such as the Earth which is finite in size. Something must give. And it does.

To understand what happens it is necessary to know one other fact: the crust of the Earth is fractured into about twelve major chunks, or plates. A plate might carry on its back continental crust or oceanic crust or both. Wegener, who was right on so much, was therefore wrong to think it was merely continents that were drifting. The plates float on the mantle, the super-hot,
super-dense
fluid of the Earth’s interior.

A subtlety here turns out to be very important. Oceanic crust, made of volcanic rock, is heavier than continental crust, which is made of granite, formed from volcanic magma. Consequently, continental crust floats higher. This explains something we so take for granted that it is never remarked on: the ocean bed is low and wet while the continents are high and dry. Continental crust, as geologists like to say, is the ‘scum of the Earth’.

So now it is possible to understand what happens as crust is ceaselessly manufactured at mid-ocean ridges. If two plates carrying continental crust collide, in the stupendous collision the light continental crust rucks up, rising to create mountains. This is happening at the site of the Himalayas. But the rucking up of coast is only a temporary solution to the ever-increasing mass of crust. Somewhere crust must be destroyed. And it is: where a plate carrying oceanic crust runs into one carrying continental crust. This is happening today along the west coast of South America.

Oceanic crust, being lighter than continental crust, dives down under it into the mantle. As it does, it carries with it water and seashells and all kinds of oceanic detritus. This is very significant because these things have the effect of lowering the melting point of the continental crust under which the ocean crust is diving. The result is volcanoes on the continental crust above. These can be seen today along the length of Chile. They are the Andes.

Actually, it is not always the case that, when oceanic and
continental
crusts collide, the oceanic crust dives underneath. In the collision off the west coast of Britain, the oceanic crust is
pushing
the continental crust along with it. This is widening the Atlantic by about 5 centimetres a year. Britain and the United States are in the midst of a long goodbye.

But, when oceanic crust does dive beneath continental crust, it does not dive down smoothly. As it plunges to oblivion in the mantle, it snags, and judders forward. And this juddering creates tremendous earthquakes, such as the one that struck Chile in 2010.

So plates are made and are destroyed. They run into each other and slide past each other. This is happening along the San Andreas Fault in California, where the Pacific Plate is moving past the North American Plate, closing the gap between Los Angeles and San Francisco by 5 centimetres a year.

Plate tectonics explains all we see on our planet. Without it, geology would make as little sense as biology without Darwin’s theory of evolution by natural selection, or genetics without DNA.

But what drives the motion of chunks of the Earth’s surface? Wegener, who died in 1930, aged only fifty, on a field trip in Greenland, failed to find it. But it is nothing more complicated than heat trying to escape from the interior of the Earth.
Incredibly
, 4.55 billion years after its creation, the planet still retains some of the heat of its molten birth.
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This is because, being a big body, it has a relatively small surface area through which heat can escape compared with its volume, and so heat has a hard time getting out. The interior of the Earth is also continually heated by the disintegration, or decay, of radioactive elements in its rocks such as uranium, thorium and potassium.

All this keeps the interior of the Earth fluid (though it is a
very
viscous fluid). And, just like water in a saucepan on a
hot-plate
, the fluid roils, with hot, light fluid rising and cold, dense fluid sinking. Nobody knows whether this convection occurs in one big circulating cell that extends down to the Earth’s core or whether the pattern is more complex. But the basic idea is
straightforward. Circulation of fluid in the mantle drives the motion of the plates.

But the plates do not only continually change the shape of the Earth’s surface; they also play a key role in keeping our planet habitable.

Carbon dioxide gas is constantly pumped into the atmosphere by volcanoes. It is sucked out of the air by the oceans and finds its way into the carbonate shells of sea creatures. When they die, they settle on the seabed. Their remains are therefore taken down into the mantle when an oceanic plate dives under a continental plate. In this way, the plate tectonic conveyor belt prevents carbon dioxide in the atmosphere building up to dangerous levels. Carbon dioxide is a potent greenhouse gas that traps heat in the atmosphere.
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What happens if there are no plate tectonics to remove
atmospheric
carbon dioxide is apparent on Venus. Carbon dioxide from volcanoes has built up to such levels that the planet has an atmosphere about 92 times thicker, composed solely of the gas. It makes the surface hot enough to melt lead.
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The Earth’s plates, as they dive down into the mantle, might appear to be forever beyond our view. However, seismic waves bouncing around inside the Earth from earthquakes can be used, with the aid of computer wizardry, to create a kind of X-ray of the interior of the Earth. Such seismic tomography shows the skin of the crust wrapped around the mantle. Deep down is the core. This consists of an outer core of liquid iron wrapped around an inner core of solid iron. Remarkably, seismic
tomography
appears to show whole slabs of plates sinking down to the core. This is surprising since they would be expected to melt. The slabs pile up outside the outer core.