When Santa Claus was delivering a few token Christmas gifts to a few houses in a few little villages in northern Europe, he seemed believable because his task was possible. But a globalized Santa, required to travel at searing speeds to distribute billions of gifts to billions of households, simply boggles belief. Despite the convenience of time zones, Santa’s task has become – sorry for the bad news – so big that he his no longer believable.

Bigness is a problem elsewhere, too. Global financing has become so big that the effects of a single monetary blunder can echo around the world. Corporations have become so big that their health is inseparable from the economic well-being of nations. And our human population is now so big that its needs are destabilizing the fundamental ecological structures regulating the planet’s biosphere. The times in which we live can now be characterized as the search for bigger and bigger solutions to bigger and bigger problems.

Could it be that we are being undone by bigness? This was the position taken by the Austrian-born economist, Leopold Kohr, in his 1957 book, The Breakdown of Nations (Guardian Weekly, Sept 30/11).

Kohr’s ideas were initially dismissed by monetary and financial experts as the vapid musings of a “poet”. But his ideas are now gaining credibility as the international financial community struggles to control a contagion that seems to be tipping the economic system from recession toward depression. Trillions of dollars in new liquidity – adding big money to a big problem – don’t seem to be helping. As many national economies integrate into a global system of regulation and trade, the problems they create seem to be less and less responsive to solutions.

Kohr’s thinking contradicts the present trend toward globalization. His argument is that bigness eventually overcomes “the human scale”, that “the problem is not the thing that is big, but the bigness itself.” Within a human scale, he contends, any system will work. But “whatever outgrows certain limits begins to suffer from the irrepressible problem of unmanageable proportions.” Perhaps we simply invent complexities that are too big for us to manage. Or perhaps the problem is in the inherent instability of bigness itself – if doubling size happens to quadruple complexity, then growth is inherently self-defeating. In the “crisis of bigness”, Kohr concludes, “instead of growth serving life, life must now serve growth, perverting the very purpose of existence.”

An assessment of our technological age seems to support this conclusion. Speed inspires more speed, consumerism nourishes more consumerism, population growth needs even more people to maintain demographic and economic balance. Mass travel homogenizes exotic places, and flying feels more like endurance than fun – as Yogi Berra said, in one of his famous oxymorons, “Nobody goes there any more, it’s too crowded.” Bigness also explains how a small electrical failure can darken half the seaboard of North America, how a single contaminated food product can threaten the safety of millions, and how a local disease can escalate to a pandemic. Kohr’s thinking would also explain why any expanding system must eventually collapse.

Bigness also explains how globalization undermines democratic processes. The bigger and more complex economic structures become as a result of international financial and trade agreements, the more are governments constrained and the less influence accrues to individual citizens – who respond to this futility by not voting.

Increasing sophistication in a highly technological society also requires increasing education – until such demands outstrip some people’s abilities to meet them. This suggests that unemployment and alienation may become an inherent part of any highly sophisticated society. People who don’t understand how things work and are unqualified to participate become disengaged, lost and bewildered amid the complexity and sophistication.

Bigness may also explain why large cities automatically break into human-scale “villages” where people have a sense of community and belonging. And bigness might also explain why people combat the depersonalization of excessive size by connecting to each other with digital devices, why they respond to industrial food production with gardening, and why they react to mass production by humanizing their possessions with artisan crafts. When big solutions can’t be found for big problems, then the task falls to the ingenuity of local communities – which is precisely what is happening.

Kohr’s “crisis of bigness” clearly relates to our current global environmental problems. Bigness has its own inexorable logic, a momentum that always justifies an escalating exploitation of nature with another mine or oil well, with more drilling, pipelines, tankers, industry, roads, consumption and growth. As Leopold Kohr discovered, questioning this theology of bigness is heretical.

But, in the great design of things, bigness is always balanced by smallness. As some things expand, others must contract. This is why our burgeoning population and our frenetic industrial activity are shrinking species diversity and narrowing ecological resilience – displacing nature’s complexity with our own. And all the heat generated by our quest for bigness is now melting Arctic ice. At present rates, the North Pole will be open ocean by the summer of 2050. And if Santa really lives there – as purported – then his house, his factory, his elves, his reindeer stables and his entire Christmas enterprise will sink into a warming sea. Not exactly a “Ho! Ho!, Ho!” event.

Our environmental problems and our current economic problems both stem from breaking contracts. In the case of the environment, the contract is with nature; in the case of economics, the contract is with society. This similarity is worth exploring because the tumult of the 20th century provides insights into who we are, how we behave, and what we might do to mend these contracts.

At the end of two world wars in 1945, a new world economic era began. The bloodshed and chaos became the cooperation and sacrifice needed to rebuild a shattered world. Business, labour and government all entered into a social contract, an implicit agreement that all would work together to lift the prosperity and security of society as a whole. This social contract was never formalized but everyone understood that business and workers alike would share in the profits of renewed economic activity, government would legislate the fair distribution of wealth, and everyone would benefit as services and infrastructure permeated the community and kept people healthy, educated and safe. The result was nearly three decades of growth, stability and security for business, labourers and society.

Then something went wrong. Perhaps it was the fading memory of the war years coupled with the corrupting power of affluence. But creeping greed relaxed the regulations and constraints that kept business in compliance with the social contract. A marker date for this transformation – a symptom as much as a cause – was August 15th, 1971, when the United States abandoned the gold standard, the formal exchange rate that had stabilized currency markets, controlled inflation, guaranteed employment, and kept economies from slipping into unsupported debt.

In an illuminating analysis by Larry Elliott, “Why the System’s Ready to Blow” (The Guardian Weekly, Aug. 19/11), he describes the loss of a moral anchor that once regulated the social conduct of business. Examples include invented financial stratagems that make money for a few but pass the costs to the many, fraudulent bank dealings, the mortgage fiasco, an expanding disregard for fairness and decency, and corporations that manipulate governments to legislate in their service. When corporations make billions in profits but pay no taxes, when their CEOs earn millions per year as their employees lose jobs and suffer shrinking wages, when food banks proliferate and families struggle for financial security amid incredible wealth, then the social contract is broken.

“For a while in the late 1980s,” writes Elliott, “the easy availability of money provided the illusion of wealth, but there was a shift from a debt-averse world where financial crises were almost unknown to a debt-sodden world constantly on the brink of banking armageddon.” This broken social contract is confirmed by the presence of Occupy protesters in at least 900 of the world’s cities. While their complaints may differ in detail, they are all objecting to social and economic injustice.

The greed that has broken the social contract is the same greed that has broken the nature contract. Ecologies can tolerate a certain amount of stress – a forgiving relationship that has existed between ourselves and nature since the very beginning of our human existence. But the rabid exploitation that is currently taking place in the guise of hyper progress and exorbitant profit is now so disproportionate to nature’s resilience that many of the foundational ecosystems of our planet are stressed to breaking. The commons is being pillaged and trashed by wanton use and abuse. The ocean’s bounty, a resource of the commons, is being hooked, dragged and netted to oblivion. The atmosphere is being clogged with greenhouse gas emissions, the seas are acidifying, ice caps are melting, soils are being exhausted, and the complex network of species that give vitality to ecosystems are collapsing. As Larry Elliott notes of the chaos that has permeated the international currency exchange since the loss of the gold standard, “The system is an utter mess.”

Poor nature. The extent of industrialization is evident everywhere, but particularly in agriculture where the lavish generosity we have teased from nature’s bounty is no longer deemed good enough. Our genetic engineering is now manipulating the very building blocks of life by warping and mixing different species into unnatural concoctions of convenience, usually for the purpose of devising custom made plants that safeguard corporate power and profit. The risk of contaminating the purity of surrounding crops or unleashing some invented contagion is dismissed by the corporate imperative to thrive and control.

In the process, an increasing number of today’s farmers are becoming the serfs of corporations, merely the dehumanized operators of industrial sites where chickens, pigs, cows and grains are grown in factory conditions for mass processing to mass markets. Species diversity, the source of nature’s strength and resilience, is being converted by industrialization to monocultures, kept from calamity by antibiotics if animal, by pesticides if plant. In this system where profit is the primary motive, the collateral damage to nature is dismissed with a shrug of unfortunate inadvertence.

But people are bigger than systems, and nature is bigger than business. Just as humans have an essential sense of fairness, so too does nature. Violate the social contract and people will resort to revolution to re-establish the norms of respect and decency. Violate the nature contract and the laws of biology, chemistry and physics allow no forgiveness. We are getting clear signals that these two essential contracts are being broken. Reasoned prudence invites us to change our behaviour.