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All civilizations collapse. The challenge is how to slow it down enough to prolong our happiness.
During the first century of our era, the Roman philosopher Lucius Annaeus Seneca wrote to his friend Lucilius that life would be much happier if things would only decline as slowly as they grow. Unfortunately, as Seneca noted, “increases are of sluggish growth but the way to ruin is rapid.” We may call this universal rule the Seneca effect.
Seneca’s idea that “ruin is rapid” touches something deep in our minds. Ruin, which we may also call “collapse,” is a feature of our world. We experience it with our health, our job, our family, our investments. We know that when ruin comes, it is unpredictable, rapid, destructive, and spectacular. And it seems to be impossible to stop until everything that can be destroyed is destroyed.
The same is true of civilizations. Not one in history has lasted forever: Why should ours be an exception? Surely you’ve heard of the climatic “tipping points,” which mark, for example, the start of the collapse of Earth’s climate system. The result in this case might be to propel us to a different planet where it is not clear that humankind could survive. It is hard to imagine a more complete kind of ruin.
So, can we avoid collapse, or at least reduce its damage? That generates another question: What causes collapse in the first place? At the time of Seneca, people were happy just to note that collapses do, in fact, occur. But today we have robust scientific models called “complex systems.” Here is a picture showing the typical behavior of a collapsing system, calculated using a simple mathematical model (see Figure 1).
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In other words, our economy and society have been optimized for failure.
If we look at the fragility and instability of essential systems, it’s clear that 2022 will be the year of breakdown. Let’s start by reviewing how systems break down, a process I’ve simplified into the graphic below.
1. Regardless of whether it was planned or not, all systems are optimized to process specific inputs to generate specific outputs. Each system is pared down to maximize efficiency as the means to maximize profits. This efficiency in service of maximizing profits requires trade-offs that only become visible when some key part of the system fails.
The system that ships containers around the world offers a useful example. Shipping containers revolutionized shipping and reduced costs by commoditizing containers (all standard sizes), container ships (specifically designed to carry thousands of containers and container ports with specifically designed cranes, docks and truck lanes / queueing.
It’s possible to load a container on some other craft with a jury-rigged crane, but the efficiency of that is essentially a fraction of the optimized system: the jury-rigged crane will only be able to load a handful of containers, the ship will only be able to carry a few containers, and the likelihood of the containers shifting increases.
The infrastructure and labor are both highly specialized. Calling out the National Guard to speed up container offloading is a useless gesture unless the Guard can deliver more cranes and experienced operators.
The greater the optimization, the greater the fragility as the breaking of any one link brings the entire system to a halt. Throwing in equipment and labor that the system isn’t designed to use will fail.
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TIMING THE MOMENT OF FRACTURE
When and how can we know that a change of direction is fundamental and lasting, rather than a temporary departure from established trends?
That, in essence, is the call we need to make now. Far from being “transitory”, current conditions – including rising inflation, surging energy prices and the over-stressing of supply-chains – are indicators of a structural change.
Ultimately, what we’re witnessing is a forced restoration of equilibrium between a faltering real economy of goods and services and a drastically over-extended financial economy of money and credit.
This is where confidence in continuity crumbles, where the delusions of ‘growth in perpetuity’ succumb to the hard reality of resource constraint, and where ‘shocks that are no surprises’ shake the financial system.
If you want just two indicators to watch, one of these is the volumetric (rather than the financial) direction of the economy, and the other is the behaviour of the prices of essentials within the broader inflationary situation.
The economics of stress
In the science of materials, it’s observable that fractures happen quickly, even if the stresses that cause them have accumulated over a protracted period. We can spend hours, days, weeks or even years gradually increasing the tension applied to an iron bar, but the ensuing snap in that bar will happen almost instantaneously.
Economics isn’t a science, but there’s a direct analogy here. Anyone who understands the economy as an energy system will be well aware of a relentless, long-standing build-up of stresses.
They’ll be equally aware that this cannot continue indefinitely.
Two things matter now.
First, when will these cumulative pressures bring about the moment of fracture?
Second, what should we expect to see when this snapping-point is reached?
The answers to the second question are pretty clear.
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Even though the Coronavirus has wreaked havoc in the lives of people worldwide, truckers have been struggling to keep the country moving. Global lockdowns, massive shifts in consumer spending and supply chain issues, raw material disruptions, cyberattacks, canals getting blocked and backing up freight, and you name it, already put our just-in-time manufacturing and delivery systems in complete disarray. When these problems also hit the trucking industry hard, as we see now, recoveries are fragile, and further shortages become the current reality and possibly the future norm. Every year the US economy depends on ten billion tons of every commodity imaginable to be delivered to the tune of almost 700 billion dollars worth of goods. If the trucks stop running, filling stations that sell nearly 300,000 gallons per month and require multiple deliveries per day could run out of fuel in hours or days. Manufacturers, unable to deliver their products from plastic bottles to toys to tomatoes, would have to halt production and sit idly by. You would see shortages of just about everything in your stores within two days. That would spark panic buying and further complicate the problems. Within a week, the entire economy would grind to a halt if all trucks stopped running.
Are we barreling down the road towards a trucking collapse? A complete truck collapse isn’t necessary for it to get so bad that every consumer feels the impact in all aspects of their lives. Several significant problems are facing this critical piece of the supply chain. If it fails, the whole system will collapse…
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Follow the money
In pre-Covid times, the world economy was on the verge of another colossal meltdown. Here is a brief chronicle of how the pressure was building up:
June 2019: In its Annual Economic Report, the Swiss-based Bank of International Settlements (BIS), the ‘Central Bank of all central banks’, sets the international alarm bells ringing. The document highlights “overheating […] in the leveraged loan market”, where “credit standards have been deteriorating” and “collateralized loan obligations (CLOs) have surged – reminiscent of the steep rise in collateralized debt obligations [CDOs] that amplified the subprime crisis [in 2008].” Simply stated, the belly of the financial industry is once again full of junk.
9 August 2019: The BIS issues a working paper calling for “unconventional monetary policy measures” to “insulate the real economy from further deterioration in financial conditions”. The paper indicates that, by offering “direct credit to the economy” during a crisis, central bank lending “can replace commercial banks in providing loans to firms.”
15 August 2019: Blackrock Inc., the world’s most powerful investment fund (managing around $7 trillion in stock and bond funds), issues a white paper titled Dealing with the next downturn. Essentially, the paper instructs the US Federal Reserve to inject liquidity directly into the financial system to prevent “a dramatic downturn.”…
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I am a degrowther and a doomer but this is not what your first reaction indicates. We are taught to be optimistic and so forth. People loath pessimist and doomers. People tire of people who cry wolf constantly. This is what the doom movement has done for decades now. There is some truth to this but there is also the reality of the slow boil. A frog will slowly boil without realizing its fate. Humans because of our short-termism and immediate gratification tendencies slow boil with periods of change. Some of this is beneficial because it is the degree of shock and the duration that is the key variable of survivability so adapting slowly allows survivable change.
My doom approach is different. I am a visionary of sorts in regards to the tipping over of an age. This is academic and I have been studying this for decades now. I have been living the response for over a decade. I have digested the available science not as a specialist but as a generalist with some specialization. I study all fields in general picking through them in relation to decline. I specialize in energy and systems for my theoretical approach. It is my assessment that a multifaceted tipping over is now at or near the peak point. The tipping over is at or near where diminishing returns to technological efforts go non-liner into problem creation. I see an extinction event for life systems with localized failure and general decline. The planetary systems that support life is in abrupt change with climate but also the nutrient, carbon, and hydrologic cycles. Finally, systematically, civilization is in a phase of degrading.
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As the chart below on ‘how systems collapse’ illustrates, the loss of stabilizing buffers goes unnoticed until the entire structure collapses under its own weight.
Disruptive extremes of weather: check
Rising geopolitical tensions with no diplomatic resolution: check
Multiplying scarcities in essential commodities: check
Domestic disorder accelerates as extreme positions harden into irreconcilable conflicts: check
Welcome to the 21st century sequel of the catastrophic 1600s, an extended period of mutually reinforcing crises that overturned regimes and empires from England to China and triggered unremitting misery across much of the human populace. (Global Crisis: War, Climate Change and Catastrophe in the 17th Century is a riveting overview of this complex era.)
What can we learn from the catastrophic 1600s? Leading the list: humans don’t respond well to scarcities. They get crotchety, argumentative, and prone to finding ways to become disagreeable rather than agreeable. Their derangement deepens as they form self-reinforcing echo-chambers of the like-minded, and the source of their misfortune shifts from fate to equally fixated human opponents.
Three extended quotes come to mind: the first bitter satirical rant from Mark Twain, the second from Patrick Henry and the third from James Madison:
Mark Twain: “O Lord our Father, our young patriots, idols of our hearts, go forth to battle — be Thou near them! With them — in spirit — we also go forth from the sweet peace of our beloved firesides to smite the foe. O Lord our God, help us to tear their soldiers to bloody shreds with our shells; help us to cover their smiling fields with the pale forms of their patriot dead; help us to drown the thunder of the guns with the shrieks of their wounded, writhing in pain; help us to lay waste their humble homes with a hurricane of fire…
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One sure way to identify a system “optimized for failure” is if all the insiders are absolutely confident the system is “optimized for my success”.
I often discuss optimization here because it offers an insightful window into how systems become fragile and break down. When we optimize something, we’re aiming to get the most bang for our buck: maximize our efficiency, profit, productivity, etc., while minimizing our costs.
To maximize our goal, whatever it is–profits, power, whatever– we strip away redundancy and buffers because these add costs and don’t boost our desired output. They create resilience, i.e. the ability to survive disruptions, but the logic of optimization is relentless: get rid of all extraneous costs, because resilience doesn’t boost the bottom line.
This trade-off–trading resilience for optimization–looks brilliant when everything goes according to plan. But when events veer outside the narrow parameters of the optimized system, the system breaks down: supply chains break, safety procedures fail, and so on.
Even more consequentially, optimization strips away anti-fragility, Nassim Taleb’s term for the ability to not just survive disruptions but emerge stronger and more adaptable.
What happens when inflexible, sclerotic systems optimized to benefit self-serving insiders encounter chaotic turbulence or conditions outside the expected parameters? They collapse because the system is optimized for failure. Put another way: when a system is optimized to benefit insiders at the expense of resilience and anti-fragility, it is effectively optimized to fail because life is not programmable to a steady-state, predictable stability.
2021 is already optimized for failure in key ways:
1. The mRNA vaccines have not been properly tested to answer essential questions such as: can a vaccinated individual retain enough of the virus to infect an unvaccinated individual?
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Can you tell me of at least one case in history where a society perceived a serious threat looming in the future and took action on it on the basis of data and rational arguments? With the best of goodwill, I can’t. Societies react to threats using a primeval stimulus-reaction that may be aggressive or defensive, but that’s almost never rational.
Curiously, our society, that we call sometimes “The West,” was the first in history to have a chance to do something rational to avoid the destiny awaiting it much before the threat was clearly visible. It was in 1972 when the newly developed digital computers were coupled with a powerful analytical tool, “system dynamics.” The result was the study called “The Limits to Growth” that foresaw how the gradual depletion of natural resources coupled with increasing pollution (that today we call “climate change”) would cause the whole Western economic system to collapse at some moment during the first half of the 21st century. The study also suggested rational solutions to avoid collapse: reduce consumption, stop population growth, manage pollution, and the like.
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Introducing the ‘Hacker’s Teleology’
Writer, philosopher and long-time contributor to PeakProsperity.com, Charles Hugh Smith, returns to the podcast to explain the new socio-economic model he has just introduced to the world through his new book A Hacker’s Teleology: Sharing the Wealth of Our Shrinking Planet.
The main mission behind Peak Prosperity is to focus on new, more regenerative and sustainable models that will better serve humanity than the old models which are currently falling apart. Charles posits a new way of living that is a) achievable with existing resources and technology, and b) much more equitable and resistant to abuse.
We very much need new alternatives like this at this time. Because, once the system breaks in earnest, our ‘leaders’ will be desperate — and as Jared Diamond wisely observed “Nations in crisis borrow and adapt solutions already devised”. So getting good ideas on the table now, so that they’re available to be adopted when needed, is critical.
The principal idea is we need a new system. Now, it doesn’t have to replace the existing system entirely. It just has to be an effective alternative that people can choose if they so desire to.
In my opinion, it needs to be decentralized, anti-fragile, yet connected with other like-minded people. But right now, we’re having to start from scratch, basically reinventing the wheel. We’re fighting a kludgy, broken, unfair, rigged system every step of the way if we want to create a decentralized community-based economy.
So what would a system be like if we designed it from scratch to actually make it easy to join a community economy? Well, we want a system that’s opt-in and voluntary, not like the one we have now.
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How does one ‘get ahead’ during hard times?
Look, I’m a systems guy. I think in systems terms. You should as well.
Why?
Because we’re entering a period of time when the major systems that have supported humanity are going to fail.
Or, put more accurately: they are already failing.
As just one example, our monetary system delivers outsized gains to the already stupendously-wealthy while piling up massive debts on the backs of we citizens, both born and yet-to-be-born. The US Federal Reserve is the unelected and unaccountable body that is most responsible for have made America’s billionaires nearly $1 trillion ‘richer’ since the pandemic hit.
These next three Fed-related data points are, in a word, obscene.
The first shows that the US Federal Reserve now “owns” more US federal debt than all foreign central banks. The second shows how billionaires are getting grotesquely wealthier from the Fed’s “rescue’” efforts. And the last shows how the Fed’s record-low interest policy has resulted in an explosion in federal debt:
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This is obscene (and infuriating!) to anyone who cares about the future. Leaving aside the morality issues for a moment, we can at least conclude that the behaviors and values on display are thoroughly unsustainable.
Eventually spending more money than you have ends in ruin.
Speaking of spending what you don’t have, a similar story can be told about ecological overshoot and humanity’s extractive practices — it’s akin to spending both the entirety of the interest income as well as some principal each year from our environmental trust fund.
There aren’t many resources that one can point to which aren’t in some serious form of either concerning decline or depletion, or both. Already thousands, if not millions, of people in the American West are considering relocating because of the ever-present danger of disruptive if not life-threatening fires:
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For many Indigenous people, the collapse of our current system is not necessarily bad news.
Gesturing Towards Decolonial Futures (GTDF) is a collective of researchers, artists, educators, activists and Indigenous knowledge keepers from the Global North and South. Our collective focuses on how artistic and educational practices can gesture towards the possibility of decolonial futures. We work at the interface of questions related to historical, systemic and on-going violence and questions related to the unsustainability of “modernity-coloniality”. We use the term modernity-coloniality to mark the fact that modernity cannot exist without expropriation, extraction, exploitation, dispossession, destitution, genocides and ecocides.
Drawing on Indigenous critiques and practices from the communities we collaborate with in Brazil, Peru, Mexico and Canada, we propose that a decolonial future requires a different mode of (co-) existence that will only be made possible with and through the end of the world as we know it, which is a world that has been built and is maintained by different forms of violence and unsustainability.
There is a popular saying in Brazil that illustrates this insight. It states that, in a flood situation, it is only when the water reaches people’s hips that it becomes possible for them to swim. Before that, with the water at our ankles or knees, it is only possible to walk, or to wade. In other words, we might only be able to learn to swim – that is, to exist differently – once we have no other choice. But in the meantime, we can prepare by learning to open ourselves up to the teachings of the water, as well as the teachings of those who have been swimming for their lives against multiple currents of colonial violence.
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