By C H Smith
The first task is replacing the crumbling intellectual framework of the present status quo system with one grounded in reality.
You may well disagree with much or perhaps most of this book; that’s fine, because the primary goal of the book is to spark a reappraisal of our situation and generate practical responses. I don’t claim to have “the answer,” or even answers; what I hope to present is a way of thinking about the challenges which is more productive than the status quo.
You may also find some of the ideas presented here difficult to accept. None of us like to think of ourselves as debt-serfs, yet how can we move forward if we cannot be honest about our responsibilities and dilemmas? We are all vulnerable to groupthink, propaganda and marketing at various times; there is no shame in simply being human.
Some of you may find parts of the analysis smacking of warmed-over Marxism, while an equal number may find certain sections “right-wing”. That much of what we accept as “obvious” might be wrong is deeply unsettling.
Unfortunately, humans are prone to a formidably long and varied List of cognitive biases.
Despite the many traps in our default modes of thinking and our pernicious tropism toward short-term contexts, when we have no choice left then we are capable of making short-term sacrifices to further long-term gains. This is the response we need to foster to survive the Great Transformation just ahead.
While every era of crisis is unique, authors such as David Fischer (The Great Wave: Price Revolutions and the Rhythm of History), Jared Diamond ( Collapse: How Societies Choose to Fail or Succeed ) and Joseph Tainter ( The Collapse of Complex Societies) have carefully researched how cycles of price, conflict and resource depletion/exhaustion tend to repeat as human populations rise beyond the carrying capacity of their environment.
I hesitate to even attempt a short summary of all the interwoven structural challenges of our era. But the key context is this, while financial and resource crises are not new, they are recurring features of human civilization, many aspects of our era’s crises are unique in all of human history: never before have we faced depletion of fossil fuels and the population pressures of over 6.5 billion humans to feed, house, clothe, transport, heal and care for in their old age. Never before have we as a species been so dependent on fragile supply chains and fast-depleting global resources.
Ironically, this cyclical nature of crisis lends itself to the emotional power of complacency: if we managed to get through those crises, then we can do it again. Unfortunately, there have been many times when the human populace did not “get through” the crisis; populations collapsed to mere shadows of their levels reached in the years of rising abundance.
Current structural challenges include:
1. demographics (promised retirement benefits are unaffordable)
2. global financial deleveraging (renunciation/write-off of debt)
3. high-cost advanced economies, “Planet of Slums” developing economies
4. rising interest rates (shortage of surplus capital)
5. de-scaling/disruption of entrenched industries/State fiefdoms by the Web
6. scalability traps/structural job losses in all economies
7. crippling regulation and overhead burdens on small entrepreneurs
8. fossil fuel depletion (Peak Oil)
9. political disunity; elites’ interests diverge from those of the society as a whole
10. rising income disparity
The 100+ year cycle of price inflation and stagnation of wages’ purchasing power which began around 1901 is now reaching the final stage of widespread turmoil, shortages, famine, war, conflict and crisis.
Without a firm understanding of the cyclical nature of human history and the unique challenges of our era, we are hard-pressed to escape the comforting illusions of complacency and fatalism.
A key point is that the above crises (or potential crises) are not discrete phenomena which can be solved in piecemeal fashion but rather interlocking, overlapping and in some cases reinforcing problems
We can safely predict the complacent and/or fatalistic nations and citizens will suffer more than those who proactively anticipated the likelihood of interlocking, reinforcing crises occurring within the next decade or two.
Ideally, such proactive anticipation should involve households, communities and the nation at large. But if the State (government at all levels) is in denial or deadlock, or crippled by debt or otherwise insolvent, then households and communities will also have to prepare themselves for some scenarios where a domino effect could transpire, toppling vulnerabilities which encircle the globe.
In a world so deeply dependent on cheap, abundant liquid fossil fuels for everything from transportation to food, the vulnerability and interdependency of all energy-dependent systems to shortage or disruption is acute
Every industry and financial sector ultimately rests on cheap, abundant petroleum. Once petroleum is no longer cheap or available in sufficient quantity to meet demand, then the energy domino will topple all the rest in rapid succession.
The unique commodity petroleum is thus the very foundation of interlocking/reinforcing crises on a global scale.
The human population has exploded in a geological eyeblink from several hundred million to 6.5 billion. the reality that the planet does not have the resources to support 3 billion middle-class consumers is readily visible.
Add these realities up and the context is a potential crash of global food and fresh water supplies, exacerbated by energy shortages.
In essence there are four interlocking crises: environmental, energy, financial and geopolitical.
The End of Debt-Based “Prosperity”
The “prosperity” of the past two decades was based not on savings, investment and productivity, as the mainstream financial media and think-tank punditry maintain, but by extremes of speculative credit, leverage, debt and risk-taking, all enabled by a financial system based on obfuscation, deception, embezzlement, fraud, abuse of credit and grossly inflated asset valuations, a.k.a. bubbles.
Compounding the collapse of this debt-based bogus “prosperity” are the end of cheap, abundant fossil fuels which enabled inexpensive global supply chains and tourism, and the “end of work,” a global contraction of paid labor.
The intersection of various long-term political and financial trends is effectively squeezing the middle class, which the State (government) depends on to pay most of the taxes. Caught between the over-reach of both the state and its elites (the Plutocracy) and the end of debt-based, cheap-oil “prosperity” which enabled it to maintain an illusion of wealth, the middle class is being squeezed to the breaking point.
Our responses to these interwoven, reinforcing challenges of our era can be organized into three inter-related levels:
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