The Opaque Process of Collapse

When I write about the demise of unsustainable systems, readers often ask me to describe the collapse I see as inevitable. This is a tough assignment, as there are as many kinds of collapse as there are systems: fragile ones can collapse suddenly, and resilient ones can decay for years or even decades before finally imploding or withering away.

Another way of describing collapse is: complex systems become much less complex.

Certain features of modern life could collapse without affecting everyday life much–for example, the derivatives markets could stop working and the impact would be enormous on those playing financial games and those who entrusted money to the gamblers, but the consequences would be extremely concentrated in the gambler/speculator class. Despite the usual cries that financial losses in the gambler/speculator class will destroy civilization, the disruptions and losses would be widely dispersed for the economy as a whole.

Other collapses–in food or energy distribution, digital communications, etc.–would have immediate and severe impacts on daily life.

My three primary models of decay and collapse are:

1. Historian David Hackett Fischer’s masterwork The Great Wave: Price Revolutions and the Rhythm of History (given to me by longtime correspondent Cheryl A.)

2. Thomas Homer-Dixon’s The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization

3. The decline of the Western Roman Empire (the process, not Edward Gibbon’s epic 6-volume history). My recommended book on the topic (a short read): The Fall of the Roman Empire

Fischer’s primary thesis is that society and the economy expand in times of plentiful resources and credit, and this increased demand eventually consumes all available resources. When demand exceeds supply and excesses of credit reach extremes, inflation and social disorder arise together.

Though we have yet to see inflation on a global scale, it is inescapable that demand will soon outstrip supply of essential resources and that the global credit bubble will pop, depriving the economy of the means to buy resources regardless of cost.

The Upside of Down describes the process of increasing complexity adding fixed costs to the system, and the way in which this diminishes returns: more and more labor, capital and resources must be devoted to maintain production. At some point, the yield is negative–costs are higher than the output.

At that point, systems start unraveling, and people simply abandon costly complex systems because the means to support them no are no longer readily available.

This is similar to John Michael Greer’s process of catabolic collapse, in which costly complex systems go through a re-set to a much lower energy consumption and less complexity. The system stabilizes at that level for a time, and then as costs rise and resources dwindle, it goes through another downsizing.

The Western Roman Empire (along with the Tang Dynasty in China) is the premier historical template for slow decline/decay leading to an eventual collapse. (Recall that the Eastern Roman Empire, the Byzantine Empire, endured for another 1,000 years.)

Depending on how you slice it, Western Rome’s Imperial decline took a few hundred years to play out. Unusually competent and energetic leaders arose at critical junctures in the early stages, and these leaders managed to stem the encroachment of other empires and “barbarian” forces and effectively re-order Rome’s dwindling resources.

By the end, The Western Roman Empire was still issuing a flood of edicts to the various regions, but there was no one left to follow the edicts or enforce them: the Roman legions existed only on parchment. The legion had a name and a structure, but there were no longer any soldiers in the field.

A number of real-world examples of decline/collapse are playing out in real time. Venezuela is one; Greece is another. Both demonstrate the opacity of the process of collapse; it is not as clear as we might imagine. A recent first-hand account of a sympathetic visitor to Venzuela captures the flavor and despair of slow-moving, uneven collapse:

Venezuela: Is There A Driver At The Wheel? (via Arshad A.)

“A dollar traded in the bank officially, or pulled out of an ATM machine, however, is worth about six bolivars only. This is how big the gap is between the black market rate (600-700 to the USD) and the official rate.

Despite the fact that the price of petrol is incredibly cheap, the government has not raised the prices even a slight amount, although this would create revenue for the state and despite the health risks of pollution.This suggests that the government is engaging in populism by refusing to take a step demanded by common sense due to its need to get reelected in December when parliamentary elections will take place.

One can easily get assassinated, as Venezuela has one of the highest homicide rates in Latin America and there are enough people who would not mind killing someone for the fee of $200.

However, when there is massive violence in the streets and many in the government seem to be corrupt, while a sense of anarchy prevails and it seems that the government turns a blind eye to violence when it takes place by local bandits, preferring to continuously blame outsiders, then there is indeed a source for concern.”

Reports out of Greece demonstrate the dynamics of decline and collapse:medicines are unavailable, pensions have been slashed and many households are now below the EU poverty level in income.

But we also hear that life goes on; the social order does not appear to have broken down into anarchy.

Clearly, the Greek economy has contracted, and millions of households have less income than they did before. But has daily life broken down? Have the institutions of public order collapsed?

Perhaps not, but what is collapsing is public trust in these institutions’ ability and willingness to manage the financial crisis and the political disorder that follows.

There is no good solution to the multiple crises in Greece, and the small circle of financial and political elites that benefited from Greece’s entry into the Eurozone remains largely untouched by the crisis. When the status quo is rigid and unbending, the odds of sudden collapse rise: what doesn’t bend will snap.

The process of collapse is thus heavily dependent on how the financial and political elites respond to the decline of resources and credit. If they manage the contraction skillfully and absorb their share of the inevitable losses, then the re-set will likely be successful and the pain short-lived.

If however the ruling elites cling to every scrap of their power and wealth, and begin fighting over the spoils while forcing the underclasses to absorb the losses of the re-set, then the fragility of the system rises in direct proportion to the policy extremes being pursued by vested interests focused on protecting their privileges regardless of cost.

The ultimate cost of protecting the privileges of the few at the expense of the many is the dissolution of the social order that enabled the rule of the privileged few.

My new book A Radically Beneficial World: Automation, Technology and Creating Jobs for All is being published in China later this year.

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  • Don Robertson

    These hysteria-pushing blogger-authors have been singing this song of collapse since the advent of the Internet. And before the Internet, these same sorts were left to hand out their leaflets on urban street corners, publishing little leftist booklets sold in socialist bookstores by bookstore owners that had goatees under the drool on their chins, and a piece of the true cross hidden in their underpants. LoL

    “One can easily get assassinated, as Venezuela has one of the highest homicide rates in Latin America and there are enough people who would not mind killing someone for the fee of $200.”

    No shit. South and Central America are like that. The immigrant invasion has brought a new ethic of personal conduct across the border into the land of Mustang Sally and Homer Simpson. Countless “B” movies portray it in one form or another.

    “At some point, the system starts unraveling […]”

    Sure it does. But what should be even more obvious is that the system is both unraveling and raveling all the time. These hucksters want to focus on the unraveling aspect of their observations, because it is hysterical and leads to hysteria among the weak of mind. Don’t worry folks. Homeland Security is keeping a watchful eye over the unraveling into mayhem aspect of what’s going on. They’re fostering it too, because that’s what is going to increase the Homeland Security budget year after year..

    And now for The Second Great Leap.

    “My new book A Radically Beneficial World: Automation, Technology and Creating Jobs for All is being published in China later this year.” -Charles Hugh Smith.

    Now this hysteria-pushing-clown, Chuck Smith, wants the mindless reader to equate their newfound sense of hysteria into the desire to read his book about some socialist fantasy the author has dreamed up. Great! Or it might/would be great if the readers here actually read books.

    Here’s the Amazon description Chuck has given his new book.

    “What if we could hit the reset button on the way we create money, work,
    commerce and community? This is not an idle question, for technology now
    enables us to hit that reset button and organize the creation of money,
    work, commerce and community in new ways. If we could start from
    scratch, what would a new system look like? To answer that, we must
    understand why the current system is failing. The current system is
    based on five principles that are assumed to be true: — Money created
    by banks trickles down to create work for all — Technology creates more
    jobs than automation destroys — Centralization is the solution to
    large-scale economic problems — Expanding debt and consumption (i.e.
    growth) is the path to prosperity — Maximizing private gain organizes
    the economy to the benefit of all All five have proven to be untrue. No
    wonder inequality is rising and opportunity is declining. Clearly, we
    need a new system that offers what the current system cannot: meaningful
    work for all. This book describes a global system that integrates
    money, work, commerce and community in new ways, using social/technical
    innovations that are already in daily use. This book is the practical
    blueprint of a new system that offers opportunities for meaningful work
    and ownership of the sources of prosperity not just to a few, but to
    everyone. In this system, every individual has the power to change the
    system for the betterment of themselves and every other participant.
    Being at the top of the heap is no longer a prerequisite. Everyone who
    is powerless in the current arrangement is empowered in this new system.
    Empowered to not just better themselves and their family, but better
    their community and the larger community of Planet Earth. A radically
    beneficial world beckons—what are we waiting for?”

    While I’m not including myself in the “we” Chucky refers to, what am I waiting for? I’m certainly not waiting for the “radically beneficial world” envisioned by Chuck. I have better things to do, including making my way in the world that is still run on other terms than what Chuck understands. If I’m waiting for anything Chuck might understand, I’m waiting for this sort of fella to crawl back into the delusional socialist fantasy rat hole from which they all come.

    This guy wants income taxes to go to 100% so the socialist goons have plenty of money to create their own Fantasy Island where middle-aged short guys with paunches get all the girls. LoL

  • diogenes

    The end of the derivatives market would be a benefit for the population at large since any profits derived from it are ultimately extracted from consumers in elevated prices. It was estimated that 25% of the price of gasoline was entirely due to derivatives speculation before the current slump. It would be interesting to have reliable information about how these vampires are doing today. Still 25% wouldnt be a bit surprising, but 25% of less, I guess. Poor poor vampires. Somebody should bail them out. I bet Hilary can help!