Wednesday, October 17, 2007

The Age of Scarcity Industrialism

It’s been suggested several times, on this blog and elsewhere, that the process of coming to terms with the reality of peak oil has more than a little in common with the process of dealing with the imminence of death. The five stages of getting ready to die outlined by Elizabeth Kübler-Ross in a series of bestselling books back in the 1970s – denial, anger, bargaining, depression, and acceptance – show up tolerably often in today’s peak oil controversies. There’s good reason for the parallel, because the end of the age of cheap abundant energy marks the terminus of many of today’s most cherished assumptions and ways of looking at the world, and it also means that a great many people alive today will die sooner than they otherwise would.

More than twenty years have gone by since I tended the dying in nursing homes, in one of a flurry of low-paying jobs I held after leaving college. Getting to know the guy with the scythe while the people around you are heading through life’s exit turnstile teaches lessons that don’t fade easily, though, and from that perspective I’m not at all sure the parallels have been taken far enough. In particular, it’s interesting to note that the same five stages – or at least the first three of them – also characterize our collective response so far to the predicament of industrial society.

When the diagnosis arrived at the beginning of the 1970s, for example, the immediate response was the one Kübler-Ross could have predicted: denial. By the end of that decade that response became an overwhelming political force. “It’s morning in America,” Ronald Reagan proclaimed, as his workmen tore down the solar hot water heaters Jimmy Carter installed on the White House roof: in some ways the definitive political act of the Eighties. Political gimmickry and reckless overpumping of North Slope and North Sea oil fields forced the price of oil down to the lowest levels in history, and made it possible for the industrial world to wallow in one last orgy of mass consumption, the final blowoff of the Age of Exuberance.

The next stage on Kübler-Ross’s list, anger, arrived on schedule as the Eighties gave way to the Nineties. By the decade’s end that stage, too, became a political force that put its poster boy in office, with a little help from hanging chads and the Supreme Court. The US invasions of Afghanistan and Iraq filled the same role in the new phase that the junking of the White House’s solar panels filled in the old, a definitive sign that the new attitude held center stage in our national soap opera. It will be interesting to see whether the winning candidate in the 2008 election pursues a weak version of Bush II’s policies, as Nixon did Johnson’s and Bush I did Reagan’s, and crashes and burns on schedule around 2012; history doesn’t repeat itself, as the saying goes, but sometimes the rhymes are exquisitely precise.

One way or another, though, the stage of anger is fading out. Even oil company executives are starting to mention peak oil and global warming, and politicians are starting to tone down their rhetoric and climb aboard various bandwagons – ethanol, biodiesel, or what have you. This marks the arrival of bargaining. This stage has certain advantages; where denial refuses to deal with death, and anger looks for someone to blame for it, bargaining looks for things that can be done to make the Reaper change his mind. I’ve argued before that we’re well past the window of opportunity in which the decline and fall of industrial society might have been prevented. Still, that doesn’t foreclose the chance to cushion the decline and get things of value through the approaching mess, and these should be at the top of the industrial world’s agenda right now.

The first transition we face on the curve of the Long Descent, as I’ve suggested in the last several posts, will take us from a form of industrial society focused on abundance to another that centers on scarcity. It’s a form without precedents outside of a few wartime examples, and the transition to it is likely to see a great many false starts and futile attempts to impose the thinking of the past on the realities of the future. Still, it’s not an impossible transition, and will likely be easier than some of the others we’ll face along the way.

The nature of the challenge is straightforward enough. The economic framework of the modern industrial world is geared to expansion: of goods and services, technology, energy use, resource extraction, and population, among other things. That won’t continue as the limits to growth begin to bite in the next few years, and many things – starting with the economic framework of the industrial world – will have to change accordingly.

We’re now close to two years past the peak of world oil production, and serious declines are likely to arrive in the next few years. How serious is a matter for guesswork today, but balancing failing production from existing fields against new production from fields under development and unconventional sources such as tar sands and biodiesel, something on the order of a 4% to 5% decline per year seems likely for the first decade or so. That will be a body blow to existing economic and social arrangements. Still, production increases of 4% to 5% a year didn’t bring Utopia, and production declines on the same scale won’t bring Armageddon, either.

A very large percentage of the energy used in a modern industrial society, after all, is wasted. During an age of cheap abundant energy, it’s profitable to use energy in ways that have no real economic value at all, because the profit to be made selling the energy outweighs the short-term costs of wasting it. Tourism, the world’s largest industry just now, is a classic example. Shut down the tourist industry – as every country in the world did during the Second World War – and redirect the resources now wasted on tourism to other uses, and industrial societies could weather a steep drop in energy supplies without impacting necessary goods and services. The same is true of many other dimensions of today’s economy of waste.

In America, in particular, the sheer scale of energy waste makes phenomenal gains in efficiency fairly easy. The average American uses twice as much energy as the average Briton, and three times as much as the average European, to support a standard of living that by some measures is not even as high as theirs. Decades of shortsighted planning and inept economic policy will have to be undone in a hurry, as Americans discover that suburban living is no longer viable in a post-commuter age, but the problems involved aren’t insuperable; for that matter, the rehabilitation of inner city neighborhoods and the rebuilding of mass transit systems could provide much-needed jobs to replace those lost when industries that exist solely to waste energy evaporate in the face of the new economics of scarcity.

As this suggests, the fading out of the economy of waste promises to stand most of the economic slogans of the last two decades on their heads. When transportation accounts for most of the cost of many commercial products, that fact will write R.I.P. on the headstone of the global economy, because goods made overseas will be priced out of markets dominated by local production and regional trading networks. We’ve already begun to see the cutting edge of the new resource nationalism, as energy reserves and strategic raw materials become the mainsprings of political and military power, and governments start treating them accordingly. Expect this to expand dramatically in the decades to come, as dependence on foreign resources becomes a noose around a nation’s neck and economic independence – even at a sharply lowered standard of living – the key to survival.

More generally, the pendulum of power could well swing away from the multinational corporations that have exercised so much influence in recent years, toward those national governments willing to use military force to maintain territorial integrity and control over resources. When most resource transfers across borders are negotiated between governments according to a calculus of political advantage, rather than being purchased on the open market by the highest bidder, those whose power comes solely from money will find themselves with a great deal less clout than they have today. Those governments that master the new calculus of power soonest, in turn, will dominate the age of scarcity industrialism.

However it unfolds, the age of scarcity industrialism will no more be a permanent state of affairs than the age of abundance industrialism that precedes it. While it lasts, access to fossil fuels and other nonrenewable resources will be the key to international power and national survival, but by that very token fossil fuels and other nonrenewable resources will continue to slide down the curves of depletion. As resource production in one nation after another drops below levels that will support any kind of industrial system, industrial economies will unravel and give way to other forms of economy – in the terms I’ve used in several recent posts, other seral stages in the process of succession that leads to the ecotechnic societies of the future.

What remains unknown is which of the current industrial societies will manage the transition to scarcity industrialism, and which will falter and crack under the strain. The United States could go either way. It’s rare for a society that claws its way to the top of the heap under one set of economic conditions to hold onto that status when conditions change, and our society’s fervent commitment to the economics of waste has opened up fissures of weakness throughout its economic, social, and political structure; the implosion of America’s current empire is thus a foregone conclusion. If the next generation of American politicians are unusually lucky and smart, we might be able to coast down the curve of declining empire as Britain has. If not, we could face any of the usual fates of empire, ranging from stagnation and contraction to nightmare scenarios of political-military collapse and partition by hostile powers.

This is one reason why it would be useful for Americans on all points of the political spectrum to get over their habit of demonizing their opponents and wallowing in self-righteous anger as soon as possible, and start looking for constructive options instead. The time of bargaining, when preparations for the difficult future ahead of us can be made most readily, will not last forever. American culture always tends to extremes; the denial that blinded the Seventies and Eighties, and the anger that burst into incandescence in the Nineties and the present decade, were both of lavish dimensions. The phase of bargaining may well equal them; so, most likely, will the depression – economic, social, and spiritual – that comes when the efforts to bargain with the Reaper turn out to be too little and too late. We can only hope that when acceptance comes, it will be on the same grand scale.


Philski said...

If we are indeed at the point of bargaining, as you suggest, I think the next stage is more likely striking out and taking what is not ours. Once we see the futility of bargaining,the failure of the American mythos will express itself in violence.

What have we got left? The Military, and God help us, the will to use it. Depression will follow and at long last after having exhausted all the alternatives, acceptance.It is a death spiral...

I'm a real fan of yours John. Keep up the good work

Sabretache said...

Keep 'em coming JMG!

That was yet another VERY insightful analysis. Thanks again

John Michael Greer said...

Philski, I read it exactly the other way. We're running up against the limits of military power -- the wheels are all but coming off the US military right now -- and the self-righteous anger that drove the idiotic foreign policy of the last few years is sounding increasingly hollow. We're still a few years out from the arrival of the stage of bargaining in full force; when that happens, some remarkable possibilities may open up. The death spiral comes later still.

Sabretache, thank you! Have no fear, they'll keep coming. I have an outline taking shape that will keep me busy with weekly posts for most of the next year.

Asturchale y Chulo said...

First of all: "history doesn’t repeat itself but sometimes the rhymes are exquisitely precise". Wow, this one ranks as high as any Shakespearean quote, seriously.
Now, there is one point I find no one faces when talking about the current trends:
What will be the role of Iraq in the incoming scarcity? I mean, eventually someone will get the power, bring order and start to pump and export oil. Can the Iraqi reserves provide us some relief for one decade or so?
I tell you, it will be an ordeal for many countries if tourism disappears. Spain has not much more than tourism and a humongous housing bubble, to begin with.

Mathew said...

JMG: I agree that the American military is falling apart, and that the current cycle of violent exploitation has reached its limit, and that our military can't control the territory its occupying, much less acquire more.

But I also believe that when real hardship and starvation hits, whether in this nation or in any other, people become capable of unlimited, genocidal war. Starvation has turned people into monsters before. I think that the main difference between us and the Germans of 1938 or the Somalis today is a couple of inches of fat around the belly.

But the age of scarce industry could last for centuries if we carefully manage our resources and it could smoothly transition into the ecotecnic civilization you envision.

I think that it is an "easy" enough transition that it will probably happen in some corner of the world. But I think that it will be more common for societies to use every scrap of resource available to smite their neighbors and steal their scraps.

Thanks for the blog John, it has become a major influence on how I live my life and educate my children.

barry stoll said...

very nice, jmg. i like where you're going with these stages in society’s process of succession after the current systems collapse. so far you haven't lost me, but as you get further and further into your suggested future, it may be harder to make arguments either way.

a question - last week in the comments you mentioned you have a book coming out about the descent we face. i know you're not the type to turn this blog into an infomercial, but you have to let us know the details! when is it coming out? is it going to be a collection of blog posts, or entirely new writing, or somewhere in between? do tell!

yooper said...

John, excellent article! I do very much enjoy your insights into the near future. I certainly hope you're assumption of a 4 or 5% decline in oil production, rings true. I do believe,(or want to), this will likely be the case. A 10 to 15% decline, well, we won't have long to either bargain or be depressed. Acceptance, is guaranteed, in one form or another.....

I'm not quite sure what you meant by, "Getting to know the guy with the scythe....." This bothers me, a bit. Perhaps, I'm again, reading more into it, than what you're trying to convey?

On another site, some reader commented that I might have some deep anxiety about death. Oh, is that so?!! ha! In Ernest Becker's,"The Denial of Death", he agrues that all our fears and anxieties are rooted in the dread of death. At least I'm in touch with my own reality and mortality......

You can bet, that I'll not bargain with anyone or deity, that I've accepted my fate long ago...Even as a very young child, I knew from the beginning, that I'd never leave the confinement of this earth. Better yet, the land, which I'm indebted too...... In fact, I'm quite comfortable with this arrangement. Bargaining, is about as fruitless, as bending the physical and natural laws of this world.

More later, yooper

Doug W. said...

JMG - I have been lurking for a while, trying to hammer out more small changes towards a post-carbon way of life. Until lately, I had been middle peaker, but the ELM model--where changes in a country's oil consumption and oil production appear to translate into geometric declines in exports--certainly got my attention.

I continue to enjoy your weekly posts. It does seem that the varioius stages do overlap with more than one happening at the same time. For example, there still seems a whole lot of denial going on. I continue to be amazed at how many people seem oblvious to what is unfolding, and once peak oil realities enter the awareness of the general public the potential for huge amount of personal and political anger seems to be almost a given. As for bargaining, it seems like the flip side of "our way of life is not negotiable" is that our (new) way of life will be dictated to us, by events, resources supplies and other countries. Acceptance seems a long way off at this point.

Doug W. (formerly Norlight)

Warren said...

A massive investment is needed to transform the society to one that survives peak oil. I.E.we need to rebuild the rail roads. I doubt if there is enough steel capacity to repair the rail beds or industrial capacity to rebuild up the needed fleet of rolling stock.

We need to rebuild industrial capacity so we can make our own products, and I am not talking about happy meal toys but things we need and not things we want.

I can not envision how we wiil maintain the infrastructure we already have that we need like water, sewage, street maintenance, we have billions of $US in deferred maintenance as it is. Whatever the climate or energy source of the future we still will need roads and bridges to have any type of functioning economy

Our farms will have to be rejuvenated, and more localized (there will be no more 9000 mile salads) we will have to eat a lot less meat an more soy etc.

This and other major changes will have to be done with less money and less energy in a world with a changed climate. We will be competing with other nations for energy and goods. This will have to be done by a generation of Americans who as a whole have had to want for very little, even most if not all of the poorest American are better off than the average third world wage slave.

The change in psyche is i think going to be one of the biggest barriers to our changing our course as a nation in time. The government and the MMS are denying there is a problem, just watch CNBC whenever the topic of Peak Oil is brought up, they quickly change he topic and or try to deflate it so that it is seen as a passing phenomena. Even when TB Pickens is on they do not really listen to what he says, they are in total denial.

As you write and I agree we are past peak, we are on he edge of an energy drop. But even if we went to 80 mbd or less of production the MMS would spin it as a phase,

That is why with all we need to be doing, nothing is getting done and when it is finally acknowledged it will be past time for any meaningful effective change, that is why the American empire will collapse under its own weight.

okieinbabylon said...

JMG, thanks for another interesting post. Like Barry, I'm eager to read your book.

That said, I wouldn't be so quick to write off transoceanic trade, even in an era of energy scarcity. The cost of transporting goods over water is very low, and I would expect different locales to still possess some comparative advantage that would make trade beneficial. The transportation costs associated with west coast to east Asia trade routes will likely be lower than the costs between the west coast and midwest. If governments don't reimpose trade restrictions, I would expect to see more trade between coasts with higher prices for all non-local goods at inland locations.

Well, that's all for now. I look forward to next weeks post.

TFS said...

Politically, we need truth and reconciliation; not only reconciliation.

If that means detailing uncomfortable truths about all political parties, so be it.

A simple "letting bygones be bygones with PNAC" is a sucker's bet.

yooper said...

Hello John! What exactly was that diagnosis in the beginning of the 1970's? For one I'd like to hear it again....

Tell you what readers, I don't think for a second this "diagnosis" has changed one bit, be it from the 70's, the 80's. the 90's and now.....

Furthermore, since this diagnosis was revealed to me, at that time,(in the early 70's), I'm still experiencing all five stages of getting ready to die...

I'm wondering what will happen when 99.9% of the people on this earth will "wake-up" to even recongonize this fact!!! Then, we will we experience, the "fall-out"......

Thanks, yooper

Dwig said...

First, a nit: the story that Reagan had Carter's panels removed right away is a myth (see

There are already people in each of the 5 stages of loss; a good place to see them in action is in the comments section of posts on The Oil Drum (particularly the latest post by Paul Chefurka, aka GliderGuider): the deniers, the enraged, the bargainers, the depressed, and the resigned. Also, however, there are people beyond Acceptance, "preparing for the next life". You can see some of them on TOD as well, and of course here.

When there's a "critical mass" of people in this stage in a local area, the development the next sere can begin in earnest, as a genuine movement rather than scattered "precursors". Do you know of any areas that might meet that description? I'm wondering about places like Willits, Totnes, and maybe even Denver, whose mayor is well aware of PO and the challenges it presents. How's Portland doing?

My personal feeling is that it's crucial to focus this development not so much on what's becoming scarce, but on what's in abundance. You need to identify and build on your strengths.

One last comment: John, I generally like your style of writing, but I feel you've overdone the images, similes, metaphors, etc. in this post. For me at least, it distracted somewhat from the message.

Revolution KTF said...

I'd like to comment on these discussions and blog postings. It seems as though JMG is envisioning a slow state of transition. There are huge factors left out of the equation in your arguments JMG. Assuming that power remains in the hands of the few - which is less and less likely as each year passes - then your theory has stable ground to stand on.

If one assumes that people will generally be kept in line and no large scale global revolution is upon us then I'd almost full heartily agree with you. From what I've researched on my own time from fields such as; neuroscience, psycology, biology, evolution, economics, and environmental issues, I've come to see that it's unlikely things will remain as stagnant as you suggest.

Given the sheer strength of human will and tenacity of our where beliefs take us, what you speak of is highly improbable. Don't forget that religion still governs a lot of people on this planet. If a concept comes along that can change the way they think by means of widescale example then anything is possible. Currently I'm working a book that is arguing exactly what I'm talking about.

Moving towards a sustainable state will generate conflict given the amount of power that has to shift hands in order for it to occur. This by itself is reason to blow your arguments out of the water if you analyze that in depth enough. People are smart and highly adaptable under the right circumstances.

A big problem right now is that people are being indoctrinated globally at such a young age that it's throwing everything off. The effects of mass indoctrination of false pretenses will enable a population that has been intentionally been led astray to uprise. Although this sounds far off, it can be explained in depth and will be.

I don't want to be rude towards JMG but he's leaving out a lot of factors in his arguments that can easily be taken in to general consideration. It makes me wonder if there is a hidden motivation?

Anyway I have to make what I'm saying sounds somewhat incoherent right now or else the concepts in the book I'm working on will get stolen. People are all opportunists under the right circumstances no matter what you'd like to believe.

Anthony said...


I agree with DougS and Dwig. Various peoples, organizations, sub-cultures and institutions will pass through the stages at various speeds. I have no doubt that when oil is $200.00/barrel and gas is over $10.00/gallon and inflation is burning up everyones savings (those who have them) that there will be some pundits who will still deny that there is anything wrong.

But that said the comparison is still valid. I can't speak for everyone but when I have a moment of clarity on a subject I still often hear parts of my own psyche trying to cling to older ways of seeing the world. So, like the personal psyche, the social or collective "consciousness" will move at various paces. But one can still say that "en mass" the current state is that of "X".

As JMG has pointed out how we deal with these stages is more important. For example, it seems that our "anger" stage is going to be characterized by militarism. It could have been more postive if we had turned that anger towards the poicies and instutions that kept us in denial - but we chose (collectively) not to do that.

The next stage is bargaining. Once again we could make this more postive. We could try to find ways to use renewables, curtail consumption etc. all in the vain hope that we will not suffer. We will fail, but at least our efforts may provide some ease of future grief. Or we may strike a bargain with the "government". We may seek to put into place a leader who will tell us that in exchange for absolute power over our lives he/she will protect us from the looming apocalypse (I know JMG does not favor the term but believe me such leader will love it). We may trade away our freedoms and our autonomy to someone who will feed us illusions to gain more power and ultimately cause even more suffering down the line.

I have to say that so far we have managed to consistently pick the wrong direction.

As for militarism - yes we are stretched thin. But that assumes that we do not institute a draft and that we continue to restrain ourselves from using our WMD (of which we have plenty).


p.s. The only complaint I have about this blog is that it doesn't update enough. I still check it every day - just in case.

John Michael Greer said...

Asturchale, good question. My guess is that Iran will end up with the lion's share, but that's only a guess. The fine details of history are almost impossible to predict in advance.

Mathew, the Germans in 1938 were better fed than most other people in the world -- one thing about fascism is that huge military buildups and big armies mean full employment. There will be wars, to be sure, and the US will doubtless be in several of them; still, it's a mistake to assume that the trends of the recent past will also be the trends of the near future, and I suspect the US militarism of the present decade may have spent its force, not least because it's failed so completely to achieve any of its objectives.

Barry, thanks for asking! The Long Descent: A User's Guide to the End of the Industrial Age will be out sometime next year, probably in the autumn, from New Society Publications. Those who have been reading this blog will recognize the ideas and some of the prose, though it's not just a rehash of the blog. I'll pass on more info as it arrives.

Yooper, by "getting to know the guy with the scythe" I was indulging in metaphor -- perhaps a bit too freely, as Dwig has suggested. The "guy with the scythe" is Death, who's often portrayed in art as a black-robed skeleton wielding a scythe. What I meant is that I spent a lot of time around dying people and cleaned up my share of corpses when I was working in nursing homes.

Doug, you're right that there's a lot of overlap between the phases, and also that acceptance is a long way off -- I don't know that I'll see it in my lifetime, but we'll see.

Warren, you're assuming that the society we'll have on the other side of crisis has to have the kind of infrastructure we have today, or face total collapse. That sort of either/or thinking seems simplistic to me; I expect something on a much lower technological basis. We will shed a lot of infrastructure in the next few decades, and a lot more will be reworked for other uses (you want steel for railroads, or any other use, salvage it from skyscrapers). I agree that the American empire will implode -- you'll notice that I mentioned that in my post; the question is what will be left here at home, and that's still up in the air.

Okie, transoceanic trade will go back to what it was in the days before fossil fuel, a good way to get certain bulk products and a wide range of specialties from one port to another. In 1800, with a very well developed maritime technology in place, most ordinary goods were made within 100 miles of their end user, and the same will likely be the case by 2100 or thereabouts.

TFS, yes, I thought somebody would object to that last paragraph, and I thought as well that the same somebody would rewrite my comment "why don't we back off a bit on the partisan hatred" to say "why don't we surrender to Satan incarnate." Sigh...

Yooper, pick up a copy of The Limits to Growth for a full copy of the diagnosis in question.

Dwig, every locality I know is still in the baby-step phase. As for the metaphors, so noted; as Tolkien said about The Lord of the Rings, the things some people object to most strongly are the things others like best. But I'll keep it in mind.

Revolution, if you're going to claim that somebody who disagrees with you likely has a hidden motivation for doing so, you've already closed off any opportunity for useful conversation. By all means write your book, though; I'll respond when it sees print.

Anthony, of course a fascist leader will trot out the bugbear of apocalypse; fascism always draws its strength from the collective imagination of the masses who put it into power, and here, at least, that imagination wallows in apocalytic dreams. To remind people that apocalypse (in the strict sense of the word) is fantasy, as I try to do, isn't to deny that it's a very popular and emotionally powerful fantasy.

As for the blog, I post every Wednesday. I write for a living and have a full slate of duties in my (unpaid) job as archdruid besides, so there's no way I can post more often. But thanks for the encouragement!

Kiashu said...

"I think the next stage is more likely striking out and taking what is not ours."

"Next" stage? Um, you ever heard of this place called "Iraq"? Got lotsa oil, if you can get it past the warring militias.

yooper said...

Hello John! Thanks, hope some readers here digest it....

John, there are many nights I lay awake thinking, "how can I improve the tourism industry here?" I would dare say, that this industry accounts for about 75% of the economy here, directly or indirectly. Without it, Ronald McDonald would be looking for a new home. Sam Walton, the same, as his store would quickly become unprofitable. Might just as well throw in the towel at that point and wave good-bye to 80% of the people in the room. Not even the lure of casino gaming would bring the people back......

Want to see 50 years of "progress" flushed down the tolit? Take tourism away, and our little community here, would fall beyond anything imaginable...There's no doubt in my mind, there was more oppertunity here during the depression, than would be if we lost this industry tomorro. Quite sadly, we are experiencing a real decline for a number of years now, naturally this is expected to continue........

John, my back is up against the wall, here. This is our last ditch effort! We're on the ropes, just waiting to be KO'd..... We're just to far away from markets to make anything profitable....

John, as you walk back and forth to you're destinations, perhaps think of me?

Perhaps, think of this, the little community has purchased two new "little buses". These might come in handy transporting the "welfare mothers" back and forth to their jobs, when private transportation becomes not feasible for them. We're almost at that point now. In part, you can "pat yourself on the back" for this, as you've changed my dark view somewhat....

John, as you might imagine, I'm not the only one holding onto "a dead chicken". What else do you expect me to do? It's all I've got......

Thanks, yooper

mczilla said...

A possible and maybe even likely scenario, except for the real elephant in the room: climate change. That's spiraling out of control so fast it may make the problem of resources shortages and deindustrialization look like a pale accomplice.

RAS said...

JMG, I have a question for you. I'm curious as to how long you think we have before we hit the wall and things start to get noticeably bad for the average American. In other words, when do you think the society as a whole will transition into the bargaining stage? Thanks.

Juho said...

Heya, not on topic, but I'd just like to ask something. I don't know if you have time, or if you have discussed this already or you are about to write a huge article on this but...

This is an interesting 5 part illustration of the modern monetary system and its origins:

How do you see the monetary system of the future, of the stable ecotechnic society?

As a result of finding about peak oil and having been aware since 2005, and given the economic problems in the world this Fall, I have gone long gold. I have also learned about GATA, watched Gold Rush 21 and learned about the gold cartel. But still, I am not fully convinced that gold standard is what we are heading for, though I would prefer it, as long as it was regulated by the government, and not private banks.

John Michael Greer said...

Kiashu, good -- lashing out is exactly what the US has been doing for the last twenty years, with no positive results whatsoever. One of these days it may just sink in.

Yooper, trying to revive the tourist industry is a sucker's bet. You'd be better off getting ready to make the transition to a subsistence economy.

Mczilla, that's already part of the scenario -- if you read The Limits to Growth, you know that ecological disruption caused by pollution is the other side of vise from economic disruption caused by resource overexploitation. I've been saying for years now that anyone who lives less than 50 feet above sea level needs to find a new place to live, and everyone else needs to be ready for shifting climate zones.

RAS, that's anyone's guess. It could come any time in the next decade or two, depending on how things play out.

Juho, I suspect that for a long time after the rubble stops bouncing, the economics of barter, reciprocal exchange, and mutual obligation will be a lot more important than anything resembling an exchange economy. But we'll see.

Danby said...

The financial systems of the mid-term future (100+ years out) will be dominated by precious metals and skills. If you want to make a living when the oil runs out, learn how to do something that people will pay for. The more skill it takes, the higher the price you can demand. Some examples; smithing (white, black, and tin), gunsmithing, brewing, winemaking and distilling, herbalism and apothercary.

One of the tactics that will be used, make that "is being used" to hold off the financial collapse that will follow $20/gallon diesel is inflation. By printing more money (which is what the Fed is doing every time you read about the government bailing out yet another investment fund full of bad mortgages), the value of each currency unit is depressed. Unfortunately, this only intensifies the the collapse, but economists who think in the long term don't get those $500,000/yr jobs with the investment bankers.

Eventually a federal reserve note will be worthless, and in a contracting economy, I don't see the American government having the discipline to restrain spending, either on pointless and endless military adventures or on destructive and counter-productive social programs.

Once hyperinflation has run it's course, and the world financial system lies if bleeding shreds at the bottom of a well, the idea of paper money will again be laughed off the stage. Gold, copper, platinum and, above all, silver will be the preferred medium of exchange.

TheDreamer said...
This comment has been removed by the author.
yooper said...

You bet John, a "suckers bet", indeed.... It's hard to soar like an eagle when you're surrounded by turkeys. Even harder for the turkeys, knowing that there's an eagle in the room....

These birds sitting around the table, are'nt stupid, they're business owners, who have risen to the top in this enviroment. This enviroment will have to change, possibly to the point of collaspe, before they'll let go of the status quo. I'm resigned to that.

Yes, John, I very much like you're idea of this new economy coming, providing jobs in the near future. Surely, this can only happen, if this transition or change comes slowly...I fear, that if it does not and happens rather quickly, any thoughts of adapting fade.

If, I'm half as smart as what I'm supposed to be, perhaps, I should change my approach with those turkeys, and plant seeds of change that might include them into near future.

Thanks John, you're "magic" has'nt gone unnoticed.


Jeff said...

John, one of the things i enjoy most about your blog is the apropos of your thoughts- this time just prior to the conflagration of So Cal. Not just that, but also when James Lovelock's thoughts are published in Rolling Stone the same day as yours-
I must be in the Acceptance stage. I have little hope or faith left in the viability of our species. To quote the article-
"In Lovelock's view, the scale of the catastrophe that awaits us will soon become obvious. By 2020, droughts and other extreme weather will be commonplace. By 2040, the Sahara will be moving into Europe, and Berlin will be as hot as Baghdad. Atlanta will end up a kudzu jungle. Phoenix will become uninhabitable, as will parts of Beijing (desert), Miami (rising seas) and London (floods). Food shortages will drive millions of people north, raising political tensions. "The Chinese have nowhere to go but up into Siberia," Lovelock says. "How will the Russians feel about that? I fear that war between Russia and China is probably inevitable." With hardship and mass migrations will come epidemics, which are likely to kill millions. By 2100, Lovelock believes, the Earth's population will be culled from today's 6.6 billion to as few as 500 million, with most of the survivors living in the far latitudes -- Canada, Iceland, Scandinavia, the Arctic Basin.

Gaia has a virus, and it is us.
Cheers! lol

John Michael Greer said...

Danby, I certainly agree with you about skills -- those are the essential medium for survival, and I'll be posting about them in more detail. I'm less sure about precious metals -- historically, a precious metal coinage requires one or more fairly viable governments to produce them and punish those who debase them, and it may be a long time before we get that level of coherent government. I'd put my money, so to speak, on barter and nonmarket modes of exchange, the sort of thing that handled most economic interactions from the fall of Rome much of the way into the Middle Ages.

Dreamer, if you'd bother to tell us we might be interested.

Yooper, we've got the same kind of people in charge here in the town where I live, which is also largely a tourist town. They don't have a clue, and won't, until one batters down the resistance in their minds by main force. Not much you can do but make your own preparations and help those who are willing to listen.

Jeff, nah, that's the stage of depression. You'll know you've reached the stage of acceptance when you no longer buy into worst case scenarios (and Lovelock's claims are very much worst case scenarios) or get into the secondhand self-hatred of "our species is a virus" comments. See you there!

adamf said...


Another excellent article.

But since you're invoking HT Odum it should be noted that it's not the efficiency of industrial society which made it more successful. You could even say it was its inefficiency which made it successful.

It was its power which made it successful and too much efficiency limits your power, according to the Maximum Power law which Odum helped develop and popularise (ok maybe not popularise quite yet).

The Maximum Power law can be witnessed as a relationship between resistance and power in electronics, and power and rpms in engines. See this graph -- it's a bit like an upside down parabola, with maximum power coming at an optimum level of efficiency, not too high, not too low.

When the engine is geared so that the engine is fighting really hard to turn, the RPMs drop right down. But it turns out that the efficiency of transforming each drop of oil burnt into movement is actually really high. You don't move very far though as the engine shudders to a stop. At the other extreme the engine is screaming in a low gear with massive RPMs but not contributing much power. At this stage it's obviously very inefficient. The sweet spot of maximum power is somewhere in the middle.

The shape of the maximum power curve changes depending on how much free energy there is. If there's lots of food/energy, the most powerful strategy is a cookie monster approach -- just chuck it all in as fast as possible, don't worry if you spill some. The maximum power curve will become asymmetric, skewed towards the inefficient. These kind of conditions allowed for industrial society.

On the otherhand, if there's scarcity, then you want to not overeat, pick up your crumbs, chew carefully, compost your wastes, etc. The the maximum power curve is now skewed towards efficiency. That's the future we're heading into of course.

In the course of trying to explain that I think I just got my head around it.

Cheers, Adam

cjwirth said...

A long range look at the future of Peak Oil is available at:

or at:

Please post this and the website on your blog. Thanks, Cliff Wirth

lane said...

You are giving is very good advice

great white quark said...

hi, i'm a new arrival, brought here by deanander at

congratulations for a happy wedding of psychology and futurology!

great writing here, wise and rational, bookmarked for regular return, many heartfelt thanks-