The end of economic growth:
the recession that will not end in our lifetime
We are past limits to growth, this is not a cyclical recession
Some of the media, government elites, and the financial world knew the 2008 financial crash was imminent but feigned surprise in public while planning their exit strategies and wargaming how to manage and manipulate the crisis to protect their power (not just more profits). The financial meltdown is not a cyclical recession, it is a permanent economic shift. The End of Growth transcends ideologies and partisan politics.
Now that we are at Peak Everything we need to move beyond Peak Denial and Peak Blame to equitably share the shrinking economic pie. Even if transnational corporations were converted into democratic, locally owned cooperatives, we have still overshot Earth's carrying capacity.
Steady state economics for an ecological society
The dominant paradigm teaches money is the most important value, energy conservation and ecological sanity are nice if we can afford them.
Most of the environmental movement has embraced the concept of the Triple Bottom Line, which suggests that the economy needs to consider ecology and social justice issues. While it is good to factor these into economic decisions, the deeper truth is the environment makes the economy possible. Energy creates money, not the other way around. No jobs on a dead planet.
It is probably not a coincidence that many of the political voices calling attention to the problems of fiat currency, the Federal Reserve and other structural problems rarely mention the underlying ecological limits - and worse, some of them seem fixated on Jewish bankers who allegedly run the world.
We need to weave together social justice advocates with understanding of how fiat money is created and that we have reached the limits to infinite growth on a finite planet.
The Very Big Corporation of America from Monty Python's The Meaning of Life
Renewables for a Steady State Economy by Mark Robinowitz
Using solar energy for twenty years (and wind power for ten) taught me that renewable energy could only run a smaller, steady state economy. Our exponential growth economy requires ever increasing consumption of concentrated resources (fossil fuels are more energy dense than renewables). A solar energy society would require moving beyond growth-and-debt based money.
After fossil fuel we will only have solar power, but that won't replace what we use now. We need to abandon the myth of endless growth on a round, and therefore, finite planet to have a planet on which to live. Will we use the remaining fossil fuels to make lots of solar panels and relocalize food production instead of waging Peak Oil Wars?
from Extraenvironmentalist.com - interview conducted at Northwest Permaculture gathering, October 2012
permaculture design, steady state economics, peak money, solar energy, limits to growth
15 minutes, 33 megabytes
The thermodynamic value of money:
understanding links between energy and money
ASPO USA: Association for the Study of Peak Oil and Gas, USA
from the ASPO-USA Peak Oil Notes, October 29, 2009
Association for the Study of Peak Oil
Quote of the day:
"(Steven Chu, US Secretary of Energy) was my boss. He knows all about peak oil, but he can't talk about it. If the government announced that peak oil was threatening our economy, Wall Street would crash. He just can't say anything about it."
-- David Fridley, scientist at Lawrence Berkeley National Laboratory, quoted in an article by Lionel Badal (see Peak Oil News, 10/28, item #23)
Center for the Advancement of the Steady State Economy
"A steady state economy can be compared to a mature forest ecosystem. The forest does not grow in aerial extent, but it is a complex, dynamic, and evolving system."
Colin Campbell, petroleum geologist, founder of ASPO, invented "Peak Oil" term
"Once you realize that this cheap, abundant, easy oil isn't there, that tells you that virtually every company quoted on the stock market is now overvalued."
"future historians will probably look back and see this as one of the great turning points for mankind. In short, debt has been premised on eternal economic growth based on flat-earth economic principles, without recognising that the growth depends on cheap energy that will no longer be available after the peak of oil production as imposed by Nature."
"as we move beyond the age of oil and beyond the economy that is driven by the age of oil, we enter an entirely new world - there really are frankly no experts anywhere who can come forward and say exactly what we do in this situation - it is entirely new to everybody's experience - there are no investors who can say this is a good investment in this situation, there are no politicians who can say this is how we should behave in this situation, even in a humble business way there is no business that can plan its future because every single aspect of its future is going to change and so we are left with a sort of vacuum"
-- Colin Campbell, founder of the Association for the Study of Peak Oil www.peakoil.net
quoted in "Peak Oil: Imposed by Nature"
John Michael Greer
John Michael Greer
The problem we face today, in the United States and more broadly throughout the world’s industrial societies, is that all the institutions of industrial civilization presuppose limitless economic growth, but the conditions that provided the basis for continued economic growth simply aren’t there any more. The 300-year joyride of industrialism was made possible by vast and cheaply extractable reserves of highly concentrated fossil fuels and other natural resources, on the one hand, and a biosphere sufficiently undamaged that it could soak up the wastes of human industry without imposing burdens on the economy, on the other. We no longer have either of those requirements.
With every passing year, more and more of the world’s total economic output has to be diverted from other activities to keep fossil fuels and other resources flowing into the industrial world’s power plants, factories, and fuel tanks; with every passing year, in turn, more and more of the world’s total economic output has to be diverted from other activities to deal with the rising costs of climate change and other ecological disruptions. These are the two jaws of the trap sketched out more than forty years ago in the pages of The Limits to Growth, still the most accurate (and thus inevitably the most savagely denounced) map of the predicament we face. The consequences of that trap can be summed up neatly: on a finite planet, after a certain point—the point of diminishing returns, which we’ve already passed—the costs of growth rise faster than the benefits, and finally force the global economy to its knees.
The task ahead of us is thus in some ways the opposite of the one that France faced in the aftermath of 1789. Instead of replacing a sclerotic and failing medieval economy with one better suited to a new era of industrial expansion, we need to replace a sclerotic and failing industrial economy with one better suited to a new era of deindustrial contraction.
"it's a cold political reality that today no candidate can win election on a platform that respects the laws of physics on a finite planet."
-- Dave Gardner, "Who Will Get This Economy Moving? No One," Nov 05, 2012
Richard Heinberg, Post Carbon Institute
"The End of Growth"
from The End of Suburbia (2004) DVD
Richard Heinberg, author, "The Party's Over"
the consequences of global oil peak for the average family may not be immediately apparent
because energy prices and the economy are so closely intertwined, that would probably result in an economic recession.
the underlying direction of events would be toward decreased economic activity because there would be less energy available to fuel economic activity
people would be wondering why we're in recession after recession and why every recession seems to be a little bit worse than the last one
it takes longer to get out of it and then we never quite get out of the recession
until finally it would come to the point after a few years where the recession would turn into an economic depression
and in this case it will be one that never ends
David Holmgren, co-originator of permaculture
David Holmgren, the co-orginator of permaculture, is author of Future Scenarios: How Communities can adapt to Peak Oil and Climate Change.
"Economic recession is the only proven mechanism for a rapid reduction of greenhouse gas emissions
... most of the proposals for mitigation from Kyoto to the feverish efforts to construct post Kyoto solutions have been framed in ignorance of Peak Oil. As Richard Heinberg has argued recently, proposals to cap carbon emissions annually, and allowing them to be traded, rely on the rights to pollute being scarce relative to the availability of the fuel. Actual scarcity of fuel may make such schemes irrelevant."
"Awareness of Climate Change by the media and general public is obviously running well ahead of awareness about Peak Oil, but there are interesting differences in this general pattern when we look more closely at those involved in the money and energy industries. Many of those involved in money and markets have begun to rally around Climate Change as an urgent problem that can be turned into another opportunity for economic growth (of a green economy). These same people have tended to resist even using the term Peak Oil, let alone acknowledging its imminent occurrence. Perhaps this denial comes from an intuitive understanding that once markets understand that future growth is not possible, then it’s game over for our fiat system of debt-based money."
-- David Holmgren, co-originator of permaculture
"Money vs. Fossil energy: the battle to control the world"
David Holmgren (co-originator of permaculture) has some of the best understanding of energy issues.
podcast February 12, 2014
401: Psycho-social Debt Jubilee
KMO welcomes permaculture co-originator David Holmgren to the C-Realm Podcast to discuss two of his essays: Money Vs Fossil Energy: the Battle for Control of the World and Crash on Demand: Welcome to the Brown Tech Future. David has been tracking the onset of climate change and peak oil for many years, but he says that in recent years, largely due to the work of Steve Keen and Nicole Foss, he has come to see financial systems as the fastest moving and most volatile element in emerging global crisis. He describes why he considers the Bush administration to have been guided by a certain energy realism lacking in too many social and climate activists. Finally, he describes why he thinks that multiple generations of mass affluence has left us saddled with a psycho-social debt that will be very difficult for us to discharge.
"The dip in global emissions created by the 2008 global financial crisis was ignored by the climate activist community as an inconvenient truth."
"Crash on Demand: Welcome to the Brown Tech Future," by David Holmgren (co-originator of permaculture)
M. King Hubbert
excerpt from Richard Heinberg, "The Party's Over," pp. 91-92, discussing M. King Hubbert, the geologist who first figured out the math behind Peak Oil. Hubbert predicted in 1956 that the USA would peak around 1970, he was pilloried for this but the USA did peak in 1970. Hubbert later predicted that the world would peak in the mid 1990s, but then cautioned this might get pushed back a decade due to the oil shock of 1973, which is what happened. Hubbert initially thought nuclear power would be the post-fossil fuel solution but changed his mind and said solar energy was the answer, but this would require giving up exponential growth and learning to live within natural limits on a finite planet. -- Mark
Hubbert immediately grasped the vast economic and social implications of this information [Peak Oil]. He understood the role of fossil fuels in the creation of the modern industrial world, and thus foresaw the wrenching transition that would likely occur following the peak in global extraction rates. ...
The world's present industrial civilization is handicapped by the coexistence of two universal, overlapping, and incompatible intellectual systems: the accumulated knowledge of the last four centuries of the properties and interrelationships of matter and energy; and the associated monetary culture which has evolved from folkways of prehistoric origin.
The first of these two systems has been responsible for the spectacular rise, principally during the last two centuries, of the present industrial system and is essentially for its continuance. The second, an inheritance from the prescientific past, operates by rules of its own having little in common with those of the matter-energy system. Nevertheless, the monetary system, by means of a loose coupling, exercises a general control over the matter-energy system upon which it is superimposed.
Despite their inherent incompatibilities, these two systems during the last two centuries have had one fundamental characteristic in common, namely exponential growth, which has made a reasonably stable coexistence possible. But, for various reasons, it is impossible for the matter-energy system to sustain exponential growh for more than a few tens of doublings, and this phase is by now almost over. The monetary system has no such constraints, and, according to one of its most fundamental rules, it must continue to grow by compound interest.
Hubbert thus believed that society, if it is to avoid chaos during the energy decline, must give up its antiquated, debt-and-interest-based monetary system and adopt a system of accounts based on matter-energy -- an inherently ecological system that would acknowledge the finite nature of essential resources.
Hubbert was quoted as saying we are in a "crisis in the evolution of human society. It's unique to both human and geologic history. It has never happened before and it can't possibly happen again. You can only use oil once. You can only use metals once. Soon all the oil is going to be burned and all the metals mined and scattered."
Statements like this one gave Hubbert the popular image of a doomsayer. Yet he was not a pessimist, indeed, on occasion he could assume the role of utopian seer. We have, he believed, the necessary know-how, all we need do is overhaul our culture and find an alternative to money. If society were to develop solar-energy technologies, reduce its population and its demands on resources, and develop a steady-state economy to replace the present one based on unending growth, our species' future could be rosy indeed. "We are not starting from zero," he emphasized. "We have an enormous amount of existing technical knowledge. It's just a matter of putting it all together. We still have great flexibility but our maneuverability will diminish with time."
"Two Intellectual Systems: Matter-energy and the Monetary Culture"
(summary, by M. King Hubbert)
During a 4-hour interview with Stephen B Andrews, SbAndrews at worldnet.att.net, on March 8, 1988, Dr. Hubbert handed over a copy of the following, which was the subject of a seminar he taught, or participated in, at MIT Energy Laboratory on Sept 30, 1981.
"The world's present industrial civilization is handicapped by the coexistence of two universal, overlapping, and incompatible intellectual systems: the accumulated knowledge of the last four centuries of the properties and interrelationships of matter and energy; and the associated monetary culture which has evloved from folkways of prehistoric origin.
"The first of these two systems has been responsible for the spectacular rise, principally during the last two centuries, of the present industrial system and is essential for its continuance. The second, an inheritance from the prescientific past, operates by rules of its own having little in common with those of the matter-energy system. Nevertheless, the monetary system, by means of a loose coupling, exercises a general control over the matter-energy system upon which it is super[im]posed.
"Despite their inherent incompatibilities, these two systems during the last two centuries have had one fundamental characteristic in common, namely, exponential growth, which has made a reasonably stable coexistence possible. But, for various reasons, it is impossible for the matter-energy system to sustain exponential growth for more than a few tens of doublings, and this phase is by now almost over. The monetary system has no such constraints, and, according to one of its most fundamental rules, it must continue to grow by compound interest. This disparity between a monetary system which continues to grow exponentially and a physical system which is unable to do so leads to an increase with time in the ratio of money to the output of the physical system. This manifests itself as price inflation. A monetary alternative corresponding to a zero physical growth rate would be a zero interest rate. The result in either case would be large-scale financial instability."
"With such relationships in mind, a review will be made of the evolution of the world's matter-energy system culminating in the present industrial society. Questions will then be considered regarding the future:
- What are the constraints and possibilities imposed by the matter-energy system? human society sustained at near optimum conditions?
- Will it be possible to so reform the monetary system that it can serve as a control system to achieve these results?
- If not, can an accounting and control system of a non-monetary nature be devised that would be approptirate for the management of an advanced industrial system?
"It appears that the stage is now set for a critical examination of this problem, and that out of such inquries, if a catastrophic solution can be avoided, there can hardly fail to emerge what the historian of science, Thomas S. Kuhn, has called a major scientific and intellectual revolution."
The following is from an article entitled "King Hubbert: Science's Don Quixote," in the February 1983 issue of Geophysics magazine, by Robert Dean Clark, assistant editor:
"Hubbert has had serious health problems for several years. Both his eyesight and hearing now give him problems. But neither the ailments nor the recent adulation have eroded his zest for intellectual combat. In recent years, he has assaulted a target--which he labels the culture of money--that is gigantic even by Hubbert standards. His thesis is that society is seriously handicapped because its two most important intellectual underpinnings, the science of matter-energy and the historic system of finance, are incompatible. A reasonable co-existance is possible when both are growing at approximately the same rate. That, Hubbert says, has been happening since the start of the industrial revolution but it is soon going to end because the amount of [that the?] matter-energy system can grow is limited while money's growth is not.
"'I was in New York in the 30s. I had a box seat at the depression,' Hubbert says. 'I can assure you it was a very educational experience. We shut the country down because of monetary reasons. We had manpower and abundant raw materials. Yet we shut the country down. We're doing the same kind of thing now but with a different material outlook. We are not in the position we were in 1929-30 with regard to the future. Then the physical system was ready to roll. This time it's not. We are in a crisis in the evolution of human socienty. It's unique to both human and geologic history. It has never happened before and it can't possibly happen again. You can only use oil once. You can only use metals once. Soon all the oil is going to be burned and all the metals mined and scattered.'
"That is obviously a scenario of catastrophe, a possibility Hubbert concedes. But it is not one he forecasts. The man known to many as a pessimist is, in this case, quite hopeful. In fact, he could be the ultimate utopian. We have, he says, the necessary technology. All we have to do is completely overhaul our culture and find an alternative to money.
"'We are not starting from zero,' he emphasizes. 'We have an enormous amount of existing technical knowledge. It's just a matter of putting it all together. We still have great flexibility but our maneuverability will diminish with time.'
"A non-catastrophic solution is impossible, Hubbert feels, unless society is made stable. This means abandoning two axioms of our culture...the work ethic and the idea that growth is the normal state of life...."
During his interview with Dr. Hubbert, Mr. Andrews asked him for his updated perspective, five years later, about his comments as quoted in the article above. He said:
"our window of opportunity is slowly closing...at the same time, it probably requires a spiral of adversity. In other words, things have to get worse before they can get better. The most important thing is to get a clear picture of the situation we're in, and the outlook for the future--exhaustion of oil and gas, that kind of thing...and an appraisal of where we are and what the time scale is. And the time scale is not centuries, it's decades."
Martin Luther King
I want to say to you as I move to my conclusion, as we talk about "Where do we go from here," that we honestly face the fact that the movement must address itself to the question of restructuring the whole of American society. There are forty million poor people here. And one day we must ask the question, "Why are there forty million poor people in America?" And when you begin to ask that question, you are raising questions about the economic system, about a broader distribution of wealth. When you ask that question, you begin to question the capitalistic economy. And I'm simply saying that more and more, we've got to begin to ask questions about the whole society. We are called upon to help the discouraged beggars in life's marketplace. But one day we must come to see that an edifice which produces beggars needs restructuring. It means that questions must be raised. You see, my friends, when you deal with this, you begin to ask the question, "Who owns the iron ore?" You begin to ask the question, "Why is it that people have to pay water bills in a world that is two-thirds water?" These are questions that must be asked.
Now, don't think that you have me in a "bind" today. I'm not talking about communism.
What I'm saying to you this morning is that communism forgets that life is individual. Capitalism forgets that life is social, and the kingdom of brotherhood is found neither in the thesis of communism nor the antithesis of capitalism but in a higher synthesis. It is found in a higher synthesis that combines the truths of both. Now, when I say question the whole society, it means ultimately coming to see that the problems of racism, the problem of economic exploitation, and the problem of war are all tied together.
-- Martin Luther King, "Where do we go from here?" August 16, 1967
James Howard Kunstler
"This is not so much financial bad weather as financial climate change"
-- James Howard Kunstler
All forms of government in recent times find themselves in the same predicament: the mismanagement of contraction. Too many people and too many enterprises are competing for a contracting resource base. In many poor countries it expresses itself plainly as expensive food, or no food at all for some. The expensive food part of the story is already being felt in the wealthier countries, too, but the contraction expresses itself more in terms of money - many people do not have enough, or else much less than they were used to having, and at the same time the money that does circulate seems increasingly worthless. So we have the great debate over whether the contraction is deflationary or inflationary.
That debate could not happen if money retained its essential meaning as a reliable medium of exchange, but the idea of what exactly money is, is becoming increasingly clouded everywhere as compound interest fails in the face of contraction. And as compound interest fails - in the form of loans that can't be repaid - the banking system implodes. This implosion has been artfully papered over with enough accounting tricks so that many citizens do not even perceive it as being underway.
"The Crash Course" energy & money
Our Finite World: Exploring how oil limits affect the economy