Complexity and Collapse

Empires on the Edge of Chaos

By Niall Ferguson

Summary: - Imperial collapse may come much more suddenly than many historians imagine. A combination of fiscal deficits and military overstretch suggests that the United States may be the next empire on the precipice.

February 26, 2010 "Foreign Affairs" - March/April 2010 Edition -- There is no better illustration of the life cycle of a great power than The Course of Empire, a series of five paintings by Thomas Cole that hang in the New-York Historical Society. Cole was a founder of the Hudson River School and one of the pioneers of nineteenth-century American landscape painting; in The Course of Empire, he beautifully captured a theory of imperial rise and fall to which most people remain in thrall to this day.

Each of the five imagined scenes depicts the mouth of a great river beneath a rocky outcrop. In the first, The Savage State, a lush wilderness is populated by a handful of hunter-gatherers eking out a primitive existence at the break of a stormy dawn. The second picture, The Arcadian or Pastoral State, is of an agrarian idyll: the inhabitants have cleared the trees, planted fields, and built an elegant Greek temple. The third and largest of the paintings is The Consummation of Empire. Now, the landscape is covered by a magnificent marble entrepôt, and the contented farmer-philosophers of the previous tableau have been replaced by a throng of opulently clad merchants, proconsuls, and citizen-consumers. It is midday in the life cycle. Then comes Destruction. The city is ablaze, its citizens fleeing an invading horde that rapes and pillages beneath a brooding evening sky. Finally, the moon rises over the fifth painting, Desolation. There is not a living soul to be seen, only a few decaying columns and colonnades overgrown by briars and ivy.

Conceived in the mid-1830s, Cole's great pentaptych has a clear message: all empires, no matter how magnificent, are condemned to decline and fall. The implicit suggestion was that the young American republic of Cole's age would be better served by sticking to its bucolic first principles and resisting the imperial temptations of commerce, conquest, and colonization.

For centuries, historians, political theorists, anthropologists, and the public at large have tended to think about empires in such cyclical and gradual terms. "The best instituted governments," the British political philosopher Henry St. John, First Viscount Bolingbroke, wrote in 1738, "carry in them the seeds of their destruction: and, though they grow and improve for a time, they will soon tend visibly to their dissolution. Every hour they live is an hour the less that they have to live."

Idealists and materialists alike have shared that assumption. In his book Scienza nuova, the Italian philosopher Giambattista Vico describes all civilizations as passing through three phases: the divine, the heroic, and the human, finally dissolving into what Vico called "the barbarism of reflection." For Hegel and Marx, it was the dialectic that gave history its unmistakable beat. History was seasonal for Oswald Spengler, the German historian, who wrote in his 1918-22 book, The Decline of the West, that the nineteenth century had been "the winter of the West, the victory of materialism and skepticism, of socialism, parliamentarianism, and money." The British historian Arnold Toynbee's universal theory of civilization proposed a cycle of challenge, response, and suicide. Each of these models is different, but all share the idea that history has rhythm.

Although hardly anyone reads Spengler or Toynbee today, similar strains of thought are visible in contemporary bestsellers. Paul Kennedy's The Rise and Fall of the Great Powers is another work of cyclical history -- despite its profusion of statistical tables, which at first sight make it seem the very antithesis of Spenglerian grand theory. In Kennedy's model, great powers rise and fall according to the growth rates of their industrial bases and the costs of their imperial commitments relative to their GDPs. Just as in Cole's The Course of Empire, imperial expansion carries the seeds of future decline. As Kennedy writes, "If a state overextends itself strategically . . . it runs the risk that the potential benefits from external expansion may be outweighed by the great expense of it all." This phenomenon of "imperial overstretch," Kennedy argues, is common to all great powers. In 1987, when Kennedy's book was published, the United States worried that it might be succumbing to this disease. Just because the Soviet Union fell first did not necessarily invalidate the hypothesis.

More recently, it is Jared Diamond, an anthropologist, who has captured the public imagination with a grand theory of rise and fall. His 2005 book, Collapse: How Societies Choose to Fail or Succeed, is cyclical history for the so-called Green Age: tales of past societies, from seventeenth-century Easter Island to twenty-first-century China, that risked, or now risk, destroying themselves by abusing their natural environments. Diamond quotes John Lloyd Stevens, the American explorer and amateur archaeologist who discovered the eerily dead Mayan cities of Mexico: "Here were the remains of a cultivated, polished, and peculiar people, who had passed through all the stages incident to the rise and fall of nations, reached their golden age, and perished." According to Diamond, the Maya fell into a classic Malthusian trap as their population grew larger than their fragile and inefficient agricultural system could support. More people meant more cultivation, but more cultivation meant deforestation, erosion, drought, and soil exhaustion. The result was civil war over dwindling resources and, finally, collapse.

Diamond's warning is that today's world could go the way of the Maya. This is an important message, no doubt. But in reviving the cyclical theory of history, Collapse reproduces an old conceptual defect. Diamond makes the mistake of focusing on what historians of the French Annales school called la longue durée, the long term. No matter whether civilizations commit suicide culturally, economically, or ecologically, the downfall is very protracted. Just as it takes centuries for imperial overstretch to undermine a great power, so, too, does it take centuries to wreck an ecosystem. As Diamond points out, political leaders in almost any society -- primitive or sophisticated -- have little incentive to address problems that are unlikely to manifest themselves for a hundred years or more.

Did the proconsuls in Cole's The Consummation of Empire really care if the fate of their great-great-grandchildren was destruction? No. Would they have accepted a tax increase that would have financed a preemptive strike against the next millennium's barbarian horde? Again, no. As the UN Climate Change Conference in Copenhagen last December made clear, rhetorical pleas to save the planet for future generations are insufficient to overcome the conflicts over economic distribution between rich and poor countries that exist in the here and now.

The current economic challenges facing the United States are also often represented as long-term threats. It is the slow march of demographics -- which is driving up the ratio of retirees to workers -- and not current policy, that condemns the public finances of the United States to sink deeper into the red. According to the Congressional Budget Office's "alternative fiscal scenario," which takes into account likely changes in government policy, public debt could rise from 44 percent before the financial crisis to a staggering 716 percent by 2080. In its "extended-baseline scenario," which assumes current policies will remain the same, the figure is closer to 280 percent. It hardly seems to matter which number is correct. Is there a single member of Congress who is willing to cut entitlements or increase taxes in order to avert a crisis that will culminate only when today's babies are retirees?

Similarly, when it comes to the global economy, the wheel of history seems to revolve slowly, like an old water mill in high summer. Some projections suggest that China's GDP will overtake the United States' GDP in 2027; others say that this will not happen until 2040. By 2050, India's economy will supposedly catch up with that of the United States, too. But to many, these great changes in the balance of economic power seem very remote compared with the timeframe for the deployment of U.S. soldiers to Afghanistan and then their withdrawal, for which the unit of account is months, not years, much less decades.

Yet it is possible that this whole conceptual framework is, in fact, flawed. Perhaps Cole's artistic representation of imperial birth, growth, and eventual death is a misrepresentation of the historical process. What if history is not cyclical and slow moving but arrhythmic -- at times almost stationary, but also capable of accelerating suddenly, like a sports car? What if collapse does not arrive over a number of centuries but comes suddenly, like a thief in the night?

WHEN GOOD SYSTEMS GO BAD

Great powers and empires are, I would suggest, complex systems, made up of a very large number of interacting components that are asymmetrically organized, which means their construction more resembles a termite hill than an Egyptian pyramid. They operate somewhere between order and disorder -- on "the edge of chaos," in the phrase of the computer scientist Christopher Langton. Such systems can appear to operate quite stably for some time; they seem to be in equilibrium but are, in fact, constantly adapting. But there comes a moment when complex systems "go critical." A very small trigger can set off a "phase transition" from a benign equilibrium to a crisis -- a single grain of sand causes a whole pile to collapse, or a butterfly flaps its wings in the Amazon and brings about a hurricane in southeastern England.

Not long after such crises happen, historians arrive on the scene. They are the scholars who specialize in the study of "fat tail" events -- the low-frequency, high-impact moments that inhabit the tails of probability distributions, such as wars, revolutions, financial crashes, and imperial collapses. But historians often misunderstand complexity in decoding these events. They are trained to explain calamity in terms of long-term causes, often dating back decades. This is what Nassim Taleb rightly condemned in The Black Swan as "the narrative fallacy": the construction of psychologically satisfying stories on the principle of post hoc, ergo propter hoc.

Drawing casual inferences about causation is an age-old habit. Take World War I. A huge war breaks out in the summer of 1914, to the great surprise of nearly everyone. Before long, historians have devised a story line commensurate with the disaster: a treaty governing the neutrality of Belgium that was signed in 1839, the waning of Ottoman power in the Balkans dating back to the 1870s, and malevolent Germans and the navy they began building in 1897. A contemporary version of this fallacy traces the 9/11 attacks back to the Egyptian government's 1966 execution of Sayyid Qutb, the Islamist writer who inspired the Muslim Brotherhood. Most recently, the financial crisis that began in 2007 has been attributed to measures of financial deregulation taken in the United States in the 1980s.

In reality, the proximate triggers of a crisis are often sufficient to explain the sudden shift from a good equilibrium to a bad mess. Thus, World War I was actually caused by a series of diplomatic miscalculations in the summer of 1914, the real origins of 9/11 lie in the politics of Saudi Arabia in the 1990s, and the financial crisis was principally due to errors in monetary policy by the U.S. Federal Reserve and to China's rapid accumulation of dollar reserves after 2001. Most of the fat-tail phenomena that historians study are not the climaxes of prolonged and deterministic story lines; instead, they represent perturbations, and sometimes the complete breakdowns, of complex systems.

To understand complexity, it is helpful to examine how natural scientists use the concept. Think of the spontaneous organization of half a million ants or termites, which allows them to construct complex hills and nests, or the fractal geometry of water molecules as they form intricate snowflakes. Human intelligence itself is a complex system, a product of the interaction of billions of neurons in the central nervous system, or what Charles Sherrington, the pioneering neuroscientist, called "an enchanted loom."

The political and economic structures made by humans share many of the features of complex adaptive systems. Heterodox economists such as W. Brian Arthur have been arguing along these lines for decades. To Arthur, a complex economy is characterized by the interaction of dispersed agents, a lack of central control, multiple levels of organization, continual adaptation, incessant creation of new market niches, and the absence of general equilibrium. This conception of economics goes beyond both Adam Smith's hallowed idea that an "invisible hand" causes markets to work through the interactions of profit-maximizing individuals and Friedrich von Hayek's critique of economic planning and demand management. In contradiction to the classic economic prediction that competition causes diminishing returns, a complex economy makes increasing returns possible. In this version of economics, Silicon Valley is a complex adaptive system; so is the Internet itself.

Researchers at the Santa Fe Institute, a nonprofit center devoted to the study of complex systems, are currently looking at how such insights can be applied to other aspects of collective human activity, including international relations. This effort may recall the futile struggle of Edward Casaubon to find "the key to all mythologies" in George Eliot's novel Middlemarch. But the attempt is worthwhile, because an understanding of how complex systems function is an essential part of any strategy to anticipate and delay their failure.

Whether the canopy of a rain forest or the trading floor of Wall Street, complex systems share certain characteristics. A small input to such a system can produce huge, often unanticipated changes -- what scientists call "the amplifier effect." A vaccine, for example, stimulates the immune system to become resistant to, say, measles or mumps. But administer too large a dose, and the patient dies. Meanwhile, causal relationships are often nonlinear, which means that traditional methods of generalizing through observation (such as trend analysis and sampling) are of little use. Some theorists of complexity would go so far as to say that complex systems are wholly nondeterministic, meaning that it is impossible to make predictions about their future behavior based on existing data.

When things go wrong in a complex system, the scale of disruption is nearly impossible to anticipate. There is no such thing as a typical or average forest fire, for example. To use the jargon of modern physics, a forest before a fire is in a state of "self-organized criticality": it is teetering on the verge of a breakdown, but the size of the breakdown is unknown. Will there be a small fire or a huge one? It is very hard to say: a forest fire twice as large as last year's is roughly four or six or eight times less likely to happen this year. This kind of pattern -- known as a "power-law distribution" -- is remarkably common in the natural world. It can be seen not just in forest fires but also in earthquakes and epidemics. Some researchers claim that conflicts follow a similar pattern, ranging from local skirmishes to full-scale world wars.

What matters most is that in such systems a relatively minor shock can cause a disproportionate -- and sometimes fatal -- disruption. As Taleb has argued, by 2007, the global economy had grown to resemble an over-optimized electrical grid. Defaults on subprime mortgages produced a relatively small surge in the United States that tipped the entire world economy into a financial blackout, which, for a moment, threatened to bring about a complete collapse of international trade. But blaming such a crash on a policy of deregulation under U.S. President Ronald Reagan is about as plausible as blaming World War I on the buildup of the German navy under Admiral Alfred von Tirpitz.

EMPIRE STATE OF MIND

Regardless of whether it is a dictatorship or a democracy, any large-scale political unit is a complex system. Most great empires have a nominal central authority -- either a hereditary emperor or an elected president -- but in practice the power of any individual ruler is a function of the network of economic, social, and political relations over which he or she presides. As such, empires exhibit many of the characteristics of other complex adaptive systems -- including the tendency to move from stability to instability quite suddenly. But this fact is rarely recognized because of the collective addiction to cyclical theories of history.

Perhaps the most famous story of imperial decline is that of ancient Rome. In The History of the Decline and Fall of the Roman Empire, published in six volumes between 1776 and 1788, Edward Gibbon covered more than 1,400 years of history, from 180 to 1590. This was history over the very long run, in which the causes of decline ranged from the personality disorders of individual emperors to the power of the Praetorian Guard and the rise of monotheism. After the death of Marcus Aurelius in 180, civil war became a recurring problem, as aspiring emperors competed for the spoils of supreme power. By the fourth century, barbarian invasions or migrations were well under way and only intensified as the Huns moved west. Meanwhile, the challenge posed by Sassanid Persia to the Eastern Roman Empire was steadily growing.

But what if fourth-century Rome was simply functioning normally as a complex adaptive system, with political strife, barbarian migration, and imperial rivalry all just integral features of late antiquity? Through this lens, Rome's fall was sudden and dramatic -- just as one would expect when such a system goes critical. As the Oxford historians Peter Heather and Bryan Ward-Perkins have argued, the final breakdown in the Western Roman Empire began in 406, when Germanic invaders poured across the Rhine into Gaul and then Italy. Rome itself was sacked by the Goths in 410. Co-opted by an enfeebled emperor, the Goths then fought the Vandals for control of Spain, but this merely shifted the problem south. Between 429 and 439, Genseric led the Vandals to victory after victory in North Africa, culminating in the fall of Carthage. Rome lost its southern Mediterranean breadbasket and, along with it, a huge source of tax revenue. Roman soldiers were just barely able to defeat Attila's Huns as they swept west from the Balkans. By 452, the Western Roman Empire had lost all of Britain, most of Spain, the richest provinces of North Africa, and southwestern and southeastern Gaul. Not much was left besides Italy. Basiliscus, brother-in-law of Emperor Leo I, tried and failed to recapture Carthage in 468. Byzantium lived on, but the Western Roman Empire was dead. By 476, Rome was the fiefdom of Odoacer, king of the Goths.

What is most striking about this history is the speed of the Roman Empire's collapse. In just five decades, the population of Rome itself fell by three-quarters. Archaeological evidence from the late fifth century -- inferior housing, more primitive pottery, fewer coins, smaller cattle -- shows that the benign influence of Rome diminished rapidly in the rest of western Europe. What Ward-Perkins calls "the end of civilization" came within the span of a single generation.

Other great empires have suffered comparably swift collapses. The Ming dynasty in China began in 1368, when the warlord Zhu Yuanzhang renamed himself Emperor Hongwu, the word hongwu meaning "vast military power." For most of the next three centuries, Ming China was the world's most sophisticated civilization by almost any measure. Then, in the mid-seventeenth century, political factionalism, fiscal crisis, famine, and epidemic disease opened the door to rebellion within and incursions from without. In 1636, the Manchu leader Huang Taiji proclaimed the advent of the Qing dynasty. Just eight years later, Beijing, the magnificent Ming capital, fell to the rebel leader Li Zicheng, and the last Ming emperor hanged himself out of shame. The transition from Confucian equipoise to anarchy took little more than a decade.

In much the same way, the Bourbon monarchy in France passed from triumph to terror with astonishing rapidity. French intervention on the side of the colonial rebels against British rule in North America in the 1770s seemed like a good idea at the time -- a chance for revenge after Great Britain's victory in the Seven Years' War a decade earlier -- but it served to tip French finances into a critical state. In May 1789, the summoning of the Estates-General, France's long-dormant representative assembly, unleashed a political chain reaction that led to a swift collapse of royal legitimacy in France. Only four years later, in January 1793, Louis XVI was decapitated by guillotine.

Although several narrative fallacies suggest that the Hapsburg, Ottoman, and Romanov empires were doomed for decades before World War I, the disintegration of the dynastic land empires of eastern Europe came with equal swiftness. What was impressive, in fact, was how well these ancient empires were able to withstand the test of total war. Their collapse only began with the Bolshevik Revolution of October 1917. A mere five years later, Mehmed VI, the last sultan of the Ottoman Empire, departed Constantinople aboard a British warship. With that, all three dynasties were defunct.

The sun set on the British Empire almost as suddenly. In February 1945, Prime Minister Winston Churchill was at Yalta, dividing up the world with U.S. President Franklin Roosevelt and Soviet Premier Joseph Stalin. As World War II was ending, he was swept from office in the July 1945 general election. Within a decade, the United Kingdom had conceded independence to Bangladesh, Bhutan, Burma, Egypt, Eritrea, India, Iran, Israel, Jordan, Libya, Madagascar, Pakistan, and Sri Lanka. The Suez crisis in 1956 proved that the United Kingdom could not act in defiance of the United States in the Middle East, setting the seal on the end of empire. Although it took until the 1960s for independence to reach sub-Saharan Africa and the remnants of colonial rule east of the Suez, the United Kingdom's age of hegemony was effectively over less than a dozen years after its victories over Germany and Japan.

The most recent and familiar example of precipitous decline is, of course, the collapse of the Soviet Union. With the benefit of hindsight, historians have traced all kinds of rot within the Soviet system back to the Brezhnev era and beyond. Perhaps, as the historian and political scientist Stephen Kotkin has argued, it was only the high oil prices of the 1970s that "averted Armageddon." But this did not seem to be the case at the time. In March 1985, when Mikhail Gorbachev became general secretary of the Soviet Communist Party, the CIA estimated the Soviet economy to be approximately 60 percent the size of the U.S. economy. This estimate is now known to have been wrong, but the Soviet nuclear arsenal was genuinely larger than the U.S. stockpile. And governments in what was then called the Third World, from Vietnam to Nicaragua, had been tilting in the Soviets' favor for most of the previous 20 years. Yet less than five years after Gorbachev took power, the Soviet imperium in central and Eastern Europe had fallen apart, followed by the Soviet Union itself in 1991. If ever an empire fell off a cliff -- rather than gently declining -- it was the one founded by Lenin.

OVER THE EDGE

If empires are complex systems that sooner or later succumb to sudden and catastrophic malfunctions, rather than cycling sedately from Arcadia to Apogee to Armageddon, what are the implications for the United States today? First, debating the stages of decline may be a waste of time -- it is a precipitous and unexpected fall that should most concern policymakers and citizens. Second, most imperial falls are associated with fiscal crises. All the above cases were marked by sharp imbalances between revenues and expenditures, as well as difficulties with financing public debt. Alarm bells should therefore be ringing very loudly, indeed, as the United States contemplates a deficit for 2009 of more than $1.4 trillion -- about 11.2 percent of GDP, the biggest deficit in 60 years -- and another for 2010 that will not be much smaller. Public debt, meanwhile, is set to more than double in the coming decade, from $5.8 trillion in 2008 to $14.3 trillion in 2019. Within the same timeframe, interest payments on that debt are forecast to leap from eight percent of federal revenues to 17 percent.

These numbers are bad, but in the realm of political entities, the role of perception is just as crucial, if not more so. In imperial crises, it is not the material underpinnings of power that really matter but expectations about future power. The fiscal numbers cited above cannot erode U.S. strength on their own, but they can work to weaken a long-assumed faith in the United States' ability to weather any crisis. For now, the world still expects the United States to muddle through, eventually confronting its problems when, as Churchill famously said, all the alternatives have been exhausted. Through this lens, past alarms about the deficit seem overblown, and 2080 -- when the U.S. debt may reach staggering proportions -- seems a long way off, leaving plenty of time to plug the fiscal hole. But one day, a seemingly random piece of bad news -- perhaps a negative report by a rating agency -- will make the headlines during an otherwise quiet news cycle. Suddenly, it will be not just a few policy wonks who worry about the sustainability of U.S. fiscal policy but also the public at large, not to mention investors abroad. It is this shift that is crucial: a complex adaptive system is in big trouble when its component parts lose faith in its viability.

Over the last three years, the complex system of the global economy flipped from boom to bust -- all because a bunch of Americans started to default on their subprime mortgages, thereby blowing huge holes in the business models of thousands of highly leveraged financial institutions. The next phase of the current crisis may begin when the public begins to reassess the credibility of the monetary and fiscal measures that the Obama administration has taken in response. Neither interest rates at zero nor fiscal stimulus can achieve a sustainable recovery if people in the United States and abroad collectively decide, overnight, that such measures will lead to much higher inflation rates or outright default. As Thomas Sargent, an economist who pioneered the idea of rational expectations, demonstrated more than 20 years ago, such decisions are self-fulfilling: it is not the base supply of money that determines inflation but the velocity of its circulation, which in turn is a function of expectations. In the same way, it is not the debt-to-GDP ratio that determines government solvency but the interest rate that investors demand. Bond yields can shoot up if expectations change about future government solvency, intensifying an already bad fiscal crisis by driving up the cost of interest payments on new debt. Just ask Greece -- it happened there at the end of last year, plunging the country into fiscal and political crisis.

Finally, a shift in expectations about monetary and fiscal policy could force a reassessment of future U.S. foreign policy. There is a zero-sum game at the heart of the budgetary process: if interest payments consume a rising proportion of tax revenue, military expenditure is the item most likely to be cut because, unlike mandatory entitlements, it is discretionary. A U.S. president who says he will deploy 30,000 additional troops to Afghanistan and then, in 18 months' time, start withdrawing them again already has something of a credibility problem. And what about the United States' other strategic challenges? For the United States' enemies in Iran and Iraq, it must be consoling to know that U.S. fiscal policy today is preprogrammed to reduce the resources available for all overseas military operations in the years ahead.

Defeat in the mountains of the Hindu Kush or on the plains of Mesopotamia has long been a harbinger of imperial fall. It is no coincidence that the Soviet Union withdrew from Afghanistan in the annus mirabilis of 1989. What happened 20 years ago, like the events of the distant fifth century, is a reminder that empires do not in fact appear, rise, reign, decline, and fall according to some recurrent and predictable life cycle. It is historians who retrospectively portray the process of imperial dissolution as slow-acting, with multiple overdetermining causes. Rather, empires behave like all complex adaptive systems. They function in apparent equilibrium for some unknowable period. And then, quite abruptly, they collapse. To return to the terminology of Thomas Cole, the painter of The Course of Empire, the shift from consummation to destruction and then to desolation is not cyclical. It is sudden.

A more appropriate visual representation of the way complex systems collapse may be the old poster, once so popular in thousands of college dorm rooms, of a runaway steam train that has crashed through the wall of a Victorian railway terminus and hit the street below nose first. A defective brake or a sleeping driver can be all it takes to go over the edge of chaos.

NIALL FERGUSON is Laurence A. Tisch Professor of History at Harvard University, a Fellow at Jesus College, Oxford, and a Senior Fellow at the Hoover Institution at Stanford University. His most recent book is The Ascent of Money: A Financial History of the World.

__________________

And now, a word from Marcus

"Death is relief from reaction to the senses, from the puppet-strings of impulse, from the analytical mind, and from service to the flesh.  Disgraceful if, in this life where your body does not fail, your soul should fail you first.

"Take care not to be Caesarified, or dyed in purple:  it happens.  So keep yourself simple, good, pure, serious, unpretentious, a friend of justice, god-fearing, kind, full of affection, strong for your proper work.  Strive hard to remain the same man that philosophy wished to make you.  Revere the gods, look after men.  Life is short.  The one harvest of existence on earth is a godly habit of mind and social action."

-- Marcus Aurelius, Meditations

Becoming a Third World Nation

Published Feb 10 2010 by The Archdruid Report, Archived Feb 11 2010

Becoming a Third World Nation

by John Michael Greer

In the course of writing last week’s Archdruid Report post, I belatedly realized that there’s a very simple way to talk about the scope of the brutal economic contraction now sweeping through American society – a way, furthermore, that might just be able to sidestep both the obsessive belief in progress and the equally obsessive fascination with apocalyptic fantasy that, between them, make up much of what passes for thinking about the future these days. It’s to point out that, over the next decade or so, the United States is going to finish the process of becoming a Third World country.
I say “finish the process,” because we are already most of the way there. What distinguishes the Third World from the privileged industrial minority of the world’s nations? Third World nations import most of their manufactured goods from abroad, while exporting mostly raw materials; that’s been true of the United States for decades now. Third World economies have inadequate domestic capital, and are dependent on loans from abroad; that’s been true of the United States for just about as long. Third World societies are economically burdened by severe problems with public health; the United States ranks dead last for life expectancy among industrial nations, and its rates of infant mortality are on a par with those in Indonesia, so that’s covered. Third World nation are very often governed by kleptocracies – well, let’s not even go there, shall we?

There are, in fact, precisely two things left that differentiate the United States from any other large, overpopulated, impoverished Third World nation. The first is that the average standard of living here, measured either in money or in terms of energy and resource consumption, stands well above Third World levels – in fact, it’s well above the levels of most industrial nations. The second is that the United States has the world’s most expensive and technologically complex military. Those two factors are closely related, and understanding their relationship is crucial in making sense of the end of the “American century” and the decline of the United States to Third World status.

The US has the world’s most expensive military because, just now, it has the world’s largest empire. Now of course it’s not polite to talk about that in precisely those terms, but let’s be frank – the US does not keep its troops garrisoned in more than a hundred countries around the world for the sake of their health, you know. That empire functions, as empires always do, as a way of tilting the economic relationships between nations in a way that pumps wealth out of the rest of the world and into the coffers of the imperial nation. It may never have occurred to you to wonder why it is that the 5% of the world’s population who live in the US get to use around a third of the world’s production of natural resources and industrial products – certainly it never seems to occur to most Americans to wonder about that – but the economics of empire are the reason.

A century ago, in 1910, it was Britain that had the global empire, the worldwide garrisons, and the torrents of wealth flowing from around the world to boost the British standard of living at the expense of everyone else’s. A century from now, in 2110, if the technology to maintain any kind of worldwide empire still exists – and it can be done with wooden sailing ships and crude cannon, remember; Spain managed that feat very effectively in its day – somebody else will be in that position. It won’t be America, because empire is the methamphetamine of nations; in the short term, the effects feel great, but in the long term they’re very often lethal. Britain managed to walk away from its empire without total catastrophe because the United States was ready, willing, and able to take over, and give Britain a place in the inner circle of US allies into the bargain; most other nations have paid for their imperial overshoot with a century or two of economic collapse, political chaos, and social disintegration.

That’s the corner into which the United States is backing itself right now. The flood of lightly disguised tribute from overseas, while it made Americans fantastically wealthy by the standards of the rest of the world, also gutted America’s domestic economy – the same economic imbalances that funnel wealth here also make it nearly impossible to produce goods or provide services at home at a cost that can compete with overseas producers – and created a culture of entitlement that includes all classes from the bottom of the social pyramid right up to the top. As always happens, in turn, the benefits of empire are failing to keep pace with its rapidly rising costs, and in addition, rising demands for imperial largesse from all parts of society are drawing down an increasingly straitened supply of wealth. Meanwhile other nations with imperial ambitions are circling like sharks; the wisest among them know that time is on their side, and that any additional burden that can be loaded onto a drowning empire will hasten the day when it goes under for the third time and they can close for the kill.

This view of the world situation is not one that you’ll find in the cultural mainstream, or for that matter any of its self-proclaimed alternatives. The contrast with a century ago is instructive. A great many people in late imperial Britain knew perfectly well that the empire on which the sun famously never set – critics suggested that this was because God Himself wouldn’t trust an Englishman in the dark – had had its day and was itself setting; the lines of Rudyard Kipling’s poem “Recessional” –

Far-called, our navies melt away;
On dune and headland sinks the fire.
Lo! All our pomp of yesterday
Is one with Nineveh and Tyre.

– simply put in powerful imagery what many were thinking at that time. You won’t find the same sort of historical sense nowadays, though, and I suspect the role of the myth of progress as the secular religion of the modern world has a lot to do with it. In 1910, the concept of historical decline was on a great many minds; these days you’ll hardly hear it mentioned, because the belief in history as perpetual progress has become all the more deeply entrenched as the foundations that made the progress of recent centuries possible have rotted away.

The resulting insistence on seeing all social changes through onward-and-upward colored spectacles has imposed huge distortions on our perceptions of recent events. One good example is the rise and fall of the so-called “global economy” in recent decades. Its proponents portrayed it as the triumphant wave of a Utopian future that would enable everybody to live like middle-class Americans; its critics portrayed it as the equally triumphant metastasis of a monolithic corporate power out to enslave the world. Very few people saw it as the desperate gambit of a faltering imperial society that could no longer even afford to run its own economy, and was forced to outsource even its most basic economic functions to other countries. Nonetheless, this is what it has turned out to be, and it had the predictable result that several other nations used the influx of capital and technology to build their own industrial sectors, bide their time, and then enter the market themselves and outcompete the very companies and countries that gave them a foot in the door.

More broadly, it seems to have escaped the attention of a great many observers that the day of the multinational corporations is drawing to an end. The struggle over Russia’s energy resources was the decisive battle there, and when Putin crushed the Western-funded oligarchs and retook control of his country’s energy supply, that battle was settled with a typically Russian sense of drama. The elegance with which China has turned international trade law against its putative beneficiaries is in its own way just as typical; a flurry of corporations owned by the Chinese government have spread operations throughout the world, using the mechanisms of global trade to lay the foundations of a future Chinese global empire, while the Chinese government efficiently stonewalled any further trade negotiations that would have put Chinese economic interests at home in jeopardy. More recently, China has begun buying sizable stakes in the multinational corporations that so many well-meaning people in the West once thought would reduce the world to vassalage; the day when ExxonMobil is a wholly-owned subsidiary of CNOOC may be closer than it looks.

The same biases that make such global changes invisible have impacts at least as sweeping here at home. Faith in progress, coupled with the tribute economy’s culture of entitlement I mentioned earlier, have made it nearly impossible for anybody in American public life to talk about the hard fact that America can no longer afford most of the social habits it adopted during its age of empire. It’s almost impossible to think of an aspect of daily life in America today that will not change drastically as a result. We will have to give up the notion, for example, that most Americans ought to go to college and get a “meaningful and fulfilling” job of the sort that can be done sitting at a desk. We will have to abandon the idea that it makes any sense to spend a quarter of a million dollars giving an elderly person with an incurable illness six more months of life. We will have to relearn the old distinction between the deserving poor – those who are willing to work and simply need the opportunity, or who have fallen into destitution through circumstances outside their control – and those who are simply trying to game the system. The great majority of us will get to find out what it’s like to make things instead of buying them, even when that means a sharp reduction in quality; to skip meals, or make do with very little, because the money to pay for anything more simply isn’t there; to treat serious illnesses at home because care from a doctor costs too much; I could go on for paragraphs, but I trust you get the idea.

All these changes, it needs to be said, would be inevitable at this point even if the industrial world depended on renewable resources and had a stable, sustainable relationship with the planetary biosphere that supports all our lives. The United States has played its recent hands in the game of empire very badly indeed, and responded to each loss by doubling down and raising the stakes even higher. If, as a growing number of perceptive commentators have suggested, the US government has been reduced to borrowing money from itself in order to pay its bills – the theme of last week’s Archdruid Report post – the end of that road is in sight. It’s hard to see this as anything but a desperation move on the part of a political and economic establishment that sees no other options for short-term survival and thinks it has nothing left to lose. It’s the exact equivalent of paying household bills by running up debt on credit cards; it can buy a little time, but at the cost of making bankruptcy a certainty once that time runs out.

The global context of the crisis, though, also needs to be kept in mind. The industrial world does not depend on renewable resources, and its relationship with the biosphere is leading it straight down the well-worn path of overshoot and collapse; the endgame of American empire, while it would be taking place anyway, has the additional factor of the limits to growth in play. In an alternate world where energy and resource flows could be counted on to remain stable for the foreseeable future, it’s quite possible that one of the rising powers might offer America the same devil’s bargain we offered Britain in 1942, and prop up the husk of our empire just long enough to take it over for themselves.

As it is, it cannot have escaped the attention of any other nation on the planet that something like a quarter of the world’s dwindling resource production could be made available for other countries, if only the United States were to lose the ability to purchase energy and other resources from outside its own borders. It’s not hard to think of nations that would be in a position to profit mightily from such a readjustment, and nothing so unseemly as a global war would necessarily be required to make it happen; to name only one possibility, it’s by no means unthinkable that the United States, having manufactured “color revolutions” to order in countries around the world, might turn out to be vulnerable to the same sort of well-organized mob action here at home.

Exactly how things will play out in the months and years to come is anybody’s guess. One of the consequences of America’s descent into Third World status, though, is that a great many of us may have scant leisure to contemplate global and national issues amid the struggle to keep food on the table and a roof over our heads. In the long run, this shift in focus may have certain advantages; I have argued in previous posts that those nations that undergo the deindustrial transition soonest, and are thus forced to learn how to get by on the very modest energy and resource flows available in the absence of fossil fuels, may find that this gives them a head start in making changes that everyone else will have to make in due time. Still, making the most of those advantages will require a very different approach to economics, among other things, than most of us have pursued (or imagined pursuing) so far.

Interestingly, this brings us back to the point where this blog’s exploration of deindustrial economics started some months ago: the thought of the maverick economist E.F. Schumacher. Among his other achievements, Schumacher developed a theory of economic development for the Third World that cut straight across the assumptions of his own time and ours alike, and proposed a route toward relative prosperity that took the limits to growth and the failures of empire into account. That route was not taken in his time; it may be the only way left open in ours. We’ll discuss it in detail in next week’s post.

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Original article available here

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Uncivilisation: The Dark Mountain Project

I have posted a new link in the TEOTWAWKI section, called 'The Dark Mountain Project.'  Follow the link to the Manifesto, if you will.  But be warned:  it is a challenge to the way we all think and view the world.  Do not continue if you do not wish your beliefs challenged, or if you find uncomfortable the thought of a disruption of and total end to your mode of existence. 

However, if (like me) you feel humanity is undergoing a definitive change, but cannot quite put your finger on what is happening and what you should be doing:  then by all means, follow the link Beyond the Pale.  The Manifesto is a long read, but well worth it.  I will talk more of Dark Mountain later, if and when I can discuss it with those I know of the Remnant.

Metamorphoses

Visitors regular and irregular to the Gable Grey have no doubt noticed of late a trend in my posts.  I don't talk much about my writing any more, as I have not done any to speak of in months.  Much of this blog's content these days can be described as "gloom and doom," and I cannot deny it.  But I cannot deny that "gloom and doom" have occupied my thoughts to a great extent the past year or so, and have come to shape my habits and my very ways of thinking about things.  I have become a habitual prepper, and have bent my will on becoming more frugal and practical in my daily routine.  All that is a work in progress, like most things in my life; but as I am come to the realization that the Paradigm Shift I have spoken of before here at the Gable Grey is much more than a concept, but a daily reality for those who (like myself) struggle to see and hear beyond the noise and hype of regular channels, I find that I have no choice but to make me and mine ready for the changes as best we can.  Notice I did not say, "coming changes."  The changes are already here.

I fear that in my efforts to become more self-reliant and pracitcal in my day-to-day existence, something precious will be lost:  that whatever-it-is that spurred me to try my hand at writing, at being a fantasist.  It is the same impulse that drove me to the works of obscure fantasists like Morris and Dunsany and MacDonald, and the same one that led me to scheme grand role-playing adventures for myself and my friends in Middle-earth.  I have found those works less as objects to be studied of late, and find myself instead walking as one in a dream, muttering half-forgotten lines by Tolkien as I stroll the brown lands of Winter.  Sometimes I am surprised at the responses I hear from the dreaming trees, murmuring in their sleep in answer to my halting words.  I am become less an artist, more a character I might write about.  I do not want to give up writing, indeed I do not think I can; but that muse sleeps deep within, the long, dark rest of winter woods.  Maybe the Spring will bring forth a new flowering.  I do not know.  Meanwhile the Paradigm Shift continues, and I continue to change, even as this blog does.

I hope my posts prove useful to some.  I run a terrible risk of becoming "the boy who cried 'wolf.'"  But here I am not going by what my brain is telling me, because my brain is usually to some degree scrambled these days trying to sort out the wheat from the chaff in the news.  But my gut, usually unreliable, is telling me that we are in the beginning stages of a great change, and that it is already well under way.  As a result, I am often busy with things like stringing chicken wire, or planting figs or blueberries or blackberries, or checking our inventories here at home.  But I hope to weather the change, and come out to whatever world lies waiting for us, and bring those things that for now must needs lie sleeping within me.  We must all prepare, but we must all try to retain those daydreams that, for some of us at least, have sustained us this far in life, and have helped make us who we are.

Endgame

Published Feb 4 2010 by The Archdruid Report, Archived Feb 4 2010

Endgame

by John Michael Greer

I’ve mentioned more than once in these essays the foreshortening effect that textbook history can have on our understanding of the historical events going on around us. The stark chronologies most of us get fed in school can make it hard to remember that even the most drastic social changes happen over time, amid the fabric of everyday life and a flurry of events that can seem more important at the time.
This becomes especially problematic in times like the present, when apocalyptic prophecy is a central trope in the popular culture that frames a people’s hopes and fears for the future. When the collective imagination becomes obsessed with the dream of a sudden cataclysm that sweeps away the old world overnight and ushers in the new, even relatively rapid social changes can pass by unnoticed. The twilight years of Rome offer a good object lesson; so many people were convinced that the Second Coming might occur at any moment that the collapse of classical civilization went almost unnoticed; only a tiny handful of writers from those years show any recognition that something out of the ordinary was happening at all.
Reflections of this sort have been much on my mind lately, and there’s a reason for that. Scattered among the statistical noise that makes up most of today’s news are data points that suggest to me that business as usual is quietly coming to an end around us, launching us into a new world for which very few of us have made any preparations at all.
Here’s one example. Friends of mine in a couple of midwestern states have mentioned that the steady trickle of refugees from the Chicago slums into their communities has taken a sharp turn up. There’s a long history of dysfunction behind this. Back in 1999, Chicago began tearing down its vast empire of huge high-rise projects, promising to replace them with less ghastly and more widely distributed housing for the poor. Most of the replacements, of course, never got built. When the waiting list for Section 8 rent subsidies, the only other option available, got long enough to become a public relations problem, the bureaucrats in charge simply closed the list to new applicants; rumors (hotly denied by the Chicago city government) claim that poor families in Chicago were openly advised to move to other states. Whether for that reason or simple economic survival, a fair number of them did.
Fast forward to the middle of 2009. Around then, facing budget deficits second only to California, the state of Illinois quietly stopped paying its social service providers. In theory, the money is still allocated; in practice, it’s been more than six months since Illinois preschools, senior centers, food banks, and the like have received a check from the state for the services they provide, and many of them are on the verge of going broke. Subsidized rent has apparently taken an equivalent hit. Believers in free-market economics have been insisting for years that the end of rent subsidies would let the free market reduce rents to a level that people could afford, but I don’t recommend holding your breath; this is the same free market, remember, that gave the United States some of the world’s worst slums in the late 19th and early 20th centuries.
The actual effects have been instructive. Squeezed between sharply contracting benefits and a sharply contracting job market, many of Chicago’s poor are hitting the road, heading in any direction that offers more options. Forget the survivalist fantasy of violent hordes pouring out of the inner cities to ravage everything in their path; today’s slum residents are instead becoming the Okies of the Great Recession. In the process, part of business as usual in the United States is coming to an end.
Illinois is far from the only state that backed itself into a corner by assuming that rising tax revenues from a bubble economy could be extrapolated indefinitely into the future. 41 US states currently face budget deficits. California has received most of the media attention so far, a good deal of it focused on the political gridlock that has kept the state frozen in crisis for years. Behind the partisan posturing in Sacramento, though, lies a deeper and harsher reality. The state of California is essentially bankrupt; nearly all the mistakes made by the once-wealthy states of the Rust Belt as they slid down the curve of their own decline have been faithfully copied by California as it approaches its destiny as the Rust Belt of the 21st century. I wonder how many local governments in neighboring states have drawn up plans for dealing with the tide of economic refugees once California can no longer pay for its welfare system, and the poor of Los Angeles and other California cities join those of Chicago on the road?
I could go on, but I think the point has been made. State governments are the canaries in our national coal mine; their tax receipts are one of the very few measures of economic activity that aren’t being systematically fiddled by the federal government. The figures coming out of state revenue offices strike a jarring contrast with the handwaving about “green shoots” and an imminent return to prosperity heard from Washington DC and the media. Across the country, every few months, states that have already cut spending drastically to cope with record declines in tax income find that they have to go back and do it all over again, because their revenue – and by inference, the incomes, purchases, business activity, and other economic phenomena that feed into taxes – has dropped even further. Now it’s true that state budgets get hit whenever the economy goes into recession, and keep on hurting even when the recession is supposed to be over, but compared to past examples, the losses clobbering state funding these days are off the scale, and a great many programs that have been fixtures of American public life for as long as most of us have been living are facing the chopping block.
A different reality pertains within the Washington DC beltway. Where states that fail to balance their budgets get their bond ratings cut and, in some cases, are having trouble finding buyers for their debt at less than usurious interest rates, the federal government seems to be able to defy the normal behavior of bond markets with impunity. Despite soaring deficits, not to mention a growing disinclination on the part of foreign governments to keep on financing the same, every new issuance of US treasury bills somehow finds buyers in such abundance that interest rates stay remarkably low. A few weeks ago, Tom Whipple of ASPO became the latest in a tolerably large number of perceptive observers who have pointed out that this makes sense only if the US government is surreptitiously buying its own debt.
The process works something like this. The Federal Reserve, which is not actually a government agency but a consortium of large banks working under a Federal charter, has the statutory right to mint money in the US. These days, that can be done by a few keystrokes on a computer, and another few keystrokes can transfer that money to any bank in the nation. Some of those banks use the money to buy up US treasury bills, probably by way of subsidiaries chartered in the Cayman Islands and the like, and these same subsidiaries then stash the T-bills and keep them off the books. The money thus laundered finally arrives at the US treasury, where it gets spent.
It may be a bit more complex than that. Those huge sums of money voted by Congress to bail out the financial system may well have been diverted into this process – that would certainly explain why the Department of the Treasury and the Federal Reserve Bank of New York have stonewalled every attempt to trace exactly where all that money went. Friendly foreign governments may also have a hand in the process. One way or another, though, those of my readers who remember the financial engineering that got Enron its fifteen minutes of fame may find all this uncomfortably familiar – and it is. The world’s largest economy has become, in effect, the United States of Enron.
Plenty of countries in the past have tried to cover expenses that overshot income by spinning the presses at the local mint. The result is generally hyperinflation, of the sort made famous in the 1920s by Germany and more recently by Zimbabwe. That I know of, though, nobody has tried the experiment with a national economy in a steep deflationary depression, of the sort that has been taking shape in America and elsewhere since the real estate bubble crashed and burned in 2008. In theory, at least in the short term, it might just work; the inflationary pressures caused by printing money wholesale could conceivably cancel out the deflationary pressures of a collapsing bubble and a contracting economy – at least for a while.
The difficulty, of course, is that pumping the money supply fixes the symptoms of economic failure without treating the causes, and in every case I know of, governments that resort to it end up caught on a treadmill that requires ever larger infusions of paper money just to maintain the status quo. Sooner or later, as the amount of currency in circulation outstrips the goods and services available to buy, inflation spins out of control, the currency loses most or all of its value, and the economy grinds to a halt until a new currency can be issued on some sounder basis. In 1920s Germany, they managed this last feat by taking out a mortgage on the entire country, and issued “Rentenmarks” backed by that mortgage. In the wake of the late housing bubble, that seems an unlikely option here, though no doubt some gimmick will be found.
It’s crucial to realize, though, that this move comes at the end of a long historical trajectory. From the early days of the industrial revolution into the early 1970s, the United States possessed the immense economic advantage of sizeable reserves of whatever the cutting-edge energy source happened to be. During what Lewis Mumford called the eotechnic era, when waterwheels were the prime mover for industry and canals were the core transportation technology, the United States prospered because it had an abundance of mill sites and internal waterways. During Mumford’s paleotechnic era, when coal and railways replaced water and canal boats, the United States once again found itself blessed with huge coal reserves, and the arrival of the neotechnic era, when petroleum and highways became the new foundation of power, the United States found that nature had supplied it with so much oil that in 1950, it produced more petroleum than all other countries combined.
That trajectory came to an abrupt end in the 1970s, when nuclear power – expected by nearly everyone to be the next step in the sequence – turned out to be hopelessly uneconomical, and renewables proved unable to take up the slack. The neotechnic age, in effect, turned out to have no successor. Since then, for most of the last thirty years, the United States has been trying to stave off the inevitable – the sharp downward readjustment of our national standard of living and international importance following the peak and decline of our petroleum production and the depletion of most of the other natural resources that once undergirded American economic and political power. We’ve tried accelerating drawdown of natural resources; we’ve tried abandoning our national infrastructure, our industries, and our agricultural hinterlands; we’ve tried building ever more baroque systems of financial gimmickry to prop up our decaying economy with wealth from overseas; over the last decade and a half, we’ve resorted to systematically inflating speculative bubbles – and now, with our backs to the wall, we’re printing money as though there’s no tomorrow.
Now it’s possible that the current US administration will be able to pull one more rabbit out of its hat, and find a new gimmick to keep things going for a while longer. I have to confess that this does not look likely to me. Monetizing the national debt, as economists call the attempt to pay a nation’s bills by means of a hyperactive printing press, is a desperation move; it’s hard to imagine any reason that it would have been chosen if there were any other option in sight.
What this means, if I’m right, is that we may have just moved into the endgame of America’s losing battle with the consequences of its own history. For many years now, people in the peak oil scene – and the wider community of those concerned about the future, to be sure – have had, or thought they had, the luxury of ample time to make plans and take action. Every so often books would be written and speeches made claiming that something had to be done right away, while there was still time, but most people took that as the rhetorical flourish it usually was, and went on with their lives in the confident expectation that the crisis was still a long ways off.
We may no longer have that option. If I read the signs correctly, America has finally reached the point where its economy is so deep into overshoot that catabolic collapse is beginning in earnest. If so, a great many of the things most of us in this country have treated as permanent fixtures are likely to go away over the years immediately before us, as the United States transforms itself into a Third World country. The changes involved won’t be sudden, and it seems unlikely that most of them will get much play in the domestic mass media; a decade from now, let’s say, when half the American workforce has no steady work, decaying suburbs have mutated into squalid shantytowns, and domestic insurgencies flare across the south and the mountain West, those who still have access to cable television will no doubt be able to watch talking heads explain how we’re all better off than we were in 2000.
Those of my readers who haven’t already been beggared by the unraveling of what’s left of the economy, and have some hope of keeping a roof over their heads for the foreseeable future, might be well advised to stock their pantries, clear their debts, and get to know their neighbors, if they haven’t taken these sensible steps already. Those of my readers who haven’t taken the time already to learn a practical skill or two, well enough that others might be willing to pay or barter for the results, had better get a move on. Those of my readers who want to see some part of the heritage of the present saved for the future, finally, may want to do something practical about that, and soon. I may be wrong – and to be frank, I hope that I’m wrong – but it looks increasingly to me as though we’re in for a very rough time in the very near future.

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Original article available here

Departures

I am nearly finished with a truly wonderful film experience:  Departures.  It is a Japanese film about a cello player who loses his job after his symphony is dissolved.  With little other recourse, he and his wife leave the big city and return to his home town, where he has a small house, left to him by his now deceased mother years earlier.  It being a small town, there are even fewer jobs than in the city; he ends up working in what in Japan is known as the "casketing" business:  they are hired by undertakers to perform the elaborate Japanese funeral rites, which are complex and, while occupying a rather lowly station among their customs, require a tremendous amount of finesse:  for the rites are performed in the presence of the family.

It is beautifully nuanced, comically touching, and profoundly relevant to pretty much anybody.  The cinematography is just short of marvelous; even the droll urban landscape is treated lovingly by the camera.  I rarely take the time to write a review of a film, but Departures is more than deserving.  I can't find anything bad to say about it, and will probably give it five stars.