Joined: Tue Jan 11 2005, 04:01pm
Location: Surrounded by morons
Posts: 406
Market economies, whether they be classical capitalist, modern corporate capitalist, mercantile, or pre-capitalist in nature, are fundamentally similar. Their common weakness is this - they can only function well when they're expanding. Remember, even durring recessions, the economists keep talking about 'growth'; a recession just means the growth is too slow. Left to itself, this growth would speed up and slow down in a natural self-limiting rythm.
A brilliant Soviet-era Russian economist whose name escapes me at the moment made a very accurate map of this; left to itself, with infinite resources, the global economy goes through cycles of growth and stagnation on a period of about 44 years; all the major economic booms and busts of the last 200 years fit well into this model. With no physical constraints, each recovery will be a logarithmic increase from the last (ie diminishing returns, but no ultimate upper limit).
The oil crisis of the 70s, for instance, merely compounded an economic slowdown that was already inevitable. It would have taken more than that to knock the economy completely off its track. The same with the current recession, it wasn't caused by any one factor - it was the normal result after the long stretch of prosperity we were comming off of. The attacks of 9/11 actually made the situation better, by allowing a pretext for, among other things, 1) the looting of Social Security for corporate bailouts, and 2) massive government spending in the military and security sectors.
I'll refrain from saying anything else about 9/11 for this post, for the sake of simplicity and readability - just understand that the attacks did not cause the recession, they couldn't have since they didn't destroy any infrastructure that wasn't quickly replaced. In fact, they mitigated a collapse that would have been much worse; a natural-occuring recession coupled with a cashflow crisis, the same kind of meltdown that caused the Great Depression.
The situation we will face in the next several years is different. We are face to face with an insurmountable physical barrier that the current paradigm cannot and will not negotiate. If the current economic order continues on its course, it will face complete and irreversable stagnation. Complete stagnation leads inevitably, and fairly quickly, to collapse. Not just depression, but complete, total, and utter collapse.
We've established that a market economy is either expanding, or it is dead. Expansion requires that markets, resources and energy supplies continually increase. Economists have this funny idea that money can be substituted for any of these things, and to a limited extent they're right. Especially with recent advances in science, most resource shortages can be overcome by throwing enough money at it. But these economists forget what money actually is.
Fundamantally, money has value because someone else will preform work in exchange for it. Money represents the ability to do work. Energy is the ability to do work. All the wonders that we can create by tossing enough cash around, are accomplished by huge expenditures of energy. If energy becomes the limiting factor, the whole paradigm falls apart like the laughable house of cards that it is.
Energy is now becoming a limiting factor. It's looking more and more like the worldwide production of oil is at its all-time peak. Oil products provide most of modern society's cheap, plentiful energy (the runner up is oil's sister, natural gas, the main source of all the world's electricity - which looks set to reach its own peak before 2020). Add to that the fact that oil is also a critical resouce in the fabrication of most synthetic materials and chemicals - in fact, modern agriculture as practiced since the late 19th century will be impossible without it - and you can see that the current world order is set to run right off the cliff. But the Powers That Be (tm) would rather control the decline and hope to come out on top of the shit pile, than try to mitigate it.
When an economy stagnates and begins to teeter, it will first begin to cannibalize itself. This can be seen all around us today, in a world where the main source of cashflow for many industries is in corporate mergers. Just look around. General Motors has long been a bank that dabbled in making cars; now they, the centerpiece of America's remaining manufactuing industry, are so desperately broke that they sold off their financial division? The corporate world is full of cooked books, money laundering, and obscene pyramid schemes. This isn't just the work of a few greedy people, this is how the system functions.
Look at how all of these corporations behave. Remember Bechtel, with the no-bid contract to rebuild Iraq's infrastructure? Anyone familiar with the Big Dig here in Boston? A project that was supposed to be under three billion dollars ended up some twelve billion overbudget and years behind schedual, and when they finally opened it the fucking tunnel leaked like a seive. That's Bechtel's handiwork - par for the course, really.
And then there's DynCorp, the contractor that delivers when the U.S. military needs to hire some outside technical expertise (in fact it's through them that the U.S. Special Forces are essentially fighting a proxy war in Colombia as we speak - but that's another thread). Several international NGOs have accused them of being involved in trafficking human slaves, but the U.S. government won't respond or investigate.
Hell, even the prisons are run by private corporations who make money by exercising the government's right to use prisoners as slave labor; who recieve subsidies and whose stocks are valued based on the number of human beings they can find pretext to lock up in their institutions. Do you think these companies' lobbyists might have something to do with the ridiculous mandatory sentencing laws that push sex offenders and sociopaths out the revolving door so they can keep the places full of harmless potheads and first-time DUIs? A snake eating its own tail is not nutritious, but that's what this society have become.
So as society begins to cannibalize itself, the powerful are quietly preparing. Notice that the gated communities of the rich and connected have a lot more security these days? You're not imagining things. The new semi-secret ones that are still being built also have their own miniature power plants and even cryogenic food storage. Why not prepare society at large? Well, because it's impossible. Right now we're on a sinking ship trying to build a lifeboat from scratch; saving the world as we know it would require building a self-sufficient luxury liner. We could still mitigate the effects - we could have done a lot more if we'd started back in the Regan era - but that would require a massive overhaul of modern society on a fundamantal level. It would require a change in the nature and distribution of power, something that the powerful are never likely to concede.
Not too long ago, Dutch economist Maarten van Mourik said, "It may not be profitable to slow decline." So what will the future look like? It's not pretty.
When the teetering mess of a civilization that the corporate oligarchy has left us with hits a major crisis, Very Bad Things are going to start happening. Oil supply is the most likely candidate for a trigger, since it is likely in irreversable decline already; but over the years I've learned that above all else, you should expect to be surprised. The first stage will be massive economic depression; spiraling unemployment, shutdown of whole industries, failure of public infrastructure. This may already be beginning, what with GM on the verge of bankrupcy and the first indications that the $100 trillion real estate bubble is starting to pop. I expect the U.S. dollar, long backed up by nothing but other people's oil and drugs, to implode in the near future.
Combine the collapsing 'real' value of money with the skyrocketing 'real' price of oil, and I expect you'll see a total collapse of the United States. Not just economic collapse - the total disintegration of all infrastructure, all services, and all structures of society. Utter collapse the likes of which the modern world has never seen. I say the U.S. in particular, because I believe it will be one of the first first-world nations to go. Even the American-grown elites now consider the American population at large to be 'useless eaters'. Our purpose in the global economy was to consume ourselves to death. Now, the old world is dying and we are in need of "demand destruction"; after the most useless 3rd-world nations have been abandoned (which has already started - ask me about Zimbabwe), America will logically be one of the first on the chopping block. Australia and Britain might last somewhat longer, the final stronghold being in continental Europe, China being the wildcard, but I doubt any part of the world will escape in the end.
Where it leads us is hazy, but clearly not good. A major die-off is a distinct possibility, from old diseases resurfacing, famine from the current agricultural business falling apart, etc. Some estimates say that the Earth can only sustainably hold 1/6th or less of its current human population. Sadly, the survivors in America will probably be dominated by antisocial right-wing extremists from Montana who were prepared to survive for all the wrong reasons. The worst misery will likely be in the biggest cities, once the transportation lines that supply them break down. Insofar as it is possible for the government to sustain itself and maintain order, it will likely be accomplished by brute force. Urban survival with be a crapshoot; rural survival will be based on locality.
