Sunday, April 23, 2017

The Greater Fool

"The overdeveloped countries are raising generations of gamblers."

  All ecosystems, including the human variety, move through stages of succession from very simple to very complex until there is a disturbance that causes a shakeout or a reset.

A system that has grown in complexity to the point where it is “supermediated” by tiny organisms (or organizations) trying to squeak in the spaces between older groupings and exploit exchanges to draw off their own existence becomes brittle at some point. Fluctuating diversity is more robust for the whole ecosystem but more fragile for the individual members. Just as an evolutionary innovation may dislodge long-residing stalwarts, a small disturbance may disintermediate recent interlopers.  

Global technoculture — we almost said “western culture” but a quick glance at India, China, or Japan would show that concept to be outdated — has been fostering lots of intermediation. The tech boom — rapid evolutionary innovation — is partly responsible. ‘Higher’ education vacillates between the stalwart model of molding students into consumerist cubicle rats, learning to push the correct buttons to get fed, and the disruptive counterpart — the next-gen, wired, tech-savvy entrepreneur class attempting to pay back outsized student loans by developing a killer app or discovering a hitherto unexplored niche for intermediation. By and large, the overdeveloped countries are raising generations of gamblers while the underdeveloping countries are herding masses of enslaved vassals deeper into debt.

This makes a lot of sense if you have to grapple with an explosion of 15- to 25-year-olds entering the workforce. In 2016 there were 963,981,944 males and 898,974,458 females in that category, the greatest portion entering from China, India, USA, Indonesia, Brazil, Pakistan, Nigeria, Bangladesh, Russia and Japan (in that order).

Boom and bust is an emergent property of social organization at civilization scale. Some would blame capitalism, but in our view that is mere scapegoating. True, by lending with interest one places the onus on the borrower to produce enough surplus to pay the interest, and in many ways that can resemble a game of musical chairs, but the principle of being able to borrow to establish and then repay from the new production of that establishment is not unsound. That is how many life forms regenerate themselves — “lending” seed that they produce in overabundance in order to endow next season’s replacement for themselves.

We have been in an expansion phase of human society since the end of the last glacial maximum. Since the discovery of first coal and then oil and natural gas, and the means to industrialize their extraction and use, we have been expanding at some multiple of our natural fecundity rate because fossil fuels have allowed a post-natural expansion of food supply and global trade.

If we want a way forward that can seriously address the real challenges, it would have to begin with deescalation. Beyond getting population under control, we need to find an economic model involving satisfaction of needs, including productive and internally-rewarding employment, without continuing to feast on the seed corn as if that did not matter. To gain adherents, any proposed change has to offer a lifestyle that is no less attractive than the old ways, although we also have within us hero genes that can be stimulated to get us to make sacrifices and feel good about it.

Since the 1980s, that expansion has been on steroids. Each year we add another 30 million humans worldwide. We double our population every 30 to 40 years. If we were to continue with business as usual until, say, 2050, we should expect to have 14 billion people sharing Earth. Of course we can’t do that, for several good reasons, not the least being the food supply. Right now food security for most depends on securing 2000 calories of oil to produce 1 calorie of grain. Each year fewer and fewer of us will be able to do that and will have to find other means, or perish.

In the early stages of our expansion we borrowed from our savings to start productive enterprises that produced more than enough to repay the loans and expand further. That is self-liquidating debt as we climb a ladder of constant growth. In the later stages, marked by contraction, with declining resources and unfulfilled demand, we have been substituting sophisticated debt instruments — fiat currencies, fractional reserve banking, adjustable rate mortgages, credit default swaps, the list goes on….

Those imaginary assets are not backed by anything but the expectation of speculative profits, but as long as everyone agrees to overlook the emperor having no clothes, the parade goes on. There is no actual income being produced to repay the debts, just proxy poker chips.

In any speculative bubble, we lose the connection between price and value. It is short sighted — based on assuming that speculative value will always trump real value. This sets the stage for the inevitable bust, as we saw in the debasement of metals in coins in Ancient Rome, Tulip Mania in Holland in the 1630s, and the Stock Market Crash of 1929. As Nicole Foss explains (at 32:17):

They think that the supply of greater fools will be limitless. Unfortunately it isn’t. Eventually you’ve found the greatest possible fool and no one will pay more than this person did. At that point everything just dries up and the price just absolutely collapses.

The simple living movement in its various names and forms has been trying to grapple with that idea for a long time. The computer design aesthetic of Steve Jobs was a form of simplification — merging music players and hand calculators with mobile phones in ways that kept the device user friendly and ergonomic. You didn’t have to carry both a boom box and a brick phone. 

Another strain of voluntary simplicity is individuals, in the style of Tolstoy and Gandhi, who are satisfied with what they have rather than want.  These experiments — extending back to Epicurus and up through Thoreau, to Daniel Suelo and Freeskilling Mark Boyle who renounce money entirely — shows that happiness comes from carefully considered choices, not by acquisition of stuff or brute force.

We are not condemned to Consumerist Armageddon. There are alternatives. Consider the 100 Thing Challenge — to whittle down personal possessions to one hundred items. Consider co-housing, tiny houses or the natural building movement. Living more simply in communities of like minded people produces a much higher quality of life than most people have now in both the underdeveloping and the overdeveloped world.

“How would you like to live very, very comfortably working only one day a week for money? Most people are trapped into a worried, 30-year period of trying to pay off the mortgage, fearful that if they lose their job they’ll lose their house, and having to work too long hours, causing stress, depression and anxiety — our biggest health problems now — in a fiendish rat race….

“I know people who live in alternative communities who live very nicely in ways I envy with one or two days work a week. Firstly they cut their expenses by not having a big house, not having a lavish wardrobe, and having alternative sources of leisure… and secondly and probably more importantly, living in a community that is highly supportive, with lots of musicians and weekend concerts and stuff, and sources of local food and shelter — build your own little mud brick house with the help of the community. And so you are living in an economy that doesn’t require much money … a non-monetary economy.”

Given these kinds of choices, we have to ask, why still seek the greater fool?

This post is part of an ongoing series we’re calling The Power Zone Manifesto. It is a series of building blocks that describe our existential climate dilemma and the only possible way to escape it. We post to The Great Change and Medium on Sunday mornings and 24 to 48 hours earlier for the benefit of donors to our Patreon page. Albert Bates offers ecovillage apprenticeships, including Cool Lab trainings, this year at The Farm in Tennessee April through July. He is teaching a full permaculture course in Ireland in August and will be on speaking tours in Brazil, Germany and India in late 2017.


Ian Graham said...

Michael T Klare's recent essay positing that the 20 million people being starved to death in Nigeria, Somalia and Southern Sudan, not including Syria and Yemen, starved by global overconsumption and indifference among the wealthy, is just a foretaste of what will come to pass as Albert's scenario unfolds. See "Climate Change as Genocide" at Tomsdispatch and

Ian Graham said...

yes we ARE condemned to a consumerist armageddon, we being the overdeveloped countries and the privileged everywhere: consumerism is being ruled obsolete by Nature (who always bats last). Ted Trainer and Co in Australia have a long documentary out on Simplicity, and if you watch it, I wager 1 in a 100 will willingly go along with the prospect of living that way. Except maybe Haitians and others who are already living below that level of meeting basic needs.

The future does not look bright.

Joe said...

food security for most depends on securing 2000 calories of oil to produce 1 calorie of grain

I have seen ratios in the 10:1 or 15:1 range, but never 2000:1. One dollar buys about 25,000 kcal of petroleum and about 3,000 kcal of rice, which is a rough indication of relative value, though not necessarily the amount of oil used in rice production, distribution and processing.

To your larger point, I agree with Ian Graham that it will be difficult to get many people to go the Thoreau route. The fact that Tolstoy, Gandhi and Thoreau are famous for their simple lives shows how rare that choice is. They are the exceptions that prove the materialistic rule.

Albert Bates said...

Thank you Ian for that push to read Michael Klare's excellent essay. I have always found small flaws in Klare's read of current events (in this case that Russia hacked the US election and presumedly the French one as well, or that Assad was responsible for the gassing of his own citizens that drew the Trump missile attack) but in general he hits the nail on the head (e.g.: that missile attacks against Ukraine or Syria have bigger blowback against the US than their actual damage to our perceived enemies).

You will note that Ted Trainer's YouTube quote as well as the Nicole Foss quote cited here were both outtakes from the Simplicity documentary, which I also recommend. I am someone who lives in one of those idyllic utopian experiments where it would be quite easy to forget about working for money altogether were it not that, as Thoreau said, “What is the use of a house if you haven't got a tolerable planet to put it on?” (Familiar Letters, 1865).

As for Joe's point about calories, yes I also found that 2000:1 number startling because 10:1 is conventional wisdom. The number comes from Robert Newman's History of Oil (2006). At the same time, it rang truer to me than 10:1 because I think one needs to factor in other externalities, like the military cost of resource wars, the untallied costs to suppress rebellions of victim populations of Venezuela, Nigeria, and the Middle East, and the hidden calories of producing revenues adequate to provide tax subsidies to agriculture, the very long defense procurement pipeline (extending into space) and fossil fuel production (propping up an otherwise bankrupt industry). Ignoring the dark economy, those known subsidies can be calculated in trillions of dollars and some Btu coefficient. Calorically Newman's 2000 seems closer to the mark to me than Heinberg's 10.

I agree lifestyle change is an uphill slog. Carrots could succeed where sticks fail, although plenty more sticks are coming. This is the subject of future installments as I wrap up this series.

Danny C said...

Those of us who were around during the Vietnam era and paid attention to the subtleties of the fallout both during and after the war saw and understood there was a larger, more sinister game being played out and coupled with the oil crisis' of the 70's saw that future conflicts would require a more confusing, convoluted narrative to keep people believing that we're after the greater good. Hence, we have this hyper nationalism which really promotes a belief that "Global technoculture" can and will solve all our current problems.

Joe said...

The average American uses 2.6 gallons of oil per day (20 million barrels X 42 / 320 million people). Each gallon of oil contains about 33,000 kcal of energy, so people use about 87,000 kcal of oil every day. If the average American consumes 2,000 kcal of food per day, the maximum oil calorie to food calorie ratio would be 42:1, assuming all oil is used to get food into the average American's mouth.

I saw the 2000:1 ratio in the transcript of Robert Newman's History of Oil, so I see where you got it. For this issue at least, it appears that Newman is not a very reliable source of information.

Albert Bates said...

Thanks Joe. I see 42:1 as a very robust number, being derived from 20 mmb/d (one-fifth of the world's daily crude production) divided by 2000 kcal/d. Unfortunately the 2000 number is a world figure. In the USA the current average is 3770 (unless its Christmas Day, when the number jumps to 7000). So by this measure we would get 23:1.

This still assumes, first, that all of that went to food, which we know is wrong, and second that all of the USA's expropriation of world oil production passes through the USA, which is also not the case.

The calculation also narrows the examination to crude oil, excluding other fossil energy such as coal and gas. Natural gas in particular is very important to agriculture, being the source for nitrogen in artificial fertilizer.

In fact, lets go ahead and leave coal out of it even though it contributes to the electric supply for farms, processing plants, warehouses, grocery stores and home kitchens. Just looking at natural gas blows the calorie ratio off the chart.

The USA consumes 27 trillion cubic feet of LNG per year, containing 6.8 million trillion (6.8E+19) kcal. Clearly not all of that goes to food but per capita that is 2.125E+11 kcal. Divided by food kcal (3770) we get 56 million to 1. Check my math, please.

Somewhere between your number and mine lies Robert Newman's.

Danny C said...

I wish I understood the math better to get that intricate of an understanding of all this. But sometimes my knuckles scrape the ground and I go with what I understand as it pertains to daily life. During the oil crisis, as some of us may remember, the speed limit in the US was lowered to 55 MPH. At that time, I was listening to a radio station that started given statistics of how many gallons of gas was saved that day, week, etc. It became real obvious that the numbers were huge and this gave someone up above enough pause that this practice stopped. Ah yes I thought. Conservation in this instance was working which flew in the face of the budding of the coming new consumerism.Those numbers worked for me.

Joe said...

I will do it on a daily basis:

US natural gas consumption is 76 billion cu ft per day which has an energy value of 252 kcal per cu ft, for a total of 19.15 trillion kcal. Divided by the population of the US (320 million) gives a per capita gas energy use of 59,850 kcal per day. Using your value of 3,770 kcal per day from food consumed by the average US resident, the ratio is 59,850/3,770 = 15.87 or a ratio of about 16:1.

But just as not all oil is consumed in producing, transporting and processing food, most gas is used either for space heating, electricity production or process heating (cement production for example). The production of nitrogen based fertilizers consumed in the US used energy equal to only 0.5% of total US power production (

I still claim that Newman's ratio is off by a couple orders of magnitude. But it really doesn't matter. Any ratio greater than 1:1 can only be sustained in the long run by renewable sources of energy. We have built our entire civilization on non-renewable sources that are depleting rapidly, a process that will not end well either for us humans or the environment we live in.

Don Stewart said...

Joe and Albert
If we look at the oil and food situation from a thermodynamic standpoint, we need to account for the energy used to produce the oil which is then worth 87,000 kcalories every day. While opinions vary, the thermodynamic model of BW Hill estimates that it now takes almost as much energy to produce energy as we get from the energy. The 'extended EROEI' figures that Professor Charles Hall uses is about 2 to 1, which would imply that it takes around 42,000 kcal of energy to produce the 87,000 kcal's.

It makes all the ratios even more ridiculous.

Don Stewart

Don Stewart said...

Decline of Oil???

This scholarly article describes some mathematical modeling of oil production and price. Oil, of course, is the foundation for doing work in our economy, such as moving a weight from Point A to Point B. Ships, planes, trains, trucks and automobiles are the typical vehicles we think of, but machines such as Caterpillar tractors are used to move dirt and rock.

The concluding remarks:
'Our analysis and empirical evidence are consistent with oil being a fundamental quantity in economic production. Our analysis indicates that once the contraction period for oil extraction begins, price dynamics will accelerate the decline in extraction rates: extraction rates decline because of a decrease in profitability of the extraction business.

Our empirical model for prices can be used by those studying future extraction rates whose models currently do not consider price parameters.

We believe that the contraction period in oil extraction has begun and that policy makers should be making contingency plans. Strategies for economies facing energy constraints are reviewed in Schindler and Schindler (0000).'

The study is a counterweight to both the cornucopian viewpoint which is currently ascendent, and the 'the price may go up but there will always be oil' viewpoint. If you believe the study, then shifting to a lifestyle which doesn't depend on moving heavy weights around needs some serious thought. And if you believe Thomas Goreau, declines in oil beginning right now are too little and too late to prevent catastrophic climate effects, so something like soil sequestration of carbon using smart farming methods becomes critical.

Don Stewart

Doomstead Diner said...

When you figure any of these calculations, you have to figure how fast the population will decrease, because that impacts how mcuh fossil fuels are necessary and how much CO2 goes up in the atmosphere. So for instance, if half the population dies by say 2030, all the calculations on how much oil will be burned thereafter are completely wrong.

This is a Population vs Energy question, not strictly an energy supply question. The fewer people there are, the more sustainable the system becomes. So a better question to ask might be, "How many people do we need to eliminate in order to have a sustainable system on Earth?".





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