[R-G] [BillTottenWeblog] Survival Isn't Cost-Effective

[Bill Totten]

by John Michael Greer

The Archdruid Report (June 17 2009)

Druid perspectives on nature, culture, and the future of industrial society


I trust my readers won't be unduly distressed by an extended safari
through the tangled jungles of the "dismal science" of economics. As
suggested in several recent Archdruid Report posts, economic factors have
played a massive role in putting the industrial world in its current
predicament, and an even more substantial role in blocking any
constructive attempt to get out of the corner into which we've painted
ourselves. There's an all too real sense in which, if modern industrial
civilization perishes, it will be because the steps necessary for its
survival weren't cost-effective enough.

Mind you, this can be interpreted in at least two different ways, and both
of them are relevant to the crisis of the industrial world. Like any other
science, economics is a set of hypothetical models that reflect, with more
or less exactness, the observed behavior of the world. Too often the
models get confused with the reality, and understanding suffers.

In a different context, that of the physics of vacuum tubes, Philip
Partner commented in his classic textbook Electronics (1950): "The theory
speaks of ions, atoms, and electrons, and of collisions between them; but
these are figments of the mind, props for its understanding [...] The
electron, like the atom, is a concept; it is part of a mental shorthand
which we have invented to summarize our knowledge of Nature. So when we
say, for example, that an electron collides with an atom, we should bear
in mind that we have never seen it happen. The use of the present
indicative does not turn hypothesis into fact" (page 569). Unfortunately
this level of clarity is hard to achieve and harder to maintain.

This has to be kept in mind when trying to make sense of the economic
dimension of industrial civilization's decline and fall, because both
sides of the equation - the models and the reality - throw up challenges
in the way of constructive action, and so do economic policies that are
based on the models, and thus function at a second remove from the
reality. It's true, and will be a central theme of future posts, that
current economic theory has lost touch with reality in critical ways, and
a revision of some of the basic ideas of modern economics is essential if
we're to make sense of our predicament and do anything constructive in
response to it. It's equally true that government policies based on
today's misguided economic notions have become massive liabilities to
societies struggling to deal with today's crisis, and even this late in
the game, changes in these policies might still do a great deal of good.
Still, it's also true that economic factors in the real world, independent
of theory, impose hard limits on what can be done.

The classic example has to be the plethora of projects for "lifeboat
communities" floated in recent years. The basic idea seems plausible
enough at first glance: to preserve lives and knowledge through the
decline and fall of the industrial age, establish a network of
self-sufficient communities in isolated rural areas, equipped with the
tools and technology they will need to maintain a tolerable standard of
living in difficult times. The trouble comes, as it usually does, when
it's time to tot up the bill. The average lifeboat community project I've
seen would cost well over $10 million to establish - many would cost a
great deal more - and I have yet to see such a project that provides any
means for its inhabitants to cover those costs and pay their bills in the
years before industrial civilization goes away.

The unstated assumption seems to be that as soon as the intrepid residents
of such a community move into their solar-heated cohousing units, start up
the wind turbines and the methane generators, and get to work harvesting
tree crops from the permacultured landscaping all around, industrial
civilization will disappear in a puff of smoke and take its taxes, debts,
and miscellaneous expenses with it. Pleasant though the prospect might
seem, I am sorry to say that this isn't going to happen. The residents of
any lifeboat community founded today will not only have to come up somehow
with the very substantial sums needed to buy the land, build the cohousing
units, wind turbines and so on, and plant all that permaculture
landscaping; they will also have to earn a living during the long
transitional process that leads from the world we inhabit today to the
conditions that will pertain at the bottom of the curve of decline. Some
awareness of these difficulties may go a long way to explain why, of the
great number of lifeboat communities that have been proposed over the last
decade or two, the number that have actually been built can be counted on
the fingers of one foot.

Economic forces constrain the future in more global ways as well. Not many
people seem to have noticed, for instance, that the grim scenario traced
out in the seminal 1973 study The Limits to Growth - still the most
plausible map of the future ahead of us, and thus inevitably the most
bitterly vilified - is driven by simple economics. As resources deplete,
that study pointed out, the cost of keeping resources flowing into to the
economy will increase in real terms, as more labor and capital have to be
invested to extract a given amount of each resource; as pollution levels
rise, in turn, the costs of mitigating their impacts on public health,
agricultural productivity, and other core economic factors go up in the
same way, and for the same reasons. Those costs have to be paid out of
current economic output, leaving less and less for other uses, until
economic output itself begins to fall and the industrial world begins its
terminal decline.

Now it's easy to insist, if you ignore the economic dimension, that a
society facing this sort of crisis can save itself by launching a massive
program to build nuclear reactors, solar thermal power plants, algal
biodiesel, or what have you, and of course this sort of claim has seen
endless rehashing over the last couple of decades. The problem is that
massive programs of this sort pile additional demands on an already
faltering economy. Any such program has to be paid for, after all, and by
this I don't mean that money has to be found for it; in today's mostly
hallucinatory economic climate, conjuring money out of thin air is easy
enough. No, it has to be paid out of current economic output, which is
much less flexible, and already has to cover the rising costs of resource
depletion and pollution. This is the trap hidden in the limits to growth;
once those limits begin to bite, the spare economic capacity that would be
needed to build one's way out of trouble no longer exists.

Thus there are limits hardwired into our situation by the inflexible
realities that surround us, and we have already strayed far enough over
those limits that the payback will inevitably be harsh. At the same time,
other forces pushing us in the same direction are a product of economic
misunderstandings, and in the way these misunderstandings are reflected in
public policy. Those could conceivably be changed in time to matter.

Resource depletion and pollution, the driving forces behind the Limits to
Growth scenario, are particularly vexed issues in today's economic
thought. As we've seen, both of these factors impose costs, potentially
drastic ones, on the economy. Under current economic arrangements,
however, those costs are not charged to the people who benefit from the
activities in question. The owner of an oil well gets the economic
benefits of pumping oil out of the ground, but does not have to pay for
the impact today's extraction will have on tomorrow's economy. (For many
years, in fact, government policies in most of the world's industrial
nations have actually rewarded oil well owners for accelerating the
depletion of this nonrenewable resource and imposing massive costs on the
future.) In the same way, the owner of a smokestack that dumps pollution
into the atmosphere gets the economic benefits of whatever activity
produces the pollution, but does not have to pay for the costs incurred as
a result of the pollution. This asymmetry has at least two results. First
and most obviously, neither the oil well owner nor the smokestack owner
has any incentive to decrease the negative impacts of his or her
activities. Still, the second and in some ways more important result is
that the long-term economic burdens of depletion and pollution are not
included in measures of the relative economic costs and benefits of the
well or the smokestack.

The result is a massive distortion in our understanding of the realities
that shape our lives. It's generally not considered a viable business plan
- outside of the financial industry, that is - to make large profits in
the short term by running up debts so large the business will have to
declare bankruptcy in the not too distant future. Yet this is exactly what
an economic system that ignores the cumulative costs of resource depletion
and pollution mitigation is doing, and on an even larger scale. The future
costs of extracting resources from depleted reserves and mitigating the
impacts of a polluted environment have the same effect as the future costs
of debt service on excessive borrowing; they buy temporary prosperity in
the near future at the cost of impoverishment or collapse further down the
road.

Garret Hardin's famous essay The Tragedy of the Commons (1968) addressed
this issue some years back. Hardin showed that in a situation where the
benefits from exploiting a resource went to individuals, but the costs
were spread throughout the community, individuals intent on maximizing
their own individual benefit would overexploit the resource and suffer
drastic losses in the longer run. His logic was impeccable, and there are
plenty of real-world examples of resource exhaustion driven by this very
process, but it has been pointed out by his critics with equal relevance
that resources held in common have in fact been managed sustainably in
countless cases around the world and throughout history. The question that
has to be asked is where the difference comes in.

This is where the divide pointed up earlier in this essay - the gap
between economic realities and the models our society uses to understand
them and predict their effects - comes into play. Hardin was quite correct
that when individuals got the benefits of resource exploitation without
paying their fair share of the costs to the community, exhaustion of the
resource follows. Those societies that have managed resources in common
successfully, in turn, found ways to make those who gained the benefits of
resource exploitation pay a commensurate share of the costs. The
collective understanding of economics in these societies, in other words,
and the social policies that shaped economic behavior, took the tragedy of
the commons into account and adjusted the customs and laws governing
economic exchanges accordingly.

As we make the transition from what I've called the abundance economies of
the first half of the industrial age to the scarcity industrialism of the
near and middle future, it's entirely possible that such adjustments could
be put into place in our own societies. The accumulated burdens of past
mistakes weigh heavily enough on the future that changes of this sort
won't stave off a great deal of trouble and suffering, but it's entirely
possible that a shift to saner policies backed by more realistic economic
ideas could cushion the descent into the deindustrial age, and make it
easier to allocate resources to projects that will actually do some good,
instead of pursuing policies which - like nearly all the economic policies
currently in place in the industrial world - will simply make matters
worse. 

_____

John Michael Greer has been active in the alternative spirituality
movement for more than 25 years, and is the author of a dozen books,
including The Druidry Handbook (2006) and The Long Descent (2008). He
lives in Ashland, Oregon.

http://thearchdruidreport.blogspot.com/2009/06/survival-isnt-cost-effective.html


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