With the US debt mountain looking increasingly unresolvable and European state debts at levels sufficient to give the markets recurrent panic attacks, the stage is nicely set for authors of collapse scenarios. Their Armageddon visions might not come to pass, but then again, given the way the marbles are rolling around, they just might. These visions are scary stuff, but usually spiced up with some decent gallows humour along the way. I will be talking about two such visions in a series of blogs. The first is by the Russian/American author, Dmitry Orlov, Reinventing Collapse: The Soviet Experience and American Prospects, which looks at the “coming” (in Orlov’s vision) collapse of America, which Orlov sees as curiously paralleling the demise of the USSR. The second is John Michael Greer’s The Wealth of Nature: Economics as if Survival Mattered, which again sees current Western economies and lifestyles as unsustainable and headed for inevitable collapse.
Parts One and Two of this blog series focus on Orlov’s account, Parts Three and Four deal with Greer. Olov was born in Leningrad and emigrated to the US at the age of 12. He has revisited Russia periodically since, including a lengthy stay that enabled him to observe the transition from the old Soviet regime to the modern kleptocracy that Russia is today. He has a very sharp eye for the curiously parallel idiocies of both his former homeland and his present homeland.
Shouting from the crowd
First, it must be said that this is not an economist's view of the world. Orlov calls himself “an eye witness” to intriguing historical processes which, on his account, will in all likelihood transform the world as we know it. And he is a very direct witness. If he were to find himself in the position of a member of the court of that fabled emperor who was conned by his tailor into appearing in his birthday suit, then you would expect that, while all around Orlov fell silent in shock and embarrassment, locked into pretending that the emperor’s new suit was real, Orlov would be the one to yell: “That idiot’s butt naked!” It’s refreshing stuff, even if it makes you want to stock up on canned goods and take classes in growing survival foods on your high-rise balcony. (Actually, in what I think of as the second part of his book, which is all about surviving the collapse, Orlov points out that staying put in your hi-rise is contra-indicated, as the military like to say. The place will turn into a garbage-infested, heatless stew. Think urban Mad Max.)
Orlov’s book was written just before the global financial crash of 2008 and was first published in 2011. It is about the collapse of the world’s two super powers, a contentious starting point if ever there was one since, at least at the time of writing, the US was and is still very much extant, whereas the USSR, undeniably, is not. But that is Orlov’s point. His book extrapolates from the Soviet experience to what he sees as the inevitable parallel collapse of the USSR’s old rival.
What, then, are the factors that cause a superpower to collapse? Here’s Orlov on the theme:
“Let us imagine that collapsing a modern military industrial superpower is like making soup: chop up some ingredients, apply heat and stir. The ingredients I like to put in my superpower collapse soup are: a severe and chronic shortfall in the production of crude oil (that magic addictive elixir of industrial economies), a severe and worsening foreign trade deficit, a runaway military budget and ballooning foreign debt. The heat and agitation can be provided most efficaciously by a humiliating military defeat and widespread fear of a looming catastrophe.”
There are one or two glaring omissions in Orlov’s list of ingredients. Most commentators on the US “problem” point to social benefit promises of unsustainable proportions, which also have the characteristic of being un-reducible, given that the US is a democracy with a large and growing army of grey voters. The amounts already earmarked in future years for Medicare and social benefits generally are many trillions of dollars more than the US “runaway military budget”. Orlov does get around to tackling Medicare and the US “medicine for profit” regime, and castigates that regime soundly, but he doesn’t focus on the fact that unsustainable social benefit spending commitments will inevitably be a potent generator of unsustainable debt. In part, one suspects, this is because his attention is on sketching parallels between the old Soviet collapse and the imminent (to him) collapse of America. The problem of unsustainable social benefit spending is essentially one of the corollaries of the democratic process in both Europe and the US, and is not a feature of the socialist system. In a socialist system, since the bosses have ultimate power they can just pretend there’s a decent safety net. In Western democracies, Greece being an obvious example, you can get elected by promising all kinds of social benefits, but, once elected, trimming back impossible state pledges while retaining your job as a politician is damn near impossible.
That’s the sharpest point of the issue and yet this dimension is not exactly prominent in Orlov’s vision of the coming collapse of America. Instead, one of his driving arguments is Peak Oil theory. Virtually discredited and ignored a few years ago, when the oil industry and the International Energy Agency (IEA) managed to convince the media and industry that global peak production was still decades off, Peak Oil is now very much back the agenda, despite tar sands and shale gas. The debate on Peak Oil, however, requires at least a couple of blogs in its own right so we’ll pass lightly by here, simply observing, as Orlov does, that virtually everything in US society, from the production of food, to the development of high technology and the sustaining of industry runs off fossil fuel. Since fossil fuel is running out, US society is headed for a cliff edge is the nub of the case.
Driving away from the past
As Orlov notes, energy demand in the US continues to rise far above what the continent can supply, making the spontaneous recovery evidenced by Russia after the collapse of the Soviet Union, on the back of substantial reserves of oil and gas, very unlikely. At bottom, Orlov’s key point is that the thing to grasp about collapses is that old ways of making a living no longer work. After the trauma of the recovery phase, which in Russia’s case took at least ten years, some found themselves with a similar level of lifestyle, many did not. The same will happen in the US, so people need to prepare themselves. Here’s how:
“... of each important thing in your life, you (need) to answer two very important questions: 'Is it collapse-proof?' and, if it is not, 'What can I do to make it collapse-proof?'. If for a given thing, the answers turn out to be 'No' and 'Nothing,' then the very important follow-up question should be: 'How can I live without it?'"
In this, as we shall see, Orlov and Greer share common ground. A fundamental ingredient of both their collapse scenarios is the end of the abundance of cheap energy and the abrupt disappearance of lifestyles predicated upon cheap energy. Part Two (published tomorrow) looks at Orlov’s critique of education, jails and medical practice in the US.
Further reading on the global economy and financial collapse:
- India and Brazil—Still Winners as the Global Economy Collapses? by Maya Bhandari
- Understanding and Forecasting the Credit Cycle—Why the Mainstream Paradigm in Economics and Finance Collapsed by Richard A. Werner
- Rebalancing the global economy – nice if you can do it… a blog post by Anthony Harrington
Tags: Armageddon , collapse scenarios , crude oil , Dmitry Orlov , eurozone , fossil fuels , Greece , Greek debt , grey vote , grey voters , IEA , International Energy Agency , John Michael Greer , Medicare , Peak Oil , prison population , Reinventing Collapse: The Soviet Experience and American Prospects , social benefits , sovereign debt crisis , Soviet Union , sustainability , The Wealth of Nature: Economics as if Survival Mattered , US debt , US deficit , USSR