Diminishing Returns, Energy Return on Energy Invested, and Collapse

What do diminishing returns, energy return on energy invested (EROI or EROEI), and collapse have to do with each other? Let me start by explaining the connection between Diminishing Returns and Collapse.

Diminishing Returns and Collapse

We know that historically, many economies that have collapsed were ones that have hit “diminishing returns” with respect to human labor–that is, new workers added less production than existing workers were producing (on average). For example, in an agricultural economy, available land might already have as many farmers as the land can optimally use. Adding more farmers might add a little more production–perhaps the new workers would keep weeds down a bit better. But the amount of additional food the new workers would produce would be less than what earlier workers were producing, on average. If new workers were paid on the basis of their additional food production, they would find that their wages dropped relative to those of the original farmers.

Lack of good paying jobs for everyone leads to a need for workarounds of various kinds. For example, swamp land might be drained to add more farmland, or irrigation ditches might be added to increase the amount produced per acre. Or the government might hire a larger army might to conquer more territory. Joseph Tainter (1990) talks about this need for workarounds as a need for greater “complexity.” In many cases, greater complexity translates to a need for more government services to handle the problems at hand.

Turchin and Nefedof (2009) in Secular Cycles took Tainter’s analysis a step further,  analyzing financial data relating to historical collapses of eight agricultural societies in operation between the years 30 B.C. E. and 1922 C. E.. Figure 1 shows my summary of the pattern they describe.

Figure 1. Shape of typical Secular Cycle, based on work of Peter Turkin and Sergey Nefedov.

Figure 1. Shape of typical Secular Cycle, based on work of Peter Turkin and Sergey Nefedov.

Typically, a civilization developed a new resource which increased food availability, such as clearing a large plot of land of trees so that crops could be planted, or irrigating an  existing plot of land. The economy tended to expand for well over 100 years, as the population grew in size to match the potential output of the new resource. Wages were relatively high.

Eventually, the civilization hit a period of stagflation, typically lasting 50 or 60 years, as the population hit the carrying capacity of the land, and as additional workers did not add proportionately more output. When this happened, the wages of common workers tended to stagnate or decrease, resulting in increased wage disparity. The price of food tended to spike. To counter these problems, the amount of government services rose, as did the amount of debt.

Ultimately, what brought the civilizations down was the inability of governments to collect enough taxes for expanded government services from the increasingly impoverished citizens. Other factors played a role as well–more resource wars, leading to more deaths; impoverished common workers not being able to afford an adequate diet, so plagues were more able to spread; overthrown or collapsing governments; and debt defaults. Populations tended to die off.  Such collapses took place over a long period, typically 20 to 50 years.

For those who are familiar with economic theory, the shape of the curve in Figure 1 is very similar to the production function mentioned in Two Views of our Current Economic and Energy Crisis. In fact, the three main phases are the same as well. The issue in both cases is diminishing returns ultimately leading to collapse.

There seems to be a parallel to the current world situation. The energy resource that we learned to develop this time is fossil fuels, starting with coal about 1800. World population was able to expand greatly because of additional food production permitted by fossil fuels and because of improvements in hygiene. A period of stagflation began in the 1970s, when we first encountered problems with US oil production and spiking oil prices.  Now, the question is whether we are approaching the Crisis Stage as described by Turchin and Nefedov.

Why Might an Economy Collapse?

Let’s think about how an economy operates. It is built up from many parts, over time. It includes one or more governments, together with the laws and regulations they pass and together with their financial systems. It includes businesses and consumers. It includes built infrastructure, such as roads and electricity transmission lines. It even includes traditions and customs, such as whether savings are held in gold jewelry or in banks, and whether farms are inherited by the oldest son. As each new business is formed, the owners make decisions based on the business environment at that time, including competing businesses, supporting businesses, and the number of customers available. Customers also make decisions on which product to buy, based on the choices available and the prices of these products.

Over time, the economy gradually changes. Some parts of the economy gradually wither and are replaced by new parts of the system. For example, as the economy moved from using horses to cars for transportation, the number of buggy whip manufacturers decreased, as did the number of businesses raising horses for use as draft animals. Customs and laws gradually changed, to reflect the availability of automobiles rather than horses for transportation. In some cases, governments changed over time, as increased wealth allowed more generous social programs and wider alliances, such as the European Union and the World Trade Organization.

In the academic field of systems science, an economy can be described as a complex adaptive system. Other examples of complex adaptive systems include ecosystems, the biosphere, and all living organisms, including humans. Because of the way the economy is knit together, changes in one part of the system tend to affect other parts of the system. Also, because of the way the system is knit together, the system has certain requirements–requirements which are gradually changing over time–to keep the economy operating. If these requirements are not met, the economy may collapse, just as the eight economies studied by Turchin and Nefedov collapsed. In many ways such a collapse is analogous to an animal dying, or climate changing, when conditions are not right for the complex adaptive systems that they are part of.

Clearly one of the requirements that an economy has, is that it needs to be wealthy enough to afford the government services that it has agreed to. Scaling back those government services is one option, but when these services are really needed because citizens are getting poorer and finding it harder to find a good-paying job, this is hard to do. The other option, unfortunately, seems to be collapse.

The wealth of an economy is very much tied to the availability of cheap energy. A huge uplift is added to an economy when the (value added to society) by an energy resource such as oil greatly exceeds its (cost of production). Over time, the cost of production tends to rise, something measured by declining EROI. The uplift added by the difference between (value added to society) and (cost of production) is gradually lost. Some would hypothesize that the falling gap between (value added to society) and the (cost of production) can be compensated for by technology changes and improvements in energy efficiency, but this has not been proven.

Our Economy is Already in a Precarious Position

As I indicated in my most recent post, if a person computes average wages by dividing total US wages by total US population (not just those employed), the average wage has flattened in recent years as oil prices rose. Median wages (not shown on Figure 2) have actually fallen. This is the same phenomenon observed in the 1970s, when oil prices rose. This is precisely the phenomenon that is expected when there are diminishing returns to human labor, as described above.

Figure 2. Average US wages compared to oil price, both in 2012$. US Wages are from Bureau of Labor Statistics Table 2.1, adjusted to 2012 using CPI-Urban inflation. Oil prices are Brent equivalent in 2012$, from BP’s 2013 Statistical Review of World Energy.

Figure 2. Average US wages compared to oil price, both in 2012$. US Wages are from Bureau of Labor Statistics Table 2.1, adjusted to 2012 using CPI-Urban inflation. Oil prices are Brent equivalent in 2012$, from BP’s 2013 Statistical Review of World Energy.

The reason for the flattening wages is too complicated to describe fully in this post, so I will only mention a couple of points. When consumers are forced to spend more for oil for commuting and food, they have less to spend on discretionary spending. The result is layoffs in discretionary sectors, leading to lower wage growth. Also, goods produced with high-priced oil are less competitive in the world market, if sellers try to recoup their higher costs of production. As a result, fewer of the products are sold, leading to layoffs and thus lower average wages for the economy.

In the last section, I mentioned that the economy is a complex adaptive system. Because of this, the economy acts as if there are hidden laws underlying the system, parallel to the laws of thermodynamics underlying physical systems. If oil supplies are excessively high-priced, very few new jobs are formed, and those that are created don’t pay very well. The economy doesn’t grow much, but it does stay in balance with the high-priced oil that is available.

The Government’s Role in Fixing Low Wages and Slow Economic Growth

The government ends up being the part of the economy most affected by slow economic growth and low job formation. This happens because tax revenue is reduced at the same time that government programs to help the poor and unemployed need to grow. The current approach to fixing the economy is (1) deficit spending and (2) interest rates that are kept artificially low, partly through Quantitative Easing.

The problem with Quantitative Easing is that it is a temporary “band-aid.” Once it is stopped, interest rates are likely to rise disproportionately. (See the recent Wall Street Journal editorial,” Janet Yellen’s Greatest Challenge.”) Once this happens, the economy is likely to fall into severe recession. This happens because higher interest rates lead to higher monthly payments for such diverse items as cars, homes, and factories, leading to a cutback in demand. Oil production may fall, because the cost of production will rise (because of higher interest rates), while the amount consumers have to spend on oil will fall–quite possibly reducing oil prices.  If interest rates rise, the amount the government will need to collect in taxes will also rise, because interest on government debt will also rise.

So we are already sitting on the edge, waiting for something to push the economy over. The Affordable Care Act (“Obamacare”) may provide a push in that direction. Inability to pass a federal budget could provide a push as well.  So could a European Union collapse. Debt defaults are another potential problem because debt defaults are likely to increase dramatically, as economic growth shrinks, as discussed in the next section.

Debt is Major Part of our Current Precarious Financial Situation

If an economy is growing, it is easy to add debt. People find it easy to find and keep jobs, so they can pay back debt. Businesses and governments find that their operations are growing, so borrowing from the future, even with interest, “makes sense.”

It is as also easy to add debt if the economy is not growing, but there is an ample supply of cheap oil that can be extracted if increasing debt can be used to ramp up demand. For example, after World War II, it was possible to ramp up demand for automobiles and trucks by allowing purchasers to use debt to finance their purchases. When this increased debt led to increased oil consumption, it greatly benefited the economy, because the (value to society) was much greater than the (cost of extraction). Governments were able to tax oil extraction heavily, and were also able to build new roads  and other infrastructure with the cheap oil. The combination of new cars, trucks, and roads helped enable economic growth. With the economic growth that was enabled, paying back debt with interest was relatively easy.

The situation we are facing now is different. High oil prices–even in the $100 barrel range–tend to push the economy toward contraction, making debt hard to pay back. (This happens because we are borrowing from the future, and the amount available to repay debt in the future will be less rather than more.) The problem can be temporarily covered up with deficit spending and Quantitative Easing, but is not a long-term solution. If interest rates rise, there is likely to be a large increase in debt defaults.

The Role of Energy Return on Energy Invested (EROI or EROEI)

EROI is the ratio of energy output over energy input, a measure that was developed by Professor Charles Hall. To calculate this ratio, one takes all of the identifiable energy inputs at the well-head (or where the energy product is produced) and converts them to a common basis. EROI is then the ratio of the gross energy output to total energy inputs. Hall and his associates have shown that EROI of oil extraction has decreased in recent years (for example, Murphy 2013), meaning that we are using increasing amounts of energy of various kinds to produce oil.

In previous sections, I have been discussing diminishing returns with respect to human labor. Oil and other energy products are forms of energy that we humans use to leverage our own human energy. So indirectly, diminishing returns with respect to the extraction of oil and other energy products, as measured by declining EROI, will be one portion of the diminishing returns with respect to human labor. In fact, declining EROI may be the single largest contributor to diminishing returns with respect to human labor. This will happen if, in fact, low EROI correlates with high oil price, and high oil prices leads to diminished wages (Figure 2). This may be the case, because David Murphy (2013) indicates that the relationship between EROI and the price of oil is in fact inverse, with oil prices rising rapidly at low EROI levels.

Contributors to Declining Return on Human Labor

Human labor is the most basic form of energy. We humans supplement our own energy with energy from many other sources. It is this combination of energy from many sources that is reflected in the productivity of humans. For example, we take it for granted that we will have tools made using fossil fuels and that we will have electricity to power computers. Before fossil fuels, humans supplemented their energy with energy from animals, burned biomass, wind, and flowing water.

What besides declining EROI of fossil fuels would lead to diminishing returns with respect to human labor? Clearly, the same problems that were problems years ago continue to be problems. For example, growing world population tends to lead to diminishing returns with respect to human labor, because resources such as arable land and fresh water are close to fixed. Greater world population means that on average, each gets person less. Oil production is not rising as rapidly as world population, so the quantity available per person tends to drop as world population rises.

Soil degradation is another issue, according to David Montgomery, in Dirt: The Erosion of Civilizations (2007). Declining quality of ores for metals is another issue. The ores that are cheapest to extract are extracted first. We later move on to poorer quality ores, and ores in less accessible locations. These require more oil and other fossil fuels for extraction, leaving less for other purposes.

There are other more-modern issues as well. Growing populations in areas where water is scarce lead to the need for desalination plants. These desalination plants use huge amounts of fossil fuel resources (oil in the case of Saudi Arabia) (Lee 2010), leaving less energy resources for other purposes.

Globalization is another issue. As the developing world uses more oil, less oil is available for the part of the world that historically has used more oil per capita. The countries with falling oil consumption tend to be the ones that recently have had the most problems with recession and job loss.

Figure 3. Oil consumption based on BP's 2013 Statistical Review of World Energy.

Figure 3. Oil consumption based on BP’s 2013 Statistical Review of World Energy.

An indirect part of diminishing returns with respect to human labor has to do with what proportion of the citizens is actually able to find full-time work in the paid labor force, and whether the jobs available are actually using their training and abilities. The Bureau of Labor Statistics calculates increases in output per hour of paid labor. I would argue that this is not a broad enough measure. We really need a measure of output per available full-time worker.

Obviously, there are potential offsets. We hear much about technology improvements and increased efficiency offsetting whatever other problems may occur. To me, the real test of whether there is diminishing returns with respect to human labor is how wages are trending, especially median wages. If these are not keeping up with inflation, there is a problem.

Conclusion

We don’t often think about the return on human labor, and how the return on human labor could reach diminishing returns. In fact, human labor is the most basic source of energy we have. Stagnating wages and higher unemployment of the type experienced recently by the United States, much of Europe, and Japan look distressingly like diminishing returns to human labor.

Stagnation of wages is happening despite attempts by governments to prop up the economy using deficit spending, artificially low interest rates, and Quantitative Easing. Without these interventions, the results would likely be even worse. If QE is removed, or if interest rates rise on their own, there seems to be a distinct possibility that these countries will be reaching the “crisis” phase as described by Turchin and Nefedov.

Historical experience suggests that a major danger of diminishing returns to human labor is that governments costs will rise so high, and wages will drop so low, that it will be impossible for the government to collect enough taxes from wage-earners. In fact, there seems to be evidence we are already headed in this direction. Figure 4 (below) shows that  the US ratio of government spending to wages has been rising since 1929. Government receipts have leveled off in recent years.

Figure 4. Based on Table 2.1 and Table 3.1 of Bureau of Economic Analysis data. Government spending includes Federal, State, and Local programs.

Figure 4. Based on Table 2.1 and Table 3.1 of Bureau of Economic Analysis data. Government spending includes Federal, State, and Local programs.

Adding more health care services under the Affordable Care Act will only increase this trend toward growing government expenditures.

One issue is how the financial benefit of human labor (together with the energy sources leveraging this labor) is split among businesses, governments, and humans. Businesses have the most control in this. If an endeavor is not profitable, they can discontinue it. If cheaper labor is available elsewhere, they can cut hold down wages in countries with higher wages. They also have the option of increased mechanization. Humans and governments both tend to get shortchanged. As the overall return of the system reaches limits, wages of humans tend to stagnate. Governments find themselves with greater and greater costs, and more and more difficulty collecting funds from increasingly impoverished citizens.

Most authors of academic articles assume that the challenge we are facing is one that can be solved over the next, say, fifty years. They also seem to believe that the fixes required are simply small adjustments to our current economy. This assumption seems optimistic, if we are really approaching financial collapse.

If we are in fact near the crisis stage described by Turchin and Nefedov, we will need to do something much closer to “start over”. We need to build a new economy that will work, rather than just “tweak” the current one. New (or radically changed) government and financial systems will likely be needed–ones that are much less expensive for taxpayers to fund. We are also likely to need to cut back on basic services, including maintaining paved roads and repairing long-distance electricity transmission lines.

Because of these changes, whole new ways of doing things will be needed. EROI analyses that have been to date represent analyses of how our current system operates. If major changes are needed, their indications may no longer be relevant. We cannot simply go backward, because methods that worked in the past, such as using draft horses and buggy whips, will no longer be available without a long development period. We are truly facing an unprecedented situation–one that is very hard to prepare for.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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491 Responses to Diminishing Returns, Energy Return on Energy Invested, and Collapse

  1. Don Stewart says:

    Dear All
    If you want to think about something you and a few friends can do to make public life better…as opposed to building a bunker for solitary survival, or persuading every country in the world to sign on to some Manifesto….I suggest that you read Bikeonomics by Elly Blue. Just published by microcosmpublishing.com.

    Blue gives bales of statistics about how additional investment in the automobile and infrastructure has a negative return, while very modest sums spent on bicycles and bicycle infrastructure have quite positive returns. She gives many examples of how adding bicycle infrastructure restores local business districts. But the largest payoff from bicycles is always the improved health of the population. Through both the reduction in pollution and the positive effects of exercise on health.

    Bicyclers spend less on each shopping trip, but spend more money overall because they make a lot more trips. They also have more money to spend as they shed cars. In sum, the losers are the oil companies, the big box stores, and the auto companies. The winners are everything that can be provided in and largely by a neighborhood.

    Another loser is grandiose plans for rail projects…in my opinion. Bicycle infrastructure tends to be cheap, sometimes constructed for single events, while any rail project is decades and billions of dollars.

    Don Stewart

    • edpell says:

      About rail, yes indeed. If we do rail it needs to be slow, local, energy efficient rail. Not bullet trains for the hunger game rich.

  2. edpell says:

    Scale of the economy. We are talking about what scale can still exist. Things like leading edge chip fabs require inputs from a global scale economy and will fail first. Things like subsistence farming which we view as having a scale of one person and a small plot of land. Of course when defense issues are added the scale may be a bit larger.

    I am interested in what level of tech and for how long can exist around various energy sources like the electric generators of Niagara Falls? Or various coal deposits, other hydroelectric sites including the massive Hydro Quebec, river based hydro smaller scale, river based mechanical mills, etc…

    Yes, in the long run it may be too expensive to refine metals but with a massive reduction in numbers and scale I think there will be metal for many hundreds of years for critical uses.

    I can see maintaining local 1840 technology levels for hundreds of years in small well defined areas that have some local energy resource. We will not have plastic for green houses if we use green houses they will need to be glassed in. I do not know much about glass making. Anybody know if 1840 level tech can make large amounts of glass for green houses? How does permaculture deal with colder climates?

    • Don Stewart says:

      Dear Ed

      One way Permaculture deals with colder climates is by using perennials. If you think about a corn crop, it is barely above ground at the height of photosynthetic potential in the third week of June. But perennials have been leafed out for a while and are ready to harvest the photosynthetic potential. Greenhouses were ostentatious luxury, once upon a time. Think of the orangerie at Versailles. Plastic covered hoophouses are for the masses trying to fit annual plants into a somewhat mismatched photosynthetic potential pattern.

      The second way Permaculture deals with colder climates is by storing the summer’s bounty in animals. Animals were traditionally slaughtered in cold weather, when spoilage was not as big an issue.

      The third way Permaculture deals with colder climates is by preserving the harvest. Many root crops can be efficiently stored in root cellars, which are quite simple to construct. Another way is by fermentation, which doesn’t require heat, per se. Fermentation does require some storage vessel, such as glass or pottery, which do require heat to make. Once made, they become capital assets passed down from parent to child.

      The fourth way Permaculture deals with colder climates is illustrated by the Chinese example of placing rocks on a slope and planting annual crops on the south side. The rocks absord sunlight during the day, and radiate the heat to the plants during the night. This raises the temperature several degrees, extending the growing season and permitting the plant to grow more hours during cool weather.

      There may be other things, but these should give you some ideas.

      Don Stewart

      • Don Stewart says:

        Ed
        One more thought on seasons. The Aztecs planted in constructed wetlands. A wetland moderates both the daytime temperature and the nighttime temperature. Joel Salatin in Virginia has a pretty large pond. In the pond he constructed a floating garden. To water the pond, he just has to dip some water up onto the garden. The water moderates the day and night temperatures. In short, he is accomplishing what the Aztecs accomplished, just with a little bit different design.

        Don Stewart

        • Don Stewart says:

          Ed
          Sorry for scattershot reply. Water also reflects sunlight. If you place a shallow pond on the south side of a greenhouse, you reflect sunlight into the greenhouse. So Joel Salatin’s pond surrounding his garden is also reflecting sunlight toward his plants, increasing the photosynthetic potential.

          Don Stewart

          • sheilach2 says:

            There were some indigenous people living by lake Titicaca high in the Andes mountains who long ago planted potatoes in beds surrounded by water filled canals. The water in the canals absorbed the heat of the day, slowly releasing it as a fog during the night staving off the frost.
            Decades later this technology was rediscovered & the canals restored increasing food production in the area.
            The rich black earth of the Amazon area was also found to be human made from biochar, broken pottery, charcoal & plant waste deliberately made to enrich the soil & such enrichment lasted for a very long time. That too has been recently rediscovered & is being used today in permaculture & other sustainable small farming.
            The famous “floating gardens” of Mexico are also human made by digging the muck up from canals & laying it inside cane fences to build it up above the water line. By continuing to clean out the canals & filling the beds, they have enriched the soil there to produce abundant food stuffs.

            The Chinese build their outhouses over a pond & invited passers by to use them. The poop feeds the algae that feeds some small filter feeding fish who in turn feed the larger fish that they eat.
            I suppose parasites would be a problem however since the ponds also have snails & they are a intermediary for those parasites that feed in us.

            There is a lot of “technology” out there that doesn’t require fossil resources to be of value to us in the future, we only have to rediscover it.

      • edpell says:

        All good. Thanks. I particularly like the stone on a slope. Simple and effective.

        • Don Stewart says:

          Dear Ed
          Just a couple more observations.

          First, I forgot the first principle of Permaculture: layers. If you walk in the woods near your house, you will see layers from the moss on the rocks to shrubs and then redbuds then the canopy trees. You will also see vines twining up anything that will support them. Permaculture tries to mimic the layering found in Nature. Its just that the selection of plants tends toward those that favor humans and the other critters which favor humans such as those that we can ‘beneficials’.

          Second, quite a few climates around the world go through a ‘wet’ and then ‘dry’ cycle. Here is an example of a subdivision in Davis, CA, laid out 30 years ago which harvest water off hard surfaces and sinks it into the soil for the dry season. Also note the passive solar heating and cooling.

          http://permaculturenews.org/2013/12/14/americas-forgotten-food-forest-suburb-rediscovered/

          You will see the interview with the architect who designed all this. The California architects knew 50 years ago much of what needed to be done. It was getting started, when Ronald Reagan was elected Governor and progress toward sustainability suffered a huge setback. Think of all the government subsidized housing that has been constructed in the last 40 years that could have been done a lot better. I imagine Margaret Thatcher had the same impact in Britain.

          Don Stewart

    • I can tell you exactly how glass for greenhouses was made in 1840s
      You heated a ball of glass, blew it into a large cylindrical shape, (a large bottle) say a foot or so long. Then you cut the ends off, then you let it cool, and cut along its length. You then reheat it until flexible, then roll it flat to give a rectangular pane of glass.
      Best of luck in finding the heat source to do that on any scale

  3. John says:

    Hi Gail,
    I still think your thesis that oil prices will fall in dollar terms is incorrect. You are looking at things from the point of view of the private consumer (who has to earn dollars) as opposed to one of the largest users of oil in the world: the US government . This is an organisation that has a technology called a printing press which can produce dollars at no cost to fund its needs. The printing will be effective and relatively painless right until the moment the dollar hyperinflates or is rejected by the oil producers.

    As oil becomes increasingly scarce, do you honestly think that the USG will stop printing dollars and suddenly learn to live within its means? The choice will be to carry on printing at the risk of destroying the currency eventually, or laying off millions of government employees, shutting down the US military and crashing the economy immediately. What do you think they will decide to do?
    How are they behaving right now?

    What happened to the price of oil during the stagflationary 1970’s? Why is this time different?

    Consumers might not be able to afford higher dollar priced oil, but the US government certainly will.

    Kind regards,
    John

    • if consumers can’t afford oil, then governments certainly can’t, not in the long term.
      governments do not have any long term money, it comes from taxpayers, if taxpayers are broke in an overall sense, then so is the government.
      This is why spending government money on government employees wages, does not grow the economy or produce wealth. It does the exact opposite,
      not that the government will admit this of course, so they will go on printing money, on the promise of ‘future growth’, which cannot happen, because growth depends on virtually unlimited amounts of cheap energy being available to fuel the economy. you cannot grow an economy on expensive, and depleting, energy sources.

  4. Don Stewart says:

    Dear All
    I have previously recommended the books Scarcity and Hardwiring Happiness for shedding light on the mind and brain problems we run into when the world doesn’t give us exactly what we want.

    Here is an interesting article which covers some of the same ground, but from a little different angle:

    http://www.mindandlife.org/the-craving-cycle/

    Marc Lewis is a researcher, formerly in Toronto, now in the Netherlands. Briefly, research by a broad array of scientists has shown that all addictions are alike: food, illegal drugs, sex, etc. The new perspective that Lewis got from looking at Buddhism is that addictions are ‘normal’, they are the craving that the Buddha warned against 2500 years ago. Note that some of the highest dopamine levels are recorded in successful politicians. In one of his blogs, Lewis discusses the possibility that behavior such as ‘internet addiction’ or ‘TV addiction’ may be medicalized and publicly funded treatment provided…which would surely sink the US government.

    Look at this passage: ‘Whether the goal is success, material comfort, prestige (the more respectable human pursuits)—or whether it’s heroin, cocaine, booze, or porn—hardly seems to matter. Either way, we believe we’ve locked our sights on an antidote to uncertainty, a guarantee of completeness, when in fact we never become complete by chasing after what we don’t have. And, most incredibly, the pursuit itself becomes the condition for more suffering because we inevitably come up empty, disappointed, and betrayed by our own desires.’

    In short, Lewis has come to suspect that basic human biology opens the way for addictive behavior in most every part of life. Problems arise when one human uses the ‘cracks in biology’ to entice another human to behave in ways that are fundamentally destructive. We can think of ‘the oldest profession’, or the marketing of ‘Black Friday’, or the selling of a presidential candidate.

    Debt is one of the major preoccupations on this site. And you can see just how any addict will see more debt as the sine qua non enabler for solving their problem. More debt doesn’t deter opium addicts, and more debt doesn’t deter the Black Friday shopper…until the bank won’t extend any more credit. When incomes for the 90 Percent have stopped increasing, and debt has reached its limits, then we can expect a crisis.

    We can also construct cyclical theories based on the need for more ‘fixes’ and the ultimate exhaustion of the willingness of those who have gotten rich by feeding the addiction to loan any more money. (This dynamic plays out between junkies and their supplier, on an individual level). Since the rich are dependent on the consumption by the 90 Percent, and since the 90 Percent are dependent on the willingness of the 10 Percent to keep loaning them more money, things will tend to explode. (Which explains why elements of Ponzi are so prominent…suppliers need to keep finding new junkies).

    It is easier to think of ways to stay out of these fixes than it is to think of ways to escape them once they baloon. For example, strict limits on debt. But that would shut off the avenue for the 10 Percent to get rich, and would limit the 90 Percent to the perceived drab world of living within their means. And the Politicans need heavy doses of Dopamine, which is delivered by success at the polls and the attendant power and so they have to promise to please somebody.

    The model can also be applied to the physical world. Most people have convinced themselves that more GDP is the solution to their problems. But more GDP demonstrably does not solve most peoples problems in the OECD countries. Theoretically, GDP measures cost…not benefit. GDP is a close analog to to an illegal drug.

    The physical world is no longer delivering steady GDP growth, so our addictive minds and bodies are desperately searching for more GDP. Dysfunctional behavior (e.g., mining the tar sands and killing all of us) can be expected.

    Don Stewart

    • xabier says:

      Don

      ‘The oldest profession’? come on, please leave those ladies out of this: I won’t hear them mentioned in the same breath as bankers and politicians!

    • sheilach2 says:

      I hate debt, I hated having to rent & I especially hated using a credit card to maintain a “lifestyle” .

      My motto is if you can’t afford it, don’t use credit to get it because it costs you more. I pay cash for what I want, if I can’t afford it, I don’t get it – period.

      That’s another reason I strongly dislike borrowing & spending instead of taxing & spending, it costs a lot more to borrow to pay for stuff.
      This government has been borrowing & spending like a drunken sailor but not for stuff we need but for things we don’t need like illegal wars.
      With taxpayers in decline, there is more demand for welfare, food support, unemployment & medicaid. Printing more bits of green paper won’t solve the problem & now there is to be a decline in Q.E. early in 2014.
      What is the government doing to help this problem?
      It’s shoving through the Trans Pacific Partnership that will send more of our jobs to 3rd world countries!!! Is that stupid or what?

      I wonder how soon the collapse of this economy will occur ?
      You can’t borrow & spend you way out of a depression or declining resources.

    • Don Stewart says:

      Dear All
      In a truly remarkable coincidence, Charles Hugh Smith repeats today some of the things I said a couple of days ago about addiction and debt and the class divide….Don Stewart
      PS Alert. Charles and Gail don’t always see eye to eye.

      http://www.oftwominds.com/blogdec13/officially-sanctioned-fakes12-13.html

      ‘In the Neoliberal Colonial Model, the addictive substance is credit and the speculative consumerist fever it fosters.’

      ‘In my analysis, the Status Quo of “private profits, public losses” and the incentivization of gargantuan household debt amounts to a modern financialized version of feudalism, in which the middle class now toils as debt-serfs. Their debt cannot be repudiated (see student loans), their stagnating disposable income is largely devoted to debt service, and their assets have evaporated as the phantom wealth created by serial credit bubbles vanishes as soon as the asset/credit bubble du jour bursts.’

  5. timl2k11 says:

    Lots of comments inspired by this thought provoking article. (Has Gail ever written an article that is not thought provoking?)
    Some things that I have been thinking about is how the cheap energy – and a cultural lack of awareness of it – inspired things like Star Trek and Star Wars. There was a time when we seemed to think that technology and progress would proceed forever, hand in hand. Fossil fuels today, tomorrow nuclear fusion and anti-matter. Moon landings and space travel (Space Shuttle) sparked our collective imagination. But no one seemed to realize why any of this was possible, an (over-) abundance of cheap fossil fuels.
    What will the collective imagine once it realizes that there isn’t anything else coming down the pipeline to propel technological advancement and progress? As has been mentioned before, perhaps that is why so many sci-fi movies nowadays are about some kind of zombie apocalypse.

    • sheilach2 says:

      Zombi apocalypse? How silly!!!
      Why can’t they face the reality of our situation & make some plans on how to deal with it?
      Like it or not, reality will not go away. I also hate the idea of the future not being as nice for most of us as the near past.
      Pity those poor folks who have never known what it’s like to live in a advanced civilization with clean water on tap, sewage treatment, fast, safe & comfortable travel, ELECTRICITY, clean, abundant food, well insulated housing, hot water on tap, modern medicine, refrigeration etc etc, all the things we currently take for granted will be just a brief blip in our history.

      I don’t worry about imaginary “zombies” ruining my days, it’s our collapse I’m worried about & the governments reaction to it.
      THAT”S the stuff of nightmares!!

  6. Don Stewart says:

    Dear All
    From time to time, the ‘Agrarian Lobby’ has spoken about biological farming and gardening. I would say that the big majority of readers think that only chemical farming is keeping us fed. Here is Ambrose Evans-Pritchard reporting on new science:

    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10479872/Dust-to-Dust-a-man-made-Malthusian-crisis.html

    I agree that Monsanto and their partners in crime are killing the soil and will eventually kill all the humans. I don’t agree that this is shocking new news…we in the ‘Agrarian Lobby’ have known this all along.

    It is some comfort to see that strictly reductionist science can finally come to the conclusion that our current course is suicidal.

    Don Stewart

    • Stan says:

      Don Stewart wrote: “Dmitry Orlov gets criticism because ‘collapse hasn’t happened like you said it would’.”

      Is the collapse going to happen all over at the same rate? I think not…there may be signs of it already – it’s just not recognized for what it is since in the beginning it will start in small, isolated areas. My guess is it will become noticeable when a country like Japan starts to display signs. I pick Japan because 1) it imports so much which is dependent on oil and 2) much of their food (that isn’t imported) comes from fishing which depends on oil and 3) the amount of their GDPthat comes from exports of finished goods which is dependent on oil and 4) closing nuclear power plants will increase their dependency on fossil fuels.

      Comments?

      Stan.

      • Don Stewart says:

        Dear Stan
        Orlov frequently says that the cultural collapse of the US is already well underway. In other words, we can separate various aspects of society and look at collapse in each one, somewhat independently. The US Government is showing a lot of signs of strain…perhaps one can say it is ‘collapsing’…I wouldn’t want to argue too much about words.

        To my way of thinking, a country where the citizens are abjectly dependent on government handouts and where half the citizens could not raise 2000 dollars in 30 days to meet an emergency is well into collapse. One could argue the same point about the increasing wealth inequality. All the factors mentioned in the article I linked to are, to me, signs of collapse.

        If you look at Gail’s graphs of oil consumption in the FSU in her current post, ask yourself whether those countries ever actually ‘recovered’. In Russia, Putin has certainly reconstructed the government, but he hasn’t done very well reconstructing their industrial sector. Is Russia still ‘collapsed’?

        In short, I don’t see ‘collapse’ as a single event, and I don’t see it as occurring all at one time. If we wanted to think, as an example, of a human heart attack. A heart attack goes back to some teenager eating fries, a burger, and a soft drink at a fast food joint. The markers in the arteries will be apparent if the kid dies in a car crash and is autopsied. The marks of the heart attack increase steadily, barring a change in behavior, and finally the middle aged man has mini-strokes and then finally a heart attack which doesn’t kill him and then finally the attack that takes him away. It’s all really one long process…how we use the language of collapse to describe it is pretty much arbitrary.

        Don Stewart

        • Good points! I saw for myself a little of what was happening in Russia when my husband and I visited in 2012. I don’t think we found anywhere that the water was safe to drink. The people who were working in jobs that required quite a lot of education lived very modestly. I visited a couple of homes in St. Petersburg. A home that a professional couple had built for themselves (stick by stick!) in a smaller city near Moscow. The road system is not very well developed. There is a waterway system from Moscow to St. Petersburg, but it has never been expanded to take any quantity of industrial boats. Instead, most of the traffic is tour boats, like the one I was on.

          The country is quite a poor country, apart from its oil and gas. It is not very competitive with Asian countries, just like the US and Europe aren’t.

          I think that there is a possibility that Russia could collapse again, if its oil supply drops. They are again dependent on oil exports for taxes.

      • I am sure each collapse will unfold differently. Dmitry Oriov keeps saying that the Unites States is less prepared for collapse than the Soviet Union was. Gasoline wasn’t available for cars, but public transit kept moving, if I remember correctly. Families also had their little gardens that they could get to on the train.

        I agree that Japan is at risk of collapse. It also has very high governmental debt. We have a lot of governments at risk–the question is which one goes first. It may be that one country starts off a chain reaction, because banks of one country hold debt of other countries.

        My guess is that what pushes governments over the edge will be something financial–higher interest rates, or a default by a major country.

      • I am sure each collapse will unfold differently. Dmitry Oriov keeps saying that the Unites States is less prepared for collapse than the Soviet Union was. Gasoline wasn’t available for cars, but public transit kept moving, if I remember correctly. Families also had their little gardens that they could get to on the train.

        I agree that Japan is at risk of collapse. It also has very high governmental debt. We have a lot of governments at risk–the question is which one goes first. It may be that one country starts off a chain reaction, because banks of one country hold debt of other countries.

        My guess is that what pushes governments over the edge will be something financial–higher interest rates, or a default by a major country.

        • Every nation survives on the energy in produces. If that is built up gradually on purely muscle power, then collapse will be relatively slow, even though it might have violent intervals. The Roman empire didn’t collapse overnight, even though it might appear so through the telescope of history. It was built using muscle power, that power dissipated as the empire became unable to feed itself and its armies and slaves. Essentially the prime occupation of Rome was infinite growth (sounds familiar?), driven by infinite energy sources. When that became unsustainable, the empire collapsed and broke up into European states.
          Fast forward 1500 years. The industrial nations of the west are in exactly the same situation. Our prime occupation is also infinite growth, driven by infinite energy sources. If we cannot continue to expand, then we contract and die.
          Western industrial economies are effectively only 100 years old, and nations are held together by industrial activity. The EU was conceived on the basis of perpetual growth, the states of the USA were gradually amalgamated into a cohesive nation because that brought maximum prosperity to all. The same applies to other nations and nation-groups. Australia is a prime example: Climate change is set to ravage that continent, so the states will break up into isolated coastal communities.
          When the energy sources of these groups fails, then they will break up, just as the Roman empire broke up because there is no means of holding them together. People will go their own way. There will be violent attempts to stop this, but it is certain to happen.

          • Ian Page says:

            I am amused by post apocalypse films showing farming communities with wind turbines solar arrays geothermal glass windows and farmers with iron or steel tools and guns..oh yes and bandits with lashed up cars. After the loss of our current nearly free energy we will not have access to the basic metals or fuel as all the sources accessible to a low energy society will have been used so none of this is possible. Sorry Hollywood! By the way metal recycling is high energy and recycling loses a proportion of material each cycle.

            Thus there is no hope of a rebuilding a high or even medium energy society post collapse this was our one chance and we blew it.

            We have a short period perhaps a decade if we are lucky during which low energy technologies and built environments could be created that do not depend on metals or energy intensive processes could be developed .however I see only a few isolated relevant technologial and societal developments and no overall focus on such a huge Manhattan 2 project for some sort of limited continuation of a successor civilisation above jungle native level.

            So in the words of Douglas Adams dolphins as they left earth just before it was destroyed to make way for a hyper spatial bypass…”goodbye,and thanks for all the fish!”

          • I see breakup of these groups at hand as well. They need more and more energy to continue. Sorry, this doesn’t fit with some folks view of a possible “steady state” economy.

      • Peak/easy/cheap oil may well be on the way out, but although your point about where the effects will be felt first seems valid, it is interesting to think about mechanisms for sharing the resource or forcing priorities on its use. The freedom of personal transportation (and long-haul travel) for leisure, and the obsession with shopping, are two indulgences the ‘west’ could well do without with no loss of dignity to the human race. That the rising poor want more of all this is understandable, but that clean water and basic medicine should continue to be denied the poor by market forces acting on diminishing resources is not acceptable, is it?

  7. Don Stewart says:

    Dear All
    Dmitry Orlov gets criticism because ‘collapse hasn’t happened like you said it would’. I’d just like to put a few end-of-year facts on the table for your consideration:

    First, when the rich and powerful are looking for a place to spend their money, where do they go? How about a farmhouse in upstate New York where the chef grows and forages almost all the food himself, cooks it, waits tables, and washes the dishes, and charges around 250 dollars plus wine and tips? But a poor person in Brooklyn who tries this and charges ten dollars to make some money will be jailed for a whole variety of crimes.
    http://www.zerohedge.com/news/2013-12-14/meet-restaurant-five-year-waiting-list

    Second, when the rich and powerful are thinking about how to improve the lives of the less fortunate, their solution involves more debt, more dependency on the government, more financialization of everything, more dog-eat-dog global trade agreements, more turning power over to global corporations, etc.

    Third, the results of turning things over to the rich and powerful doesn’t seem to be turning out well at all:
    http://www.zerohedge.com/news/2013-12-17/83-numbers-2013-are-almost-too-crazy-believe

    Fourth, the President of the United States asserts his right to kill anyone, anywhere, if he decides it is a good idea…along with anyone who might be standing close to the targeted person. And the US Congress gleefully buys him drones to accomplish his goals. And the NSA records everything to make sure that all the ‘enemies’ are discovered. I long for the good old days of Nixon’s ‘enemies list’ on a page or two of paper.

    Don Stewart
    PS I think Orlov won.

  8. Don Stewart says:

    Dear All
    Some essential reading. Make a cup of tea and allow 15 minutes. Gail is mentioned, along with a lot of the other usual suspects…Don Stewart

    Crash On Demand: Welcome to our Brown Tech Future by David Holmgren
    http://holmgren.com.au/wp-content/uploads/2013/12/Crash-on-demand.pdf

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