Why We Have an Oversupply of Almost Everything (Oil, labor, capital, etc.)

The Wall Street Journal recently ran an article called, Glut of Capital and Labor Challenge Policy Makers: Global oversupply extends beyond commodities, elevating deflation risk. To me, this is a very serious issue, quite likely signaling that we are reaching what has been called Limits to Growth, a situation modeled in 1972 in a book by that name.

What happens is that economic growth eventually runs into limits. Many people have assumed that these limits would be marked by high prices and excessive demand for goods. In my view, the issue is precisely the opposite one: Limits to growth are instead marked by low prices and inadequate demand. Common workers can no longer afford to buy the goods and services that the economy produces, because of inadequate wage growth. The price of all commodities drops, because of lower demand by workers. Furthermore, investors can no longer find investments that provide an adequate return on capital, because prices for finished goods are pulled down by the low demand of workers with inadequate wages.

Evidence Regarding the Connection Between Energy Consumption and GDP Growth

We can see the close connection between world energy consumption and world GDP using historical data.

Figure 1. World GDP in 2010$ compared (from USDA) compared to World Consumption of Energy (from BP Statistical Review of World Energy 2014).

Figure 1. World GDP in 2010$ compared (from USDA) compared to World Consumption of Energy (from BP Statistical Review of World Energy 2014).

This chart gives a clue regarding what is wrong with the economy. The slope of the line implies that adding one percentage point of growth in energy usage tends to add less and less GDP growth over time, as I have shown in Figure 2. This means that if we want to have, for example, a constant 4% growth in world GDP for the period 1969 to 2013, we would need to gradually increase the rate of growth in energy consumption from about 1.8% = (4.0% – 2.2%) growth in energy consumption in 1969 to 2.8% = (4.0% – 1.2%) growth in energy consumption in 2013. This need for more and more growth in energy use to produce the same amount of economic growth is taking place despite all of our efforts toward efficiency, and despite all of our efforts toward becoming more of a “service” economy, using less energy products!

Figure 2. Expected change in GDP growth corresponding to 1% growth in total energy, based on Figure 1 fitted line.

Figure 2. Expected change in GDP growth corresponding to 1% growth in total energy, based on Figure 1 fitted line.

To make matters worse, growth in world energy supply is generally trending downward as well. (This is not just oil supply whose growth is trending downward; this is oil plus everything else, including “renewables”.)

Figure 3. Three year average percent change in world energy consumption, based on BP Statistical Review of World Energy 2014 data.

Figure 3. Three-year average percent change in world energy consumption, based on BP Statistical Review of World Energy 2014 data.

There would be no problem, if economic growth were something that we could simply walk away from with no harmful consequences. Unfortunately, we live in a world where there are only two options–win or lose. We can win in our contest against other species (especially microbes), or we can lose. Winning looks like economic growth; losing looks like financial collapse with huge loss of human population, perhaps to epidemics, because we cannot maintain our current economic system.

The symptoms of losing the game are the symptoms we are seeing today–low commodity prices (temporarily higher, but nowhere nearly high enough to maintain production), not enough jobs that pay well for common workers, and a lack of investment opportunities, because workers cannot afford the high prices of goods that would be required to provide adequate return on investment.

How We Have Won in Our Contest with Other Species–Early Efforts 

The “secret formula” humans have had for winning in our competition against other species has been the use of supplemental energy, adding to the energy we get from food. There is a physics reason why this approach works: total population by all species is limited by available energy supply. Providing our own external energy supply was (and still is) a great work-around for this limitation. Even in the days of hunter-gatherers, humans used three times as much energy as could be obtained through food alone (Figure 4).

Figure 4

Figure 4

Earliest supplementation of food energy came by burning sticks and other biomass, starting one million years ago. Using this approach, humans were able to gain an advantage over other species in several ways:

  1. We were able to cook some of our food. This made a wider range of plants and animals suitable for food and made the nutrients from these foods more easily available to our bodies.
  2. Because less energy was needed for chewing and digesting, our bodies could put energy into growing a larger brain, thus giving us an advantage over other animals.
  3. The use of cooked food freed up time for such activities as hunting and making clothes, because less time was needed for chewing.
  4. Heat from burning plant material could be used to keep warm in cold areas, thereby extending our range and increasing the total human population that could be supported.
  5. Fire could be used to chase off predatory animals and hunt prey animals.

Our bodies are now adapted to the need for supplemental energy. Our teeth are smaller, and our jaws and digestive apparatus have shrunk in size, as our brain has grown. The large population of humans that are alive today could not survive without supplemental energy for many purposes, such as cooking food, heating homes, and fighting illnesses that spread when humans are in as close proximity as they are today.

Our Modern Formula For Winning the Battle Against Other Species

In my view, the formula that has allowed humans to keep winning the battle against other species is the following:

  1. Use increasing amounts of inexpensive supplemental energy to leverage human energy so that finished goods and services produced per worker rises each year.
  2. Pay for this system with debt, because (if supplemental energy costs are cheap enough), it is possible to repay the debt, plus the interest on the debt, with the additional goods and services made possible by the cheap additional energy.
  3. This system gradually becomes more complex to deal with problems that come with rising population and growing use of resources. However, if the output of goods per worker is growing rapidly enough, it should be possible to pay for the costs associated with this increased complexity, in addition to interest costs.
  4. The whole system “works” as long as the total quantity of finished goods and services rises rapidly enough that it can fund all of the following: (a) a rising standard of living for common workers so that they can afford increasing amounts of debt to buy more goods, (b) debt repayment, and interest on the debt of the system, and (c) an increasing amount of “overhead” in the form of government services, medical care, educational services, and salaries of high paid officials (in business as well as government). This overhead is needed to deal with the increasing complexity that comes with growth.

The formula for a growing economy is now failing. The rate of economic growth is falling, partly because energy supply is slowing (Figure 3), and partly because we need more and more growth of energy supply to produce a given amount of economic growth (Figure 2). With this lowered world economic growth, the amount of goods and services being produced is not rising fast enough to support all of the functions that it needs to cover: interest payments, growing wages of common workers, and growing “overhead” of a more complex society.

Some Reasons the Economic Growth Cycle is Now Failing

Let’s look at a few areas where we are reaching obstacles to this continued growth in final goods and services. An overarching problem is diminishing returns, which is reflected in increasingly higher prices of production.

1. Energy supplies are becoming more expensive to extract.

We extract the easiest to extract energy supplies first, and as these deplete, need to use the more expensive to extract energy supplies. We hear much about “growing efficiency” but, in fact, we are becoming less efficient in the production of energy supplies.

In the US, EIA data shows that we are becoming less efficient at coal production, in terms of coal production per worker hour (Figure 5).

Figure 5. US coal production per worker, on a Btu basis based on EIA data.

Figure 5. US coal production per worker, on a Btu basis based on EIA data.

With oil, growing inefficiency is shown by the steeply rising cost of oil exploration and production since 1999 (Figure 6).

Figure 6. Figure by Steve Kopits of Westwood Douglas showing trends in world oil exploration and production costs per barrel.

Figure 6. Figure by Steve Kopits of Douglas-Westwood showing trends in world oil exploration and production costs per barrel.

Thus, it is for a fairly recent period, namely the period since about 2000, that we have been encountering rising costs both for US coal and for worldwide oil extraction.

The extra workers and extra costs required for producing the same amount of energy  counteract the tendency toward growth in the rest of the economy. This occurs because the rest of the economy must produce finished products with fewer workers and smaller quantities of resources as a result of the extra demands on these resources by the energy sector.

2. Other materials, besides energy products, are experiencing diminishing returns. 

Other resources, such as metals and other minerals and fresh water, are also becoming increasingly expensive to extract. The issue with mineral ores is similar to that with fossil fuels. We start with a fixed amount of ores in good locations and with high mineral percentages. As we move to less desirable ores, both human labor and more energy products are required, making the extraction process less efficient.

With fresh water, the issue is likely to be a need for desalination or long distance transport, to satisfy the needs of a growing population. Workarounds again involve more human labor and more resource use, making the production of fresh water less efficient.

In both of these cases, growing inefficiency leaves the rest of the economy with less human energy and a smaller quantity of energy products to produce the finished goods and services that the economy needs.

3. Growing pollution is taking its toll.

Instead of just producing end products, we are increasingly finding ourselves fighting pollution. While this is a benefit to society, it really is only offsetting what would otherwise be a negative. Thus, it acts like an item of overhead, rather than producing economic growth.

From the point of view of workers having to pay for higher cost energy in order to fight pollution (say, substitution of a higher cost energy source, or paying for more pollution controls), the additional cost acts like a tax. Workers need to cut back on other expenditures to afford the pollution control workarounds. The effect is thus recessionary.

4. The amount of “overhead” to the world economy has been growing rapidly in recent years, for a number of reasons: 

  • The amount of overhead is growing because we are reaching natural barriers. For example, population per acre of arable land is growing, so we need more intensity of development to produce food for a rising population.
  • With greater population density and increased bacterial antibiotic resistance, disease transmission becomes more of a problem.
  • Increasing education is being encouraged, whether or not there are jobs available that will make use of that education. Education that cannot be used in a productive way to produce more goods and services can be considered a type of overhead for the economy. Educational expenses are frequently financed by debt. Repayment of this debt leads to a decrease in demand for other goods, such as new homes and vehicles.
  • We have more elderly to whom we have promised benefits, because with the benefit of better nutrition and medical care, more people are living longer.

5. We are reaching debt limits.

As economic growth has slowed, we have been adding more and more debt, to try to mitigate the problem. This additional debt becomes a problem in many ways: (a) without cheap energy to leverage human labor, there are not many productive investments that can be made; (b) the addition of more debt leads to a need for more interest payments; and (c) at some point debt ratios become overwhelmingly high.

At least part of the slowdown in economic growth that we are seeing today is coming from a slowdown in the growth of debt. Without debt growth, it is hard to keep commodity prices high enough. Investment in new manufacturing plants is also affected by low growth in debt.

Reasons for Confusion in Understanding Our Current Predicament

1. Not understanding that all of the symptoms we are seeing today are manifestations of the same underlying “illness”. 

Most analysts think that the economy has stubbed its toe and has a headache, rather than recognizing that it has a serious underlying illness.

2. Academia is focused way too narrowly, and tied too closely to what has been written before. 

Academics, because of their need to write papers, focus on what previous papers have said. Unfortunately, previous papers have not understood the nature of our problem. Academics have developed models based on our situation when we were away from limits. The issues we are facing cover such diverse subjects as physics, geology, and finance. It is hard for academics to become knowledgeable in many areas at once.

3. Models that seemed to work before are no longer appropriate.

We take models like the familiar supply and demand model of economists and assume that they represent everlasting truths.

Figure 7. (Source Wikipedia). The price P of a product is determined by a balance between production at each price (supply S) and the desires of those with purchasing power at each price (demand D). The diagram shows a positive shift in demand from D1 to D2, resulting in an increase in price (P) and quantity sold (Q) of the product.

Figure 7. (Source Wikipedia). The price P of a product is determined by a balance between production at each price (supply S) and the desires of those with purchasing power at each price (demand D). The diagram shows a positive shift in demand from D1 to D2, resulting in an increase in price (P) and quantity sold (Q) of the product.

Unfortunately, as we get close to limits, things change. Both wage levels and debt levels have an impact on demand; the quantity of goods available is also affected by diminishing returns. The model that worked in the past may be totally inappropriate now.

Even a complex model like the climate change model being used by the IPCC is likely to be affected by financial limits. If near-term financial limits are to be expected, IPCC’s estimate of future carbon from fuels is likely to be too high. At a minimum, the findings of the IPCC need to be framed differently: climate change may be one of a number of problems facing those people who manage to survive a financial crash.

4. Too much wishful thinking.

Everyone would like to present a positive result, especially when grants are being given for academic research that will support some favorable finding.

A favorite form of wishful thinking is believing that higher costs of energy products will not be a problem. Higher cost energy products, whether they are renewable or not, are a problem for many reasons:

  • They represent growing inefficiency in the economy. With growing inefficiency, we produce fewer finished goods and services per worker, not more.
  • Countries using more of the higher cost types of energy become less competitive in the world market, and because of this, may develop financial problems. The countries most affected by the Great Recession were countries using a high percentage of oil in their energy mix.
  • The amount workers have available to spend is limited. If a worker has $100 to spend on energy supply, he can buy 100 times as much in energy supplies priced at $1 as he can energy supplies priced at $100. This same principle works even if the cost difference is much lower–say $3.50 gallon vs. $3.00 gallon.

5. Too much faith in, “We pay each other’s wages.”

There is a common belief that growing inefficiency is OK; the wages we pay for unneeded education will work its way through the system as more wages for other workers.

Unfortunately, the real secret to economic growth is not paying each other’s wages; it is growing output of finished products per worker through increased use of cheap energy (and perhaps technology, to make this cheap energy useful).

Increased overhead for the system is not helpful.

6.  An “upside down” peak oil story.

Most people in the peak oil community believe what economists say about supply and demand–namely, that oil prices will rise if there is a supply problem. They have not realized that in a networked economy, wages and prices are tightly linked. The way limits apply is not necessarily the way we expect. Limits may come through a lack of jobs that pay well, and because of this lack of jobs, inability to purchase products containing oil.

The connection between energy and jobs is clear. Good jobs require the use of energy, such as electricity and oil; lack of good-paying jobs is likely to be a manifestation of an inadequate supply of cheap energy. Also, high paying jobs are what allow rising buying power, and thus keep demand high. Thus, oil limits may appear as a demand problem, with low oil prices, rather than as a high oil price problem.

In my opinion, what we are seeing now is a manifestation of peak oil. It is just happening in an upside down way relative to what most were expecting.


One way of viewing our problem today is as a crisis of affordability. Young people cannot afford to start families or buy new homes because of a combination of the high cost of higher education (leading to debt), the high cost of fuel-efficient new cars (again leading to debt), the high cost of resale homes, and the relatively low wages paid to young workers. Even older workers often have an affordability problem. Many have found their wages stagnating or falling at the same time that the cost of healthcare, cars, electricity, and (until recently) oil rises. A recent Gallop Survey showed an increasing share of workers categorize themselves as “working class” rather than “middle class.”

It is this affordability crisis that is bringing the system down. Without adequate wages, the amount of debt that can be added to the system lags as well. It becomes impossible to keep prices of commodities up at a high enough level to encourage production of these commodities. Return on investment tends to be low for the same reason. Most researchers have not recognized these problems, because they are narrowly focused and assume that models that worked in the past will continue to work today.

1,002 thoughts on “Why We Have an Oversupply of Almost Everything (Oil, labor, capital, etc.)

  1. California Is the World’s Eighth Largest Economy http://www.lao.ca.gov/LAOEconTax/Article/Detail/1


    When the water runs out in California and the state’s economy collapses… the game is over… everywhere.

    You simply cannot unplug such a massive part component of the US economy — and not have dire consequences.

    Heck — we can’t even let a major auto maker or insurer (e.g. GM, AIG)) go under without dire consequences (hence the massive bailouts in 2008)

    • What happened?
      California used to be the 6th largest economy?
      Are they going downhill already?

  2. Just as Gail has stated many times, without a functioning financial system, things fall apart very rapidly.
    And “whatever some analysts might be saying”, Greeks are now suffering mightily, as the €22 million per day hit to the economy has now bankrupted the country’s hospitals which have reportedly run out of painkillers and sheets. Here’s The Independent:
    Greek hospitals have run out of supplies such as painkillers, scissors and sheets as budget cuts have left the health service unable to provide even basic provisions for operations and medical procedures…
    Huge cuts to the healthcare budget, amid the economic turmoil which made millions unemployed, have left than 2.5m Greeks uninsured, up from 500,000 in 2008..
    healthcare spending has fallen by 25 per cent since 2009, creating shortages of the most basic surgical equipment and leaving too little money to pay nurses’ salaries.
    Reports have surfaced of patients being turned away from hospital because there was no meter to measure their high blood pressure, while others have had to do without painkillers during medical procedures. One patient was even asked to bring their own sheets to hospital.
    A trainee surgeon at KAT, a respected state hospital in Athens, said the situation was at “breaking point”.
    “There is no money to repair medical equipment, no money for ambulances to use for petrol, no money to hire nurses and no money to buy modern surgical supplies

    • What the EU rulers are doing to Greece is utter shame.
      At least, Syriza is still standing, and Podemos just won a poll in Spain:
      “Spain’s Establishment Hurt by Graft as Podemos Gathers Force”

      In almost all other EU countries, people are looking towards far-right parties, though. Probably due to lack of recent experience (while in Greece and Spain, many people still remember).

      • I don’t see it that way.

        If Greece is allowed to walk away from their debt then so will Spain, Italy, France, UK etc… because nobody can pay back what they owe.

        If Greece goes then the global financial system goes — and the global economy goes — and the lights and heat go off… the grocery stores empty … the famine begins http://www.toptenz.net/top-10-historic-famines-caused-cannibalism.php

        And the situation the Greeks are enduring at the moment…. will look like a paradise.

        • Eddy,
          No discussion about the final outcome, but we’re not there yet; maybe soon, but not yet.

          I don’t think that Greece itself is of any threat for the financial system; they’ve been hedging against greek default in 2010 (iirc) when they transferred the main part of the debt from private (the banks) to public (the EU states). It’s a political problem, no longer a financial one. And it’s being held by the Troïka, which is a financial construction, not a political one (at least, not a democratic one). Does the US Federal State let the people of Alabama (or another) starve to death?

          So the real problem is -as you say- to avoid the contagion to Spain and others if some formal public solution is found to alleviate this burden off the greek shoulders. Hey, don’t tell me there isn’t some way around that! No, they prefer to remain inflexible and not move a comma in the rules of this Germany-takes-all institution.
          But on the other hand, this rigidity is more and more threatened by nearly all the peoples of Europe, and the EU construction is doomed anyway. The rulers won’t be able to keep their privileges for very long.

          We’re telling them “You must suffer and give up hope so that we can maintain our lifestyle” (in fact, so that a tiny bunch of jetset banksters can suck ever more money). I know that’s what we’ve been doing to our colonies* and are continuing to do to so-called emerging countries, but Greece is different, it’s a part of our Union, which they sold us as an ideal of Democracy (a greek invention!). Disgusting hypocrisy.

          *: I think it’s Pepe Escobar who coined the formula “IMF colonies” for over-indebted countries. I find the image very true and explicit.

          • Greece is no doubt the whipping boy of the ECB… and I suppose the ECB wants to be able to point to them and say to Spain etc… don’t even think about it… and that makes sense…

            But where do you draw the line… how far down do you grind the Greeks…

            I suspect the ECB reckons we are all completely screwed at some point — the Greeks are just screwed a little sooner. And at the end of the day Greece is still not in such a bad spot — there are literally dozens of countries that are far worse of than Greece — and nobody does anything about that

            I wonder if the ECB has sat down with Tsipras and explained the Big Picture to him — that the fight goes beyond the financial crisis — that the end of civilization is at stake? And that although things are bad in Greece – they will get a whole lot worse (for everyone) if Greece detonates the default bomb. Has he been told he must ‘take one for the team’

            The reason I suggest this is because Tsipras has backed down on his election promises big time — and the left within his party are not happy.

            As for the ECB (which is a franchise of the Fed which is owned by the men who control the world aka the PTB) knowing the Big Picture (some seem unsure of that) keep in mind it is the central banks that made what is not a viable enterprise – shale oil – viable by a) instructing their MSM minions to invent the ‘100 years of oil myth and b) making the funding available via QE ZIRP.

    • without a functioning financial system, things fall apart very rapidly.

      These “things” than “fall apart very rapidly” are things that humans have done without for some 199,800 years of existence. Those who have become totally dependent on them will suffer while others manage to get by.

      • Yep, sounds like that we humans just get by and survive and forget about living a life.
        Please, don’t be smug and reply that it may be a wonderful adventure. Just because you have all your bases covered (seemingly), doesn’t mean you will escape, especially at 70.

        • I wouldn’t at all claim to “have all the bases covered.” Not by a long shot! But we have gone to some care to cover some of the most important ones.

          Two hikers were out in the woods when a bear charged them.

          “C’mon, let’s run!” said the first hiker.

          “We can’t outrun that bear!” said the second hiker.

          The first hiker replied, “No, but I can outrun you!

          It’s all a game, anyway. You can improve your odds, but that faster hiker might trip on a hidden root in the path.

          Ain’t none of gonna “escape,” anyway. So you might as well be determined to enjoy the trip, no? Some here are planning through hedonism and filling their “bucket list.” I prefer to enjoy the process of learning to live in a low-energy manner.

          And if that’s an attitude you call “smug,” then you’d best adopt it, pronto, because research shows that optimists live longer and do better in a crisis.

          Or just join the wailing and gnashing of teeth that seems prevalent in these comments. “WE’RE ALL GONNA DIE!” Well, yea — what’s your point?

            • Being the faster runner might make you the preferred target of the bear… they like to the challenge.

          • I have a hybrid plan — bucket list + small farm.

            I also support the extinction event theory — because when I take out my scale and weigh the facts — that’s the conclusion I come to.

            What’s the point of the we are all gonna die conversation?

            1. It can be useful to some to understand what we are facing so they don’t waste their time on folly (oh my folly – buying a place in a remote place with long winters — thinking there would still be electricity — because the power came from hydro in that area of the country!!! Oh my foolishness — I wish I had know about Finite World before I did that — I could have spent what I lost selling on some wonderful hedonistic adventures!)

            2. Because we won’t be able to compare outcomes after the fact so they need to be debated and discussed now

      • Has anyone reading this blog read; “Abundance-The future is better than you think”?
        by Diamandis and Kotler.
        I was wondering whether its message is realistic?

        • Abundance–The Future is Better than You Think has a huge number of reviews, with most people giving it high ratings. Of course, high ratings only show that you are providing people with what they like to hear. One popular review says:

          In their new book `Abundance: The Future Is Better Than You Think’, Peter Diamandis and Steven Kotler argue that, despite the problems that our technology has recently created (including dwindling resources, global warming, and a population explosion that threatens to confound [and in some cases already does confound] our advances in agricultural production and medicine), we needn’t discard our techno-optimism after all. Indeed, according to Diamandis, the world is on the precipice of another explosion in technology that will soon bring refuge from many of our current problems, and abundance to our doorstep. Not content to let the goal or the timeline remain vague, Diamandis is happy to hang a more precise definition on each. When it comes to abundance, Diamandis defines it as “a world of nine billion people with clean water, nutritious food, affordable housing, personalized education, top-tier medical care, and non-polluting, ubiquitous energy” (loc. 317), and, to top it all off, the freedom to pursue their goals and aspirations unhindered by political repression. With regards to the timeline, Diamandis claims that it “should be achievable within twenty-five years, with noticeable change possible within the next decade” (loc. 580).

          In an attempt to convince us that this goal is achievable (and convincing he is), Diamandis takes us through the latest technological developments (and those that will soon be coming down the pipe) in numerous fields such as water filtration and sanitation (including advancements in water desalination, nano-filtering, sewage recycling, and the smart-water-grid); food production (including the next generation of genetically modified foods, vertical farming, in-vitro meat, and agroecology); education (including personalized education, the OLPC [One Laptop Per Child program], AI education programs, and advancements in educational games, video-games and computer programs); energy (including solar and wind power, the next generation of nuclear energy and algal biofuel, the smart-energy-grid, and battery-encapsulated energy storage); healthcare (including stem cell therapy and organ creation, robotic medical care-givers and surgeons, genomic medicine [based on your individual genome], and Lab-on-a-Chip technology [a diagnostic tool compatible with your cell phone that can instantly analyze samples of saliva, urine and blood]), and many, many more.

          According to Diamandis, the technological innovations mentioned above are being spurred on by 3 forces in particular these days that are likely to bring us to a state of abundance even quicker than we might otherwise expect, and one that extends to all parts of the world. The 3 forces are (in reverse order as to how they are presented), 1) the rise of the bottom billion–which consists in the fact that the world’s poorest have recently begun plugging into the world economy in a very substantial way, both as a consumer and as a producer of goods (largely as a result of the communications revolution, and the fact that cell phones are now spreading even to the world’s poorest populations); 2) the rising phenomenon of the tech-philanthropists–a new breed of wealthy individuals who are more philanthropic than ever, and who are applying their efforts to global solutions (and particularly in the developing world); and 3) the rising phenomenon of DIY innovation–which includes the ability of small organizations, and even individuals to make contributions even in the most advanced technological domains (such as computing, biotechnology, and even space travel).

          I would say that this outcome is not likely at all. We are running into financial problems caused by diminishing returns right now. This doesn’t seem to be factored into the analysis in this book.

    • That is an excellent example of a) how quickly things can collapse and b) how so many things we take for granted will disappear when global collapse kicks off.

      Keep in mind Greece is still plugged into BAU — they have electricity and oil…. the shops remain open…. so this is a relatively prosperous country relative to what is coming…

  3. Dear Gail and Finite Worlders

    I want to comment on a particular concept in Capra and Luisi’s book, The Systems View of Life. I also want to tentatively contrast it with the description of the same phenomenon in Mobus and Kalton.

    The issue is the ‘hierarchy’ of relationships. For example, the cell is part of the organ which is part of the human which is part of the society. And a computer program is written in pieces which are parts of the whole, and various machines are parts of a factory. Mobus and Kalton, to my recollection, do not make a clear distinction between the natural hierarchy and the humanly constructed hierarchy.

    But Capra and Luisi do make a distinction. The discussion can be found on and around page 65:

    ‘Since the early days of organismic biology, these multi-leveled structures of systems within systems have been called hierarchies. However, this term can be misleading, since it is derived from human hierarchies, which are fairly rigid structures of domination and control, quite unlike the multi-leveled order found in nature.’

    And on page 68:
    ‘The view of living systems as networks provides a novel perspective on the so-called ‘hierarchies’ of nature. Since living systems at all levels are networks, we must visualize the web of life as living systems (networks) interacting in network fashion with other systems (networks). For example, we can picture an ecosystem schematically as a network with a few nodes. Each node represents an organism, which means that each node, when magnified, appears itself as a network. Each node in the new network may represent an organ, which in turn will appear as a network when magnified, and so on.

    In other words, the web of life consists of networks within networks. At each scale, under closer scrutiny, the nodes of the network reveal themselves as smaller networks. We tend to arrange these systems, all nesting within larger systems, in a hierarchical scheme by placing the larger systems above the smaller ones in pyramid fashion. But this is a human projection. In nature, there is no ‘above’ or ‘below’, and there are no hierarchies. There are only networks nesting within other networks.’

    To bring this down to a practical problem, consider the question of Social Security as the population of working age decreases. To the humanly constructed notions of hierarchy, this is a big problem. There is a vast network of laws and transfers of money which is resistant to change. But if the government were to disappear tomorrow, then humans would resolve the matter in humanistic terms. (Resolve doesn’t mean everyone will be happy.) Classically, the old people take care of the children to earn their keep…they do not retire to Florida to play golf. And the old people are not suffering for decades with chronic diseases brought about by consuming the fruits of the fossil fuel age and thus requiring vast expenditures on ‘health care’. Family and clan ties work reasonably well to adjust to the inevitable cycles of birth, maturity, and age and death. However, those ties cannot be legislated, nor can family disputes be adjudicated by the Supreme Court.

    The root problem exposed by the Social Security issue is that humanly constructed hierarchies are rigid and resist adaptation to reality. Natural networks are vastly more adaptable and, therefore, resilient.

    One might speculate that the root cause of the crisis in Greece is a clash between the humanly constructed hierarchies: a government in Athens and the governments in the EU counties plus the IMF. Absent those human constructs which enter into borrowing and lending arrangements which are legal, but not natural, arrangements, there would be no problems. Varoufakis has commented that he tries to talk about economics, while the EU ministers want to talk about the law. Varoufakis has his fingers on part of the fundamental problem.

    In short, I believe that the distinction that Capra and Luisi make is crucial to understanding the nature of the problems adapting to peak everything, and the potential (but staunchly resisted) solutions.

    Don Stewart
    PS Also compare Tim Garrett’s view of value as arising from network connections.

  4. I continue to see attacks on QE in the comments section of the MSM… and this just occurred to me:

    You are driving across a desert and you are running out of fuel … the last gas station you come across is closed …

    But you rummage around and find five large cans of gasoline that is tainted with water….

    You can try running the car by putting that in the tank knowing it is going to seize up your engine at some point … or you can lie down and die on the spot.

    The car has continued to run for nearly 7 years… so QE was most definitely the right decision

    • Most rational decision from my perspective. It kicked the can down for these years. I rather wonder whether they have any other ammunition left. The “Big bazooka” in words of Hank Paulson worked. What they need this time? A-bomb?

      • I would have the whole house of cards fall then and there. The bastardss should have been strung up with pitchforks and tossed in the compost heap!

  5. “A single corn kernel coated with a neonicotinoid can kill a song bird.” As a long time environmental lawyer and campaigner, I should not have been stunned by that fact but I was. Shaking my head in dismay, I read on, “Even a tiny grain of wheat or canola treated with the …neonicotinoid… can fatally poison a bird.”


    Aren’t we clever beasts!

  6. America takes pause on a big holiday weekend requiring little in the way of real devotions beyond the barbeque deck with two profoundly stupid movie entertainments that epitomize our estrangement from the troubles of the present day.

    First there’s Mad Max: Fury Road, which depicts the collapse of civilization as a monster car rally. They managed to get it exactly wrong. The present is the monster car show. Houston. Los Angeles. New Jersey, Beijing, Mumbai, etc. In the future, there will be no cars, gasoline-powered, electric, driverless, or otherwise. Mad Max: Fury Road is actually a perverse exercise in nostalgia, as if we’re going to miss being a nation of savages in the driver’s seat, acting out an endless and pointless competition for our little place on the highway.

    More http://kunstler.com/clusterfuck-nation/yesterdays-tomorrowland/

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