Collapse Contagion?

30 07 2012

This isn’t anything deep; I’m just thinking out loud about decline preparations and the difficulties of a faster collapse scenario. I first stumbled across this piece on collapse contagion while reading through the comments to a recent post on The Archdruid Report. Greer’s subsequent post addresses well the issues with taking the most dramatic forecasts too seriously while still acknowledging its overall acuity. Both the original report and Greer’s response are sharp and detailed enough that I will summarize only a little bit and encourage folks to read it all for themselves.

To say it is a harrowing read is an understatement.The report examines, from the probabilistic approach of risk management, the threat of a global economic collapse. The report focuses on the precariousness of the global financial system first, then proceeds to consider the way in which peak oil enters into the mix.

It presents a global financial collapse as a real possibility (not a guaranteed occurrence!), but one that is substantially increased by the stress peak oil will no doubt put on the system. Throughout, the potential fall out of a total failure is examined. It does so in order to make clear the complex chain of dependencies that support our present lifestyle and their fragility.

The report is not intended as a firm prediction of what will happen, but details the worst-case scenario as a sort of baseline from which planning can begin. That is important to appreciate. The author is not saying that the worst-case collapse scenario is the most likely or imminent one, just that an appreciation of it as one probability among others is necessary for clear-sighted forecasting.

As Greer points out, were the situation to approximate the sort of disaster described in the report, it would be very likely that radical action would be taken to change its course. Such action would occur along the point of the chain most amenable to rapid reform and revolution, the financial sector.
That said, the report’s overall point isn’t blunted. Even if this rapid action were taken, the overall trajectory of decline would not be reversed, only slowed (which is Greer’s fundamental point, too).

With all that in mind, what sort of forecasting can we make based on the report? While a total and rapid onset collapse is almost entirely unlikely, the rapid onset of scarcity is a real possibility. Even if governments take radical action to take control of the financial sector in a rapid-collapse situation, the real market of goods upon which it depends would stutter and stall.

While it could be resuscitated, the rapid movement of goods which depends on the rapid movement of (imaginary) financial capital, would be irrevocably damaged. Necessities could be nationalized and distributed in a barely good-enough fashion, but the free flow of luxury and excess through the market would be a different matter. It would take time to rebuild financial networks on a system participants could trust.

This collapse could happen even without the influence of oil scarcity, which is important to keep in mind. The financial sector’s excess is so far out of synch with the actual system of production, that its precariousness could drive a sudden scarcity scenario that would result in a partial collapse ahead of a collapse model that focuses on fossil fuel resources alone.

This isn’t always distinguished in peak oil discussions. While peak oil will surely force contractions in the global trade system, it is not the only factor that could. Peak oil is one factor among several that will shape contraction and, at a given point, it may not even be a driving factor. We could see a financial contraction in the next decade which would be more severe than fuel resources would dictate.

The sorts of things determined by the curve of contracting resources would likely level out over the long term. There would be an increasing synchronization of financial and fuel contraction coming to define the process. The limits on human population this would impose would also be increasingly regular.

Over the short term, though, contraction is likely to be very uneven. This makes predicting and planning for the social dimension of the future difficult and demands a great deal of flexibility and resilience on the part of individuals and communities.

That isn’t an excuse not to prepare, by the way. A strategy is almost always better than no strategy. Rather, it is a demand to prepare and to pay attention, so that if the situation begins to tilt this way or that, you will be ready to tilt in response. Those sort of preparations are not just about putting a plan to paper and mechanically executing it. If the situation changes underneath you (and it is likely to!), then a mechanical plan can become toxic.

Rather, you need to prepare yourself by learning how the system works, how it is possible for it to break. so you can make adjustments on the fly to your strategy.

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One response

8 09 2012
charltonestatetrust

you’ve brought out some really important points – well done!

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