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Hell in a Hand Basket and Why We’re Going There, Guaranteed (sort of)

Tulum, Mexico. 1986.

Tulum, Mexico. 1986.

[My love of music has me suggesting that a song be played in the background while you’re reading this. There are a couple I’d like to suggest: Talking Heads-Nothing but Flowers; Blue Rodeo-Lost Together (must have some Canadian content); or, given the Ukraine/Syria/Iran/North Korea/Venezuela/Congo African Republic/Senkaku-Daiyou Islands/etc. situations, Frankie Goes to Hollywood-Two Tribes. Enjoy:)]

The ebb and flow of societies is well documented by historians and archaeologists. It seems every society rises in complexity to a zenith of some kind and then falls. There are an increasing number of people who contend that this sociopolitical transformation is fast-approaching for our globalised, industrial civilization, and of those some believe that this shift will be a long drawn out affair of slow decline[i], while others suggest it may be more of a sudden shift[ii], or collapse[iii].

Whether this change takes generations or is much more sudden and dramatic matters not (unless you’re living through the latter one, I suppose); one’s perception of this depends upon the temporal perspective taken. For example, let’s assume, for the sake of argument, that the oil-dependent, industrialized society of humans lasts 400 years, 200 years up and 200 years down (I think I’m being overly generous here on the demise side).

A 200-year decline may, given normalcy bias, not be perceived as a significant shift at all by those experiencing it. However, if we can step back and view this rise and fall in larger historical terms, say on a 10,000-year basis, this ascent/descent scenario may be perceived as quick and calamitous. I think perspective is everything here. (Note that I’ll continue to refer to the impending change as ‘collapse’ because I tend to believe the change will come quickly, especially once the power grid fails.)

That being said, the antecedents of such collapse are varied and complex. They range from declining marginal returns[iv] to environmental collapse[v] to psychological shifts[vi] to overshooting local carrying capacity[vii] to Peak Oil[viii] to population growth[ix]. Humans don’t require artificial intelligence that perceives us as a threat, a viral pandemic leading to a zombie apocalypse, or an alien invasion for our resources to push us over the cliff; we don’t even need a nuclear war. We have our own non-military, sociocultural peculiarities to accomplish it.

As with any complex, dynamical system, the variables that lead to collapse interact in ways both knowable and surprising (such are the emergent phenomenon that arise from complex systems). Feedback that might provide clues to the coming demise tends to be ignored, delayed, or misinterpreted, resulting in dismissal of clear signals. In fact, oftentimes, the actions taken by players can expedite the process of collapse. To this end, I believe that our economic system, with globalisation efforts and its underlying foundation of infinite growth, may be the catalyst that pushes our industrial civilisation over the impending cliff of collapse. But, who really knows? My guess is about as good as anybody else’s[x].

What are some of the components contributing to this collapse endgame? I offer a few: exponential growth of population; dependency on fossil fuels; human hubris; economic credit/debt obligations; climate change; peak resources (especially oil and water); delayed feedback; corrupt political/economic systems; misperceptions; accumulation of toxins/pollutants; misleading information; and just plain, old ignorance (some purposeful I believe). And, don’t forget the black swans.

To me, population growth seems to be the factor that we have pushed in the wrong direction but the underlying variable to this is energy. Populations do not grow if there is not enough energy to support such growth. This energy may take the form of domesticated animal and plant life, or long-stored, concentrated energy (i.e. fossil fuels), but at its base is solar energy and how it is exploited. For tens of thousands of years human population was held in check by limited energy exploitation. The ‘Agricultural Revolution’ certainly gave a boost to human population, especially within new villages, towns, and cities erupting all over the globe. However, once fossil fuels began to be exploited our population took off in a global, exponential explosion. It is this exponential growth of human population that has put us in this bind we are in.

To better understand what is happening, I believe one of the fundamental pieces of information to get a grip on is, in fact, exponential growth. Exponential growth is a concept well-known (think compound interest) but whose consequence has been lost on many. The late Dr. Albert Bartlett was perhaps one of the leading authorities on the implications of such growth and spent much of his professional career attempting to educate people about it. In a presentation he gave thousands of times and was viewed many more times on youtube (viewed more than 1/4 million times; not bad for an old guy lecturing about mathemtics) he outlines the importance of it and its consequences.

Entitled ‘Arithmetic, Population, and Energy’[xi], Bartlett argues, among other things, that zero population growth will happen whether we wish it to or not, it is a mathematical certainty. In the words of others, if something cannot grow forever, it won’t. However, as Bartlett points out, we hold near and dear to our hearts many things that are contributing to overpopulation: education, healthcare, immigration, sanitation, law and order. On the other side of the ledger, however, are forces that counter these: war, famine, disease, accidents, murder, abortion, and infanticide. His point is that we can either deal with the issue of overpopulation by changing our behaviours (and attitudes) or nature will do it for us; the choice is ours (or is it?).

_______________________

…here we can see the human dilemma—everything we regard as good makes the population problem worse, everything we regard as bad helps solve the problem. There is a dilemma if ever there was one.
Dr. Albert Bartlett

_______________________

A burgeoning population and its implications for human sustainability on a finite planet has been around for some time. Thomas Malthus’s treatise on the subject in 1798 being perhaps one of the most well known. Had Malthus known of the incredible boost to global carrying capacity that was about to be unleashed by the exploitation of a one-time windfall of concentrated and easily-transportable energy, petroleum, he may not have been so adamant in his conclusion that the end of growth was near-at-hand. But such are the chances when one attempts to foretell the future.

My own biases, prejudices, predilections, observations, and experiences, suggest this human experiment we are a part of will not end well[xii]. I believe that there is too much momentum, too many people with a sense of entitlement, too many sociocultural myths, too many elite protecting the status quo, and far too much ignorance for us to avoid a global collapse. Unless, of course, Zemphram Cochrane’s trans-warp engine test on April 4, 2063 at 11:15 am, after the Third World War (aka Eugenics Wars), is seen by a Vulcan survey expedition and makes First Contact, saving us from ourselves[xiii].

What typically follows social, political, economic collapse is a ‘dark age’ of some kind and is perhaps best known (at least within Western history) by the years that followed the collapse of the Roman Empire. But more on this in another post.

Despite all of the above, there are a variety of other variables that could push a teetering globe into a collapse scenario, particularly geopolitics or a natural disaster. No one knows. Prediction of the future is for meteorologists and economists, neither of which is very good beyond a couple of days for the former, and much less for the latter. I must admit, however, that Marion King Hubbert’s prediction of the coming demise of industrial civilization[xiv], along with the seminal text, The Limits to Growth[xv], are pretty good guesses in my books.

The one thing I am sure of, the more I learn, the more I am finding that I am ignorant of. Although I spent a career as an educator[xvi], I continue to be a student…and perhaps this diatribe is all just an elongated justification of my belief system, “a tale told by an idiot, full of sound and fury, signifying nothing”[xvii]

Olduvai (aka Steve Bull)


[i] Greer, J.M.. The Long Descent: A User’s Guide to the End of the Industrial Age. New Society Publishers, 2008. (ISBN 978-0-86571-609-4)
Kunstler, J. H.. The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century. Grove Press, 2009/2006/2005. (ISBN 978-0-8021-4249-8)
[ii] Diamond, J.. Collapse: How Societies Choose to Fail or Succeed. Penguin Books, 2005/2011. (ISBN 978-0-14-311700-1)
Orlov, D.. The Five Stages of Collapse: Survivor’s Toolkit. New Society Publishers, 2013. (ISBN 978-0-86571-736-7)
Ruppert, M.. Confronting Collapse: The Crisis of Energy and Money in a Post Oil World. Chelsea Green Publishing, 2009.  (ISBN 978-1-60358-164-3)
[iii] I use the following definition of collapse, as proposed by Joseph Tainter (see footnote below): “[It] is fundamentally a matter of the sociopolitical sphere. A society has collapsed when it displays a rapid, significant loss of an established level of sociopolitical complexity….To qualify as an instance of collapse a society must  have been at, or developing toward, a level of complexity for more than one or two generations…The collapse in turn must be rapid—taking no more than a few decades—and must entail a substantial loss of sociopolitical structure. Losses that are less severe, or take longer to occur, are to be considered cases of weakness and decline.” (p. 4)
[iv] Tainter, J.A.. The Collapse of Complex Societies. Cambridge University Press, 1988. (ISBN 978-0-521-38673-9)
[v] Diamond, J.. Ibid.
[vi] Orlov, D.. Ibid.
[vii] Catton, Jr., W.R.. Overshoot: The Ecological Basis of Revolutionary Change. University of Illinois Press, 1982. (ISBN 978-0-252-09988-4)
[viii] Ruppert, M.. Ibid.
[ix] Malthus, T.. An Essay on the Principle of Population as it Affects the Future Improvement of Society. J. Johnson, 1798.
[x] Take a good, long critical look at the world and its leaders. Do you have faith, enough faith that you would risk your own life and that of your family, in the leaders of this world to be capable of circumnavigating successfully the various crises that are erupting with greater magnitude and frequency, from climate change to geopolitical stresses to resource depletion to economic collapse? If you have that much faith in them, well good luck to you. Quite simply, I don’t. I believe they are incapable of managing these dilemmas and cascading failures of the various systems of industrialised civilisation will occur some time in our future. NO, I have no idea when.
[xi] Bartlett, A.. Arithmetic, Energy, and Population. (Transcript: http://www.albartlett.org/presentations/arithmetic_population_energy_transcript_english.html).
[xii] I must admit that my particular pessimistic perspective makes for an interesting dynamic between my spouse and I, for she is the eternal optimist who, as a practising educator, believes in the successful implementation of social engineering to prevent many of the negative consequences (I’ve just retired from the profession but have always been a ‘little’ critical of it, and authority; the latter, in no small part, likely the result of being the child of a police officer).
[xiii] Star Trek, First Contact. See http://en.wikipedia.org/wiki/Star_Trek:_First_Contact
[xiv] Hubbert, M.K.. Energy from fossil fuels. Science, Feburary 4, 1949. v.109, pp. 103-109.
[xv] Meadows, D., J. Randers, & D. Meadows. Limits to Growth: The 30-Year Update. Chelsea Green Publishing Company, 2004. (ISBN 978-1-931498-58-6)
[xvi] 9 years as a classroom teacher (grades 6-8), 13 as an administrator (K-8 school).
[xvii] Shakespeare. Macbeth (Act 5, Scene 5, lines 26-28)

 

Hell in a Hand Basket and Why We're Going There, Guaranteed (sort of)

Tulum, Mexico. 1986.

Tulum, Mexico. 1986.

[My love of music has me suggesting that a song be played in the background while you’re reading this. There are a couple I’d like to suggest: Talking Heads-Nothing but Flowers; Blue Rodeo-Lost Together (must have some Canadian content); or, given the Ukraine/Syria/Iran/North Korea/Venezuela/Congo African Republic/Senkaku-Daiyou Islands/etc. situations, Frankie Goes to Hollywood-Two Tribes. Enjoy:)]

The ebb and flow of societies is well documented by historians and archaeologists. It seems every society rises in complexity to a zenith of some kind and then falls. There are an increasing number of people who contend that this sociopolitical transformation is fast-approaching for our globalised, industrial civilization, and of those some believe that this shift will be a long drawn out affair of slow decline[i], while others suggest it may be more of a sudden shift[ii], or collapse[iii].

Whether this change takes generations or is much more sudden and dramatic matters not (unless you’re living through the latter one, I suppose); one’s perception of this depends upon the temporal perspective taken. For example, let’s assume, for the sake of argument, that the oil-dependent, industrialized society of humans lasts 400 years, 200 years up and 200 years down (I think I’m being overly generous here on the demise side).

A 200-year decline may, given normalcy bias, not be perceived as a significant shift at all by those experiencing it. However, if we can step back and view this rise and fall in larger historical terms, say on a 10,000-year basis, this ascent/descent scenario may be perceived as quick and calamitous. I think perspective is everything here. (Note that I’ll continue to refer to the impending change as ‘collapse’ because I tend to believe the change will come quickly, especially once the power grid fails.)

That being said, the antecedents of such collapse are varied and complex. They range from declining marginal returns[iv] to environmental collapse[v] to psychological shifts[vi] to overshooting local carrying capacity[vii] to Peak Oil[viii] to population growth[ix]. Humans don’t require artificial intelligence that perceives us as a threat, a viral pandemic leading to a zombie apocalypse, or an alien invasion for our resources to push us over the cliff; we don’t even need a nuclear war. We have our own non-military, sociocultural peculiarities to accomplish it.

As with any complex, dynamical system, the variables that lead to collapse interact in ways both knowable and surprising (such are the emergent phenomenon that arise from complex systems). Feedback that might provide clues to the coming demise tends to be ignored, delayed, or misinterpreted, resulting in dismissal of clear signals. In fact, oftentimes, the actions taken by players can expedite the process of collapse. To this end, I believe that our economic system, with globalisation efforts and its underlying foundation of infinite growth, may be the catalyst that pushes our industrial civilisation over the impending cliff of collapse. But, who really knows? My guess is about as good as anybody else’s[x].

What are some of the components contributing to this collapse endgame? I offer a few: exponential growth of population; dependency on fossil fuels; human hubris; economic credit/debt obligations; climate change; peak resources (especially oil and water); delayed feedback; corrupt political/economic systems; misperceptions; accumulation of toxins/pollutants; misleading information; and just plain, old ignorance (some purposeful I believe). And, don’t forget the black swans.

To me, population growth seems to be the factor that we have pushed in the wrong direction but the underlying variable to this is energy. Populations do not grow if there is not enough energy to support such growth. This energy may take the form of domesticated animal and plant life, or long-stored, concentrated energy (i.e. fossil fuels), but at its base is solar energy and how it is exploited. For tens of thousands of years human population was held in check by limited energy exploitation. The ‘Agricultural Revolution’ certainly gave a boost to human population, especially within new villages, towns, and cities erupting all over the globe. However, once fossil fuels began to be exploited our population took off in a global, exponential explosion. It is this exponential growth of human population that has put us in this bind we are in.

To better understand what is happening, I believe one of the fundamental pieces of information to get a grip on is, in fact, exponential growth. Exponential growth is a concept well-known (think compound interest) but whose consequence has been lost on many. The late Dr. Albert Bartlett was perhaps one of the leading authorities on the implications of such growth and spent much of his professional career attempting to educate people about it. In a presentation he gave thousands of times and was viewed many more times on youtube (viewed more than 1/4 million times; not bad for an old guy lecturing about mathemtics) he outlines the importance of it and its consequences.

Entitled ‘Arithmetic, Population, and Energy’[xi], Bartlett argues, among other things, that zero population growth will happen whether we wish it to or not, it is a mathematical certainty. In the words of others, if something cannot grow forever, it won’t. However, as Bartlett points out, we hold near and dear to our hearts many things that are contributing to overpopulation: education, healthcare, immigration, sanitation, law and order. On the other side of the ledger, however, are forces that counter these: war, famine, disease, accidents, murder, abortion, and infanticide. His point is that we can either deal with the issue of overpopulation by changing our behaviours (and attitudes) or nature will do it for us; the choice is ours (or is it?).

_______________________

…here we can see the human dilemma—everything we regard as good makes the population problem worse, everything we regard as bad helps solve the problem. There is a dilemma if ever there was one.
Dr. Albert Bartlett

_______________________

A burgeoning population and its implications for human sustainability on a finite planet has been around for some time. Thomas Malthus’s treatise on the subject in 1798 being perhaps one of the most well known. Had Malthus known of the incredible boost to global carrying capacity that was about to be unleashed by the exploitation of a one-time windfall of concentrated and easily-transportable energy, petroleum, he may not have been so adamant in his conclusion that the end of growth was near-at-hand. But such are the chances when one attempts to foretell the future.

My own biases, prejudices, predilections, observations, and experiences, suggest this human experiment we are a part of will not end well[xii]. I believe that there is too much momentum, too many people with a sense of entitlement, too many sociocultural myths, too many elite protecting the status quo, and far too much ignorance for us to avoid a global collapse. Unless, of course, Zemphram Cochrane’s trans-warp engine test on April 4, 2063 at 11:15 am, after the Third World War (aka Eugenics Wars), is seen by a Vulcan survey expedition and makes First Contact, saving us from ourselves[xiii].

What typically follows social, political, economic collapse is a ‘dark age’ of some kind and is perhaps best known (at least within Western history) by the years that followed the collapse of the Roman Empire. But more on this in another post.

Despite all of the above, there are a variety of other variables that could push a teetering globe into a collapse scenario, particularly geopolitics or a natural disaster. No one knows. Prediction of the future is for meteorologists and economists, neither of which is very good beyond a couple of days for the former, and much less for the latter. I must admit, however, that Marion King Hubbert’s prediction of the coming demise of industrial civilization[xiv], along with the seminal text, The Limits to Growth[xv], are pretty good guesses in my books.

The one thing I am sure of, the more I learn, the more I am finding that I am ignorant of. Although I spent a career as an educator[xvi], I continue to be a student…and perhaps this diatribe is all just an elongated justification of my belief system, “a tale told by an idiot, full of sound and fury, signifying nothing”[xvii]

Olduvai (aka Steve Bull)


[i] Greer, J.M.. The Long Descent: A User’s Guide to the End of the Industrial Age. New Society Publishers, 2008. (ISBN 978-0-86571-609-4)
Kunstler, J. H.. The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century. Grove Press, 2009/2006/2005. (ISBN 978-0-8021-4249-8)
[ii] Diamond, J.. Collapse: How Societies Choose to Fail or Succeed. Penguin Books, 2005/2011. (ISBN 978-0-14-311700-1)
Orlov, D.. The Five Stages of Collapse: Survivor’s Toolkit. New Society Publishers, 2013. (ISBN 978-0-86571-736-7)
Ruppert, M.. Confronting Collapse: The Crisis of Energy and Money in a Post Oil World. Chelsea Green Publishing, 2009.  (ISBN 978-1-60358-164-3)
[iii] I use the following definition of collapse, as proposed by Joseph Tainter (see footnote below): “[It] is fundamentally a matter of the sociopolitical sphere. A society has collapsed when it displays a rapid, significant loss of an established level of sociopolitical complexity….To qualify as an instance of collapse a society must  have been at, or developing toward, a level of complexity for more than one or two generations…The collapse in turn must be rapid—taking no more than a few decades—and must entail a substantial loss of sociopolitical structure. Losses that are less severe, or take longer to occur, are to be considered cases of weakness and decline.” (p. 4)
[iv] Tainter, J.A.. The Collapse of Complex Societies. Cambridge University Press, 1988. (ISBN 978-0-521-38673-9)
[v] Diamond, J.. Ibid.
[vi] Orlov, D.. Ibid.
[vii] Catton, Jr., W.R.. Overshoot: The Ecological Basis of Revolutionary Change. University of Illinois Press, 1982. (ISBN 978-0-252-09988-4)
[viii] Ruppert, M.. Ibid.
[ix] Malthus, T.. An Essay on the Principle of Population as it Affects the Future Improvement of Society. J. Johnson, 1798.
[x] Take a good, long critical look at the world and its leaders. Do you have faith, enough faith that you would risk your own life and that of your family, in the leaders of this world to be capable of circumnavigating successfully the various crises that are erupting with greater magnitude and frequency, from climate change to geopolitical stresses to resource depletion to economic collapse? If you have that much faith in them, well good luck to you. Quite simply, I don’t. I believe they are incapable of managing these dilemmas and cascading failures of the various systems of industrialised civilisation will occur some time in our future. NO, I have no idea when.
[xi] Bartlett, A.. Arithmetic, Energy, and Population. (Transcript: http://www.albartlett.org/presentations/arithmetic_population_energy_transcript_english.html).
[xii] I must admit that my particular pessimistic perspective makes for an interesting dynamic between my spouse and I, for she is the eternal optimist who, as a practising educator, believes in the successful implementation of social engineering to prevent many of the negative consequences (I’ve just retired from the profession but have always been a ‘little’ critical of it, and authority; the latter, in no small part, likely the result of being the child of a police officer).
[xiii] Star Trek, First Contact. See http://en.wikipedia.org/wiki/Star_Trek:_First_Contact
[xiv] Hubbert, M.K.. Energy from fossil fuels. Science, Feburary 4, 1949. v.109, pp. 103-109.
[xv] Meadows, D., J. Randers, & D. Meadows. Limits to Growth: The 30-Year Update. Chelsea Green Publishing Company, 2004. (ISBN 978-1-931498-58-6)
[xvi] 9 years as a classroom teacher (grades 6-8), 13 as an administrator (K-8 school).
[xvii] Shakespeare. Macbeth (Act 5, Scene 5, lines 26-28)

 

charles hugh smith-Certainty, Complex Systems, and Unintended Consequences

charles hugh smith-Certainty, Complex Systems, and Unintended Consequences.

(February 14, 2014)

When it comes to complex systems and unintended consequences, the key phrase is “be careful what you wish for.”

A lot of people are remarkably certain that their understanding of how systems will respond in the future is correct. Alan Greenspan was certain there was no housing bubble in 2007, for example (or he did a great job acting certain). There is no shortage of people who are certain the U.S. dollar is doomed to collapse, but only after losing the reserve currency status.

Other people are certain China can launch a gold-backed currency that will replace the dollar as the world’s reserve currency.

Some are certain the U.S. stock market is going to crash this year, while others are equally certain that stocks will continue lofting higher on central bank tailwinds.

Being wrong about the way systems responded in the past doesn’t seem to deter people from being certain about the future. Those who were certain there was no bubble in 2007-8 were wrong, and those (myself included) who saw the can being kicked down the road were wrong in not anticipating that global stocks would not just recover their pre-crash heights but go on to new nominal highs, based on the excellence of the can-kicking skills of central states and banks.

Complex systems don’t act in the linear way our minds tend to work. Humans are built to distill a chaotic array of sensory data into a narrative that simplifies decision-making and risk assessment (for example, “us good, them bad”). We prefer our chains of causality to have a few big links we can follow without difficulty. We find systems with multitudes of ambiguous inputs tiresome and so we invent ideologies (“us good, them bad”) and very occasionally, elegant mathematical statements that reduce the chaos of data to predictable causal chains.

We are built to cling very stubbornly to certainty once we reach a conclusion, because ambiguity and having to constantly change our assessments of inputs and causality are big drains on our energy and mental capabilities. It’s “cheaper” in terms of energy and anxiety to just stick with the story we grew up with or the one we chose after a bit of looking at what our mates think/believe/claim is true.

Certainty has another advantage: it’s more persuasive than hedged hesitancy.Leadership tends to fall to those without hesitation, the bold ones with the powerful rhetoric of certainty, confidence and optimism. We don’t want the narrative muddled with hedges–maybe “them” are not necessarily evil, dangerous enemies, etc.–and so we shout down, ridicule or ignore those who are circumspect about how systems will respond in the future.

Politicians have of course mastered the art of distilling narratives to the desired state of certainty, confidence and optimism, and in repeating the story often enough that mere repetition lends it credence.

The problem is simplistic, linear narratives don’t map complex systems. All sorts of unexpected and unintended things happen in complex systems when you change the inputs and try to control the output.

We have a name for systems where the inputs are all tightly controlled to yield a simplistic desired output: they’re called monocultures, and monocultures are exquisitely vulnerable to unintended consequences and “leaks” from the outside world. Though monocultures look robust, they are actually quite fragile, because the natural feedbacks and redundancies of natural systems have been eradicated to make the desired yield the primary output.

This is why politicians cannot deal with either complex systems or unintended consequences. As a result, they have to act as if complex systems and unintended consequences don’t exist.

Thus Federal Reserve Chair Janet Yellen sticks to the simplistic narrative that the economy is flourishing and so the Fed can “taper” its money-creation/asset-buying operation, but she is careful not to mention the unintended consequences of the Fed’s monoculture: to mention just one, that since the Federal deficits are shrinking rapidly, if the Fed didn’t reduce its $1 trillion a year program, it would soon end up owning the entire Treasury market.

Since there could be unintended consequences of that, the Fed chair doesn’t mention the topic.

The narrative that printing money destroys the currency being printed is appealing on many levels. It makes sense, and history is replete with examples of just this narrative.

But the system isn’t quite as linear as we might wish. If $10 trillion in dollar-denominated value is wiped out in write-downs triggered by marking phantom assets to market, and $1 trillion is printed, the system still lost $9 trillion. As correspondent David C. observed:

Destruction of dollar *value* means that surviving dollars become more *valuable.*

If stocks, bond, real estate, Beanie Babies, etc. decline in VALUE, it means they are worth fewer dollars-per-unit. This means that dollars are, by definition, rising in value per unit, and this absolutely confounds those who believe the next big thing is inflation/hyperinflation.

They simply can’t see that if people become poorer (as their stocks, bonds, homes, etc. fall in value), and especially if the banks begin to fail in a wave too large to bail and take deposits into monetary nothingness, the most likely outcome is that those who retain access to dollars will see their dollars rises dramatically in purchasing power, the exact opposite of the last 82 years of experience.

I’ve encountered few people who can accept this paradoxical analysis.

Our fully fiat-money system enabled the embrace of illusions so pervasive that people simply can’t see how much “value” today rests on cross-linked IOU’s. When those IOU-dollars begin to evaporate in earnest, desperation for the underlying “asset” (a dollar, as perverse as that seems given that the dollar is backed by nothing and preceded by no production of value) should skyrocket.”

As for China launching a gold-backed currency that acts as the reserve currency–it isn’t quite as simple and tidy as it appears. Triffin’s Paradox is based on a peculiar characteristic of a reserve currency: it serves both a domestic market and a global market, and the two have different dynamics.

A reserve currency must be available in size in global markets, which means the issuing nation must export its currency in size so others have enough of it to fill their reserves and grease their trade exchanges. The issuing nation can simply helicopter drop the equivalent of several trillion dollars of currency into other nations (something that hasn’t been tried), or it has to run trade deficits, i.e. it buys more goods and services from other nations than it exports to them, and so it exports its currency to other nations to use as a reserve currency.

This means nations that run enormous trade surpluses can’t issue a reserve currency, because they’re not exporting currency, they’re importing other nations’ currency and having to “sterilize” it into their own domestic economy or buy something denominated in the imported currency.

There’s another paradox. Let’s say China became a net importer on a grand enough scale to issue a reserve currency. The one example we have of a nation issuing gold-backed currency that was also the reserve currency based on that nation running large trade deficits is the U.S. in the late 1960s. What happens in this circumstance is those holding the gold-backed currency decide to trade the currency for gold, and the issuing nation soon runs out of gold.

This sets up a paradox: net exporting nations cannot issue a reserve currency, fiat or gold-backed, for the simple reason they are importing currency, not exporting it for others to use as a reserve currency.

Any nation that does run a trade deficit large enough to enable a reserve currency and backs that currency with gold will see its gold reserves vanish as holders of their currency trade its currency for gold.

I have addressed a few of the complexities of reserve currencies and trade before:

The Impossibility of China Issuing a Reserve Currency (October 14, 2013)

Why the Shrinking Trade Deficit Will Choke U.S. Corporate Profits (August 8, 2013)

Understanding the “Exorbitant Privilege” of the U.S. Dollar (November 19, 2012)

When it comes to complex systems and unintended consequences, the key phrase is “be careful what you wish for.”

It’s Time for Business to Earn a License to Lead | Paul Polman

It’s Time for Business to Earn a License to Lead | Paul Polman.

The acronym VUCA — Volatile, Uncertain, Complex, Ambiguous — may have its origins in the military, but it is increasingly clear that it applies to all aspects of our lives today. The fact is we operate in an age of fast-moving and increasingly unpredictable change. No one country, society, industrial sector or individual organisation is immune. We are all impacted. Navigating this new reality is made even more challenging by the increasingly interdependent nature of today’s world.

The issues and predicaments we face are linked inextricably as never before. There is no better or more dramatic illustration of this than the food, water, energy and climate nexus, so effectively highlighted over recent years by the World Economic Forum and others. How do we guarantee food security for a rapidly rising population in the face of growing water and energy constraints, many of them directly attributable to climate change? No wonder one leading scientist has warned of a ‘perfect storm’ of global events. Increasingly, business has found itself in the eye of this storm, mistrusted by large sections of society and seen, with some justification, as part of the problem and not part of the solution to many of today’s challenges. This has to change. Business can no longer afford to be a bystander, content to sit on the sidelines doing the minimum necessary to acquire its ‘licence to operate.’ The challenges require — and citizens demand — a different approach.

Permissible growth in the future has to be based on sustainable and equitable models. Having acquired a license to operate, it’s time for business to earn a license to lead. The military and defense officials who first identified the VUCA world used to speak of the need for ‘burden sharing’, for sovereign nations to spread more evenly the responsibility for defending freedoms around the world. It’s a military parallel that also has resonance today. For its part, business has to accept a much greater share of the responsibility for everything that goes on within the length and breadth of its value chain. Putting your own house in order is a necessary — but insufficient — condition for developing sustainable growth models.

This is the essence behind the Unilever Sustainable Living Plan, which gives expression to the company’s commitment to double its size while reducing its overall environmental footprint and increasing its positive social impact. It’s a plan that covers the entire value chain, from sourcing to manufacturing to the way consumers use our products.

This requires the kind of holistic, systems-based thinking that Andrea Bassi and Gilbert Probst argue needs to become mainstream, in their book Tackling Complexity: A Systemic Approach for Decision Makers. The book adopts systemic thinking to solve complex problems in socio-political as well as business environments, turning them into opportunities.

The main innovation that systemic thinking introduces — the emphasis on defining the problem-creating system, which is made up of interacting parts, rather than prioritizing events that need immediate fixing — can be used to better understand reality and its complexity. Tackling Complexity proposes a five-step technique with which to better understand problems and the context in which they arise, and tools to directly inform each step of the decision-making process. Practically, systemic thinking can be used to identify problems, analyze their boundaries, design strategies and policy interventions, forecast and measure their expected impacts, implement them, and monitor and evaluate their successes and failures.

If we get this right we can make a difference. However, the sheer size and scale of the challenges we face means that even the largest and most internationally dispersed businesses and organizations are limited in the scope of what they can achieve. System-wide changes rely on a critical mass of interested parties, all willing to enter into deep partnerships and collaborations, founded on new levels of trust and a commitment to action, not debate.

There is still a long way to go. We are far from reaching the tipping point that is needed, though the tide is certainly turning, in my view. The commitment to put an end to illegal deforestation and develop sustainable alternatives for commodities like palm oil and soy, for example, is an inspiring illustration of what can be achieved when governments and industry partners come together determined to bring about transformational market-wide changes. None of this is easy. Everything carries a risk. Taking the first step is often the most difficult. It takes courage and a willingness to focus on long-term horizons, not short-term results. Systemic changes therefore require new forms of leadership from men and women — and especially women — willing to be the vanguards of change. For them, Tackling Complexity provides an invaluable route map of what it takes to drive change and succeed in the VUCA world that is undoubtedly here to stay.

The World Complex: A system doomed to fail

The World Complex: A system doomed to fail.

A system doomed to fail

In the broadest sense, there are three types of systems in the world.The first are simple systems which are characterized by only a few variables or agents, and which can be described by perhaps a handful of equations (or even one).

The second are systems which are characterized by disorganized complexity. These may consist of huge numbers of agents or variables, and their interactions cannot be described by simple equations; yet the overall system is well-described statistically through averages and can be described as being stochastic. Such systems are typically characterized by a stable equilibrium, provided there are no external shocks to the system. They are incapable of generating internal shocks or surprises. For example, you might consider the distribution of air molecules in a room. You may not be able to predict the motion of any particular air molecule, but you can be reasonable certain that the global population won’t do anything unexpected (like all move into one side of the room leaving a vacuum on the other side).

The third type of system is characterized by organized complexity. As the systems above, one may consist of many variables or agents, each of which is simple, but the system’s behaviour does not lend itself to statistical description because instead of the activities of each component dissolving into a background equilibrium, large-scale (even global scale) structure “emerges” instead of seething chaos. Along with these “emergent properties”, common features of such a system include multiple equilibria, adaptive behaviour, and feedbacks. There is no simple way to describe its behaviour, as much of the system’s history is bound up in its behaviour (what economists call “long memory”).

Complex systems, for all their unpredictability are remarkably resilient. The resilience arises from the way in which this type of system interacts with its environment–through the individual actions of its simple components, the system is able to gather information about its environment and modify its operations to adapt. Yet this adaptation and evolution all occur in the absence of central control.

The above descriptions–and characterizations of three types of systems–go back to 1948. Unfortunately it appears that Dr. Weaver was too optimistic when he recommended science develop an understanding of the third type of system “over the next 50 years”. Here we are 65 years later and we have made only basic improvements in our understanding of such systems.

What has gone wrong? I think it is partly due to the limitations of the Newtonian paradigm on which science has rested over the past few hundred years.

Back to Weaver. He asks,

How can currency be wisely and effectively stabilized? To what extent is it safe to depend on the free interplay of such forces as supply and demand? To what extent must systems of economic control be employed to prevent the wide swings from prosperity to depression? These are also obviously complex problems, and they too involve analyzing systems which are organic wholes, with their parts in close interrelation.

The Fed has answered.

Sixty-five years ago, economics was known to be a complex, organized system. Yet today, the Fed continues to set policy as if the economy were a stochastic system that could be sledgehammered into whatever equilibrium state is deemed politically expedient. I would further argue that the Fed has not managed to succeed even in hammering the economy into a desirable equilibrium, but rather has mastered the ability to create artificial statistics to “justify” its actions.

The system is doomed to fail, because the resilience of natural complex systems requires freedom of action for its individual components. We do not observe resilient complex systems with central control. Yet central control is the dominant ideology of our present political and economic systems. Total control, with a vanishingly thin veneer of democracy, ephemeral as the morning dew.

PatternDynamics: Following The Way Nature Organizes Itself to Deal with Complexity

PatternDynamics: Following The Way Nature Organizes Itself to Deal with Complexity.

by David MacLeod, originally published by Integral Permaculture  | TODAY

The natural world is staggeringly complex, and yet amazingly elegant in how it manages the multitude of interconnected parts into organized, unified wholes that thrive. What is the secret for harnessing this elegance for use in human systems? Tim Winton found that observation of the most common patterns found in the natural world led to the development of high level principles which can then be used to address the most complex challenges that human systems face.

After learning some of the common patterns found in all natural systems, we can then begin to recognize these patterns in human systems , and learn how to balance the ones that are skewed, and to integrate in the ones might add a greater level of enduring health. We can “make a deeper difference by changing the system!”

change the system

PatternDynamics is a systems thinking tool for creating systems level change that Winton has been developing over 20 years as he’s worked in diverse fields, including: environmental services contractor, organic farmer, sustainability educator, designer, project manager, consultant, executive leadership, and corporate governance.

What is unique about PatternDynamics is that it combines the patterns of nature with the power of language, to produce a sustainability pattern language.

In a recent paper by Barrett Brown, referring to a study he had done in 2012 of top performing organizational leaders, he observed that these top leaders “use three powerful thinking tools to design their initiatives and guide execution. They are (a) Integral theory, (b) Complexity theory, and (c) Systems theory. These models help them to step back from the project, get up on to the balcony, and take a broad view of the whole situation. They use these tools to make sense of complex, rapidly changing situations and navigate through them securely.”

And famed Permaculture teacher Toby Hemenway (author of Gaia’s Garden)recently posted on his blog the following recommendation: “To enrich our ability to use recipes and put them into context, without engaging in a full-blown design analysis from scratch, we can use pattern languages. The term was coined by architect Christopher Alexander to mean a structured grammar of good design examples and practices in a given field—architecture, software design, urban planning, and so forth— that allow people with only modest training to solve complex problems in design. … Like recipes, pattern languages are plug-and-play rather than original designs, but they allow plenty of improvisation and flexibility in implementation, and can result in rich, detailed solutions that fit. A handbook of pattern languages for the basic human needs and societal functions, structured along permaculture principles, would be a worthy project for a generation of designers.”[my emphasis]

PatternDynamics is firmly rooted in Integral theory, Complexity theory, and Systems theory, and as well contains Permaculture’s emphasis on patterns and principles (PatternDynamics was developed during Tim’s time as Director of the Permaforest Trust, a 170 acre Permaculture education center in New South Wales, Australia). In addition a fifth strong influence was Alexander’s ideas on pattern languaging. These five robust theories and practical application tools provide a very firm foundation that will continue to support PatternDynamics long into the future as it continues to evolve. It is probably not the recipe book that Hemenway envisions, rather the patterns are more like a set of key ingredients from which we are invited to collaborate to co-create the needed recipes for a given context. The goal is to facilitate collective intelligence.

Tim Winton“The key to complexity is systems thinking, and the key to systems thinking is patterns. The key to patterns is using them as a language – an idea I borrowed from architect and mathematician Christopher Alexander’s book ‘Notes on the Synthesis of Form’.”
– Tim Winton

Systems thinking itself is complex and difficult to learn, which is why the series of Patterns in PatternDynamics can be so helpful in simplifying that complexity – “If we don’t have a symbol for something, it does not become enacted in our reality” Winton says.

order_chart

Secondly, as these Patterns become part of a shared language, this gives us the ability to collaborate with others –hence the facilitation of collective intelligence. Noting the increased complexity in our human systems, Winton states that “No longer is any one person brilliant enough to solve the complex problems we face; we really have to use our collective intelligence.” This innovative method of facilitating collective intelligence is proposed as an essential 21st century skill.

Speaking for myself, after completing the Level II training in PatternDynamics, I notice that I am starting to see “wholes” much more often, in extremely diverse systems. Everything from systems at work in my own body, to systems in organizations I’m involved with, to the systemic problems facing our world, and all the way up to long term processes going on in our universe. Being able to see these wholes then helps the next step – ideas are flowing more easily on how to balance and integrate to improve the health of the systems I am involved with.

Therefore, it is with some excitement that I am preparing to host a One Day PatternDynamics Workshop on January 26, 2014 here in Bellingham, Washington. Click Here for more information about this event. A workshop is also being held in Oakland, CA on January18th – more info here.

Related:

To read a longer article I co-wrote about an introductory workshop I attended last year, go here: Integral Leadership Review

 

April 9, 2013 ‘Signs’

Signs of collapse?

013I came across the pictured ‘sign’ on the way to dropping one of my daughter’s off at a friend’s house this past weekend and while it may not be an obvious indication of the coming societal collapse it portends to the poor planning that often accompanies complex (and not so complex) projects.

Some twenty-five years ago I witnessed a similar planning fiasco in my native London, Ontario, where a bike path was placed beside a busy east-west corridor; the only problem for cyclists was that there were posts located in the middle of the path every so often.

More recently, I wrote about a related incident in which a number of young trees were planted along a major north-south route in York Region, Ninth Line (see this) only to be removed and discarded a number of months later to lay a gas pipeline in the ground.

A conspiratorial view would be that such ‘miscalculations’ are actually planned to extend the work required and, thereby, increase the costs/profits. Others might contend that such events are an unintended consequence of positive changes; some things need to be ‘destroyed’ in order to ‘create’, similar to the ‘broken window’ fallacy that suggests an economy can be lifted through ‘creative destruction’ (this is the unfortunate view some warmongers also hold).

A major concern, however, should be the amount of energy wasted through such incidents. It’s bad enough that we are rapidly depleting precious, nonrenewable resources through major construction projects that ignore many of the long-term conundrums we are rapidly rushing towards. We are seeing massive infrastructure projects that continue to be based upon a belief that our current transportation systems are also the way of the future. Nothing is likely to be further from the truth (see this and this).

gifted

I often believe we are ‘pushing in the wrong direction’ as Donella Meadows laments in Thinking in Systems: A Primer: “…a clear leverage point:  growth. Not only population growth, but economic growth. Growth has costs as well as benefits and we typically don’t count the costs—among which are poverty and hunger, environmental destruction and so on—the whole list of problems we are trying to solve with growth! What is needed is much slower growth, very different kinds of growth and in some cases no growth or negative growth.The world leaders are correctly fixated on growth as the answer to all problems, but they’re pushing with all their might in the wrong direction,…leverage points are frequently not intuitive. Or if they are, we too often use them backward, systematically worsening whatever problems we are trying to solve” (emphasis added).

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