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EXTRACTED: Power is nothing without control: how to lose an empire

EXTRACTED: Power is nothing without control: how to lose an empire.

Sunday, March 23, 2014

Power is nothing without control: how to lose an empire

Image from an advertising campaign for Pirelli in the 1990s.

Empires seem to be a typical human structure that reappears over and over in history. The problem is that empires are often so efficient that they tend to overexploit and destroy even theoretically renewable resources. The final result is a destructive cascade of feedbacks: not only the empire gradually runs out of resources, but it also runs out of the capability of controlling them; with the two effects reinforcing each other. Power is nothing without control. And, usually, control seems to run out before power.

In practice, empires in trouble tend to fragment into independent blocks or statelets before actually disappearing as economic systems. It is the result of the increasing costs of control, which are not matched any more by the diminishing flux of natural resources. We have seen this phenomenon in recent times with the fragmentation and the disappearance of the Soviet Union. We may be seeing it today with the modern worldwide empire we call “Globalization.” The recent events in Ukraine seem to show that the system, indeed, has troubles in controlling its periphery and may soon fragment into independent blocks.

Of course, it is still too early to say whether what we are seeing today in Ukraine is just a bump in the road or a symptom of impending systemic collapse. As usual, however, history may be a guide to understand what lies ahead. In the following post, I examine the collapse of the Roman empire in light of considerations based on control and resources. It turns out that, even for the ancient Romans, power was nothing without control.

Peak gold: how the Romans lost their Empire

by Ugo Bardi

A Roman “Aureus” minted by Emperor Septimius Severus in 193 CE. At nearly 8 grams, the Aureus was truly an imperial coin – the embodiment of Rome’s wealth and power. (image from Wikipedia).
In this post, I argue that precious metal currency was a fundamental factor that kept together the Roman empire and gave to the Romans their military power. But the Roman mines producing gold and silver peaked in the first century CE and the Romans gradually lost the capability of controlling their resources. In a way, they were doomed by “peak gold.”

When I heard for the first time that the Roman Empire fell because of the depletion of its silver and gold mines, I was skeptical. Compared to our situation, where we are facing the depletion of fossil fuels, the Roman case seemed to me to be completely different. Gold and silver don’t produce energy, they don’t produce anything useful. So, why should the Roman Empire have fallen because of something we might call “peak gold”?

And yet, as I delved into the matter, I noticed how evident was the correlation of declining gold and silver availability with the decline of the Roman Empire. We have scant data on the production of Roman mines, mainly located in Spain, but it is commonly believed that production peaked at some moment during the first century CE (or perhaps early 2nd century CE). Afterwards, it rapidly dwindled to nearly nothing, even though gold mining never completely stopped (1).

As you can see in the figure, the loss of precious metal production was reflected in the silver content of the Roman currency. The Romans didn’t have the technology needed to print paper bills, so they just debased their silver currency, the “denarius,” by increasing its copper content. By mid 3rd century, the denarius was nearly  pure copper: “fiat money” if there ever was one. During that  period, gold coins were not debased, but they basically disappeared from circulation. (graph above from Joseph Tainter (2)).

As I argued in a previous post, the progressively dearth of precious metals  correlates well with the various events that took place during the declining phase of the empire and with its eventual disappearance. Of course, correlation doesn’t mean causation but, here, the correlation is so strong that you can’t think it is just a question of chance. With time, it appeared clear to me that there were also clear links between several factors in the collapse of the Empire.

In general, complex systems tend to fall in a complex manner and the Roman Empire did not simply fall because of the lack of its primary energy source which, at that time, was agriculture. Energy (and power) is useless without control and for the Romans controlling the energy generated by agriculture requires capital investments for troops and bureaucracy. Both were affected by the decline of the production of precious metals. In time, the reduced military effectiveness of the empire disrupted the ability of controlling the agricultural system. That condemned the Empire to collapse.

This is a hugely complex story that can’t possibly be exhausted with a mere blog post. Nevertheless, the problem is very general and it can be condensed in a single sentence: “power is nothing without control” So, I believe it is possible to lay down in a relatively short space the main elements of the interplay between gold, military power, and food in Roman times. Let me try.

– The Romans and gold

Ultimately, what creates and keeps together empires is military force. The Roman Empire was so large and so successful because it was, possibly, the mightiest military force of ancient times. The Romans had been so successful at that not because of special military innovations. The recipe for their success was simple: they paid their fighters with precious metal currency. The combined technology of gold mining and coin minting had allowed the Romans to create one of the first standing armies in history. Still today, we call our enlisted men “soldiers”, a term that comes from the Roman word “Solidus;” the name of the late empire gold coin.

Not only money could create a standing army, it could also swell it to large sizes. Enlisting in the legions – the backbone of the army – was reserved to Roman citizens, but anyone could enlist in the “auxilia“, “auxiliary” troops. In the figure, you see Roman auxilia (recognizable by their round shields) presenting the severed heads of Dacians to Emperor Trajan during the Dacian campaign of the 2nd century CE. Normally, Romans were not supposed to cut off enemies’ heads, it was seen as uncivilized, but the auxilia were notoriously a little unruly (note how the Emperor, on the left, looks perplexed). But, by the time of the Dacian wars, the auxilia had become a fundamental part of the Roman army and they were to remain so for the remaining lifetime of the Empire.

Gold and silver were essential elements in the hiring of troops for the Romans and that was especially true for foreign ones. Put yourself in the caliga (sandals) of a German fighter. Why should you put your framea (lance) in the service of Rome if not because you were paid? And you wanted to be paid in serious money; copper coins would not do. You wanted gold and silver coins that you knew could be redeemed anywhere in Europe and especially in that gigantic emporium of all sorts of luxury goods that was the city of Rome, the largest of the ancient world. And, by the way, where did these luxury items come from? Mostly, were imported. Silk, ivory, pearls, spices, incense, and much more came from India and China. Importing these items was not just an extravagant hobby for the Roman elite, it was a tangible manifestation of the power and of the wealth of the empire; something that was an important factor in convincing people to enlist in the auxilia. But the Chinese wouldn’t send silk to Rome in exchange for worthless copper coins – they wanted gold and they obtained it. Then, that gold was lost forever for the Empire which, basically, could produce only two things: grain and troops, neither of which could be exported at long distances.

This situation explains the gradual military decline of the Roman empire. With the decline of the precious metal mines, it became more and more difficult for emperors to recruit troops. The lack of a strong central power caused the empire to become engulfed in civil wars; with the army mainly engaged in fighting chunks of itself and the empire splitting in two parts: the Eastern and the Western. During this phase, the number of troops was not reduced, but their quality strongly declined. After the military reform by Emperor Diocletian during the third century CE, the Roman army was formed mainly of limitanei; not really an army but a border police unable to stop any serious attempt on the part of foreigners to puncture the borders. To keep the empire together, Emperors relied on the “comitatenses” (also with other names) mobile crack troops which would plug (or try to plug) the holes in the border as soon as they formed.

The combination of limitanei and comitatenses worked in keeping the barbarian out of the Empire for a while. But the hemorrhage of gold and silver continued. So, during the last decades the empire, the paradigmatic Roman troops were the “bucellarii” a term that means “biscuit eaters”. The name can be taken as implying that these troops fought for food. Of course that may not have been always true, but it is a clear indication of the dearth of money of the time. There are also reports of troops paid in pottery and in some cases with land – the latter use may have been a factor in creating the feudal system that replaced the Roman empire in Europe.

In a way, as we see, the Romans were doomed by their “peak gold” (and also “peak silver). By the loss of their precious metal supply, the Romans lost their ability of controlling their troops and as a result of their resources. And power is nothing without control.

But the Roman empire did not fall just because it was invaded by foreigners or because it split in multiple sectors. It experienced a systemic collapse that wasn’t just a military one: it involved the whole economy and the social and political systems as well. To understand the reasons of the collapse, we need to go more in depth in the way the Roman economic system worked.

– The Romans and energy

The energy of the Roman Empire came from agriculture; mainly in the form of grain. At the beginning of their history and for several centuries onward, it seems that the Romans had little or no problems in producing enough food for their population. That makes sense considering that in Roman times the population of Europe was less than one tenth of what it is today and hence there was plenty of free space for cultivations. Reports of food problems in the Empire appear only with the 1st century CE and truly disastrous famines appear only with the 5th century CE – when the Western Roman Empire was already in its terminal phase. “Peak food”, apparently, came much later, about 3-4 centuries, than “peak gold”.

The very existence of a “peak food” for the Roman empire is somewhat puzzling: agriculture is, in principle, a renewable technology that had been able to feed the Roman population for several centuries. During the last period of the empire, there is no evidence of a population increase; on the contrary, it is clear that it declined. So, why couldn’t agriculture produce enough food?

The problem is that producing food doesn’t just involve plowing some land and sowing crops. Agricultural yields depend on the vagaries of the weather and, more importantly, agriculture has the tendency of depleting the land of fertile soil as a result of erosion. To avoid this problem, the ancient had a number of strategies: one was nomadism. From Caesar’s “De Bello Gallico” we learn that, as late as in the 1st century BCE, European populations still practiced a nomadic life style. They would do that in order to find new, pristine land and planting crops in the rich soil that they could produce by slashing and burning trees. That was possible because continental Europe, at that time, was nearly empty of people and entire populations could move unimpeded.

The Romans, instead, were a sedentary population and they had the problem of soil depletion. As population grew, erosion became a problem, especially in a mountainous region such as Italy is (3). In addition, some urban centers – such as Rome – became so big that they were impossible to supply using just local resources. With the 1st century BCE, the situation led to the development of a sophisticated logistic system based on ships that carried grain to Rome from the African provinces, mainly Libya and Egypt. It was a major task for the technology of the time to ensure that the inhabitants of Rome would receive enough grain and just when they needed it. It required large ships, storage facilities and, more than all, a centralized bureaucracy that went under the name of “annona” (from the Latin world “annum“, year). So important it was this system, that Annona was turned into a full fledged Goddess by imperial propaganda (you can see her in the image above, on the back of a coin minted at the time of Emperor Nero – from Wikipedia). For us, turning bureaucracy into a divine entity may appear a bit farfetched but, perhaps, we are not so far away from that.

Despite its complexity, the Roman logistic grain system was successful in replacing the insufficient Italian production and it permitted to feed a city as large as Rome, whose population approached (and perhaps exceeded) one million inhabitants during the heydays of the empire. But it was not Rome alone which benefited of the grain transportation system and the system could create a relatively high population density concentrated along the shores of the Mediterranean sea. It was this higher population density that gave to the Romans a military edge over their Northern neighbors, the “barbarians”, whose population was limited by a lack of a similar logistic system.

But what actually moved grain from the shores of Africa to Rome? In part, it was the result of trade. For instance, grain shipping companies were in private hands and they were paid for their work. But grain itself didn’t move because of trade: the provinces shipped grain to Rome because they were forced to. They had to pay taxes to the central government and they could do so either in currency or in kind. It seems that grain producers paid usually in kind and Rome didn’t ship anything in return (except in terms of troops and bureaucrats). So, the whole operation was a bad deal for provinces but, as usual in empires, opting out of the system was not allowed. When, in 66 CE, the Jews of Palestine decided that they didn’t want to pay taxes to Rome any more, their rebellion was crushed in blood and Jerusalem was sacked. In the end, it was military power that kept the system under control.

The Roman annona system may not have been fair, but it worked fine and for a long time: at least a few centuries. It seems that the African agricultural system was managed by the Romans with reasonable care and that it was possible to avoid soil erosion almost until the very end of the Western Empire. Note also that the annona system doesn’t seem to have been affected – in itself – by the debasing of the silver denarius. This is reasonable: grain producers had no choice; they couldn’t export their products at long distances and they had only one market: Rome and the other major cities of the empire.

But the system that fed the city of Rome appears to have declined and finally collapsed during the 5th century CE. We have some evidence (3) that it was in this period that erosion turned the North African shores from the Roman “grain belt” into the desert we see nowadays. Possibly, the disaster was unavoidable, but it is also true that warfare does a lot of damage to agriculture and this is surely true for the North African region, object of extensive warfare during the last period of the Roman Empire. More in general, the strain to the economic system generated by continuous warfare may have led producers to overexploit their resources, privileging short term gains to long term stability. Were it not for these events, it is likely that the agricultural productivity of the land could have been maintained for a much longer time. But that was not the case.

With the North African land rapidly turning into a desert, King Genseric of the Vandals (see his face on a “siliqua” coin in the figure), ruling the region, halted the shipping of grain to Rome in 455 CE, then proceeding to sack the city in the same year. That was the true end of Rome, whose population shrunk from at least a few hundred thousands to about 50,000. It was the end of an age and never again would the North African shores be exporters of food.

– The fall of the Roman empire

Complex systems tend to fall in a complex manner and several interlocked factors played a role together first in creating the Roman empire, then in destroying it. At the beginning, it was a technological innovation, coinage of precious metals, that led the Romans to develop a military might that allowed them to access a resource which would have been impossible to exploit otherwise: the North African agricultural land. But, as it is often the case, the exploitation mechanism was so efficient that eventually it destroyed itself. Lower productivity of the precious metal mines reduced the efficiency of the Roman military system and this, in turn, led to fragmentation and extensive warfare. The increasing needs of resources for war were an important factor in destroying the agricultural system whose collapse, in turn, put an end to the empire.

The dynamic interplay of the various elements involved in the growth and the fall of the empire can be seen in the figure below, from a previous essay of mine.  In the diagram, the source of energy is agriculture, but it is just an element of a complex system where various entities reinforce or dampen each other.

The diagram is patterned after the one originally created by Magne Myrtveit for our society described in the 1972 “Limits to Growth” study. This, as other studies of the same kind, provide a nice, aggregated view of the trajectory of an economic system which tends to overexploit the resources it used. As models, however, they are not completely satisfactory in the sense that they don’t include the question of control. It is a cost which needs to be paid and the gradually declining flow of resources makes it difficult. As a result, empires rarely collapse smoothly and as a whole, but rather tend to fragment and engage in internecine wars before actually disappearing. That was the destiny of the Roman Empire which experienced the general rule that power is nothing without control.

The Romans and us

It has always been fashionable to see the Roman Empire as a distant mirror of our civilization. And, indeed, we see that the points of contact are many. Just think of the sophisticated Roman logistic system: the navis oneraria which transported grain from Africa to Rome are the equivalent of our super-tankers transporting crude oil from the Middle East to Western countries. And think how China and India are playing today exactly the same role they were playing in the remote Roman times: they are manufacturing centers which are gradually soaking the wealth of the empire that we call, today, “globalization”.

This said, there is also an obvious difference. The Roman energy system was based on agriculture and hence it was theoretically renewable, at least until the Romans didn’t overexploit it. Our system is based on fossil fuels, which are obviously non renewable resources. Hence, we tend to be more worried about the depletion of our energy resources rather than that of gold and silver which – it seems – we could safely remove from our financial system without evident problems.

Still, there remains the fundamental problem that power is useless without control. The control system of the globalization empire works on similar principles as the older Roman one. It is based on a sophisticated financial system which, eventually, works because it is integrated with the military system. In the globalized army, soldiers, just like the Roman ones, want to be paid. And they want to be paid with a currency that they can redeem with goods and services somewhere. The dollar has, so far, played this role, but can it play it forever?

Eventually, everything that humans do is based on on some form of belief of what has value in this world. The Romans saw gold and silver as stores of value. For us, there is a belief that bits generated inside computers are stores of value – but we may be sorely disappointed – not that there will ever be a “peak bits” as long as there are computers around, but surely a major financial collapse would not just impoverish us, but most of all it would disrupt our capability of controlling the energy resources we need so desperately.

So, when oil pundits line up oil reserves as if each barrel were a soldier ready for battle, they tacitly assume that these reserves are available for use of the global empire. That’s not necessarily true. It depends on the degree of control that the empire will be able to exert on producers. That depends on the financial system which may well turn out to be the weak link of the chain. Without control, power is useless.

The Roman empire was lost when the financial system ceased to be able to control the military system. When the Romans lost their gold, everything was lost. In our case, it may well be that we will lose our ability to control the military system before we actually lose our ability to produce energy from fossil fuels. If the dollar loses its predominance in the world’s financial system, then producers may be tempted to keep their oil for themselves or, at least, not so enthusiastic any more in allowing the Empire to access it. What’s happening today in Ukraine may be a first symptom of the impending loss of global control.

1. “Mining in the Later Roman Empire”, J.C Edmondson, The Journal of Roman Studies, 79, 1989, 84,http://www.jstor.org/stable/301182
2. Tainter, Joseph A (2003. First published 1988), The Collapse of Complex Societies, New York & Cambridge, UK: Cambridge University PressISBN 0-521-38673-X,
3“The Roman Empire: Fall of the West; Survival of the East”, James F Morgan, Bloomington 2012

 

ClubOrlov: How To Time Collapses

ClubOrlov: How To Time Collapses

Douglas Smith
Zeus

Over the past half a decade I’ve made a number of detailed predictions about collapse: how it is likely to unfold, what its various manifestations are likely to be, and how it will affect various groups and categories of people. But I have remained purposefully vague about the timing of collapse and its various stages, being careful to always append “give or take half a decade” to my dire prognostications. I wasn’t withholding information or being coy; I really had no way of calculating when collapse will happen—until five days ago, when, out of the blue, I received the following email from Ugo Bardi:

Hi Dmitry,

You may be interested in this post of mine.

Starting from this post, I’m trying to draw a parallel between the collapse of the Soviet Union and the impending collapse of Italy. There are, as always, similarities and differences. In particular, the Soviet Union collapsed almost immediately after that oil production flattened out and started declining. On the contrary, the Italian government survives despite a loss of 36% in oil consumption.

My impression is that it is all related to different taxation methods. I understand that the Soviet tax system was based mainly on commodity taxes and on taxes on production. When production stalled, people had nothing to buy and the government had nothing to tax because most people owned nothing and had little or no savings in banks. So, the government had no choice but to fold over and disappear.

Instead, the Italian system is based largely on income tax and property tax. The government is losing revenues on commodity taxes (e.g. on gasoline) but it can compensate with property taxes. Italians, on the average, are “rich,” in the sense that they have savings in banks and most of them own their homes. So, the government can tax their properties and their savings. As long as Italians still have something taxable, then the government will survive. It will disappear only when it has managed to strip citizens completely of everything they have.

Do you agree with this interpretation? (BTW, Italy as a state may be even more culturally diverse than the old Soviet Union was.)

Ugo

I wrote back:

Hi Ugo,

Very interesting article. Yes, the entire southern tier of the EU is in some early stage of collapse, but so far it hadn’t occurred to me to draw parallels between it and USSR. Now that you mention it, the parallel is obvious: it is financial collapse triggered by something having to do with oil, but with polarities reversed, and delayed by a period of wealth destruction.

In the case of USSR, taxation wasn’t really a source of government revenue. The national economy was based on government ownership of everything, central planning and budgets, and a system of assigning ministerial contracts to enterprises owned by the ministries. The external economy was a matter of exporting hydrocarbons in exchange for foreign currency, which was used to buy grain—mostly feed grain for cattle, without which the population would become protein-deprived and malnourished. Over the so-called “stagnation” period of the 1980s the Soviet economy became hollowed out because of several trends. Too much spending on defense was one of them. Another was that investment in capital goods (machinery, plant and equipment) reached the point of diminishing returns, which is very difficult to characterize but not so difficult to observe. Lastly, Solzhenitsyn and the dissident movement had done irreparable damage to Soviet prestige, destroying morale. The coup de grace, when it came, consisted of two pieces. One was the inability to expand oil production given the state of Soviet oil extraction technology of the era. The other was the fall in oil prices, down to $10/bbl at one point, because North Sea and Alaska both went on stream, and the Saudis pumped as much oil as they could based on a tacit agreement with the US to depress oil prices and thus crush the Soviets. In this they largely succeeded. The USSR became heavily indebted to the West, and, at the very end, needed Western credit to keep the lights on in the Kremlin. One of the final scenes featured Gorbachev on the phone with [West Germany’s Chancellor] Helmut Kohl asking him to ask the Americans to release some funds.

Now, I can see parallels to this in what is happening now in the US and in the EU, but with all the polarities reversed: here oil flows in and money flows out, and the coup de grace [will be] high oil prices rather than low. Instead of failures of central planning, which failed to allocate production effectively, we have failures of the globalized market, where production is effectively globalized but consumption is ineffectively localized among the wealthy and the formerly wealthy, and has to be fueled by credit. Instead of diminishing returns from deployment of capital goods, we have diminishing returns from deployment of capital itself, where a unit of new debt now produces much less than a unit of economic growth. The damage to reputation and morale is mostly on the US side of the Atlantic, where in place of Solzhenitsyn and the dissident movement we have Abu Ghraib [scandal], [Wikileaks’ Julian] Assange and [Edward] Snowden. With the EU, most of the damage has to do with [the] experience of economic disparities between the rich core and the increasingly impoverished periphery, and the recent move in Ukraine to walk away from the EU, and the ensuing Western-financed mayhem in Kiev, show that the bloom is off the EU rose as well. The runaway military spending is likewise mostly a US issue, although epic failures in Afghanistan, Libya and Syria, in which the EU is complicit, are likely to have some effect as well.
Comparing USSR to Italy is difficult because of the disparity of scale: 1/5 of the planet’s dry surface versus a smallish peninsula; an economy that slowly decayed in isolation versus an integral part of the EU; a country where the choice is between burning hydrocarbons or dying of exposure versus one where the choice is between riding a scooter or taking the bus; a country with a ravaged agricultural sector unable to grow enough protein calories versus a nation of foodies where corner groceries make worthy subjects for oil paintings. But I think that when it comes to the actual collapse, when it finally comes, there will still be identifiable similarities. Financial collapse always comes first: all sorts of financial arrangements unravel as the center becomes unable to float the periphery, and in response the periphery starts to withhold economic cooperation. The result is a breakdown in supply chains, shutdown of production, and, shortly thereafter, shutdown of commerce. In the case of the USSR, this unfolded in 1989-91 as the various republics and regions refused to cooperate with Moscow. I suspect that this will also happen in the EU, at some point. But I think that you are exactly right that whereas the average Soviet citizen could not be fleeced, Italy, and much of the EU, still have plenty of fat sheep that the government can shear to keep things running. Thus we are looking at a few more years of steady decline before the lights start going out. This, then, is the key distinction: the USSR collapsed promptly because it was already skin and bones, whereas the US and the EU still have plenty of subcutaneous fat to burn through. But they are, in fact, burning through it. And so, the conclusion is, collapse will come, but here it will take a little longer.
-Dmitry
Ugo responded:
I agree with you, of course. It makes perfect sense to me and it is the main point I was making: the Soviet government couldn’t tax Soviet citizens too much because they owned very little.
The Italian government instead has some luck in the sense that Italians have some savings and most of them own their homes. So, the government is progressively strangling their citizens to squeeze out of them all that they have—while they still have something.

The last round of tax increases in Italy is targeting homes and it is really, really hurting, especially the poor. You can be poor here, and still own a house that you inherited from your parents. Now the government asks you to pay as if that house were revenue! That is truly evil. People who don’t have the money to pay this property tax can only indebt themselves with banks (or worse). Eventually, they’ll have to sell their homes or give them to the bank (or to the Mafia)—the result is disaster for everybody, including for the banks, and even the government. But the whole thing has a perverse logic. It has the advantage that it generates some immediate cash which is badly needed, then the hell with the future.

The [next] phase will be to target bank accounts. Then, when there will be nothing left, the government will decamp and say bye to everybody. Hell, what a planet I landed in…..

All the best,

Ugo

And so here is the outline of the method for calculating the timing of collapses:
1. Find out when the collapse clock starts running by looking for a significant drop in energy consumption
2. Calculate how long the clock is going to run by dividing the total wealth of the citizenry by the economic shortfall of the shrinking economy
For any industrial economy the collapse clock starts running as soon as the consumption of fossil hydrocarbons starts dropping appreciably. It is sometimes difficult to tell whether this has already happened if the country in question is still a major hydrocarbon producer. Gross production numbers can still be holding steady or even seem to go up a bit, but once you subtract all the energy that is being expended on energy production itself, and on the unprofitable mitigation of its many undesirable consequences, you might be able see a decline sooner rather than later. Notably, the net energy yield, or EROEI, is very low for all the newer unconventional sources that have been trumpeted as panaceas in recent years, such as ones that require hydrofracturing and drilling in deep water, tar sands and so on. (The so-called “renewables,” such as wind, solar and biofuels, are an even bigger joke, because all of them with the exception of hydroelectric plants have net energy that is too low to sustain an industrial economy, plus they all depend on technologies that are “nonrenewable” unless the country maintains a vast industrial base which happens to run on fossil fuels.) And so the drop in net energy consumption is clear for Italy, which produces 7% of the oil it consumes and imports the rest, whereas the picture is somewhat less clear for the US, which still manages to supply around a third of its oil.
Since all industrial economies literally run on fossil fuels, lower energy consumption immediately translates into a lower level of economic activity and a shrinking economy. The gap between the expectations of economic growth that are dialed into all of the financial arrangements, and the reality of economic decline driven by lower energy availability, has to be plugged with the population’s savings. There are a number of ways of expropriating wealth, generally proceeding from various kinds of stealth taxation measures, to more overt measures, to outright expropriation. Taking the US as the example (since I am most familiar with it) the expropriation cascade is proceeding as follows:
1. Central bank policy of zeroing out of interest rates on savings combined with massive money-printing. This forces money into speculative markets (stocks, real estate, etc.) creating huge financial bubbles; when these bubbles pop, savings are said to be destroyed, but in reality that money has already been spent by the government or used to fill the private coffers of those closely associated with the government.
2. Government policy of canceling retirements or short-changing retirees. The federal government has worked hard to make its official measure of inflation all but meaningless so that it can justify its policy of making cost of living adjustments to social security payments that are far less than the the real increases in the cost of living. Another federal expropriation scheme is via guaranteed student loans, which cannot be discharged through bankruptcy, and which have created an entire class of indentured servants. At the more local level, state and municipal governments are curtailing or canceling retirement programs by virtue of going bankrupt.
3. Ever more onerous reporting requirements for financial transactions, especially for those who try to leave the country and expatriate their savings. All foreign bank accounts must now be reported, and people who work abroad are now forced to file voluminous annual reports that cost thousands of dollars to prepare. Those who decide to repudiate their US citizenship are made to pay a hefty exit tax. Nevertheless, record numbers of US citizens have been doing just that. Just having a US passport often makes it impossible to set up accounts in foreign financial institutions, which have little desire to comply with US demands for financial disclosure.
These are the measures that are already in place. Looking at what’s been tried before, here and elsewhere, we can see what other measures are in the works. Among them:
1. So-called “bail-ins” where insolvent financial institutions are rescued by confiscating depositor funds. We can expect the script to be similar to what happened in Cyprus: politically connected depositors get word ahead of time and yank out their money forthwith; everybody else gets shorn.
2. Limits on bank withdrawals. You might still “have” money in the bank, but that’s the only place you can “have” it. The semantics of the verb “to have” can be quite tricky, you see…
3. Ever-increasing taxes on property resulting in property confiscation. It works like this: government prints money and hands it out to its friends; its friends use it to temporarily bid up property values; property taxes go up to a point where the property owners can’t pay them; owners lose their properties. A staggering 63% of real estate purchases in Florida last December were cash purchases.
4. Various kinds of sudden, new, super-complex regulations, noncompliance with which results in very large fines. In turn, nonpayment of these fines results in forfeiture of assets. The US has some very curious laws according to which inanimate objects such as cars, boats and houses can be charged with a crime, seized and auctioned off. We can expect lots more of such property grabs in the future.
5. Gold confiscation, which happened once in the US already, so there is a precedent for it. Yes, I know that this will make a number of people upset, but I am yet to hear a convincing argument for why the US government would not resort to gold confiscation when that turns out to be one of the few remaining cards it can play.
This list is by no means comprehensive. If you feel that I have missed something major, please submit a comment, and I will consider it for inclusion.

Now, it would be nice if all of these measures worked like clockwork, always producing the right amount of wealth confiscation to levitate the government, and the financial scheme on which it is based, for a little while longer. Alas, as with most things, something is bound to go wrong at some point, most likely when you least expect it. And it seems like a dead certainty that something will in fact go wrong well before every last American citizen is relieved of every bit of their accumulated wealth and is living peacefully in a roadside ditch, wearing an attractive loincloth and a stylish mudpack for a hat, quietly perfecting a nouvelle cuisine that features snails au jus and dandelion salad au chaume. Maybe you can imagine it, but I can’t. Beyond a certain point, I can only imagine reports of widespread “public disturbances” followed by “breakdown of law and order.”
Still, I hope that this framework will allow us to set an upper bound for how long collapse can be deferred for any given country. Once hydrocarbon consumption drops appreciably, the clock starts running. Then it is possible to estimate how long the clock can theoretically run by dividing the remaining net worth of the population by the size of the hole in the economy created by falling energy consumption.
But after that things get messy. Some countries will hollow themselves out quite peaceably, and go softly into the night, while others will explode and fast-forward though the financial-commercial-political collapse sequence. And so perhaps the most useful thing to know is whether the collapse clock is already running for any given country, because if it is already running, then it becomes a fool’s game to wait around for the inevitable outcome.
One reasonable approach is to get another passport and quietly relocate to another country. It is important that this country be one for which the collapse clock is not running and won’t be for a long time yet. Ideally this would be a financially secure, politically stable, energy independent, militarily invincible, underpopulated, non-extradition country which will be among the last to be severely disrupted by climate change and where you could have lunch with Edward Snowden. But this approach doesn’t appeal to everyone, and I understand that.
And so another approach is to adapt to what’s coming while remaining in the US, or in any other country for which the collapse clock is running, by making yourself, and your wealth, should you have any, illegible. Here is a very nice article by one smart cookie by the name of Venkatesh Rao on the concept of illegibility. And here is his very nice primer on being an illegible person. This kind of illegibility has nothing to do with bad handwriting; it is about hiding in plain sight. Please read these as homework, because I will have more to say on this topic in the near future. And I would love to see a list of countries for which the collapse clock is running, along with first-order estimates for how long it could possibly run for each one, based on their population’s net worth and the country’s economic shortfall. But since this post has just gone over 3000 words, I am leaving this as an exercise for the reader.

The punctuated collapse of the Roman Empire

The punctuated collapse of the Roman Empire.

The punctuated collapse of the Roman Empire

by Ugo Bardi, originally published by Cassandra’s legacy  | JUL 15, 2013

 

I defined as the “Seneca Cliff” the tendency of some systems to collapse after having peaked. Here I start from some considerations about whether the collapse could be smooth or an uneven process that we could define as “punctuated.” I am taking the Roman Empire as an example and showing that it did decline much faster than it grew. But the decline was surely far from smooth. 

The idea of an impending collapse of our civilization is already bad enough in itself, but it has this little extra-twist that collapse may be given more speed by what I called the “Seneca Cliff,” from the words of the Roman Philosopher who had noted first that, “Fortune is slow, but ruin is rapid“. The concept of the Seneca Cliff seems to have gained some traction over the Web and many people have been discussing it. Recently, I found an interesting comment on this point by Jason Heppenstall on his blog “22 billion energy slaves”. He summarizes the debate as:

“In the fast-collapse camp are the likes of Dmitry Orlov (who bases his assessment on his experience of seeing the USSR implode) and Ugo Bardi, who expects a ‘Seneca’s Cliff’ dropoff. James Kunstler, Michael Ruppert and any number of others can probably also be added to the fast-collapse camp.

By comparison, the likes of John Michael Greer reckon we are in for a drawn-out era of terminal decline punctuated by serious crises which, at the time, will seem rather severe to all involved but which will give way to plateaux of relative stability, albeit at a lower level of energy throughput.”

Actually, the two camps may not be in such a radical disagreement with each other as they are described. The idea of the fast (or Seneca-like) collapse does not necessarily mean that collapse will be continuous or smooth. The model that describes the Seneca effect does give that kind of output, but models are – as usual – just approximations. The real world may follow the curve in a series of “bumps” that will give an impression of recovery to the people who will experience the painful descent period.

So, collapse may very well be “punctuated: a series of periods of temporary stability, separated by severe crashes. But it may still be much faster than the previous growth had been. I discussed this point already in my first post on the Seneca Effect, but let me return on this subject and let me consider one of the best known cases of societal collapse: that of the Roman Empire.

First of all: some qualitative considerations. Rome’s foundation goes back to 753 BC; the end of the Western Empire is usually taken as 476 AD, with the dethroning of the last Western Emperor, Romulus Augustus. Now, in between these two dates, a time span of more than 1200 years, the Empire peaked. When was that?

The answer depends on which parameter we are considering but it seems clear that, whatever choice we make, the peak was not midway – it was much later. The Empire was still strong and powerful during the 2nd century AD and we might take the age of Emperor Trajan as the peak (he died in 117 AD) as “peak empire.” We may also note that up to the time of Emperor Marcus Aurelius (who died in 180 AD), the empire didn’t show evident signs of weakness, so we could take the peak as occurring in mid or late 2nd century AD. In the end, the exact date doesn’t matter: the Empire took around 900 years to go from the foundation of Rome to the 2nd century peak. Then, it took just 400 years – probably less than that – for the Empire to wither and disappear. An asymmetric, Seneca-like collapse, indeed.

We also have some quantitative data on the Empire’s cycle. For instance, look at this image from Wikipedia.

It shows the size of the Roman military over the Empire’s span of existence. WIth all the uncertainties involved, also this image shows a typical “Seneca” shape for both the Western and the Eastern parts of the Empire. Decline is faster than growth, indeed.

There are other indicators that we can consider about the collapse of the Roman Empire. In many cases, we don’t have sufficient data to say much, but in some, we can say that collapse was, indeed, abrupt. For instance, you can give a look to a well known image taken from Joseph Tainter’s book “The Collapse of Complex Societies

The figure shows the content of silver in the Roman “denarius” which by the 3rd century AD, had become pure copper. Note how the decline starts slow, but then goes on faster and faster. Seneca himself would have understood this phenomenon very well.

So, the Roman Empire seems to have been hit by a “Seneca collapse” and that tells us that the occurrence of this kind of rapid decline may be commonplace for the entities we call “civilizations” or “empires”.

It is also true, however, that the Roman collapse was far from being smooth. It went through periods of apparent stability, interrupted by periods of extremely fast descent. The chroniclers of the time described these periods of crisis, but none of them seem to have connected the dots: they never saw that each crisis was linked to the preceding one and leading to the next one. Punctuated collapse seemed to be invisible to the ancient Romans, just as it is for us, today.

 

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