Jan 112013
 January 11, 2013  Posted by at 4:10 pm Finance

Scale matters. When it changes, other things change as a function of it, often in unpredictable ways. Emergent properties are system characteristics that come into existence as a result of small and simple units of organization being combined to form large and complex multi-unit organizational structures. One can know everything there is to know about the original simple units and yet be unable to predict the characteristics of the larger system that emerges as many units come together to interact as a larger whole.

For instance, knowing everything about an individual cell sheds no light on the behaviour of a sophisticated multicellular organism. At a higher level of organization, knowing everything about an organism does not predict crowd behaviour, the functioning of an ecosystem, the organization of stratified societies, or the dynamics of geopolitics as societies interact with one another. The complex whole is always far more than just the sum of its parts.

Human social organization is particularly flexible when it comes to changes in scale. It can function in a myriad forms – from simple, generalist tribal associations, where everyone knows everyone else and interactions are grounded in established personal relationships, to the most complex, specialized and hierarchical imperial civilizations, where emergent connections and institutional structures must inevitably transcend the personal.

Where human societies find themselves along that continuum will depend on many local factors, including the nature, extent, accessibility and storability of the resource base over time, as well as the potential for leveraging human labour, historically using animals. Energy, and particularly energy returned on energy invested (ie the potential to control substantial energy surpluses) is critical. The greater the extent to which substantial, storable resource surpluses can be amassed and centrally controlled, the more likely a complex hierarchical organizational structure is to emerge. Where surpluses are small, resources cannot be stored, human efforts cannot be leveraged, or key resources are less subject to control, much smaller scale, simpler and more horizontally structured groups would be expected instead.

Forms of organization based on agriculture are inherently both expansionist and catabolic. Existing ecosystems are destroyed to make way for patches of monocrop, rapidly converting the productive potential of the land into human biomass at the expense of biodiversity and soil fertility. Many hands are needed to work the land, so many children are produced, but as they grow up, more land must be cultivated every generation, because the existing land cannot accommodate the rapidly rising number of mouths to feed. Carrying capacity is, however, limited.

This in-built need to expand, sometimes to the scale of an imperium in the search for new territory, means that the process is grounded in ponzi dynamics. Expansion stops when no new territories can be subsumed, and contraction will follow as the society consumes its internal natural capital. Previous agricultural societies have left desert in their wake when that natural capital has been exhausted.

Limits to growth are not a new phenomenon, nor is collapse when expansion is no longer possible. The difference this time is that we are approaching hard limits at a global scale, there is nowhere left to expand to, modernity has greatly increased the scope and the rate of our catabolic potential, and therefore the collapse will be the most widespread human civilization has faced.

Some societies are more despotic than others. Elite control over resources, distribution of surpluses, or monolithic infrastructure, such as major dams, confers power and strengthens hierarchy. Where surpluses are substantial, controllable and storable, and can support a large percentage of the population not required to work the land directly, a great deal of societal differentiation and complexity may develop, with a substantial gap between haves and have nots. The haves are typically part of the rentier economy, or otherwise in a position to cream off the surpluses from the labour of lower social strata.

The degree of general freedom probably depends on the extent to which it is in the interests of the powerful. If it is more profitable for the elite to grant economic freedom, and then reap a large share of the proceeds, than to control society directly from the centre, then freedom is far more likely. When circumstances change, however, that may no longer be the case. Relative freedom is associated with economic boom times, when there is an explosion of economic activity to feed off. When boom turns to bust, and there is little economic activity for a prolonged period, direct control of what if left is likely to be of greater appeal. As we stand on the verge of a very substantial economic contraction, this is a major concern. Freedom is addictive, and taking it away has consequences for the fabric of society.

In our own modern situation, the freedom enjoyed in first world countries is arguably both a direct and an indirect a result of the enormous energy surplus we have benefited from. Energy surplus has allowed us to substitute energy slaves directly for the forced labour that has been a prevalent feature of so many previous societies, and it has allowed us to intensify complexity in order to create many opportunities for innovation and advantage. It has also enabled an increase of scale to the global level, so that hard work for low pay, and unpleasant externalities, could be off-shored while retaining the benefits in the first world, albeit very unevenly distributed within it.

The size of the global energy surplus is likely to fall very substantially in the coming years. This will inevitably have a major impact on global socioeconomic dynamics, as it will undermine the ability to maintain both the scale and degree of complexity of the global economy. The expansion of effective organizational scale on the way up is a relatively smooth progression of intensification and developing complexity, but the same cannot be said for its contraction. As we scaled up we built structural dependencies on the range of affordable inputs available to us, on the physical infrastructure we built to exploit them, on the trading relationships formed through comparative advantage, and on the large scale institutional framework to manage it all. Scaling down will mean huge dislocation as these dependencies must give way. There is simply no smooth, managed way to achieve this.

A foundational ingredient in determining effective organizational scale is trust – the glue holding societies together. At small scale, trust is personal, and group acceptance is limited to those who are known well enough to be trusted. For societies to scale up, trust must transcend the personal and be grounded instead in an institutional framework governing interactions between individuals, between the people and different polities, between different layers of governance (municipal, provincial, regional, national), and between states on the international stage.

This institutional framework takes time to scale up and relies on public trust for its political legitimacy. That trust depends on the general perception that the function of the governing institutions serves the public good, and that the rules are sufficiently transparent and predictably applied to all. This is the definition of the rule of law. Of course the ideal does not exist, but better and worse approximations do at each scale in question.

Over time, the trust horizon has waxed and waned in tandem with large cycles of socioeconomic advance and retreat. Trust builds during expansionary times, conferring political legitimacy on larger scale forms of organization. Trust takes a long time to build, however, and much less time to destroy. The retreat of the trust horizon in contractionary times can be very rapid, and as trust is withdrawn from governing institutions, so is political legitimacy. This process is already underway, as a litany of abuses of public trust previously obscured by expansion is coming to light. Contraction will rapidly lift the veil from far more trust-destroying scandals than almost anyone anticipates.

Even at the peak of expansion, international scale institutions struggled to achieve popular legitimacy, due to the obvious democratic deficit, lack of transparency, lack of accountability and insensitivity to local concerns. Even under the most favourable circumstances, true internationalism appears to be a bridge too far from a trust perspective. For this reason, world government and a global currency were never a realistic prospect, as much as some may have craved and others dreaded them. Even a transnational European single currency has suffered from a fatal disparity between the national level of primary loyalty and the international level of currency governance, and as such has no future.

As the circumstances supporting economic globalization and attempts at global governance evaporate, and the process goes into reverse, smaller and smaller scale governance structures are likely to join international institutions as stranded assets from a trust perspective – beyond the trust horizon – and lose legitimacy as a result. International structures are likely to fade away, or be torn apart by strife between disparate members who no longer see themselves are part of a larger whole. The socioeconomic impact of the latter process, for which Europe is the prime example, is likely to be enormous. For a time this may strengthen national institutions, but this is likely to be temporary as they too are subject to being undermined by the withdrawal of trust.

Where people no longer internalize and follow rules, because they no longer see those rules as in the general interest, existing national institutions would have to devote far more energy to surveillance and compliance enforcement. The difference in effort required is very significant, and that effort further alienates the governed population in a socially polarizing downward spiral of positive feedback. It also renders governance far less effective. The form of the institutional framework may still appear outwardly the same, but the function can be both undermined from below and overwhelmed from within by an obsession with enforcement until it ceases to be meaningful. This shift is already well underway.

As contraction picks up momentum, the combination, on the one hand, of a desire to control remaining resources and the benefits from remaining economic activity, and on the other the loss of trust and compliance, and consequent movement towards enforcement, is likely to lead to far more authoritarian forms of government in many places. While central control can occasionally facilitate useful responses to crisis, such as rationing of scarce resources, the power is far more likely to be abused for the benefit of the few, as has so often been the case throughout history.

It is within this general context that society will have to function, although considerable path-dependent local variation can be expected. Trust has a very long way to withdraw, especially in places where some form of totalitarianism develops, as this malignant form of governance actively undermines trust among the populace for the purpose of maintaining control through fear. Even in luckier locations, trust is likely to contract enough to undermine the efficacy of any institution beyond municipal scale, and possibly smaller.

Contractions as large as the one ahead lead to a major trust bottleneck through which society must pass before any kind of recovery can begin to get traction, but the narrowness of that bottleneck will vary considerably between societies. Societies with well developed, close-knit communities are likely to find that far more trust survives, and that in turn will mitigate the impact of contraction and hasten the recovery that will involve rebuilding trust from the bottom up.

Given that trust is a major determinant of effective organizational scale, and that the trust horizon is set to contract substantially, the scale at which it makes most sense to work will be much smaller and more local than previously. The future will, eventually, be one of decentralization by necessity. The odds of making a positive impact at smaller scale will be substantially higher, particularly if the actions undertaken are predicated upon a simpler society rather than based on current complex systems. It makes sense to focus scarce resources – money, energy, materials, effort, emotional intensity – where they can achieve the most. An understanding of scale and its determinants is critical in this regard.

It is interesting to look at the role of money in relation to trust and societal scale. Very small and simple societies grounded in personal relationships can function on a gift basis, as the high level of trust in a small number of well-known others is enough to mean that keeping track of favours done for one another is not necessary. Favours may simply be performed when necessary and reciprocity taken for granted. Resources may be 'owned' by the group, or made generally available to the group, rather than owned privately and subject to specific exchange.

Scaling up from this point requires interacting with people less well known, where there is less faith that favours done will be reciprocated, so that keeping track becomes necessary. Larger societies are more likely to be hierarchical, with resources privately owned. Exchange of goods or services would then require some form of relative value quantification. It could be decided that everyone's time is of equivalent worth and therefore that, at the simplest level of value accounting, keeping track of hours contributed would be sufficient. Further scaling up would require greater sophistication in both time and resource accounting. Money is the value abstraction that evolves to perform this function, hence the development of a monetary economy is an emergent property of scale. The paradox of money is that even as it allows trust to scale up beyond the personal, its use is fundamentally a measure of distrust in reliable interpersonal reciprocity.

As scaling up continues, along with increasing socioeconomic differentiation, it becomes necessary to interact constantly with completely unknown individuals. For this to function, the necessary trust must vest in the institutional framework itself, in the abstract representation of value that becomes a store of value in its own right in addition to being a medium of exchange, and in the complex web of rules by which it operates in large scale societies. These rules grow progressively more complex with expanding societal scale and increasing complexity, as the nature of money itself becomes increasingly abstract and derivative.

Money in the form of precious metals was replaced by promissory notes based on precious metals, then promissory notes backed by faith alone, virtual representations of promissory notes, promises to repay promissory notes, or bets on the abstract price movements (denominated in promissory notes) of underlying assets, which could themselves by abstract. Trust in the value of these abstractions in turn gives them value, and each extension of monetary equivalence creates the foundation of confidence for the next step.

The initial physical monetary commodity would have been chosen to be relatively scarce and not creatable, facilitating central control over a limited money supply. However, when an expansionary dynamic is underway, and a larger money supply is called for in order to lubricate the engine of a growing economy, a rapidly expanding supply of increasingly abstract monetary equivalents may serve that need, at the cost of the loss of any semblance of control over the supply of what is accepted as constituting money. In other words, inflationary times are grounded in an exponentially exploding supply of human promises, backed by assets that are increasingly over-pledged as collateral even as their price is bid up by the expanding purchasing power granted by confidence in promises to repay. This is another self-reinforcing dynamic.

Our history has experienced many credit-fuelled cycles of expansion, going back to antiquity. Positive feedback spirals continue, relatively smoothly, until they can no longer do so. A limit is reached, and there is typically a rapidly spreading realization that the pile of human promises is very heavily under-collateralized. The trust which had conferred value in abstract promises dissipates very quickly, taking the erstwhile value with it.

The credit which had gained monetary equivalence during the expansion is deprived of it, and the resulting abrupt contraction of the effective money supply becomes a major factor in a positive feedback loop in the deflationary direction – the collapse of the money supply removes the lubricant from the engine of the economy, the fall in purchasing power undermines asset prices and promises consequently become even less well collateralized, driving further contraction.

The last thirty years have seen the latest incarnation of a major expansion cycle, reaching unprecedented heights in terms of trust in the value of abstractions as the exponential growth of the shadow banking system has overwhelmed official monetary channels and control mechanisms. We are now on the verge of the implosion that will inevitably follow as trust evaporates and virtual value disappears. The contraction will proceed until the small amount of remaining credit/debt is acceptably collateralized to the few remaining creditors.

At that point we can begin to rebuild trust in a new monetary system, and by extension a new form of societal organization. It will likely be one with a strong emphasis on central monetary supply control, with little or not scope for the monetization of expansionary promises. The successive 'financial innovations' that built the bubble will be outlawed, as similar phenomena have been before in the aftermath of collapse. Unfortunately, the controls do not last, and a new generation will eventually make similar mistakes once the experience of boom and bust passes once again from living memory.

While there is nothing we can do to prevent the bubble from bursting, or the contraction of the trust horizon that will inevitably occur, we can attempt to cushion the blow and limit the extent of contraction. Understanding the critical role of trust, how to nurture it, how it determines effective organizational scale, and therefore what scale to operate at at what time will allow us to maximize the effectiveness of our actions. In terms of rebuilding a monetary system, it will be necessary in many places to operate at a profoundly local level initially, with the reintroduction of the simplest forms of trust extension above a gift economy – keeping track of hours traded in a time banking process, and local currencies operating within the trust horizon. It will be necessary to build community interconnections actively in order to establish, maintain and increase the necessary trust.

If the process succeeds in halting and reversing the contraction of the trust horizon in places, then new monetary arrangements can be scaled up in those locations when necessary. There will be no need to do so rapidly, as the artificial demand stimulation of the bubble years will have disappeared, inevitably leaving much less economic activity during a period of economic depression, and therefore much less demand for a large money supply to lubricate the engine of the economy.

Governance arrangements operating at a scale in line with local monetary provision will be necessary, and can expect to be more effective than larger institutions substantially beyond the trust horizon. The latter, where they still exist and can exercise power at a distance, are most likely to make it more difficult for society to be able to function rather than less, as they can be expected to resist the decentralization that could allow localities to establish resilience.

Operating at a local scale to build local supply chains and resilience is far more compatible with the human psyche. At times when social organization has expanded to the point where it dwarfs individual actions, and may control them either directly or indirectly, individuals are disempowered by scale. Many feel they have no control over the critical factors of their own lives, which often leads to psychological disturbances such as depression, at present widely addressed with medication. Increasing scale can reduce both empowerment and civic engagement, as it fosters the perception that one can achieve nothing through individual action.

The increasing complexity that accompanies scaling up also occupies time, money and individual energies, leaving little in the way of personal resources to contribute to the public sphere. Of course for the few in positions of control, scale translates into leveraging power, which can effectively become a drug in its own right, but for the masses it is much less conducive to functioning effectively and meaningfully. For a while the masses can be bought off with bread and circuses, and, for some, with aspirations to achieving a position of power and leverage themselves.

This only works while it remains possible to supply sufficient bread and circuses, and while people still believe that higher aspirations may be realistic. Expansions do shake up up established orders enough to open doors for a few to exploit the new niches that open up with increasing complexity, but in the latter stages of expansion, the social strata typically reform and solidify again, so that upward mobility becomes harder or impossible. The combination creates a dangerous situation, where financial implosion and social explosion can happen in a simultaneous dislocation.

The shift to operating at a local scale, over the longer term at least (once the dust has settled), can be expected to improve the balance between individuals and society, albeit at the cost of living in a much simpler, lower energy and less resource intensive manner. The implications of this shift are huge. Almost every aspect of our lives will change profoundly. We can expect the transition to be traumatic, as the dislocation of major contractions has always been. What large scale and extreme complexity have given us only appear to be normal, as they have persisted for much or all of our lifetimes. In fact we stand at the peak of an unprecedentedly abnormal period in human history – the largest in a long series of financial bubbles, thanks to the hydrocarbons that allowed it to develop over decades.

Things look good at the peak of a bubble, as if we could extrapolate past trends forward indefinitely and reach even higher heights. However, the trend is changing as the enabling circumstances are crumbling, and the bubble is already bursting as a result. Our task now is to navigate a changing reality. We cannot change the waves of expansion and contraction, as their scale is beyond human control, but we can learn to surf.

Artwork: Ilargi for The Automatic Earth


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January 11, 2013 at 4:10 pm #8407

Nicole Foss

Scale matters. When it changes, other things change as a function of it, often in unpredictable ways. Emergent properties are system characteristics t
[See the full post at: Scale Matters]

January 11, 2013 at 10:56 pm #6747


I guess this is how you write The Complete Non Moralizing Theory of Human Tragedy in a single blog post.

January 12, 2013 at 12:38 am #6748

Carbon waste life form

Hi Nicole

As I see it, the benefit of this approach is to be able to view trust and power at different scales as an emergent property of the resources available to society. That way, you don’t get tangled up in the morality of resource sharing, you don’t see the situation as partisan, but instead an an inevitable function of catabolic collapse. That’s the way to make the most intelligent and compassionate choices.

That right?


January 12, 2013 at 1:57 am #6749


Thank for the “why” of what is coming. In Engineering and design, why is a big part, perhaps the main part of completing any project.

January 12, 2013 at 2:07 am #6750

Nicole Foss

Thanks :) That’s pretty much what I was going for – looking at expansion and contraction objectively as phenomena that transcend the personal, or even the institutional, so that blame is pointless. All we can do is to look at where we are in the cycle and work with it as constructively as possible. Anger is corrosive, and collective anger even more so. Angry populations to terrible things to their fellow human beings. There is nothing to be gained this way, and a great deal to lose.

January 12, 2013 at 2:44 am #6751


Outstanding even for the great Stoneleigh! Nicole I love your mind and your ability to expound upon complex issues with a direct simplicity that clarifies the big picture for those who want to see it and adjust their lives accordingly.

January 12, 2013 at 5:21 am #6752


Seems like a nice scenario. If one could find Galt’s Gulch without the DHS following along…for ones own safety, mind you.

And if an inkling of a rule of law survives the expected rout. But…

If one plans on surfing through what’s coming, it might be advisable to relocate to Doheny right now, before the all consuming State closes all avenues of choice in it’s seizure of resources and available assets, as well as the means of their production. Ala, the old Soviet Union?

As I recall, most of the 60′s surfin’ safari sounds didn’t originate in Leningrad. Not sure those enduring that little social experiment had a lot of ability to surf their way merrily through it. And I can’t imagine any central power not dispatching it’s most profitable minions hither and yon across the countryside, into every nook and cranny of micro communities. Those minions be the tax assessors.

A big assumption here is that the majority retain enough semblance of freedom, with which to even take the liberty of waxing down the board, let alone “shootin’ the tube.”

Pretty hard to extrapolate the last 100 years of relative freedom to choose, into the next 100 years of emergency/unknowns. I think it can be considered a given that when central authority is threatened, bad things happen to proles.

‘Till later, Hang Ten…

January 12, 2013 at 5:59 am #6753


Surfing the requisite (given human nature) tsunami won’t be fun.

January 12, 2013 at 12:20 pm #6754


Surplus energy, trust, money & credit, population – and how they all interact in conditions of both expansion and contraction. Its a nicely constructed model of the world.

Population busts actually follow contractions – Russia, and Japan have both had them in recent years. If the world has a multidecade contraction, might we have many fewer babies than expected as a result?

January 12, 2013 at 7:31 pm #6755

Nicole Foss


I do expect a population bust, at least initially, although there are a few complicating factors. In the longer term I expect birthrates to rise, although probably not as much as deathrates.

People have fewer babies when they don’t think they’ll be able to look after them, or when they don’t like the look of the world they would have to bring them into. This is to the extent that they have some control over the process. They may well not have modern forms of control, and it may take a while to get used to how people dealt with it in the past. I’m not thinking so much of the obvious nasty possibilities, but of other ways people limited family size. There must have been such methods, since average family size varied a great deal from culture to culture where circumstances were different, long before we had modern methods.

I expect things to get much worse for first world women in terms of rights and control of our own bodies. Our emancipation (which really only applied to middle class and up anyway) was probably a function of the availability of energy slaves. When these are no longer there, I expect culture to shift to make women feel drudgery is their duty again, and to deprive us explicitly of other options. In the Soviet collapse, women lost childcare, equal status and opportunities in a giant rejection of everything that had characterized the communist system (in a throwing-the-baby-out-with-the-bathwater kind of way). Men often drank themselves to death and women had to do whatever was necessary to cope.

The word proletariat derives from ‘ their only wealth is their sons’, meaning that the only asset poor people could control was the number of children they had, where children could be expected to produce more for the family than they cost to feed. This dynamic is why agricultural societies have such large families too – they generate farm workers who produce a net benefit for the farm. Of course the value of a large family depends on circumstances, like having land to work, but in very poor countries, slum dwellers may also have an incentive to produce children to send out to beg or steal or work in sweatshops. Children are the only form of old age security in many places as well.

Low birthrates in wealthier places have to do with factors such as low deathrates (so virtually all children can be expected to survive), the cost of giving a child what middle class parents would define as a good enough start in life, education leading to women with career aspirations instead, and the availability of external supports that mean people are not dependent on their children in old age. It costs a huge amount to raise a child in line with cultural expectations – with lessons for all sorts of things, a good school, a posh college (poshness being more important to many than the actual content of the education) and all sorts of material goods pushed at children through advertising. Most of those things will no longer be available anyway, except for the very wealthy. Child (and maternal) mortality will rise as access to medical care falls, career aspirations will disappear with skyhigh unemployment, education will be far less accessible to most, opportunities will be very limited, and external supports will no longer be available.

Already, some very alarming misogynist noises are coming out of parts of US society. Women should be very worried about where that is leading. I am expecting hardline political freaks to be elected in tough times, and in the US I expect those to be of the fire-and-brimstone variety likely to impose strict ‘morality’. To me that is terrifying. A century or more of cultural progress could be wiped out. In tough times, the strong tend to take out their frustrations on the weak, who may have no choice but to bear it. In fundamentalist places like Iran, clerics have been known to blame earthquakes on scantily clad women. This is the kind of spurious connection people make in hard times, when magical thinking comes to the fore. In such times people are far more prone to believing such things, or at least not daring to argue. Domestic violence is also endemic in poor places living on the edge. Access to justice and redress is sadly a function of wealth.

Working to build community while that can still be done may reduce the impact of some of these larger trends, at least in places. It is urgent that we do so, because it takes time and we have relatively little of that left. If we do not, the future will be dystopian indeed.

January 12, 2013 at 8:43 pm #6756


I am one of those peak oil nuts and believe the whole thing links back to oil. Collin Campbell quoted a large banker after the banker realized oil wells will slow down in production : “My God we have a lot of bad debt … we are insolvent”. They had believed expansion tomorrow would pay for debts of today because relatively free oil coming out of the ground. Their whole analysis and method of doing business had been going on for more than 50 years.

So what to do. How about a ponzi scheme. How about a housing market that emulates the oil market. Hand out loans to everyone based on future valuation kind of like what had been done with oil. That could restart the economy without any ill effects.

Well I guess that went kind of wrong but its ok we have something else we can try. Lets try really low interest rates. That could restart the economy without any ill effects.

I am not sure if we will have deflation or if another scheme will be tried but any analysis brings me to one conclusion every time. First the schemes will not work. Second the schemes increase tension and cause greater instability. Third when attempting to not pay the cost of invalid thinking with stupid schemes the price paid is higher.

It may be that we experience inflation and deflation within the same year because of my second point. The government may temporarily be able to inflate the money supply to create inflation.

I am a little alarmed by Nicole’s misguided statement “shift to make women feel drudgery is their duty again, and to deprive us explicitly”

When I look back at the difficulties of what was being done and who did how much work it is clear – drudgery and being deprived was not a gender thing. 100 years ago both sides worked tirelessly for little gain and died young. If you were poor, which was everyone, things clearly would not be pretty. Individualism was not an option for anyone, you worked with the community or die.

January 12, 2013 at 10:05 pm #6757


Excellent summary of how trust, law, money and scale of government are related. Very cogent. The basis of a complex society is available energy of course. I happen to agree that we are heading toward decreasing energy availability. Our society will change. The emperium, desperate to maintain control and power, will tax and abscond as long as they can.

Socially, I find certain comments interesting. Women’s roles changing?…everyone’s role will change. I like the way James Kunstler puts it…in a scarce energy world, reverting to old roles will pretty much not even be questioned. Men are more suited to hard manual labor…women to other roles. But all will be forced to work.
“Compassionate” Certainly we all strive for that personal quality. But our complex society has made this term into something of a “high level” activity and quality…something completely dependent on massive energy consumption. It seems that community based “compassion” is very similar to Nichole’s description of trust. It starts small and becomes “something a little bit different at the large scale. It can only be excercised at the large scale in an affluent, energy or resource consuming society. This will largely not be the case in at least a portion of the transitional future.
Other comments indicate concern about our potential to lose our “cultural progress.” This concern is legitimate as much of our “cultural progress” is based on affluence…ultimately based on imperial exploitation (and/or cheap energy). I would submit that cultural progress is a relative term that will ultimately lose importance in a scarce energy world.

Thank you for your excellent insight, Nichole.

January 12, 2013 at 10:22 pm #6758


Insightful… as usual.

For those who are not aware of small towns/communities dynamics, the “pecking order”, and the resulting dynamics of bullying, shunning, and exploitation by others will be present and obvious.

“Malign Hand of the Markets”, by John Staddon.

This book presents the information concerning the financial crash which should be understandable to most people.

Review …
Due to human nature/behaviors, predators can make ponzi schemes work.
The financial system crash resulted in the greatest theft of money ever.
The theft is still continuing.

The system will not be changed because those benefiting are in power/control.

January 12, 2013 at 10:39 pm #6759


stoneleigh post=6460 wrote: Thanks :) That’s pretty much what I was going for – looking at expansion and contraction objectively as phenomena that transcend the personal, or even the institutional, so that blame is pointless. All we can do is to look at where we are in the cycle and work with it as constructively as possible. Anger is corrosive, and collective anger even more so. Angry populations to terrible things to their fellow human beings. There is nothing to be gained this way, and a great deal to lose.

On a personal level, if there’s one single a-hole that I’m positively batshit furiously crazy-angry about, is that SOB who thought it would be a good idea to start planting the frigging grass seeds and use them for food (then store them, guard them, and so on). But then I reason that because the “bright idea” crossed that particular a-hole’s mind, it was inevitable that some other a-hole would have come up with the same idea sooner or later, so I cool down for a while. But then it starts again! Fortunately for him, the guy died 10,000 years ago, or there would have been some serious nose punching, I tell you!

January 13, 2013 at 1:18 am #6760


Interesting p01 that you bring up the issue of agriculture and the planting of grass seed for food. I recently read a fascinating article by Greg Wadley & Angus Martin in The Australian Biologist entitled ‘The origins of agriculture – a biological perspective and a new hypothesis’ in which they acknowledge that cereal grains and legumes (and dairy products) all produce opioid compounds when cooked, suggesting that early agriculturalists grew to depend on these foods not so much because they offered benefits but instead because they developed chemical dependencies on the opioids and needed increasing ‘doses’ of the foods to satiate their growing addictions. With the growing and consuming of cereal grains and legumes so tightly linked to the emergence of complex societies, perhaps one can posit that the entire idea of ‘civilization’ is built on chemical dependency fed by particular types of food (that, at least in the US, represent the single largest segments of our FDA-designed food pyramid? Food for thought…

January 13, 2013 at 2:00 am #6761



A fun and little less serious documentary ‘how beer saved the world’ would agree with the premise that mankind became civilized in order to increase consumption of addictive substances. If we are going to really consider food survival aqua culture should be looked into because of its sustainability.

I find it doubtful anyone will be able to completely grow their own food without including meat. Actually when trying to obtain the calorie intake it seems we are actually taking in a high percentage of fat well above any food group. If anyone has accomplished anything close to growing enough food to satisfy their own consumption needs I would be interested.

Should also note that being completely self sufficient will by definition be leading to being less civilized.

January 13, 2013 at 8:23 pm #6762


That is very interesting, since it puts a new light on the popular saying, which my grandfather would never miss an opportunity to repeat:
“Bread makes you fat and dumb”.

Of course at the time when this wisdom was developed, there were no seed oils (another plague on human health, exclusively brought by the Industrial type of civilization) in the food supply, or I would have known a quote about those poisons also.
Whether the plants wanted to poison us, or the culture tried to do it instead as a proxy for the plants, some people knew by generational observation what was good and what wasn’t.
Nowadays everybody is clueless and confused about what to eat, and honestly I cannot blame them, because I got all confused also, little by little. The message is just too strong, and probably the opioids are already doing their thing at full capacity.

January 13, 2013 at 9:54 pm #6763


One should absolutely stay away from wheat.

“So how—and when—did this ancient grain become such a serious health threat? Author and preventive cardiologist William Davis, MD, says it’s when big agriculture stepped in decades ago to develop a higher-yielding crop. Today’s “wheat,” he says, isn’t even wheat, thanks to some of the most intense crossbreeding efforts ever seen. “The wheat products sold to you today are nothing like the wheat products of our grandmother’s age, very different from the wheat of the early 20th Century, and completely transformed from the wheat of the Bible and earlier,” he says. Clearfield Wheat, grown on nearly 1 million acres in the Pacific Northwest and sold by BASF Corporation—the world’s largest chemical manufacturer—was created in a geneticist’s lab by exposing wheat seeds and embryos to the mutation-inducing industrial toxin sodium azide, a substance poisonous to humans and known for exploding when mishandled, says Dr. Davis. This hybridized wheat doesn’t survive in the wild, and most farmers rely on toxic chemical fertilizers and pesticides to keep the crops alive. (It’s important to note, however, that the intensive breeding efforts that have so dramatically transformed wheat should not to be confused with genetic engineering of food, or GMOs. This type of technology has its own set of problems, though.) “

A much more thorough expose on this is “The Dark Side of Wheat” by Sayer Ji

The sad thing is that for a huge percentage of the population food decisions are economic decisions. When you don’t have much money you buy foods that have the highest caloric value for your money which are most often high volume low cost junk foods of wheat, grain fed animals, corn syrup, hydrogenated oils; substances that do not support long term health.

January 14, 2013 at 4:16 pm #6764


Hi Nicole,

One of your excellent essays on the “why” of things.I am giving thought to breaking down and installing a printer that has sat in a box for a year…mostly to put a few of your writings down as a written history for my grandkids…to make sure they ,in their heart of hearts understand the why of whatever comes….

Bee good,or
Bee careful


January 15, 2013 at 12:32 pm #6765

Viscount St. Albans

Gold, Sand and Jet Fuel

Scale Matters.
One million square miles of Sahara vs. A squadron of Dassault Rafales

Bamako, Mali.
For a city of almost 2 million people, Mali’s capital doesn’t offer much of a skyline. Apart from a single, imposing brownish concrete-clad edifice, not a single secular structure competes with the minarets.


The picture made me wonder: Who owns that tower? The ministry of security?

I should have known better. It is the BCEAO Tower, and it belongs to none other than Banque Centrale des États de l’Afrique de l’Ouest (France’s banking arm for its NorthWest African possessions).
As with La Cote D’Ivoire only 18 months ago, I wonder how many loans for Malian roads, mines, bridges, etc. sit on the books of BNP Paribas and Societe Generale. At some point, the EROEI in France’s West African colonies will turn negative. Paris will certainly burn up plenty of pricey jet fuel attempting to patrol roughly 1 million square miles of Sahara. That’s quite a steep input cost. I wonder: What are the true outputs here (For Paris, of course, not the Malian people)? Justice for the victims of medieval law doesn’t pay for jet fuel. I suspect the fruits of the labor are shiny and gold-colored.

Then again, since the oil for the jet fuel probably flows from Gabon and Cameroon (France’s Central African possessions), with financing provided by BEAC, better known as Banque des États de l’Afrique Centrale (France’s banking arm in central Africa), perhaps the whole package is one virtuous circle.

Colonialism in all its permutations will always be with us. It’s the moralistic sophistry about justice and constitutional order that makes me laugh and grimace at the same time. Let’s not forget about the yellow metal…….

(from wikipedia):
“In 1991, following the lead of the International Development Association, Mali relaxed the enforcement of mining codes which led to greater foreign investment in the mining industry.[4] From 1994 to 2007, national and foreign companies were granted around 150 operating licences along with more than 25 certificates for exploitation and more than 200 research permits. Gold mining in Mali has increased dramatically, with more than 50 tonnes in 2007 from less than half a tonne produced annually at the end of the 1980s.”

January 17, 2013 at 1:23 am #6769

Golden Oxen

“In 1991, following the lead of the International Development Association, Mali relaxed the enforcement of mining codes which led to greater foreign investment in the mining industry.[4] From 1994 to 2007, national and foreign companies were granted around 150 operating licences along with more than 25 certificates for exploitation and more than 200 research permits. Gold mining in Mali has increased dramatically, with more than 50 tonnes in 2007 from less than half a tonne produced annually at the end of the 1980s.”

Would you prefer a more constructive economic endeavour? Producing something more useful like poppy, drones, nuclear weapons or chemical. Would a movie industry or a gambling mecca work well in Mali?

It’s good honest work and doesn’t bother anyone except the hate gold fiat lovers, and of course the environmentalists; they are bothered by just about everything.

January 17, 2013 at 4:00 am #6770


Economics can be a beautiful thing.

January 17, 2013 at 8:24 pm #6782


Hi Stoneleigh,

Another take on it is via social theory and the civilising forces of modernity:

A foundational ingredient in determining effective organizational scale is trust – the glue holding societies together. At small scale, trust is personal, and group acceptance is limited to those who are known well enough to be trusted. For societies to scale up, trust must transcend the personal and be grounded instead in an institutional framework governing interactions between individuals, between the people and different polities, between different layers of governance (municipal, provincial, regional, national), and between states on the international stage.

Hence the origins of what sociologists differentiate as mechanical solidarity and organic contractarianism. The mechanical being characteristic of medieval and feudal societies with their ‘nobles oblige’ of the Lords and the ‘tied’ obligations of the serfs, and the clan family nation of tribal societies with their even more mechanical fixed ‘blood’ ties. Compared to the relatively organic contractarian society of ‘law and order’


It is interesting to look at the role of money in relation to trust and societal scale. Very small and simple societies grounded in personal relationships can function on a gift basis, as the high level of trust in a small number of well-known others is enough to mean that keeping track of favours done for one another is not necessary. Favours may simply be performed when necessary and reciprocity taken for granted. Resources may be ‘owned’ by the group, or made generally available to the group, rather than owned privately and subject to specific exchange.

This is the simplest example of mechanical solidarity. Next up from this very simple familiar society is that of the small hierarchy of king/lord/tribal leader (as opposed to family or clan elder leader)

These situations are still mechanical, and the actors still known – often intimately- to one another. But the relationship is now one of ‘obligation’ and rite, this is where religion originates (from the Latin religio – onis = obligation towards), and is seen in most societal structures with strong pyramid based hierarchies, with royal/religious sanction and power at the top and serf/slave obligation a the bottom . A priestly class exist in between to ‘administer’. Here we have the basis of what most would recognise a three tier class system, with elite, middle and lower class layers.

The evolution in terms of contractarian society comes from the levelling of this ‘class’ structure. It comes from such notions as ‘human rights’ and ‘all equal under the law’. This is the contractarian society, in which a ‘social’ contract exists between both individuals and the ‘governing’ body. This is the basis of the idea of democracy, especially in the egalitarian guise of one-person one vote. (Few realise just how unusual this arrangement actually is in the history of human relations)

However, the older mechanical systems never went away and have constantly harangued and interfered with this new idea of democratic contractarianism. Its human nature; after all humans evolved under the mechanical solidarity of family clan and tribe, not the legal contract. And the variations can be seen around the world, with western ‘democracies’ (appearing to be on the surface at any rate) the most contractarian through the ‘developing world’ with its various flavours of modern organic contractarianism spliced with traditional mechanical solidarity, from south American/latino machismo to African ‘Big Man’ culture, to the various Mafia/gang type organisations around the world; with many countries and nations having their own distinctive mix from Russian oligarchy to English neo-feudalism. Not forgetting local disparities such as ‘being on the wrong side of the tracks’ with is a modern manifestation of the ‘other’ or ‘outsider’ in humans relations. (See: Norbert Elias, especially his ‘Civilising Process’)


January 17, 2013 at 8:27 pm #6783


And as Jal pointed out:

For those who are not aware of small towns/communities dynamics, the “pecking order”, and the resulting dynamics of bullying, shunning, and exploitation by others will be present and obvious.

This is human nature, don’t think that for one moment contractarian organisations are also not rife with this sort of behaviour, it’s just that their organisation makes it less prevalent and ‘obvious’.


January 18, 2013 at 6:55 am #6788


I’m feeling awfully silly for having my money in short-term Treasuries earning nothing through this bull market run.

January 18, 2013 at 9:52 am #6790


Another valuable discussion, this one is very close to my heart. Living in a comparatively cohesive, active community, I can see how far there is to go, even once a community is aware of all the issues discussed here. We have had a Time Bank here, and a CSA, we have had an advanced Transition group that accomplished more than most I’ve read about. There was an award-winning community waste system, which has since been shut down by the city, in favor of a multinational trash company whose bid they accepted over the local community’s contractor. The time bank and the CSA are long gone, and the Transition group is dormant. Great projects have been started, but maintaining them is another matter.
The major impediment I have noticed is that starting projects comes quite easy, but after awhile energy flags, people lose interest, and infighting starts. People are accustomed to a high standard of “customer service” and quite often feel cheated with the actual results of realistic projects.

The community cooperation muscle has also been so atrophied over time that initiatives ground themselves on the rocks of personal conflicts between people of like minds. I don’t think this is news to anyone, I am simply saying that the whole building-of-trust exercise is exactly as described above, except that it needs to start even smaller, with groups of 2 or 3 people working on relatively limited objectives, such as regularly meeting up for canning and such.
A friend of mine with land and the beginnings of a farm and the initiative to hold workshops and try out novel community cooperation ideas on a small scale has run across numerous problems. people start out with the best of intentions and then energy flags. Sometimes things degenerate into needless conflict. Her generous offerings of her facilities have not been valued as such, because I think people in these times don’t really value resources appropriately. For example, she has contributed her water supply and various amounts of electricity to get projects started, but things like that are often not counted.
These days I focus on building relationships with very small groups on very limited initiatives and work on communication.

January 18, 2013 at 12:34 pm #6791


Stoneleigh, I really do thank you for all your inspiring works, especially this one. When I seek a fresh perspective, The Automatic Earth always delivers.

Devolving into small units would be, in my perspective, a best case scenario. It is good to recognize that it’s not all doom and gloom… that perhaps we can help society shift into a decentralized and trust based ethical model. I certainly pray for that, but the devolution we see happening today seems more in line with authoritarianism.

Large systems can be stabilized by simplifying the elements within. At this time, people have much economic freedom, and with more paths and thus more more variability. It would seem to me that those of privilege intend to control the population through a combination of force and fear; this would remove the freedom and, if public lash-back can be quashed, help to stabilize the society. I look at how government operates today, in most western societies and especially the US and EU, and a migration towards authoritarian rule seems to be the modus operandi.

While rarely endeared by the peasantry, authoritarian societies such as monarchies have endured for centuries. The histories of Britain, France, and Spain serve as prime examples. The question about devolution from an authoritarian state becomes one of energy and force… for when the rulers are unable to exercise their control of a kingdom, they lose it. However the result is not the simple societies which you mention; another authoritarian ruler generally steps in to replace the fallen. There is the issue of EROEI in oil, but the technologies which supported monarchies and dictatorships in centuries past still exist today, along with a sporting new line of tools which can be added as additional control mechanisms (drones and mankind’s massively expanded artillery, for example). It would appear that if the ‘free’ society fails, enough control mechanisms exist for authoritarianism to endure for at least our natural lifetimes.

I would love to hear you chime in on the probability of trust based societies instead of authoritarian rule. I desperately want to see your scenario occur over the one I present, but the trajectory seems well established.

@Chas – You missed no bull market. You missed a bull market fake-out. They are not the same thing. When this farce of a rise fails, the fireworks will be spectacular and your dry powder will buy plenty. The average economic participant has no resilience. You are in an enviable position.

January 18, 2013 at 10:51 pm #6792


HI folks,

The last two comments by Ishkabibble and milliepickle are very pertinent as they highlight the gap between what people imagine might happen and what actually does. The problem lies with terms such as community which hide the actual social dynamics. Community means generally ‘from the common’ and refers to relations that are more mechanical than contractarian (see my own previous post). Also historically they are based around necessity, often to do with food production or defence, especially of small towns and villages where everyone pretty well new each other and where they stood in that society. Trying to have this sort of ‘community’ in a society where you have only ‘known’ someone for a few months or maybe years if you are lucky, where there is no real necessity and instead it is as much a lifestyle choice as much as anything is doomed to failure.

As for what happens in ‘communities’ when necessity does hit check out the results of the current UK moderate snow fall:

Nice community response in clearing the shelves :whistle:

IMHO if you want a taste of post ‘collapse’ check out some of the rougher areas of sub-Saharan Africa or anywhere where ‘colonialism’ has gone from governance to exploitation.


January 19, 2013 at 6:29 am #6793


Ishkabibble post=6501 wrote:
…the technologies which supported monarchies and dictatorships in centuries past still exist today…It would appear that if the ‘free’ society fails, enough control mechanisms exist for authoritarianism to endure for at least our natural lifetimes.

The traditional technologies of poverty and ignorance have always been universally employed by authoritarian rule, but the revolutionary discovery of national liberty expressed in the american and french revolutions, being inevitable socio-economic reactions to intolerable tyranny, may have created a lasting and indominable impulse of societal anti-authoritariansm, rendering the perfect political ignorance of liberty permanently impossible.

It seems impossible for a previously liberated revolutionary society to completely unlearn and remove the moral memory of democratic and anti-authoritarian mechanisms once constituted and having lasted in an institutional form for generations, making the sustainable intergenerational ignorance of liberty no longer tenable, while also establishing the permanent expectations of intellectual and political failure of authoritarianism as a form of government, which leaves only directed poverty as a transient tool for authoritarian control, but being now clearly apparent as directed violence.

But, absent ignorance, and having glimpsed the promise of an open society, then the absolute intensity and purposeful intent of violent poverty required to supress the spirit of liberty, once learned and remembered on a societal scale, is itself unsustainable, since the required supression mechanisms will eventually dampen all excess energy flux available for centralised power projection.

For instance, the virtues and profitabilities of free speech, once familiarised, cannot be hidden or erased from the collective memory of a people, having once freed themselves. And since the intellectual weakness of authoritarianism cannot withstand civil discourse and disintergates under sustained criticism and organised political opposition, the necessary totalitarian supression of discourse and political organisation critical of authoritarian rule will dampen economic activity to the extent than centralised control mechanisms become ineffective and unaffordable, so any complex criminal center cannot hold, regardless of technotyrannical efficacy.

January 20, 2013 at 6:00 pm #6798

Viscount St. Albans

Scale Matters ……
Several Million Square Miles of Sahara and Jet Fuel is Pricey

As mentioned earlier in the week with regard to France’s colonial Malian intervention: What’s the EROEI and who pays for all that very expensive Jet Fuel?

A Hilarious article From this Sunday’s NYTimes

Money Quote:
“In Paris, French officials said the United States, while willing to help ferry African troops, wanted to bill France for the use of transport aircraft, which officials said would not go down well with the French. The Pentagon favors providing rapid help with transport and even with air-to-air refueling, but the White House is more reluctant, the officials said.”


January 20, 2013 at 8:37 pm #6799


Does scale matter?
If you did not use natural gas to extract oil from the oil sands would it be available for exporting via a pipeline to the coast or south to the USA?

Toshiba Nuclear Reactor For Oil Sands To Be Operational By 2020: Reports


While the news of nuclear reactors potentially dotting the oilsands landscape is already raising concerns among some environmentalists, the technology could actually prove greener than current methods. Oilsands producers typically use natural gas to power bitumen extraction, which contributes significantly to Canada’s carbon emissions.

List of small nuclear plants under research/development


January 21, 2013 at 2:33 am #6801


“the technology could actually prove greener than current methods”

What do you do with the nuclear waste? Is that “green”

January 24, 2013 at 12:00 am #6821



January 25, 2013 at 4:43 am #6825


Stoneleigh wrote: “People have fewer babies when they don’t think they’ll be able to look after them, or when they don’t like the look of the world they would have to bring them into.”

Actually, the opposite is true. People have more babies under those conditions. As conditions improve, they have fewer babies. This has been proven time and time again, all over the world, over many decades. There is no doubt. It is a paradox, but it is true: women in chaotic and resource-poor environments, suffering from existential insecurity, are much more fertile than women in more stable and resource-rich ones. You would think it would be the opposite, but it isn’t. It is counter-intuitive.

An interesting sidelight on this: there is an ugly streak in neo-Malthusianism, characterized by a “let ‘em die!” attitude toward the third world, or impoverished populations. The idea is that we should not support the starving or impoverished; we should “let nature take care of the problem on it’s own”, or something like that. Maybe I should not say that this is just an “ugly streak in neo-Malthusianism”; maybe this is intrinsic to all neo-Malthusianism. In any case, my point is that that idea does not work. “Letting them die” does not work. They will not just die; they will have more kids. (They WILL die, but they will have more kids before doing so.) The problem does not solve itself. It gets worse. However, the opposite approach DOES work. Want lower population? Simple. Feed ‘em, clothe ‘em, etc. Presto! Lower fertility. And several decades later, falling population.

And it happens at a VERY low level of consumption and SES/GDP. It is not necessary to bring people up to anywhere near the level of the modern west/north. Something on the order of $U.S. 5000 per capita per year is plenty. A good example is China: their fertility has now fallen BELOW replacement at a per capita GDP of under $U.S. 5000. (That is down from fertility of 5-6, before the revolution, when most of the population was living in desperate poverty.) It will go even further negative as the poorer rurals are lifted up. India is headed in the same direction, though they are still slightly above replacement. They are like China, but 20-30 years behind.

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