Bangs and Whimpers

Anatol Knotek

[Update: The Five Stages of Collapse has finally been sent to the printer. May delivery is now guaranteed. Please place your order below.]

Quite a few people wrote to me over the past week asking about all the noise coming out of Cyprus. If you haven't heard, there is a financial collapse that is unfolding there: banks are closed and people can't get at their money. The Cypriot banks are insolvent. This is no surprise: all banks everywhere are insolvent, and would fail immediately were the various types of ongoing bailouts to suddenly stop. These bailouts include an ever-longer list of annoying financial jargon—liquidity injections, quantitative easing, toxic-asset-purchasing by central banks, accounting tricks such as “mark-to-fantasy,” which allows them to make bogus claims as to the value of their assets, yadda-yadda. The point is, the financial system failed in 2008, and stayed that way. The faulty formula behind all modern finance is debt raised to the power of time, and only works when there is exponential growth in economic activity and energy. Energy's exponential growth stopped in 2005 due to resource depletion; three years later finance collapsed. Permanently. Since then we have been witnessing a global game of “extend and pretend,” which cannot be played indefinitely. If something can't go on forever, it doesn't.

Open Thread

The book is going to press next Monday and, having edited it and proofread it and fact-checked it relentlessly for weeks now, I am in no mood to churn out another weekly essay. There are 30 thousand of you out there! Can't some of you write something interesting yourselves, for once? Just this once? Thank you!

The proliferation of defunct states

[Another excerpt from The Five Stages of Collapse.]

The triumph of the nation-state was made possible by the triumph of industry over artisanal production, especially in the area of weaponry. Industrialization gave the larger nations the means to produce vast quantities of war matériel, in turn giving them the impetus to homogenize and standardize the population by imposing a single language and educational system in order to be able to field a unified fighting force. The transformation was profound: at the time of the French Revolution only 10-12 percent of the French population could be said to speak French; in Italy the number of people who could be said to speak Italian was even lower. It allowed a handful of European nation-states to conquer the entire planet, before suffering the successive paroxysms of the two world wars. As they retreated, they did their best to carve up the planet into patches that, they hoped, would emerge as nation-states in their own right.

Where There's No Government

Mason London

Excerpt from The Five Stages of Collapse

[In italiano: Dove non c'è governo]

Modern societies rely on the government to defend property rights, enforce contracts and regulate commerce. As the economy expands, so do the functions of government, along with its bureaucratic structures, laws, rules and procedures and—what expands fastest of all—its cost. All of these official arrangements show an accretion of complexity over time. Each time a new problem needs to be solved, something is added to the structure, but nothing is ever taken away, because previous arrangements are often grandfathered in, and because simplifying a complex arrangement is always more difficult and expensive than complicating it further. But socioeconomic complexity is never without cost, and once the economy crests and begins to contract, this cost become prohibitive. In the context of a shrinking economy buffeted by waves of escalating crises, an outsized officialdom comes to exhibit ever greater negative economies of scale, while the arduous task of reforming it so as to scale it down and simplify it cannot receive priority due to a lack of resources. In the best case, after a more or less chaotic transitional period, new, simplified and scaled-down official structures do eventually arise.

Monkey Trap Nation

Lukas Brezek

A few weeks ago I flew back to Boston from St. Petersburg. Nine time zones is a lot to fly through in a day, especially when flying west. It all adds up to a single very long day that just won't end. When I had left Boston, I set up the boat to stay above freezing using a minimum amount of electric heat, so I expected to find a cold boat, but not a frozen one, in spite of the freezing cold and the snow, which was coming down quite heavily when I landed. But it turned out that while I was away the shore power cable's connection to its socket aboard the boat started arcing and burned, leaving the boat without power. (I was lucky; the boat could have burned down.) I spent an interesting couple of hours finding tools and supplies by flashlight, then stripping and splicing cables to restore power. As I finally went to sleep that night, wrapped in an electric blanket aboard a slowly defrosting boat, I thought to myself: “What have I done?” Sure, I flew to Boston because that's where my boat is, but there has got to be a better reason than that!

Pray for an Asteroid

On the morning of February 15, 2013, a 500-ton meteor entered the atmosphere somewhere near the Ural mountains, in the vicinity of Chelyabinsk, Russia, an industrial city of over a million. The intensity of the blast was estimated at around 500 kilotons of TNT equivalent, or 30 nuclear bombs of the type the Americans dropped on Nagasaki, Japan. The shock waves from the sonic boom it created blew out numerous windows. Around a thousand people were wounded, mostly with lacerations from flying glass; 40 of them remain hospitalized. The damage is being estimated at over one billion rubles ($33 million USD). Over 24,000 workers and volunteers, coordinated by Russia's Emergency Ministry, went to work on the clean-up. Their specific emphasis was on keeping buildings from freezing (the temperature in Chelyabinsk is around -20ºC). By February 17 much of the damage had been repaired. Schools, hospitals and other pubic buildings had their windows replaced and were reopened. The government is supplying replacement windows to residential buildings.

Book Excerpt: The wrong math

This is an excerpt from The Five Stages of Collapse: Survivors' Toolkit. Please order your copy for shipment in May.

Regular price $18.00 USD Autographed, numbered copy $28.00 USD

NOT THE COVER!

An argument can be made that lending at any rate of interest above 0 percent eventually leads to a deflationary collapse followed by a quick but painful bout of hyperinflation thrown in at the very end. A positive interest rate requires exponential growth, and exponential growth, of anything, anywhere, can only produce one outcome: collapse. This is because it quickly outpaces any sustainable physical process in the universe, outside of a few freak cases such as a sustained nuclear explosion, where the entire universe blows up, taking all of us with it, along with all of our debts.

Book Excerpt: The Problem of Excessive Scale

This is an excerpt from The Five Stages of Collapse: Survivors' Toolkit. Please order your copy for shipment in May.

Regular price $18.00 USD Autographed, numbered copy $28.00 USD

(Although the order is placed through PayPal, you don't need to have a PayPal account; just click "Don't have a PayPal Account?" during check-out and enter a credit or debit card number. If you do have a PayPal account, please make extra-double-sure that the shipping address associated with it is up-to-date and correct, and will remain that way through May.)

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In his excellent book The Breakdown of Nations the maverick economist Leopold Kohr makes several stunning yet, upon reflection, commonsense observations. He points out that small states have tended to be far more culturally productive than large states, that all states go to war but that big states have disproportionately bigger wars that kill many times more people, and that by far the most stable and advantageous form of political organization is a loose confederation of states, each so small that none can dominate the rest. Kohr arrives at his conclusions by a process of reasoning by homology (viz. analogy) by analyzing many of the problems of modernity as different manifestations of the same underlying problem: the problem of excessive scale.

Please Place Your Order for The Five Stages of Collapse

This book has been five years in the making, and now I am finally in a position to finish the job and put a copy directly in your hands. I will even sign it. I have contracted with a fulfillment center to promptly ship out copies of The Five Stages of Collapse: Survivors' Toolkit as soon as they come off the press in early May. By popular demand, I have also added an option to let you order an autographed, numbered copy, for a little extra. The book will eventually filter out to various online bookstores and maybe even a few actual real ones, but it will take a few months for that to happen, and half a year or so until a few of your dollars trickle down to me. But if you pre-order the book directly from me, then I get paid first, and in return I will personally see to it that your copy is included in the very first print run and that you get it in May. Your direct support is very important: it is what will allow me to continue blogging and writing books. Thank you.

Regular price $18.00 USD Autographed, numbered copy $28.00 USD

Please note: Although the order is placed through PayPal, you don't need to have a PayPal account; just click "Don't have a PayPal Account?" during check-out and enter a credit or debit card number. Also, please make extra-double-sure that the shipping address associated with your PayPal account is up-to-date and correct, and will remain that way through May. If you do submit an order with an incorrect address, write to me and I will issue a refund so you that can resubmit it.

Book Announcement: The Five Stages of Collapse

Starting next Tuesday and for the next three months this book will be available for pre-order right on this blog. (It will also be available elsewhere, but on terms that don't come close to making book-writing a sustainable proposition, so if you want me to keep writing you should get the book directly from me.) As the publication date nears, I will also be publishing some excerpts. [Minor note: there has been some confusion regarding the book's subtitle; please ignore it.]

This book is based on the identically titled article I published on this blog in February of 2008, just as financial collapse was starting to gather steam. Since then, this article has been read nearly 100,000 times on this blog alone (it has been reposted on many other web sites) and it is its enduring popularity that has convinced me to write a book-length treatment.