For those of you trying to make heads or tails out of the financial news out there, a good place to start would not be an economics textbook (it took me four years in college and an economics degree to figure out those were all garbage myself), but a small volume by Joseph Tainter titled The Collapse of Complex Societies
. In this thin book, most of the chapters are about anecdotal histories of collapsed societies, with the intellectual meat of the book residing in a short, twenty page or so, chapter in the middle. I'll try a brief summary here, but I don't have the book with me and it's been several years since I read it, so be forewarned this summary has accumulated some of my own cultural detritus over the years.
Essentially, complex systems, and these could be civilizations, agricultural networks, or Fortune 500 companies like Enron or Fannie Mae, do not exit the scene the same way they enter it. Layers of complexity are added one at a time in a kind of organic growth. Complexity allows for a division of labor among individual components of the system in addition to broadening the resource base that the entity has access to. But complexity in human organizations also brings with it additional nonproductive managerial layers that increase in number and proportion along with the size of the entity. When the producing members of the system begin to reach the physical limits of what they can produce (here's where traditional economics fails miserably, as it cannot foresee this ever occurring), the return for each producing member slows dramatically. This is because instead of just producing for themselves, they also bear the weight of the nonproductive managerial layer. A threshold is quickly crossed where it makes more sense to work alone or in small groups or to abandon the activity altogether. Either way, the built-up entity no longer makes sense, and ceases to exist in a dramatic fashion.
On a worldwide scale, we are watching this happen in a variety of arenas. Oil production is an obvious example. For those of you not familiar with the fundamentals of the concept of Peak Oil (or for great daily updates on resource limits generally), the energybulletin.net website has an excellent primer on the subject. When Matt Simmons, author of Twilight in the Desert, made a bet with Joe Tierney of the New York Times in 2005 that the oil price would average $200 by the end of this decade, I was skeptical. It hasn't happened yet, obviously, but it looks like it certainly could!
Being a member of the far left (revolutionary left is probably more accurate), I always find the Republicans' responses to our most serious national issues funny (in a sad, no-hope-for-the-human-race kind of way). Their reaction to the "oil crisis" is especially amusing for its blatant attempt at personal gain at the expense of the problem they are trying to solve. Opening up off-shore drilling will make some dollars for our local oil meganationals like Exxon (and we all know they're suffering terribly), but it is almost certain to lower the worldwide availability of oil and drive up the price for two simple reasons.
First, all available oil rigs and engineers are currently employed drilling for offshore oil in incredibly productive places like Saudi Arabia, the west coast of Africa, and Brazil. Compared to these places, off-limits areas near our own coasts are pittances in terms of productivity, but because oil companies prefer the taxpayer-subsidized returns and security they get here at home, they will likely move rigs from these productive areas to our less productive ones. Replacement engineers and new off-shore rigs take 5-10 years to create.
Second, the majority of this shoreline resides in some of the most hurricane-prone areas in the world. Putting more of our energy infrastructure out there guarantees a possibility some of it will get slammed whenever a hurricane brews in the gulf. Every time there's a strong thunderstorm off the coast of Africa, the price of oil will be going up.
It's been heartening over the years to see some folks give up on the idea of fossil fuels and commit to eradicating them from their lives. An awesome new book, The Transition Handbook by Rob Hopkins, details how entire towns and neighborhoods can accomplish this. As the larger systems continue to stutter and fall we can create a much more sustainable, and as Rob likes to point out, resilient, civilization by becoming locally independent for our food and energy. Complex systems behave like the giants they are. They lose a leg, are toppled, and that's the end. But diversified smaller systems and communities, like the caterpillar or the millipede, can lose a leg or two and keep on trucking.