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Republished by Energy Bulletin, OpEdNews, and Countercurrents, and translated into Turkish for

The following exchange between Michael Carriere and Alex Knight occurred via email, July 2010. Alex Knight was questioned about the End of Capitalism Theory, which states that the global capitalist system is breaking down due to ecological and social limits to growth and that a paradigm shift toward a non-capitalist future is underway.

This is the third part of a four-part interview. This part is a continuation of Alex’s response to the second question. Click here for Part 2A. Scroll to the bottom for links to the other sections.

Part 2B. Social Limits and the Crisis

MC: Capitalism has faced many moments of crisis over time. Is there something different about the present crisis? What makes the end of capitalism a possibility now?

AK: As I described in the last section, the current crisis can be understood as resulting from a massive collision between capitalism’s relentless need for growth and the world’s limits in capacity to sustain that growth. These limits to growth are both ecological and social. In this section I’ll discuss the concept of social limits to growth.

The Extraordinary Power of Social Movements

Social limits to growth function alongside the ecological limits but are drawn from a different source. By social limits we mean the inability, or unwillingness, of human communities, and humankind as a whole, to support the expansion of capitalism. This broadly includes all forms of resistance to capitalism, a resistance that has arguably been increasing around the world through innumerable forms of alternative lifestyles, refusal to cooperate, protest, and outright rebellion.

As a disclaimer it’s important to recognize that not all resistance is progressive. There are right-wing, fundamentalist, and undemocratic forces that also resist capitalism, for example the Taliban, or North Korea. These are not our allies. They do not share progressive values, we cannot condone their attacks on women, or on freedom more generally, and I don’t see anything to be gained by working with them. However it is important to recognize how these forces are aligned against capitalism and U.S. imperialism, in addition to being aware of the danger they present to our own hopes and dreams.

Progressive resistance, on the other hand, has always taken its strength from grassroots social movements. Silvia Federici writes about the immense and varied peasant movements in medieval Europe that fought for religious and sexual freedom, challenging both feudal lords and emerging capitalist elites. I like to think of these rebels as my European ancestors – they were just commoners but they rose up to fight for a better world. This is the nature of social movements. Ordinary folks, daring to pursue their deepest aspirations, interests and dreams, join together with others who share those desires, and thereby create something extraordinary. The magic exists in the joining-together. Isolated individuals lack the power to accomplish what a group can achieve.

We can appreciate this extraordinary power if we look at how social movements have transformed our lives. A century ago, millions of American workers joined the labor movement and won the 8-hour day, Social Security, and workplace safety. Regular folks carried forward the Civil Rights Movement and broke Southern segregation. The feminist and LGBT movements have transformed the way gender and sexuality are viewed all over the world. It’s hard to overstate how dramatically these and other social movements have improved society. While capitalism has invented ways to co-opt social movements and redirect them into outlets that do not challenge the system on a deep level (like the “non-profit industrial complex”), movements have remained alive and vibrant by empowering people to reach towards a different world.

Have social movements limited capitalist oppression recently? To answer this we need to learn the story of the Global Justice Movement.

Demonstrators tear down a section of security fence in the Mexican resort city of Cancun to confront the World Trade Organization’s Fifth Ministerial summit on Sept. 10, 2003.

The Global Justice Movement

David Graeber, anarchist anthropologist, wrote a remarkable essay called “The Shock of Victory” in which he looks at this movement that suddenly flared up at the turn of the millennium and seemed to disappear just as quickly. Although most Americans may not remember the Global Justice Movement, and those who participated in it may feel demoralized by the fact that capitalism still exists, Graeber points out that many of the movement’s ambitious goals were accomplished. Read the rest of this entry »

Below I’ve reposted a new article by Roger Baker, former ’60s SDSer and current peak oil activist in Austin, TX, linking the Economic Crisis with Peak Oil.  There is more evidence mounting that last year’s global economic downturn was to some degree a direct result of the unprecedented oil price spike that immediately preceded it.

For example, this article (“Jeff Rubin: Oil Prices Caused the Current Recession”) explains that Europe and Japan (which are both more vulnerable to oil prices because they produce less oil than the US but consume plenty) entered recession before the financial subprime crisis hit global markets.

Quote: “Higher oil prices started four of the last five world recessions; we shouldn’t be too surprised if they started this one also.”

Past Recession and Causal? Oil Spikes

Keep in mind the unprecedented nature of this recent oil price spike, where the price of oil went to all-time record levels of nearly $150/barrel. This chart suggests that the economic effects of past price rises will likely pale in comparison to this much greater recent spike, at the end of the day.

Finally, we have this telling quote from Gail the Actuary: “It seems to me that the problem with non-availability of credit, particularly long-term debt, is ultimately tied in with peak oil. It is difficult to have more than a tiny amount of long term debt once an economy is no longer growing.”

My book, The End of Capitalism, will explore this theme in more depth, but it’s worth conjecturing:  If the global economy literally cannot grow any more, because of real and unavoidable limits on vital resources such as oil, how can we anticipate the multi-layered global consequences?

We have arguably begun witnessing the first wave of financial consequences, but this is just the tip of the iceberg.  How might the economy as a whole system have to transform, and if growth as the paradigm of industrial capitalism is literally behind us, what kind of economy will the paradigm shift towards? Will we see a new sustainability rooted in democracy and freedom, or an even greater tyranny than what capitalism has wrought?

Some Economic Implications of Peak Oil

By Roger Baker • on April 27, 2009

World oil production probably peaked in 2008. Liquid fuel production, including oil, is indicated by the OPEC data [1] to have reached a peak in July 2008 at about 86 million barrels per day, with its price peaking at about the same time. ASPO International agrees, as indicated on the chart page of their recent newsletters [2].

Peak oil has profound economic implications, most of which are unwelcome. There is good evidence indicating that peak oil triggered the global economic crisis; that oil price was the limiting factor that broke the momentum as the global economy tried to keep expanding. [3,4].

Predictably some factor like the end of cheap oil must limit the ability of global investments to expand exponentially, while paying interest on the global debt bubble. The risk was evenly spread by instruments like credit default swaps, so the collapse was global.There is scholarly confirmation of the role of the 2008 oil shock on the global economy should see the April 2009 Brookings paper “Causes of the Oil Shock of 2007-08″, by UC San Diego economist Dr. James Hamilton: [5,6].

“…Whether we would have avoided those events had the economy not gone into recession, or instead would have merely postponed them, is a matter of conjecture. Regardless of how we answer that question, the evidence to me is persuasive that, had there been no oil shock, we would have described the U.S. economy in 2007:Q4-2008:Q3 as growing slowly, but not in a recession.” Read the rest of this entry »

I recently posted Dmitry Orlov’s great essay ‘Closing the Collapse Gap‘, and here is his latest piece, which he delivered to the 5th Conference on Peak Oil and Community Solutions.  I am only reposting excerpts, because the original is very long and somewhat repetitive.  I also must warn that although I find Orlov’s insight useful, I have a much more positive view of the collapse of US Imperialism, mainly because I think he is overlooking the benefits of this process for the planet’s ecosystem as well as the possibility of freedom for the majority of the world’s people who are currently suffering under US dominance.  Iraqis certainly will have a different view of the collapse of the US Empire than those in the Pentagon.

How about for Americans? Is the collapse of the US better for people who live here?  Orlov’s conclusion actually indicates that it may be, especially in terms of rebuilding the social fabric that has been worn away by individualism and consumerism.  But he also overlooks the reality of social oppression in the US. Not everyone lives the same “middle class” lifestyle he seems to be taking for granted.  There are already millions of Americans on the brink of poverty, or deep in poverty, who don’t worry about losing their SUVs.

The best outcome is for not just a collapse, but a transformation, so that nobody has to go hungry or work their life away just so that the wealthy can take cruises or visit the spa.  The current Bailouts are the most striking example of the government having the exactly opposite priorities.  Instead of bailing out homeowners, or the poor who lack access to public transportation, they are dumping money into the hands of the real estate and automaking profiteers!  We must continue to oppose this nonsense, from Obama or anyone, and make sure that our money is used for the benefit of the majority, not the wealthy few.  In a world of shrinking wealth, there should be no rich, and there doesn’t have to be any poor either.  [alex]

The Five Stages of Collapse

by Dmitry Orlov
Originally published by Energy Bulletin, Nov. 11, 2008.

Hello, everyone! […] My specialty is in thinking about and, unfortunately, predicting collapse. My method is based on comparison: I watched the Soviet Union collapse, and, since I am also familiar with the details of the situation in the United States, I can make comparisons between these two failed superpowers.

I was born and grew up in Russia, and I traveled back to Russia repeatedly between the late 80s and mid-90s. This allowed me to gain a solid understanding of the dynamics of the collapse process as it unfolded there. By the mid-90s it was quite clear to me that the US was headed in the same general direction. But I couldn’t yet tell how long the process would take, so I sat back and watched.

I am an engineer, and so I naturally tended to look for physical explanations for this process, as opposed to economic, political, or cultural ones. It turns out that one could come up with a very good explanation for the Soviet collapse by following energy flows. What happened in the late 80s is that Russian oil production hit an all-time peak. This coincided with new oil provinces coming on stream in the West – the North Sea in the UK and Norway, and Prudhoe Bay in Alaska – and this suddenly made oil very cheap on the world markets. Soviet revenues plummeted, but their appetite for imported goods remained unchanged, and so they sank deeper and deeper into debt. What doomed them in the end was not even so much the level of debt, but their inability to take on further debt even faster. Once international lenders balked at making further loans, it was game over.

What is happening to the United States now is broadly similar, with certain polarities reversed. The US is an oil importer, burning up 25% of the world’s production, and importing over two-thirds of that. Back in mid-90s, when I first started trying to guess the timing of the US collapse, the arrival of the global peak in oil production was scheduled for around the turn of the century. It turned out that the estimate was off by almost a decade, but that is actually fairly accurate as far as such big predictions go. So here it is the high price of oil that is putting the brakes on further debt expansion. As higher oil prices trigger a recession, the economy starts shrinking, and a shrinking economy cannot sustain an ever-expanding level of debt. At some point the ability to finance oil imports will be lost, and that will be the tipping point, after which nothing will ever be the same.

This is not to say that I am a believer in some sort of energy determinism. If the US were to cut its energy consumption by an order of magnitude, it would still be consuming a staggeringly huge amount, but an energy crisis would be averted. But then this country, as we are used to thinking of it, would no longer exist. Oil is what powers this economy. In turn, it is this oil-based economy that makes it possible to maintain and expand an extravagant level of debt. So, a drastic cut in oil consumption would cause a financial collapse (as opposed to the other way around). A few more stages of collapse would follow, which we will discuss next.[…]

I don’t mean to imply that every part of the country will suddenly undergo a spontaneous existence failure, reverting to an uninhabited wilderness. I agree with John-Michael Greer that the myth of the Apocalypse is not the least bit helpful in coming to terms with the situation. The Soviet experience is very helpful here, because it shows us not only that life goes on, but exactly how it goes on. But I am quite certain that no amount of cultural transformation will help us save various key aspects of this culture: car society, suburban living, big box stores, corporate-run government, global empire, or runaway finance. Read the rest of this entry »

[There are many articles (including one I wrote in college), and even whole books written about Petrodollars – the way that US dollars dominate the world economy by their crucial involvement in all global oil trades.  This just happens to be a very clearly written and accessible essay, so I’m reprinting it despite slightly out-of-date numbers. The extent to which the fragility of petrodollar hegemony affects US foreign policy is probably the biggest question mark, but it seems plausible that the much-threatened aggression against Iran has a lot to do with that country’s moves to abandon the dollar for their oil trades. – alex]

Oil prices and the dollar

C. P. Chandrasekhar
Jayati Ghosh

Originally published by Business Line, February 26, 2008.

The depreciation of the US dollar has been closely bound up with the movement of oil prices, as world oil trade is typically denominated in dollars. Yet this relationship may now be under threat as the dollar continues to depreciate and the US economy tips into recession. In this edition of Macroscan, C. P. Chandrasekhar and Jayati Ghosh examine how oil prices have changed with different numeraires, and consider the implications for the future of the oil-dol lar nexus.

The relationship between oil and the US dollar has been at the heart of the way international economic relations have been organised for more than half a century.

International capitalism has relied on the US dollar as the basic reserve currency, and has therefore granted it an essential degree of stability for several decades despite the large external deficits run by the US and the periodic swings in its valuation in currency markets.

More than half of aggregate world exports are denominated in dollars; more than 80 per cent of all international currency transactions similarly involve dollars.

Loans made by the IMF and other multilateral institutions are denominated in dollars. More than 60 per cent of the foreign exchange reserves held by central banks of all countries are in dollar assets.

This has obviously meant huge advantages for the US. It has allowed the US economy to benefit from access to imports that can effectively be paid for simply by printing dollars, and has therefore allowed the US to run enormous current account deficits for prolonged periods. It has encouraged the rest of the world to finance these deficits by providing its savings to be held in US or dollar-denominated financial assets, to the point that all the developing regions of the world are also building dollar reserves that directly or indirectly find their way to the US economy.

Dollarisation of oil markets

A key feature of this entire process has been the dollarisation of world oil markets. Oil is the central commodity of industrial capitalism, absolutely essential for the production of essential and widely used goods. All industrial economies, and most developing ones, would grind to a halt with even a moderate disruption of oil supplies.

Most of the world oil trade has operated and continues to operate in dollars, even when the US is not the trade partner. Oil prices are defined in dollars for most oil exporters. As a result, oil importing countries also pay in dollars. The oil-exporting countries accumulate dollar reserves, which have been preferentially invested back in the US because of the zero currency risk involved in this.

Indeed, this recycling of petrodollars has been very significant as a source of finance for US trade deficits in several periods, including in recent times. Other countries also hold dollars for future oil purchase.

The dramatic increase in the price of oil in the past few years could be argued to have accentuated this tendency. As Chart 1 indicates, oil prices have increased dramatically in dollar terms especially from 2003, going up by nearly 2.5 times between 2003 and 2007.

This has obviously contributed very significantly to the wealth of oil exporters, and allowed them to generate balance of payments surpluses and build foreign exchange reserves, which have then been invested dominantly in dollar assets in US markets.

However, this is also the period that the US dollar has been depreciating, especially with respect to some of the other major currencies such as the euro and the Japanese yen. As a result, the change in oil prices has been less striking in terms of these currencies than in terms of the dollar.

The currency factor
Read the rest of this entry »

Excerpts from Democracy Now!, May 6, 2008.

[Kevin Phillips, author of “Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism”, surveys the economic crisis facing U.S.-dominated global capitalism – including peak oil, the collapse of the Dollar, rising food costs, and the growing dominance of the banking and credit industries. This is fairly radical stuff coming from a former GOP strategist.]

AMY GOODMAN: What do you think is one of the most serious signs of this overall global crisis of American capitalism?

KEVIN PHILLIPS: Well, not to single out just one, I have an approach I use to say that normally when a country is—United States is—heading into a recession, there are one or two, sometimes three, factors that you worry about. But at this point in time, the American economy, you can think of it as being kind of in a shark tank, and there are like six or seven sharks, and you don’t usually see anything like that number. Read the rest of this entry »

Update April 30, 2008: Iran dumps U.S. dollar for oil trades – “Iran, OPEC’s second-largest producer, has stopped conducting oil transactions in U.S. dollars.”

In the last eight years implementing the plans for the Project for the New American Century (PNAC) designed “to promote American global leadership” has backfired.

To accomplish PNAC’s goals, all threats needed to be eliminated. From the onset, the United Sates earmarked two countries as mortal enemies: Venezuela and Iran. With Venezuela, it is well documented that the CIA attempted to overthrow the democratically elected government of Chavez. And with Iran, the United States continues to use it as a scapegoat for its failures in Iraq. These cold war tactics however are proving to be US’s undoing.

The United States is hemorrhaging from every orifice, and oil prices can be used to measure the rapidity of its demise. Read the rest of this entry »

See this awesome Graph-Presentation.

Originally published in the Wall Street Journal.

Boom Cuts U.S. Clout,

Revives Middle East;

Dark Days for Detroit


January 3, 2008; Page A1

The surging price of oil, from just over $10 a barrel a decade ago to $100 yesterday, is altering the wealth and influence of nations and industries around the world.

These power shifts will only widen if prices keep climbing, as many analysts predict. Costly oil already is forcing sweeping changes in the airline and auto sectors. It is intensifying the politics of climate change and adding urgency to the search both for fresh sources of crude and for oil alternatives once deemed fringe.

[Go to graphic.]

The long oil-price boom is posing wrenching challenges for the world’s poorest nations, while enriching and emboldening producers in the Middle East, Russia and Venezuela. Their increasing muscle has a flip side: a decline of U.S. clout in many parts of the world.

Steep gasoline prices also threaten America’s long love affair with the automobile, while putting strains on many lower-income people outside big cities, who must spend an increasing share of their budgets just on fuel to get to work. Read the rest of this entry »

By William M. H. Kötke

13 September, 2007

The planetary elite are compelled to continue on their path of growth leading toward planetary domination. The international bankers through their control of the industrial world’s privately owned central banks maintain a tether on the money system through their control of the U.S. dollar as the currency of international trade. One important mechanism that allows this is that the largest item in international trade – oil – is sold in dollars. In order to insure the continuance of the dollar economy, they must be able to choose which currency oil is sold for or control the oil – or both. The center of the empire, the U.S., is maintained by debt as the petrodollars and other dollars come into the U.S. at the rate of at least two and a half billion per day (purchasing U.S. government bonds) in order to continue the cycle, which keeps the empire and its military power expanding As the elite carry out their strategies of domination they are racing against time. The monster trends of Peak Oil and energy exhaustion, climate change which will severely disrupt the seasons of growth in the food supply system, the weakness of the dollar and ecological collapse are pursuing them. An exponentially growing world population with growing material consumption based on dwindling resources and a dying planet won’t work, but they have no other option to maintain their power and profit.

Seeds of Change

As the industrial system spins toward exhaustion, seeds of change are sprouting at the base. The people at the base are not revolting in order to take the power that the elite have but are revolting to take power over their own lives. Read the rest of this entry »

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