The End of Capitalism

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

1.
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 »