Where Economics Fails

It’s occurred to me more than once that we might be wise to set aside an annual weekend to mourn the death of Osiris or Persephone or Bladud the wind-god or some other divinity, as our pagan ancestors did, or as those Christians who still take the narratives of their faith seriously do each year on Good Friday. It might at least put a merciful end to the media’s frantic and macabre efforts to bestow a belated sainthood on each new member of the dead celebrities’ club, no matter how far from sanctity the trajectory of their lives might have been.

Thus you’d be correct in guessing that I didn’t put much time this past weekend into paying attention to the media furore over the death of Michael Jackson. I was, instead, busy with my usual research. While tens of millions of people spent the weekend glued to their TVs reviewing the catastrophic fall from grace of an undeniably brilliant cultural phenomenon that achieved unparalleled success, and then was brought down by a supertanker-sized load of unresolved inner conflicts heated to crisis by a disastrous mismatch between an extravagant lifestyle and faltering income – well, I suppose that’s a fair description of what I was doing, too.

Still, the decline and fall of industrial civilization, that troubled and dysfunctional superstar still wobbling across the historical stage, can’t be tracked that effectively by taking in music videos or soundbite interviews. Instead, I spent the weekend reading through economics textbooks. “Thriller” is not exactly the word I’d use to describe these hefty tomes, but I’d recommend that anyone concerned with the future of our society ought to read at least one. This is not because current economic textbooks offer useful guidance to the challenges of our time. Quite the contrary; the world they describe is as imaginary as Oz, and rather less relevant to contemporary life. What makes them important is precisely that so many of the decision makers of our time treat this fantasy as reality.

Understand current economic thought and you understand most of the mistakes that are dragging industrial civilization down to ruin. The Energy Information Administration (EIA), a branch of the US government, has become infamous in the peak oil scene over the last decade or so for publishing estimates of future petroleum production that have no relationship to geological reality. Their methodology, as described in EIA publications, was simply to estimate probable increases in demand, and then to assume that increased demand would automatically be met with a corresponding increase in supply. Quite a few peak oil writers have suggested some dark conspiracy behind this blithe disregard for the limits of a finite planet, but it takes only a few minutes’ worth of reading to identify the real culprit as the standard notion of the law of supply and demand taught in every first-year economics textbook today.

According to this model of the world, the amount of any commodity available in a free market is controlled by the demand for that commodity. When consumers want more of a commodity than is available on the market, and are willing to pay more for it, the price of the commodity goes up; this provides an economic incentive for producers to produce more of the commodity, and so the amount of the commodity on the market goes up. Increased production sets an upper limit on price increases, since producers competing against one another will cut prices to gain market share, and the willingness of consumers to pay rising prices is also limited. Thus, in theory, the production and price of a commodity are set by a shifting balance between the desire of consumers to buy it and the desire of producers to make a profit from producing it.

What makes the theory so seductive is that within certain limits, and in certain circumstances, it works tolerably well. The problem creeps in when economists lose track of the existence of those limits and circumstances, and this, to a remarkable degree, is exactly what they have done. To be fair, they had good reason to do so, because during the three-hundred-year boom that created the industrial world following the successful harnessing of fossil fuels, the limits rarely applied and the circumstances were far more often present than not. Among the most important roots of the current crisis, in turn, are the hard facts that the limits have begun to come into play, and the circumstances no longer exist.

Let’s start with the obvious. Imagine that a plane full of investment bankers makes a forced landing in the Pacific close to a desert island. The island has no food, no water, and no shelter; it’s just a bare lump of rock and sand with a few salt-tolerant grasses on it. As the bankers struggle ashore from the sinking plane, the need for food, water, and shelter on that island is going to be considerable, but even if each of the bankers have a suitcase full of $134 billion dollars in bearer bonds – like those guys who were caught trying to enter Switzerland a little while back – that need is going to go unfilled, until and unless a ship arrives from somewhere else. The lesson here is simple: economics doesn’t trump physical reality.

More generally, the theoretical relationship between supply and demand functions only when supply is not constrained by factors outside the economic sphere. The constraints in question can be physical: no matter how much money you’re willing to pay for a perpetual motion machine, for instance, you can’t have one, because the laws of thermodynamics don’t take bribes. They may be political: Nazi Germany had a large demand for oil from 1943 to 1945, for example, and the Allies had plenty of oil to sell, but anyone who assumed on that basis that a deal would be cut was in for a big disappointment. They may be technical: no matter how much you spend on health care, for instance, sooner or later it’s going to fail, because nobody’s yet been able to develop an effective treatment for death. Economists have come up with various workarounds to deal with external factors of this sort, some more convincing than others.

Another set of factors that can crumple up the law of supply and demand and toss it into the wastebasket, though, has received far less attention. These are constraints that we might as well call “ecological,” and they unfold from the awkward fact that human economic activity is far less independent of the natural world than economists often try to pretend. The scale of this dependence is as rarely recognized as it is hard to overstate. One of the few attempts to quantify it, an attempt to work out the replacement costs for natural services carried out a few years back by a team headed by heretical economist Robert Costanza, came up with a midrange figure equal to around three times the gross domestic product of all human economic activity on earth.

Out of every dollar of value circulating in the world’s economy, in other words, something like 75 cents were provided by natural processes rather than human labor. What’s more, most if not all of that 75 cents of value had to be there in advance in order for the production of the other 25 cents to be possible at all. Before you can begin farming, for example, you need to have arable soil, water, and an adequate growing season, as well as more specialized natural services such as pollination. These are nonnegotiable requirements; if you don’t have them, you can’t farm. The same is true of every other kind of productive work in the human economy: nature’s contribution comes first, and generally determines how much the human economy can produce.

It’s for this reason that E.F. Schumacher, the maverick economist whose ideas are the launching pad for this series of posts, drew a hard distinction between what he called primary goods and secondary goods. Secondary goods are the goods and services provided by human labor, the ordinary subject of economic theory. Primary goods are the goods and services provided by nature, and they make the production of secondary goods possible. The difference between the two is very much like the difference between income and profit in a business: you have to have income in order to have profit, and if you neglect income while maximizing your profit, sooner or later you go bust.

A failure to distinguish between primary and secondary goods is at the root of a great deal of current economic nonsense. It’s usually possible, for example, to substitute one secondary good for another if the supply runs short or the price gets too high, and for this reason it’s a standard assumption of economics – and one of the foundations of the law of supply and demand – that consumers can meet their needs equally well with many different goods. Yet this assumption does not apply to natural goods. In the world of nature, a different rule – Liebig’s law of the minimum – applies instead: production is limited by the scarcest necessary resource. Thus if you have a farm and can’t get water for your crops, it doesn’t matter if you have excellent soil and all the other requisites of farming; you can’t grow anything.

In certain limited situations, to be sure, it’s possible to substitute one primary good for another – for instance, to use low-grade iron ores such as taconite when the high-grade ores have been exhausted. Even when this can be done, though, a law of diminishing returns always applies. You can get iron out of low-grade ore, but the extraction process is less efficient and takes much larger inputs of energy. When energy is cheap, you can ignore this – and this is exactly what happened over the course of the 20th century, as the iron industry retooled itself to use steadily lower grades of ore and steadily larger inputs of energy – but that in itself simply passes costs onto the future, since the fossil fuels that provided the energy inputs are themselves subject to depletion, and to a law of diminishing returns. One way or another, the substitution imposes additional costs without providing any additional economic benefit.

This same rule also applies to every other natural good. Consider the valuable service provided to the world’s economies by the honeybees that pollinate most nongrain food crops. If we succeed in adding the honeybee to the already long list of the world’s extinct life forms, it would doubtless be possible to replace their pollination services by other means, whether that took the form of huge pollinating machines rumbling across the fields or the simpler and probably more economical approach of migrant workers using little brushes to wipe pollen from a bag onto the stamen of every single flower. Note, though, that no farmer in his or her right mind would hire a thousand laborers with brushes instead of calling up the local beekeeper and arranging for a few hives to be left in the fields; substituting some other pollination method for bees would add a huge additional cost to farming, without yielding any additional benefit.

I’ve come to think that the unrecognized difference between secondary goods, which can be readily replaced by other goods without additional cost, and primary goods, which cannot, is among the most important forces driving our current crisis. For the last three centuries, the industrial economies of the world have been using up every primary good that can be converted into secondary goods at extravagant and steadily increasing rates. Think of any good or service provided by nature – from topsoil to oceanic fish stocks, from the pollution-absorbing capacities of rivers to the storm-buffering properties of wetlands, from breathable air and drinkable water to the mineral stocks and fossil fuel reserves that keep the entire system running – and you’ve just identified something that’s being used up rapidly by industrial societies, with no thought of the potential costs of substituting something else for it, much less of the hard fact that nothing we can possibly do can provide a substitute for some of them once they’re gone.

The mismatch between this hopelessly shortsighted approach and the unforgiving limits of nature is imposing a rising toll of substitution costs on industrial economies around the world. Of course there are other factors involved. Still, as I hope to show in a future post, the best explanation for the “stagflation” that beset economies and baffled economists in the 1970s was the unrecognized burden of substitution costs for a range of natural goods depleted or damaged during the previous decades. Equally, the economic dysfunctions that led central banks around 2002 to flood financial markets with cheap credit – a disastrous decision that ended up powering the boom and bust that landed us in the current Great Recession – were driven by mounting substitution costs for another range of natural goods that had been depleted or overused in the previous decades of prosperity. As peak oil adds a new round of substitution costs to those already in play, this same process is likely to have even more dramatic impacts on the future.

The Thermodynamic Economy

The last twelve months or so of economic chaos has taught those of us in the peak oil community some useful lessons. Perhaps the most valuable of these lessons is extent to which conventional economic ideas have failed to make sense of the way that the twilight of fossil fuels is working out in practice.

Not too long ago, it bears remembering, most people on all sides of the peak oil debate – believers, skeptics, and everyone in between – assumed that the law of supply and demand would necessarily define the world’s response to the end of cheap oil. As existing reserves depleted, nearly everyone agreed, the intersection of decreasing supply and rising demand would drive prices up. Common or garden variety cornucopians insisted that this would lead to more drilling, more secondary extraction, and other measures that would produce more oil and bring the price back down; techno-cornucopians insisted that this would lead to the discovery of new energy resources, which would produce more energy and bring the price back down; green cornucopians insisted that this would finally make renewable energy cost-effective, and at least keep the price from rising further; and pessimists argued that none of these things would happen, and the price of oil would rise steadily on up into the stratosphere.

None of them were right. Instead, as the world crossed the bumpy plateau surrounding its 2005 production peak, oil prices moved up and down in waves of increasing violence, culminating in a drastic price spike driven in part by speculative greed, and followed by an equally drastic crash driven in part by speculative panic. The shockwaves from that spike and crash were not solely responsible for the economic power dive that followed – most of a decade of hopelessly misguided fiscal policy, criminal negligence in the banking and business sectors, and a popular psychology of entitlement extreme even by the standards of past speculative disasters, all had their own parts to play – but even a financial world less shaky than the house of cards that imploded last year would have had a hard time dealing with the body blow inflicted on it by the oil spike and its aftermath.

The rubble from that collapse is still bouncing, even as politicians and pundits insist that the worst is over and a recovery will follow shortly. (This is not exactly comforting; the politicians and pundits of an earlier day said exactly the same thing during the “sucker’s rally” of 1930, when stock markets and other economic indicators regained much of the ground lost in 1929 before plunging catastrophically in the years that followed.) One thing that’s already become clear amid the dust and rubble, though, is that models of the future that assumed a steady upward rise in prices don’t apply to the much more complex reality of spike and crash that is shaping our energy future.

Somewhere in the midwest, perhaps, where a half-completed ethanol plant whose parent company has gone bankrupt is being sold for scrap, and oil leases bought for high prices last June sit unused because the current price of oil won’t justify their development, the dream of a smooth market-driven transition to a different energy system is rolling across a field with the tumbleweeds. Meanwhile the price of oil is continuing its stubborn refusal to obey the laws of supply and demand. Demand has dropped, as consumers and businesses caught in the economic downdraft cut costs, and stockpiles are ample, but the price of oil has doubled since its post-spike low, following a slow, ragged, but unmistakable upward trend.

What makes this all the more fascinating is that oil has shown the same habit of standing economic rules on their heads before. Back in the 1970s, one of the great challenges facing the economics profession was the riddle of stagflation. According to one of the most widely accepted rules of macroeconomics, inflation and deflation – which can be defined precisely as expansion and contraction, respectively, of the money supply – form two ends of a continuum of economic behavior. Rising prices, rising wages, and increased economic activity leading to overproduction are all signs of inflation, while flat or declining prices and wages and diminished economic activity leading to recession are all signs of deflation. In the wake of the Seventies oil shocks, though, the industrial world found itself in the theoretically impossible situation of an inflationary recession: prices were rising, but wages struggled to keep pace, and economic activity declined sharply.

That was stagflation. For more than a decade, economists tried to make sense of the riddle it posed, before finally giving up with a certain amount of relief in the Reagan years, and deciding that it was an anomaly that had gone away and so didn’t matter any more. To many of the economists who tried to make sense of stagflation, it was clear enough that the oil crises had had something to do with it, but this in itself posed its own awkward questions. The economics of commodity prices had been studied exhaustively since the time of Adam Smith, but the behavior of the world economy in the face of rising oil prices violated everything economists thought they knew.

Only a few economists at the time, and even fewer since then, realized that these perplexities pointed to weaknesses in the most basic assumptions of economics itself. E.F. Schumacher was one of these. He pointed out that for a modern industrial society, energy resources are not simply one set of commodities among many others. They are the ur-commodities, the fundamental resources that make economic activity possible at all, and the rules that govern the behavior of other commodities cannot be applied to energy resources in a simplistic fashion. Commented Schumacher in Small is Beautiful:

“I have already alluded to the energy problem in some of the other chapters. It is impossible to get away from it. It is impossible to overemphasize its centrality. [...] As long as there is enough primary energy – at tolerable prices – there is no reason to believe that bottlenecks in any other primary materials cannot be either broken or circumvented. On the other hand, a shortage of primary energy would mean that the demand for most other primary products would be so curtailed that a question of shortage with regard to them would be unlikely to arise” (p. 123).

If Schumacher is right – and events certainly seem to be pointing that way – at least one of the basic flaws of contemporary economic thought comes into sight. The attempt to make sense of energy resources as ordinary commodities misses the crucial point that energy follows laws of its own that are distinct from the rules governing economic activities. Trying to predict the economics of energy without paying attention to the laws governing energy on its own terms – the laws of thermodynamics – yields high-grade nonsense.

Look at the way that rules governing the availability of other resources go haywire when applied to energy. When North America’s deposits of high-grade iron ore were exhausted, for example, the iron industry switched over to progressively lower grades of ore; these contain less iron per ton than the high-grade ores but are much more abundant, and improved technology for extracting the iron makes up the difference. In theory, at least, the supply of iron ore can never run out, since industry can simply keep on retooling to use ever more abundant supplies of ever lower-grade ores, right down to iron salts dissolved in the sea.

Try to do the same thing with energy, by contrast, and two awkward facts emerge. First, the only reason the iron industry can use progressively lower grades of ore is by using increasingly large amounts of energy per ton of iron produced, and the same rule applies across the board; the lower the concentration of the resource in its natural form, the more energy has to be used to extract it and turn it into useful forms. Second, when you try to apply this principle to energy, you very quickly reach the point at which the energy needed to extract and process the resource is greater than the energy you get out the other end. Once this point arrives, the resource is no longer useful in energy terms; you might as well try to support yourself by buying $1 bills for $2 each.

This difficulty can be generalized: where energy is concerned, concentration counts for much more than quantity. That’s a function of the second law of thermodynamics: energy in a whole system always moves from high concentrations to low. Within the system, you can get energy moving against the flow of entropy, but only at the cost of reducing a larger amount or higher concentration of energy to waste heat. That’s how fossil fuels came into existence in the first place; the vast majority of hundreds of millions of years of energy from sunlight falling on prehistoric plants were degraded to waste heat and radiated into outer space, and in the process a very small fraction of that sunlight was concentrated in the form of carbon compounds and buried underground.

The same rule of concentration explains a great many things that current economic ideas miss. Consider the claims made every few years that we can power the world off some relatively low-grade energy source. Latent heat stored in the waters of the world’s oceans, for example, could theoretically provide enough power for the world’s economy to keep it running for some preposterously long period of time, and any number of inventions have tried to tap that energy. They’ve all failed, because it takes more energy to concentrate that heat to a useful temperature than you get back from the process. The same is true a fortiriori of “zero point energy,” the energy potential that according to current physics exists in the fabric of spacetime itself. It doesn’t matter in the least that there’s an infinite amount of it, or something close to that; it’s at the lowest possible level of concentration, and thus utterly useless as a power source for human society.

The same limits apply, if less strictly, to many of today’s renewable energy sources. Solar energy, for example, is very abundant, but it’s also very diffuse. As with any other energy resource, you can concentrate some of it, but only by letting a larger quantity of it turn into waste heat. It’s quite common to hear the claim that because solar energy’s so abundant, our society can easily power itself by the sun, but this shows a failure to grasp thermodynamic reality. Today’s industrial societies require very highly concentrated energy sources; our transportation networks, our power grids, and most of the other ways we use energy, all work by degrading very high concentrations of energy all at once into waste heat, and without those highly concentrated resources, those things won’t work at all.

Now of course there are plenty of productive things that can be done with more diffuse energy sources. Once again, solar energy provides a good example. Passive solar heating for buildings is a mature and highly successful technology; so is solar hot water heating; so are a good many other specialized uses, such as using solar ovens for cooking, water purification, and the like. All these can contribute mightily to the satisfaction of human needs and wants, but they presuppose very different social and economic arrangements than the centralized energy economy of power plants, refineries, pipelines and power grids we have today. As concentrated energy from fossil fuels becomes scarce, in other words, and more diffuse energy from the sun and other renewable sources has to take up the slack, many of the ground rules shaping today’s economic decisions will no longer apply.

What this implies, in turn, is that economics does not exist in a vacuum. The ground rules just mentioned took shape, after all, in an age where economic processes were dominated – one might even say “distorted” – by our species’ temporary access to extravagant supplies of cheap and highly concentrated fossil fuel energy. The new ground rules of economics that will take shape in the twilight of the age of cheap energy, in turn, will be shaped by the fact that energy is once again scarce, costly, and diffuse. More generally, it’s necessary once again to pay attention to the myriad ways that human economic systems are rooted in the wider processes of the natural world – a theme that will be central to next week’s post.

Survival Isn't Cost-Effective

I trust my readers won’t be unduly distressed by an extended safari through the tangled jungles of the “dismal science” of economics. As suggested in several recent Archdruid Report posts, economic factors have played a massive role in putting the industrial world in its current predicament, and an even more substantial role in blocking any constructive attempt to get out of the corner into which we’ve painted ourselves. There’s an all too real sense in which, if modern industrial civilization perishes, it will be because the steps necessary for its survival weren’t cost-effective enough.

Mind you, this can be interpreted in at least two different ways, and both of them are relevant to the crisis of the industrial world. Like any other science, economics is a set of hypothetical models that reflect, with more or less exactness, the observed behavior of the world. Too often the models get confused with the reality, and understanding suffers.

In a different context, that of the physics of vacuum tubes, Philip Partner commented in his classic textbook Electronics (1950): “The theory speaks of ions, atoms, and electrons, and of collisions between them; but these are figments of the mind, props for its understanding. [...] The electron, like the atom, is a concept; it is part of a mental shorthand which we have invented to summarize our knowledge of Nature. So when we say, for example, that an electron collides with an atom, we should bear in mind that we have never seen it happen. The use of the present indicative does not turn hypothesis into fact” (p. 569). Unfortunately this level of clarity is hard to achieve and harder to maintain.

This has to be kept in mind when trying to make sense of the economic dimension of industrial civilization’s decline and fall, because both sides of the equation – the models and the reality – throw up challenges in the way of constructive action, and so do economic policies that are based on the models, and thus function at a second remove from the reality. It’s true, and will be a central theme of future posts, that current economic theory has lost touch with reality in critical ways, and a revision of some of the basic ideas of modern economics is essential if we’re to make sense of our predicament and do anything constructive in response to it. It’s equally true that government policies based on today’s misguided economic notions have become massive liabilities to societies struggling to deal with today’s crisis, and even this late in the game, changes in these policies might still do a great deal of good. Still, it’s also true that economic factors in the real world, independent of theory, impose hard limits on what can be done.

The classic example has to be the plethora of projects for “lifeboat communities” floated in recent years. The basic idea seems plausible enough at first glance: to preserve lives and knowledge through the decline and fall of the industrial age, establish a network of self-sufficient communities in isolated rural areas, equipped with the tools and technology they will need to maintain a tolerable standard of living in difficult times. The trouble comes, as it usually does, when it’s time to tot up the bill. The average lifeboat community project I’ve seen would cost well over $10 million to establish – many would cost a great deal more – and I have yet to see such a project that provides any means for its inhabitants to cover those costs and pay their bills in the years before industrial civilization goes away.

The unstated assumption seems to be that as soon as the intrepid residents of such a community move into their solar-heated cohousing units, start up the wind turbines and the methane generators, and get to work harvesting tree crops from the permacultured landscaping all around, industrial civilization will disappear in a puff of smoke and take its taxes, debts, and miscellaneous expenses with it. Pleasant though the prospect might seem, I am sorry to say that this isn’t going to happen. The residents of any lifeboat community founded today will not only have to come up somehow with the very substantial sums needed to buy the land, build the cohousing units, wind turbines and so on, and plant all that permaculture landscaping; they will also have to earn a living during the long transitional process that leads from the world we inhabit today to the conditions that will pertain at the bottom of the curve of decline. Some awareness of these difficulties may go a long way to explain why, of the great number of lifeboat communities that have been proposed over the last decade or two, the number that have actually been built can be counted on the fingers of one foot.

Economic forces constrain the future in more global ways as well. Not many people seem to have noticed, for instance, that the grim scenario traced out in the seminal 1973 study The Limits to Growth – still the most plausible map of the future ahead of us, and thus inevitably the most bitterly vilified – is driven by simple economics. As resources deplete, that study pointed out, the cost of keeping resources flowing into to the economy will increase in real terms, as more labor and capital have to be invested to extract a given amount of each resource; as pollution levels rise, in turn, the costs of mitigating their impacts on public health, agricultural productivity, and other core economic factors go up in the same way, and for the same reasons. Those costs have to be paid out of current economic output, leaving less and less for other uses, until economic output itself begins to fall and the industrial world begins its terminal decline.

Now it’s easy to insist, if you ignore the economic dimension, that a society facing this sort of crisis can save itself by launching a massive program to build nuclear reactors, solar thermal power plants, algal biodiesel, or what have you, and of course this sort of claim has seen endless rehashing over the last couple of decades. The problem is that massive programs of this sort pile additional demands on an already faltering economy. Any such program has to be paid for, after all, and by this I don’t mean that money has to be found for it; in today’s mostly hallucinatory economic climate, conjuring money out of thin air is easy enough. No, it has to be paid out of current economic output, which is much less flexible, and already has to cover the rising costs of resource depletion and pollution. This is the trap hidden in the limits to growth; once those limits begin to bite, the spare economic capacity that would be needed to build one’s way out of trouble no longer exists.

Thus there are limits hardwired into our situation by the inflexible realities that surround us, and we have already strayed far enough over those limits that the payback will inevitably be harsh. At the same time, other forces pushing us in the same direction are a product of economic misunderstandings, and in the way these misunderstandings are reflected in public policy. Those could conceivably be changed in time to matter.

Resource depletion and pollution, the driving forces behind the Limits to Growth scenario, are particularly vexed issues in today’s economic thought. As we’ve seen, both of these factors impose costs, potentially drastic ones, on the economy. Under current economic arrangements, however, those costs are not charged to the people who benefit from the activities in question. The owner of an oil well gets the economic benefits of pumping oil out of the ground, but does not have to pay for the impact today’s extraction will have on tomorrow’s economy. (For many years, in fact, government policies in most of the world’s industrial nations have actually rewarded oil well owners for accelerating the depletion of this nonrenewable resource and imposing massive costs on the future.) In the same way, the owner of a smokestack that dumps pollution into the atmosphere gets the economic benefits of whatever activity produces the pollution, but does not have to pay for the costs incurred as a result of the pollution. This asymmetry has at least two results. First and most obviously, neither the oil well owner nor the smokestack owner has any incentive to decrease the negative impacts of his or her activities. Still, the second and in some ways more important result is that the long-term economic burdens of depletion and pollution are not included in measures of the relative economic costs and benefits of the well or the smokestack.

The result is a massive distortion in our understanding of the realities that shape our lives. It’s generally not considered a viable business plan – outside of the financial industry, that is – to make large profits in the short term by running up debts so large the business will have to declare bankruptcy in the not too distant future. Yet this is exactly what an economic system that ignores the cumulative costs of resource depletion and pollution mitigation is doing, and on an even larger scale. The future costs of extracting resources from depleted reserves and mitigating the impacts of a polluted environment have the same effect as the future costs of debt service on excessive borrowing; they buy temporary prosperity in the near future at the cost of impoverishment or collapse further down the road.

Garret Hardin’s famous essay “The Tragedy of the Commons” addressed this issue some years back. Hardin showed that in a situation where the benefits from exploiting a resource went to individuals, but the costs were spread throughout the community, individuals intent on maximizing their own individual benefit would overexploit the resource and suffer drastic losses in the longer run. His logic was impeccable, and there are plenty of real-world examples of resource exhaustion driven by this very process, but it has been pointed out by his critics with equal relevance that resources held in common have in fact been managed sustainably in countless cases around the world and throughout history. The question that has to be asked is where the difference comes in.

This is where the divide pointed up earlier in this essay – the gap between economic realities and the models our society uses to understand them and predict their effects – comes into play. Hardin was quite correct that when individuals got the benefits of resource exploitation without paying their fair share of the costs to the community, exhaustion of the resource follows. Those societies that have managed resources in common successfully, in turn, found ways to make those who gained the benefits of resource exploitation pay a commensurate share of the costs. The collective understanding of economics in these societies, in other words, and the social policies that shaped economic behavior, took the tragedy of the commons into account and adjusted the customs and laws governing economic exchanges accordingly.

As we make the transition from what I’ve called the abundance economies of the first half of the industrial age to the scarcity industrialism of the near and middle future, it’s entirely possible that such adjustments could be put into place in our own societies. The accumulated burdens of past mistakes weigh heavily enough on the future that changes of this sort won’t stave off a great deal of trouble and suffering, but it’s entirely possible that a shift to saner policies backed by more realistic economic ideas could cushion the descent into the deindustrial age, and make it easier to allocate resources to projects that will actually do some good, instead of pursuing policies which – like nearly all the economic policies currently in place in the industrial world – will simply make matters worse.

On The Road

I'd hoped to be able to write a couple of posts in advance to keep The Archdruid Report going over the next two weeks, during most of which I'll be on the road and out of reach of the internet. Unfortunately the time hasn't worked out, so the next regular post will be on Wednesday, June 17. In the meantime, I'm pleased to report that The Ecotechnic Future, the sequel to The Long Descent, is on track for a September release and can be preordered now. Thank you all for contributing to the conversation that has made both these books possible -- and, with a little luck. might just enable us to cushion the descent into the deindustrial age.

A Guide for the Perplexed

An irony endured, and occasionally relished, by those of us whose concerns about peak oil have found their way into print is the awkward fact that it’s difficult to talk publicly about using less fossil fuel energy without using more of it. The networks of transportation and communication left to us by the collective decisions of the recent past demand a great deal of energy input, and social habits evolved during the heyday of cheap energy amplify that, making long-distance trips a practical necessity for the working writer. These days, that usually means air travel.

A passage in Theodore Roszak’s Where the Wasteland Ends explores the chasm between the old romantic dreams of human flight and the utterly unromantic reality that replaced them. More than once, after a few hours packed like sardines in a metal can breathing the same stale air a hundred times over, it’s occurred to me that the crabby oldsters who insisted that humanity was not meant to fly may have had more of a point than most of us suspect. The one consolation I’ve found is that the hours of enforced inactivity on planes and in airports provide some of the few chances an increasingly busy schedule allows me for sustained reading. And that, dear reader, is how I ended up sitting in a tacky restaurant in the even more tacky Dallas-Fort Worth airport a few weeks back, killing time between one flight and the next, with a copy of E.F. Schumacher’s book Small Is Beautiful in my hands.

This was by no means my first encounter with Schumacher. Back in the 1970s, when I first began studying the ways that energy, ecology, and history were weaving our future, his name was one to conjure with throughout the environmental and appropriate-tech movements; you could expect to see Small is Beautiful on any bookshelf that also held The Whole Earth Catalog, say, or The Book of the New Alchemists. Still, by the time I stuffed a copy in my carry-on bag and headed to the airport, close to thirty years had passed since the last time I’d opened it. I suspect many other people have neglected it to at least the same degree.

This is unfortunate, because Schumacher’s insights have not lost any of their force with the passing years. Quite the contrary; he was decades ahead of his time in recognizing the imminence of peak oil and sketching the outlines of an economics that could make sense of a world facing the twilight of the age of cheap abundant energy. It’s fair to say that in many ways, the peak oil scene has not yet caught up with him. For this reason among others, a review of the man and his ideas may be timely just now.

Ernst Friedrich Schumacher was born in Bonn in 1911 and attended universities there and in Berlin before going to Oxford in 1930 as a Rhodes Scholar, and then to Columbia University in New York, where he graduated with a doctorate in economics. When the Second World War broke out he was living in Britain, and was interned for a time as an enemy alien, until fellow economist John Maynard Keynes arranged for his release. After the war, he worked for the British Control Commission, helping to rebuild the West German economy, and then began a twenty-year stint as chief economist and head of planning for the British National Coal Board, at the time one of the world’s largest energy firms.

He also served as an economic adviser to the governments of India, Burma, and Zambia, and these experiences turned his attention to the economic challenges of development in the Third World. Recognizing that attempts to import the industrial model into nonindustrial countries usually failed due to shortages of infrastructure and resources, he pioneered the concept of intermediate technology – an approach to development that focuses on finding and using the technology best suited to the resources available – and founded the Intermediate Technology Development Group in 1966. His interest in resource issues also led to an involvement in the organic agriculture movement, and he served for many years as a director of the Soil Association, Britain’s largest organic farming group.

I suspect it was precisely these practical involvements that predisposed him to see past the haze of unrecognized ideology that makes so much contemporary economic thought so useless when applied to the real world. Economics as an academic field is notoriously forgiving of even the most embarrassingly inaccurate predictions, and a professor of economics can still count on being taken seriously even when every public statement he has made about future economic conditions has been flatly disconfirmed by events. This is much less true in the business world, where predictions can have results measured in quarterly profits or losses. Working in a setting where consistently failed predictions would have cost him his job, Schumacher was not at liberty to put ideology ahead of evidence, and the conflict between what standard economic theory said, then as now, and the realities Schumacher observed all around him must have had a role in making him the foremost economic heretic of his time.

His economic ideas cover a great deal of ground, not all of it relevant to the project of this blog; readers interested in the overall shape of his ideas should certainly pick up a copy of Small Is Beautiful and find them there. Four of his propositions, however, struck me as core assets in any attempt to make sense of the economic dimensions of the end of the industrial age.

First, Schumacher drew a hard distinction between primary goods and secondary goods. The latter of these includes everything dealt with by conventional economics: the goods and services produced by human labor and exchanged among human beings. The former includes all those things necessary for human life and economic activity that are produced not by human beings, but by nature. Schumacher pointed out that primary goods, as the phrase implies, need to come first in any economic analysis because they supply the preconditions for the production of secondary goods. Renewable resources, he proposed, form the equivalent of income in the primary economy, while nonrenewable resources are the equivalent of capital; to insist that an economic system is sound when it is burning through nonrenewable resources at a rate that will lead to rapid depletion is thus as silly as claiming that a business is breaking even if it’s covering up huge losses by drawing down its bank accounts.

Second, Schumacher stressed the central role of energy among primary goods. He argued that energy cannot be treated as one commodity among many; rather, it is the gateway resource that allows all other resources to be accessed. Given enough energy, shortages of any other resource can be made good one way or another; if energy runs short, though, abundant supplies of other resources won’t make up the difference, because energy is needed to bring those resources into the realm of secondary goods and make them available for human needs. Thus the amount of energy available per person puts an upper limit on the level of economic development possible in a society, though other forms of development – social, intellectual, spiritual – can still be pursued in a setting where hard limits on energy restrict economic life.

Third, Schumacher stressed the importance of a variable left out of most economic analyses – the cost per worker of establishing and maintaining a workplace. Only the abundant capital, ample energy supplies, and established infrastructure of the world’s industrial nations, he argued, made it functional for businesses in those nations to concentrate on replacing human labor with technology. In the nonindustrial world, where the most urgent economic task was not the production of specialty goods for global markets but the provision of paid employment and basic necessities to the local population, attempts at industrialization far more often than not proved to be costly mistakes. Schumacher’s involvement in intermediate technology unfolded from this realization; he pointed out that in a great many situations, a relatively simple technology that relied on human hands and minds to meet local needs with local resources was the most viable response to the economic needs of nonindustrial nations. Since the end of the age of cheap abundant energy bids fair to place the world’s industrial nations on something like a par with today’s Third World, struggling to feed large populations with sharply limited resources and disintegrating infrastructures, the same logic will much more likely than not apply to our own future as well.

Finally, and most centrally, Schumacher pointed out that the failures of contemporary economics could not be solved by improved mathematical models or more detailed statistics, because they were hardwired into the assumptions underlying economics itself. Every way of thinking about the world rests ultimately on presuppositions that are, strictly speaking, metaphysical in nature: that is, they deal with fundamental questions about what exists and what has value. Trying to ignore the metaphysical dimension does not make it go away, but rather simply insures that those who make this attempt will be blindsided whenever the real world fails to behave according to their unexamined assumptions. Contemporary economics fails so consistently to predict the behavior of the economy because it has lost the capacity, or the willingness, to criticize its own underlying metaphysics, and thus a hard look at those basic assumptions is an unavoidable part of straightening out the mess into which current economic ideas have helped land us.

All of these four points deserve more development than Schumacher, in the course of a busy and active life, was able to give them. All four also can be applied constructively to the specific economic questions surrounding the end of the age of cheap energy and the coming of deindustrial society. Over the weeks and months to come, subject to the usual interruptions, I want to explore this latter task in some detail, and propose a few potential lines of approach toward the former. As last week’s post pointed out, the economic dimension is perhaps the least understood aspect of the crisis of industrial civilization, and a good part of that lack of understanding can be traced to the chasm that has opened up between current ideas and economic reality. Anything that can help bridge that gap could be crucial in navigating the challenging future ahead of us.

The Economics of Decline

I opened last week’s post by pointing out that many people nowadays fail to grasp some of the most basic realities facing us as the industrial age comes to an end. That turned out to be a rich irony, for a great many of the comments I received in response to the post displayed a blind spot even bigger than the one I attempted to address. It’s a convenient irony, though, as it offers a useful way to start talking about an underexplored dimension of the predicament of our time.

The post in question pointed out that today’s much-hyped "information superhighway," far from being the wave of the future so many of its promoters claim it to be, was a temporary product of the last hurrah of the age of cheap energy and can't be expected to survive for long as that age winds down. Instead, as the economic burden of the internet's immense energy usage begins to bear down, other technologies less dependent on huge energy inputs will become more economical, driving a spiral in which rising costs and restricted access will cut into internet service while simpler technologies absorb a growing range of its current economic roles. Finally, when economic contraction and social disintegration have proceeded far enough, the internet will simply drop out of use altogether because the economic basis for its operation will have gone away.

Most of those who objected to this sketch of the future, in turn, relied on a very curious logic. The internet will remain viable and widely accessible, they claimed, because the economic advantages of keeping it are so great. Those few who addressed the issue of costs at all simply insisted that technological progress would allow the internet to use less power than it does at present, and left it at that. The same arguments, interestingly enough, were deployed in earlier discussions about railroad technology: most critics simply insisted that railroads were efficient and economically advantageous, while a few suggested that they could be run more efficiently than they are now.

All this is true, but it misses the central issue I've tried to raise in the last few posts – the impact of energy and resource scarcity on the relative costs and benefits of different technologies – and it also dismisses the even broader issue of whether such energy-intensive technologies are sustainable at all in the future ahead of us. It's a dizzying departure from reason to insist that the advantages conferred by the internet mean that the internet must continue to exist. The fact that something is an advantage does not guarantee that it is possible.

An example from one of the most famous cases of social collapse is relevant here. On Easter Island, as I think most people know by now, the native culture built a thriving society that got most of its food from deepwater fishing, using dugout canoes made from the once-plentiful trees of the island. As the population expanded, however, the demand for food expanded as well, requiring more canoes, along with many other things made of wood. Eventually the result was deforestation so extreme that all the tree species once found on the island went extinct. Without wood for canoes, deepwater food sources were out of reach, and Easter Island's society imploded in a terrible spiral of war, starvation, and cannibalism.

It's easy to see that nothing would have offered as great an economic advantage to the people of Easter Island as a permanent source of trees for deepwater fishing canoes. It's just as easy to see that once deforestation had gone far enough, nothing on Earth could have provided them with that advantage. Well before the final crisis arrived, the people of Easter Island – even if they had grasped the nature of the trap that had closed around them – would have faced a terrible choice: leave the last few big trees standing and starve today, or cut them down to make canoes and starve later on. All the less horrific options had already been foreclosed.

Further back in Easter Island's history, when it might still have been possible to work out a scheme to manage timber production sustainably and produce a steady supply of trees for canoes, this would have required harsh tradeoffs: one additional canoe per year, for example, might have required building or repairing one less house each year. Both the canoe and the house would have yielded significant economic advantage, but it wouldn't have been possible to get both. In a world of limited resources, in other words, it's not enough to insist that a given allocation of resources has economic advantages; you must also show that the same resources would not be better used in some other way or for some other need.

The survival of the internet in an age of dwindling energy supplies is subject to the same hard logic. The internet demands huge inputs of energy and resources. Those were easy to provide during the quarter century from 1980 to 2005, when the price of energy was artificially forced down to the lowest levels in human history, and the same glut of cheap energy made it possible to build and power the internet without impacting other sectors of the economy. As energy becomes scarce and costly in the not too distant future, on the other hand, the demands of the internet will begin to conflict with the demands of other economic sectors. The task of managing those conflicts will likely be the supreme economic challenge of the century ahead of us, not least because we are so utterly unused to thinking in terms of hard tradeoffs; we assume, blindly, that we can have it all.

Now it's true, of course, that the internet could be operated more efficiently than it is today. Efforts to increase efficiency, however, are subject to a law of diminishing returns; a range of limits ultimately rooted in thermodynamic laws put a ceiling on just how efficient any process can get. Such gains also have costs of their own; research and development does not come cheaply these days, nor does the construction and installation of more efficient equipment, and the budget cuts currently sweeping through companies and universities worldwide – themselves the harbingers of much greater cuts to come – do not exactly support the act of faith that claims infinite technological improvement as the answer to this and all other problems.

Nor is it valid to put the possibility of increased efficiency for the internet on one side of the balance and ignore the equivalent possibilities on the other side. After all, other technologies – some of which are already simpler and more efficient than the internet – are just as liable to see gains in efficiency as the internet. Even a more efficient internet is unlikely to be the most economical way to use the sharply constrained energy and resource flows of the deindustrializing future; if another technology or suite of technologies can provide something like the same services at a lower cost, that technology or suite of technologies will outcompete the internet. Thus if it costs less, all things considered, to send messages over shortwave radio, order products by mail from a catalog, and get pornography from a local adult bookstore, than to do the same things over the internet, then the internet will fall by the wayside, or at best will be propped up for noneconomic reasons as long as economic realities make it possible to do so.

It's crucial to remember that the entire supply chain that keeps the internet and its potential competitors running has to be factored into these calculations. It's easy to see the internet as uniquely efficient if all you take into account is the energy going into your home computer, or even if you consider the gigawatts used by server farms. Putting those gigawatts to work, however, requires an electrical grid spanning most of a continent, backed up by the immense inputs of coal and natural gas burnt to put electricity into the wires, and a network of supply chains that stretches from coal mines to power plants to the oil wells that provide diesel fuel for trains and excavation machines; the server farms draw on a vast array of supporting services and manufactures, from the overseas mines that produce rare earths for semiconductor doping through the factories that turn out components to the colleges that turn out trained technicians, and the list goes on.

All told, a fair fraction of the world's industrial economy helps support the internet in one way or another, and many of those support functions can't be done at all in a less centralized way or at a lower level of technology. Most of the potential replacements for the internet don't suffer from that limitation. It's entirely possible to build a shortwave radio by hand, for example, using components that can be built by hand from readily available materials; there are radio amateurs alive today who did precisely that before the postwar electronics boom made manufactured components cheap and easily accessible. In a world where the cost of energy is a major economic burden, these differences will matter, and give a massive economic advantage to less energy-intensive ways of accomplishing things.

One useful way to assess the vulnerability of any current technology in a world on the far side of Hubbert's peak, in fact, is to note the difference between the direct and indirect energy inputs needed to keep it working and the inputs needed for other, potentially competing technologies that can provide some form of the same goods or services. All other factors being equal, a technology that depends on large inputs of energy will be more vulnerable and less economically viable in an age of energy scarcity than a technology that depends on less, and the bigger the disparity in energy use, the greater the economic difference. In turn, communities, businesses, and nations that choose less vulnerable and more economical options will prosper at the expense of those that do not, leading to a generalization of the more economical technology. It really is as simple as that.

You might think that this sort of economic analysis would be an obvious and uncontroversial part of peak oil planning. Of course it's nothing of the kind. Most discussion and planning around the subject of peak oil these days pays no more than lip service to economics, if it deals with that dimension at all, and a great many of the plans being circulated these days look very appealing until you do the math and discover that the most basic questions about resource inputs and economic outputs haven't been addressed.

Now part of this blindness to the economic dimension is hardwired into contemporary culture. It hardly needed the mass exodus into delusion that drove the recent real estate bubble to prove that most people in the industrial world nowadays think that getting something for nothing is a perfectly reasonable expectation. We have lived with such abundance for so long that a great many of us seem to have lost any sense that there are limits we can't borrow or bluster our way around. To a very great extent, indeed, the last three hundred years of economic expansion have been driven by a borrowing binge even more colossal, and ultimately more catastrophic, than the one imploding around us right now. Instead of borrowing from banks, we borrowed from the Earth's stockpile of fossil carbon, and squandered most of our borrowings on vaster equivalents of the salad shooters and granite countertops that absorbed so much fictitious value during the late boom. By the time Nature's collection agencies get through with us, in turn, they may just have repossessed everything we bought with our borrowings – which is to say nearly everything we've built over the last three centuries.

Yet there's another source feeding into this blindness, because the theories of economics that have been used to try to make sense of the flows of natural and manufactured wealth in our societies are hopelessly inadequate to the task. It's difficult to construct a meaningful economic analysis of the future within a paradigm that insists that resources magically appear whenever there's money to pay for them, for example, or claims that damage inflicted by human economic activities on the natural systems that allow our economy to function in the first place are "externalities" that need not be considered in cost-benefit analyses. Current economic theory commits both these howlers, and others as well.

With next week's post, we'll begin a more detailed exploration of what an economic vision relevant to a deindustrializing future might look like. That exploration will start from the work of E.F. Schumacher, who was one of the most thoughtful (and heretical) economists of the last century, as well as an early (and rarely remembered) peak oil theorist. Using his ideas as a springboard, I hope to take today's discourse about the future of industrial society into unexplored territory, and – not incidentally – provide some unexpected but practical tools for coping with the arrival of the deindustrial age.

The End of the Information Age

One of the repeated lessons I’ve learned over the three years since The Archdruid Report began appearing is the extent to which many people nowadays have trouble grasping some of the most fundamental facts about the crisis of our times. I had yet another reminder of that a few days back, when the comments on last week’s post started coming in.

A point made in passing in that post was that railroads, while they are much more efficient than automobile or air transport, still require relatively large amounts of concentrated energy, and so may become uneconomical for many uses at a certain point well down the curve of fossil fuel depletion. One of my readers took rather heated exception to this comment. Only America’s backwards railroads, he pointed out indignantly, relied on fossil fuel; since European and Japanese railways used electricity, they would be unaffected by fossil fuel depletion and could keep rolling along into the far future.

This kind of logic is common enough these days that it’s probably necessary to point out the flaws in it. Electricity isn’t an energy source; it has to be generated, using some other energy source to do so. The electricity that powers the European and Japanese rail systems is mostly generated by plants that burn coal, with significant help from nuclear reactors and a rather smaller assist from hydroelectric plants. Of these, only the hydroelectric plants are a renewable energy source; the others are poised just as firmly on the downslope of depletion as the diesel oil that runs American locomotives.

Coal is turning out to be much less abundant than the cozy estimates of a few decades ago made it sound, and of course there’s the far from minor impact of coal burning on an already unstable global climate. Fissionable uranium is well down its own depletion curve, and it’s worth noting that the enthusiastic claims sometimes made for breeder reactors, the use of thorium as a nuclear fuel, and other alternatives to conventional fission plants are very rarely to be heard from people who have professional training in the fields concerned. Thus my reader was quite simply wrong; the European and Japanese rail systems that so excited his admiration are just as dependent on nonrenewable fuels as the American system, and are also just as vulnerable to the economic implications of supply and demand as energy supplies dwindle.

Now of course there are other reasons why railroads may be kept in service, at least for certain uses, long after they become economic liabilities. Many of the world’s larger nations – the United States and Russia among them – grew to their present size only after rail transport made it possible to exert political and economic power on a continental scale, and future governments may well keep long-distance rail links going as a matter of national survival. That likelihood, though, does nothing to counter the point central to last week’s post: that in a world with much less energy, older and more energy-efficient transport methods such as canal boats may turn out to be much more economically viable than their more recent and more extravagant replacements, and those cities and regions well positioned to take advantage of waterborne transport may therefore thrive in the 21st century as they did in the 19th.

The same logic can be applied usefully to many other aspects of the future taking shape ahead of us right now. Probably the best example is the looming impact of a future of energy constraints on the ways that modern industrial cultures store, process, and distribute information.

It’s hard to think of a subject that has been loaded with anything like as much hype. Our time, the media never tires of repeating, is the Information Age, an epoch in which economic sectors dealing with mere material goods and services have been relegated to Third World sweatshops, while the economic cutting edge deals entirely in the manufacture, sales, and service of information in various forms. As usual – can you think of a short-term trend that hasn’t been identified as a wave of the future destined to rise up an asymptotic curve to infinity, or at least absurdity? I can’t – the standard assumption is that the future will be just like the present, but even more so, with more elaborate technologies providing more baroque information products and services as far as the eye (or, rather, the webcam) can see.

This is hardly a new vision of the future. In his 1909 novella “The Machine Stops,” which should be required reading for anyone who buys into the Information Age hullabaloo, E.M. Forster provided a remarkably exact dissection of contemporary cyberculture’s idea of its destiny most of a century in advance. It’s a great story on its own terms, but it also puts a finger on the central weakness of an information-centered society: information does not exist without a physical substrate, and if the physical substrate goes, so does the information.

In Forster’s story, that substrate was the Machine – an interconnected technostructure that spanned the globe and provided the necessities and luxuries of life to uncounted millions of people who spent their lives in hivelike cells, staring into screens and tapping on keyboards like so many of today’s computer geeks. Adept at manipulating abstract ideas, the inhabitants of the Machine lost touch with the fact that their universe of information only existed because the physical structure of the Machine kept it there, and their attitude toward the Machine gradually evolved into a religious reverence devoid of any reference to the practical realities of the Machine’s workings. The skills needed to apply physical tools to pipes and wires dropped out of use, and the consequences – minor malfunctions snowballing into major ones, and finally into total systems failure – followed from there.

Now of course fiction is fiction, and the events that cause the Machine to stop are unlikely to be repeated in the real world. The central concept, though, demands attention, because our Machine – the internet – depends just as much on a physical substrate as the one in Forster’s novella. In our case, that substrate is the global network of communications links and server farms, and the even vaster economic and technical infrastructure that keeps them funded, powered, and supplied with the trained personnel and spare parts that keep them running.

Very few people realize just how extravagant the intake of resources to maintain the information economy actually is. The energy cost to run a home computer is modest enough that it’s easy to forget, for example, that the two big server farms that keep Yahoo’s family of web services online use more electricity between them than all the televisions on Earth put together. Multiply that out by the tens of thousands of server farms that keep today’s online economy going, and the hundreds of other energy-intensive activities that go into the internet, and it may start to become clear how much energy goes into putting these words onto the screen where you’re reading them.

It’s not an accident that the internet came into existence during the last hurrah of the age of cheap energy, the quarter century between 1980 and 2005 when the price of energy dropped to the lowest levels in human history. Only in a period where energy was quite literally too cheap to bother conserving could so energy-intensive an information network be constructed. The problem here, of course, is that the conditions that made the cheap abundant energy of that quarter century have already come to an end, and the economics of the internet take on a very different shape as energy becomes scarce and expensive again.

Like the railroads of the future mentioned earlier in this post, the internet is subject to the laws of supply and demand. Once the cost of maintaining it in its current form outstrips the income that can be generated by it, it becomes a losing proposition, and cheaper modes of information storage and delivery will begin to replace it in its more marginal uses. Governments will have very good reasons to maintain some form of internet as long as they can, even when it becomes an economic sink – it’s worth remembering that the internet we now have evolved out of a US government network meant to provide communication capacity in the event of nuclear war – but this does not mean that everyone in the industrial world will have the same access they do today.

Instead, as energy costs move unsteadily upward and resource needs increasingly get met, or not, on the basis of urgency, expect access costs to rise, government regulation to increase, internet commerce to be subject to increasing taxation, and rural areas and poor neighborhoods to lose internet service altogether. There may well still be an internet a quarter century from now, but it will likely cost much more, reach far fewer people, and have only a limited resemblance to the free-for-all that exists today. Newspapers, radio, and television all moved from a growth phase of wild diversity and limited regulation to a mature phase of vast monopolies with tightly controlled content; even in the absence of energy limits, the internet would be likely to follow the same trajectory, and the rising costs imposed by the end of cheap energy bid fair to shift that process into overdrive.

The waning of the internet will pose an additional challenge to the future, because – like other new technologies – it is in the process of displacing older technologies that provided the same services on a more sustainable basis. The collapse of the newspaper industry is one widely discussed example of this process at work, but another – the death spiral of American public libraries – is likely to have a much wider impact in the decades and centuries to come. Among the most troubling consequences of the current economic crisis are wholesale cuts in state and local government funding for libraries. The Florida legislature was with some difficulty convinced a few weeks ago not to cut every penny of state support for library systems – roughly a quarter of all the money that keeps libraries open in Florida – and county and city libraries from coast to coast are cutting hours, laying off staff, and closing branches.

Some of the proponents of these budget cuts have been caught in public insisting that with the rise of the internet, nobody actually needs public libraries any more. (The fact that many of these people call themselves conservatives proves, if any additional proof is needed, just how empty of content today’s political labels have become; what exactly do they think they’re conserving?) Now of course public libraries provide many services the internet doesn’t, and it also provides them to all those people who can’t afford internet access. The point I’d like to make here, though, is that the public library will still be a viable information technology in a postpetroleum society. When Ben Franklin founded America’s first public library, it may be worth noting, he did it without benefit of fossil fuels.

If public libraries can be kept open during the waves of economic crisis that punctuate the decline of civilizations, then, everyone will likely be the better for it. I am sorry to say that this is probably not the most likely way things will fall out. The current wave of library downsizing is probably a harbinger of things to come; pressed between too many demands and too little funding to go around, library systems – like public health departments, for example, and a great many other institutions that make community life viable – are far too likely to draw the short straw. Exactly this sort of short-term thinking has driven the loss of vast amounts of information and cultural heritage in the collapse of past civilizations.

As we move into the penumbra of the deindustrial age, then, it’s crucial to start thinking about the options open to us – individually and collectively – with an eye toward their long-term viability and to the hard reality of a world of ecological limits. When today’s data centers are crumbling ruins long since stripped of valuable salvage, and all the data once stored there has evaporated into whatever realm magnetic patterns go to when they die, the thinking that led politicians to gut viable library systems on the assumption that the internet will take up the slack will look remarkably stupid. Still, the habits of thought instilled by the age of cheap abundant energy are hard to shake off, and from within them, such mistakes are hard to avoid.