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What’s Next for Capitalism After the Current Version Implodes?

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by Charles Hugh Smith

Has the centralized nation-state model of global capitalism finally reached its autumn?

Predicting the end of Capitalism has been a popular pastime since the term was coined. The reason why this particular parlor game is so fruitless is that Capitalism is not monolithic or static–and neither is socialism, the other great ideological umbrella that covers a variety of systems and iterations of State/collective ownership of assets.

If we take the long-term historical perspective of Giovanni Arrighi in The Long Twentieth Century: Money, Power and the Origins of Our Times, we find that modern global Capitalism has gone through four iterations, each of which saw the dissolution of the old order and the emergence of an even greater source of capital and power. Arrighi has built upon the epic structure created by Fernand Braudel in his three volume history of modern Capitalism, Civilization & Capitalism, 15th to 18th Century, a series I have often recommended here to anyone who seeks to understand the origins and nature of modern Capitalism:

The Structures of Everyday Life (Volume 1)
The Wheels of Commerce (Volume 2)
The Perspective of the World (Volume 3)

Though we could easily start with Venice in the 14th century (that would make it five transitions), Arrighi begins with the trading/banking powerhouse of Genoa and lists the following expansive iterations that replaced the previous version when it reached the apogee of its particular model and fell into decline: Holland, Great Britain and the U.S.

What sets Arrighi’s analysis apart is his identification of a “grand cycle” that has not been recognized by other historical models of Capitalism’s development (and oft-predicted impending demise). This is not a cycle of price and scarcity described so compellingly inThe Great Wave: Price Revolutions and the Rhythm of History, or a demographic cycle as described in The Fourth Turning or the “S-curve” cycle of over-reach and marginal return described so ably in Overshoot: The Ecological Basis of Revolutionary Change and The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization, nor is it a Kondratieff cycle of expansion and repudiation of credit.

Rather, this is a cycle internal to global Capitalism, and in particular the top layer of mobile capital that Braudel identifies as the “real home of Capitalism.” In this view, centers of capital expand beyond the boundaries set by the previous dominant center when the old regime declines in an inevitable “autumn.”

Each iteration of mobile Capitalism has limits intrinsic to its model, and when those limits are reached, then the regime slides into an S-curve (a simple model for complex systems by Cesare Marchetti) of topping out and decline.

The question this analysis poses is this: once the U.S. founders on its debt and debauchery of its currency, is this the end of the centralized model of global expansion? Put another way: given that the U.S. empire–commercial, military, diplomatic and financial–already spans the entire globe in a completely unprecedented fashion, is any further expansion even possible?

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Written by testudoetlepus

February 23rd, 2012 at 7:25 pm

Gregg Braden on 2012 & Fractal Time

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On Coast-To-Coast AM with George Noory

Gregg Braden merged ancient understanding of cycles with modern views of nature’s patterns. Such patterns or fractals repeat on a cyclic basis following the rhythms of nature, so we can predict the return of these conditions. We are nearing the end of a Mayan 5,125 year cycle. Great civilizations have collapsed at this juncture due to earth changes. We have to work together in a cooperative manner in order not just to survive, but to transcend. 2012 marks the end of a world age. We are moving into direct alignment with the energy source at the center of our galaxy. Braden expects profound effects on the Earth. He has developed the Time Code Calculator to compute dates related to patterns and cycles. Can we expect the conditions of the past to play out again in the present or future?

One hour, 54 minutes
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Suspended Civilization

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by James Howard Kunstler

Question du jour: why is Jon Corzine still at large? In what fabulous Manhattan restaurants has he been enjoying plates of cockscombs and lobster with sauce hydromel and cinghiale ai frutti di bosco, while less well-connected citizens of this degenerate republic have to order their suppers from the dumpster in the WalMart parking lot where they have been living lately.

Is there still an Attorney General in this country? Will somebody please follow Eric Holder down a hallway and see if he leaves a trail of sawdust on the floor. Or did congress just retract all the fraud statutes by stealth in the same way that the Federal Reserve handed out $7.7 trillion in bailouts back in 2008 (much more than the generally accepted figure of the $800 billion TARP) without anyone finding out until three years later when some Bloomberg reporters rooted the numbers out of a Freedom of Information Act (FOIA) filing. And by the way, what is the US Federal Reserve doing handing out billions of dollars to the Royal Bank of Scotland? Was Scotland admitted to the Union by stealth, too? Or did Jamie Dimon just buy it as a birthday present for Barack Obama, who likes golf.

This is what life in the USA is like nowadays: shit happens and shit un-happens, and you find out about it years later. Only a desperate and hopelessly degenerate nation would choose to live this way, in a law-optional society, in which money means everything, and yet nobody even knows what money is (or where it goes, and what it does when it goes there.)

Jon Corzine has not revealed the destination of the loot (somewhere between $600 million and $2.5 billion, estimated) that vanished from the “segregated” accounts of his many clients at MF Global. The rumor is that it went to cover a rude margin call from Jamie Dimon’s bank, JP Morgan, after JC took some unfortunate positions in European sovereign bonds in a bad month. Beyond the question of why Mr. Corzine is not in jail (as a flight risk, just like DSK) is how come the Department of Justice has not so much as issued a statement saying that they were looking into the matter, so as to reassure both the victims and the financial markets that this is not a culture that just makes shit up as it goes along – i.e. that we have predictable rules and formal procedures for doing stuff.

The clowns and villains who run America have accomplished something really epic: they have vanquished meaning. Nobody knows what anything means anymore. Anything goes now. All bets are off. It’s not reassuring. It leads to bad things happening like blood in the streets. When nothing means anything anymore, some people will actually strive, make an effort, to reestablish meaning in practical economic and political life, because civilized life is impossible without it. So, in those historic moments when civilization is suspended, people will work like hell to restore meaning. Sometimes though, like Germany in the 1930s, you discover that the suspension of civilization is itself intoxicating, and you ride with that for a while.

Things are really flying apart now, and just in time for Santa Claus. The European bond rollovers are about to come in fast and furious during the season of Advent and nobody can make their interest payments. They will be skipped or postponed and promised for “next Tuesday,” and yet the bizarro universe of credit default swaps will not be triggered – is there a counter-party on God’s green earth who could afford a pay-out? Of course not. It was all a charade. So we’ll just learn that there actually is no “insurance” on all this paper. Yesterday’s “hair-cut” will be tomorrow’s “throat cut” as the middle innings of suspended civilization play out.

There are heroes as-yet-sung-and-unsung in America, people who prefer reality over reality-TV, people with a taste for meaning in life, which often requires the recognition that some things are true and some not so true, and you’re better off with what’s true. What appears to be true is that the old order is finished and a new disposition of things is coming along. The Long Emergency will beat a path straight to the Great Re-set. Sign up for it. Roll up your sleeves. There is so much to do in this country. If you are young, especially, it’s all waiting for you.

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My books are available at all the usual places.


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Suspended Civilization

[Clusterfuck Nation]

Written by testudoetlepus

December 5th, 2011 at 3:58 pm

The Limits of Incantation

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by John Michael Greer

Since I started talking about the end of the industrial age in this blog, not quite five years ago, a fair number of my readers have had some difficulty imagining what industrial decline would look like in practice. That’s been a hard question to answer, not least because the notion that the only possible futures are progress or catastrophe has been repeated so often that it’s become integral to most contemporary worldviews.

Still, events have taken care of the matter. Readers of this blog who still want to know what the decline of an industrial civilization looks like need only take a good look at the latest news.

I could pull out any number of examples from the ongoing flurry of current affairs, but the ones that come readiest to hand are also the ones on most people’s minds these days. The cascading series of disasters in Japan is first on the list, of course. Poised unsteadily on a set of volcanic islands in one of the world’s most tectonically active areas, the Japanese have been hammered by massive earthquakes and tsunamis at regular intervals since before the dawn of recorded history, with a commensurate cost in death and human suffering; there are good reasons why Japanese culture so insistently stresses the impermanence of life and the transience of worldly things.

This time, though, the ordinary convulsions of the earth and sea intersected with an aging and brittle technostructure in ways that are amplifying the damage. Exhibit A, of course, is the Fukushima Daiichi nuclear power plant. Built in the early 1960s using a design now considered dubiously safe, and pushed past the safe limits of its working life for the usual economic reasons, the plant turned out to be just that little bit too fragile to deal with the tsunami. A breakdown in the cooling system launched a series of cascading systems failures; as I write these words, it’s anyone’s guess whether the emergency crews who are risking their lives in the face of potentially lethal radiation will be able to get the crisis under control, or whether a chunk of northeastern Japan will get a dusting of high-level nuclear waste.

Meanwhile large sections of the global economy are quietly grinding to a halt as products and components from the shattered factory belt of northeastern Japan vanish from the world’s shelves. Global supply chains and just-in-time ordering turned out to have the same problem as every other attempt to improve efficiency by eliminating redundancy: they work great, until something goes wrong and you need a fallback option. Another object lesson in the hazards of too much interconnection is coming from global stock markets, which have been slapped silly by the sensible decision of millions of Japanese to cash in their foreign investments and get some liquidity in place where it counts right now, at home. The yen is up, most stock indexes are down, and another layer of instability has been added to a global economy staggering under the blows it’s already received.

Instability of another kind comes from the Middle East. In Libya, what looked like yet another canned “color revolution” suddenly had the script torn up by Col. Moammar Gaddafi’s unwillingness to play along. Whatever his failings as a person and a head of state, a lack of resolve is clearly not one of them; while Western politicians were smugly dismissing him as a has-been, Gaddafi marshalled his remaining forces, consolidated his position, and then launched a forceful military response that seems to have turned the civil war in his favor. Proponents of nouveau internet insurgencies take note: tanks, fighter planes, and infantry may be hopelessly old-fashioned, but that doesn’t make them ineffective.

The ruling house of Bahrain turned to similar methods when the insurgent flashmob occupying large sections of the capital turned violent. A call for help to neighboring monarchs brought in troops from Saudi Arabia and the United Arab Emirates, who promptly crushed the rising. The Saudis themselves had gotten on top of a similar rising at a much earlier stage; Western reporters in Saudi Arabia have noted with some discomfort that anyone who tried to organize protest rallies on the internet or the cell phone network could not be contacted shortly thereafter. It’s not unreasonable to be appalled at such methods of repression, but it’s worth remembering that the Western heads of state who denounce them, if they were faced with the prospect of an armed insurgency in their own countries, would do exactly the same things.

Behind the spread of insurgencies across the Arab world, in turn, lies the simple mathematics of food prices. Last month the cost of food worldwide passed the previous record set in 2008. To most people in America, where food accounts for a small portion of the family budget, that’s an inconvenience; to most people in the nonindustrial world, where it’s not uncommon for families to spend half their income putting food on the table, it’s an existential threat. Starving people do desperate things, such as trying to overthrow the local government. Autocratic governments with their backs to the wall do equally desperate things, such as calling in air strikes, or shoving dissidents out the back end of a van in the middle of the Arabian desert a couple of hundred miles from the nearest water source, doubtless with a pious wish that Allah will protect the virtuous.

So we’ve got technological crises, economic crises, and political crises, all driving a variety of feedback loops that intersect with other dimensions of the predicament of industrial society in ways that are hard to predict. Those of my readers who want a model for the long twilight of the industrial age may find this one useful; rinse and repeat, with occasional pauses and intensifications, and you’ve probably got a decent model of the next couple of centuries. Still, there’s another factor in play that’s worth a comment or two.

When Gaddafi refused to bow out and the insurgency in Libya tipped over into civil war, my readers will have noticed, President Obama’s response was simply to proclaim, as loudly as possible, “Gaddafi must go.” He had plenty of company in saying those words, but neither he nor any of his fellow heads of state did anything noticeable to make Gaddafi’s departure happen. Meanwhile, Gaddafi’s tanks and planes continued to pound the insurgents.

It’s not as though the western powers don’t have options, either, at least in theory. Any European nation much larger than Belgium could easily stop Gaddafi’s offensive in its tracks and take out his air force into the bargain, and we won’t even talk about what a spare US carrier group could do. For that matter, a few well-packed planeloads of munitions landing at Benghazi would probably be enough to turn the tide of the civil war back in the insurgency’s favor. The problem is that the situation in the Middle East as a whole is risky enough that any intervention, anywhere, could trigger drastic and highly unwelcome shifts in the balance of power.

At this point, after all, in the wake of the West’s abandonment of longtime ally Hosni Mubarak in Egypt, the Arab nations that produce most of the world’s oil have got to be asking themselves whether a sudden shift in allegiances might be in their best interests, and Western support of the Libyan insurgents would put ample frosting on top of that cake. If the Saudi monarch were to pick up the phone one fine morning, dial Beijing, and inquire about the possibility of a mutual defense pact, I doubt he’d be put on hold for long An awareness of this possibility has to be on the minds of policymakers in Washington and Brussels. This likely has much to do with the fact that the titular commander in chief of the world’s most expensive military machine has been reduced to mouthing “Gaddafi must go” as though it was an incantation.

Most of the way around the world, in Japan, the same reliance on incantation is playing a significant role in the Kan administration’s response to the Fukushima disaster. Right now, to be fair, the only factors that actually matter are the small team of beleaguered technicians who are struggling there at the plant, on the one hand, and the remorseless laws of nuclear physics on the other, so officials in Tokyo really have few other options. Incantations have long counted among the fine arts in Japan – it bears remembering, for example, that the imperial broadcast that announced surrender at the end of the Second World War referred to Japan’s total defeat in that conflict by saying, “the war situation has developed not necessarily to Japan’s advantage.” When a high government official announced a few days ago that one of the containment vessels at Fukushima Daiishi was “not necessarily intact,” in other words, those who were paying attention knew that it was time to worry – or to relocate.

Still, far and away the most colorful use of incantations in response to the Fukushima disaster has been in the media and the blogosphere here in America, where proponents of nuclear power have worked overtime to try to put their particular spin on a situation that seems to take a perverse pleasure in frustrating their efforts. It’s likely that much of this is being bought and paid for by the nuclear industry; using paid internet flacks to saturate social media with a desired message has already become a standard tactic in the worlds of politics and big business.

Still, whether they’ve issued from paid cyberflacks or unpaid true believers, the incantations in question make an intriguing spectacle. They started out, in the early days of the crisis, presenting rosy estimates of the situation, even claiming that the results of the tsunami showed just how safe nuclear power is. When reactor buildings started blowing up and made that last claim a bit hard to defend, insisting that the problem was a matter of one obsolete reactor design, and trotting out various pieces of untested vaporware as the wave of the future became the order of the day. When the situation started really spiralling downhill, it was time for rants about the evils of coal, as though that’s the only alternative, and then, inevitably, claims that the only alternative to nuclear power is to slink back to the caves.

There is, of course, another alternative. It’s the alternative that we’re all going to take anyway, as fossil fuels deplete and the various subsidies that make nuclear power and most of the other alternatives look economically viable go away forever. That alternative is to use much less energy than we do today. Here in the United States, it bears repeating, we use three times as much energy per capita as people in most European countries, to prop up a standard of living that by most measures isn’t as good. Fairly modest conservation measures, of the sort discussed in recent posts here, could render every nuclear power plant in America surplus if they were applied nationwide; a more serious national effort aimed at getting down to European levels of consumption could probably manage to turn most of the coal-fired plants into museum pieces as well.

Again, this is what we’re going to do anyway, whether we choose that route or not. The vast government subsidies that currently prop up not only nuclear power, but most of the rest of America’s energy production and consumption, are not going to be sustainable for all that much longer; neither, of course, are the “energy subsidies” that every other energy source derives from the immense quantities of cheap petroleum that are used to mine, transport, and provide raw materials for everything from solar panels to nuclear power plants. Equally, the American imperial presence in the Middle East and elsewhere, which currently backstops a global economic system that provides the 5% of us who live in America with 25% of the world’s energy resources and around 33% of its raw materials and industrial product, has a relatively short shelf life ahead of it, and as that comes unraveled, we are all going to have to learn to live with much less.

Faced with these unpalatable prospects, and a distinct shortage of practical options for doing anything about them, it’s not surprising that incantation has become the order of the day. In the twilight years of civilizations, as political, economic, and technological systems failures hamstring the ability of leaders and pressure groups alike to get their way, it’s a fairly common experience. Still, as an archdruid, I have a certain professional interest in incantations, and I find it disappointing to see them applied in situations where they’re not going to accomplish anything – say, to unseat a dictator who’s proven his willingness to use more robust means to keep himself wedged in place, or to make a brittle, dangerous, unsustainable, overcentralized, and fantastically expensive technology like nuclear power meet the needs of a declining industrial civilization. If any of the people involved would like to learn something about the proper uses and limits of incantations, I’d be happy to provide some tips.

********************

On a brighter note, I’m delighted to report that choreographer Valerie Green and Dance Entropy, a New York City-based experimental dance troupe, will shortly be premiering a new work, “Rise and Fall,” inspired in part by my book The Long Descent, with music by nonconventional industrial group the Tone Casualties. Green writes:

“’Rise and Fall’ is an abstract dance for five performers based on the cycle of a civilization. This experimental dance work is comprised of multiple sections running the course of the following cycle: a new beginning, tracing footprints and remnants of the past, on to a developing population, agriculture, industrialization, modernization, awareness, gross consumption, terror, decline, population dissipation, and knowledge to begin again. The inspiration from this book cane from a recent visit to the Yucatan peninsula of Mexico, and the book The Long Descent by John Michael Greer…I have found the above ideas thought provoking and an inspiration in the development of a non-traditional movement vocabulary, and a compelling work of dance.”

Readers of this blog in the NYC area can see “Rise and Fall” at Dixon Place Experimental Theater at 7:30 pm, March 31, or at the Green Space Studio at 8 pm, April 8 and 17.

The Limits of Incantation

[The Archdruid Report]

Written by testudoetlepus

March 17th, 2011 at 11:55 am