(Note: This article was mostly written in the days shortly before the election of Donald Trump)
There are few things that one can say with certainty about the future – yet in order to continue living we have to live as if we can make reasonably accurate predictions about the future, even that we can shape what the future will be like. That is when we make plans for what will happen and bring them to fruition. Comfort and security depends on being able to make the future reasonably predictable and to do that we forecast the things we do not fully control and work at things we hope that we can control. At the heart of many a religious belief system is not only a story about origins but a vision with predictions about the future, the story of what is going to happen. (e.g the Second Coming or the Last Judgement). It is also the job of the priests to be able to intercede with the Deity for the future we want – as well as to consult the Oracle. The word “divination” means to forsee – and also to be inspired (breathed in) by the Divine. “The Gift of Prophecy” is holy and is where individuals (or a small group) are able to foresee what, to most people, will come as a totally new and unexpected event or situation.
Of course all sorts of people predict the future for different purposes but we would not often use the word “prophecy” to describe what they do. Routine prediction as a job role can involve considerable responsibility and there are serious implications when weather forecasters predict the path of a hurricane. Climate science, on a broader canvas and much longer time scale is also predictive. Beyond the secure world of human beings is a planet and a universe in which many things happen over which we have little or no control and some of them are very threatening. We work to provide shelter from the storms but have virtually no power over whether and where there will be storms. All we can do is develop an ability to see the signs of emerging threats and then organise arrangements in anticipation.
Few forecasters are as revered as economists. Economists make forecasts about what is going to happen in the world of that great God – money. It is the quasi ‘sacred’ role of economists to predict the growth rate of national money income and reassure us that the future will be rather like the past, but that there will be more for everyone. If they cannot do that they are then required to say what governments can do so that growth can be resumed. This is because growth measures what economists since the 18th century have regarded as “improvement”, the measure of progress and the criteria for nearly all social judgements: how humanity gets to have ever more material possessions.
In this process of supposed “improvement” a great deal of importance is attached to knowing what the markets are up to. Economists will explain that uncertainty – experiencing the future as an unknown – is bad for business. Before “the business community” will commit – and risk – money when they invest, the runes about future markets must be consulted and it is the job of an economist to perform the magic rites and deliver their findings to politicians and business leaders and, more generally, to newspapers, radio and TV.
Before going further it’s important to grasp another thing about being able to shape the future into a world that is comfortable and secure – we must have the resources that will allow us to do this. We tend to think of “resources” as money (or purchasing power) but for most practical purposes shaping the future in our economic world involves energy in a form that an be applied to a variety of machines and the movement and processing of a variety of materials. For example, petrol is fuel energy in a form that can be used to get an engine in a car or a lorry to work to transport people and materials from “a” to “b”. To shape the future humans and their machines use energy carriers in purposeful work – and all work requires energy. To get that energy in the form that we need for particular machines and particular purposes we need energy to deliver us the energy to the people and machines in the required format – in a food form to people, hay or oats to working horses and petrol or electricity to different kinds of machines.
This also takes energy. It takes energy to search for oil fields. It take energy to drill them when we find them. It take energy to refine the oil and it takes energy to deliver the refined liquid fuel to its point of use when we need petrol or diesel.
So what? Few things are more important than accurate forecasts about the supply of fuel if that supply might be in doubt. Yet if it rarely has been in doubt, people take for granted that the fuel they need will be there, for sale on a market without problems. For over 200 years fuel supplies have been available – so why should the future be different?
My point is that if we look as if we might lose access to energy, lose access to power (the rate of energy flow) then the only thing that becomes predictable is the loss of predictability itself. There will be chaos – a loss of ability to work on situations according to planned intentions – in other words the loss of the ability to shape things or steer events. Without free energy available for purposeful activity order cannot be maintained. Chaos is a form of decay – a process of uncontrollable breakdown, at the mercy of processes that we unable to respond to, as on a ship buffeted by a storm and without power.
Hardly anyone gives this possibility a single thought. They take for granted the power will be there and all the machinery of modern civilisation will remain powered and available.
For many things it does not appear that forecasting and prediction will be necessary because in many spheres of life we can live with the assumption that there is a normality where today and tomorrow will be much the same as yesterday. Within this normality each of us have set routines in which we do things so often and repetitively and we cease to notice that we are even doing them. It is as if our brains are on “automatic pilot” and we do not consciously decide to do things. We do them without devoting any attention to what we are doing at all. It is then a nuisance when we cannot find later where we put down our spectacles because we gave no attention at all to when and where we took them off.
If people were to find themselves outside of the situation of “normality” then their mental state is likely to be one of disorientation – together with a large helping of frustration, anger and panic. The disorientation arises because people do not have a frame of reference in which to interpret what is happening. Information from their observations do not fit within any frame of reference that they have and cannot be made intelligible. The things that are happening appear to be new and unique in an unpleasant way. They cannot easily be pigeon holed in a ready made explanation. People do not know how to understand something that is not comparable to anything that they have ever seen happen before. The more a situation occurs “out of the blue” the greater the shock.
That does not mean that there will be no one who has an explanation. Unfortunately, people with an explanation will often have spent a long time being ignored and marginalised and their ideas will not be well known.
People who foresee problems with the arrangements that most other people take for granted are likely to have a hard job of it convincing the others that there might be a problem ahead. That is partly why prophets are often doomed to be ignored until it is too late – or almost too late. While things are going well the conventional wisdom of the mainstream will be that there is little to be gained by devoting any attention to alternative ways of understanding the world. Cassandras spoil the mood of celebration about good times – and it is common to persecute people who bring bad news. That’s why the conceptual frameworks of Cassandras will typically be mocked, ignored and persecuted. More generally, people who are “ahead of their time” have little joy in their role because it is by definition a role in which they are isolated. If they are the bearer of potential bad news it is likely to be even worse for them. As Jeffrey Masson put it in his book “Against Therapy”:
“When we read almost any modern autobiography, we see that what was most painful was living in a reality that others did not see or would not acknowledge or did not care about.”
Sometimes things occur unexpectedly as unknown unknowns but at least there are precedents for such events. However there are also times when events, objects or situations occur which are without precedent that we cannot interpret within an existing frame of reference. In those circumstances we may not notice the new information at all. Or we may notice that a situation needs interpreting but have not a clue how to start doing that. Imagine a person shouting in alarm at you – “watch out, you are about to step into the path of a bus”…. but they shout in a foreign language of which you know not a single word.
Being shouted at by a stranger in a foreign language like this might not help. It might even have the opposite effect to the one intended. The stranger’s intention is to try to get you to look where you are going – but given the circumstances their action may serve to draw your attention away in alarm at a foreigner who is shouting at you and who is mis-interpreted as being hostile and as a threat. The threat is interpreted as a reason to hurry on one’s way…. which is unfortunately into the path of the bus.
New situations can be misunderstood. There are multiple ways that situations can be conceptually constructed, including new and unexpected situations. I recall many years ago discussing with someone who was convinced that once the financial markets grasped the the idea of looming peak oil, there would be a catastrophic financial crisis because they would understand that growth was no longer possible and, therefore, that the debt based money system and banking system would have no future.
When someone argues something it’s often worth asking whether a contrary point of view could also be true and I did in this conversation. There are always unknown unknowns out there which could triggersomething completely unexpected. For example, before peak oil and a financial crisis occurs a meteor could strike from outer space. (The Stern Review on the economics of climate change contains a discussion of the unlikely but real chance of planet earth being hit by a meteor.) There are always what are called black swans events – high impact events that are very improbable but which do happen now and then.
Although the meteor strike was one possible argument against my friend it was not very probable. My main counter argument was different and themed around the multiple interpretations that can be made of the same event. Events and situations can and are interpreted in radically different ways by different people in society. Different interpretations (including misinterpretations) are important in what subsequently happens.
Throughout society people interpret the same events in a multiplicity of different, and often contradictory ways. As Anais Nin put it “we do not see things as they are, we see things as we are”. We look at the break down of a country in the Middle East and see a religious conflict. Or we see a conflict over pipeline routes by two rival geo-political blocks with competing energy strategies. Or we see a humanitarian crisis. Or we see the outcome of a drought that was the result of climate change that destroyed the agrarian economy of a country, driving rural people into cities and destabilising its power structure. Or we see war crimes being committed. Or we see a refugee crisis. Of course every observer is aware that a crisis is bigger than their personal interpretation of it but how we interpret depends crucially on who we are – a defence chief, a diplomat, an economist, a politician, a worker for a humanitarian focused NGO, a variety of different kinds of journalist. Each will privilege certain kinds of information for their interpretation of what is happening.
One of the problems of the modern world is the unbelievably high specialisation of roles and therefore the huge number of different viewpoints from which events can be viewed. A complex society has a complex spectrum of interpretations. In this context what is entirely predictable to one group is an unknown unknown to another group. To make the situation even more complicated – the group “in the know” may find their predictions unwanted or rejected. Climate scientists have been in this situation for some time.
It is quite impossible to know everything there is about many complex situations and this is frustrating in and of itself, particularly when one has some need to act. As a result highly complex situations can get simplified in the minds of millions of people. It often happens that perceptions of a complex situation in society become interpreted differently. Two or more counterposed and ever more paranoid and narrow ways of thinking about the situation are created. The polarised and rival interpretations can easily take hold and run out of control. Millions of people can let newspaper or media magnates transform an immensely complex situation with no easy solution into a simplified picture of who is “right” and “who is wrong”. To “solve the crisis” we must accept the leadership of a warlord and “defeat our enemies”.
In this situation it seems to me to be entirely possible that an immensely important historical event like peak oil could take place with the full understanding of a only small number of in the know people – but without most people being aware that it has happened. It is possible that what we might interpret as the knock-on consequences unleashed by peak oil are interpreted not as the consequences of peak oil but in multiple alternative ways that distract attention away from the peak oil collapse event. And then the actions that follow on from those alternative explanations keep running on and on…
“The collapse” came about because war broke out…
The collapse came about because of cyber war unleashed by geo-political tensions at that time
The collapse came about because of corruption in Wall Street and among the banksters
The collapse came about because there was too much debt
The collapse came about because Donald Trump was elected as President of the USA
The collapse was because the rise of populist nationalisms undermined global interdependencies.
The collapse came about because of Brexit
The collapse came about because some people refused to accept Brexit
The collapse came about because of a huge amount of uncertainty
The collapse was a chain reaction from bank losses caused by inherent weaknesses in the eurozone
Stories can always be told in different ways. The construction of the narrative can be built on one or more partial truths and look very convincing. In many aspects of life one can even “turn a story upside down or reverse cause and effect” and it will still be plausible.
Let us tell a story where the chain of causation and sequence of events is that an energy crisis triggers a financial melt down and that leads to a knock-on political crisis. In fact you can tell that story back to front in this way – misguided politicians pressure central bankers leading to financial mismanagement. This eventually leads to a big melt down in the financial markets and that leads to an investment crisis in the energy sector. In that story you don’t have an energy crisis as causative and primary what you have is a political mismanagement of the finance sector with a knock on effect on energy.
It matters a very great deal which story society comes to believe about what has happened. For when a society shares a story about what has happened this can either powerfully help or powerfully hinder its recovery from unexpected shocks.
An important point here is that some stories may be plausible and make total sense to a small group of academics and/or activists but not match up at all with the dominant social narratives about how things are.
I have seen it argued that because financial markets are driven by interpretation and perception they evolve much quicker than the kinds of long term processes of depletion that lead to peak oil. That’s always been the viewpoint of thinkers like Nicole Foss and Raul Ilagi Meijer at the Automatic Earth. As Ilagi puts it in a recent post he and Nicole Foss moved on from analysing peak oil to “focusing more on finance than energy, because we feel the former has a shorter timeline than the latter.” As a result, “we continue to find that the financial world will dump us into a bigger crisis sooner than energy will”.
To which my response is: maybe, maybe not.
Who gets to interpret what “dumps the world” into big crises?
At various meetings where Nicole Foss has been speaking the phrase that she uses that I most object to has always been “what we are going to see” when she explains what she thinks is going to happen with great conviction.
I prefer, instead, to say “It seems to me that we are likely to see….”.
Feasta members are well known to be gloomy often because we take the idea of the limits to economic growth seriously. If your theme is sustainability and if you see lots of things that are not sustainable then you expect that things will break down. It follows from what “sustainable” means. So I, like others in Feasta, have been fairly convinced for many years that “what we are going to see” is likely to be a rapid breakdown. For year after year I have foreseen this breakdown as being imminent.
Many years later it still has not happened – although Donald Trump has been elected…but at the very least I feel compelled to ask – how did we get the timing so wrong? I still feel that a breakdown is coming – but timing does matter and we have been wrong. When you are wrong you ought to explain it, otherwise one is like the boy who cries Wolf and the Wolf does not come. It sets one up for being thought as a “Doomer” and then discredits the whole message.
I remember having a debate with a member of the Transition Movement about shale and fracking many years ago because it ran counter to the Transition narrative about the impending nature of the oil peak. He was not concerned to bestow much attention to shale because he thought that shale and fracking would not be economic. Well, he was right…but he was also wrong. Shale gas and then shale oil never have been economic but the “shale revolution” has still happened and shale and fracking has had a tremendously destructive impact.
One metaphor that Illargi has used in the blog, “The Automatic Earth” is a reference to a cartoon character Wile E Coyote. Wile E spends much time chasing another comic character, the roadrunner – and then finds that he has himself zoomed over the edge of a cliff. In the cartoon there is a split second where Wile E hovers in space, supported by nothing. It is after the moment of dawning realisation of his true condition that he crashes down.
Fine…. but for year after year the realisation has not – so far – occurred. I don’t doubt that peak oil and gas and, more generally, the limits to growth, are real and imminent and will have a deep impact on all aspects of life for all of us. But how far the situation is recognised and interpreted for what it is is quite another matter. The chances of the economic crisis being traced back to an energy crisis or the limits to growth seems, if anything, further away after the election of Donald Trump. A lot of the “liberal establishment” will interpret the chaos as the result of Trump’s policies. Millions of Trumps supporters will interpet their problems as due to unfair trade practices and/or hostile acts by other countries that are “enemies of the USA”.
It is time to abandon a default assumption that millions of people act on the basis of well informed rational calculations. Nor do people in the political and economic elites. They act on the basis of faiths – belief systems that are sometimes granfalloons or collective fantasies that it seems convenient for them to believe at any time.
Let’s give the shale boom as an example. For some time oil and gas industry analysts like Arthur Berman have noticed that in the shale plays in the USA, despite the losses, despite the negative cash flow growing the debts of this industry year after year, despite the bankruptcies, “stupid money” is still prepared to flow into the shale industry. That has mattered. For example in the UK there has been the threat of a shale gas industry and a huge movement has grown up against it. For me personally it means I have worked my socks off in my recent retirement warning communities against this industry that threatens to frack large areas of Nottinghamshire including the famous Sherwood Forest.
Now I could have stood aside and opined that the industry would never happen because it would not be economic even on narrow cost grounds. There have been good grounds for arguing that. A year ago the Greenpeace Energy Desk published an article pointing out that at natural gas prices prevailing in the UK 4 separate studies had shown a price per therm to extract gas by fracking in the UK that was greater than what the gas could be sold for if it was there to be extracted. Indeed everywhere in the world the gas fracking industry has struggled to make a profit – and yet the the oil and gas industry keeps on trying to make it happen. So what is going on here?
It is true that, as Illargi argues on the Automatic Earth blog, financial markets can change very rapidly. In one sense the actors in those markets do indeed have a “short timeline”. However there is a deeper sense in which actors in the financial markets and in business do not change their attitudes – that is in regard to what I call their faiths. And by “their faiths” I mean the belief that technology and markets will eventually come to the rescue and, as a result, no matter how bad things are now, eventually some kind of growth will resume.
It is that kind of unshakeable faith that was challenged in the early 1970s when the authors of the “Limits to Grown” published their famous book. Economists rushed to discredit the book because it was not challenging any old idea – it was challenging the hegemonic faith of the 1970s which is still the hegemonic faith in 2016. It was challenging a shibboleth, breaking a taboo, arguing something that was supposed to be unthinkable. The whole purpose of society was to grow, it was the measure of modernity, the very idea of progress itself was being questioned and the theologians of money wealth, the priesthood trained in the economics religion were outraged.
If you want to get a sense of this mindset then there is this quote, cited by Clive Spash, at the recent Degrowth Conference in Budapest. In this quote Lord Nicholas Stern says why he and his peers think climate change is such a problem:
“In the long term, if climate change is not tackled, growth itself will be at risk” (Better Growth, The New Climate Economy)
So while “the markets” may lose their confidence in particular assets or even fear for the stability of the banking system that is not the same as losing the deeper faith. What I mean by faith here is explained at great length in my book Credo but for the purposes of this essay I will quote a short passage:
“Faiths are attractive when they help us make sense. help us find meaning and orientation – and thus to know what it makes sense for us as individuals and groups to do, given the bigger picture. Faiths are thus not only a way of making sense of what we read in the newspapers and hear on the news broadcasts. Faiths help us choose our purposes – they help frame our imagination of what way we might live out our personal and collective story. They contextualise what we decide will be the projects, the agendas, the games or the careers to which we devote ourselves. However there is a problem when we just absorb the destructive frames of reference of the power elite without even noticing that we are doing this. In the words of a variety of French thinkers we have allowed our “imaginaries” to be “colonised”.
So what is it that keeps the system going? What is it that makes it possible for the oil and gas industry to draw in the money from Wall Street despite the mounting losses and the mounting debt? How come that Wile E Coyote has been able, year after year, to remain suspended in mid air without falling?
There is a system of belief that people are organising their lives on – that forms the basis of how they understand themselves and their relationships with each other. It forms the basis of their decision making and what they understand their life narratives to be. Most of them are not be aware of it but, as Keynes put it,
“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly supposed. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”
Thus why does the money flow to the loss making shale industry? There is a deep faith out there that the price system of the market actually works – and in the way that the elementary textbooks says. If oil becomes expensive to extract then it will eventually become scarcer so its price will eventually rise and that will make investment in the oil industry profitable. This elementary economics written by defunct economists like Samuelson is a taken for granted faith for the masses.
Fracking is a new and innovative technology. Its a new engineering solution and there is money to be made in investing in innovation. Technological innovation is the future. The corporate PR hype can ride on the back of this kind of faith – while the reality, that an indebted economy cannot afford to pay ever higher extraction costs for oil and gas that this technological innovation requires, is ignored as the losses mount up and up and the debts with them.
A few years ago a growing number of people looked into the future and foresaw the limits to economic growth in climate change, pollution and the depletion of minerals and fuels. Peak oil was seen as rising oil prices and in 2008 many recognised that high oil and gas prices would leave people running up debts to cope and then struggling to pay their debts and high fuel bills. In the financial crisis the price of fuels collapsed and then recovered for a time. But the price recovery has never been enough to make fracking and other unconventional fuel sources profitable. However, the boom in production happened nonetheless just as the recovery from a debt crisis was achieved by yet more debt. Now the debt crisis and the crisis in the fossil fuel industry is happening together.
In retrospect it seems obvious – past the oil peak there is not a struggle by society to adapt to ever higher prices so much as a process of denial manifested in a debt crisis. When consumers, companies and the energy sector itself finds its costs rising at first they appear to have the option to borrow more on the assumption that the situation is temporary.
That’s the function of faith – faith can also be thought of in this context as the inertia in existing arrangements. Since there has been innovation and growth for 200 years the assumption is that innovation and growth are the norm and that new sources of wealth will emerge that will be the real resources that can be sold for to raise the means of future payment. The assumption is that any crisis is real but nevertheless temporary.
In this case this assumption and this faith is wrong, very wrong. Unfortunately however the conceptual framework to understand this is understood only by a few. Most people will not look at the situation. The coming bankruptcy of the energy sector is a crisis that mainstream economists will not be able to understand nor to solve.
Probably as frightening as what is about to happen is that almost no one in the mainstream will understand what is happening nor how to resolve it. Being hit by an unknown unknown like this will be bad enough – far worse that virtually no one understands it. After all, the crisis will be seen as a result of…..Brexit, the US political crisis, the eurozone backing crisis, Putin…take your pick…
Note: Feasta is a forum for exchanging ideas. By posting on its site Feasta agrees that the ideas expressed by authors are worthy of consideration. However, there is no one ‘Feasta line’. The views of the article do not necessarily represent the views of all Feasta members.
Brian Davey graduated from the Nottingham University Department of Economics and, aside from a brief spell working in eastern Germany showing how to do community development work, has spent most of his life working in the community and voluntary sector in Nottingham particularly in health promotion, mental health and environmental fields. He helped form Ecoworks, a community garden and environmental project for people with mental health problems. He is a member of Feasta Climate Working Group and former co-ordinator of the Cap and Share Campaign. He is editor of the Feasta book Sharing for Survival: Restoring the Climate, the Commons and Society, and the author of Credo: Economic Beliefs in a World in Crisis.