To date, I've only posted my own writings here. But I read an article this morning that is so important, relevant, and quality, I couldn't not post it. It is about the real and metaphorical connections between the concentration of power in a barrel of oil and the concentration of power in a society such as ours. The author points out that our whole money/economic system is going to (have to) change as we cross peak-oil, peak-debt, peak-power-concentration, peak-civilization. It is truly an excellent synthesis.
The article is reproduced in full below, or you can read it on its original site,
here.
~~~
Peak Oil, Peak Debt, and the Concentration of Power
by Charles Eisenstein, an author and faculty member at Goddard College in Vermont.
When theorists approach the peak oil problem from the perspective of
finding a substitute that will allow us to maintain our present energy
infrastructure, their conclusion is one of despair. There may be many
substitutes for oil as a concentrated form of storable energy, but none
of them are nearly as good as oil itself. Those invested in the status
quo would, quite understandably, like to maintain it, but it is becoming
apparent even to the most highly invested that the status quo is
doomed; that it can be maintained only temporarily, and at a rapidly
accelerating environmental cost. The transition before us is not merely a
transition in fuel types. It is also a transition in the whole energy
infrastructure, both physical and psychological; a transition away from
big power plants, distribution lines, and metered consumers; away from
capital-intensive drilling, refining, distribution, and consumer fueling
stations. More broadly, it is a transition away from centralization,
concentration, and all the social institutions that go along with it.
Both the energy system and the money system are based on accumulation
and the concentration of power. Not only our energy infrastructure, but
our dominant yet invisible way of thinking about energy, presupposes a
centralized system of distribution based on a highly concentrated energy
source. Many alternative energy technologies have made little headway,
not because they are technologically unfeasible, but because they don't
fit into our present physical, financial, and psychological
infrastructure.
There is a causal as well as a metaphorical parallel between the
concentration of power in oil and in money. A concentrated power source
that can be stored allows social and political power to concentrate in
the hands of those who control it. It generates very different social
dynamics from an energy source that is universally distributed and
constantly renewed. For one thing, the profit potential of the latter is
intrinsically less. Once you have sold the geothermal pump or the PV
array, the buyer is self-sufficient, unlike the electrical power
consumer who has to pay the metered rate in perpetuity. Energy
dependency and economic dependency are closely linked.
A similar pattern holds in other fields as well. In medicine, for
instance, the universal, endogenous medical knowledge of several
centuries ago that employed common weeds as medicine has given way to a
system in which both knowledge and pharmaceutical medicines have been
purified, abstracted, and concentrated in an exclusive domain. There is
little profit potential in dandelion or burdock, nor did the village
herbalist or country doctor of yesteryear make much money. We might
apply the same analysis to the migration of legal power from informal
community-based mechanisms of dispute resolution to the centralized,
codified, and therefore in a sense concentrated mechanisms of the law.
So also for education, entertainment, and news.
In all these realms though, the trend toward increasing concentration
is nearing its peak, or has peaked already. The peak manifests in many
different ways. In some areas it reflects resource depletion; in others,
demand saturation; in others, it is due to technology. For example,
thanks in large part to the Internet, a tide of decentralization and
disintermediation is erasing the producer/consumer divide in the areas
of news and entertainment. That more and more of our time is spent
watching "content" produced by amateurs suggests that we are approaching
"peak Hollywood," in parallel with peak healthcare, peak pollution,
peak advertising, peak fisheries, and peak oil.
It should not be surprising, since the profit motive has been the
primary driver towards these peaks, that we should be approaching a peak
in the realm of money as well, a peak that we might call "peak debt."
The crisis in money is ineluctably related to the crisis in everything
else, because the viability of our money system depends on growth: the
conversion of nature into goods, and relationships into services. This
conversion cannot proceed much farther, due to resource depletion and
the inability of society and biosphere to sustain more damage. While one
may dispute that economic growth depends on petroleum, it does depend
on increasing consumption of something. For decades or centuries, we
have maintained growth first by meeting needs, then by creating new
needs, then by bringing non-monetized cultures and non-monetized domains
of our lives into the money domain. Community, for example, can be
stripmined just as coal can: turn the functions of story-telling,
dispute resolution, child care, elderly care, recreation, entertainment,
into paid services. But in either case, material or social, this
process is reaching its limit. We are indeed entering a time of Peak
Everything.
The crisis in money is related to the crisis in energy, the
environment, and everything else. The difficulty in finding a substitute
for oil, for example, is born of economics. Imagine what we could have
accomplished if the millions of scientific careers and hundreds of
billions of dollars that have been devoted to petroleum and nuclear
power over the last fifty years had gone instead into developing
"alternative" energy technologies. Imagine if, at the dawn of the
environmental movement in the 1960s, we had launched a global scientific
effort exceeding that devoted to the space race to create a
pollution-free society. It did not happen, and with good reason: there
was no money in it (given the kind of money system we have had).
Compared to the technologies of Big Energy, there is little profit to be
made in the alternatives. The alternatives are not conducive to
economic growth, and will never flourish in a money system that compels
and depends on growth.
Sunlight, wind, conservation, geothermal energy, and more
controversial technologies like cold fusion, Bedini/Bearden devices, and
so forth share an important characteristic in common. Their energy
source is more or less ubiquitous, so that users needn't be dependent on
an ongoing supply of scarce fuel. They are, in an important sense,
abundant. This feature puts them at odds with our money system, which
depends on the creation and maintenance of scarcity. To profit from
something, say energy, it must be scarce: high-tech pharmaceuticals, for
example, rather than ubiquitous weeds and folk medicine.
The same is true of information; hence the strenuous efforts of
music, book, and film publishers to create artificial scarcity in
digital content through copy protections and intellectual property law.
They are fighting a losing battle: when the marginal cost of production
for any product approaches zero, the natural price point tends toward
zero as well. The first copy of Microsoft Word costs hundreds of
millions of dollars to produce, but each subsequent copy costs virtually
nothing.
Alternative energy sources are similar: the initial cost may (or may
not) be high, but once the installation is complete, ongoing costs are
extremely low or zero. By returning energy to a non-monetary realm, they
actually contribute to economic de-growth. Think about that next time
you read economic arguments about how to "stimulate demand" and
"reignite economic growth." In the present system, in the absence of
growth, unemployment, poverty, and the polarization of wealth intensify.
In the present system, economic well-being is incompatible with
post-carbon energy technologies.
A cynical observer, looking at the history of the suppression of
alternative energy technologies, might conclude the same attempt to
create artificial scarcity is happening in energy as it has in digital
content. However, there is no need to resort to conspiracy theories to
explain it; mere economics will suffice. Let's consider an example.
It is not too difficult to build houses that require almost no
external power source for heating and cooling. By using construction
materials of large thermal mass, geothermal wells, and passive solar
principles, a house could, with sufficient PV (photo voltaic) power, be
comfortably independent of the energy grid. Why aren't they being built
this way?
One reason is certainly the habits and culture of the building
industry, but the main reasons are financial. (1) For starters, future
energy savings are generally not fully capitalized in a real estate
value appraisal. (2) But even if they were, our interest-based system,
with discounting of future cash flows, only motivates the initial
investment if it generates savings above the rate of interest. (3)
Finally, the existing energy system enjoys a high level of hidden
subsidy due to the externalization of its environmental and social
costs.
The first point is easy to explain: assuming a 2.5% interest rate,
the net present value (NPV) of $1,000 in annual electricity savings is
$40,000. Rarely, however, does that modest level of energy efficiency
contribute nearly that much to a house's value.
As for the second point, what is more economically rational: to buy a
house for $200,000 and pay $2,000 a year for power, or to buy a house
for $300,000 and pay $200 a year for power? Assuming your mortgage loan
is at 5% interest, it is much more rational to pay $2,000 a year for
power, forever and ever. Even if you don't need to borrow, you can earn
more than 2% interest on that extra $100,000.
Thirdly, the price of gasoline, oil, electrical power is artificially
cheap. The costs of pollution, war, oil spills, nuclear accidents, and
so forth are not reflected in the price of a gallon of gasoline or a KWH
of electricity. They are offloaded onto society and future generations.
For example, because the government will have to pay the costs of any
truly catastrophic oil spill or nuclear accident, the companies are
operating with free insurance. It is no coincidence that massive risks
accompany centralized energy installations. Big Energy comes with big
risks, as well as the political power to socialize the costs of those
risks. People complain that solar and wind power are only competitive
because of subsidies, but conventional energy enjoys far greater
subsidies.
These subsidies are not the result of mere political influence. They
are built into our money system. Unless and until we have a money
system that forces the internalization of costs and eliminates the
discounting of future cash flows, Big Energy will always enjoy an
advantage. That advantage can be mitigated through moral suasion and
various kinds of subsidies, but wouldn't it be better to align the money
system with the kind of energy system we would like to see, and indeed
the kind of planet we would like to see, so that goodness and profit
need not be opposed?
What would a money system like this look like? Perhaps it would model
the common feature of alternative energy systems that I have described.
Rather than originating at a monopoly source, perhaps it would be
universally distributed in its genesis. Rather than being storable in
concentrated form, maybe it would require constant regeneration. Rather
than requiring payment for its continuing supply (i.e. via interest),
maybe it would be generated at no cost.
In fact, money systems bearing some or all of these features have
been proposed, and if implemented, they would create conditions far more
salubrious than at present for the development of a new energy
infrastructure. These systems internalize social and environmental
costs, restore the commons, build community, reverse the discounting of
future cash flows, are compatible with a steady-state or de-growth
economy, eliminate economic rents, and systemically discourage the
concentration of wealth.
My book, Sacred Economics, lays out one such system, or rather
a synthesis of several of them. The key ideas are not new, however, and
are even slowly making inroads into the mainstream dialog as the
inescapability of Peak Debt becomes undeniable. A central idea is
negative interest (also known as demurrage), which discourages
accumulation, allows money to circulate in the absence of growth, and
encourages long-term thinking.
Other important pieces of the puzzle include commons-backed currency,
local and bioregional currency, mutual credit and P2P banking, gift
economics, shifting taxation away from income and onto resource and
pollution, and a social dividend. Today, most of these proposals seem
very radical, although they are entering the public discourse in covert
forms. Interest rates, for example, are nearing zero and look to stay
there for the foreseeable future, making investments with very long
payback periods more feasible. Some economists, among them Willem
Buiter, Greg Mankiw, and Robert Hall, have even dared propose taking
rates (namely the Fed Funds Rate) negative.
As old certainties break down, what was once radical becomes common
sense. However dogged our denial, the present energy infrastructure is
doomed to obsolescence. The same is true of our financial
infrastructure; indeed, the two are inextricably linked. They will fail
together, yet on the other hand, while they remain, each props up the
other. The money system exerts an irresistible pressure to convert
everything and anything into money – for example, the Alaskan National
Wildlife Refuge, the Alberta tar sands, the capacity of the atmosphere
to absorb waste – and with each successful conversion, the money system
gets a brief reprieve. By the same token, any bit of nature that we can
protect from exploitation hastens the demise of the money machine.
This is why efforts to reform the energy system must go hand in hand
with efforts at financial reform. Neither is prior to the other; each,
rather, is a different facet of the same thing. The collapse of each is
part of the collapse of an entire mode of civilization, and an entire
way of being that underlies it, clearing the way for the emergence of a
new, in accordance with universal dynamics of birth, death, and
transcendence.
We might call this way of being, this mode of civilization, the
"Ascent of Humanity." It was an age of growth, of domination, of taming
the wild and expanding the human realm; of becoming the lords and
possessors of nature. That age is ending, and a new era of co-creative
partnership with nature is beginning, in which we understand that we are
interdependent, not separate. The energy system, and money system, of
the future must embody this new relationship.
