Michael O’Meara has a long review of Dimitry Orlov’s Reinventing Collapse: The Soviet Example and American Prospects. As the title suggests, the book (which I haven’t read) explores the likely future trajectory of the United States in the wake of a Soviet Union style collapse of the global economy. The culprit of this doomsday scenario is Peak Oil.
Although O’Meara fails to mention him by name, the Mad Max Dark Age described in his review owes much to the vivid imagination of James Howard Kunstler, whom longtime readers of this blog are undoubtedly familar with. Kunstler uses the term Long Emergency to describe this future period of national breakdown. In World Made By Hand (2008), he provided a fictional portrait of everyday life in upstate New York under these conditions.
A year ago, I spent a lot of time writing about these issues. In retrospect, the stock market did collapse as predicted; the NYSE lost over half its value. Bear Sterns, Lehman Brothers, and Wachovia went under. The other major big banks and brokerages survived (so far) as a result of taxpayer welfare and massive government intervention in the private sector. GM finally went bankrupt. Chrysler was bought out by Fiat. The official unemployment rate now hovers around 10%. The consensus is that we are in the worst recession since the Great Depression.
In the Spring of 2008, it looked like we were headed towards revolutionary conditions. The price of a barrel of oil (artificially driven up by speculators) was approaching $150. The airlines were going bankrupt, cutting flights, raising prices. Truckers were going on strike in protest of high fuel prices. The economy was clearly tanking as consumers reigned in their discretionary spending. In the Third World, there was famine and food riots. Haitians were eating dirt and overthrowing their government.
If the price of oil had risen, say, another $100 to $150 … what would have happened? It is easy to imagine a massive die off in the Third World; refugees flooding into the West; the just-in-time system breaking down; all kinds of shortages; massive political unrest.
Ultimately, the U.S. economy couldn’t handle $150 per barrel oil and cracked last summer. The price of oil collapsed to around $30 per barrel as the speculators flooded out of the commodites market. The conditions associated with high oil prices were ameliorated, but it was only a temporary reprieve. The rate of oil depletion ensures that it is a problem we will have to face again someday.
In the wake of our economic collapse, Kunstler and his associates have often made an important point: weaning America off its oil addiction isn’t going to be as easy as some have suggested. The havoc in the capital markets and the collapse of oil prices has cut the knees out of alternative energy and future oil development projects.
T. Boone Pickens was on television last fall touting the massive wind farms he planned to build to wean America off foreign oil. His efforts have since come to naught. The volatility of the market continues to stiffle any sort of long term planning for our energy needs. This flaw could one day prove fatal for the capitalist system.
If anything is true, the 2007-2009 recession has proved that the government’s cures for our economic ailments are often worse than the disease. Alan Greenspan’s meddling with interest rates following the collapse of the New Economy/Dot.Com bubble only created a new and even bigger bubble in the housing market. I won’t hazard to predict the consequences of the massive expansion of the money supply under Bush/Obama in response to this latest economic crisis.
The possibility of collapse gives us hope that one day the awful system we live under will one day meet its demise. If Barack Obama’s America is indicitive of our future, that is a fantasy worth clinging to.
Note: Before anyone points out the obvious, I stopped linking to Kunstler months ago over his Zionism and warnings of “cornpone Nazism.”