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The shape of the recovery

Posted Jan 7, 2009 by Richard Heinberg

Letter L An article on the Bloomberg website today suggests that Asia will have a "V-shape" recovery from the current economic crisis, rebounding in 2010. This is opposed to a "U-shape" recovery, which would presumably take a little longer.

May I suggest another alphabetic possibility? What if the "recovery," not just in Asia, but globally, is shaped more like a big capital L?

No doubt the suggestion that we have reached fundamental limits to economic growth is as unpalatable today as was the initial forecast, issued back in 1972, that such limits would be met during this century. The famous Club of Rome report, which sold more copies than any other environmental book in history, was vilified almost immediately by pro-growth think tanks in Washington, which organized a highly successful PR takedown during the 1980s. Today, it is impossible to mention the phrase "limits to growth" in public without hearing a dismissive outburst from somewhere within earshot. Never mind the follow-up studies that have shown that the primitive computer-based analysis on which the original report was based was on the right track—which is to say that the freight train of industrial civilization is on the wrong track, and headed for history's biggest "splat."

But how can we know that the current economic crisis represents our ultimate encounter with ecological limits, and not merely a major case of the financial hiccups that have recurred frequently over the past couple of centuries? Might the global economy rebound for a few years, maybe even a decade or more, before really hitting the wall? In that case, wouldn't a premature declaration of limit-hitting lead to further humiliation of ecological prophets by the mainstream media? Gloomy talk about an "L-shaped" non-recovery is likely to provoke tar-and-feathering in any case, simply because people who are already suffering economically want good news, not bad—and they especially do not want to hear the REALLY bad news that the era of cheap and easy abundance that they have been told is their birthright is gone forever.

It is the situation with world energy supplies that leads to the (in my view) inescapable conclusion that what we are seeing now is more than a hiccup, worse than a "U-shaped" recovery, and better characterized as the beginning of an adjustment to a new long-term state of much lower energy flow, declining population, and reduced resource consumption. True, the evident cause for the seizing up of the growth machine is a series of Ponzi schemes piled on top of one another, administered not only by the world's largest and most respected investment banks but by central banks and governments themselves. But that machine needs oil as much as it needs money. Currently, with oil prices low and surplus amounts sloshing around a bloated market, it seems (to many commentators) ludicrous to conclude that tight oil supplies could constrain future economic growth. For the mainstream analysts, it's all about money. But as my colleague Daniel Lerch and I have argued (Peak oil still relevant? More than ever., Whither Oil Prices, The End of Growth), the economic crisis was at least partly triggered by the oil price spike of 2008, and now, with demand being crushed and prices so low, not enough investment is going into the energy sector to prevent a far greater oil supply crisis from erupting as soon as demand picks up again.

Oil is by no means the only limit to growth—we are in the era of Peak Everything: topsoil, water, fish, minerals, you name it. But oil is the single limiting factor that will matter most, soonest.

So if we have indeed hit the wall, should those of us who understand the fact keep quiet in order to avoid being branded as alarmists, doom-sayers, or worse?

That's a tactical question, and it deserves some debate. There are those who would argue that we who do "get it" should minimize the gloom and lead with positive messages, visions of how we can all be better off in a low-flow world. We should help people adapt to the, uh, downturn and not rub their noses in it.

In general, that's good advice. And I intend to spend much more of my writing time this year identifying and describing what some folks are doing to help them get by in ever harder times.

But it's also important to understand the bigger shape of the historical moment we occupy. If we all think it's a V or a U, we will be wasting most of our effort, just as the US government is currently wasting hundreds of billions of dollars propping up the balance sheets of investment banks that should simply divulge their toxic assents and close their doors. There's only so much money and time available to us, and we need to use it strategically to manage the contraction phase of the industrial bubble that we have all been part of.

If we understand the historical moment and act intelligently, there is at least a chance we can avoid the fate of the Easter Islanders, the Mayan cities, the Roman Empire. But that's going to require quick learning and adaptation—and a willingness to hear some bad news.

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Reader Comments

18 comments

The folly of "directing" evolution

From: Richard Bell, Jan 13, 2009 05:52 PM

Hubris about our species' ability to manipulate our environment has brought us to the global environmental crisis we find ourselves in today, where it is not difficult to construct scenarios in which our species is either greatly reduced in numbers, or even goes extinct.

But to argue that seizing control of our "genetic stock" and somehow creating or selecting mutations that would remedy our flawed mental abilities, is to embrace the same hubris that has already brought us low. The idea that humans possess the wisdom to confidently steer the evolution of our species in a positive direction is risible, given the complexity of the problem. And the historical record of efforts to direct human evolution

(eugenics, Social Darwinism, "the master race") ought to be enough to give pause to anyone considering such proposals.

Misunderstanding of this

From: Siblesz, Jan 13, 2009 09:05 AM

Misunderstanding of this issue is so great that the only way for us to successfully begin to start addressing the issue is when shit actually starts hitting the fan. Humans are incapable of long-term thinking, and the whole hurricane of disinformation and miscommunication present in our current society is so vast that it is impossible to avoid the inescapable reality of world collapse. Sure, we can form some grassroots movements here and there, but they are so miniscule in shape right now that they don't even begin to cover the damage of what will be needed to be done. In the end, we're set for a very harsh collapse, and nothing will prevent that from happening. It is the norm for human civilizations to expand, and then contract. We are no different, and deluding ourselves in the fantasy of permanency will serve no good. That, of course, does not mean that we should just say, "Oh well" and just wait for it to happen without moving a finger... every one of us should do our most to prepare for what's coming, as long as we don't fool ourselves into thinking that there's even the small possibility of a short-term fix. There isn't. Recognize that the storm is coming, meditate on the suffering that it will bring, act on what you need to do to seek safety from the coming storm, and then just let go... clinging on to the illusion of this civilization will bring nothing but disillusionment and despair. If you give in to the greater forces at play and despair upon these thoughts before the storm arrives, you will be free from shadows and disillusionment when it actually does come to happen. And if we don't survive, too bad. We're all meant to die anyway, so no worries. Don't fret. The worse thing that can happen to us is that we die, and that is going to happen to us anyway. So relax, enjoy the sunrise, love those around you, and let go. :) Cheers, and lots of love,

Juan

This is a poor analysis -- from a to z

From: Heinz, Jan 11, 2009 12:12 PM

I wished you would make greater use of informed opinions of scientists (try Smil on The Limits to Growth) or Nobelians (Krugman) on the crisis. Add Rogoff and Roubini, for good measure.

Let see it this version makes it through PCI moderators/censors/juge of good taste.

thoughts and words

From: Frank Gifford, Jan 9, 2009 11:39 AM

Richard, thanks for your insights and provocative post. I would like to urge everyone to try to avoid name calling, pigeon-holing, scapegoating, etc... For the sake of future generations, it is important for those who have eyes that can see to form a strong positive (but realistic) vision of the future, and seek to cultivate the wisdom, courage, strength, and perseverance to work towards making your vision a reality. If enough people cultivate the work of refining perceptions (ISHK works in this area fulltime) perhaps the future generations of all living beings will inherit a reasonable Earth. Frank from EntropyPawsed

I am more convinced than

From: Child Autonomous, Jan 8, 2009 11:20 PM

Wow. I bring up the Malthusian Soldiers and come back to see this gem of a quote about "survival of the genetic stock." Typical resorts to violence and brutishness aren't exactly genetic. Like I said in my post above, a majority of this Peak Oil scene has skipped over so much important information and replaced it with garbage on genetics or accepting non-egalitarian systems as "human nature". How are you going to decide what the actual "stock" is to perpetuate your Master Plan anyhow? or are you the first in line to cancel your genes out?

That will only come with further expansion of the pre-frontal cortex and associated cortical circuits, with stronger inhibitory links to the limbic centers. That means man must further evolve in the direction he started toward at the end of the Pleistocene.

We already have the genome of our Pleistocene ancestors. Sorry. Looks like you overlooked that one during your fantasy of genetic determinism - moralism and genetics combined - the pinnacle of attempted domestication. The puritans dream. As if our biology failed us. Paul Shepard would laugh in your face and so would all former and current nomadic hunter-gatherers (culturally speaking, not genetically). Do you even understand the mechanisms that made nomadic hunting and gathering (and scavenging) such a successful adaptive strategy? If so, you wouldnt be basing your ridiculous argument on genes.

From genetic moralism master plans, survivalism, and eschatology.

I hear my cuckoo-cuckoo clock going off.

Natural selection cannot save us

From: J.H., Jan 8, 2009 07:33 PM

George,

The notion that natural selection is going to improve our genus is laughable. You say we need an "expansion of the pre-frontal cortex." Even in the extremely unlikely case that a random genetic mutation occurred in one individual that resulted in the first step towards such an expansion, there is no reason to believe it would increase the likelihood of that genetic trait being passed on. What competitive advantage would exist that might be favored by natural selection?

Moreover, most genetic mutations are harmful, not helpful. As these harmful changes accrue in the genome, we are more likely to see our genus devolve, not evolve. No, I think the only way our pre-frontal cortices will be expanding is if we discover how to effect such a change ourselves.

J.H.

Great article!

From: Gail the Actuary, Jan 8, 2009 06:47 PM

I don't know how we get this idea of a likely L shaped recovery across to people. A few days ago I put together a post on The Oil Drum showing why the collapse of our financial system a likely outcome of our current predicament (oil and debt). http://www.theoildrum.com/node/4915#more It is difficult to pick ourselves up, if we and much of the rest of the world have to start rebuilding from such a low level.

Pieces posted on PostCarbon.org by paid fellows should be rated

From: Heinz, Jan 8, 2009 06:25 PM

Pieces posted on PostCarbon.org by paid fellows should be rated by readers. This incoherent rant deserves poor marks, whatever one may think about the future of energy, growth, resources, ingenuity, civilization, sciences or football.

The US has and continue to produce some of the best and most rigourous minds. To frame and present this "current economic crisis" properly, I would seek to anchor my opinion on the writings or op-eds pieces of the Krugman, Roubini or Rogoff of this world -- Roubini and Rogoff were able to identify ahead of time the causes and potential scale of the crisis.

This short paper by Rogoff and Reinhart (not wonkish at all) is a good place to start. http://www.economics.harvard.edu/faculty/rogoff/files/Aftermath.pdf

I'm sorry but this whole

From: Child Autonomous, Jan 8, 2009 01:43 PM

I'm sorry but this whole millenarian/survivalist mentality in the peak oil scene/western world is joke. Siting Mayan calendars and culturally/religious specific war analogies just comes off as wing nut - which you are. Bringing that sort of mentality after reading Heinberg's stuff makes me wonder just what kind of people are into this stuff. It's about on par with some of the more survivalist ideology seen around the peak oil "blogosphere". Where they seemed to bypass all other avenues of thought (anthropology, ethnography, anthropology of war, etc.) and are ready to encapsulate themselves to get ready for external raiding in a sad form of tribalization. "Don't let your neighbors know you're into this so you don't have to be depended on in the future for skills and supplies." Are you kidding me? If thats your mentality, maybe you get what you deserve, instead of being righteous Malthusian Soldiers who survive peak oil. This whole scene is so ethnocentric and limited in scope that it's a laugh.

I wonder what the Hadza hunter-gatherers would think of Mayan calendars and and prayers in fox holes. Probably not much. and in lands of scarce resources, they seemed to get along just fine. But why learn anything from them? Get ready! Spread the word! Build your fortified walls and hoard your resources! It's time to die!

what a joke.

Cleverness isn't the problem - lack of wisdom is.

From: George Mobus, Jan 8, 2009 11:13 AM

Richard,

You may recall our conversation at the Beyond Peak Oil conference in Ohio several years back regarding sapience. The evidence (esp. neurobiological) that humanity severely lacks the basis for wisdom sufficient to guide our decisions and behaviors in this overly complex, dynamic, and uncertain world we've created, is piling up. Of course, the biggest piece of evidence is the fact that we have arrived at this point at all. A wiser species would, presumably, figured out that there were limits to growth and then acted accordingly, limiting population growth and consumption per capita.

Our species is, I suspect, doomed. But not our genus. At least not necessarily. Evolution, as has always been the case, is the solution to the problem. The problem isn't how are we to save our cultures/civilizations. It isn't even how are we going to save our species. The problem is how is our genus going to survive? What new species of Homo will emerge, if any, that might have a better developed sapience? A eusapience (true wisdom)?

I am more convinced than ever that those of us who really grasp the significance of peak everything should be thinking about the survival of genetic stock. We should accept the plausibility of a population crash and inevitability of an evolutionary bottleneck and take steps to assure our best genetic representatives make it through. Otherwise, I suspect the typical resort to violence and brutishness will prevail and most likely those survivors will be selected against when the world undergoes radical climate and biota changes. We are not going to preserve our world now. We are not going to fix our culture because our basic mentalities (of Homo spaiens) run to growth in consumption, something that is built into the limbic brain. It takes much greater strategic and systems thinking along with morally driven judgment to override this basic instinctual drive. That will only come with further expansion of the pre-frontal cortex and associated cortical circuits, with stronger inhibitory links to the limbic centers. That means man must further evolve in the direction he started toward at the end of the Pleistocene.

I have much more to say on it at: http://questioneverything.typepad.com/

George

How about a \ shaped

From: Iconoclast421, Jan 8, 2009 10:59 AM

How about a \ shaped recovery?

Or ɭ

:·Þ

speaking of the Mayans...

From: Doug, Jan 8, 2009 09:11 AM

Another clear and penetrating post by Richard Heinberg. Speaking of the Mayans, our society appears to be right on track (with climate changes, peak oil, and economic meltdown) with the Mayan prophesy that the world as we know it will end in December of 2012.

I've been bustin' butt so far this year planting dozens of new bare-root fruit trees. It will be five to seven years before I may receive a harvest that is worthy of my efforts. If the Mayans are correct in their prediction, I suppose I'm just wastin' time. But just in case there's still hope for the future, I'll keep planting fruit trees...and spreadin' the word:

People get ready!! During WWI they said that in the fox holes there were no atheists to be found. We're all in a big fox hole now!! Say your prayers...then role up your sleeves and get your butt in gear creating a sustainable local food and water supply.

And another thing ...

From: ebishirl, Jan 8, 2009 06:20 AM

... that many so-called "mainstream" pundits miss is that making the transition to a low-energy/alternative-energy future requires making the most of the fossil fuels we have NOW. Without adequate supplies of oil/gas, there IS no transition. (i.e., How can we manufacture, distribute and install a distributed solar-power network without oil/gas to operate PV factories, power ships, trains and trucks, and get installers to peoples' homes to put in rooftop panels?)

I think the problem is in

From: subgenius, Jan 7, 2009 04:31 PM

I think the problem is in the term "recovery" and the expectations bound up in it...

How about a new vocabulary that talks of "re-balancing" and "reducing impact"?

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