One of the things I find most interesting about economic crises is the way that the same rhetoric gets recycled in each one, as though official and unofficial media alike ran out of new ideas long ago and just repeat the same stories over again with the names changed and the old serial numbers filed off. When the mortgage bubble now deflating around us was still filling with air, media blared that a new economic model had arrived, that this particular asset class would keep appreciating forever, and that it really was different this time: all the same mantras heard back during the tech stock bubble of the late 1990s, or for that matter in every other speculative frenzy since the Dutch tulip mania of the 17th century.
Equally, once the mortgage bubble started leaking air and taking mortgage companies and hedge funds down with it, some US official or other tempted fate in a big way by proclaiming that “the fundamentals are sound.” The financial authorities said exactly the same thing in the aftermath of the 1929 stock market crash, and if there’s any phrase in economic history that translates better as “run for your lives,” I don’t know it. You’d think we would have learned from the tech stock boom and bust that it’s never different this time, and when an economy is propped up by the wishful thinking that drives all speculative frenzies, the fundamentals are never sound, and yet each bubble conjures up the same thinking and the same phrases all over again.
One song on this broken record, though, deserves special attention here. In The Great Crash 1929, one of the best (and certainly most readable) works of economic history ever written, John Kenneth Galbraith talked about “the notion that somewhere on Wall Street…there was a deus ex machina who somehow engineered the boom and bust.” His comment is apposite: “No one was responsible for the great Wall Street crash. No one engineered the speculation that preceded it. Both were the product of the free choice and decision of hundreds of thousands of individuals. The latter were not led to the slaughter. They were impelled to it by the seminal lunacy which has always seized people who are seized in turn with the notion that they can become very rich.”
Still, it’s not part of the standard rhetoric of economic crisis to encourage people to contemplate their own folly, and so we’ve already started to see claims that the great mortgage bubble and bust was deliberately engineered. There’s a twist, though, because the usual rhetoric of the past – the notion that the motive behind all this deviousness is pure greed – has been shouldered aside by the claim that the boom and bust were engineered to turn Americans into the debt slaves of a totalitarian state under the polymorphous banner of the New World Order.
That’s a claim worth noticing, not least because every significant crisis of the last dozen years or so has been interpreted by many of the same people in exactly the same way. It’s worth noticing as well because, like so much of what now passes for left-wing thought, this claim was pioneered by the John Birch Society, for many decades the cutting edge of the American extreme right. The phrase “new world order” itself was coined by the Society’s founder Robert Welch in 1972, as part of a florid system of conspiracy theory that blamed US corporations and the Trilateral Commission for everything Welch thought was wrong with the world. The ease with which these ideas of the far right were imported lock, stock and barrel by the other end of the political spectrum after the implosion of the New Left at the end of the 1960s is one of the richer ironies of recent cultural history.
Yet there’s another point worth noticing here, and that’s the extent to which the rhetoric of conspiracy has become a convenient way to evade any suggestion of personal responsibility for the consequences of one’s actions. Galbraith’s comments are relevant here. People plunged into real estate speculation because they thought they could get lots of money for nothing, and other people bought houses they couldn’t afford because they thought that, by the magic of repeated refinancing, they would never have to pay for them. Of course they were helped to embrace one or both of these delusions by the army of scam artists who always cluster around speculative bubbles, but the old maxim still holds: nobody can con you unless you first con yourself.
This habit of invoking conspiracy to dodge responsibility troubles me, not least because, as I’ve suggested in a previous post, the expansion of the industrial system over the last three hundred years or so – the Age of Exuberance, to use William Catton’s evocative phrase – resembles nothing so much as a speculative bubble on a titanic scale. We’ve seen how countless people in recent years have fondly credited their own financial brilliance for paper profits that turned out to be the product of a Ponzi scheme writ large. In the same way, the pundits and publicists of industrial society have insisted all along that our technological cleverness and creativity are responsible for a boom that, in the cold light of a deindustrial morning, will more likely be seen as the fantastically irresponsible exploitation of 500 million years’ worth of irreplaceable fossil fuels in an eyeblink of geological time.
The parallels run deep. Just as a speculative bubble lasts only so long as a steady stream of new speculators pour their money into the game and keep expanding the total amount of funds in play, the fossil fuel bubble of the last 300 years has depended on a steady stream of new energy reserves that keep expanding the total amount of cheap abundant energy available to the world’s industrial societies. Just as a speculative bubble routinely leads to extravagant misallocations of resources – the immense square footage of new home construction in the last five years or so might as well be the poster child for that just now – the fossil fuel bubble has resulted in resource allocations that our descendants will likely find at least as profoundly misguided.
Just as a speculative bubble ends in a sharp economic contraction unless some new financial gimmick can be found to reinflate the economy, finally, the most likely aftermath of the fossil fuel boom is a long and difficult contraction that will shake our societies to the core, since the likelihood that another energy source will be found in time to reinflate the fossil fuel bubble doesn’t look high just now. There’s even a parallel in the way one bubble feeds into another: just as the 1925 Florida land boom gave way to the 1927-9 stock market boom, and then to bust, and the tech stock boom of the late 1990s turned into the real estate boom now unraveling around us, the coal boom of 1725-1900 yielded to the petroleum boom of 1900-2005. If the parallel completes itself, the bust that follows will likely be on an epic scale – and it seems all too likely that this may work out in an equally massive hunt for scapegoats to blame for it all.
There’s already a substantial corner of the peak oil scene for whom discussing the end of the age of cheap abundant energy is inseparable from denouncing the current US government for an assortment of crimes, real or imagined. I’m no fan of the Bush administration – longtime readers of this blog know that I consider its energy and environmental policies disastrously misguided – but it seems to me that the effort to paint the leftover Reagan-era bureaucrats and politically naive right-wing intellectuals who run that administration as the modern liberal equivalent of Satan incarnate has less to do with their behavior than with the irruption of a frankly paranoid style of thinking into the American cultural mainstream.
Now to some extent this simply tracks the rise of a rhetoric of hatred in American politics, a process to which both parties have contributed mightily since 1970 or so. The vitriol heaped on the Bush administration by Democrats since 2001 matches with fair exactness the denunciations of the Clinton administration by Republicans in the eight years before then. Today’s claims that Bush is about to establish a dictatorship have an equally exact parallel in claims, circulated feverishly in far right circles after the 1992 election, that Clinton was about to do the same thing. Since neither party offers anything like a constructive approach to the problems besetting American society just now, it’s probably inevitable that they would both try to redirect the conversation to the supposed villainies of the other side.
Still, I’ve come to think that there’s more involved here than an escalation of partisan bickering. Like the conspiracy rhetoric beginning to circulate about the end of the housing bubble, it’s an evasion of responsibility – very few Americans, after all, had to be dragged kicking and screaming into eager participation in the fossil fuel powered orgy of consumption that peaked in the decade just past – and it’s also a way of not dealing with the hard work that has to be done if we’re to move into the end of the age of cheap abundant energy with anything worth saving still intact. On the list of work that has to be done as our society starts skidding down the far side of Hubbert’s peak, arguing over who’s most to blame may not deserve a very important place, but it’s also a good deal easier than some of the things that belong much higher up.
Finally, it may be worth thinking about where today’s search for scapegoats could lead. Imagine for a moment that the rhetoric we’re discussing succeeds in pinning the blame for peak oil on the Bush administration and American business leaders. It’s unpleasantly easy to imagine Republican politicians hanged en masse for crimes against humanity, oil executives and their families dragged from their homes and torn to pieces by screaming mobs, and the like. Such things have happened far too often in recent history to be dismissed as abstractions; they could all too readily shred what little is left of the basic civility any society needs to function at all, but they would not bring us one step closer to a meaningful response to the predicament of industrial society. I can only hope that enough people are willing to step back from today’s rhetoric of partisan hatred to make such things a little less likely, in a future that will be difficult enough without them.
