The shape of the recovery
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.