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Peak Moment #202: Collapse of the titans

Learn from the Soviets — personal relationships are the best currency, says Russian-born Dmitry Orlov, the author of Reinventing Collapse: The Soviet Example and American Prospects. The American empire is following the USSR into collapse, he asserts, with financial collapse happening first, followed by commercial and then political collapse. Dmitry, an America resident for several decades, suggests lowering our needs and expectations and replacing money transactions with barter and exchanges. [http://www.cluborlov.com]

Listen to Audio. Read the Transcript [below]. Download video on iTunes.
Read in Janaia’s journal Meeting up with Mike Ruppert and Dmitry Orlov.

Collapse of the Titans
Peak Moment episode 202
Guest: Dmitry Orlov
Recorded May 22, 2011

Janaia Donaldson:: Hi, welcome to Peak Moment. I'm Janaia Donaldson. My guest today has some very unique perspectives on what's happening in the American economy and the American culture. Dmitry Orlov, thank you for joining me.

Dmitry Orlov:: Thank you for having me on your show.

JD: Dmitry, you were raised in Russia but came here in your youth, worked here but have been back and forth between Russia and the United States for some decades. Dmitry is the author of a book called Reinventing Collapse: The Soviet Example and American Prospects. I think a lot Americans think the Soviet Union collapsed, we're the superpower, we control the world, and nothing like that could happen to us. You've also got a new book out called "Hold Your Applause." So start us out with your unique perspective. What happened in Russia that you think might be happening here, or is happening here. Tell us.

DO: Russia was really symmetrical, or the Soviet Union was really symmetrical, with the United States, as a post-World War II superpower. And the fact that it collapsed first is reflective of the fact that a command-and-control economy is marginally less efficient at chewing through and destroying natural resources than a market economy. But it just collapsed first. It's not reflective of anything beyond some subtle differences. And the United States will collapse second.

I had that realization after going back to the Soviet Union and Russia before, during and after the collapse. As a result of that, I came to the realization that exactly the same thing is happening in the US, just somewhat more slowly. I've gone public with that message about seven years ago, and it was fairly well received even back then. But at this point, it's almost accepted that the United States is no longer a superpower.

JD: I think seven years ago — your Reinventing Collapse was published in 2008, so it probably was published before the big financial collapse that exposes a lot of fragility, skeletons in the American, well the world, economy. What I understand from you is that although maybe the ideologies and the practices between the Soviet Union and the United States are different, but the economic reality that both had been living under, that we are still living under, is exactly the same thing. Tell us about that.

DO: It's exactly the same. It's reliance on science and technology, and technological progress, which allows you to eat through natural resources faster and more efficiently. But it doesn't really change the picture. The Soviet Union ate through its mother lode of natural resources somewhat faster than the United States. Now, once the expansion of growth and the use of natural resources comes to a stop or peaks, the only thing that can happen after that, in an exponentially expanding economy, is the taking on of debt, faster and faster. So the Soviet Union went bankrupt and collapsed, and the United States is going bankrupt and collapsing. So that's kind of similar.

JD: It does look that way. Back a second: "exponentially growing economy." Give us a little sense of — what does that mean?

DO: Exponential growth results from charging for the use of money, for setting an interest rate on money. And that locks you into a mathematical function, which is debt raised to the power of time. That's exponential growth. It outpaces every physical process short of, say, a nuclear explosion.

JD: So we cannot keep up with this increasing debt load that you read about in the headlines all the time.

DO: No one can.

JD: The world can't.

DO: Nothing can. It's a physical impossibility. Collapse is baked into the equation — it's guaranteed. And so we are past the first stage in the United States, which is increasing the use of natural resources until they peak. We're almost through the second stage, which is take on more and more debt, until the whole thing becomes completely ridiculous.

JD: Tell us about the other stages we might have ahead of us.

DO: I've defined the five stages of collapse, and the first one of them we're almost in the middle of, which is financial collapse. It was papered over in 2008 and now that paper is wearing rather thin. It's really quite impossible to figure out a way to pay down the U.S. debt without inflating it away and various other means that are extremely disruptive.

Now, once financial collapse happens, the next thing that happens is commercial collapse. So all the different ways people have of gaining access to the survival necessities, using money and using imports, go away, and they have to fall back on local resources for just everything they need. Usually the thing that happens right along with that or after that, is political collapse where basically there's open revolt, the government loses all authority, and the country splinters and falls apart through secession movements. We're seeing the beginning of that, with people scratching their heads and thinking, we don't think Washington is on our side any more. Do we need them? California could do a lot better as a separate country, if it stopped paying the federal taxes and following federal mandates. That is occurring to more and more people. So this is following the same trajectory as the Soviet Union.

JD: Did you cover all the stages?

DO: The next two stages are generally avoidable, which is social and cultural collapse, where social institutions fail — churches, charities, whatever remains. And then cultural collapse is where people fall apart themselves, families fall apart, etc., because of the hardship they experience. Those two stages are generally avoidable if one tries hard enough. Now the problem is, in a lot of places in this country, social and cultural collapse have already run their course.

JD: They're already happening.

DO: That's right. Right now that is looking better than it is because of the financial structure, because of commercial access, and political stability. If you take those three things out, then what's left? In a lot of places, nothing.

JD: I want to go back to the commercial stability. That struck a chord of fear in my heart. If the way that we normally get our food, the real necessities, water — collapses, I feel we aren't terrifically prepared in American culture with backup systems for doing that. Yes, we have some local growers and CSAs, and so on. One of your points was that people in Russia already had many of those other means of getting things. Tell us about that.

DO: The Soviet Union inadvertently through various problems had achieved a high level of collapse preparedness. Not that they prepared for collapse. It was as a side effect, it did happen. The system there was in some ways very resilient in the face of collapse. It allowed the people there to muddle through. Nothing like that exists in this country, where it's either everything working perfectly or call in FEMA [Federal Emergency Management Agency] and evacuate everyone.

JD: And even that is not working perfectly.

DO: And that is by no means working perfectly.

JD: I mean, the food on the shelves at the supermarkets, we have three days or some frightening number like that.

DO: So people basically have to make their own preparations. And it's not just preparations for collapse, it's a complete change of orientation and culture and expectations. It's a wrenching experience that takes many years to adjust. You have to become a different person; it's not just you behave a little differently. Your culture changes. Your circle of friends probably changes. You reshuffle your family life. It's a wrenching change. And I think the good news is that it's not too late to do that.

JD: And hopefully avoid much of the last two stages you mentioned there.

DO: Exactly.

JD: I appreciate the good news, and our Peak Moment viewers will be relieved to hear that. What can they be thinking about and doing — both on that level of "how do you be prepared on the level that may be wrenching?" and also the practical sides of, "okay, if you don't want to rely on a very vulnerable, not very resilient system, what can they start to do for themselves?"

DO: Let's start with what they can start NOT to do. There's this fictional notion of success that exists in the United States, which in most forms is completely indistinguishable from complete and total failure. Successful people go to work all the time. They work 60, 80 hours a week, achieving absolutely nothing, riddling themselves with various ailments that are expensive to treat, alienating themselves from the rest of humanity because they're stuck at work all the time. And of course, convincing themselves that the stupid stuff that they do for work is somehow important, because otherwise they wouldn't be able to keep going.

So the first thing people have to do is stop doing what they're doing. Abandon this faulty notion of success that results in them going into debt, and the rest of the country going ever more deeply into debt, chewing through national treasure at a faster and faster rate, going faster and faster towards bankruptcy. The whole idea of doing more to achieve less should really sink in, and people should try doing less.

Now, the first thing you have to do to be able to do less is to need less. To really cut your resource use, cut your burn rate, get rid of possessions, simplify your life, and become idle. And out of that idleness will come the realization that the very few things you actually need, and that you need to do to get.

JD: You're asking about a real profound change in our personality structures, in our character.

DO: Absolutely. In the mix of the people here in this country, there are plenty of people who are, you know, kind of following my prescription already. They're just being ignored and neglected and treated as low-status individuals. Once the high-status individuals are all done running around and killing each other, those people will be left behind to pick up the pieces.

JD: What an amazing picture. Because certainly in America you figure the people that are wealthy and in the powerful positions at the top — all the people that managed to get all the wealth transferred over to them, the 1% that have the 90% wealth — are going to be the victors here; they'll be insulated from that kind of collapse.

DO: Their wealth is ephemeral. It only exists as numbers, as letters on pieces of paper. Their wealth is denominated in future industrial production that does not exist because of lack of resources.

JD: The folks that are in the sidelines but are getting the message that you are saying: your first step was to realize what you do need and don't need — to let go of a lot of stuff. And get rid of debt. Then what?

DO: Look at what the groups here in this country that are really on the edge do. And then you'll realize what people will have to do once everybody is on the edge. What do illegal immigrants here in California do? They send money home. They invest in their families. That's the best thing you can invest in, is human relationships, because that gives you something to fall back on. If you take care of people, people will take care of you. If you treat people who don't have a full time job as second-class individuals, then you, once you don't have a job, will be treated as a second-class individual.

JD: Here in California, with a large hispanic population, I see that their communal sense is strong, right here in the midst of American culture. I see them taking care of each others' babies, cooking for each other, and all kinds of things I don't see in the white culture in the mainstream, certainly as the media presents it. They're find work for each other.

DO: The path from here to there is very important. Look at all the things that you pay for. Figure out a way to get them from people for free. So you pay a babysitter — try to work out a barter arrangement with the babysitter or the babysitter's family. Simple things like that. Don't pay for the things that the people around you could do for free, in exchange for things you could do for them.

JD: So increasingly think about the skills you have, or the things you have, or the things you can produce, that are your currency, what you have to offer. Today you did a presentation ["The Twilight of the Antipodes and the Cultural Flip" slideshow and video] and you talked about economies, turning our way of thinking about our economies, on their head, which I find really intriguing. Can you tell us some about that?

DO: There's a way of living that has been with the human species throughout its history, where most of what governs your interactions with the people around you is gifts, and the debt of gratitude. You get everything for free. So for instance you're dealing with your own children. You give them all kinds of presents while they're growing up, and as you grow old, they start giving those presents back. Recompensing you. That's the intergenerational contract.

Similar contracts exist between peer groups, and neighbors, and neighboring villages, and all sorts of things. They share the bounty in various ways without resorting to commerce. Now, commerce is really important when you want to earn coin in order to pay taxes, because there's an empire ruining your life. But other than that, you don't need money.

JD: [laughing] That's true. Because if somebody's bringing something exotic from another country — like salt, if you're inland and you don't have salt, you'll trade them for something they don't have, like venison, or whatever it is.

DO: Exactly. So there are all kinds of symmetrical arrangements that are possible to compensate people that are helping you without resorting to coin of the realm. Analogous to a food pyramid, this is a typical relationship pyramid where, at the base you have family and friends and neighbors. And at the very top you have strangers that you trade with.

JD: So the base is what you put most of your energy into. Most of your transactions are [with] the relationships that are closer to you. And at the top of the pyramid, very few.

DO: Yes, a few luxury goods, a few little imports, that thing for the special occasion, some silk for a wedding gown...

JD: That is not the Wal-Mart model, here.

DO: The Wal-mart model is basically how to go bankrupt when you can no longer go deeper into debt. That's the Wal-Mart model. You take everybody's job, you offshore it, you flood the local market with imports, and then wait for everybody to go bankrupt so you can close the Wal-Mart and nothing's left.

JD: And meanwhile you've destroyed the little stores that were providing all of those things to that community, and they're all walled up.

DO: Exactly. Now you can't compete with the Wal-Mart model by opening a business. But you can compete with it by NOT opening a business.

JD: Dmitry, I thank you for that. Because I really love the local business model, and I'm thrilled to have local businesses happening, but at this point at least, they can't compete. What you're saying — you don't even step to that level. You just come down to the gift — try as much as possible — the gift and barter economy.

DO: As a business, Wal-Mart and the financial institutions that sustain them have pretty much cut off their oxygen supply. So you can't really compete with them on that basis. But the only thing you can do is to say, "We don't need your oxygen. We make our own."

JD: I understand the notion here of beginning to create more of those barter/gift relationships. But I still picture people saying, "I still depend on the supermarket. My neighbor has chickens and I can get some eggs from her, but that's a tiny bit, even if I pare down my needs." What other ideas can you give people?

DO: Let's say you go to the supermarket to buy meat. Well, don't eat meat. That's pretty simple. Switch to rice and beans. Raise some rabbits — they're easy to raise. A lot of it has to do with lowering standards, with expecting less. Less physical comforts. So if you're willing to lower your standards and to live with less, it's much easier than if you want to perpetuate this model with other means.

One of the things that really confines people is the American house, with all that it comes with — central heating, air conditioning, plugged into the electrical grid and the sewer or a septic tank, which is an expensive thing — and all of those other trappings that are requirements, and that aren't all that necessary in order to survive. If people can simplify their living arrangement, especially in a way that doesn't require a rent or mortgage, then they end up very far ahead, and they get a lot of room in which to play and try things and experiment.

But if they're roped into the structure where you need a car and a house and therefore you need a job, then you, first of all, have no money, and secondly you have no time, because you're busy paying for all of this. So any way to opt out of the American dream that people can find is a really good idea, because that dream is actually more of a nightmare with each passing day.

JD: I think more and more people are realizing that, with the foreclosures and levels of debt, and they're trapped, with the jobs they can get, and so. Certainly at some point we run against regulations that don't permit that. A little cabin that doesn't have a way to deal with waste water is not legal in this county, for example. So I'm sure there's going to be a lot of, what do I say, under the radar may be how some people can step out of that system, at least until that system can relax and permit living at a lower standard.

DO: If you don't have a toilet, you don't generate waste water. So there are ways of skirting various requirements.

JD: Yes indeed. There are certain people doing humanure and composting toilets...

DO: It's just that a lot of people have high standards and find these solutions unpalatable, so they draw their work every living day of their life, and not think about this. But it's their choice, and it seems like a poor one.

JD: Increasingly I'm finding that the folks listening to Peak Moment are more and more interested to see what could be possible in the directions you're talking about. And maybe not even seeing it as ... maybe "lowering" some standards, sort of the American view of what affluence is and the 6000 square foot house ... but other things compensate for that. Where maybe your standard of relationship is higher because of this.

DO: Absolutely. One of the things Americans sacrifice is basically to have a choice over who they deal with. They deal with random people all day and they expect nothing of it, whether those people are sympathetic or interesting or what. They're just kind of thrown in and roll with the punches. But if your requirements are a lot lower, then you get to pick and choose who you work with and deal with.

JD: You yourself have made some interesting choices about how you live. You're following your own advice. Tell us about that.

DO: I got rid of the house and the car. We bought a sailboat, we moved aboard. We sailed it all over the place from Maine to Florida. We took a break for a little while and I refitted the boat, so that it's much more comfortable now. Nothing fancy. I basically used Home Depot insulation and things like that. Plywood. But it just made the boat better for our needs. And now we're back on board and getting ready to sail off again.

Now, a sailboat is amazing. Because first of all there are very few regulations that govern what you do with it. So it's a good testbed for green living. Of course it has to be off the grid because it's a sailboat, it moves. And it's compact enough and small enough so that big things, projects that would be just incredibly expensive in a house, like super-insulating a house is an expensive proposition. Super-insulating a boat is $1300, that's what I spent doing it. So things like that allowed us to do a lot of things that we otherwise wouldn't be able to do, like not work for periods of time.

JD: So Dmitry, who's we?

DO: Me and my wife.

JD: Two of you. Equivalent of square feet sort of quality...

DO: There's really no equivalent, because every chunk of space on a sailboat is used for multiple uses, not just one. I walk into a house now and what I see is empty space. I see wasted space. But a sailboat is more of a jigsaw puzzle. I can count places to sit in a boat: I think there are (counting) six comfortable places for each one of us to sit. And that counts for a lot. Allows for some variety. And that's something that matters. How comfortable are we when we're sleeping? Very comfortable. It's like a crib.

JD: I'm expecting that on your sailboat you're not attempting to grow your food.

DO: Not on the sailboat, but there are some things that I've started exploring that are kind of interesting. There are a lot of islands that you can only really visit if you have your own boat, and some of them only if you have your own sailboat because they're remote, and you'd burn so much fuel getting to them in any other way. But you can just anchor off some island, and go on there. A lot of these nominally are owned by someone but they're not used, they're abandoned. And you can do various permaculture things there. If you visit next year, suddenly you have a lot of edibles growing in the wild. So there are tricks like that to be used.

Also, you can dock the sailboat in various places next to a patch of land you can farm for a season. You farm that land, but your residence moves with you so you don't even have to have a cottage on that land, maybe a toolshed or something like that. So it opens up a lot of possibilities.

DO: And you can move to a place that's palatial. The outdoors are the greatest palace there is.

JD: Yes, absolutely. We have one minute left. What have we not said?

DO: I don't know. One thing I'd like to point out to people is — I overhear a lot of conversation and I'm asked often, "What can we do to change the minds of those around us. The only reason I do what I do is because I have this blog [www.cluborlov.com] and the ability to publish — if somebody handed me a megaphone I'd be remiss if I didn't use it — but it's not like I'm in the retail business of convincing one person at a time. My advice is "Don't even try. Just be available, be knowledgeable, and be willing to answer questions when people ask them." Imposing your worldview on others never works at all.

JD: Maybe the best answer is just to be the example.

DO: Inspire by example. That is certainly... I hate hearing from people who say, "Well, I'd love to do this and that and the other thing, but I can't convince [person] x and y to follow along." Well, try doing things by yourself in the time that you have. Make little changes first and big changes will follow. People don't believe people who just talk.

JD: Thank you for being one of those examples. You inspire me. You inspire a lot of people by living it. And I will add, in reading your books [Reinventing Collapse: The Soviet Example and American Prospects], by just poking holes, by telling the truth of what you're seeing here. It's very refreshing to not have unstated agendas. I really appreciate that. Thank you for joining me.

DO: Thank you.

JD: You're watching Peak Moment. I'm Janaia Donaldson. My guest today is Dmitry Orlov. Join us next time.

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