December 3, 2010

Heinberg: The New Normal, or The End of Growth

No one does a better job in presenting the neo-Malthusian case than Richard Heinberg. His The Party's Over: Oil, War, and the Fate of Industrial Societies was one of the first books I read on the peak oil case, which at the time pretty much frightened me out of my wits. I distinctly recall his prediction that, after the oil ran out, the electrical grids would fall in about 100 years or so.

He is especially good (and grim) in setting forth the interlocking character of our energy, enironmental, and financial crises from the "peak everything" perspective. This extract is from his new book, forthcoming in 2011, which he is kindly putting up on the web as a "work in progress."
Many financial pundits point to profound problems internal to the economy—including overwhelming, un-repayable levels of public and private debt, and the bursting of the real estate bubble—as immediate threats to the resumption of economic growth. The assumption generally is that eventually, once these problems are dealt with, growth can and will pick up again. But the pundits generally miss factors external to the financial economy that make a resumption of conventional economic growth a near-impossibility. This is not a temporary condition; it is essentially permanent.

Altogether, as we will see in the following chapters, there are three primary factors that stand firmly in the way of further economic growth:

◦The depletion of important resources including fossil fuels and minerals;

◦The proliferation of environmental impacts arising from both the extraction and use of resources (including the burning of fossil fuels)—leading to snowballing costs from both these impacts themselves and from efforts to avert them and clean them up; and

◦Financial disruptions due to the inability of our existing monetary, banking, and investment systems to adjust to both resource scarcity and soaring environmental costs—and their inability (in the context of a shrinking economy) to service the enormous piles of government and private debt that have been generated over the past couple of decades.

Despite the tendency of financial commentators to focus only on the last of these factors, it is possible to point to literally thousands of events in recent years that illustrate how all three are interacting, and are hitting home with ever more force.

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