As the energy sources feeding such systems are usually finite or temporary, the amplification cannot go on for ever. At some point, the amplifying phenomena meet their limits and those systems crumble down as the sources they draw energy from dry up or disappear.
A cyclone is such a system (evolving over a time scale spanning a few days) : it emerges over and feeds on the warm equatorial or tropical ocean surfaces, gets stronger and stronger, stabilizes, fluctuates and finally collapses after having reached some continental coast and dissipated its energy, being no longer fed.
A swarm of locusts is another one (evolving over a time scale spanning a few weeks). After having emerged and expanded by feeding on agricultural fields, it reaches its maximum size and finally dies of starvation when most of the available fields have been devastated.
It seems to me that the industrial civilisation also classifies as one of such systems (evolving over a time scale spanning decades, and of course much more complex and sophisticated than a cyclone or a swarm of locusts). Born in Occident by the end of the century of enlightenment (the 18th), this extraordinary civilisation began to soar significantly around 1860, taking advantage from the newly acquired capability to produce and use energy from fossil fuels.
It seems to me that the industrial civilisation also classifies as one of such systems (evolving over a time scale spanning decades, and of course much more complex and sophisticated than a cyclone or a swarm of locusts). Born in Occident by the end of the century of enlightenment (the 18th), this extraordinary civilisation began to soar significantly around 1860, taking advantage from the newly acquired capability to produce and use energy from fossil fuels.
Today, fifteen decades later, having spread over most parts of the Earth, it still stands on its ascending path. But its position on this path is probably not very far from the coming summit, as the present deep recession seems to indicate.
The amplifying mechanisms driving the observed ascension stem from a very complex set of synergic interactions connecting together, in all directions, the four main macro-systemic components involved when we consider the evolution of the whole system (at world level) :
-> the resources this system feeds on, including the energy sources (mainly fossil fuels) ;
-> the real economy sustained by those resources ;
-> the global population sustained by this real economy ;
-> the financial network ruling the exchange mechanisms between the innumerable micro-systemic components evolving within the global system.
The general growth resulting from such amplification has mostly been fed, until now, by the system’s capability to produce annual amounts of industrial energy increasing year after year, as shows a curve plotting the evolution of those amounts from 1860 to 2000 [1].
Three successive periods can be distinguished on this curve. The calculated figures are approximate due to the low resolution of the graph and incertitude about the used data. But the lack of precision does not matter very much in regard to the purpose of the present article (mainly qualitative and descriptive).
1. From 1860 to 1900, the newly born industrial civilisation got almost all its energy from coal. Worth about 0.1 Gtoe in 1860, its annual energy production grew slowly at the average linear rate of 0.0075 Gtoe/year, finally reaching about 0.4 Gtoe around 1900.
[1 Gtoe = 1 000 000 000 toe = 1 billion tonne of oil equivalent].
2. Between 1900 and 1940, the maturing civilisation began to feed on oil, gas and hydraulic, but coal remained the dominant used fuel. With an average linear growth rate of 0.03 Gtoe/year (four times higher than during the four previous decades), the global energy production reached 1.5 Gtoe in 1940 (three to four times more than in 1900).Then the production kept stagnating around that level from 1940 to 1945 (Second World War).
3. After the war, this production resumed its ascending path, much more vigorously than before, increasing with an average linear growth rate of 0.15 Gtoe/year over the period 1945-2000 (about five times faster than during the period 1900-1940 and twenty times faster then during the period 1860-1900).
Around 1962 oil began to surpass coal as the major energy source.
The amplifying mechanisms driving the observed ascension stem from a very complex set of synergic interactions connecting together, in all directions, the four main macro-systemic components involved when we consider the evolution of the whole system (at world level) :
-> the resources this system feeds on, including the energy sources (mainly fossil fuels) ;
-> the real economy sustained by those resources ;
-> the global population sustained by this real economy ;
-> the financial network ruling the exchange mechanisms between the innumerable micro-systemic components evolving within the global system.
The general growth resulting from such amplification has mostly been fed, until now, by the system’s capability to produce annual amounts of industrial energy increasing year after year, as shows a curve plotting the evolution of those amounts from 1860 to 2000 [1].
Three successive periods can be distinguished on this curve. The calculated figures are approximate due to the low resolution of the graph and incertitude about the used data. But the lack of precision does not matter very much in regard to the purpose of the present article (mainly qualitative and descriptive).
1. From 1860 to 1900, the newly born industrial civilisation got almost all its energy from coal. Worth about 0.1 Gtoe in 1860, its annual energy production grew slowly at the average linear rate of 0.0075 Gtoe/year, finally reaching about 0.4 Gtoe around 1900.
[1 Gtoe = 1 000 000 000 toe = 1 billion tonne of oil equivalent].
2. Between 1900 and 1940, the maturing civilisation began to feed on oil, gas and hydraulic, but coal remained the dominant used fuel. With an average linear growth rate of 0.03 Gtoe/year (four times higher than during the four previous decades), the global energy production reached 1.5 Gtoe in 1940 (three to four times more than in 1900).Then the production kept stagnating around that level from 1940 to 1945 (Second World War).
3. After the war, this production resumed its ascending path, much more vigorously than before, increasing with an average linear growth rate of 0.15 Gtoe/year over the period 1945-2000 (about five times faster than during the period 1900-1940 and twenty times faster then during the period 1860-1900).
Around 1962 oil began to surpass coal as the major energy source.
Nuclear energy emerged significantly around 1973.
In 2000, the global annual output of 9.5 Gtoe subdivided according to the following order : oil (3.7 Gtoe) ; coal (2.3 Gtoe) ; gas (2 Gtoe) ; nuclear (0.75 Gtoe) ; renewable energies, including hydraulic (0.75 Gtoe).
Deviating slightly from the mean linear tendencies, we notice :
-> the strong downward inflection observed between 1929 and 1934 (The Great Depression), compensated by a strong growth recovery during the four years preceding the Second World War ;
-> the exponential-looking part of curve extending from 1945 to around 1970 (the Thirty Glorious Years) ;
-> the slowdowns and rebounds of the years 1970, 1980 and 1990, in connection with the so-called oil shocks.
The exponential-looking shape observed between 1945 and 1970 stems from the fact that the matured industrial civilisation remained able to produce energy at low cost and sell it at low price (as it appears on a graph published by Wikipedia) while at the same time keeping able to satisfy an exponentially-growing demand.
Such evolution (during the Thirty Glorious Years) came along with the development of very strong synergic interactions having generated the fast parallel growths observed on the three other main macro-systemic quantities involved : the world population, the gross world product and the total amount of capital values accounted by the global financial network [2].
The emergence of fast expanding new markets allowed an ever greater number of individuals and companies to borrow money from the banks, launch profitable projects, reimburse their debt (+ interests) pay taxes and reinvest part of their profits so as to increase their capital, contributing in this way to the perpetuation of general growth.
As an ever greater amount of circulating money was created on the credit side of the financial network by creating ever more debts on the liability side of solvent borrowers, an ever greater number of people became able to benefit from this newly created circulating money.
Such conditions allowed first world liberal democracies to thrive and consolidate their viability. Their leaders’ capability to be elected and re-elected became ever more founded on their capability and/or opportunity to stimulate and/or take advantage from the perpetuation of fast growth.
The Thirty Glorious Years ended in 1974, with the so-called first oil shock. My analysis of the macro-systemic evolution of the industrial civilisation beyond this point (and until April 2009) has recently led me to distinguish three successive phases.
1. From 1974 to around 2004, most of the energy kept being produced at low cost and able to satisfy growing demand (prolonging the average linear growth rate of 0.15 Gtoe/year previously established) but the selling prices of primary energy on the marketplace experienced a few temporary sharp increases (under the effects of geopolitical reasons) generally followed, after a while, by returns of lower prices. Such variations came along with correlated economic-growth slowdowns alternating with fast-economic-growth returns, as shows a graph published in October 2008 by Jeff Rubin and Peter Buchanan.
2. After 2004, world annual energy production went past a level beyond which the industrial civilisation ceased to be able to satisfy strong growing demand (from now on being driven upwards by the so-called emergent nations). As a consequence, the energy selling prices increased, increased and increased again (this time under the effects of supply-demand game and speculation), as shows a graph plotting the evolution of those prices from 1999 to 2008.
At first, nobody took any notice, so growth went on as usual, for a while, until July 2008, moved by its previous momentum, with the help of market deregulation and the blessing of heads of state somehow worried about those increases, yet delighted to observe that growth was still going on.
The great difference between the high selling prices and the low average cost of production generated tremendous profits. An important part of such profits fed the numerical growth of various populations, allowing them to buy consumer goods and sustaining in this way economic growth. A second part allowed wealthy elites to create and acquire new profitable capital. A third part was invested in projects aiming to produce costly energy (renewables, asphaltic sands, bituminous shales, deep oil) and contributing in this way to sustain energy-production growth.
A lot of other projects were undertaken, financed with a high proportion of money borrowing, carelessly discarding the risks that might suddenly emerge either from energy prices getting very high and/or from deep economic depression settling in, creating in this way gigantic financial bubbles susceptible to implode [3] with capital depreciation, over-indebtedness, bankruptcies, projects being aborted before being completed, etc.
3. Something new suddenly happened in July 2008 : crude oil prices went past a certain threshold beyond which an unexpected backlash was triggered.
Then energy demand and consumer spending reduced substantially, provoking a sharp decrease of those prices (within just a few months), abruptly slowing growth in some countries and reversing it into contraction in others.
Therefore, as the previously discarded risks materialised, many financial bubbles imploded [3] and a lot of money capitalised in them disappeared. A severe credit crunch brutally succeeded former careless lending. Markets became extremely volatile and unpredictable, compelling states to react, get out of laissez-faire capitalism and take emergency measures in order to avoid a premature collapse of the global financial network.
Deviating slightly from the mean linear tendencies, we notice :
-> the strong downward inflection observed between 1929 and 1934 (The Great Depression), compensated by a strong growth recovery during the four years preceding the Second World War ;
-> the exponential-looking part of curve extending from 1945 to around 1970 (the Thirty Glorious Years) ;
-> the slowdowns and rebounds of the years 1970, 1980 and 1990, in connection with the so-called oil shocks.
The exponential-looking shape observed between 1945 and 1970 stems from the fact that the matured industrial civilisation remained able to produce energy at low cost and sell it at low price (as it appears on a graph published by Wikipedia) while at the same time keeping able to satisfy an exponentially-growing demand.
Such evolution (during the Thirty Glorious Years) came along with the development of very strong synergic interactions having generated the fast parallel growths observed on the three other main macro-systemic quantities involved : the world population, the gross world product and the total amount of capital values accounted by the global financial network [2].
The emergence of fast expanding new markets allowed an ever greater number of individuals and companies to borrow money from the banks, launch profitable projects, reimburse their debt (+ interests) pay taxes and reinvest part of their profits so as to increase their capital, contributing in this way to the perpetuation of general growth.
As an ever greater amount of circulating money was created on the credit side of the financial network by creating ever more debts on the liability side of solvent borrowers, an ever greater number of people became able to benefit from this newly created circulating money.
Such conditions allowed first world liberal democracies to thrive and consolidate their viability. Their leaders’ capability to be elected and re-elected became ever more founded on their capability and/or opportunity to stimulate and/or take advantage from the perpetuation of fast growth.
The Thirty Glorious Years ended in 1974, with the so-called first oil shock. My analysis of the macro-systemic evolution of the industrial civilisation beyond this point (and until April 2009) has recently led me to distinguish three successive phases.
1. From 1974 to around 2004, most of the energy kept being produced at low cost and able to satisfy growing demand (prolonging the average linear growth rate of 0.15 Gtoe/year previously established) but the selling prices of primary energy on the marketplace experienced a few temporary sharp increases (under the effects of geopolitical reasons) generally followed, after a while, by returns of lower prices. Such variations came along with correlated economic-growth slowdowns alternating with fast-economic-growth returns, as shows a graph published in October 2008 by Jeff Rubin and Peter Buchanan.
2. After 2004, world annual energy production went past a level beyond which the industrial civilisation ceased to be able to satisfy strong growing demand (from now on being driven upwards by the so-called emergent nations). As a consequence, the energy selling prices increased, increased and increased again (this time under the effects of supply-demand game and speculation), as shows a graph plotting the evolution of those prices from 1999 to 2008.
At first, nobody took any notice, so growth went on as usual, for a while, until July 2008, moved by its previous momentum, with the help of market deregulation and the blessing of heads of state somehow worried about those increases, yet delighted to observe that growth was still going on.
The great difference between the high selling prices and the low average cost of production generated tremendous profits. An important part of such profits fed the numerical growth of various populations, allowing them to buy consumer goods and sustaining in this way economic growth. A second part allowed wealthy elites to create and acquire new profitable capital. A third part was invested in projects aiming to produce costly energy (renewables, asphaltic sands, bituminous shales, deep oil) and contributing in this way to sustain energy-production growth.
A lot of other projects were undertaken, financed with a high proportion of money borrowing, carelessly discarding the risks that might suddenly emerge either from energy prices getting very high and/or from deep economic depression settling in, creating in this way gigantic financial bubbles susceptible to implode [3] with capital depreciation, over-indebtedness, bankruptcies, projects being aborted before being completed, etc.
3. Something new suddenly happened in July 2008 : crude oil prices went past a certain threshold beyond which an unexpected backlash was triggered.
Then energy demand and consumer spending reduced substantially, provoking a sharp decrease of those prices (within just a few months), abruptly slowing growth in some countries and reversing it into contraction in others.
Therefore, as the previously discarded risks materialised, many financial bubbles imploded [3] and a lot of money capitalised in them disappeared. A severe credit crunch brutally succeeded former careless lending. Markets became extremely volatile and unpredictable, compelling states to react, get out of laissez-faire capitalism and take emergency measures in order to avoid a premature collapse of the global financial network.
It seems now that the annual energy production will no longer be able to prolong the average linear growth rate of about 0.15 Gtoe/year observed from 1945 to July 2008. The average tendency that will follow will most likely draw a curve inflecting with a decreasing slope, reaching a summit (Peak Energy) and then going down, under the combined effects of the depletion of accessible and not-too-expensively exploitable resources, of the strong reduction of the capability to create ever more circulating money by creating ever more debts on the credit side of the financial network, and of the strong reduction of investment capabilities, each of these three effects reinforcing the two others [4].
It seems difficult to evaluate if the average inflection leading towards the summit will evolve at the time scale of years or at the time scale of months, as such evolution greatly depends on imponderable events that may happen or not happen. World leaders accustomed to solve problems with the help of growth perpetuation will become ever more powerless as the recession deepens ; and the combination of social unrest rooted in desperation (on one hand) with general incomprehension of the fact that newly-become-powerless leaders cannot deliver what they do not have (on the other hand) may trigger and precipitate all sorts of events.
The G20 leaders have recently succeeded in devising an official “common understanding of the causes” having led to the present recession, hammered out after having cautiously reduced the crisis to its financial dimension and carefully avoided to enter into a deeper long-term-evolution analysis taking into account energy production and acknowledging the existence of limits to growth. I can understand that the adoption of such kind of “understanding of causes” is coherent with the main objective to borrow some additional time and try to persuade a majority of people that this crisis will end (as did all previous crises) with the usual return of fast growth. But I cannot believe that such leaders are unable to grasp the obvious fact that in a finite world growth cannot last forever. Thus, how can we explain their behaviour ?
The only explanation I can see is that they remain unable to master and oppose the overwhelming pressures that still constrain the global industrial civilisation to try to grow as much and as fast as it possibly can, even though it becomes ever more clear that the ultimate limits to growth are now in sight and fast approaching. It seems very likely, therefore, that such inescapable constraining pressures will go on acting as long as their resulting global action will remain able to sustain the annual-energy-production growth needed to keep the global system viable, leading to a systemic collapse [5] when growth reverses durably into decline. But the G20 leaders are, of course, very reluctant to publicly enter into a deep analysis leading to such dreadful conclusion. And this is probably the reason why they have adopted that official “understanding” that reduces the present global crisis to its financial dimension and deliberately ignores its major cause : the existence of limits to growth ; a cause glaringly obvious but so disturbing that governments do not want to recognise its reality.
André Sautou
__________
References and annotations :
[1] Biomass energy excluded. Source of the curves : Manicore. Data : Schilling & Al. (1977), IEA (2002), Observatoire de l'Energie (1997). Reproduced by the French scientific magazine La Recherche (N° 415 – Janvier 2008 – cahier spécial, Objectif Terre). Updated on various WEB pages.
[2] The parallel co-evolution of the annual energy production and of the world population is clearly put in evidence on the graph “Energy and Population”.
[3] I often hear that “financial bubbles burst”, but I think it is more accurate to say that they “implode”.
It seems difficult to evaluate if the average inflection leading towards the summit will evolve at the time scale of years or at the time scale of months, as such evolution greatly depends on imponderable events that may happen or not happen. World leaders accustomed to solve problems with the help of growth perpetuation will become ever more powerless as the recession deepens ; and the combination of social unrest rooted in desperation (on one hand) with general incomprehension of the fact that newly-become-powerless leaders cannot deliver what they do not have (on the other hand) may trigger and precipitate all sorts of events.
The G20 leaders have recently succeeded in devising an official “common understanding of the causes” having led to the present recession, hammered out after having cautiously reduced the crisis to its financial dimension and carefully avoided to enter into a deeper long-term-evolution analysis taking into account energy production and acknowledging the existence of limits to growth. I can understand that the adoption of such kind of “understanding of causes” is coherent with the main objective to borrow some additional time and try to persuade a majority of people that this crisis will end (as did all previous crises) with the usual return of fast growth. But I cannot believe that such leaders are unable to grasp the obvious fact that in a finite world growth cannot last forever. Thus, how can we explain their behaviour ?
The only explanation I can see is that they remain unable to master and oppose the overwhelming pressures that still constrain the global industrial civilisation to try to grow as much and as fast as it possibly can, even though it becomes ever more clear that the ultimate limits to growth are now in sight and fast approaching. It seems very likely, therefore, that such inescapable constraining pressures will go on acting as long as their resulting global action will remain able to sustain the annual-energy-production growth needed to keep the global system viable, leading to a systemic collapse [5] when growth reverses durably into decline. But the G20 leaders are, of course, very reluctant to publicly enter into a deep analysis leading to such dreadful conclusion. And this is probably the reason why they have adopted that official “understanding” that reduces the present global crisis to its financial dimension and deliberately ignores its major cause : the existence of limits to growth ; a cause glaringly obvious but so disturbing that governments do not want to recognise its reality.
André Sautou
__________
References and annotations :
[1] Biomass energy excluded. Source of the curves : Manicore. Data : Schilling & Al. (1977), IEA (2002), Observatoire de l'Energie (1997). Reproduced by the French scientific magazine La Recherche (N° 415 – Janvier 2008 – cahier spécial, Objectif Terre). Updated on various WEB pages.
[2] The parallel co-evolution of the annual energy production and of the world population is clearly put in evidence on the graph “Energy and Population”.
[3] I often hear that “financial bubbles burst”, but I think it is more accurate to say that they “implode”.
Within my own representation, a financial bubble is “kept under pressure” when the total amount of capital values written down in it increases with time.
It becomes in a “state of depression” when this total amount decreases.
It “implodes” if a lot of capital values disappear (bankruptcies) or get highly depreciated.
[4] The character of accessibility and the capabilities to exploit resources vary, depending on many conjunctural factors such as market prices, geopolitical and environmental considerations, and probably many other factors that will be revealed in the future.
[4] The character of accessibility and the capabilities to exploit resources vary, depending on many conjunctural factors such as market prices, geopolitical and environmental considerations, and probably many other factors that will be revealed in the future.
[5] The evolution of this collapse may happen at the timescale of decades, years or months, depending on the scenario that (contingent) history will unfold (one between innumerable physically possible others).
