Reinventing Collapse

The Soviet Experience and American Prospects-Revised & Updated

Dmitry Orlov

• Publisher: New Society Publishers
• Year: 2011
• Print ISBN: 9780865716858
• eBook ISBN: 9781550924756
• Topic: Economics
• Subtopic: Political Economy
• Index: Economics

A guide to the decline of the American empire for individuals, families and communities

The United States is in steep decline. Plagued by runaway debt, a shrinking economy, and environmental catastrophes to rival Chernobyl, the United States has been retracing the trajectory of the Soviet Union in the early 1980s toward national bankruptcy and political dissolution. By comparing a collapse that has run its course to one that is now unfolding, Dmitry Orlov holds a unique lens up to America's present and future.

As Orlov's predictions continue to come true, his writing continues to gain mainstream acceptance. This revised and updated edition of Reinventing Collapse examines the circumstances of the demise of the Soviet superpower and offers clear insights into how we might prepare for the events that are unfolding here.

Orlov gives no quarter to prophets of doom and gloom, finding plenty of room for optimism, if only we focus our efforts on personal and cultural transformation instead of trying to perpetuate an impossible status quo. This challenging yet inspiring and surprisingly upbeat work is a must-read for anyone concerned about peak oil, the environment, geopolitics, international relations, and life in a resource-constrained world.

Dmitry Orlov is an American engineer who was an eyewitness to the Soviet collapse and has written extensively on the subject of the impending collapse of the United States.

CHAPTER
1

The Soviet Example

ADECADE AND A HALF AGO the world went from bipolar to unipolar, because one of the poles fell apart: The SU is no more. The other pole — symmetrically named the US — has not fallen apart, yet; but there are ominous rumblings on the horizon. The collapse of the United States seems about as unlikely now as the collapse of the Soviet Union seemed in 1985. The experience of the first collapse may be instructive to those who wish to survive the second.

I anticipate that some Americans will react rather badly to having their country compared to the USSR. I would like to assure you that the Soviet people would have reacted similarly, had the United States collapsed first. “Of course the United States collapsed,” they would have said, “and why wouldn’t it have? It was a hopelessly backward system, destined for the scrapheap of history: self-enriching political elites, industry predicated on generating profits for the elites rather than on serving public needs, boom and bust cycles, homelessness, unemployment, a legacy of slavery and Indian genocide, yadda-yadda. What could it possibly have in common with us, who solved all these problems decades ago, thanks to progressive social policy and centrally planned production? Stop prattling on about that failed former British colony! We have more important things to do than listen to you! We are busy building Communism — on Mars!”

Jingoism, you see, is usually a two-sided coin, neither side containing anything particularly informative. Feelings aside, here are two 20^th century superpowers, who wanted more or less the same things — things like technological progress, economic growth, full employment and world domination — but disagreed about the methods. And they obtained similar results — each had a good run, intimidated the whole planet and kept the other scared. Each eventually went bankrupt.

Reasonable people would never argue that the two poles were exactly symmetrical; along with significant similarities, there are equally significant differences. Both are valuable in predicting how the second half of the clay-footed superpower giant that once bestrode the planet will fare once it too falls apart. Until recently, however, few people would have taken this premise seriously. After all, who could have doubted that the world economic powerhouse that is the United States, having recently won the Cold War and the Gulf War, would continue, triumphantly, into the bright future of superhighways, supersonic jets and interplanetary colonies? But more recently the number of doubters has started to climb steadily.

One key observation is that the US economy is dependent on the availability of cheap, plentiful oil and natural gas to a greater extent than any other country. Once oil and gas become expensive (as they already have) and in ever-shorter supply (a matter of one or two years at most), economic growth will stop and the economy will collapse. The term “collapse” as I try to use it here has been given a precise meaning by John Michael Greer’s theory of catabolic collapse in his 2005 book How Civilizations Fall: A Theory of Catabolic Collapse. According to this theory, collapse can be calculated to occur when “production fails to meet maintenance requirements for existing capital.” The theory adds some much needed rigor to the poorly understood recurring phenomenon of advanced societies suddenly going “poof.”

But even without delving too deeply into theory, it is possible to sketch out very simple collapse scenarios that anyone can understand. Oil powers just about everything in the US economy, from food production and distribution to shipping, construction and plastics manufacturing. When less oil becomes available, less can be produced, and economic growth comes to an end. In an economy that is designed to operate at a steady state this would not be such a problem, but the US economy operates on debt, and the value of debt is based on the promise of future growth. Without growth, debt pyramids begin to crumble, and once that happens, less money is available for such things as oil imports. Lather, rinse, repeat. A while later, look around: Where did that economy disappear to?

At this point, it appears that 2005 set the all-time record in global (conventional) oil production and although it is still theoretically possible that this record will be exceeded in coming years, pessimistic, and usually under-reported, news of rapidly depleting reserves, delayed projects and collapsing production at key supergiant fields far outweighs optimistic, and usually over-hyped, news of new discoveries or new projects coming on-stream. There is also a cottage industry of professional optimists, proudly serving the needs of clients whose long-term investment strategy is to continually invest for the short term. Optimism is contagious, and so they are the ones who get most of the press.

Not that the professional realists are in short supply. They are to be found at the CIA, the Defense Department, the General Accounting Office and the US Congress. They all insist that looming energy shortages are a severe threat and that something must be done to address them. (The most realistic of these realists point out that something should have been done about it already, starting one or two decades ago.) More and more municipalities across the country are passing Peak Oil resolutions, determined to cut energy consumption before circumstances force their hand. Efforts to label the observable, measurable phenomenon of peaking oil production as a “theory” neatly parallel the efforts of global warming deniers. Note, however, that what is known on the subject now is more or less what was known a decade or so ago. Thus, the lack of attention paid to it over the decades resulted not from ignorance but from denial: although the basic theory that is used to model and predict resource depletion has been well understood since the 1960s, most people prefer to remain in denial. And although the dynamics of denial are a bit off the subject of Soviet collapse and what it may teach us about our own, I can’t resist saying a few words about it, for it is such an interesting subject. I also hope that it will help some of you to go beyond denial, this being a helpful step towards understanding what I am going to say here.

Now that a lot of the Peak Oil predictions are coming true more or less on schedule, and it is becoming increasingly difficult to ignore the steady climb of energy prices and the dire warnings from energy experts of every stripe, outright denial is being gradually replaced with subtler forms of denial, which center around avoiding any serious, down-to-earth discussion of the likely actual consequences of Peak Oil and the ways one might cope with them.

Instead, there is much discussion of policy: what “we” should do. The “we” in question is presumably some embodiment of the Great American Can-Do Spirit: a brilliantly organized consortium of government agencies, leading universities and research centers and major corporations, all working together toward the goal of providing plentiful, clean, environmentally safe energy to fuel another century of economic expansion. Welcome to the sideshow at the end of the universe!

One often hears that “We could get this done, if only we wanted to.” Most often one hears this from non-specialists, sometimes from economists, but hardly ever from scientists or engineers. A few back-of-the-envelope calculations are generally enough to suggest otherwise, but here logic runs up against faith in the Goddess of Technology: that she will provide. On her altar are assembled various ritualistic objects used to summon the Can-Do Spirit: a photovoltaic cell, a fuel cell, a vial of ethanol and a vial of bio-diesel. Off to the side of the altar is a Pandora’s box packed with coal, tar sand, oceanic hydrates and plutonium: if the Goddess gets angry, it’s curtains for life on Earth.

But let us look beyond mere faith, and focus on something slightly more rational instead. This “we,” this highly organized, high-powered problem-solving entity, is quickly running out of energy, and once it does, it will not be so high-powered any more. I would like to humbly suggest that any long-term plan it attempts to undertake is doomed, simply because crisis conditions will make long-term planning, along with large, ambitious projects, impossible. Thus, I would suggest against waiting around for some miracle device to put under the hood of every SUV and in the basement of every McMansion, so that all can live happily ever after in this suburban dream, which is looking more and more like a nightmare in any case.

The next circle of denial revolves around what must inevitably come to pass if the Goddess of Technology were to fail us: a series of wars over ever more scarce resources. Paul C. Roberts, who is very well informed on the subject of Peak Oil, has this to say: “What desperate states have always done when resources turn scarce ... [is] fight for them.” (Mother Jones, November 12, 2004) Let us not argue that this has never happened, but did it ever amount to anything more than a futile gesture of desperation? Wars take resources; when resources are already scarce, fighting wars over resources becomes a lethal exercise in futility. Those with more resources would be expected to win. I am not arguing that wars over resources will not occur. I am suggesting that they will be futile, and that victory in these conflicts will be barely distinguishable from defeat. I would also like to suggest that these conflicts would be self-limiting: modern warfare uses up prodigious amounts of energy, and if the conflicts are over oil and gas installations, then they will get blown up, as has happened repeatedly in Iraq. This will result in less energy being available and, consequently, less warfare.

Take, for example, the last two US involvements in Iraq. In each case, as a result of US actions Iraqi oil production decreased. It now appears that the whole strategy is a failure. Supporting Saddam, then fighting Saddam, then imposing sanctions on Saddam, then finally overthrowing him, has left Iraqi oil fields so badly damaged that the “ultimate recoverable” estimate for Iraqi oil is now down to 10–12 percent of what was once thought to be underground (according to the New York Times).

Some people are even suggesting a war over resources with a nuclear endgame. On this point, I am optimistic. As Robert McNamara once thought, nuclear weapons are too difficult to use. And although he has done a great deal of work to make them easier to use, and had considerable success in advocating the introduction of small, tactical, battlefield nukes and the like, and despite recently renewed interest in nuclear “bunker busters,” they still make a bit of a mess and are hard to work into any sort of a sensible strategy that would reliably lead to an increased supply of energy. Noting that conventional weapons have not been effective in this area, it is unclear why nuclear weapons would produce better results.

But these are all details; the point I really want to make is that proposing resource wars, even as a worst-case scenario, is still a form of denial. The implicit assumption is this: if all else fails, we will go to war; we will win; the oil will flow again; and we will be back to business as usual in no time. Again, the Iraqi experience should be enough to sober up anyone still waiting around for the success of a global police action to redirect the lion’s share of the dwindling world oil supplies toward the United States.

Outside this last circle of denial lies a vast wilderness called the Collapse of Western Civilization, roamed by the Four Horsemen of the Apocalypse, or so some people will have you believe. Here we find not denial but escapism: a hankering for a grand finale, a heroic final chapter. Civilizations do collapse — this is one of the best-known facts about them — but as anyone who has read The Decline and Fall of the Roman Empire will tell you, the process can take many centuries.

What tends to collapse rather suddenly — and with far greater regularity than civilizations — is the economy. An economy does not collapse into a black hole from which no light can escape. Instead, something else happens: society begins to spontaneously reconfigure itself, establish new relationships and evolve new rules, in order to find a point of equilibrium at a lower rate of resource expenditure.

Note that the exercise carries a high human cost: without an economy, many people suddenly find themselves as helpless as newborn babes. Many of them die sooner than they would otherwise: some would call this a “die-off.” There is a part of the population that is most vulnerable: the young, the old and the infirm; the foolish and the suicidal. There is also another part of the population that can survive indefinitely on insects and tree bark. Most people fall somewhere in between.

Economic collapse gives rise to new, smaller and poorer economies. That pattern has been repeated many times, so we can reason inductively about similarities and differences between a collapse that has already occurred and one that is about to occur. Unlike astrophysicists, who can confidently predict whether a given star will collapse into a neutron star or a black hole based on measurements and calculations, we have to work with general observations and anecdotal evidence. However, I hope that my thought experiment will allow me to guess correctly at the general shape of the new economy, and arrive at survival strategies that may be of use to individuals and small communities.

The Collapse of the Soviet Union: An Overview

What happens when a modern economy collapses and the complex society it supports disintegrates? A look at a country that has recently undergone such an experience can be most educational. We are lucky enough to have such an example in the Soviet Union. I spent about six months living, traveling and doing business in Russia during the perestroika period and immediately afterward, and was fascinated by the transformation I witnessed.

The specifics are different, of course. The Soviet problems seem to have been largely organizational rather than physical in nature, although the fact that the Soviet Union collapsed just three years after reaching peak oil production is hardly a coincidence. The ultimate cause of the Soviet Union’s spontaneous collapse remains shrouded in mystery. Was it Ronald Reagan’s Star Wars? Or was it Raisa Gorbachev’s American Express card? It is possible to fake a missile defense shield; it is not so easy to fake a Harrods department store. The arguments go back and forth. One contemporary theory would have it that the Soviet elite scuttled the whole program when they decided that Soviet Socialism was not going to make them rich. (It remains unclear why it should have taken the Soviet elite 70 years to come to this startlingly obvious conclusion.)

A slightly more commonsense explanation is this: during the pre-perestroika “stagnation” period, due to the chronic underperformance of the economy, coupled with record levels of military expenditure, trade deficit and foreign debt, it became increasingly difficult for the average Russian middle-class family of three, with both parents working, to make ends meet. (Now, isn’t that beginning to sound familiar?) Of course, the government bureaucrats were not too concerned about the plight of the people. But the people found ways to survive by circumventing government controls in a myriad of ways, preventing the government from getting the results it needed to keep the system going. Therefore, the system had to be reformed. When this became the consensus view, reformers lined up to try and reform the system. Alas, the system could not be reformed. Instead of adapting, it fell apart.

Russia was able to bounce back economically because it remains fairly rich in oil and very rich in natural gas, and will probably continue in relative prosperity for at least a few more decades. In North America, on the other hand, oil production peaked in the early 1970s and has been in decline ever since, while natural gas production is now set to fall off a production cliff, notwithstanding the recent desperate and environmentally destructive use of “Fracking” to get at shale gas. Yet energy demand continues to rise far above what the continent can supply, making such a spontaneous recovery unlikely. When I say that Russia bounced back, I am not trying to understate the human cost of the Soviet collapse or the lopsidedness and the economic disparities of the reborn Russian economy. But I am suggesting that where Russia bounced back because it was not fully spent, the United States will be more fully spent and less capable of bouncing back.

But such “big picture” differences are not so interesting. It is the micro-scale similarities that offer interesting practical lessons on how small groups of individuals can successfully cope with economic and social collapse. And that is where the post-Soviet experience offers a multitude of useful lessons.

Back in the USSR

I first flew back to Leningrad, which was soon to be rechristened St. Petersburg, in the summer of 1989, about a year after Gorbachev freed the last batch of political prisoners, my uncle among them, who had been locked up by General Secretary Andropov’s final, senile attempt at clenching an iron fist. For the first time it became possible for Soviet escapees to go back and visit. More than a decade had passed since I left, but the place was much as I remembered it: bustling streets full of Volgas and Ladas, Communist slogans on the roofs of towering buildings lit up in neon, long lines in shops.

About the only thing new was a flurry of activity around a newly organized Cooperative movement. A newly hatched entrepreneurial class was busy complaining that their “cooperatives” were only allowed to sell to the government, at government prices, while they contrived ingenuous schemes to skim something off the top through barter arrangements. Most were going bankrupt. It did not turn out to be a successful business model for them or for the government, which was, as it turned out, also on its last legs.

I went back a year later and found a place I did not quite recognize. First of all, it smelled different: the smog was gone. The factories had largely shut down, there was very little traffic and the fresh air smelled wonderful! The shops were largely empty (in the sense of being quite uncontaminated by consumer goods) and often closed. There were very few gas stations open and the ones that were had lines that stretched for many blocks. There was a ten-liter limit on gasoline purchases.

Since there was nothing better for us to do, my friends and I decided to take a road trip to visit the medieval Russian cities of Pskov and Novgorod, taking in the surrounding countryside along the way. For this, we had to obtain fuel. It was hard to come by. It was available on the black market, but no one felt particularly inclined to let go of something so valuable in exchange for something so useless as money. Soviet money ceased to have value, since there was so little that could be bought with it, and people still ...

Table of contents

• COVER PAGE
• TITLE PAGE
• COPYRIGHT PAGE
• CONTENTS
• PREFACE TO SECOND EDITION
• INTRODUCTION
• 1. THE SOVIET EXAMPLE
• 2. SUPERPOWER SIMILARITIES
• 3. THE COLLAPSE GAP
• 4. COLLAPSE MITIGATION
• 5. ADAPTATION
• 6. CAREER OPPORTUNITIES
• CONCLUSION
• ABOUT THE AUTHOR