We're living in a declining civilization and the slope of that decline is getting steeper. (In case you're wondering, I put the high-water mark of Industrial Civilisation at fifty one years ago, on July 20th, 1969, to be exact.) Eventually that slope, gentle at first, becomes a cliff. Just like the top of Ayres Rock. The collapse cliff is perilously near.
Dmitri Orlov opines that collapse occurs in five stages. 1 - Financial. 2 - Commercial. 3 - Political. 4 - Social. and 5 - Cultural.
I'm now convinced that the world has already passed Stage One - financial collapse. I think that event occurred in 2008; Subtract all the 'wealth' generated in the financial sectors of the worlds' industrial economies from their respective GDPs and you'll find that the physical economies of the OECD - where the production and distribution of real, tangible goods and services occurs - have been in freefall since 2005. The global financial system was only saved from collapse by converting it into a gargantuan Ponzi scheme, financed with trillions of Dollars of borrowed money.
But that was only a temporary fix.
For more than a decade now, the real economy has been rotting away behind a facade of borrowed money. Like all Ponzi schemes, those who invest earliest, get rich, while those in last, end up holding the bag. The 'elites' of our society have convinced everyone else that the financial system is the wealth-producing engine of the economy. But it isn't. True wealth is (the production of) real, tangible goods and services. The financial sector simply facilitates (and regulates) this process.
Coincidentally, 2005 is the same year that the global production of 'conventional' Crude Oil peaked. You see, the production of real, tangible goods and services is directly proportional to (and dependent upon) the availability of energy and raw materials. This is the real reason why the standard of living of most working-class people in the OECD has been declining since the nineteen seventies, while the financial markets seem to soar forever skywards. The 'inconvenient truth' behind the rosy energy outlook over the last fifteen years, is that the energy profit (aka energy return on energy invested or EROEI) has been declining steadily. Fifty years ago, it took one barrel of energy (equivalent) to extract one hundred barrels of oil. That was a 99% profit that could be (and was) used for all other economic activity in the industrialised world. That ratio now stands at about one to seven. In other words, it now takes one barrel of oil (energy equivalent) to extract seven barrels of oil. The total amount of oil extracted is irrelevant. Since 2005, the real economy has been forced to operate on an energy supply that's been steadily increasing in price relative to everything else. Inflation hides this inconvenient fact. The problem is that most of the worlds' industrial infrastructure is optimised to run on energy that's both plentiful and CHEAP.
And now, the actual quantity of oil that is being produced is beginning to decline as "unconventional" sources - deep-water, fracking, tar-sands etc - dry up.
That's the biggest Pachyderm in the room.
So, with the global financial system resembling nothing as much as a gargantuan confidence-trick, having abandoned all connections to objective reality, all it may take to trigger a failure, is a sneeze. Enter the Wuhan Flu.
The "lockdown' may serve to trigger Stage Two - Commercial Collapse - of Orlov's Five Stages. If governments keep their economies shut-down for too long, vast numbers of businesses will fail. Banks must keep money flowing as without it, the grand Ponzi scheme will collapse. Without a Financial system to enable payments, settlements and capital allocation, the real economy of goods and services freezes up. Every day the lockdown continues, increases the odds that Stage Two will occur.
Of course, governments might find a way to kick the can down the road for a while longer. They'll try regardless, because addressing the root-cause of this crisis essentially involves redeeming or forgiving a truly astronomical amount of debt, and the people who will be most impacted by that policy are societys' elites. I think the odds of that happening are comparable to the odds of a butterfly surviving a trip through an operating blast-furnace.
The more likely alternative then, is a massive economic dislocation.
What form that dislocation will take, is a matter of debate, but if history is any guide, what can be predicted is that everyone below the elites will end up a LOT poorer than they are now. It doesn't matter much to a population reduced to destitution, whether the mechanism that got them into that state was an inflationary recession or a deflationary depression. What does matter is that all trust in (and respect for) societies' institutions - government, universities, Police, media, the banks etc will be shattered. And once that trust is gone, you're at Stage Three - political collapse. This is the fertile soil in which radical ideologies germinate and grow. It's a powder-keg that can explode into revolution.
Watching the Democrats in the U.S. behaving like a proverbial wrecking-ball in the economic and political spaces, you can be forgiven for concluding that this is their grand strategy to win power. This once, history is on their side; Lennin did it in 1917. Mussolini did it in 1923. Hitler did it in 1932. The results weren't pretty, which explains why the Left is so 'enthusiastic' about revising or erasing history.
Of course, the alternative could be that present governments use this pandemic as an excuse to impose a more authoritarian rule, discarding the polite fiction that is 'democracy' altogether. This would work, if the people were convinced that their rulers were acting in their best interests and for the benefit of the country and not just the elite. This strategy has proved successful in places like Singapore but that's because their government is authoritarian, not totalitarian and is NOT parasitic. Ordinary people there have the (economic) freedom to prosper. Beyond a reasonable set of rules that apply to everyone equally, and are designed to facilitate people to live together and interact peacefully, the government stays out of its peoples' lives and pockets.
However, the Australian government is ideologically of the Left. Everyone in politics identifies our form of government as a "Liberal Democracy". Liberalism is a euphemism for Socialism. Socialism in all forms, is parasitic. They prey on the productive, to support the unproductive, with themselves at the top of that list. Once you account for Income Tax, GST and all the other taxes and fees that all three tiers of government impose, Australians work for six months out of every year to support the state. The most signifigant obstacles to establishing and running a business are all created by government. I've yet to meet a regulation that costs you nothing to comply with.
ALL signifigant Australian political parties are left of centre. Only the distance varies. And, they all march Left, ideologically, over time. Todays Liberal Party would be indistinguishable from the Communists, to someone in Robert Menzies' cabinet. The so-called 'Conservatives' haven't conserved anything in the last fifty years. They've simply consolidated the gains made by the extreme Left. So it's a fair bet that, if they had the opportunity, our existing parties would impose a parasitic totalitarian government that served the interests of the elite, only. Just watch how the authorities in Victoria and Queensland (both Labor state governments) are behaving towards their citizens in the present emergency.
What about the possibility of revolution? That's going to vary from country to country, depending on a lot of factors - culture, degree of indoctrination, how severe the deprivations are and so-on. One very important factor will be whether or not the people possess the means to revolt. That means guns. It's no accident that once it gains power, the first priority of every Socialist state is to disarm its citizens. If you can find an exception to this rule, please let me know. Revolution here in Australia? I doubt it. Australians are too fat, too lazy, too well off, too indoctrinated and too mistrustful of each other to organise a revolt.
A country, not a nation, inhabited by sheep.
