Our current social order is no longer sustainable. Our economic system is based on a tragically flawed set of premises, namely that we can extract all we want from the environment, pump all the waste we want into it, and make most of our wealth, as a nation, by speculating financially. An oversimplification? Yes. But it refers to an important and dangerous trend which will here be laid out and explored.

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Our current social order is no longer sustainable. Our economic system is based on a tragically flawed set of premises, namely that we can extract all we want from the environment, pump all the waste we want into it, and make most of our wealth, as a nation, by speculating financially. An oversimplification? Yes. But it refers to an important and dangerous trend which will here be laid out and explored.

We are taught to assume that our societies must forever continue to grow both in numbers of persons and amount of consumption. But this is a monstrous lie. Why so? Simply because the world is finite and we have already greatly exceeded the amount of resource consumption that is compatible with our continued avoidance of economic and ecological collapse. Explanation: This avoidance of economic and ecological collapse requires that the functioning of our society does not threaten the existence of the vast majority of the biota biota on which we are totally dependent. As things stand now, however, the way our political-economic system is arranged, and the consumption it promotes even requires -- has already triggered the sixth great extinction event, and is in the process of precipitating the economic and ecological collapse we had hoped to avoid.

What is ironic about this is that we are one of the species that is now threatened in this sixth great extinction event. This is because our existence depends, as already stated, on the basic biotic arrangement that has existed for the last many million years, and we are destroying much of that biota and causing the rest of it to undergo major rearrangements. In short, our actions have set in motion slow but inexorable forces that will accelerate the degradation of the natural world on which we are so dependent.

That may well take many centuries to fully play out, but what will happen very much sooner is that we will loose our capacity to do the kind and amount of economic work that has been the hallmark of modern civilization, and upon which our civilization utterly depends.

Here's how it will happen: Our world, even the less developed nations, runs on fossil fuels and our available supply of fossil fuels is starting to decline. Oil is declining at an alarming rate and oil is the kingpin fossil energy source. Why? Because it takes diesel fuel to mine and transport coal. Hence, all fossil fuel energy sources will go into decline with the shortage of oil and diesel, even though there will still be lots of fossil fuels left in the ground.

And because of this, our current form of social organization, our forms of governance, our economic processes, and our approaches to education of the younger generations cannot continue for much longer. We are therefore on the verge of a kind of social and economic collapse that will probably come within the next decade.

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Several Keynesian economists, most notably Paul Krugman and Robert Reich, have called for more and massive spending on job creation to thereby put money into the pockets of people who will go out and buy more stuff. But think about this in terms of the already excessive consumption we have already seen to be leading to economic and ecological collapse. In the face of this potential collapse (from excessive consumption), how then can the so-called health of our economy be viewed, by these economists and just about everyone else, as being based on the growth of consumption?! "If we don't consume enough," their reasoning goes, "there won't be enough work for other people, to make the stuff (or services) that we want. Then there will be more people out of work, less spending, etc."

What kind of corner have we painted ourselves into here?

Do these economists really believe that the maximized growth scenario can go on forever, even as our resource base goes into rapid decline?

At the center of this conundrum is the way we define and relate work, jobs and access to basic goods and services. For example: If there's a shortage of work, but also a shortage of basic goods and services for all, yet also an ecological danger stemming from the consumption of too much of the superfluous, why not give anyone who wants it the opportunity to find decently compensated work in the production of just the basic goods and services they need? Why instead force them to work on the production of ye more, ever more, in the way of superfluous goods and services?! If they produced only basics, they could be paid not in dollars but in some kind of labor credits, on a special credit card, the value of which could be redeemed only by purchasing some of the basic goods and services that they and their millions of government-paid co-workers had helped bring into being. This would completely eliminate the by-now obscene requirement for the corporations of our society to produce ever more in the way of superfluous goods and services, one of the ostensible purposes of which is to try and generate the numbers of jobs we need for our growing army of the unemployed. (Five Americans now look for every available job. America lost many millions jobs as a result of the policies of President George W. Bush and his administration.

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Another reason for corporations producing so much in the way of superfluous goods and services is that American capitalism is driven by the need to grow profits to satisfy investors who are looking for the maximum return on investment. The average investor no longer buys stocks for the long haul. If a share price doesn't move upward soon enough, they move their investment money somewhere else. And of course Wall Street profit margins benefit from the churn of all this investment activity. In addition, this quest for short-term profit advantages forces companies to continually squeeze labor by reducing labor costs, and occasionally cut corners re: worker safety and environmental protection, and get creative in their accounting practices. .

In the old days, we used to think competition in the modern capitalistic economy was a good thing. It drove innovation in product development. It gave us more choices. And it helped drive prices down. But that was then. This is now. Today it's getting harder and harder to come up with true innovations in products that actually fill basic or fundamental needs. Why? Because today's capitalist economy is operating primarily in product areas where it is mainly filling wants (e.g. electronic gadgets like iPhones) rather than fundamental needs.

But even that realm, of superfluous product innovation, may have topped out of late. For now the only real innovation in the marketplace, except at a few companies like Apple, is in terms of creating bogus investment vehicles (CDOs and the like) that promise extraordinary gains. Yes there is some innovation in advertising, where the trick is to get people to think they need some glitzy gizmo, so that the producer can go on growing its sales and profits. On such wastefulness the growth and "success' of our economy depends?!

The problem with this is, of course, that the majority of so-called innovation today is (from the perspective of a dying ecosystem) rubbish. Worse still, it is rubbish for which we have absolutely no idea what the total and long-term costs will be.

Simply stated: We are in deep doo-doo when our belief system tells us that we have to consume mindlessly in order to create enough jobs to keep our economy afloat. (Check out the following articles to see more evidence of this: http://www.ft.com/cms/s/0/eaf81fbe-8de3-11df-9153-00144feab49a.html). Also

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Remember president G.W. Bush's imploring the nation that the best thing people could do in the wake of 9/11 was to go shopping? At that point many of us wrote him off as insane. But now we also have to write off all of these venerable economists as insane, who are essentially urging us to do the same thing!

Is massive spending on Green infrastructure the answer?

If only we could arrive at a steady-state economy by way of building all the "green' infrastructure we need (an estimated $3 trillion dollars worth), thereby providing decently paid jobs to all who need them, we would be home free. We could transition to our new sources of energy, adapt to a no-growth philosophy, and everyone would prosper. At least that's the claim.

What Krugman and Reich don't understand, however, is that our economic system, as currently structured, depends on maintaining a tremendous flow of power that can only come from fossil fuels. But that net energy flow is already in decline. And the panic we are feeling about oil supplies and our justifications for drilling in deep water where we obviously don't know what the hell we're doing is an indication that the truth is starting to sink in but unfortunately not into the minds of economists who have been indoctrinated in grad school that growth and the need for ever increasing consumption are axiomatic.

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What these economists can't seem to let themselves understand is that the desire for ever more stuff, that can only be produced by consuming ever larger amounts of energy, is weighing down (and beginning to destroy) the ecosystem (let's hereafter refer to it as the Ecos). And now, in an attempt to put one more hole in the Earth in order to extract more oil, mankind has unleashed the force that may well break the back of the Ecos in a large part of the United States. For more than two months now, as we all know, oil has been gushing into the Gulf of Mexico, spoiling the deep waters, the surface waters and now the wetlands and beaches of the Gulf states.

This may well be the event that will lead to the collapse of our economy. The global financial system is now incredibly fragile, as the Greek economy and those of several other southern European countries (as well as Ireland) attest. The roaring Chinese economy is based on growth (albeit from a very low starting point), but as Chinese workers are now starting to demand higher wages and better working conditions (sure to raise the energy cost of doing business), that economy too has become fragile. Japan, also, is in deep trouble; it has been suffering from deflation for two decades. So all of the economies of the world, including (or especially) that of the United States, are in one way or another teetering on the brink. As with a line of dominoes, all it will take is a trigger event of just the right magnitude to set the rolling collapse in motion.

We've already glimpsed how this might happen, in the financial collapse of 2008-09, apparently caused by unduly risky financial instruments and the associated bursting bubbles.

The US government and other governments stepped in with bailouts and supports that were, themselves, based on debt -- the governments had to borrow (mostly from the central banks of China and Japan) the many hundreds of billions that they then turned around and "lent' to various financial institutions as well as to automobile companies. However, it is highly unlikely that these foreign government banks would be willing to lend double or triple the amounts they have already lent which is what it would take to create the US government jobs programs necessary, and/or finance the infrastructure programs that would re-create the many millions of jobs that have been lost as a result of George W. Bush being appointed president.

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The cost of just the effort to clean up and fix the damage done by our unprecedented gusher in the Gulf will, eventually, so far exceed anything that anyone is now considering that it will simply not be completed. Not even close. The effects of the collapse of the Gulf state economies and the potential loss of off-shore sources of oil will spread throughout the nation, indeed throughout the world. BP will never be able to pay for anything even approaching a sufficient restoration of the region. Neither will the US government be able to pay for it. Tens of thousands of refugees will be leaving the southern coastal area of the US in the next six months. If a hurricane hits the Gulf in the near term, the collapse and exodus of survivors may come even sooner.

The illusion that ever more economic growth is the way out of our economic crisis

Robert Reich is one of the smartest and most articulate economists out there. For those who may not remember, he was the Secretary of Labor under Bill Clinton's administration. As smart as he is, however, his advice to the president is to increase the national debt to spur economic growth. In this wrong-headed belief, he is in good company among the "illuminati' of economists. Paul Krugman, too, has been calling for substantially more stimulus from the US government for quite a while now. Both these brilliant men are of course hard-core Keynesians. [John Maynard Keynes famously pointed out that government spending could be used as a policy instrument to spur economic growth.] Even Republican president Richard Nixon adopted the notion that the US government should intervene in market conditions to keep the economy from tanking and ironically remarked, "We're all Keynesians now." On top of that, Ben Bernanke, head of the Fed, called for NO decline in government spending. "That will keep the economy on track to recovery," he said.

Well, if the government had the money to spend, that approach might work. Even when the country had to go into temporary debt to pay the bill, that approach was OK. But once again, that was then; this is now. The problem with Reich's and Krugman's call for more stimulus now is that the only way the US can spend money on stimulus is to go much deeper into debt. However, there is a major problem with any more indebtedness right now: Paying off debt tomorrow (which is the plan) depends entirely on growth of the real economy (making stuff), and that depends on increased energy flows in the future to do that work. However, as we've already noted, energy supplies are going into decline, not increasing, and will continue going into decline as time goes on. In addition, the ecological and environmental costs of ever more growth and consumption are becoming ever more prohibitive. (See: The Future of Capitalism -- Profits and Growth)

And once again: What kind of economy are these economists trying to stimulate back into growth? They say they want to create jobs so that consumers will have cash to go out and spend again. And what will these consumers spend it on? The answer to this question is: It doesn't matter as long as they spend! The gross domestic product (GDP), these economists claim, is the benchmark measure of the health of the economy. As long as the GDP is growing month over month, then all is well (they say). We have lived in a consumer-driven economy all these years, and have always revived it with more consumer spending. So, what these economists want to have happen is for the government to take on still more debt to once again provide businesses with monetary incentives to hire people so that those people will have incomes to go out and buy ever more stuff and ever more services, so that other people will have jobs and income to buy ever more stuff that needs to be bought. That has always been the formula for success.

But it is no longer. http://www.storyofstuff.com/

Like all neoclassical economists, Messrs Reich and Krugman believe in the closed loop version of macroeconomics: Money begets money, and as long as the money supply has good velocity without triggering inflation, then life will always be good for most everyone.

Problem is, the economists who hold to this view still haven't realized the vital role of energy as the underlying currency of economic activity. They still don't understand that the decline of net energy underway even now . . is going to make it impossible to do enough productive work in the future to ever pay back the debt we take on today. But don't think our creditors are blind to this realization!

True to their grad school indoctrination, the economists who ARE blind to it, are "true believers' in the sense that they only pay attention to the data and models they've already learned to believe in.

Cleverness (intelligence + creativity), which is the characteristic we so often admire and praise, is simply insufficient to understand the physical reality that we should be paying attention to. But to pay attention to it, we must drop ideological beliefs in favor of scientific knowledge about that reality. To wit:

If our plan is to merely to revive the maxed-out consumer-based economy, going further into debt today will only make matters far worse in the not-too-distant future. In our current situation, Obama should be pushing not for a jobs bill (to stimulate all manner of production and consumption), but rather an education bill that (if we are to go further in debt) would at least be an investment in something that would actually help people qualify for the kind of jobs that are available in the 21^st century.

The government should also provide scholarships to people wanting to go to permaculture school! That's right. If the plan is to re-inflate the consumer-based economy, then the best thing we can teach people now, is how to raise their own food! Because after the depression comes (as a result of this short-sighted policy), locally generated food is what people are going to need most.

For those who are underwater in their mortgages, Obama should push for a bank jubilee, forgiving all mortgage debt (or at least reducing it by a considerable margin) wherever people cannot or will not pay. That would clearly hurt banks in a big way, so the political consequences for him might be severe, but realistically we need to understand and admit that these debts will never be paid in full anyway, under any set of circumstances, so why not at least let the unemployed and underemployed keep their homes and learn to take care of themselves as best they can, even though there is ever less employment available to them aside from McJobs (Do you want fries with that?) and cleaning the houses and swimming pools of the rich, and taking care of their children and their elderly and infirm.

In summary: Debt cannot be repaid unless more in the way of productive work is done in the future than was done when the debt was being created. And that cannot happen because we have passed peak oil and peak net energy. But our brilliant (if brainwashed) economists can't yet understand this, because of their grad school indoctrination.

Looking at all this from an historical perspective

Money has always represented an amount of work that had been done or soon would be done. The more energy available to a society, the more in the way of productive work the people of that society could do, and the more real wealth -- what we now call capital -- would then be produced to support the burgeoning biomass of humanity. This economic reality was developing rapidly by the middle of the eighteenth century. Science and engineering raced ahead to produce one energetic wonder after another. And then toward the end of that century we broke into the veritable big energy bank that had always been beneath our feet. We found fossil fuels and very soon learned how to exploit them to accomplish ever more in the way of productive work -- massive and unprecedented amounts of production and work. So much excess energy flowed from these finds that our economic system literally exploded in the virtual wink of an historical eye. Suddenly we were absolutely swimming in highly usable energy. This led to science and technology exploding expansively as well. More than enough energy allowed us humans to become incredibly exploratory in every sense of the word. Our explorations produced ever more ways to use our new energy resources. There was so much energy available, and as a consequence, so much money, that for awhile no one really knew what to do with it.

Enter the multiplicative powers of investment, corporations and banking.

Way back in the sixteenth century someone got the bright idea of getting rich people to invest directly in ventures of various kinds. Kings and princes were rich so they were the first to take up the offers. Later rich merchants could afford to invest. Several got together to form a company for a particular purpose. They did this by purchasing stocks in the venture where the stock had a payback greater than its face value if the venture succeeded. This was a more elaborate form of gambling on the future than had been the case with traditional banking. Since energy flow was steadily increasing, these ventures generally paid off. So the form of a stock company developed and matured over time. Then, sometime in the eighteenth and nineteenth century, the notion of a corporation (a stock company protected by legal status, where the investors would not be held liable for misadventures if something went wrong and greater costs were incurred) came into being.

For the financially privileged, stocks were great devices for making money without lifting a finger to do any labor. The company could purchase all the labor it needed, including the second- and third-order labor necessary to extract raw materials and form them into parts. Eventually the company could purchase non-human labor in the form of great machines that did tremendous amounts of work in place of human labor. Since society was awash in "cheap" energy, using more machine power made great sense. And so it was that the monetary link between human labor and the value of products was all but severed. We substituted machine labor and abundant energy flow for human effort, making the "price" of products not representative, any longer, of actual labor value. And with all that excess energy, we could all become wasters and conspicuous consumers, at least in those countries that had access to cheap energy and advanced machinery. Since the price of products no longer had much relation to human effort, as long as someone felt they could afford a widget, and that widget gave them psychological satisfaction, then why not buy it? It no longer even mattered if the widget was a tool (even a fancy one) or not. If it existed and captured the imagination of what sort of "happiness" it would bring, then we consumers went for it.

Alas, the party comes to an end

For the past hundred years we have plundered the energy banks beneath our feet to fuel this orgy of consumption. But like any other bank, this one has a fixed-sized vault. It only holds so much of an energy supply. And at the rate we have been pulling it out of the bank, guess what? Supplies are running low.

But more than that: Since energy extraction takes energy to do the work of getting it out of the ground, the net energy is all that remains available to make widgets. And since fossil fuel energy gets progressively harder to extract (it takes ever more work to get the next increment of energy, and thus ever more energy is used up in the extraction), the net energy that remains available is starting to recede, rapidly.

Globalization, outsourcing, and the rise of the service economy in America

For the past twenty to thirty years we have actually had ever less net energy available on a global basis for the production of real wealth. As a result, we in the OECDcountries have turned to more abstract forms of work, the so called "services,' which produce no real wealth to speak of, but requires major energy flows from biomass. McDonalds Corporation is a good example. It's primarily a service corporation (it cooks our meals for us), but the amount of paper, oil and plastic it uses is enormous.

However, during this time of making the transition from increasing energy flows to decreasing energy flows, some very interesting things have been happening. One of the first of these phenomena signaling the reversal of growth in energy access was globalization, which has consisted mostly of an attempt to find the cheapest labor for producing goods (even wasteful goods like salad shooters). Jobs were shifted from the OECD countries to several developing countries that had adopted development-supporting laws enabling the shift.

The reason that labor in these developing countries was cheaper, however, was and is that they had much lower energy demands. Their workers simply didn't consume energy-intensive goods and services the way we Americans do. American workers had grown used to the high-energy-flow economy and all its goodies like large flat screen TVs and forty sports-cable channels. The average Chinese worker had no such requirements for high wages, to support such a life style. Of course that is now changing due to the increasing energy flow into their consumer lives, and also due to the effects of western culture (shown on TV) pervading their lives. Yes the Chinese have a lot of coal that they will increasingly have to turn to for power, but as diesel supplies get scarcer and more expensive, even the extraction of coal will become increasingly difficult.

The second interesting phenomenon involves money. Or rather something that passes as money. Even before energy started being somewhat restricted for the OECD economies, something remarkable had happened in the banking and stock market worlds. Remember how bankers and stock investors were always betting on the future? They were depending on the old pattern of ever more energy producing ever more wealth, even though they didn't yet fully understand the basis of that wealth production. But then, when energy supplies started to shorten up, things got a bit riskier and it was time to let the rubes and day traders in, so that their money could be taken away by the clever and corporately powerful, who were able to devise brilliant schemes for doing exactly that.

Banksters figured out ways to construct elaborate bets, and play the market, with bets on the relative movement of stock prices in the market, which they exploited to the max with extremely sophisticated and proprietary computer programs that allowed their traders to spot stock price movements instantly and exploit them before other traders knew what happened. In addition, lots of money was now being created by betting on bets! Derivatives -- money that exists mainly in computer memories, and to some extent on paper, and that wasn't tied to actual real energy flows but rather to anticipated future flows. Worse still, a lot of this paper wealth was based on speculation speculation on greater growth in the flow of future energy.

Similar attitudes pervaded other commodity markets and even real estate markets. Since humanity had always obtained ever more energy, could always do more in the way of productive work, and had always created more real wealth, it was axiomatic that this pattern would and could go on forever. All this is codified in modern neoclassical economics, along with the assumption that we can safely bet not just on the immediate future but on the far future. We have long been confident that in that far future we would produce fabulous amounts of wealth that would easily pay back all our debts, and all our bets on those debts, and all our debt taken out to make those bets on all those debts. Problem is, it has all turned out to be a kind of pyramid scheme a pyramid scheme that worked as long as energy flow was increasing. But it couldn't work any longer after energy flows began to contract.

And so we get back to the one basic certainty

We will be getting ever less energy from fossil fuels. The energy cost of extracting more fossil fuels is going up radically (the energy return on energy invested is declining). At some point it will no longer be worth the effort to drill for more oil, and we will be forced to revert to real-time solar energy and wind energy to fuel our society. It is vague, at best, what kind of society we can have with only real-time solar and wind (and a few other alternative inputs like geothermal). While it is true that sunlight and wind are abundant and essentially free, the problem lies in the energy capture and conversion technology. In spite of all the current hype (or hope) the terrible truth is that we cannot severely cut back on the fossil fuels we use without greatly reducing the amount of stuff we buy and consume. It is also highly unlikely that high-consumption lives can be had by the huge numbers of people expected to inhabit the planet in, say, 30 years time -- or even by the current world population. Even today, if everyone in the world consumed stuff at the levels Americans do, we would need the resources of six other planets just like Earth.

In conclusion:

The future of civilization depends on moving rapidly away from an economy that glorifies jobless growth and futureless growth, and towards a prosperous (in terms of basic goods and services for all) but steady-state economy, an economy that tells the truth about the real cost of natural resource extraction and usage.

The stewardship aspects of the new economy should appeal to all the great religions of the world, and their voices are needed to counter the disinformation campaigns of the major polluters and the wrong-headed ideas of most economists. The BP oil disaster gives citizens the platform from which to speak out and demand a new economics for a clean energy future and the well-being of humanity.

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Our government therefore has two choices

It can either continue to coddle the privileged, be servitors of the soulless corporate elite, and wait for the howling mob to grow sufficiently restive to begin hanging the financiers and their factota from lamp posts,

or . .

its leaders can rein in the "economic royalists" and spend their remaining and limited number of days in office attempting to put the fraud-based financial institutions (which they helped create) back in their cages, so that the great majority of humanity can live free of want, penury, and disaster. This would of course entail the risk of retaliation by those 'malefactors of great wealth,' as Teddy Roosevelt called them and would even, perhaps, require a sudden and unexpected strike at them, possibly even the wholesale arrest of many of them, on charges of corruption and treason, and perhaps even the life imprisonment of a few of the worst -- in order to demonstrate that the people's government means business.

In either case, it would appear that the government sellouts who toadied and prostituted themselves to these economic royalists and malefactors of great wealth have a somewhat tenuous future. Too bad for them, but should we really feel sorry for the unprincipled scum who so effectively and so profitably served their super-wealthy overlords, at our very considerable expense?

Authors Bio:

Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've always been more interested in political economics and what's going on behind the scenes in politics, than in mechanical engineering, and because of that I've rarely worked more than 8 months a year, devoting much of the rest of the year to reading and writing about that which interests me most.