UNDERSTANDING COLLAPSING SYSTEMS

One of my readers, J.H., kindly sent me a book, Reinventing Collapse: The Soviet Example and American Prospects: Dmitry Orlov.  This book expanded on a famous powerpoint presentation by Dimitry Orlov.  Closing the ‘Collapse Gap’: the USSR was better prepared for collapse than the US | Energy Bulletin  has the entire powerpoint presentation.  Below are two of Orlov’s slides:

The emblem here is from the Golden Era of Cooperation between the Communists and the US/NATO/G7 empire.  Starting with the right-winger, Nixon, cooperation with the communists was seen as a key to expanding our empire, winning over the very alienated third world nations, getting our pathetic selves out of Vietnam in one piece and stopping OPEC.  

 

We befriended China to counter Russian power in Asia, particularly in Vietnam.  The Russian need for US wheat and corn due to collapsing agricultural output was our first opening to the USSR government.  Various peaceful space missions were suggested by the Soviet government and the US, struggling to fund NASA, thought this was a good idea.  Thus, the Apollo and Skylab projects were successfully launched.

 

Western Europe needed natural gas and Germany eagerly began negotiating with the Soviet leaders to extend gas lines from Eastern Europe. France was already deep in these projects, playing a successful triangulation game with the US and the Soviet Union, incidentally, becoming the hub for third world diplomacy thanks to hosting the US/Soviet/Vietnam peace talks.

 

All of this pretty much collapsed when the Soviet Union invaded Afghanistan.  Like a poisoned thorn, this poorest of almost all third world nations is rich in psychological fury and power .  Bereft of nearly all things that sustain societies, the super-poor of Afghanistan are super-rich in determination, independence [of the sort that is filed under ‘freedom means having nothing left to lose’] and high religious fervor.  

 

When left alone, countries with high religious or political fervor usually slide into deep poverty and the population ends up passive/aggressive.  This happens when the religious/political True Believers take power and crush all opposition via cruel, blunt means.  When censorship rises and political or religious activities are crushed in the name of making a system homogenous, all systems rot and die.

 

This is due to the necessity of having a multi-cultural/multi-philosophical system if one wishes to ‘be nimble and quick.’  Ideology of any sort or system is, in contrast, quick sand, not faster in speed.  Below is another slide from Orlov’s excellent presentation:

One problem with Olov’s book as well as his analysis is, he thinks the entire Russian system collapsed and ceased to exist.  And when it rebuilt, it did so organically and under the hammer of hostile Western powers which viewed the collapse of Russia as an excellent looting opportunity.

 

He did cover this somewhat in his book but mentions Putin only twice.  The book was written in 2008 which means, not only was it out of date in this regard [I have been writing about Putin for more than 5 years now!] but also only mentions him because Putin puts into pithy language, observations that are quite amusing.  But not recognizing him as the Chief Architect of the New Russian Empire is a major failing in this book.

 

Orlov’s comparisons between Russia’s ‘make do/barter society set up by the loss of value in the currency from 1919-1999 and the US money-oriented social system is a very good analysis.  I know, from my own travels and experiences, the dollar or the DM in the Soviet Union had great utility.  People were quite happy to get their hands on these since they could be used to buy things in the stores set up for government officials.

 

The USSR had a dual shopping system: one for insiders and then the state system for outsiders.  The insider shopping system was based on imports using capital from the Russian military/industrial complex international sales and later, from sales of energy to Western Europe.  As international finance flowed more and more into the USSR, the differential between the special stores using only foreign currencies versus the ones that accepted rubles grew and grew until they  were totally opposite each other.

 

A dynamic exists whereby a system, when it reaches any extreme horizon of any sort, will suddenly ‘flip’ or switch to its opposite.  For example, stores for only the elites will either be looted or the elites will be killed.  Or, in most cases, both happen.  The total collapse of the Soviet system didn’t kill off the elites, they either fled the country or switched themselves into a new guise.  So, instead of a revolution, Russia bungled along, being steadily looted, until Putin took over and began to eliminate both dissent internally as well as ruthlessly eliminating, via assassination, the looters who thought their money would protect them from the former KGB leader.

 

For knowledge is still power.  Putin knew a lot since he had control of the vast Soviet-era information gathering systems and the allegiance of the most of the core of the secret police.  Using them as his main tool, coupled with a blazing sense of patriotism towards Mother Russia, Putin was able to pull Russia away from total collapse and will be hailed as one of Russia’s greatest leaders.  

 

Orlov’s book gives a totally wrong conclusion to his narrative.  He thinks that Russia pulled out due to the lack of private ownership which led to people simply looting public systems or living off of them for an indefinite period of time and this sustained them when there was no economy and therefore, since the US has a much more limited public system, we will fare worse. Especially, he derides the politically active people by declaring, they had no solutions and therefore, were wasting their time. Everyone was busy trying to find food, grow food or locate things.

 

But not everyone was busy doing this!  Vladimir Putin  was rebuilding the State from within the predecessor to the KGB, the FSB.  Putin was very, very politically active throughout his life and definitely, this picked up, not collapsed, with the fall of Mikhail Gorbachev .  The Chechnya rebellion was a total disaster for the Russian central government until Putin took over power in the famous 2000 New Year’s celebration where a drunk Yeltsin suddenly resigned due to Putin holding a great deal of private information about Yeltsin and his corrupt family.  

 

Using his political and police connections, fusing this with great patriotism and a belief that Russia should be powerful, not weak, and a burning desire to actually change the course of history led Putin to victory.  Orlov’s book doesn’t explain how power was reassembled and how the gangs and looters who operated with impunity during the collapse were all brought to justice or eliminated ruthlessly.  

 

Obviously, even when the military collapsed, the secret police didn’t collapse, they reorganized around the dynamic Putin who was exposed to German influences during the East German regime’s heyday.  Putin wasn’t a back-water provincial but an internationalist who had many contacts in the West.  When East Germany merged with West Germany, the Germans who worked with Putin in the past were still very much in Berlin only now, they had free access to all Western systems and were now involved in German politics.  Putin used these systems and contacts as a springboard to the West.

 

I differ greatly from both Mr. Kunstler’s style of ‘Oh my god!  Suburbia will collapse!’ and Mr. Orlov’s ‘Oh well, forget politics, they don’t matter!’ dual belief systems.  I have lived on the edge of capitalism and lived in suburbia, the countryside, isolated mountain observatories and the biggest cities on earth.  I found, for example, that when NYC was going bankrupt, my political power grew.  It did not shrink. 

 

I had enough power to cause a lot of headaches for other political rivals, for example.  I could carve out places of great power via organizing the community to do simple things like street patrols.  I could control my own environment to an immense degree. As the State retreated and gave up, I moved in and took over.

 

If the State refused to light the streets, I took over that!  If the State left us at the mercy of armed gangs, I formed my own ‘gang’ and took over a reasonable area, about 50 square blocks of Brooklyn.  Many neighborhoods were reduced to smoldering ruins while mine, in the middle of this destruction, improved.  The City came back from bankruptcy and retook these public sectors and I moved to suburbia.  Which I didn’t like at all and so, moved to my mountain where I am Queen of all that I survey.

 

Giving up is stupid.  Those who organize and even more importantly, take over the SOCIAL systems abandoned by either the government or capitalists, become VERY POWERFUL.  I cannot emphasize this enough!  Anyone counseling us to ‘give up and survive’ is a fool.  The future belongs exactly to whoever is willing to organize the masses and provide services.  This often falls to religious organizations which is why the Church was so successful as the Roman welfare state collapsed.

 

And organizers of armed bands who could compel devotion or distribute wealth and control lands ended up as the creators of a new aristocracy that lasted for a thousand years!  The organizers of any collapsed state gain tremendous powers and control of tremendous resources including the all-important labor pools.

 

The Atlantic Online | March 2009 | How the Crash Will Reshape America | Richard Florida

 

“One thing seems probable to me,” said Peer Steinbrück, the German finance minister, in September 2008. As a result of the crisis, “the United States will lose its status as the superpower of the global financial system.” You don’t have to strain too hard to see the financial crisis as the death knell for a debt-ridden, overconsuming, and underproducing American empire—the fall long prophesied by Paul Kennedy and others.

Big international economic crises—the crash of 1873, the Great Depression—have a way of upending the geopolitical order, and hastening the fall of old powers and the rise of new ones. In The Post-American World (published some months before the Wall Street meltdown), Fareed Zakaria argued that modern history’s third great power shift was already upon us—the rise of the West in the 15th century and the rise of America in the 19th century being the two previous sea changes.

But Zakaria added that this transition is defined less by American decline than by “the rise of the rest.” We’re to look forward to a world economy, he wrote, “defined and directed from many places and by many peoples.” That’s surely true. Yet the course of events since Steinbrück’s remarks should give pause to those who believe the mantle of global leadership will soon be passed. The crisis has exposed deep structural problems, not just in the U.S. but worldwide. Europe’s model of banking has proved no more resilient than America’s, and China has shown that it remains every bit the codependent partner of the United States. The Dow, down more than a third last year, was actually among the world’s better-performing stock-market indices. Foreign capital has flooded into the U.S., which apparently remains a safe haven, at least for now, in uncertain times.

It is possible that the United States will enter a period of accelerating relative decline in the coming years, though that’s hardly a foregone conclusion—a subject I’ll return to later. What’s more certain is that the recession, particularly if it turns out to be as long and deep as many now fear, will accelerate the rise and fall of specific places within the U.S.—and reverse the fortunes of other cities and regions.

 

This article ranges through history and is a very interesting read.  But as usual, has many assumptions based on generalized reading.  For example, it talks about how manufacturing left the Northeast and moved elsewhere, abandoning all the Hill Towns of New England.  But this is not entirely true.  Yes, many factories did leave but most of the towns out here still had industry.  The retraction of this industrial base after Reagan opened the doors to imports has been staggering.  Nearly all of the industries here struggled for 20 years to adapt to the ‘new competition’ and finally, just simply gave up.  

 

Towns in farming communities in Europe and America gave up because they became huge slave estates where the owners didn’t live with their farms and instead, used illegal aliens and slave-style machines using cheap energy, to run massive farming enterprises.  Since no one needed the services of all the people who populate villages, these vanished.  Lawyers, undertakers, sales people, preachers, doctors, etc all vanished. They are vanishing from my own village! We have virtually no stores left and they struggle to survive.  

 

Since we are near a big city, the lawyers, doctors, etc all practice in the City, not in the Village.  So, even though we have these people for neighbors, we don’t have access to their services here, we must travel to the City to get it.

 

The Atlantic article talks about how our all northern industries are being relocated to either the former-slave states that make unionizing impossible or to foreign shores where wages are very low.  The stresses between the slave states versus the free states will have yet another turn of the screw in history.  For, even today, the free states fund the slave states in the form of Federal taxes that have drained wealth from the north and moved it south, using the central government as a leverage for displacing economic benefits.

 

Free trade enabled this process to speed up.  Competition with non-unionized, police states has undermined unionized, democratic states.  The global world supports despotism and uniformity while local politics and economics is various and self-sustaining. 

 

The Atlantic Online | March 2009 | How the Crash Will Reshape America | Richard Florida

 

But another crucial aspect of the crisis has been largely overlooked, and it might ultimately prove more important. Because America’s tendency to overconsume and under-save has been intimately intertwined with our postwar spatial fix—that is, with housing and suburbanization—the shape of the economy has been badly distorted, from where people live, to where investment flows, to what’s produced. Unless we make fundamental policy changes to eliminate these distortions, the economy is likely to face worsening handicaps in the years ahead.

Suburbanization—and the sprawling growth it propelled—made sense for a time. The cities of the early and mid-20th century were dirty, sooty, smelly, and crowded, and commuting from the first, close-in suburbs was fast and easy. And as manufacturing became more technologically stable and product lines matured during the postwar boom, suburban growth dovetailed nicely with the pattern of industrial growth. Businesses began opening new plants in green-field locations that featured cheaper land and labor; management saw no reason to continue making now-standardized products in the expensive urban locations where they’d first been developed and sold. Work was outsourced to then-new suburbs and the emerging areas of the Sun Belt, whose connections to bigger cities by the highway system afforded rapid, low-cost distribution. This process brought the Sun Belt economies (which had lagged since the Civil War) into modern times, and sustained a long boom for the United States as a whole.

But that was then; the economy is different now. It no longer revolves around simply making and moving things. Instead, it depends on generating and transporting ideas. The places that thrive today are those with the highest velocity of ideas, the highest density of talented and creative people, the highest rate of metabolism. Velocity and density are not words that many people use when describing the suburbs. The economy is driven by key urban areas; a different geography is required.

 

Cities operate only if the surrounding countryside is also operational.  The suburban power structure deliberately starved the cities.  And made fun of urban culture.  And basically, reversed the flow, the poor in the cities would have to commute to the suburbs to work for the suburbanites who worked in the cities!  For most of the spending by the suburban culture was in the suburbs, not the cities! Instead of going to the City to shop, the working masses shopped outside of the cities, also starving them of tax revenues in this area, too.

 

What created the ‘sun belt boom’ was two things: government spending starting with FDR, who was a Democrat and back then, the South was mostly Democratic.  And the invention of air conditioning.  First, in the dry southwestern deserts, the invention of the ‘swamp box’ made the indoors bearable in summer.  And the air conditioner, which removes moisture, then allowed the humid South to thrive.  

 

The Atlantic Online | March 2009 | How the Crash Will Reshape America | Richard Florida

 

If anything, our government policies should encourage renting, not buying. Homeownership occupies a central place in the American Dream primarily because decades of policy have put it there. A recent study by Grace Wong, an economist at the Wharton School of Business, shows that, controlling for income and demographics, homeowners are no happier than renters, nor do they report lower levels of stress or higher levels of self-esteem.

And while homeownership has some social benefits—a higher level of civic engagement is one—it is costly to the economy. The economist Andrew Oswald has demonstrated that in both the United States and Europe, those places with higher homeownership rates also suffer from higher unemployment. Homeownership, Oswald found, is a more important predictor of unemployment than rates of unionization or the generosity of welfare benefits. Too often, it ties people to declining or blighted locations, and forces them into work—if they can find it—that is a poor match for their interests and abilities.

As homeownership rates have risen, our society has become less nimble: in the 1950s and 1960s, Americans were nearly twice as likely to move in a given year as they are today. Last year fewer Americans moved, as a percentage of the population, than in any year since the Census Bureau started tracking address changes, in the late 1940s. This sort of creeping rigidity in the labor market is a bad sign for the economy, particularly in a time when businesses, industries, and regions are rising and falling quickly.

 

Homeowning is not for everyone.  Someone has to fix things.  The mania for ‘fix ’em up’ has been a good force, I believe.  It increases job skills.  It also increases the attachment to a social system.  Renters are very hard to organize for saving a community.  Easy to organize to start a system that controls the rent. Rent control for NYC, for an example, has been a total disaster and led to the loss of apartments by the hundreds of thousands via landlords either abandoning them or the tenants destroying them.

 

Tenants tend to be quite destructive, in fact.  They will clog toilets repeatedly rather than learn how to do things properly.  They will leave windows open so rain comes in and ruins the floors.  They scratch things, break things, etc.  Only if a landlord has the legal right to collect for damage, can they make a profit.  And easy eviction laws are also necessary.  These can and are abused by landlords.  For example, a child of mine was renting in Seattle.  There was an earthquake.  The landlord blamed her for the damage!  But waited until she moved out of state to hit her with a lawsuit, knowing she was on the opposite side of the continent and he could give her lots of trouble in court until she paid.

 

So I much prefer buying for a wide variety of reasons.  But the problem of difficulty in selling is due to bubbles: bubbles are always local.  So people can’t move to bubble states easily from non-bubble states.  This is why avoiding bubbles is so important.  The principal value matters!  People were allowed to bid up prices using various tricks and lies.  This, in turn, burdened the banking system and the social systems with inflated capital costs which can’t be undone without causing the whole economic system to collapse.

 

This is why avoiding bubbles is life an death on nearly every level.  They are fun, going up.  But distort the basic economic system and creates more problems than they solve.  They endanger not just economic systems but social systems.  And can cause political collapse. And the only way to resolve a political collapse is to work like crazy to launch a new political system.  Orlov counsels giving up and letting outsiders do this.  The Atlantic article assumes that the US people will spontaneously come up with a new system.

 

I say, we will try to avoid this for as long as possible.  We will inch further and further into a police state that is unsustainable due to the high overhead of our police and military that are gold plates while utterly and totally inefficient and incompetent due to too much easy money and too much ‘fat.’  Literally, fat, for that matter.  Anyone talking about how we transitioned from the Great Depression must mention WWII.  And it was a major war inside of Russia that brought Putin into power. 

 

Nationalists who are patriotic tend to be the ones who pull nations out of tailspins.  Sometimes, they are utterly evil like Hitler or Mao.  But they succeed due to their anchoring their systems into defending their own homelands.  Good people do this, too: if they are truly patriotic, they win in the long run.  Good or evil, patriotism wins over ‘give up’ or ‘sell out to foreign powers.’  The US elites are ‘sold out to foreign powers’ and happily evade taxes, move offshore and import semi-slave labor to wreck the lives of citizens who can’t do all this.  They can do this with impunity until the People realize the major political parties are corrupt.  And the leaders, traitors.  Then, we have a revolution or a coup run by patriots.

 

A coup where the military simply openly steals won’t work, by the way.  There has to be some sort of good social services given in return for power.  This is why the anarchists and libertarians will never control any power.

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7 Comments

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7 responses to “UNDERSTANDING COLLAPSING SYSTEMS

  1. Pingback: UNDERSTANDING COLLAPSING SYSTEMS « Culture of Life News

  2. Tito

    Well, from the same author of that book one very scary article:

    http://cluborlov.blogspot.com/

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  5. Green Itch

    We will inch further and further into a police state that is unsustainable due to the high overhead of our police and military that are gold plates while utterly and totally inefficient and incompetent due to too much easy money and too much ‘fat.’

    Hey, look who’s cheering on this development:

    http://www.weeklystandard.com/Content/Public/Articles/000/000/016/157ehmas.asp

  6. Green Itch

    We will inch further and further into a police state that is unsustainable due to the high overhead of our police and military that are gold plates while utterly and totally inefficient and incompetent due to too much easy money and too much ‘fat.’

    Hey, look who’s cheering on this development:

    http://www.weeklystandard.com/Content/Public/Articles/000/000/016/157ehmas.asp

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