Tuesday, 16 June 2009

Notes from Dmitri Orlov

Following David Korowicz at FEASTA's New Emergency Conference came Dmitri Orlov, who was his usual splash of cold water. Orlov was raised in the Soviet Union, moved to America as a child, and returned to Russia several times as its society collapsed and had to rebuild itself.

In 2005 he began giving a talk called "The Collapse Gap," suggesting not only that the United States could similarly implode but that Americans are far less prepared than Russians were. He found fans in peak oil authors like James Howard Kunstler, and spun his talks into an entertaining book, "Reinventing Collapse," which came out last year.

I had a chance to talk and sit in workshops with Orlov during the conference, and he is the same offstage as on -- intelligent, dour, darkly humourous. His unromantic, survivalist view of the future sometimes clashes with advocates of allotments and wind farms -- his talk included a gentle dig at the Transition Town movement, for example. Even if I reserve more hope for the future, he keeps the rest of us grounded.

Here are a few notes from Orlov's talk -- paraphrases, not actual quotes.

Right now we are in a situation of societal overextension. Life at $100,000 a year becomes unsustainable – life at $10,000 a year is much more sustainable.

The oil price spike in 2008 crashed the economy, much as the price spikes of the 1970s did, and in both cases the crash seemed to take place when the price of oil reached about 25 percent of global GDP – that seems to be the threshold.

We will lose our money, but there are different ways to do so. We should try not to lose our money all at once. We should try to stay out of harm’s way during the time of social chaos, and we should devote part of whatever land we have to sustainable use – woods, things like that.

We must lock down our resources, meaning mainly land, and invest in personal and group self-sufficiency. Do not hoard objects that will have limited usefulness – consumer goods, precious metals and so on. Instead, hoard objects that will have a high use value later, and decouple from the global economy as much as possible.
It is insane to sink our investment in things we don’t need, like a car industry, and not in things we will need, like health care.

By 2010-2020 we will see even steeper declines, with the natural world still largely intact. By 2020-2030 we should start seeing the destruction of much of what is left of the natural world.

No one will be able to say when the collapse happened for the world, everyone will only know when it happened to them. Some people will do better than others, leading many to deny that a wholesale collapse is taking place.

There are certain personality types who fare better than others in a collapse. People who continue with their lives indifferent to a larger catastrophe will fare well, as will people who are determined to do well, and people who are somewhat unreasonable. People who want to please everyone are likely to do poorly.

Money will be less available in the future, but there are other bases for a market. Gift-giving builds relationships and involves obligation in a way that money does not. Barter is also a useful method.

Many people will continue to have a belief in science and technology, not realising that technology requires energy, and that science is not based in belief.
Finally, we have been brought up as factory-farmed humans – institutionalised in schools, in jobs, and in other processed forms of interaction. We need to gradually become free-range humans.

5 comments:

Aron said...

Hi,
"technology requires energy"

Good technology enables us to require less energy.

"the crash seemed to take place when the price of oil reached about 25 percent of global GDP"
Is this correct?
Even with 147$ price the price of oil seems to be 4.5 trillion dollars/year.
The world GDP was 65.6 trillion in 2007.

Investing is precious metals a bad idea?
Hmmm, maybe... IMHO gold is the longest pricing bubble in histroy :)
But you need some kind of money in case of a FIAT money collapse and I think LETS is a good idea, but you also need some harder currency than that.

Brian Kaller said...

Aron,

I agree that good technology allows us to use less energy, provided you define "good" as "that which allows us to use less energy."

Seriously, technology can be a very good thing, but it's not a simple quality that can be factored in - using broadband to transmit information is much faster and easier right now than shipping a crate of books, but it requires a vast infrastructure of electronics makers, electrical transformers, communications sattelites and so on. Picking what would be the less-energy option would be very complicated.

There's also Jeavon's Paradox, which states that if we use energy more efficiently, it will be cheaper, and we will use more of it.

I agree, I calculate the percentage to be more like 14%. As for gold, I don't know enough to take sides on the issue, except that it's not friends and you can't eat it.

Aron said...

"Picking what would be the less-energy option would be very complicated."
Well, yes and no. It is probably true that we use more energy for transmitting information but the efficiency is far better (the bit/Joule ratio). The problem is that most of the info going around today is crap :) (TV, YouTube etc.)
A good question would be what the minimal energy requirement for the Internet in a big energy shortage situation is.
I guess if we could limit the crap info by billing according to network usage and this way we need much less server farms and routers running. And because of the tech advancements these fewer computers would still provide the service we had a few years ago for much less energy.

"There's also Jeavon's Paradox, which states that if we use energy more efficiently, it will be cheaper, and we will use more of it."
This is a very interesting question. Well, we do use energy to the limit. This is a very sad thing.
I guess this is caused by the fact that competing nations do not want to start saving and let the others take advantage.
It's an economic arms race game.
After thinking a while about this I came to the conclusion that it was a very rational decision from the USA to support gas guzzling SUV-s in this decade. It might not have been the smartest choice in the long run, but you can find supporting arguments.
Like: maybe if the US would have taxed gas like Europe, China would now have a much stronger army.
The only reason for investing into renewable energy in this moment is that it will have a good return in 10-20 years (e. g. for solar power plants). Even we can see a return today:
the high taxation of fuel in Europe and Japan now paid off in crushing the american car industry (unfortunately the US government is trying to save it).

"I agree, I calculate the percentage to be more like 14%."
How did you get 14?
Let's see a rough calc:
85 million barrels/day
means 31 billion/year multiplied by 145 dollars/barrel
adds up to 4.5 trillion dollars/year

The GDP was 65 trillion for 2007.
7%
But 145 was the maximum, the price average was more like 75 for 2007, which means 3,5 - 4%.
14% sounds more like all energy which sounds quite reasonable at first glance because electricity and gasoline at the pump have more costs than crude oil.

" As for gold, I don't know enough to take sides on the issue, except that it's not friends and you can't eat it."

:) Friends are of course much more important. I speculate that if things get worse, much worse, I will still be able to trade gold and silver for food, because people will trade at some level, and you need some kind of money for that (of course Fiat money collapses in this case). If things get worse than that, my guess is that we won't be able to survive at all, only cockroaches and rats...
I'm hoping that politicians are not _that_ stupid...

Btw. did you get more pessimistic since the AmCon article? (I liked it very much and that is how I found your blog)

Brian Kaller said...

Aron,

True, I think we could shave off more than 90 percent of communications and not be worse off, in this age when information has become garbage – of course, everyone will think their own communiqu├ęs are the ones worth saving. I can see things like the Internet used much more frugally, though – say, a constant broadband connection for a hundred-person neighbourhood, who can sign up to use it for half an hour a day. Or a rationed infrastructure where the electrical grid operates during certain hours. I can see communities planning more arrangements like this in difficult times.

I’m not seeing the SUV rationale that you’re seeing. I agree that renewable energy might pay off more down the road than immediately, but that’s a good reason to invest.

I might have been going on fossil fuels in general – I don’t have the back of that envelope in front of me. 

Thank you for the compliment. Not really -- I have pessimistic days and optimistic ones, but mostly I see the same range of possibilities. We are probably not going to colonize the galaxy or go extinct this year; rather, we (in the Western First World, at least) are going to keep the suburban developments and highways we have now, but with less money, imported goods and fuel. Within that range I think it likely that we can segue to a stable prosperity that combines the best of old and new – backyard gardens, small farms, community, windmills, commuter trolleys, pared-down internet – that I described in the AmCon article. If people refuse to prepare, though, or panic during the next outage or shortage, there are darker possibilities.

I’m more concerned about the natural world – not so much cute pandas or spotted owls, nice as they are, but about, for example, the massive, recent drop in the plankton that forms the basis of ocean life. Changes like that would be an entirely different magnitude of danger, and they are still poorly understood. Thankfully, what helps with one group of concerns – localization, simplicity, self-reliance – seems likely to help with the other as well.

Brian Kaller said...

Orlov clears up the 25-percent issue in a follow-up post:

http://cluborlov.blogspot.com/2009/06/errata.html