Bill Totten's Weblog

Monday, July 25, 2005

Reflections on the Collapse of Complex Societies

by Bill Totten

Nihonkai Shimbun and Osaka Nichinichi Shimbun (July 07 2005)

(I've written a weekly column for two Japanese newspapers for the past three years. My colleague, Patrick Heaton, prepared this English version from the Japanese original.)

Crude oil prices continue to skyrocket, constantly reaching new levels.

Even if some companies are affected, average people haven't yet been hit severely by the price rises. It won't be long, however, before most people become aware that rising prices are not simply because of an increase in energy demand in India and China, or a decrease in supply from the Middle East, but rather the price increases are because of the fact that oil production is reaching its peak. When over half of any oil field has already been drilled, there is a decrease in productivity such that the cost of drilling itself increases, exceeding the value of the remaining oil recovered. The reality is that for this reason most of the fields providing oil for the world are already losing productivity. For instance, in the biggest oil-producing nation, Saudi Arabia, sea water must now be pumped into the largest oil fields during drilling so the oil can be extracted.

Joseph Tainter's analysis of diminishing marginal returns

Recently I read an interesting book by archeologist Joseph A Tainter called "The Collapse of Complex Societies". Mr Tainter's book examines from the viewpoint of human history the causes of societies collapsing. He explains, for example, that the Roman Empire collapsed because of diminishing marginal returns on investments made for solving social and economic problems. As civilization advances and societies become increasingly complex, investment in research and development becomes profitable for a growing number of people. Eventually, however, a shift occurs and an increasingly large amount of money is needed to solve an ever-narrowing and more difficult range of problems, such as can be seen in the case of investment and innovation in today's high-tech medical care.

Tainter maintains that humans initially create societies and nation states and then foster development of these organizations in order to solve problems. In the beginning of this process, much profit can be gained for the creators of societies by investing in pursuit of immediate solutions of social and economic problems. As social complexity increases, however, profits begin to decrease. At some point in the process the profits are not as great as the energy applied to the system.

The approaching situation described by the theory of peak oil is an example of this type of collapse. At first energy is easy to obtain so people become accustomed to using it liberally. As energy sources begin to run out, more costly procedures are employed to obtain resources, yet the returns on the investment continue to decrease. Finally, when a situation of increasing costs and decreasing profits is reached, the condition cannot be sustained over a long period of time and society and the nation collapse.

If the collective preference is for highly-industrialized civilizations, then such collapses are viewed as tragedies to be feared. If it is indeed the case that decreasing investment returns in a complex society cause collapse, then I believe the only thing we can do now is strive to simplify our society to an appropriate level. Toward this end, processes must be reevaluated promptly to eliminate waste.

Is Japan first to reach diminishing marginal returns?

Tainter's appraisal is not a mainstream thesis in contemporary Japanese society where the phenomenon of peak oil is not yet widely understood. In fact, many economists seem to hold an opposing viewpoint, asserting that the problem of energy shortage can be overcome simply by revitalizing the economy. No doubt they hold this view because they believe scientific progress can solve any problem. But so long as resources are limited in our complex society, resources and capital that should be used in developing other economic fields will be diverted to pursuit of progress in scientific advancement. If no other energy sources are found to replace current resources, financial problems will inevitably arise.

Is Japan the first modern industrialized society to be at the point of diminishing marginal returns? It is difficult to ascertain whether this is the case, but what we can say is that even if we only consider the problem of peak oil, all industrialized societies depend tremendously on oil and other fossil fuels. In that sense, perhaps we have already passed the point of no return or will inevitably pass it in the near future.

Despite this situation, there is no reason to be pessimistic about imminent collapse. From a historical point of view, we can see that we are not alone; any numbers of societies and nations have been compelled to follow the same natural laws. We have only been temporarily avoiding such a collapse. Humankind has faced huge changes for a long time. Rome, for example, continued to make vast investments in the face of diminishing returns. When it could no longer sustain the investments required for empire, it simply collapsed. But the collapse did not bring about sudden confusion and poverty. Many citizens were finally freed from the yoke of heavy taxation and were actually able to improve their livelihoods.

What we are facing today is not only the end of oil, but a reduction in water, forests, and other natural resources. As our modern social, political and economic systems face collapse, there is hope in the transformation to a new system. A sudden collapse might bring pain and misery, but perhaps our society will take a relatively long time to weaken and collapse, as did the Mayan civilization.

Bill Totten


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