It’s not every day that someone is willing to stick their neck out and tell you exactly when all the malaise and despair of the modern era started, but that’s pretty much what John Michael Greer did in a recent essay. The date he picked for America’s pinnacle moment, 1974, coincides with the Arab oil embargo, oil price shocks, and a major economic recession. Is this really the beginning of a catabolic collapse of the American empire? Greer’s theory in a nutshell is that as societies grow they tend to accumulate infrastructure as they add complexity, all of which requires maintenance. At some point the maintenance bill on all of the infrastructure is a s big as society’s earnings, so growth comes to a standstill. Resolution is brought about by shedding infrastructure and complexity – usually in a painful crisis mode, until the maintenance cost on the now smaller infrastructure and the simpler society is affordable and growth can resume. It’s a sort of business cycle model, but on the scale of the rise and fall of nations and empire. The grand ups and downs are on multi-generational time scales. Picking 1974 as the start of our inevitable descent as a nation, despite the plethora of technological advances made since then that surround us, requires a bit of courage and a look beneath the veneer of modern society.
Of course we have had a few ups and downs since the 70’s, but by the standard measures of economic success, there is no sign pointing at 1974 as a watershed date. GDP keeps on growing; our material standard of wealth is beyond equal; science and technology promise new and better every year.
Finding signs of catabolic collapse in the national economic data requires a bit of sleuthing. The classic economic success indicator, GDP, keeps track of national income and production, but it doesn’t track the underlying infrastructure or asset base. It is certainly possible to maintain income by selling the furniture – at least for a while.
Certainly our energy world changed in 1974. Prior to that time, growth of GDP closely followed growth in energy consumption. Faced with the reality of domestic peak oil and the Arab oil boycott, the nation rather abruptly changed it’s behavior. GDP growth has continued apace, but energy usage has leveled off. On the face of it, this is a good thing; we really are using energy more efficiently. In 1974 per capita energy consumption was about 350 million BTU/yr. That amount of energy cost about $3000 in 1974, yet it provided leverage for $23,000 of GDP income. In the intervening three decades per capita GDP has increase about 80% while energy consumption has been flat. Our economic system demands relatively constant GDP growth, so we might be suspicious that the abrupt transition to energy frugality has put some stress on the economy.
If we have been maintaining income growth by consuming our infrastructure, what should this look like in the economic statistics that get continually tallied? Global financial transactions and changes in savings behavior can obscure fundamental national trends. Before we start selling the furniture, we might at least find that we cannot squirrel a way a nest egg for the future. Sure enough, the decline of personal savings can be pretty well dated to the mid ’70’s.
Our forced frugality in energy consumption did not extend to our personal finances. Not only did we stop saving, we also took on more debt, and we started selling off our domestic assets to foreigners. On the first chart above I plotted a “Corrected” GDP per capita where I subtracted changes in per capita savings, credit outstanding, and foreign ownership as measured by the current account, from the nominal GDP. One could argue that these three factor are all unsustainable methods of propping up the GDP. Over the last three decades, of the 80% increase in GDP, about 15% is illusory because of these three factors.
Harder to tease out is the deferred maintenance on our public infrastructure. The miles of paved roads are still growing, at least in urban areas. More often, however, maintenance projects are being funded by bonded debt rather than general fund revenues at both the state and federal level.
The human costs of the stressed economy is perhaps best seen in the incarceration rate. Usually catabolic collapse is not seen as the root cause of the dramatic rise in prison populations, but the timing of the dramatic increase fits.
It’s hard to know where to put the blame for job flight abroad, the rise of globalization, the rise of inequality, and the burgeoning parasitic financial sector, all trends that also could be given a birthday around the date in question. Are these just the trends to be expected of a capitalist society, or are they a necessary reaction to a the sudden domestic energy constraint imposed on America in 1974?
Back to John Greer:
“the question is simply when to place the first wave of catabolism in America – the point at which crises bring a temporary end to business as usual, access to real wealth becomes a much more challenging thing for a large fraction of the population, and significant amounts of the national infrastructure are abandoned or stripped for salvage. It’s not a difficult question to answer, either.
The date in question is 1974.”