Fleeing Vesuvius. Gillian Fallon
trade as banks became afraid to accept other banks’ letters of credit.1
Just as we never consider the ground beneath our feet until we trip, these glimpses into the complex webs of interdependencies upon which modern life relies only come when part of that web fails. When the failure is corrected, the drama fades and all returns to normal. However, it is that normal which is most extraordinary of all.
Our daily lives are dependent upon the coherence of thousands of direct interactions, which are themselves dependent upon trillions more interactions between things, businesses, institutions and individuals across the world. Following just one track; each morning I have coffee near where I work. The woman who serves me need not know who picked the berries, who moulded the polymer for the coffee maker, how the municipal system delivered the water to the café, how the beans made their journey or who designed the mug. The captain of the ship that transported the beans would have had no knowledge of who provided the export credit insurance for the shipment, who made the steel for the hull, or the steps in the complex processes that allow him the use of satellite navigation. And the steel-maker need not have known who built the pumps for the iron-ore mine, or how the oxygen for the furnace was refined.
Every café has customers like me who can only buy coffee because we are exchanging our labors across the world in ways that are dependent upon the globalized infrastructure of IT systems, transport and banking. The systems and the myriad businesses upon which they depend are only viable because there are economies of scale. Our global infrastructure requires millions of users across the world, the ship needs to carry more than coffee beans, and my café needs more than a single customer. The viability of my morning coffee requires the interactive economic and productive efforts of the globalized economy.
Thinking this way enables us to see that the global economy, and thus our civilization, is a single system. This system’s structure and dynamics are therefore central to understanding the implications of ecological constraints and, in particular for this analysis, peak oil.2 Here are some of its principal features.
The Global Economy Is Self-Organizing
The usually seamless choreography of the global economy is self-organizing. The complexity of understanding, designing and managing such a system is far beyond our abilities. Self-organization can be a feature of all complex adaptive systems, as opposed to “just” complex systems such as a watch. Birds do not “agree” together that arrow shapes make good sense aerodynamically, and then work out who flies where. Each bird simply adapts to its local environment and path of least effort, with some innate sense of desire and hierarchy, and what emerges is a macro-structure without intentional design. Similarly, our global system emerges as a result of each person, company and institution, with their common and distinctive histories, playing their own part in their own niche, and interacting together through biological, cultural and structural channels.
The self-organization reminds us that governments do not control their own economies. Nor does civil society. The corporate or financial sectors do not control the economies within which they operate. That they can destroy the economy should not be taken as evidence that they can control it.
The Global Economy Has Growth-Dependent Dynamics
We have come to regard continued economic growth as normal, part of the natural order of things. Recessions are viewed as an aberration caused by human and institutional weakness, the resumption of economic growth being only a matter of time. However, in historical terms, economic growth is a recent phenomenon. Angus Maddison has estimated that Gross World Product (GWP) grew 0.32% per annum between 1500 and 1820; 0.94% (1820– 1870); 2.12% (1870–1913); 1.82% (1913–1950); 4.9% (1950–1973); 3.17% (1973– 2003), and 2.25% (1820–2003).3
We tend to see global economic growth in terms of change. We can observe it through increasing energy and resource flows, population, material wealth, complexity and, as a general proxy, GWP. This can be viewed from another angle. We could say that the globalizing growth economy has experienced a remarkably stable phase for the last 150 years. For example, it did not grow linearly by any percentage rate for any time, decline exponentially, oscillate periodically, or swing chaotically. What we see is a tendency to compound growth of a few percent per annum, with fluctuations around a very narrow band. At this growth rate, the system could evolve, unsurprisingly, at a rate to which we could adapt.
The sensitivity felt by governments and society in general to very small changes in GDP growth shows that our systems have adapted to a narrow range of variation. Moving outside that range can provoke major stresses. Of course small differences in aggregate exponential growth have major effects over time, but here we are concentrating upon the stability issue only.
The growth process itself has many push-pull drivers: in human behaviour; in population growth; in the need to maintain existing infrastructure and wealth against entropic decay; in the need to employ those displaced by technology; in the response to new problems; and in the need to service debt that forms the basis of our economic system.
The Global Economy Grows in Complexity
Complexity can be measured in several ways — as the number of connections between people and institutions, the intensity of hierarchical networks, the number of distinct products produced and the extent of the supply-chain networks required to produce them, the number of specialized occupations, the amount of effort required to manage systems, the amount of information available and the energy flows required to maintain them. By all these measures, economic growth has been associated with increasing complexity.4
As a species, we had to become problem solvers to meet our basic needs, deal with status anxiety and respond to the new challenges presented by a dynamic environment. The problem to be solved could be simple such as getting a bus or buying bread; or it could be complex, such as developing an economy’s energy infrastructure. We tend to exploit the easiest and least costly solutions first. We pick the lowest hanging fruit or the easiest extractable oil first. As problems are solved new ones tend to require more effort and complex solutions.
A solution is framed within a network of constraints. One of the system constraints is set by the operational fabric, comprising the given conditions at any time and place which support system wide functionality. For modern developed economies this includes functioning markets, financing, monetary stability, operational supply-chains, transport, digital infrastructure, command and control, health services, research and development infrastructure, institutions of trust and socio-political stability. It is what we casually assume does and will exist, and which provides the structural foundation for any project we wish to develop. Our solutions are also limited by knowledge and culture, and by the available energetic, material, and economic resources available to us. The formation of solutions is also shaped by the interactions with the myriad other interacting agents such as people, businesses and institutions. These add to the dynamic complexity of the environment in which the solution is formed, and thus the growing complexity is likely to be reinforced as elements co-evolve together.
As a result, the process of economic growth and complexity has been self-reinforcing. The growth in the size of the networks of exchange, the operational fabric and economic efficiencies all provided a basis for further growth. Growing complexity provided the foundation for developing even more complex integration. In aggregate, as the operational fabric evolves in complexity it provides the basis to build more complex solutions.
The net benefits of increasing complexity are subject to declining marginal returns — in other words, the benefit of rising complexity is eventually outweighed by its cost. A major cost is environmental destruction and resource depletion. There is also the cost of complexity itself. We can see this in the costs of managing more complex systems, and the increasing cost of the research and development process.5 When increased complexity begins to have a net cost, then responding to new problems arising by further increasing complexity may be no longer viable. An economy becomes locked into established processes and infrastructures, but can no longer respond to shocks or adapt to change. For the historian Joseph Tainter, this is the context in which earlier civilizations have collapsed.6
The Global Economy is Increasing Codependence and Integration
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