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The Limits to Growth and Greece: systemic or financial collapse?

The Limits to Growth and Greece: systemic or financial collapse? thumbnail


The results of the “standard run” (or “base case”) scenario of “The Limits to Growth” 1972 study. Could it be that the ongoing Greek collapse is a symptom of the more general collapse that the model generates for the first two decades of the 21st century?

So, we have arrived to an interesting point, to be intended in the Chinese sense of a curse. It is the point where the people of Greece are being asked to choose between starvation and slavery and this is supposed to be a triumph of democracy.

As the tragedy unfolds, people take sides, aiming their impotent rage at this or that target; the Euro, the bureaucrats of Brussels, the Greek government, Mr. Tsipras, some international conspiracy, and even Mr. Putin, the usual bugaboo of everything.

But, could it be that all the financial circus that we are seeing dancing in and around Greece be just the effect of much deeper causes? The effect of something that gnaws at the very foundations not only of Greece, but of the whole Western World?

Let’s take a step back, and take a look at the 1972 study titled “The Limits to Growth” (LTG). Look at the “base case” scenario, the one which used as input the data that seemed to be the most reliable at the time. Here it is, in the 2004 version of the study, with updated data in input.

Despite all the criticism that the LTG study received over the years, its basic soundness was repeatedly demonstrated, for instance inThe Limits to Growth Revisited.” The LTG calculations were based on a number of assumptions, the main one was that the increasing costs resulting from the gradual depletion of the world’s natural resources would bring an increasing burden on the industrial system, forcing it to slow down its growth and, eventually, to start an irreversible decline.

In general, models are most reliable when they are very general (or “aggregated”). So, for instance, it is an accepted challenge that of predicting the Earth’s climate in a hundred years from now, but only because the models make no attempt to predict the weather patterns of specific days and specific places. When you are hit by a hurricane, you can say that it is the result of the changing climate, but you also know that it is impossible to predict when and where the next hurricane will strike.

The same is true for the collapse generated by the LTG models. It is very aggregated: it can predict a general collapse, but it cannot predict where and when exactly local collapses will occur. But it is likely that local collapses would start in the weakest economies of the world; regions with low industrial production capabilities and little or no mineral resources of their own. Greece, indeed.

That doesn’t mean that financial factors may not have accelerated the Greek collapse or made it worse. But, if the reason of the Greek disaster is systemic, then no financial trick will cure a disease which is not financial at its core.

If the LTG study is right and the crisis is generated by the gradually increasing costs of production of natural resources, (and there is plenty of evidence that these costs are increasing worldwide, see also here) then, collapse cannot be avoided, at best it can be mitigated by acting at the system level. By means of such measures as renewable energy, efficiency, and recycling, the system can be helped to cope with a reduced resource availability. But the economic contraction of the system is unavoidable. It is a contraction that we call financial collapse, but that is simply the result of the system adapting to lower quality (i.e. more expensive) resources.

And, if the reasons for the collapse are systemic and not financial, then it must be a progressing phenomenon that is going to affect all the vulnerable countries, starting with the Mediterranean European countries: Spain, Italy, and Portugal, which might well be the next in line.

Is the collapse going to stop, ever? Yes, it will stop when the size of the world’s economy will have become compatible with the quality of the energy supporting it (that we can measure in terms of the energy return on energy invested, EROEI). So, we may face a very long and deep descent, indeed, unless we manage to resupply the economy with new sources of renewable energy of comparable energy quality.

It is not impossible, but not cheap either, and most people say that it is too expensive. So, our future will be what our greed will cause it to be. At least, we’ll have what we deserve.


Cassandra’s legacy by Ugo Bardi

13 Comments on "The Limits to Growth and Greece: systemic or financial collapse?"

  1. Plantagenet on Mon, 29th Jun 2015 2:01 pm 

    If the cost of producing natural resources is too high, as Dr. Bardi claims, then why are almost all commodities, including oil, at or near their lows?

    Mr. Bardi seems to have forgotten his math. Low prices are not high prices. We are in an oil glut right now, and oil is off 50% from its highs. As a bonus, most other industrial commodities are also at or near their lows.


  2. joe on Mon, 29th Jun 2015 2:02 pm 

    Genuinely suprised that the banksters are willing to play this kind of hardball. After July 5th I guess the Greek people will decide if it’s over or not. I’m still backing the banksters to pull through but then again they might be happy to see greece out of the euro. The Plutocrats in Germany/France have to question how they will manage credit in the eurozone in future as well as the levels of acceptable risk. This could all be moot if greece votes to keep austerity and stay in the euro. They could vote for their own taxation, its democratic at least. Either way all of this is bad for globalists who have to accept that nations will have a say in whether or not they accept deals from private globalist central banks like the ECB or IMF.

  3. yoananda on Mon, 29th Jun 2015 2:05 pm 

    EROEI of renewable depends partly on those of oil and are not better than oil, so far.

  4. yoananda on Mon, 29th Jun 2015 2:08 pm 

    “If the cost of producing natural resources is too high, as Dr. Bardi claims, then why are almost all commodities, including oil, at or near their lows?”

    because it’s cyclic. That’s all.
    Cycle of 3 year.
    Oil companies have to anticipate oil demand and decide how much to invest, which turn into producing field many year later.

    3 years of high prices have produced demand destruction. There is no oil glut but demand weakness.

  5. penury on Mon, 29th Jun 2015 2:59 pm 

    “If the cost of producing natural resources is too high, as Dr. Bardi claims, then why are almost all commodities, including oil, at or near their lows?” This is a good question and the answer is; The people have no f99999g money, The cost of any item is determined not by the cost of production but the availability of cash or credit to make the transaction. People who can afford energy at the current prices are buying all they can. However, there are more and more people everyday who cannot afford this price. we are in a predicament. it costs more to produce than I can pay, therefore you must produce less, therefore the price goes up and now my neighbor cannot afford it. Seems to be a chronic conundrum

  6. Davy on Mon, 29th Jun 2015 4:12 pm 

    Article says “if the reasons for the collapse are systemic and not financial” in my view the financial is systematic. Our global system is a complex human economic ecosystem that is financially systematic. In this respect the financial system is a progressing phenomenon. Our human ecosystem is financial based and is progressing past its stable financial state.

    Fossil fuels have allowed this systematic financial phenomenon to progress well past a stable, sustainable and perturbation resilient state. This is not a southern European problem this is a global issue. This is not only a financial issue this is resource based, ecosystem health based, and population overshoot based. These collapse issues are happening in multiple areas and at multiple systematic levels. In other worlds this is broad based collapse.

    This collapse is subtle and could be confused as a bumpy growth plateau or a bumpy descent plateau. You might ask what the difference is. The difference is momentum and inertia. We are somewhere within that pinnacle of growth maybe growth maybe descent but the momentum if it is growth is about spent but not yet falling. If it is descent the momentum is not yet strong enough to show clear descent characteristics.

    I do believe the inertia is clear we are nearing limits and the results are diminishing returns of our normal progress at all levels. We are losing the battle with entropy and that is the inertia restricting our normal growth momentum we have known for hundreds of years especially the last 100. We are definitely nearing a systematic limit of species populations. Our population is maxing and the remaining other species are plummeting. Food and water are clearly approaching limits for all species.

    The article mentions a long descent but that is unclear at this point. I hope so because a species survival in a collapse is based upon the degree and duration of that collapse. All other species are going to be influenced by this. In other words the degree and duration of the human species collapse will be the measure of the 6th great extinction. We are the trigger species for how deep and profound this extinction event will be. There is no reason for this not to be very quick and hard. This aspect of collapse is not predictable by any means.

    Descent is not like growth. Growth is a steady long term growth process built upon and by growth. Descent is decay sometimes rapid sometimes slow but not steady and not functionally unfolding. It will not be orderly and predictable.

    The article mention of energy resupply is not going to make a difference in my view of collapse or no collapse. This collapse is inevitable and must happen because it is part of natural law. No amount of energy can change a descent trajectory. Energy resupply could change the degree and duration of the descent but not the descent itself. If the energy is applied correctly it could mitigate and allow adjustments but not stop descent.

    This is planetary descent now with the ecosystem, climate, and human system in a descent momentum. I mentioned above we are between a growth and descent plateau but it is the end of growth none the less. The bullet has left the barrel and has reached its maximum stable trajectory and must fall because of gravity. Gravity is limits and entropic decay in our case.

    It is clear climate is disturbed and no complex civilization can survive a disturbed climate. Our ecosystem is disturbed and is just as important as climate. Both are really one and the same in a holistic human view. Our population is well past normal sustainable levels.

    It is over folks and this is global not just a Greek tragedy. The question now is degree and duration. How are we going to make that better or worse? We do have that ability.

  7. Apneaman on Mon, 29th Jun 2015 4:52 pm 

    The effects of climate change are going to break our systems – infrastructure, private property, insurance, etc like match sticks. Then it’s going to break peoples spirits. Our systems are not designed for this nor can they be reformed to manage it. You are on your own. Hey Planty, how’s that fire treating you up there? Haven’t heard so much as a peep from you about it. Records smashed to shit and it ain’t even independence day yet. Gonna be a hellish summer for many.

    ‘Mind Blowing’ Flames Destroy Homes in Washington State

  8. yukonfisher on Mon, 29th Jun 2015 4:53 pm 

    Joe is surprised the banisters have allowed the situation to get so dire- perhaps we need to recall that banisters too screw up. Greece is calling their bluff, just as Iceland did, albeit under slightly different circumstances. The banisters got that one wrong too.

  9. Jimmy on Mon, 29th Jun 2015 5:43 pm 

    Collapse is here and the dominos are falling. More and more failed states have been emerging and this will continue. Greece is simply one of the first western states to become a failed state. Not long ago the only failed states were Afghanistan and Somalia. Now we’ve got many more. And many more will be added to the failed state list until they are all failed states. This IS collapse. The weaker ones with less resources and less reserves go first. It’s a house of cards and it’s starting to fall. If Ron Patterson is correct then 2013 to 2015 is the bumpy plateau and 2016 will herald in the peak in oil production. By 2017 it’ll be in the rear view mirror. By 2023 it’ll be a whole new world! Collapse with a climate change kicker on top. Interesting times indeed.

  10. Davy on Mon, 29th Jun 2015 6:11 pm 

    Look Ape Man you Canadians are sending smoke down to my home WTF. More accurately is this coming from Planter Alaskan fires?

  11. Apneaman on Mon, 29th Jun 2015 6:18 pm 

    Davy, that’s from Saskatchewan and maybe the NWT too. Mmmmm I love the smell of burning permafrost in the morning.

  12. apneaman on Mon, 29th Jun 2015 8:47 pm 

    Extreme makeover: mankind’s unprecedented transformation of Earth

    29 June 2015 Leicester, University of

    “We think of major changes to the biosphere as the big extinction events, like that which finished off the dinosaurs at the end of the Cretaceous Period. But the changes happening to the biosphere today may be much more significant, and uniquely are driven by the actions of one species, humans.”

  13. apneaman on Mon, 29th Jun 2015 9:09 pm 

    Lets play connect the dots.

    Heat wave in B.C. breaks 64 temperature records
    Osoyoos and Warfield, B.C. both had highs of 40 Celsius

    B.C. heat wave hiking power consumption
    Hydro says power consumption is up 10 to 15 per cent

    Glaciers, BC Hydro’s Melting ‘Batteries’

    Scientists are trying to figure out how rising temps will change the alpine run-off that helps power the province.

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