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Role of Wages of the Common Worker in Oil Prices, Collapse

Role of Wages of the Common Worker in Oil Prices, Collapse thumbnail

In their book Secular Cycles, Peter Turchin and Surgey Nefedof point out the important role falling wages of the common workers played in early collapses. I got to thinking that this might be an issue with our current situation as well, including the low level of oil prices.

I explain this in two presentations. The first one is called “Overview of a Networked Economy“. The second one is called, “Economic Growth and Diminishing Returns.”

A couple of (amateurish) slides that need explanation are the following ones:

Standard definition of economic growth

The cloud above my representation of the economy is supposed to represent the cloud of goods and services that the economy makes. Many people would like us to believe that as long as this cloud is growing, everything is fine.

What Peter Turchin discovered is that there is a smaller cloud that really needs to be growing, as well.

This cloud is the after-tax income of the common worker. If this isn’t growing, then it is hard to collect enough taxes. The ultimate downfall comes from government downfall, because of the problems of the common worker.

Wages of Common Worker

The above slide is an attempt to show the after-tax income of common workers as a subset within the GDP cloud. (It probably should be much smaller.)

Common workers are ones who will tend to buy mostly goods and not too many services. In fact, the goods that they buy are not necessarily even high tech goods. If these workers cut back on goods that use a lot of commodities in their production, this cutback could contribute to all of the other pressures we are now seeing toward lower commodity prices, and make it much hater for oil prices to rise again.

If we want common workers to do better, it looks to me like we need an increasing supply of cheap-to-extract oil (low priced would help as well).

To see the full story, you will need to click on the links above.

I will be leaving on March 13 to spend four weeks lecturing and traveling in China. (My family will not be coming along, so I won’t be leaving an empty house here.) Hopefully I will have a chance to write a “regular” post between now and then–the two presentations are from this series. I don’t expect to be able to write posts while I am in China because China does not allow access to the WordPress site where I write my posts

our finite world

5 Comments on "Role of Wages of the Common Worker in Oil Prices, Collapse"

  1. Makati1 on Wed, 25th Feb 2015 11:54 pm 

    China and many other countries are cutting ties to the internet for security from the Empire’s tentacles. It is only going to increase the isolation of the West from the rest of the world. And about time.

    Of course, people with less income spend it on necessities, which are usually NOT high tech/energy input items. They are basic food items, clothing (not brand names) and shelter without the ‘bells and whistles’ thought of as necessities not long ago. (A/C, vacuum cleaners, TV, etc.)

    I will be interested in the articles that follow the visit to China.

  2. Perk Earl on Thu, 26th Feb 2015 12:17 am 

    “I won’t be leaving an empty house here.”

    Sounds like a security alert, but I don’t blame you because when we leave our house for several days we say something loud in the garage (with the garage door open) towards a non-existent person inside the house to give the illusion of it being occupied. “Ok Sue Ann, we’ll see you when we get back!”

    When there was a kid across the street that use to regularly vandalize us I would say goodbye to my wife in the driveway, then charge through the house, down the property, through the vacant lot below and meet my wife on the street below, jump in and we’d be gone for however many days. It worked too because if that kid had any idea we’d be gone he’d of ransacked the place no doubt.

  3. Industrial on Thu, 26th Feb 2015 1:55 am 


    I get up everyday now after 10 years of taking a societal beat down for peak oil,plus 6 years after modifying my cellular chromosomes…and im just the baddest guy on the planet earth.Every time i wash my hands and take a shower aliens just get pissed because there i am making sure that not a spec of dirt is on me…i scrub my nails deep and just put on a nice little show for them all to see….i might not own the water on the planet…but it definitely doesn’t belong to you….i don’t even own the resources that i used to build my body,but there i am just poisoning every drop of it…just to let you all know that this is what sustainability looks like…

    I mean this isn’t a hostile action (truly:) cleanliness is next to godliness and lets just say i like to feel a little (god-ish) these days in the face of a dying industrial civilization.As time goes on you will begin to see a figure just take shape on this planet…im becoming this brick layer of the 21st century,just a living pharoh of the industrial age…:)

    The aliens are so advanced that they see everything going down on the planet earth…trust me nasa can already detect the atmospheres of alien planets.

    (Iv been working on a new song) while listening to {New Concept – The 21th Century (Electro Mix)}

    Gasoline is cheap.Planet earth is weak.

    Bring the dominant species known as humanity to it’s knees…
    Then bring back the old growth trees

    The species is a deceiver of me
    My words have no commodity
    I am a digital code….a double helix catastrophe
    Stop the species before it tries to stop me

    Eat them…just don’t touch me….
    My body is too polluted to be cleaned economically.
    The homo sapien species’s leaders rape children sexually.

    I am here to learn
    i am seeking healthy sustainability
    on an unsustainable planet
    impossible dream

    Kill them please..from carbon depletion
    malnutrition and disease.
    Our conscious is clean there future’s can be technologically foreseen.

    Earth is the originator of a species that has become the enemy of life it’s self.
    Know this world,know your enemies…foresee the death they will bring to all things.

  4. marko on Thu, 26th Feb 2015 7:04 am 

    this is one of the essential thing in society collapse not just in oil price collapse , in my opinion

  5. paulo1 on Thu, 26th Feb 2015 7:36 am 


    Pretty much out there if this is supposed to be communication. I have a great imagination but don’t appreciate having to work at understanding someone elses POV.

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