matter how it is spent, but people whose lifestyle is already satisfactory will probably either save it or use it for more investment. If they save it, someone else needs to borrow it and spend or invest it instead.
The situation in a typical country today is that just over 20% of its income needs to be invested back each year as, if it was all saved, 20% of the workforce would find themselves without jobs. But the people doing the investing demand a satisfactory return and only if economic growth takes place and incomes increase will they be able to get one. If the broad mass of investors fails to get a return one year, they will not invest the next. Unemployment will increase and prices will fall, pulling profits down with them. The amount available for investment will be reduced and the economy will move along a low-growth or no-growth path until another series of innovations comes along.
For the past 200 years, however, a flow of innovations has brought about rapid growth. Many of these innovations have involved the substitution of fossil energy for energy from human, animal and solar sources because, if a worker’s efforts can be supplemented in this way, he or she can produce much, much more. An averagely fit man can apply about 75 watts to his work. If he is assisted by a one-horsepower motor, the sort you might find on a hobbyist’s circular saw, he can apply ten times more power to the task and consequently work much faster. A positive feedback develops, with the greater productivity leading to higher profits and incomes and additional investment and energy use. The income gap between those using fossil energy and those who don’t gets wider and wider. In 1960, the average income in high-fossil-energy-using countries was 30 times that in low-energy countries. By 2001 it was almost 90 times larger. Moreover, the 20% of the world living in high-energy, high-income countries enjoyed 80% of world income, investment and trade.
It is therefore reasonable to say that the use of fossil energy facilitated a greater division of income and wealth than was usual between worker and business owner in artisanal societies. It also led to industrial capitalism and the development of the banking system because, once some enterprise owners were making more profit than they needed to plow back into their own companies, a mechanism was required to take their savings and lend them out to people who did want to invest. A structure was also needed to handle the profit-sharing part of those investment funds — the limited liability company.
I need hardly say that, just as the use of fossil fuels drove people out of manufacturing, it also drove them off the land. The use of fertilizers, tractors and sprays made each farm worker much more productive so less labor was required. In 1790, at least 90% of the US labor force worked in agriculture. In the year 2000, less than 1.4% did while still producing enough to meet home and export demand. The average American farmer produced 12 times more an hour in 2000 than his predecessor did in 1950.2 Again, these changes were irresistible. Food prices fell by about 90% in relation to average incomes between 1920 and 1990. This meant that farmers had to increase their output by at least 1,000% for their income to keep up with the rest of society. As this could only be done by using fossil energy and industrial sector inputs, their output had to increase further to pay for them.
In May 2005, however, this period of rapid income growth for some and the displacement and poverty for others came to an end when world oil production ceased to increase. Indeed world energy supplies, and the supplies of other commodities, had been struggling to keep up with growing demand for two years previously and their prices had begun to rise. In dollar terms, the price of oil had risen to five or six times its 2003 level by 2008, while there was, on average, a tenfold rise in the price of other commodities over the same period. To give two examples, the price of copper quadrupled between 2003 and 2006, while the lead price peaked in 2007 at eight times its 2003 value.
These price rises caused the international financial crisis, as I explain in a later chapter. They were a signal that we should stop doing our Pompeii-style repairs and move away from the present system by devoting all our resources to building a civilization on a different basis, just as we would in a military emergency.
This book is all about how such a new civilization might be built, the resources that might be available for the transition and how our attitudes will have to change to bring it about. Many of the perversions listed at the top of this article need to be undone. Some we can do for ourselves and our families. Some can only be achieved on a community scale. In other cases, national and/or international action is required. Suggestions for action are given in the final chapter.
The task is immense and, on a global level, our version of Vesuvius will probably overwhelm us while we are doing it. Only those countries and communities that have made a determined break with the past will have a chance of surviving at a comfortable level. The rest of us will find that the systems on which our lives and livelihoods depend are overwhelmed and break down entirely, never to recover, and that we have no alternative support systems upon which to fall back. We cannot expect to get any clearer warnings of impending disaster than the people of Pompeii received. There are already financial fires around the economic cone. If we are to survive we need to move out quickly. Now.
But which way are we to go? Is there a map? It would be a poor book about an emergency situation which did not provide one. So, for the final chapter, my co-editor and I asked the contributors to suggest actions which readers could take or support at four levels — personal, community, national and global. In general, it is only at the national and global levels that fairly firm suggestions can be made and these are exactly those over which our readers have least influence. There is, in fact, a continuum. Influence diminishes the more people are involved. Readers can do a lot to change their own behavior and probably have appreciable influence over their immediate families. They have less influence over what they could do, or try to get done, in their communities, and at a national and international level they have almost no influence at all.
There are two problems with this. One is that, at the personal level, circumstances vary so much that it is hard to find even broad general principles which apply to everyone. For example, should people spend their resources on cutting their household’s energy use or would it be better to invest the money involved in a community renewable energy project? And the answer is...it all depends. There is no single right answer.
The other problem is that the key actions to ensure our survival can only be carried out at the national and international level. This is where the Pompeii analogy breaks down. The workmen who left their tools when the ash began to fall had somewhere they could run to with their families to be safe. People today don’t. Nowhere on the planet will be left undamaged by the environmental and economic catastrophes that will occur if the nations of the world continue on their present path. So it’s not just a question of some of us heeding the warning fires and running away, leaving the rest to their fate. We have to convince the majority of the world’s population to come along too.
We should therefore adopt collective solutions wherever possible rather than personal ones. This does not mean that individual acts are unimportant, of course. Indeed, they often ease the way for everyone else. The more individuals who decide to cycle to work, for example, the better the collective provision that is likely to be made for them. Similarly, the more people who fit triple-glazed windows, the easier and cheaper such windows are likely to become for others to obtain. However, it would make no sense for you to buy your own single-house wind turbine unless you cannot get a connection to the electricity grid. Its cost would be high in relation to its output and the energy and materials used in its construction would have been more productive had they been used to make a bigger machine. Nor would you be able to regard yourself as a worthy eco-pioneer because your solution could never be adopted by everyone else. Power needs are better met collectively; and it was three neighboring families’ battle to develop a collective supply that led to the development of the Danish wind energy industry.3 The Transition Towns movement is potentially so important only because it has adopted a collective approach to energy, food and money supplies.
So Gill and I suggest that you should ask yourself three questions as you work your way through this book. The first is “What can I do myself?”,
