Chris, right now I am trying to digest an immense mass of material from the media, lists, academic sources etc and to reflect to the List the most potent, pertinent or pungent from all this. It is obvious that the world-system has just passed thru a key inflection-point, a more radical lurch into crisis than the 1997-98 Asia Meltdown. I want the List archive to be a resource which people can use after the dust has settled a little. Incidentally, the membership of the CrashList has increased significantly in recent weeks, and this is because our focus and concerns have acquired more immediacy and perceived relevance than heretofore. Now, here is my Thought for Sunday: what if World Oil has *just passed thru its production peak*? In other words, what if annual production in the year 2000 - of around 78m bbls - turns out to be a high point *which is never subsequently surpassed*? This is a distinct possibility. Note that there have been previous downswings in oil and energy production, notably in the late 1980s when production and prices fell for several years in a row. The great American Boom of the 1990s finally led to a marked upswing in production, which is now (most people agree) pressing against spare capacity: possibly only Iraq and Saudi have much spare capacity right now. There are various scenarios about what can happen next. Optimists (Doug Henwood) say that this is all just 'short-term fluctuations', there is 'gobs of oil out there', and longterm oil production will continue to increase at 2-3% p.a. for another few decades. This is no longer credible. We have reached a turning-point. It is possible that a recession will now take the heat out of the supply situation. Opec itself now expects there to be a glut of oil in a year's time. If the recession turns nasty and the US bubble bursts, oil prices will dive thru the Opec floor and can head back to $10/bbl. My guess is that Opec and Big Oil do indeed expect something like this, and that is why there is such deep reluctance to commit major resources to upstream investment. But without that upstream investment, long term oil production CANNOT increase. Nopec is already peaking: North Sea, Mexico, Venezuela, Russia and the US oil basins are mostly in steep decline. Only massive investment of half a trillion or more dollars, in the old but still productive Persian Gulf fields, and in the Caspian and some deep sea horizons, can boost up production again. But it may already be too late to find the money to invest in those former super-giant fields like Ghawar which are already severely depleted. And this investment may never happen, because *there will never be sufficient demand*. This is what Shaikh Yamani means when he says "The Stone Age did not end because we ran out of stones, and the Oil Age will not end because we run out of oil". This failure on investment and onset of persistent production declines will happen because the capitalist world economy will have entered a prolonged slump or trough, from which endogenous growth potentials will only emerge slowly if at all; and absent exogenous shocks (world war, the discovery of massive new cheap energy sources etc), such a trough can continue for decades (it did after 1973); in other words, the growth trendline will be permanently inflected downwards. Since oil prices will remain low for several years there will be no rush for energy efficiency or alternatives. But after 3-5 years there will be another inflection-point (other things being equal), because the continued lack of oilfield investment will show up in an accelerated overall decline in production, as older fields are shut in and as lack of capital replacement suddenly bites. Thus, the present oil shock can trigger other, successive oil shocks in coming years *EACH TIME WITH GLOBAL PRODUCTION LOWER THAN BEFORE*. This is the key thing: we are talking now about how the downside of the Hubbert Curve appears in practice, as world oil production comes down off its present rocky plateau. Each successive oil shock can only progressively weaken the world economy, thinning out its technical systems, scientific superstructures and cades, narrowing the complexity, depth and diversity of society's capital base, which is the essential springboard for future technical and productivity advances to occur. Of course, the geopolitical fallout from such a long term secular decline is hard to foretell, but the important thing to recognise is that world capitalism has at last bumped against an external constraint (energy shortage) which it will struggle against, but which actually decides all its future options, one way or another. The epoch of boundless growth is over. It is already quite clear that we have to adapt to a new historical horizon, distinctly different from any we have known. Those who believe "science will always find an answer" are simply cargo-cultists who don't get what is happening. There are the related questions of social and environmental justice, wealth and income distribution patterns, and of long term human population growth. Although the rate of growth has been falling for thirty years, the inertial momentum still built into the world's demography means that other things being equal the population will still rise to 7-9 billion even if it falls thereafter (after about 2050). So the reality is that there will be little or no future growth in production or resources, while there will still be another 203 billion people to feed, clothe, house etc. The only possibilities left for growth come in the form of efficiency savings, alternatives etc. For reasons discussed here ad nauseam, these possibilities are less than generally supposed. It is said for instance that Americans can enjoy their present lifestyle while using 70% less energy. It is true that they will have to use much less energy, but not so certain that that nothing else will change. On the contrary, there will be massive upheaval on a world scale. One more thing: everyone has their scenarios stuffed in their back pocket, and I have mine. This is the *best case*. I believe that another distinct possibility is that the World Hubbert Curve may follow a different path: oil and energy production in general (ie all forms of energy production) may not gently decline, but may collapse. This is what happened in the USSR, where oil production in 1987 was 600m tonness and in 1991 around 300m tonnes, and is still falling. The collapse of Soviet industry and society was the immediate, direct result of the collapse of the Soviet energy-base. Public health, medicine, social services and education also collapsed, as did public and private morality. If that kind of Hubbert decline happens on a world scale, obviously outcomes in general will be quite different. A remark about your comments: Chris wrote: >the marxist theory of capitalist crises, as I > understand it, describes > the endless tendency for surplus value to accumulate more > surplus value, to > the business cycle accelerating until it reaches its rate- > limiting step in > the > > contradiction between capitalist accumulation and the > limited purchasing > power of the masses of working people. > > There are sub-phases to this as stocks of overproduced commodities > accumulate, which usually first trigger a financial crisis, > before a > general economic crisis ensues, with the destruction of a > significant > amount of capital, living and dead. > > This theory of crises depends on exploitation of labour power. Marx > recognises exploitation of resources too, but his theory of > capitalist > crises is not dependent on them. > > Mark's point above is compelling enough in that a short > supply of a basic > commodity like oil may imperil the profitability of certain > sectors of the > economy short of a general economic crisis of capitalism. > But it would be > theoretically risky to substitute important ecological > arguments for the > marxian theory of crises. > > That theory is independent of what technology is used by > capitalism. Indeed > it presumes constant revolutionising of the means of > production under > capitalism. > > Mark is persuasive about the arguments that the human > race is coming up > against the finite limits of extractable oil. But that does not > necessarily unfortunately mean the end of capitalism. > > Capitalism wobble as a result. But if you don't push it, it > won't fall. In your polite and kindly way, you are accusing me of being a Ricardian or worse, a Physiocrat, ie, someone who believes that physical limits condition available wealth. This is a very good criticism to make. My answer (one of several possible answers) might be that whatever kind of capitalism comes after, what we are living thru *now* is the closing period of the era of Industrial Capitalism. If human societies continue to be ruled by commodity exchange, wealth will continue to accumulate, there will be large and differentiated markets, and there will be commercial capitalism, mercantile capitalism etc, as there was among the Advanced Organic Societies which preceded Industrial Capitalism, ie before 1750. But these will not be capitalism on the world scale, capitalism of accumulation, as *we* have known it because there will be no technical basis, no energetic basis, for accumulation. Industrial Capitalism *itself* arose because of determined attempts to overcome energy and resource scarcities. The technologies of steam and iron arose out of learning how to use plentiful coal in place of scarce wood (not because some budding financier read Karl Marx and said "Eureka!"). Maybe some unforeseen discovery is just around the corner. But if it's going to happen, it better happen fast if it is to make a difference. Absent some scientific deus ex machina, there might also be attempts at reinventing feudalism and slavery. When capital and land become expensive (which they will, after the Crash) labour will become very cheap indeed. People will be quite dispensable. People will have to leave the cities and work on the land, and it won't be easy. There almost certainly will be (I suppose) attempts at communalism of different kinds. Many will die. 8 million people have died above demographic trendline in the USSR since 1991, a quiet holocaust. Mark _______________________________________________ Crashlist resources: http://website.lineone.net/~resource_base To change your options or unsubscribe go to: http://lists.wwpublish.com/mailman/listinfo/crashlist
