I am going to attempt to abstractly present to you a tool to adapt your life going forward into a world in decline. This is a rough analysis that should be considered as an attitude not as a hard variable. The nature of decline and collpase is 80% attitude and only 20% concrete action. It is proper attitude that is a force multiplier that impacts the 20% so greatly.
Wise choices now are more important than ever as the margins of survival shrink. Work on your attitude and the 20% of action that is so important to your feeling of well being will happen more naturally. If we are in an age of decline then think decline. You will have to live in a world preaching growth. Somewhere in this juxtaposition you can find a better path. There are no refuges but there are manageable solutions to less pain and suffering.
You need to take this 40% number and discount your life for what appears to be reality represented by society. This is not the actual reality of the age of decline. The linked and highlighted article following my discussion is telling of a world oblivious to reality. This article helps explains this 40% figure that represents the discounted value of perceived reality. The 40% represents excess claims to affluence from surplus energy.
Debt, inflation, and unavailability of goods and services are affecting all of our lives. This 40% figure is a tag for this divergence of value. This “bid and ask” is between the real economy of physical realities of energy, goods, and services and the abstract economy of financialization. Money is not things and as money becomes further divorced from things decline goes nonlinear because of systematic interconnectedness. Growth is slow and predictably builds upon itself. Collapse is rapid and unpredictable.
The corruption of the finalized economy with its moral hazard of disregard for basic accounting principles is allowing continued divergence by allowing elites to maintain their wealth levels. This distortion of free and fair markets for proper price discovery now points to a late-stage capitalism of decline that is global and all inclusive. Without proper price discovery the efficiency of resource utilization is not possible. This means malinvestment and the marked-to-market of a proxy value that does not reflect actual productive value.
The priveldge of having access by a few to the concentration and centralization of this proxy wealth is leading to extreme wealth inequality. This has created a parasitic class. This class represents the elites who command the administrative and law-making bodies. This combination is a revolving door of patronage and employment. This arrangement means the checks and balances that prevent the looting of the public domain by private interests has all but been eliminated. Corruption is now the new work ethic. This is how you succeed and this has created a new business skill of psychopathy of greed is a social good.
This class is now taking this proxy value which is a wealth abstraction even further by embracing the technocracy of authoritarian control and efficiency efforts to homogenize and herd the general public into a conformity that can be controlled to ensure elite wealth and power preservation. They will tell you this is for your benefit and the planet. They care for only one thing and that is power. This power brings them wealth and this wealth will be on your backs as a tax on everything you have including your dignity.
This technocratic new world order will be financialization on steroids by valuing you the individual digitally. The Great Reset which is no longer a secret, wants you to own nothing and be happy. This corporatist and statist arrangement will own the assets and control its disbursement based upon your credit value from social and productive utility to their economic model. You will be evaluated by algorithms that will watch everything you do within their model. You will be regulated to serf status based upon conformity.
The insidious realty of this situation is it represent the slide into decline that civilizations eventually fall into when limits are bumped up to then exceeded. There is no solution for this other than degrowth, dematerialization, and a decoupling from a false affluence. This means an abrupt return to the hard limits of living within your means we thought modernism delivered us from. Our technology and innovation we thought were so powerful will actually be our undoing.
This means the parasitic class and their new economic, social, and political arrangement will end and this ending will be spectacular. The current danger comes from disregarding the warning signs that are now flashing red. Each incremental step in this direction is logarithmic. This is because destructive change is going nonlinear.
This latest transition phase now called the fourth industrial revolution will take us even further away from the stability of a real economy that provides the basics with a degree of resilience and sustainability. This new economic paradigm that will by initiated will take the delocalization and the reliance on technology even further from what civilization is capable of maintaining.
This 40% figure needs to be a benchmark for you to ascertain where you fit into this deviation from what is real. The more wealth you have the closer you are to this 40% figure. The place you have in the financialized global economy is especially important. This includes geography because the more financialized the local economy the greater the concentration of people and resources brought in from afar. Concentration and specialization are a key component of overreach.
How much of your prosperity is based upon a connection to this abstract wealth and what is your location to it? How much of your wellbeing is from a safety net and or financial investments? Most safety nets are unfunded liabilities. Most financial investments are grossly overvalued. Geographic locations that house these abstractions are not sustainable. If you have an administrative job in government then you are part of the administrative state that will be rationalized by decline.
So, this 40% can be adjusted by how close or how far you are from this intrinsic overvalue. This means our food, shelter, and energy is vitally important now. How far does it travel to get to you? The inconvenient truth is the time for adjustment to this reality is closing shut. The ability for many to pick up and move to a better location is almost over. This is further compounded by what specialization has done to the ability of people to localize themselves in a natural sustainability with the skills needed.
Being able to practice the home economics of maintaining shelter is huge but these days discounted. The reality of a local community that has enough specialized abilities located within its geography along with people with generalize basic skills has been forced out by efficiency. In modern economies 2% of the population grow things and this is primarily an industrial practice. A century ago, 40% were on the land and many people practiced basic food production and preservation. Food was more seasonal and structure were smaller and easier to heat and cool.
You can ignore this and live day by day or you can embrace decline and live day by day. Get out of future think in either case. The first way is psychologically easier and it is called denial. The other is embracing reality with humility and acceptance that leads to a sobriety of action. There are activities and things you can triage out of your lives. There are goals and dreams that need to be ended because of the reality of this 40% discount. The truth is your response will be a combination of the two based upon what is forced upon you.
Remember the forces of degrowth are abandonment, dysfunction, and irrational. Abandonment is difficult to avoid because this is a physical reality of loss. Dysfunction can be managed if you aware of it. This is an abstract systematic reality that you can distance yourself from. You can’t leave it but you can avoid making it worse. The irrational you can fully avoid. Embrace the truth that this world is no longer growing but the narrative is growth based.
This means your affluence is either in actual decline or you are continuing an overextension that will make you life even more dangerously exposed to decline. The elites will take the brunt of this sudden breakdown. Those who are now being disenfranchised will be better able to adapt that is to a point. There is a point where a life does not function without the basics.
This is why the interplay of denial and acceptance is so important to you the individual now in this new age of decline. All of us have a limit of how much truth we can handle when this truth is adverse. You need to find a functional balance. The overwhelming anxiety of a bad future prevents a living and enjoying of the here and now. There is much to rejoice in now don’t waste this.
There is only so much change you can do but there is some change that is critically important. The sobriety and acceptance of this new paradigm of an age of decline is a prerequisite filter to making plans. Be very careful what you invest in with your time, money, and most of all expectations. Entertain a stoic, spartan, an ascetic flavoring to your life that is locked into limits to change and limits to growth.
This 40% can be managed 10% either way by adapting accordingly. Those who end up in the 30% range will have a margin of adaptability that may save them. Most of us can give up 30% but 50% is too much. This is a time where societies 40% overextension into overshoot can be moved 10% either way by you the individual. Embracing the reality of how affluent modern life really is will give you a tremendous edge. Forgo anything that claims returns that do not fit into this negative 40% reality.
“Surplus Energy Economics”
“#225. Gravitational pull”
“There are, essentially, two ways in which we can seek to explain the working of the economy. One of these is the conventional or orthodox school of thought, which presents economics as a process determined by the behavior of money, and acknowledges no limits to the potential for growth. For the best part of nine years, this site has endeavored to encourage, explore, model and quantify the alternative interpretation, which states that prosperity is a product of the use of energy, and that there are very real resource and environmental limits to economic expansion.”
“The “laws” of economics are not, in fact, analogous to the laws of science. Rather, they are observations about the behavior of money. The central conclusion of this orthodoxy is that there need be no limits to economic growth, because the driver of expansion is under our control as the creators and managers of money. Monetary causation enables us to use pricing, incentives and demand to circumvent all material limitations. A more recent refinement of this theme combines technical innovation with monetary management to assure us that all material limits can be circumvented, through technology and monetary management, such that ‘growth in perpetuity’ is perfectly feasible, and can be used as a reliable forward presumption.”
“The alternative thesis reasons from entirely different predicates. Instead of assuming that future energy requirements are a function of assumed economic expansion, our understanding is that prosperity is a function of the availability of energy value. The energy approach to economics starts with recognition that the economy is an energy system, because nothing that has any economic utility at all can be provided without the use of energy…‘the principle of ECoE’. This recognizes that, whenever energy is accessed for our use, some of this energy is always consumed in the access process.”
“In Surplus Energy Economics (SEE), this ‘consumed in access’ component is known as the Energy Cost of Energy (ECoE), and is expressed as a percentage. Importantly, energy cannot be used twice. This means that the proportion of total energy supply absorbed as ECoE cannot also be used for any other economic purpose. This in turn means that material economic prosperity is a function of the availability of surplus (ex-ECoE) energy. We know that ECoEs are shaped by geographic reach, economies of scale and the process of depletion. With the potential of reach and scale now exhausted, depletion has become the factor driving the ECoEs of oil, gas and coal…Critically, though, it is self-evident that the potential of technology is circumscribed by the limitations of physics, which in this case means the material characteristics of energy resources.”
“This understanding is critical, because it takes the potential of renewables out of the realm of wishful thinking, and requires us to accept two limitations to the potential economic value of renewables. First, we know that the resources required for the creation and maintenance of renewables capacity are products of the legacy energy provided by oil, gas and coal. This means that the trajectory of the ECoEs of renewables is linked to that of fossil fuels. Second, we also know that renewables have their own constraints, most obviously the Shockley-Queisser limit to the theoretical maximum efficiency of solar power generation, and the Betz’ law equivalent for wind power.”
“We further recognize that ECoEs affect both the delivery costs and the affordability of energy. This means that ECoE trends determine, not just the qualitative nature of available energy, but the quantitative issue of supply. The last of our three principles – otherwise known as “the trilogy of the blindingly obvious” – is that money has no intrinsic worth, but commands value only as a ‘claim’ on the goods and services made available by the material economy of energy. On this basis, we arrive at the transformative conception that there are two economies. One of these is the proxy or financial economy of money, credit and assets. The other is the material or real economy of goods, services, labor and energy.”
“On this basis, the creation of money in its various forms can outgrow the underlying economy, but this process simply creates what are known in SEEDS terminology as “excess claims”. Much of our recent economic and financial experience can be explained as the creation of ever more abundant excess claims which, by definition, cannot be honored ‘for value’ by a smaller underlying or ‘real’ economy…prosperity per person has plateaued, and has now turned downwards…the real cost of essentials has continued to rise, in large part because so many necessities are energy-intensive…Finally, where these overview indicators are concerned, an enormous gap has emerged between the financial and the real economies, such that the economy of goods, services and energy is now about 40% smaller than its financial proxy of money, credit and assets.”
“You will appreciate that, because prices are the interface between the real and the financial economies, inflation is a natural consequence of this divergence or, rather, of the pressures that operate towards the restoration of equilibrium between the two economies…the systemic understatement of inflation by conventions which, amongst other quirks, exclude asset price rises from a definition of inflation which concentrates on – and, even then, understates – changes in consumer prices…It warns us that a major correction looms between the ‘two economies’, a correction that must involve financial ‘value destruction’ as a consequence of the elimination of ‘excess claims’.”
“We are now at liberty to recognize that each rise in the price of fossil fuels, whilst it increases the cost of using conventional cars and commercial vehicles, also raises the price of all of those materials (including steel, concrete, copper, lithium and cobalt) that are required for energy transition. We can place the undoubted environmental downsides of this transition into a broader context. We can take cognizance of the fact that the ECoEs of renewables are linked to those of fossil fuels through renewables’ reliance on resources which can only be made available by the legacy energy provided by oil, gas and coal.”
“If you’re in government, it tells you that future resources are going to be far less than you might hitherto have assumed, and that the provision of essentials is set to become the critical battleground between competing priorities. If you’re in business, it tells you that we cannot rely on growth, least of all in discretionary sectors, and that the scope for capital investment is poised to decrease rather than to expand. It anticipates the wholesale failure of business models based on false predicates, and suggests that the taxonomy of de-growth – with its emphasis on product and process simplification, on delayering, and on managing utilization and critical mass risks – is the appropriate template for decisions.”
2 thoughts on “Discount”
Thanks for posting this. Exactly the pep talk I needed to read right now as I need this kind of brave sobering (yet comforting) writing as I:
– put on the brave face to work in my “administrative job in government” as you put it (trying to get postgrowth on the agenda, where everyone is still under the yoke of neoclassical economics)
– support my wife who suffers from depression, feeling isolated from family and friends who are caught up in their own issues yet will look to me for hope for the future
– build our homestead up with greater self-sufficiency (possibly close to 40% now for all food.)
Greg, I need the prep talk too so I am speaking to myself also. I consider myself an expert prepper and skilled with goats and cattle. I heat with wood and we grow some of our food. My problem is I am living a comfortable middle-class life complete with good foods, clothing, amazon stuff, and nice home etc. I can green prep and live middle class because of investments from when I was younger. It is sobering when I digest my own words of what is ahead for me. Just because I talk about the sacrifices ahead does not mean I will do any better at stomaching the discomforts. It is human nature to find less affluence a downer.
I hope the best for you. It sounds like you have that attitude component to this struggle that turns the pessimism of decline into the optimism of action. You will be a leader for your family and friends to find strength in. There are days when I don’t know where to start but no matter how beaten down I am I do something for the day. Rarely is there a day I don’t do anything. Stay the course and don’t weaken.