The self-serving theories of growthaholic economists peel away from this deep reality like cheap wallpaper. Since the days of Akenaten and Ceasar, overfed profiteers have insisted that their elite and esoteric genius creates wealth. When they salted the soils or decimated forests, they would march into the next watershed or “discover” another continent.

Those days are over. There are no more giant resource pools to plunder. The wealth of Pharaohs and stock hustlers arrived not from their genius, but from their facility with deception, fashioning loans with fantasy money, and trading bets on the changing value of paper promises, the modern “derivatives” market. But in the end, all this affluence relies on the real wealth: nature, her systems, her materials, and her energies.

Markets will rally and crash again, and paper pushers will stuff more cash into their safety deposit boxes, but in the end, money cannot replace soil and water. Gross domestic products provide no surrogate for authentic well-being.

As world stock markets collapsed this fall, several urgent environmental events rumbled below the superficial hand-wringing, like deep volcanoes awakening to announce, “Nature shall not be mocked.”

It’s the soil, folks

“We abuse land because we regard it as a commodity belonging to us,” wrote American ecologist Aldo Leopold five decades ago. “When we see land as a community to which we belong, we may begin to use it with love and respect.”

Economists ignored, even ridiculed, such warnings from ecologists, and the planet now faces a shortage of fertile soil, the result of erosion, salination, contamination, desertification, and a swelling population. U.N Agriculture head, Lennart Bage announced last summer, “Fertile land with access to water has become a strategic asset.” It always has been, for everything that lives.

This year, Iran bought over 1 million tons of wheat from the U.S., something they have not done since 1980. Iran would not come begging to their avowed enemy if they had any other option. Iran, the Saudis, and other oil-rich Middle East nations rely on global agriculture for grain. The United Arab Emirates buy farmland in Sudan and Kazakhstan. South Korea seeks land in Mongolia, China in Southeast Asia. Libya leases farms in the Ukraine.

With the closing of Ukrainian shipments, only three major grain exporters remain: North America, Australia, and New Zealand. However, these global producers rely entirely on fertilizers and fossil fuels. However, the production of phosphorus, principal component of fertilizer, is rare and in decline, and the era of cheap energy is coming to an end.

The big bonfire

Globalization is literally running out of gas. Geologists at the Association for the Study of Peak Oil (ASPO) Conference in California, in September, confirmed that world oil production has stopped growing and will begin its inevitable decline during the next decade.

A U.S. Department of Energy study (The Hirsch Report) warned in 2005 – the year that global production plateaued – that society required a 20-year lead time to implement an optimal new energy plan. It is already too late for such a measured response, and this failure to act in time is the direct result of denial from lobbyists and economists, who chanted “eternal growth,” while obscuring or ignoring the evidence before them.

Conventional economic theory has claimed that resources are virtually infinite, that only capital and labour are required to create “wealth.” Oil depletion exposes this tragic conceit. Oil production declined last year in eight of the top twelve producing nations. Every major oil field on the planet is in decline, and global discoveries peaked forty years ago.

Meanwhile, economic growth promoters expect humanity to double its vehicle fleet over the next decade, from 1 billion to 2 billion vehicles, while building more roads across arable farmland.

Wind and solar power developments will help mitigate the coming energy crunch, but will not replace cheap liquid fuels. Biofuels will have certain localized value, if based on agricultural waste, but will prove insignificant on a globalized scale. Corn ethanol undermines food agriculture, and will not remotely replace cheap oil. Cellulose and algae biofuel projects cannot even produce net energy, so they are not economic at any price.

New oil discoveries and recovery technologies lag hopelessly behind the decline of conventional oil fields. Oil industry promoters recently proclaimed “90 billion barrels of oil” in the Arctic. However, these lobbyists failed to mention that this oil – even if it could be confirmed and recovered – represents three years of global supply.

The best and cheapest energy source is conservation. The only environmentally feasible solution to the end of cheap liquid fuels is to burn less. Randy Udall, who drafted Colorado’s Renewable Energy Mitigation Program, told the ASPO conference that energy companies have no use for conservation. Instead, they will burn more coal, make liquid fuel from coal, and melt bitumen at unearthly temperatures in low-efficiency tar sands and oil shale projects.

Udall called our era of history “the Big Bonfire.” We burn a million tons of fossil fuel every hour, releasing 80-million tons of CO2 each day. And here, we arrive at the third big crack in the growthaholics’ thin facade.

Ancient methane

According to the international Global Carbon Project, last year’s annual increase in carbon emissions, 2.9 percent, exceeded previous projections, “generating stronger climate forcing and sooner than expected.” All the international gatherings, carbon-trading festivals, and Kyoto handshakes have failed to reduce carbon emissions or even stabilize the growth rate of these emissions.

Meanwhile, in September, Orjan Gustafsson of Stockholm University – with the International Siberian Shelf Study, sponsored by the Russian Science Academy and American Geophysical Union – announced evidence that millions of tons of a methane gas – 25 times more potent than CO2 as a greenhouse gas – now escapes into the atmosphere from beneath the Arctic seabed. As the International Panel on Climate Change (IPCC) has warned, the deep permafrost appears now to be thawing. 

Scientists on board Russian research ship Jacob Smirnitskyi recorded methane bubbling to the sea surface, causing air-borne concentrations 100-times background levels. Ten previous expeditions since 2003 did not detect these levels of free methane. The new data describes releases so intense that the methane does not have time to dissolve in seawater but rises as bubbles to the ocean surface. Similar releases have been recorded in the East Siberian and Laptev Seas, amounting to millions of tons of methane from melting sub-sea permafrost.

The escaping methane represents a massive exhalation of ancient hydrocarbons likely captured in the Paleozoic warm era when amphibians crawled from the sea. The carbon escaped once before, during the Permian ecological collapse, 225 million years ago, leading to peak Mesozoic heat, and was recaptured as methane during the last 100-million years. Meteorologists warn that this significant store of ancient carbon could lead to run-away global warming, far beyond the influence of human technologies to sequester or forestall.

The methane represents an unaccounted cost of doing business in the era of the big bonfire. Market wizards may shave toxic assets from their balance sheets, but they cannot dictate nature’s accounting.

Resilience

Regardless of stopgap bailouts and more paper promises, economic collapse will continue in fits and starts until humanity achieves genuine ecological balance, adopts a steady state economy, and finally understands that ecology is the foundation of human enterprise. There are only two options for living cultures in a physical system: homeostasis or collapse.

Future generations will have every right to dismiss “the big bonfire” as an era of ignorance and  unconscionable excess. But I want future generations to know this: Many from our generation never sold you out. We kept our eyes open, witnessed the truth, and did our best to warn our bumbling, myopic civilization.

I speak to young people, who are terrified and/or angry about the state of the world, the wasteful extravagance of society, and needless ecological destruction. I experienced similar reactions when I learned as a child that our world could be vaporized by nuclear weapons. When we’re young, our families and teachers protected us from certain disturbing realities. If we remain naïve or ill-informed, the discovery of alarming truths about our world may create shock and outrage.

The best way to never again be disillusioned is to not be illusioned in the first place.

Economic slight of hand won’t restore our place on this earth. Human survival strategies now will be as much about resilience during transformation as finding “solutions” to preserve untenable expectations. Our resilience will include a rediscovery of a richer life with simpler means, a genuine quality of life that cannot be purchased but only lived. Human society can change, and in fact has to change. Don’t get depressed. Get informed and get active.

See this and other essays at "Deep Green," on the Greenpeace International site.

In the 1980s, fishermen caught the last wild Beluga sturgeon from the Sea of Azov, source of prized caviar, and wild sturgeon in the Caspian Sea failed to reproduce. The sturgeon catch plunged by 95 percent, and the cost of caviar soared. Such extraordinary price growth is known as "hyperinflation," or as economist Eric Sprott says, "the caviar syndrome."

This may sound trivial regarding caviar, but hyperinflation turns critical with commodities such as oil, gas, copper, zinc, water, or fine hardwood, all now growing rare on a global scale. Industrial civilization has already depleted the best and most accessible of these resources. Sturgeons might recover if we leave them alone, but copper and oil do not reproduce themselves.

As humanity scours every last region of the planet for resources, we enter a new historic period in which certain vital commodities no longer have a traditional market price linked to demand and supply, but rather to the cost of access.

Hitting the wall

In April, 500 migrating ducks landed on a Syncrude Canada oilsands tailing pond and perished. Syncrude CEO Tom Katinas reported being "very saddened" by this, quickly banned media from the site, and issued an internal memo: "It is our responsibility to ensure that the best interests of Syncrude are maintained." To clarify, the oil company’s best interest is cash flow, not ducks.

The Canadian oilsands, once promoted as a saviour of the world petroleum crisis, now appears anaemic. Shell Canada recently adjusted its oilsands production estimates from CAN$ 7.3 to CAN$ 11 billion, an abrupt 50-percent cost increase. Then, last month, Imperial Oil geologist Clement Bowman insisted that the Canadian government commit billions of dollars to solve "the huge environmental problems associated with the resource," namely, carbon-dioxide emissions, water divergence, a nuclear power plant to boil the sludge, dead ducks, and an obliterated prairie ecosystem. Bowman emphasized that unless these environmental issues are solved, "the oilsands have almost hit the wall."

There you have it. The "wall" is profitability. The "free-market" strategy to dodging this wall is public welfare: socialize the costs; privatize the profits.

The full environmental and social costs of doing business are never reported on the operating budgets of these billionaire companies. Public money and toxic lakes do not appear on the balance sheets. Why? Because it wouldn’t be profitable. Investments from the public and from nature don’t earn stock options, although the free market wizards need these investments to avoid hitting the wall.  

The Alberta, Canada oilsands: obliterated prairies 

Great powers  

Since 2003, the US has spent over a trillion dollars, and killed over a million people, to secure Iraq’s oil supply. The long-term public cost of the war is now projected to reach US$ 2-3 trillion, which roughly amounts to a US$ 30/barrel subsidy for every drop of oil in the Iraqi proven oil reserves.

Nations have waged oil wars for a century, since 1912, when the British Navy abandoned coal for oil and Winston Churchill declared, "You have got to find the oil … purchased regularly and cheaply in peace, and with absolute certainty in war." Such tactics are not lost on China. "A great power must be one that controls more resources," wrote Zhang Wenmu, a research fellow at the China Institute of Contemporary International Relations, "and there has never been a case in history where such a pursuit is realized in peace."

To gain access to forests and oil fields, China finances thugs in Burma and Sudan, just as the US has backed deadly juntas in El Salvador and Chile, or Russia in its provinces. China has caught up with the US and Europe in consumption, now using over a quarter of the world’s copper and steel, and half the cement. Note that we now discuss resource use in large fractions of the Earth’s entire supply.

Construction projects in poorer countries simply stall because there isn’t enough cement or steel at any price.

The rising costs of retrieving oil – war, subsidies, energy input, and ecological disaster relief – will increase the price of everything. Economists call this "cost-push" inflation, a more virulent strain than commonly reported inflation. Central banks are helpless to manipulate cost-based inflation with bank rates or money supply. This state of affairs is the logical conclusion of growth economics on a fixed planet warmed by a modest star.

Bidding wars

In 1979, Soviet geologists discovered the world’s largest undeveloped copper deposits in Afghanistan. The CIA-armed Taliban booted out the Russians, and in 2005, companies from the UK, US, and Canada bid for the rights to the Afghani Anyak copper field. The bids came in at about US$ 1.2 billion, including infrastructure, roads, a power plant, and a profit margin acceptable to shareholders.

But then, in the fall of 2007, China offered Afghanistan US$ 2.8 billion for the copper, more than doubling the effective value in a single stroke. By financing US trade debt, China holds fist-fulls of rapidly sinking US dollars that they would rather trade for resources, Sudanese oil, Afghani copper, or swaths of northern Alberta. The estimated 12 million tons of copper in the Anyak field – the largest known untapped reserve in the world – will supply China for four years.

No profit-minded company could have matched the Chinese copper bid, because it left no profit. Overnight, world copper prices were no longer about supply and demand, but about access. Since 2003, the price of copper has soared from US$ 0.81 per pound to over US$ 3.90, a surge of about 38 percent annually. Traditional economic theory tells us that commodity price increases dampen consumption and boost supply by making marginal deposits profitable. However, the reverse is now true with oil, copper, and other limited natural products. As price accelerates, global demand still grows, and recoverable reserves still dwindle, unleashing hyperinflation, the End of Price, an era in which access to vital commodities is about power, not market mechanisms.

Human suffering also booms with commodity prices. Gulf News economics writer Sean Kelleher suggests, "we are into a new paradigm." Surging commodity prices, he writes, "might well be a boon to investors, but it will be a burden to the poorer end of all societies." Traditional wealth creation reveals its dark side. China’s Southern Metropolis Daily reports that an open child slave trade now thrives within China. Factory managers purchase children "like cabbages" in Sichuan street markets and ship them to the Pearl River Delta industrial heartland, following the tradition of English textile factories, Belgian rubber dealers in the Congo, or American cotton barons.

We now see the real face of modern industrialism: plunder public assets, enrich the wealthy, exploit child slaves, lay waste to living habitats, design obsolescence, and sell shoddy goods in community-killing giant box stores. On paper, it’s all profitable. In reality, the ship of industry steams forward like the Titanic.

The tech fix  

Another favourite theory of the growth economists is that "technology" will save us from resource depletion. Ethanol will replace petroleum. Oops. We forgot that corn grows in soil that once supported forests or supplied food.

Innovators, we hear, will allegedly find alternatives for everything, but copper and oil, for example, possess unique properties. Copper water pipe is strong and flexible at a wide range of temperatures, antibacterial, and easy to use. Copper remains essential for high-efficiency, high tech electronics that supposedly promise efficiency gains.

As James Kunstler explains in The Long Emergency, technology is not energy. Technology costs energy. Electronic wizardry does not replace a depleted earth. The world’s copper, lead, and tin consumption might endure for 20 years at current rates before it reaches the "caviar syndrome." Bauxite and iron ore may last 50 years. But the clock keeps ticking, 3 billion more people will inhabit the planet in 50 years, and nature shall not be mocked.

Bankrupt theories  

Robert Ayres, Professor Emeritus at the INSEAD business school in France, explains that eternal-growth economists make four erroneous assumptions:  

1. Steady growth projected into the future is a fallacy. There are no examples in nature of exponential growth continuing indefinitely.

 

2. Traditional economic growth models rely on an unjustifiable simplification of human activity, and an ignorance of nature’s laws and complexities.

 

3. Growth economists imagine abstract firms and consumers making optimum decisions with perfect information. None of this exists. Sovereign, monopolistic, and special interests direct decisions and foreclose valuable options.

 

4. The theory that capital, plus labour and technology, equals growth ignores nature’s requirements and limits.

To this we may add the so-called "invisible hand" of Adam Smith. The theory assumes that people pursuing their own self interest will guide civilization to the "best possible world." The evidence of history shows that no such invisible hand transforms collective greed into paradise. The history of slavery, sweatshops, and dead lakes filled with toxic sludge attest to this fallacy.  

Traditional economists – socialist and capitalist – have presumed that industrial output could grow forever. Other more visionary economists – Donella Meadows, Herman Daly, Hazel Henderson, E.F. Schumacher – long ago pointed out that traditional economic theory forgot to account for ecological systems and natural value.

Even some traditional economists now recognize the error. A 2008 Goldman-Sachs investment report about commodity shortages stated, "we see parallels with Malthusian economics." Engineers, planners, UN advisors, and investment bankers now commonly admit that the maligned economist Malthus was essentially correct. His work involves nothing more obscure than high-school calculus. The limits to growth are real.

Earth’s economics  

We now see that our galloping economies rely on handouts, massive debt, war, abuse, waste, and a diminished earth. Rivers die, species go extinct, forests disappear, deserts grow, and people suffer. This state of affairs signals social dysfunction on a global scale. The industrial world exhibits sociopathic and "ecopathic" behaviour. Innocent citizens sometimes appear traumatized, even while doing their best to remain optimistic and apply creative solutions.

Daly, Henderson, Ayers, Mark Anielski, Nicholas Stern, and many other sound economists have described more accurate economic theories that recognize natural value and authentic quality of life. What human enterprise must now learn is this:

The ecology is the economy.

Everything we use, every innovation, every human enterprise or simple pleasure rests on the bounty of the Earth. Economists ignore ecology at our peril. The end of conventional price puts ecology and nature in proper perspective: priceless.

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See this and other Rex Weyler blog posts

at “Deep Green” Greenpeace International