Published
Dec 4 2006 by
Energy Bulletin, Archived
Dec 4 2006 Closing the 'Collapse Gap': the
USSR was better prepared for
collapse than the US
by Dmitry Orlov
Good evening, ladies and gentlemen. I am not an expert or a scholar or
an activist. I am more of an eye-witness. I watched the Soviet Union
collapse, and I have tried to put my observations into a concise
message. I will leave it up to you to decide just how urgent a
message it is.
My talk tonight is about the lack of collapse-preparedness here in
the United States. I will compare it with the situation in the Soviet
Union, prior to its collapse. The rhetorical device I am going to use
is the "Collapse Gap" – to go along with the Nuclear Gap, and the
Space Gap, and various other superpower gaps that were
fashionable during the Cold War.
Slide [2] The subject of economic collapse is generally a sad one.
But I am an optimistic, cheerful sort of person, and I believe that,
with a bit of preparation, such events can be taken in stride. As
you can probably surmise, I am actually rather keen on observing
economic collapses. Perhaps when I am really old, all collapses will
start looking the same to me, but I am not at that point yet.
And this next one certainly has me intrigued. From what I've seen
and read, it seems that there is a fair chance that the U.S. economy
will collapse sometime within the foreseeable future. It also would
seem that we won't be particularly well-prepared for it. As things
stand, the U.S. economy is poised to perform something like a
disappearing act. And so I am eager to put my observations of the
Soviet collapse to good use.
Slide [3] I anticipate that some people will react rather badly to having
their country compared to the USSR. I would like to assure you that the
Soviet people would have reacted similarly, had the United States
collapsed first. Feelings aside, here are two 20th century superpowers,
who wanted more or less the same things – things like technological
progress, economic growth, full employment, and world domination –
but they disagreed about the methods.
And they obtained similar results – each had a good run, intimidated
the whole planet, and kept the other scared. Each eventually went
bankrupt.
Slide [4] The USA and the USSR were evenly matched in many categories,
but let me just mention four.
The Soviet manned space program is alive and well under Russian
management, and now offers first-ever space charters. The Americans
have been hitching rides on the Soyuz while their remaining spaceships
sit in the shop.
The arms race has not produced a clear winner, and that is excellent
news, because Mutual Assured Destruction remains in effect. Russia
still has more nuclear warheads than the US, and has supersonic cruise
missile technology that can penetrate any missile shield, especially a
nonexistent one.
The Jails Race once showed the Soviets with a decisive lead, thanks to
their innovative GULAG program. But they gradually fell behind, and in
the end the Jails Race has been won by the Americans, with the highest
percentage of people in jail ever.
The Hated Evil Empire Race is also finally being won by the Americans.
It's easy now that they don't have anyone to compete against.
Slide [5] Continuing with our list of superpower similarities, many of the
problems that sunk the Soviet Union are now endangering the United
States as well. Such as a huge, well-equipped, very expensive military,
with no clear mission, bogged down in fighting Muslim insurgents. Such
as energy shortfalls linked to peaking oil production. Such as a
persistently unfavorable trade balance, resulting in runaway foreign
debt. Add to that a delusional self-image, an inflexible ideology, and
an unresponsive political system.
Slide [6] An economic collapse is amazing to observe, and very interesting
if described accurately and in detail. A general description tends to fall short
of the mark, but let me try. An economic arrangement can continue for quite
some time after it becomes untenable, through sheer inertia. But at some
point a tide of broken promises and invalidated assumptions sweeps it all
out to sea.
One such untenable arrangement rests on the notion that it is
possible to perpetually borrow more and more money from abroad, to pay
for more and more energy imports, while the price of these imports continues
to double every few years. Free money with which to buy energy equals free
energy, and free energy does not occur in nature. This must therefore be a
transient condition. When the flow of energy snaps back toward equilibrium,
much of the US economy will be forced to shut down.
Slide [7] I've described what happened to Russia in some detail in
one of my articles, which is available on
SurvivingPeakOil.com. I don't
see why what happens to the United States should be entirely
dissimilar, at least in general terms. The specifics will be different,
and we will get to them in a moment. We should certainly expect
shortages of fuel, food, medicine, and countless consumer items,
outages of electricity, gas, and water, breakdowns in transportation
systems and other infrastructure, hyperinflation, widespread shutdowns
and mass layoffs, along with a lot of despair, confusion, violence, and
lawlessness. We definitely should not expect any grand rescue plans,
innovative technology programs, or miracles of social cohesion.
Slide [8] When faced with such developments, some people are quick to
realize what it is they have to do to survive, and start doing these things,
generally without anyone's permission. A sort of economy emerges,
completely informal, and often semi-criminal. It revolves around liquidating,
and recycling, the remains of the old economy. It is based on direct access
to resources, and the threat of force, rather than ownership or legal
authority. People who have a problem with this way of doing things,
quickly find themselves out of the game.
These are the generalities. Now let's look at some specifics.
Slide [9] One important element of collapse-preparedness is making
sure that you don't need a functioning economy to keep a roof over
your head. In the Soviet Union, all housing belonged to the government,
which made it available directly to the people. Since all housing was also
built by the government, it was only built in places that the government
could service using public transportation. After the collapse, almost
everyone managed to keep their place.
In the United States, very few people own their place of residence free
and clear, and even they need an income to pay real estate taxes. People
without an income face homelessness. When the economy collapses, very
few people will continue to have an income, so homelessness will become
rampant. Add to that the car-dependent nature of most suburbs, and what
you will get is mass migrations of homeless people toward city centers.
Slide [10] Soviet public transportation was more or less all there was, but
there was plenty of it. There were also a few private cars, but so few that
gasoline rationing and shortages were mostly inconsequential. All of this
public infrastructure was designed to be almost infinitely maintainable, and
continued to run even as the rest of the economy collapsed.
The population of the United States is almost entirely car-dependent, and
relies on markets that control oil import, refining, and distribution. They also
rely on continuous public investment in road construction and repair. The
cars themselves require a steady stream of imported parts, and are not
designed to last very long. When these intricately interconnected systems
stop functioning, much of the population will find itself stranded.
Slide [11] Economic collapse affects public sector employment almost as
much as private sector employment, eventually. Because government
bureaucracies tend to be slow to act, they collapse more slowly. Also,
because state-owned enterprises tend to be inefficient, and stockpile
inventory, there is plenty of it left over, for the employees to take home,
and use in barter. Most Soviet employment was in the public sector, and
this gave people some time to think of what to do next.
Private enterprises tend to be much more efficient at many things. Such
laying off their people, shutting their doors, and liquidating their assets.
Since most employment in the United States is in the private sector, we
should expect the transition to permanent unemployment to be quite
abrupt for most people.
Slide [12] When confronting hardship, people usually fall back on their
families for support. The Soviet Union experienced chronic housing
shortages, which often resulted in three generations living together
under one roof. This didn't make them happy, but at least they were
used to each other. The usual expectation was that they would stick
it out together, come what may.
In the United States, families tend to be atomized, spread out over
several states. They sometimes have trouble tolerating each other
when they come together for Thanksgiving, or Christmas, even during
the best of times. They might find it difficult to get along, in bad times.
There is already too much loneliness in this country, and I doubt that
economic collapse will cure it.
Slide [13] To keep evil at bay, Americans require money. In an economic
collapse, there is usually hyperinflation, which wipes out savings. There
is also rampant unemployment, which wipes out incomes. The result is a
population that is largely penniless.
In the Soviet Union, very little could be obtained for money. It was
treated as tokens rather than as wealth, and was shared among
friends. Many things – housing and transportation among them – were
either free or almost free.
Slide [14] Soviet consumer products were always an object of derision –
refrigerators that kept the house warm – and the food, and so on. You'd
be lucky if you got one at all, and it would be up to you to make it work
once you got it home. But once you got it to work, it would become a
priceless family heirloom, handed down from generation to generation,
sturdy, and almost infinitely maintainable.
In the United States, you often hear that something "is not worth
fixing." This is enough to make a Russian see red. I once heard of an
elderly Russian who became irate when a hardware store in Boston
wouldn't sell him replacement bedsprings: "People are throwing away
perfectly good mattresses, how am I supposed to fix them?"
Economic collapse tends to shut down both local production and
imports, and so it is vitally important that anything you own wears out
slowly, and that you can fix it yourself if it breaks. Soviet-made stuff
generally wore incredibly hard. The Chinese-made stuff you can get
around here – much less so.
Slide [15] The Soviet agricultural sector was notoriously inefficient.
Many people grew and gathered their own food even in relatively
prosperous times. There were food warehouses in every city, stocked
according to a government allocation scheme. There were very few
restaurants, and most families cooked and ate at home. Shopping
was rather labor-intensive, and involved carrying heavy loads.
Sometimes it resembled hunting – stalking that elusive piece of meat
lurking behind some store counter. So the people were well-prepared
for what came next.
In the United States, most people get their food from a supermarket,
which is supplied from far away using refrigerated diesel trucks.
Many people don't even bother to shop and just eat fast food.
When people do cook, they rarely cook from scratch. This is all
very unhealthy, and the effect on the nation's girth, is visible, clear
across the parking lot. A lot of the people, who just waddle to and
from their cars, seem unprepared for what comes next. If they
suddenly had to start living like the Russians, they would blow
out their knees.
Slide [16] The Soviet government threw resources at immunization
programs, infectious disease control, and basic care. It directly operated
a system of state-owned clinics, hospitals, and sanatoriums. People
with fatal ailments or chronic conditions often had reason to complain,
and had to pay for private care – if they had the money.
In the United States, medicine is for profit. People seems to think
nothing of this fact. There are really very few fields of endeavor to
which Americans would deny the profit motive. The problem is, once
the economy is removed, so is the profit, along with the services it
once helped to motivate.
Slide [17] The Soviet education system was generally quite excellent.
It produced an overwhelmingly literate population and many great
specialists. The education was free at all levels, but higher education
sometimes paid a stipend, and often provided room and board. The
educational system held together quite well after the economy
collapsed. The problem was that the graduates had no jobs to look
forward to upon graduation. Many of them lost their way.
The higher education system in the United States is good at many
things – government and industrial research, team sports, vocational
training... Primary and secondary education fails to achieve in 12 years
what Soviet schools generally achieved in 8. The massive scale and
expense of maintaining these institutions is likely to prove too much
for the post-collapse environment. Illiteracy is already a problem in the
United States, and we should expect it to get a lot worse.
Slide [18] The Soviet Union did not need to import energy. The
production and distribution system faltered, but never collapsed.
Price controls kept the lights on even as hyperinflation raged.
The term "market failure" seems to fit the energy situation in the
United States. Free markets develop some pernicious characteristics
when there are shortages of key commodities. During World War II,
the United States government understood this, and successfully
rationed many things, from gasoline to bicycle parts. But that was a
long time ago. Since then, the inviolability of free markets has become
an article of faith.
Slide [19] My conclusion is that the Soviet Union was much better-
prepared for economic collapse than the United States is.
I have left out two important superpower asymmetries, because
they don't have anything to do with collapse-preparedness. Some
countries are simply luckier than others. But I will mention them, for
the sake of completeness.
In terms of racial and ethnic composition, the United States resembles
Yugoslavia more than it resembles Russia, so we shouldn't expect it
to be as peaceful as Russia was, following the collapse. Ethnically
mixed societies are fragile and have a tendency to explode.
In terms of religion, the Soviet Union was relatively free of apocalyptic
doomsday cults. Very few people there wished for a planet-sized
atomic fireball to herald the second coming of their savior. This was
indeed a blessing.
Slide [20] One area in which I cannot discern any Collapse Gap is national
politics. The ideologies may be different, but the blind adherence to them
couldn't be more similar.
It is certainly more fun to watch two Capitalist parties go at each other
than just having the one Communist party to vote for. The things they
fight over in public are generally symbolic little tokens of social policy,
chosen for ease of public posturing. The Communist party offered just
one bitter pill. The two Capitalist parties offer a choice of two placebos.
The latest innovation is the photo finish election, where each party buys
50% of the vote, and the result is pulled out of statistical noise, like a
rabbit out of a hat.
The American way of dealing with dissent and with protest is certainly
more advanced: why imprison dissidents when you can just let them
shout into the wind to their heart's content?
The American approach to bookkeeping is more subtle and nuanced than
the Soviet. Why make a state secret of some statistic, when you can just
distort it, in obscure ways? Here's a simple example: inflation is "controlled"
by substituting hamburger for steak, in order to minimize increases to
Social Security payments.
Slide [21] Many people expend a lot of energy protesting against their
irresponsible, unresponsive government. It seems like a terrible waste
of time, considering how ineffectual their protests are. Is it enough of a
consolation for them to be able to read about their efforts in the foreign
press? I think that they would feel better if they tuned out the politicians,
the way the politicians tune them out. It's as easy as turning off the
television set. If they try it, they will probably observe that nothing about
their lives has changed, nothing at all, except maybe their mood has
improved. They might also find that they have more time and energy to
devote to more important things.
Slide [22] I will now sketch out some approaches, realistic and
otherwise, to closing the Collapse Gap. My little list of approaches
might seem a bit glib, but keep in mind that this is a very difficult
problem. In fact, it's important to keep in mind that not all problems
have solutions. I can promise you that we will not solve this problem
tonight. What I will try to do is to shed some light on it from several
angles.
Slide [23] Many people rail against the unresponsiveness and
irresponsibility of the government. They often say things like "What is
needed is..." plus the name of some big, successful government
project from the glorious past – the Marshall Plan, the Manhattan
Project, the Apollo program. But there is nothing in the history books
about a government preparing for collapse. Gorbachev's "Perestroika"
is an example of a government trying to avert or delay collapse. It
probably helped speed it along.
Slide [24] There are some things that I would like the government to
take care of in preparation for collapse. I am particularly concerned
about all the radioactive and toxic installations, stockpiles, and dumps.
Future generations are unlikely to able to control them, especially if
global warming puts them underwater. There is enough of this muck
sitting around to kill off most of us. I am also worried about soldiers
getting stranded overseas – abandoning one's soldiers is among the
most shameful things a country can do. Overseas military bases should
be dismantled, and the troops repatriated. I'd like to see the huge
prison population whittled away in a controlled manner, ahead of time,
instead of in a chaotic general amnesty. Lastly, I think that this farce with
debts that will never be repaid, has gone on long enough. Wiping the
slate clean will give society time to readjust. So, you see, I am not asking
for any miracles. Although, if any of these things do get done, I would
consider it a miracle.
Slide [25] A private sector solution is not impossible; just very, very
unlikely. Certain Soviet state enterprises were basically states within
states. They controlled what amounted to an entire economic system,
and could go on even without the larger economy. They kept to this
arrangement even after they were privatized. They drove Western
management consultants mad, with their endless kindergartens,
retirement homes, laundries, and free clinics. These weren't part of
their core competency, you see. They needed to divest and to
streamline their operations. The Western management gurus
overlooked the most important thing: the core competency of these
enterprises lay in their ability to survive economic collapse. Maybe the
young geniuses at Google can wrap their heads around this one, but
I doubt that their stockholders will.
Slide [26] It's important to understand that the Soviet Union achieved
collapse-preparedness inadvertently, and not because of the success
of some crash program. Economic collapse has a way of turning economic
negatives into positives. The last thing we want is a perfectly functioning,
growing, prosperous economy that suddenly collapses one day, and
leaves everybody in the lurch. It is not necessary for us to embrace the
tenets of command economy and central planning to match the Soviet
lackluster performance in this area. We have our own methods, that are
working almost as well. I call them "boondoggles." They are solutions to
problems that cause more problems than they solve.
Just look around you, and you will see boondoggles sprouting up
everywhere, in every field of endeavor: we have military boondoggles
like Iraq, financial boondoggles like the doomed retirement system,
medical boondoggles like private health insurance, legal boondoggles
like the intellectual property system. The combined weight of all these
boondoggles is slowly but surely pushing us all down. If it pushes us
down far enough, then economic collapse, when it arrives, will be like
falling out of a ground floor window. We just have to help this process
along, or at least not interfere with it. So if somebody comes to you and
says "I want to make a boondoggle that runs on hydrogen" – by all
means encourage him! It's not as good as a boondoggle that burns
money directly, but it's a step in the right direction.
Slide [27] Certain types of mainstream economic behavior are not
prudent on a personal level, and are also counterproductive to bridging
the Collapse Gap. Any behavior that might result in continued economic
growth and prosperity is counterproductive: the higher you jump, the
harder you land. It is traumatic to go from having a big retirement fund
to having no retirement fund because of a market crash. It is also
traumatic to go from a high income to little or no income. If, on top of that,
you have kept yourself incredibly busy, and suddenly have nothing to do,
then you will really be in rough shape.
Economic collapse is about the worst possible time for someone to suffer
a nervous breakdown, yet this is what often happens. The people who
are most at risk psychologically are successful middle-aged men. When
their career is suddenly over, their savings are gone, and their property
worthless, much of their sense of self-worth is gone as well. They tend to
drink themselves to death and commit suicide in disproportionate numbers.
Since they tend to be the most experienced and capable people, this is a
staggering loss to society.
If the economy, and your place within it, is really important to you, you will
be really hurt when it goes away. You can cultivate an attitude of studied
indifference, but it has to be more than just a conceit. You have to develop
the lifestyle and the habits and the physical stamina to back it up. It takes
a lot of creativity and effort to put together a fulfilling existence on the
margins of society. After the collapse, these margins may turn out to be
some of the best places to live.
Slide [28] I hope that I didn't make it sound as if the Soviet collapse
was a walk in the park, because it was really quite awful in many ways.
The point that I do want to stress is that when this economy collapses,
it is bound to be much worse. Another point I would like to stress is that
collapse here is likely to be permanent. The factors that allowed Russia
and the other former Soviet republics to recover are not present here.
In spite of all this, I believe that in every age and circumstance, people
can sometimes find not just a means and a reason to survive, but
enlightenment, fulfillment, and freedom. If we can find them even
after the economy collapses, then why not start looking for them now?
Thank you.
