There comes a moment in the lives of most of us (thankfully, we almost all live long enough to experience this) when we discover that “it’s not just my kid that thinks of the events of my life as ancient history, it’s a whole lot of those folks out there!” When I think about the millennial generation (Net Generation, Gen Y, etc.), whose leading wave has seen its feet come ashore on the beach of “never trust anyone over thirty”, I reflect on the fact that between them and the trailing edge of Gen X about half the people on the street don’t share the experiences that I, as a boomer, found as formative. Considering, in turn, that the experiences of the 1930s and 1940s are as alien to me as those of the late 1960s and 1970s are to them, I can only conclude that Santayana’s aphorism about history and its repetition is about to be lived out again.
History as taught in schools has tended to fall into two main camps;
- Categorization via the periods of war, the reigns of rulers or some other means of treating the clock and calendar as a line punctuated by reference marks. This is not only generally a method that bores 90%+ of the class into intellectual sleep; anyone who turns an active mind to it immediately sees that broad historical strokes don’t nicely align with centuries and decades, the throne-spans of rulers, or the like (this is the problem in the philosophy of history, of periodization, and an underlying reason why Henry Ford claimed “History is Bunk”).
- The modern anti-historical method of taking an ideological stance (be it Marxist analysis, primacy of a nation-state, feminist theory, or many other forms) and “reading it back” into historical periods in order to establish clearly that they have nothing to teach us. This leaves the student with the clear notion that there is nothing history can contribute and thus a purely functional approach to current issues is defaulted to.
In history, there are significant events that warp the course of peoples. Al Qaeda’s attack on the United States on 11 September 2001, for instance, is one such. All the analysis and attempts to predict in the world did not and could not predict the exact timing, the exact form of the attack and the form the reaction would take. (Who, amongst us, would have predicted that a pioneering nation proud of its primacy would have turned its over 300 million citizens into people willing to give up their hard-won freedoms in a quavering desire for “security”? There are many others on this planet that that would have been a reasonable prediction for: the American people weren’t likely candidates. Yet others — including those who have also suffered attacks — have kept calm and carried on far better.
Yet winding through history as well are long-term processes that unfold. Most of these, unfortunately, are processes of positive feedback: in other words, they produce imbalances that intensify over time. These are the processes that end in a “tipping point”, one where there is a jump into the chaotic from a domain of apparent simple and comprehensible order. While societal innovation — what Toynbee in his A Study of History called the reaction of a creative minority who separate themselves from the conditions at hand to reinvent the process (in the realm of growth, this is Quigley’s [The Evolution of Civilizations] “creation of a new economic engine”) — is one response to the breakdown of order at a tipping point, the far more common one has been the emergence of “The Man on Horseback”, the “Leader” who takes charge and establishes a new order.
We are rife with metaphors for this moment of tipping: the collapse of the camel when one more strand of straw is added to his load; the avalanche that starts when one more snowflake is added to the snow pack on a mountain side; the collapse of a dune when one more grain of sand or small pebble is blown onto it. We remember those who step up to seize control after the collapse as well. Most signal a second slide (think of the Roman Empire once Augustus seized control and became Imperator, of the French Revolution when Napoléon seized control, of the seizing of power in Russia by Lenin and his faction, or the election of Hitler in Weimar Germany): what appears to go well at first decays into terminal collapse.
All of our policies have been designed to add, gram by gram, to the weight the system carries. Positive feedback processes about social welfare, life extension, correcting “injuries of the past” and many others have been wound around our society. For those who have taken on the responsibility of maintaining order in the world (originally the French, then the British, now the Americans) each in turn has reached a point where they are trapped, unable to abandon any outpost of power without opening up another point of weakness and yet unable to afford the cost of maintaining those outposts — and meanwhile, as none have achieved global order (despite global presence) new weak points constantly get added to the mix. (What else is a Somali coast or South China Sea pirate?, to name but one class of case.)
But there are limits to everything. I do not know (and neither does anyone else, despite their claims to the contrary) where the tipping points are. We can at best know two types of things: taken this far previously, this happened; and by experience, the process in its field of conditions is about “here”. That “field of conditions” is relevant: the shift from money as metal to money as a symbol of metal to money as a symbol, tout court, to money as the velocity of debt that unfolded throughout the twentieth and early twenty-first century is what has allowed us to be where we are today. At what point will the accumulated debt “grains of sand” collapse the dune and force the economy to reset at a much lower level of potential? We don’t know.
But we do know (by pattern recognition) that toward the end of a positive feedback process, just before it snaps (either under its own weight or via an external event) it grows rapidly — the exponential curve’s famous “hockey stick” moment.
Having destroyed much of the available investment capital in our society in the technology bubble (itself a creature of the transition to “money as velocity of debt”), and then followed that with attempts to continue to increase debt velocity in the face of the destruction of growth to pay off prior debts that led to the housing bubble (still unfolding, with a second US, UK and EU wave to come and a first major Canadian and Australian wave later this year?), we have now moved to the notion of government as the “spender of last resort”. But global demand for capital to buy the Treasury notes and bonds that, in turn, finance these deficits exceeds the available monies.
Will we see a series of dominos fall? (The domino theory, to return to the starting point of this little essay through history, was the rationale for Vietnam and Cambodia — as defining for the late 1960s and early 1970s as Iraq, Afghanistan [and likely Iran and Pakistan to come] are now — for years.) Or will there be a sudden collapse due to an external event that suddenly seizes all the debt markets and immobilizes them (as was Al Qaeda’s intention in 2001)?
Again, we don’t know — but we rest on the edge of a knife.
Meanwhile, the politics of our countries is rife with proposals for ever more deficit spending, ever more engineering of methods and results, and ever more ways to “set money aside” for a retirement no longer a part of employment (except for a select few) and thus dependent on highly liquid markets to extract wealth trapped in real estate or stocks, and the endless pumping up of growth. I would not be surprised that the next wave of change will either wipe out the tax status of retirement funds, or mandate that they be invested in the debt ponzi scheme now offered by our central banks and Treasuries worldwide, or both. Meanwhile our analogy to the hyperinflation of Weimar or the wiping out of assets in the transition from Czarist to Bolshevik Russia will be the traps that our mortgages, lines of credit and credit cards have become — all recourse instruments, and with escalating rates of interest to shield their rentier owners from a diminution in revenues — while taxes and fees accelerate upward, both to offset the overspending, and to pay for the “final programs” now being discussed by politicians anxious to buy one more vote.
We are, I fear, past the point of soft landings. A crash is coming, one it will be hard to rise from again. Governments will end up falling; much more of the world — including parts of it we consider “developed” — will become failed states or rigid dictatorships.
If this worries you, the time to act is now. Not next week, but now. We are but a few grains of sand away from the crisis.