Peak Oil, Peak Debt, and the Concentration of Power
As for the second point, what is more economically rational: to buy a house for $200,000 and pay $2,000 a year for power, or to buy a house for $300,000 and pay $200 a year for power? Assuming your mortgage loan is at 5% interest, it is much more rational to pay $2,000 a year for power, forever and ever. Even if you don’t need to borrow, you can earn more than 2% interest on that extra $100,000.
Thirdly, the price of gasoline, oil, electrical power is artificially cheap. The costs of pollution, war, oil spills, nuclear accidents, and so forth are not reflected in the price of a gallon of gasoline or a KWH of electricity. They are offloaded onto society and future generations.
For example, because the government will have to pay the costs of any truly catastrophic oil spill or nuclear accident, the companies are operating with free insurance. It is no coincidence that massive risks accompany centralized energy installations. Big Energy comes with big risks, as well as the political power to socialize the costs of those risks. People complain that solar and wind power are only competitive because of subsidies, but conventional energy enjoys far greater subsidies.
These subsidies are not the result of mere political influence. They are built into our money system. Unless and until we have a money system that forces the internalization of costs and eliminates the discounting of future cash flows, Big Energy will always enjoy an advantage. That advantage can be mitigated through moral suasion and various kinds of subsidies, but wouldn’t it be better to align the money system with the kind of energy system we would like to see, and indeed the kind of planet we would like to see, so that goodness and profit need not be opposed?
What would a money system like this look like? Perhaps it would model the common feature of alternative energy systems that I have described. Rather than originating at a monopoly source, perhaps it would be universally distributed in its genesis. Rather than being storable in concentrated form, maybe it would require constant regeneration. Rather than requiring payment for its continuing supply (i.e. via interest), maybe it would be generated at no cost.
In fact, money systems bearing some or all of these features have been proposed, and if implemented, they would create conditions far more salubrious than at present for the development of a new energy infrastructure. These systems internalize social and environmental costs, restore the commons, build community, reverse the discounting of future cash flows, are compatible with a steady-state or de-growth economy, eliminate economic rents, and systemically discourage the concentration of wealth.
My book, Sacred Economics , lays out one such system, or rather a synthesis of several of them. The key ideas are not new, however, and are even slowly making inroads into the mainstream dialog as the inescapability of Peak Debt becomes undeniable. A central idea is negative interest (also known as demurrage), which discourages accumulation, allows money to circulate in the absence of growth, and encourages long-term thinking.
Other important pieces of the puzzle include commons-backed currency, local and bioregional currency, mutual credit and P2P banking, gift economics, shifting taxation away from income and onto resource and pollution, and a social dividend. Today, most of these proposals seem very radical, although they are entering the public discourse in covert forms.
Interest rates, for example, are nearing zero and look to stay there for the foreseeable future, making investments with very long payback periods more feasible. Some economists, among them Willem Buiter, Greg Mankiw, and Robert Hall, have even dared propose taking rates (namely the Fed Funds Rate) negative.
As old certainties break down, what was once radical becomes common sense. However dogged our denial, the present energy infrastructure is doomed to obsolescence. The same is true of our financial infrastructure; indeed, the two are inextricably linked. They will fail together, yet on the other hand, while they remain, each props up the other.
The money system exerts an irresistible pressure to convert everything and anything into money – for example, the Alaskan National Wildlife Refuge, the Alberta tar sands, the capacity of the atmosphere to absorb waste – and with each successful conversion, the money system gets a brief reprieve. By the same token, any bit of nature that we can protect from exploitation hastens the demise of the money machine.
This is why efforts to reform the energy system must go hand in hand with efforts at financial reform. Neither is prior to the other; each, rather, is a different facet of the same thing. The collapse of each is part of the collapse of an entire mode of civilization, and an entire way of being that underlies it, clearing the way for the emergence of a new, in accordance with universal dynamics of birth, death, and transcendence.
We might call this way of being, this mode of civilization, the “Ascent of Humanity.” It was an age of growth, of domination, of taming the wild and expanding the human realm; of becoming the lords and possessors of nature. That age is ending, and a new era of co-creative partnership with nature is beginning, in which we understand that we are interdependent, not separate. The energy system, and money system, of the future must embody this new relationship.
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