The Collapse of the American Empire. What Future for Humankind?

These notes are not supposed to disparage nor to exalt an entity that has a history that goes back to at least a couple of millennia ago. Like all Empires, past and present, the Modern World Empire went through its parable of growth and glory and it is now starting its decline. There is not much that we can do about it, we have to accept that this is the way the universe works. On this subject, see also a previous post of mine "Why Europe Conquered the World "

For everything that exists, there is a reason and that's true also for that gigantic thing that we call sometimes "The West" or perhaps "The American Empire," or maybe "Globalization." To find that reason, we may go back to the very origins of the modern empire. We can find them in an older, but already very advanced, empire: the Roman one.

As someone might have said (and maybe someone did, but it might be an original concept of mine), "geography is the mother of Empires." Empires are built on the availability of natural resources and on the ability to transport them. So, the Romans exploited the geography of the Mediterranean basin to build an empire based on maritime transportation. Rome was the center of a hub of commerce that outcompeted every other state in the Western region of Eurasia and North Africa. This transportation system was so important that it was even deified under the name of the Goddess Annona. It was kept together by a financial system based on coinage, Latin as lingua franca, a large military system, and a legal system very advanced for the time.

Like all empires, though, the Roman one carried inside the seeds of its own destruction. The empire peaked at some moment during the 1st century of our era, then it started declining. It was the result of a combination of related factors: the depletion of the precious metal mines that deprived the Empire of its currency, the growth of the Silk Road that siphoned the Roman wealth to China, the overexploitation of the North-African agriculture that fed the Roman cities. No money, no resources, no food: the Empire could only collapse and it did.

The old Roman Empire left a ghostly shadow over Europe, so persistent that for almost two millennia people tried to recreate it one way or another. But it was not possible, again it was a question of geography. The Roman intensive agriculture had so badly damaged the North-African soil that it could never recover -- still, it hasn't. The loss of the fertile soil on the southern shore divided the Mediterranean sea into two halves: the green and still fertile Northern part, and the dry and barren Southern part. Nevertheless, there were several attempts to rebuild the ancient economic and political unity of the basin. The Arabic caliphate built a Southern Mediterranean Empire based on Arabic as the Lingua Franca and on Islam as the common cultural ground. But the expansion of Islam never reached Western Europe. Its economic base was weak: the North African agriculture just couldn't support the population level that would have been needed to control the whole Mediterranean basin. The same destiny befell, later on, on the Turkish Empire.

On the Northern side of the Mediterranean sea, Europe was a region that the ancient Romans had always considered mostly a periphery. With the Roman Empire gone, Northern Europe was freed to develop by itself. It was the period that we call the "dark ages," a misnomer if ever there was one. The dark ages were a new civilization that exploited some of the cultural and technological structures inherited from Rome but that also developed original ones. The lack of gold and silver made it impossible for Europeans to keep Europe together by military means. They had to rely on subtler and more sophisticated methods that, nevertheless, were patterned over the old Roman structures. Cultural unity was insured by Christianity, with the church even creating a new form of currency not based on precious metals but on the relics of holy men and women. The church also was the keeper of Latin, the old Roman language that became the European the Lingua Franca, the only tool that allowed Europeans to understand each other.

In this way, the Europeans created a gentle and sophisticated civilization. They could maintain the rule of law and they gave back to women some of the rights that they had lost during the Roman Empire. Witch-burning, endemic in the Roman Empire, couldn't be completely abolished, but its frequency was reduced to nearly zero. Slavery was formally abolished, although it never actually disappeared. Material wealth was de-emphasized, in favor of spiritual wealth, art and literature flourished as much as they could in a poor region as Europe was at that time. Wars didn't disappear, but the early Middle Ages were a relatively quiet period with the Church maintaining a certain degree of control over the worst excesses of the local warlords. The Arthurian cycle emphasized how errant knights were fighting to perform good deeds and to defend the weak. It was put in writing only in the late Middle Ages, but it had been part of the European dreamscape from much earlier times.

But things never stand still. During the Middle Ages, the European population and the European economy were growing together exploiting a relatively intact territory. Soon, the gentle civilization of the early Middle Ages gave way to something that was not gentle at all. With the turn of the millennium, Europe was overpopulated and Europeans started looking for areas where to expand. The crusades started with the 11th century and were a new attempt to re-unify the Mediterranean basin. Europe was even equipping itself with international structures that could have governed the new Mediterranean Empire: the chivalric orders. Of these, the Templars were an especially interesting structure: in part a military society, but also a bank and a cultural center, all based on Latin as lingua franca. The idea was that the new Mediterranean Empire would be governed by a supranational organization, not unlike the old Roman Empire.

But the crusades were an expensive failure. The military effort had to be supported by the main economic resources of the time: forests and agricultural land. Both were badly overstrained and the result was an age of famines and pestilences that nearly halved the European population. It was a new collapse that took place during the 14th century. It was bad enough that we may imagine that the descendants of the Sultan Salah ad-Din could have stricken back and conquered Europe, had they not been stabbed in the back by the expanding Mongol empire.

The European Population: graph from William E Langer, "The Black Death" Scientific American, February 1964, p. 117 -- note how growth is faster after the collapse than it was before.

But Europeans were stubborn. Despite the 14th century collapse, they kept using the same trick they had been using before to rebuild after a disaster: patterning new structures on the old ones. The Europeans were good warriors, skilled shipbuilders, excellent merchants, and always willing to take risks in order to make money. They keep doing what they were good at doing and, if they couldn't expand into the East, why not expand West, across the Atlantic Ocean? It was a wildly successful idea. Europeans imported gunpowder technology from China and used it to build fearsome weapons. With their newly mastered gunnery skills, they created a new kind of ship, the cannon-armed galleon. It was a dominance weapon: a galleon could sail everywhere ad blast away all opposition. A century after the great pestilence, the European population was growing again, faster than before. And, this time, the Europeans were embarking on the task of conquering the world.

Over a few centuries, Europeans behaved as worldwide marauders: explorers, merchants, pirates, colonists, empire builders, and more. They sailed everywhere and wherever they sailed, they dominated the sea and, from the sea, they dominated the land. But who were they? Europe never gained a political unity nor it embarked on an effort to create a politically unified empire. While fighting non-European populations, Europeans were also fighting each other for the spoils. The only supranational governing entity they had was the Catholic Church, but it was an obsolete tool for the new times. By the 16th century, the Catholic Church was not anymore a keeper of relics, it was a relic itself. The final blow to it came from the invention of the printing press that enormously lowered the cost of books. That led to a market for books written in vernacular language and that was the end of Latin as a European lingua franca. The result was the reformation by Martin Luther, in 1517: the power of the Catholic Church was broken forever. Now, European states had what they wanted: a free hand to expand where they wanted.

As you may have imagined, the result of this "battle royal" historical phase was a new disaster. The European states jumped at each other's throat engaging in the "30-years war" (1618 – 1648). Half Europe was laid waste, plagues and famines reappeared, food production plummeted down, and with it population. Europeans were not just fighting against each other in the form of warring states. European men were fighting against European women: it was the time of witch-burning, tens of thousands of innocent European women were jailed, tortured, and burned at the stake. With its forests cut and the agricultural land eroded by overexploitation, there was a distinct possibility that the age of the European world empire was over forever. It was not.

Just like a stroke of luck had saved Europe after the first collapse of the 14th century, another nearly miraculous event saved Europe from the 18th century collapse. This miracle had a name: coal. It was a European economist of the 19th century, William Jevons, who had noted that "with coal, everything is easy." And with coal Europeans could solve most of their problems: coal could be used in place of wood to smelt metals and make weapons. This saved the European forests (but not for Spain, which had no cheap coal and whose empire floundered slowly). Then, coal could be turned into food using an indirect but effective technology. Coal was used to smelt iron and produce weapons. With weapons, new lands were conquered and the inhabitants enslaved. The slaves would then cultivate plantations and produce food to be shipped to Europe. It was the time when the British developed their habit of tea in the afternoon: the tea, the sugar, and the flour for the cakes were all produced in the British plantations overseas.

And the cycle continued. The European population restarted growing during the 18th century and, by the end of the 19th century, the feat of conquering the world was nearly complete. The 20th century saw a consolidation of what we can now call the "Western Empire" with the term "West" denoting a cultural entity that by now was not just European: it encompassed the United States, Australia, South Africa, and a few more states -- including even Asiatic countries such as Japan which, in 1905, gained a space among the world powers by force of arms, soundly defeating a traditional European power, Russia, at the naval battle of Tsushima. From a military viewpoint, the Western Empire was a reality. There remained the need of turning it into a political entity. All empires need an emperor, but the West didn't have one, not yet.

The final phase of the building of the Western World Empire took place with the two world wars of the 20th century. Those were true civil wars fought for imperial dominance, similar to the civil wars of ancient Rome at the time of Caesar and Augustus. Out of these wars, a clear winner emerged: the United States. After 1945, the Empire had a common currency (the dollar), a common language (English), a capital (Washington DC) and an emperor, the president of the United States. More than all that, it had acquired a powerful propaganda machine, the one we call today "consensus building." It built a narrative that described WW2 as a triumph of good against evil -- the latter represented by Nazi Germany. This narrative remains today the funding myth of the Western Empire. The only rival empire left, the Soviet Empire, collapsed in 1991, leaving the American Empire as the sole dominant power of the world. Also that was seen as proof of the inherent goodness of the American Empire. It was then that Francis Fukuyama wrote his "The End of History," (1992) correctly describing the events he was witnessing. Just like when Emperor Octavianus ushered the age of the "Pax Romana," it was the beginning of a new golden age: the "Pax Americana"

Alas, history never ends and, as I mentioned at the beginning of this essay, all empires carry inside themselves the seeds of their own destructions. Just a few decades have passed from the time when Fukuyama had claimed the end of history and the Pax Americana seems to be already over. The Western world dominance had been based first on coal, then on oil, now trying to switch to gas, but all these are finite resources becoming more and more expensive to produce. Just like Rome had followed the decline of its gold mines, the West is following follow the decline of the wells it controls. The dollar is losing its role of world currency and the Empire is under threat by a new commercial system. Just as the ancient silk road was a factor in the collapse of the Roman Empire, the nascent "road and belt initiative" that will connect Eurasia as a single commercial region may give the final blow to the Globalized dominance of the West.

To be sure, the Western Empire, although in its death throes, is not dead yet. It still has its wondrous propaganda machine working. The great machine has even been able to convince most people that the empire doesn't actually exist, that everything they see being done to them is done for their good and that foreigners are starved and bombed with the best of good intentions. It is a remarkable feat that reminds something that a European poet, Baudelaire, said long ago: "the Devil's best trick consists in letting you believe he doesn't exist." It is typical of all structures to turn nasty during their decline, it happens even to human beings. So, we may be living in an "Empire of Lies" that's destroying itself by trying to build its own reality. Except that the real reality always wins.

And there we are, today. Just like the old Roman Empire, the Western Empire is going through its cycle and the decline has already started. So, at this point, we could hazard some kind of moral judgment: was the Western Empire good or bad? In a sense, all empires are bad: they tend to be ruthless military organizations that engage in all kinds of massacres, genocides, and destruction. Of the Roman empire, we remember the extermination of the Chartaginese as an example, but it was not the only one. Of the Western Empire, we have many examples: possibly the most evil one being the genocide of the North-American Indians, but such things as the extermination of civilian by aerial bombing of cities during WW2 was also impressively evil. And the (evil) Empire doesn't seem to have lost its taste for genocide, at least as it can be judged from some recent declarations by members of the American government about starving Iranians.

On the other hand, it would be difficult to maintain that Westerners are more evil than people belonging to other cultures. If history tells us something, it is that people tend to become evil when they have a chance to do so. The West created many good things, from polyphonic music to modern science and, during this last phase of its history, it is leading the struggle to keep the Earth alive -- a girl such as Greta Thunberg is a typical example of the "good West" as opposed to the "evil West."

Overall, all empires in history are more or less the same. They are like waves crashing on a beach: some are large, some small, some do damage, some just leave traces on the sand. The Western Empire did more damage than others because it was larger, but it was not different. We have to accept that the universe works in a certain way: never smoothly, always going up and down and, often, going through abrupt collapses, as the ancient Roman philosopher Lucius Seneca had noted long ago. Being the current empire so large, the transition to whatever will come after us needs to be more abrupt and more dramatic than anything seen in history before. But, just like it was the case for ancient Rome, the future may well be a gentler and saner age than the current one. And the universe will go on as it has always done.

When Jerusalem was in Tuscany. The Last Gasps of a Dying Empire

This post was previously published on "Chimeras." It is reproduced here with an introduction and some minor modifications

Did you know that in Italy there is a place called "Jerusalem in Tuscany?" In the monastery of "San Vivaldo," you can find a 16th-century sanctuary structured in such a way to make pilgrims go through an experience similar to that they would have by visiting the real Jerusalem. The sanctuary is still very much the same as it was when it was built, half a millennium ago.

The key feature of all empires is their centralized control over different social and economic subregions. Control is normally obtained by a combination of metal currency and military means, but that's not strictly necessary. Our modern Global Empire does not disdain the use of lethal force, but it is kept together largely by the soft communication techniques we call "propaganda" or, more recently, "consensus building." Some ancient empires were also based on communication techniques, in particular the Catholic Church which dominated Western Europe for about one millennium using its monopoly on Latin as regional 'lingua franca'. Here, I am examining the traces left by the last attempt of the Church to maintain its dominance by developing a completely new, image-based, communication system. It didn't work, but it was impressively modern and it compares well with our present icon-based communication systems. It may tell us something about where we are going in terms of the control of those large social organizations we call "states."

Imagine yourself in Europe during the late Middle Ages -- it was a different world for many reasons but one would perhaps be the most striking: language. Today, Europe is organized in terms of sharp borders of linguistic areas that usually correspond to national states. Inside the borders, there is one -- and only one -- "correct" language while dialects or minority languages are at best tolerated and often despised. But, in the world of the Middle Ages, languages varied smoothly as you moved from one village to another and, after a few hundred kilometers, people could barely understand each other. And, of course, there were fuzzy boundaries for the main language areas: the Latin, the Germanic, the Celtic, the Greek, the Slavic, and other minor ones. Europe was truly a Babel.

But there was a lingua franca that connected the various areas of Europe: Latin, an inheritance of the dead Roman Empire. The Romans had created a nearly homogeneous Latin-speaking language area that included most of Western Europe and of North Africa, while the rest of the Empire spoke Greek. That language unity had been lost with the fading of the empire, disappearing when its dominance tool, gold-based currency, had disappeared with the depletion of its gold mines.

But the loss had been only partial. In Western Europe, Latin was still thriving and, in a certain sense, the Empire was still alive. A new organization had taken the place of the Roman Empire, the Church, which proclaimed itself "Catholic" ("universal" from καθολικός) and used many of the same tools: its structure was patterned on the Imperial one, with the Pope in Rome playing the role of the Emperor, the overseers (bishops) playing the role of the Roman governors, and with Latin remaining the universal language, at least for Western Europe.

The difference was that the Church couldn't use military force to maintain its dominance: legionnaires had to be paid and that required hard currency which had disappeared in the metal-poor Europe of Middle Ages. So, the Church was a "soft" empire which never directly ruled Europe. It operated mainly influencing Feudal Rulers who needed overseers, interpreters, counselors, accountants, and the like. Latin was a fundamental tool for the role of the Church: a monk from Ireland would speak Gaelic with the other monks of his monastery, but he could speak in Latin with a visiting priest from Italy. And both could advise their local kings when it was the time for negotiations with some foreign warlord. All over Western Europe, a Church-based Latinized area had developed and it was the main cultural feature of Europe of the time.

But things always change and, sometimes, change fast. Europe's population kept growing during the Middle Ages, not smoothly but in a series of collapses and rebounds. By the mid 14th century, the "black death" had killed some 30 million Europeans, about one-third of the population of the time. Half a century later, Europe had recovered and the population was skyrocketing upward. It was the time of the great explorations, of the discovery of new lands, and of the return of abundant currency with gold coming from the Americas. The new wealth was creating new political structures: states much more powerful than the ragtag feudal kingdoms that had dominated Europe in earlier times.

With the economic changes, there came cultural changes. More people could afford to learn how to read and write and the monopoly of the Church on cultural matters was being threatened. Already during the early 14th century, Dante Alighieri wrote his "Comedy" not in Latin, the language of the intellectuals, but in Vernacular Italian: a language that the people of Florence could understand. But it was with the invention of the printing press by Gutenberg, in the mid 15th century, that things really took a different path. As long as a book had to be laboriously copied by hand by a scribe, it was an expensive tool for a class of specialists and it made no sense to write it in a language that wasn't Latin. The printing press made books affordable by people who were not part of the Church's clergy.

Revolutions always bring unexpected changes: the 15th-century European bourgeoisie who could afford printed books were not professional clergymen and few of them had studied Latin. Suddenly, a new market appeared: that of books printed in vernacular languages. Already in the late 15th century, Bibles in German were being printed and you know how Martin Luther published a German version of the Bible in 1522. That was, possibly, his most revolutionary act. With Bibles in their language, people didn't need anymore a priest to interpret the holy scriptures for them. The Latin-based Catholic Empire had suddenly become obsolete.

Of course, the Catholic Church didn't just sit and watch as it was being pushed into the waste bin of history. You know about the counter-reformation movement, the Council of Trento (1545- 1563), and the thirty-years war, up to recent times the bloodiest confrontation recorded in human history. With the counter-reformation, the Church reaffirmed the primacy of Latin as the language of choice, truly the sacred language of Europe.

But that couldn't work. Latin could be a lingua franca, a tool for understanding each other, but it was hardly a sacred language. Moslems could claim that God had spoken in Arabic to the Prophet Muhammad. But never in the Christian scriptures you could read that God had spoken in Latin to anyone, He had spoken in Hebrew or, at most, in Aramaic. And the Christian prophets of the New Testament had used Greek. Latin could provide translations, but it wasn't the real thing.

So, the Catholic Church was fighting an impossible battle. It must be said that it put up a spirited resistance and that, during the 18th century, there was an attempt to revive Latin as a cultured language, for instance, Isaac Newton wrote his "Principia" in Latin in 1687. But it was a brief revival, the tumultuous growth of national states in Europe destroyed all attempts to keep Latin as a universal language. By the late 19th century, Europe was what it is today: an ensemble of nation-states whose behavior could be likened to that of a group of drunken psychopaths at a party, each one armed to the teeth and ready to start shooting at the others at the slightest hint of provocation. Engaged in their local quarrels, the European States managed to destroy themselves in a series of internecine wars and the result was the expansion of the American Empire and the dominance of English as the world's lingua franca during the second half of the 20th century. At that point, Latin had become a language as dead as ancient Sumerian.

During the transition from Latin to English, for the Catholic Church it was impossible to maintain the fiction of universality. During the Great War, Catholic Priests were blessing the Austrian and the Italian soldiers on the opposite sides of the frontline and encouraging them to kill each other in the name of the same God. That made no sense, obviously, and the Church eventually admitted defeat with the Second Vatican Council, (1962-1965), when permissions were granted to celebrate the Mass in vernacular languages. With the demise of Latin, priests from different regions of the world were now speaking to each other in English. It was the end of an age: the Catholic Church was not universal anymore.  Even though theoretically still a structure dominated by the Roman Papacy, it was to become what it is now: a loose network of national churches, not unlike the Protestant Churches it had been battling against so strongly. The Catholic cycle of domination over Western European history had lasted more than a millennium -- now it was over.

But let's go back to the 16th century, when the battle lines were just starting to be drawn. The Catholic Church didn't just resist change, it tried to fight back. It did so by using the weapons it had, in particular, its rich and varied tradition of iconography, from frescoes to nativity scenes. There was a reason for this tradition: the Church had been using a language - Latin - that was completely alien to many of its followers, so it had used images as a way to make the message more easily understandable. Christianity had moved along a path different than that of Islam, which had instead capitalized on the capability of the Ummah of understanding, at least in part, Classical Arabic, the language of the Holy Quran. So, when the Latin-based claims to universality were threatened, the Church reacted with a bold move: trying to develop a new universal language. It was to be a purely iconographic one. 

This is what the sanctuary of San Vivaldo was: an original attempt to develop a new language, one that would bypass the Protestant target of the literate elites to speak directly to the illiterate masses (as we would call them today). The images of the sanctuary show strictly no text -- they are purely visual icons, based on color, movement, postures, expressions. They are very simple and direct, similar to our modern comic strips.

We can imagine that the visitors of the various chapels were accompanied by guides explaining to them what they were seeing in their vernacular language -- these guides would play the role of the "text balloons" in our modern comics. And the full-immersion experience would have been remarkable in a world that had none of the modern graphical tricks: movies and newspapers. 

Did it work as planned? For us, some five centuries after that San Vivaldo was created, it is difficult to judge. There are many "Holy Mountains" in Europe which attempt to provide the same kind of emotional experience that San Vivaldo does, all based on simple and high-impact dioramas. At least one more "Italian Jerusalem" exists in Val Sesia, the Holy Mount of Varallo, also based on dramatic and colored 3D images, as you see below.

Over time, with the development of the popular press and of TV, these sanctuaries lost importance and became obsolete. They were forgotten, although many of them still exist, scattered all over Europe. But the basic idea remains that of providing a non-text communication that bypasses the need for translation. Isn't it exactly what we are doing with the icon-based signs that you can find almost everywhere, today? 

Then, the development of machine translation may soon make universal languages obsolete. It is not a perfect technology, but today it is already good enough to turn the world from a Babel tower to a sort of gigantic train station. The new communication technologies may succeed in making writing and speech fully user-transparent: the interface will transform our input in whatever vernacular we happen to speak into a different vernacular understood by the person on the other side of the system. Is this the ultimate Esperanto? And what effect will it have on the seemingly all-powerful nation-states of today, so fond of warring and of killing people? 

Impossible to say, but, as usual, we are running into the future without ever wondering if we really want to go there. 

_______________________________

Note: I went to San Vivaldo in 2017, the place is truly impressive and nearly unknown. If you have a chance to visit Tuscany, by all means, take this less beaten path and enjoy this special jewel of Tuscan history.

"Extracted": a press review from Luis de Souza

A review of the recent publication of "Extracted" by one of the co-authors of the book, Luis de Souza, from his blog "At the edge of time". In this post, Luis examines mainly the recent developments of the Ukrainian crisis and other features of the world energy situation.

Press review 03-05-2014 - Extracted

by Luis de Souza

Two years ago Ugo Bardi invited me to take part in the redaction of a book on raw materials. I spent much of the 2012 summer researching and writing to produce a chapter on two particular metals: silver and gold. After a first edition in German language last year, the English version has finally arrived, to what appears to be a warm reception.

"Extracted" provides an overview on the relationship between our society and economy and the stocks of raw materials found in the Earth's crust. These stocks are sources of negentropy - negative entropy, meaning organised or concentrated matter, as opposed to chaos and dispersion - that feed our industries with low cost inputs. The economic difficulties we live today are closely linked to a decline in the quality of the resources needed to feed our economies - meaning an increase in entropy - that may at some point even translate into a decline of extraction rates.

Resource Crisis
"EXTRACTED" published
Ugo Bardi, 29-04-2014

My new book, "Extracted" is now on sale. It is an updated version in English of the German version which was published last year. You can get it directly from the editor, Chelsea Green or from the usual sources.

This book was a lot of work, but I must say that I am very happy about the final result and I would like to thank my co-authors, who provided the specialized expertise for the "glimpses" about specific mineral commodities, the staff of Chelsea Green for their highly professional help in editing, and the staff of the Club of Rome for having made the task possible.

The first reactions to the book seem to be highly favorable, which is, I think, a bit worrisome. Fortunately, there has been at least one negative review on Amazon.com by someone who says he feels "insulted" by the book, but nevertheless he gives it three stars out of five!

But on the short terms concerns are more on the geo-politics of raw materials. Moscow has issued an ultimatum to Ukraine on its gas debts, threatening to cut supplies beyond the 7th of May. Days later the IMF approved an aid package to the troubled country, proving that control comes with a bill attached.

The Telegraph
Ukraine: Russia's Gazprom issues May 7 ultimatum over gas supplies
Emily Gosden, 25-04-2014

Russian state-controlled energy giant Gazprom has ratcheted up the pressure on Ukraine, issuing a May 7 ultimatum to settle $3.5bn unpaid debts or start paying in advance for its gas.

Alexander Medvedev, deputy chief executive, warned that Europe must help Ukraine pay the bill – and a further $5bn needed to refill storage facilities this summer - or face “severe problems” with gas supplies this winter.

By May 7, Ukraine would owe about $3.5bn for gas it has used in recent months, Mr Medvedev said. If it failed to pay, Gazprom would stop supplying Ukraine with gas for domestic usage from June, unless it paid for it in advance.

Here is one of the reasons why Russia can't simply let Ukraine pass onto the sphere of influence of the US. And why extending NATO that far is such a terrible idea.

David Stockman's Contra Corner
Why The War Party Is Playing With Fire: Much Of Putin’s Military-Industrial Complex Is In Eastern Ukraine!
Pater Tenebrarum, 30-04-2014

However, it turns out that there is something else that makes the Ukraine’s East especially important – for Russia. Back when the Ukraine split from the Soviet Union, it took some 30% of the country’s industry with it – inter alia a big chunk of its defense industry. As pointed out in an article in the FT by Jan Cienski , Russia’s military-industrial complex remains highly dependent on spare parts produced by Ukrainian factories – and their deliveries have not surprisingly recently been halted. This sheds new light on the backdrop to the previous gas discounts and the sudden decision to threaten a delivery stop unless the Ukrainian government pays its debts to Gazprom. Tit for tat. However, there are additional implications. [...]

The article points out further that ‘invading the Ukraine in order to get hold of these plants would be a 19th century way of looking at a 21st century relationship’, an assessment one must agree with. Absent the current tensions, the Ukrainian factories would still sell these parts after all – it is their business and they cannot eat them. Since many of the parts are probably highly specific, it won’t be easy to retool the factories, especially for an essentially bankrupt country like the Ukraine.

Would Russia’s president Putin invade the Ukraine for that? We rather doubt it actually. However, Russia is not a monolithic country ruled by an almighty dictator. Putin has a great advantage at present because he enjoys truly stunning approval ratings in Russia (as of mid-March, they were at a new high of 76%). Twelve times more people said they ‘like and even admire him’ compared to those expressing dislike. Some recent results of detailed polling questions can be found here.

In Iraq a farcical election took place where 270 parties ran for a 320 seat parliament. The winner(s) will in fact be taking power over Baghdad and little else of the country. The war front keeps neighing on the capital, both from the east and the north.

New York Times
Militants Pose Threat on Eve of National Elections in Iraq
Tim Arango and Duraid Adnan, 28-04-2014

That reality, which the government appears powerless to remedy, offers a sobering postscript to the American war and a volatile backdrop to elections scheduled for Wednesday. The vote will be Iraq’s first nationwide election since the withdrawal of United States forces at the end of 2011, and it is clear it will be held amid rapidly growing violence and sectarian bloodletting. On Monday, six suicide bombers struck polling sites around the country as security force members voted in advance, killing at least 27 people, officials said.

The greater fear, though, is that there is no way back this time, that the sectarian division of the nation will become entrenched as the government concentrates its forces on protecting its seat of power in Baghdad. With fighting in Abu Ghraib, on the western edge of Baghdad and less than 20 miles from the city center, the government recently shut down the local prison. Insurgents have gained strength in Salahuddin Province, to the north of Baghdad, and in Diyala Province, northeast of the capital.

“All arrows are pointing toward Baghdad now,” said Jessica D. Lewis, research director at the Institute for the Study of War, who has closely followed the fighting in Anbar.

At websites like PeakOilBarrel.com the accuracy of figures published by the EIA on gas production in the US have been questioned one way or another for some time. This week I came across the article below, that exposes what seems to be deliberate data manipulation.

Post Carbon Institute
The EIA is Seriously Exaggerating Shale Gas Production in its Drilling Productivity Report
David Hughes, 21-04-2014

“Natural gas output from US' Marcellus edges closer to 15 Bcf/d: EIA” declared the headline in Platts that attracted my attention, since the latest data on the Marcellus shale gas play of PA and WV indicated production was less than 12 bcf/d. This headline was based on the latest issue of the EIA’s new monthly Drilling Productivity Report published April 14. Reading further, the article claimed that the Haynesville shale play “peaked at about 10 Bcf/d in 2012”, when in fact it had peaked at closer to 7 bcf/d in 2011. These errors are serious exaggerations of reality and bear further investigation, as the EIA Drilling Productivity Report is widely read and quoted in the media.

Fortunately the EIA also publishes independent production data by shale play in its Natural Gas Weekly Update. A check of production data for the Marcellus revealed that it was at 11.8 bcf/d in February and that the Haynesville had indeed peaked at 7.2 bcf/d in November 2011. These figures are also corroborated by Drillinginfo, a commercial database which is used by the EIA.

The erroneous view the EIA (and more widely the Obama administration) has been trying to convey regarding gas reserves and production in their country is a clear attempt to lure investors towards a doubtful industry. So far it is working, cheap money has been readily available to companies that spend far more than what they earn. Until one day; call it "shale subprime".

Bloomberg
Shale Drillers Feast on Junk Debt to Stay on Treadmill
Asjylyn Loder, 30-04-2014

Rice Energy Inc. (RICE), a natural gas producer with risky credit, raised $900 million in three days this month, $150 million more than it originally sought.

Not bad for the Canonsburg, Pennsylvania-based company’s first bond issue after going public in January. Especially since it has lost money three years in a row, has drilled fewer than 50 wells -- most named after superheroes and monster trucks -- and said it will spend $4.09 for every $1 it earns in 2014.

The U.S. drive for energy independence is backed by a surge in junk-rated borrowing that’s been as vital as the technological breakthroughs that enabled the drilling spree. While the high-yield debt market has doubled in size since the end of 2004, the amount issued by exploration and production companies has grown nine-fold, according to Barclays Plc. That’s what keeps the shale revolution going even as companies spend money faster than they make it.

“There’s a lot of Kool-Aid that’s being drunk now by investors,” Tim Gramatovich, who helps manage more than $800 million as chief investment officer of Santa Barbara, California-based Peritus Asset Management LLC. “People lose their discipline. They stop doing the math. They stop doing the accounting. They’re just dreaming the dream, and that’s what’s happening with the shale boom.”

More bad news to the petroleum and gas sector in the US is the growing possibility of environmental regulation coming into place. First it was drinking water supply protection, more recently earthquakes, but now flaring seems the main threat.

OilPrice.com
Is This Issue About to Explode for Big Oil?
Dave Forest, 28-04-2014

It's no secret that oil production has surged in many new parts of North America recently. Often in areas that have limited infrastructure in terms of pipelines--especially for natural gas.

That means oil producers need to flare any gas produced alongside oil output. Burning off the stuff because there simply isn't a way to get it to market.

But this month two regional governments have said that gas flaring needs to stop.

The most critical is North Dakota. Where the state Department of Mineral Resources is reportedly looking at new rules to limit flaring.

The hypothesis of China taking the opportunity of relatively low gold prices to build a relevant strategic reserve of this monetary metal has been around for almost an year. Now even the mainstream media is contemplating this hypothesis. This story is part of a bigger plot that brings us back to "Extracted", the difficulty in finding and accessing high quality resources is shifting power away from old power structures.

Reuters
China allows gold imports via Beijing, sources say, amid reserves buying talk
20-04-2014

China does not release any trade data on gold. The only way bullion markets can get a sense of Chinese purchases is from the monthly release of export data by Hong Kong, which last year supplied $53 billion worth of gold to the mainland.

"We have already started shipping material in directly to Beijing," said an industry source, who did not want to be named because he was not authorised to speak to the media. The quantities brought in so far are small, as imports via Beijing have only been allowed since the first quarter of this year, sources said.

The People's Bank of China (PBOC) is believed to be adding to its gold reserves, according to the World Gold Council (WGC), as it looks to diversify from U.S. Treasuries. The central bank rarely reveals the numbers.

Gold's 28 percent plunge last year and China's record bullion imports in 2013 sparked speculation that the PBOC has added significant amounts of gold to its reserves, and could likely make an announcement this year.

An editor of the Financial Times proposing the nationalisation of banking? Yes, this crisis is forcing the re-thinking of traditional structures and systems. While positive outcomes could be expected from such move, ours is not exactly a problem of money, no matter how disappointed monetarists may be.

Financial Times
Strip private banks of their power to create money
Martin Wolf, 24-04-2014

Banking is therefore not a normal market activity, because it provides two linked public goods: money and the payments network. On one side of banks’ balance sheets lie risky assets; on the other lie liabilities the public thinks safe. This is why central banks act as lenders of last resort and governments provide deposit insurance and equity injections. It is also why banking is heavily regulated. Yet credit cycles are still hugely destabilising.

What is to be done? A minimum response would leave this industry largely as it is but both tighten regulation and insist that a bigger proportion of the balance sheet be financed with equity or credibly loss-absorbing debt. I discussed this approach last week. Higher capital is the recommendation made by Anat Admati of Stanford and Martin Hellwig of the Max Planck Institute in The Bankers’ New Clothes.

A maximum response would be to give the state a monopoly on money creation.

Some space now for renewable energies. I followed particularly close the development and deployment of the Pelamis wave energy systems in Portugal some years ago; they were in the water just for a couple of months, to simply fade into oblivion afterwards. Wave energy is indeed a promising resource but the technology is far from anything mature, as the article below details.

Environment360
Why Wave Power Has Lagged Far Behind as Energy Source
Dave Levitan, 28-04-2014

It’s not difficult to imagine what wind energy looks like — by this point we have all seen the towering turbines dotting the landscape. The same goes for solar power and the panels that are spreading across rooftops worldwide. But there is another form of renewable energy, available in huge quantities, that doesn’t really call to mind anything at all: What does wave power technology look like?

Wind and solar power have taken off in the past decade or two, as costs have come down rapidly and threats from climate change have made clear the need to transition away from fossil fuels. Meanwhile, numerous studies have concluded that wave power — and to a lesser extent, tidal power — could contribute massive amounts to the overall energy picture. But while the industry has made halting progress, experts agree that it remains decades behind other forms of renewables, with large amounts of money and research required for it to even begin to catch up.

Maturity is something PV does not lack. Below a remarkable example of its market penetration, providing energy to poor communities that can not possibly afford to tap electricity from the grid.

Deutsche Wella
Solar energy lights up lives in Kenya
Victoria Averill, 29-04-2014

Fifty-two-year-old Daniel Tempes Olonapa stands outside his greenhouse perched on a hilltop overlooking the towering buildings of Kenya's capital, Nairobi. He points to two paper-sized black panels on top of his roof.

"Can you see them?" Daniel asks, pointing towards the panels excitedly. "They are small, but they are very powerful. I rigged them up there myself and put in the batteries. Then the sun comes and we get light, we can charge our phones. My six children can do their homework at night. "

The solar panels supplying Daniel with precious electricity come from the solar energy startup M-Kopa, which means "borrow" in Swahili.

The company is on a mission to supply cheap, clean and affordable solar power to the thousands of rural, off-grid Kenyans like Daniel, who up until now have only dreamt of having electricity on tap. M-Kopa has brought together the latest solar technologies with high quality solar panels, batteries and lights, and is selling them at kiosks and shops around Kenya.

European followers may wish to read mid-week commentary on the first ever presidential debate. Have a pleasant weekend.

Power is nothing without control: how to lose an empire

Image from an advertising campaign for Pirelli in the 1990s.

Empires seem to be a typical human structure that reappears over and over in history. The problem is that empires are often so efficient that they tend to overexploit and destroy even theoretically renewable resources. The final result is a destructive cascade of feedbacks: not only the empire gradually runs out of resources, but it also runs out of the capability of controlling them; with the two effects reinforcing each other. Power is nothing without control. And, usually, control seems to run out before power.

In practice, empires in trouble tend to fragment into independent blocks or statelets before actually disappearing as economic systems. It is the result of the increasing costs of control, which are not matched any more by the diminishing flux of natural resources. We have seen this phenomenon in recent times with the fragmentation and the disappearance of the Soviet Union. We may be seeing it today with the modern worldwide empire we call "Globalization." The recent events in Ukraine seem to show that the system, indeed, has troubles in controlling its periphery and may soon fragment into independent blocks.

Of course, it is still too early to say whether what we are seeing today in Ukraine is just a bump in the road or a symptom of impending systemic collapse. As usual, however, history may be a guide to understand what lies ahead. In the following post, I examine the collapse of the Roman empire in light of considerations based on control and resources. It turns out that, even for the ancient Romans, power was nothing without control.

Peak gold: how the Romans lost their Empire

by Ugo Bardi

A Roman "Aureus" minted by Emperor Septimius Severus in 193 CE. At nearly 8 grams, the Aureus was truly an imperial coin - the embodiment of Rome's wealth and power. (image from Wikipedia).

In this post, I argue that precious metal currency was a fundamental factor that kept together the Roman empire and gave to the Romans their military power. But the Roman mines producing gold and silver peaked in the first century CE and the Romans gradually lost the capability of controlling their resources. In a way, they were doomed by "peak gold."

When I heard for the first time that the Roman Empire fell because of the depletion of its silver and gold mines, I was skeptical. Compared to our situation, where we are facing the depletion of fossil fuels, the Roman case seemed to me to be completely different. Gold and silver don't produce energy, they don't produce anything useful. So, why should the Roman Empire have fallen because of something we might call "peak gold"?

And yet, as I delved into the matter, I noticed how evident was the correlation of declining gold and silver availability with the decline of the Roman Empire. We have scant data on the production of Roman mines, mainly located in Spain, but it is commonly believed that production peaked at some moment during the first century CE (or perhaps early 2nd century CE). Afterwards, it rapidly dwindled to nearly nothing, even though gold mining never completely stopped (1).

As you can see in the figure, the loss of precious metal production was reflected in the silver content of the Roman currency. The Romans didn't have the technology needed to print paper bills, so they just debased their silver currency, the "denarius," by increasing its copper content. By mid 3rd century, the denarius was nearly  pure copper: "fiat money" if there ever was one. During that  period, gold coins were not debased, but they basically disappeared from circulation. (graph above from Joseph Tainter (2)).

As I argued in a previous post, the progressive disappearance of precious metals correlates well with the various events that took place during the declining phase of the empire and with its eventual demise. Of course, correlation doesn't mean causation but, here, the correlation is so strong that you can't think it is just a question of chance. With time, it appeared clear to me that there were also clear links between several factors in the collapse of the Empire.

In general, complex systems tend to fall in a complex manner and the Roman Empire did not simply fall because of the lack of its primary energy source which, at that time, was agriculture. Energy (and power) is useless without control and for the Romans controlling the energy generated by agriculture requires capital investments for troops and bureaucracy. Both were affected by the decline of the production of precious metals. In time, the reduced military effectiveness of the empire disrupted the ability of controlling the agricultural system. That condemned the Empire to collapse.

This is a hugely complex story that can't possibly be exhausted with a mere blog post. Nevertheless, the problem is very general and it can be condensed in a single sentence: "power is nothing without control" So, I believe it is possible to lay down in a relatively short space the main elements of the interplay between gold, military power, and food in Roman times. Let me try.


- The Romans and gold

Ultimately, what creates and keeps together empires is military force. The Roman Empire was so large and so successful because it was, possibly, the mightiest military force of its times. The Romans had been so successful at that not because of special military innovations. The recipe for their success was simple: they paid their fighters with precious metal currency. The combined technology of gold mining and coin minting had allowed the Romans to create one of the first standing armies in history. Still today, we call our enlisted men "soldiers", a term that comes from the Roman word "Solidus;" the name of the late empire gold coin.

Not only money could create a standing army, it could also swell it to large sizes. Enlisting in the legions - the backbone of the army - was reserved to Roman citizens, but anyone could enlist in the "auxilia", the "auxiliary" troops. In the figure, you see Roman auxilia (recognizable by their round shields) presenting the severed heads of Dacian warriors to Emperor Trajan during the Dacian campaign of the 2nd century CE. Normally, Romans were not supposed to cut off the heads of defeated enemies. It was seen as uncivilized, but the auxilia were notoriously a little unruly (note how the Emperor, on the left, looks perplexed). But, by the time of the Dacian wars, the auxilia had become a fundamental part of the Roman army and they were to remain so for the remaining lifetime of the Empire.

Gold and silver were essential elements in the hiring of troops for the Romans and that was especially true for foreign ones. Put yourself in the caligae (sandals) of a German fighter. Why should you put your framea (lance) in the service of Rome if not because you were paid? And you wanted to be paid in serious money; copper coins would not do. You wanted gold and silver currency that you knew could be redeemed anywhere in Europe and especially in that gigantic emporium of all sorts of luxury goods that was the city of Rome, the largest of the ancient world. And, by the way, where did these luxury items come from? Mostly, were imported. Silk, ivory, pearls, spices, incense, and much more came from India and China. Importing these items was not just an extravagant hobby for the Roman elite, it was a tangible manifestation of the power and of the wealth of the empire; something that was an important factor in convincing people to enlist in the auxilia. But the Chinese wouldn't send silk to Rome in exchange for worthless copper coins - they wanted gold and they obtained it. Then, that gold was lost forever for the Empire which, basically, could produce only two things in addition to precious metals: grain and troops, neither of which could be exported at long distances.

This situation explains the gradual military decline of the Roman empire. With the decline of the precious metal mines, it became more and more difficult for emperors to recruit troops. The lack of a strong central power caused the empire to become engulfed in civil wars; with the army mainly engaged in fighting chunks of itself and the empire splitting in two parts: the Eastern and the Western. During this phase, the number of troops was not reduced, but their quality strongly declined. After the military reform by Emperor Diocletian during the third century CE, the Roman army was formed mainly of limitanei; not really an army but a border police unable to stop any serious attempt on the part of foreigners to puncture the borders. To keep the empire together, Emperors relied on the "comitatenses" (also known by other names) mobile crack troops which would plug (or try to plug) the holes in the border as soon as they formed.

The combination of limitanei and comitatenses worked for a while to keep the barbarians out of the Empire. But the hemorrhage of gold and silver continued. So, during the last decades the empire, the paradigmatic Roman troops were the "bucellarii" a term that means "biscuit eaters". The name can be taken as implying that these troops fought for food. Of course that may not have been always true, but it is a clear indication of the dearth of money of the time. There are also reports of troops paid in pottery and in some cases with land - the latter use may have been a factor in creating the feudal system that replaced the Roman empire in Europe.

In a way, as we see, the Romans were doomed by their "peak gold" (and also "peak silver). By the loss of their precious metal supply, the Romans lost their ability to control their troops and, as a result, of their resources. And power is nothing without control.

But the Roman empire did not fall just because it was invaded by foreigners or because it split into multiple sectors. It experienced a systemic collapse that wasn't just a military one: it involved the whole economy and the social and political systems as well. To understand the reasons for the collapse, we need to go more in depth in the way the Roman economic system worked.



- The Romans and energy

The energy of the Roman Empire came from agriculture; mainly in the form of grain. At the beginning of their history and for several centuries onward, it seems that the Romans had little or no problems in producing enough food for their population. That makes sense considering that in Roman times the population of Europe was less than one-tenth of what it is today and hence there was plenty of free space for cultivations. Reports of food problems in the Empire appear only with the 1st century CE and truly disastrous famines appear only with the 5th century CE - when the Western Roman Empire was already in its terminal phase. "Peak food", apparently, came much later, about 3-4 centuries later than "peak gold".

The very existence of a "peak food" for the Roman empire is somewhat puzzling: agriculture is, in principle, a renewable technology that had been able to feed the Roman population for several centuries. During the last period of the empire, there is no evidence of a population increase; on the contrary, it is clear that it declined. So, why couldn't agriculture produce enough food? 

The problem is that producing food doesn't just involve plowing some land and sowing crops. Agricultural yields depend on the vagaries of the weather and, more importantly, agriculture has the tendency of depleting the land of fertile soil as a result of erosion. To avoid this problem, the ancient had a number of strategies: one was nomadism. From Caesar's "De Bello Gallico" we learn that, as late as in the 1st century BCE, European populations still practiced a nomadic life style. They would do that in order to find new, pristine land and planting crops in the rich soil that they could produce by slashing and burning trees. That was possible because continental Europe, at that time, was nearly empty of people and entire populations could move unimpeded.

The Romans, instead, were a sedentary population and they had the problem of soil depletion. As population grew, it became a larger and larger problem, especially in a mountainous region such as Italy (3). In addition, some urban centers, such as Rome, became so big that they were impossible to supply using just local resources. With the 1st century BCE, the situation led to the development of a sophisticated logistic system based on ships that carried grain to Rome from the African provinces, mainly Libya and Egypt. It was a major task for the technology of the time to ensure that the inhabitants of Rome would receive enough grain and just when they needed it. It required large ships, storage facilities and, more than all, a centralized bureaucracy that went under the name of "annona" (from the Latin world "annum", year). So important it was this system, that Annona was turned into a full fledged Goddess by imperial propaganda (you can see her in the image above, on the back of a coin minted at the time of Emperor Nero - from Wikipedia). For us, turning bureaucracy into a divine entity may appear a bit farfetched but, perhaps, we are not so far away from that.

Despite its complexity, the Roman logistic grain system was successful in replacing the insufficient Italian production and it permitted to feed a city as large as Rome, whose population approached (and perhaps exceeded) one million inhabitants during the heydays of the empire. But it was not Rome alone which benefited from the Annona and the system could create a relatively high population density concentrated along the shores of the Mediterranean sea. It was this higher population density that gave to the Romans a military edge over their Northern neighbors, the "barbarians", whose population was limited by a lack of a similar logistic system.

But what actually moved grain from the shores of Africa to Rome? In part, it was the result of trade. For instance, grain shipping companies were in private hands and they were paid for their work. But grain itself didn't move because of trade: the provinces shipped grain to Rome because they were forced to. They had to pay taxes to the central government and they could do so either in currency or in kind. It seems that grain producers paid usually in kind and Rome didn't ship anything in return (except in terms of troops and bureaucrats). So, the whole operation was a bad deal for provinces but, as usual in empires, opting out was not allowed. When, in 66 CE, the Jews of Palestine decided that they didn't want to pay taxes to Rome any more, their rebellion was crushed in blood and Jerusalem was sacked. In the end, it was military power that kept the system under control.

The Roman Annona system may not have been fair, but it worked fine and for a long time: at least a few centuries. It seems that the African agricultural system was managed by the Romans with reasonable care and that it was possible to avoid soil erosion almost until the very end of the Western Empire. Note also that the Annona system doesn't seem to have been affected - in itself - by the debasing of the silver denarius. This is reasonable: grain producers had no choice; they couldn't export their products at long distances and they had only one market: Rome and the other major cities of the empire.

But the system that fed the city of Rome appears to have rapidly declined and finally collapsed during the 5th century CE. We have some evidence (3) that it was in this period that erosion turned the North African shores from the Roman "grain belt" into the desert we see nowadays. Possibly, the disaster was unavoidable, but it is also true that warfare does a lot of damage to agriculture and this is surely true for the North African region, object of extensive warfare during the last period of the Roman Empire. More in general, the strain to the economic system generated by continuous warfare may have led producers to overexploit their resources, privileging short term gains to long term stability. Were it not for these events, it is likely that the agricultural productivity of the land could have been maintained for a much longer time. But that was not the case.

in 455 AD, King Genseric of the Vandals (see his face on a "siliqua" coin in the figure) could not be paid anymore. Then, he had no more reasons to keep shipping grain to Rome. So, he loaded the ships with warriors instead of grain and proceeded to sack the city in the same year. That was the true end of Rome, whose population shrunk from at least a few hundred thousands to about 50,000. It was the end of an age and never again would the North African shores be exporters of food.


- The fall of the Roman empire

Complex systems tend to fall in a complex manner and several interlocked factors played a role together first in creating the Roman empire, then in destroying it. At the beginning, it was a technological innovation, coinage of precious metals, that led the Romans to develop a military might that allowed them to access a resource which would have been impossible to exploit otherwise: the North African agricultural land. But, as it is often the case, the exploitation mechanism was so efficient that eventually it destroyed itself. Lower productivity of the precious metal mines reduced the efficiency of the Roman military system and this, in turn, led to fragmentation and extensive warfare. The increasing needs of resources for war were an important factor in destroying the agricultural system whose collapse, in turn, put an end to the empire.

The dynamic interplay of the various elements involved in the growth and the fall of the empire can be seen in the figure below, from a previous essay of mine.  In the diagram, the source of energy is agriculture, but it is just an element of a complex system where various entities reinforce or dampen each other.

The diagram is patterned after the one originally created by Magne Myrtveit for our society described in the 1972 "Limits to Growth" study. This, as other studies of the same kind, provide a nice, aggregated view of the trajectory of an economic system which tends to overexploit the resources it used. As models, however, they are not completely satisfactory in the sense that they don't include the question of control. It is a cost which needs to be paid and the gradually declining flow of resources makes it difficult. As a result, empires rarely collapse smoothly and as a whole, but rather tend to fragment and engage in internecine wars before actually disappearing. That was the destiny of the Roman Empire which experienced the general rule that power is nothing without control.


The Romans and us

It has always been fashionable to see the Roman Empire as a distant mirror of our civilization. And, indeed, we see that the points of contact are many. Just think of the sophisticated Roman logistic system: the navis oneraria which transported grain from Africa to Rome are the equivalent of our super-tankers transporting crude oil from the Middle East to Western countries. And think how China and India are playing today exactly the same role they were playing in the remote Roman times: they are manufacturing centers which are gradually soaking the wealth of the empire that we call, today, "globalization".

This said, there is also an obvious difference. The Roman energy system was based on agriculture and hence it was theoretically renewable, at least until the Romans didn't overexploit it. Our system is based on fossil fuels, which are obviously non renewable resources. Hence, we tend to be more worried about the depletion of our energy resources rather than that of gold and silver which - it seems - we could safely remove from our financial system without evident problems.

Still, there remains the fundamental problem that power is useless without control. The control system of the globalization empire works on similar principles as the older Roman one. It is based on a sophisticated financial system which, eventually, works because it is integrated with the military system. In the globalized army, soldiers, just like the Roman ones, want to be paid. And they want to be paid with a currency that they can redeem with goods and services somewhere. The dollar has, so far, played this role, but can it play it forever?

Eventually, everything that humans do is based on on some form of belief of what has value in this world. The Romans saw gold and silver as stores of value. For us, there is a belief that bits generated inside computers are stores of value - but we may be sorely disappointed. Not that there will ever be a "peak bits" as long as there are computers around, but surely a major financial collapse would not just impoverish us, but most of all it would disrupt our capability of controlling the energy resources we need so desperately.

So, when oil pundits line up oil reserves as if each barrel were a soldier ready for battle, they tacitly assume that these reserves will available for use of the global empire. That's not necessarily true. It depends on the degree of control that the empire will be able to exert on producers. That depends on the financial system which may well turn out to be the weak link of the chain. Without control, power is useless.

The Roman empire was lost when the financial system ceased to be able to control the military system. When the Romans lost their gold, everything was lost. In our case, it may well be that we will lose our ability to control the military system before we actually lose our ability to produce energy from fossil fuels. If the dollar loses its predominance in the world's financial system, then producers may be tempted to keep their oil for themselves or, at least, not so enthusiastic any more in allowing the Empire to access it. What's happening today in Ukraine may be a first symptom of the impending loss of global control.




1. "Mining in the Later Roman Empire", J.C Edmondson, The Journal of Roman Studies, 79, 1989, 84, http://www.jstor.org/stable/301182
2. Tainter, Joseph A (2003. First published 1988), The Collapse of Complex Societies, New York & Cambridge, UK: Cambridge University Press, ISBN 0-521-38673-X,
3. "The Roman Empire: Fall of the West; Survival of the East", James F Morgan, Bloomington 2012