I've been writing this over the last few days. It is a bit disjointed. But seeing Ken Langone bloviating on CNBC this morning made me finish and post.
It occurs to me that the birth of capitalism was coincident with the use of hydrocarbon energy.
Coal use got going in the late 1700's. And capitalism as we know it today got started about that time as well. And each discovery of easier energy, from oil and gas caused another spurt in the growth of world economies and capitalism.
Capitalism depends on growth. Capitalism depends on the continued growth of money. The effect of capitalism is to concentrate the wealth in a few successful hands. Without the creation of more money that goes into the hands of those at the bottom of the economy, the workers and laborers who are engaged in the mining of the wealth of the earth for the use of all, those at the upper layers of the food chain have no buyers for their brilliant ideas.
So, if it indeed does follow (from an earlier post) that the decreased EROI of energy stunts growth and makes all activities more relatively expensive, then the money creation that capitalism depends on will be constrained. And what that would mean for the world is mindboggling. If energy becomes less available worldwide how will the wealth that is now concentrated in those few hands get distributed?
A picture of a large sack of grain comes to mind. The mice have a heyday. They grow fat and have lots of babies, who also do the same. There is no limit to the good times. Until the sack of grain is empty. This is the analogy to the deregulation of business in the 1980's and the manipulation of interest rates that resulted in the largest credit expansion in human history. These actions were in reaction to the end of the good times in the 1970's and early '80s. Perhaps, if the mice had conserved some grain they wouldn't all have to die of starvation.
The same could be said of the United States of America as we expanded from Atlantic to Pacific oceans. It was easy. And capitalism was useful. Now we are crowded. The larger the concentration of people the more regulation is needed.
The world has been harvesting millions of years of stored energy in oil and gas in the last 200 yrs.
I guess we MUST have faith in humanity and our ability to find something else. But nature is not so romantic. So the prospect is devastating.
But, what the hell. In the long run we all die. Right?
Or we change our way of government and our way of economics. And start to reward cooperation rather than competition.
And this morning on CNBC was Mr. Ken Langone, the former head and cofounder of Home Depot, bloviating about what the country needs to "get the economy going again". His main point was that we need to deregulate business. This all comes from a man who made his name at the heart of that great credit expansion. I wanted to ask him if we shouldn't just do what President Reagan did: namely, cut taxes and increase govt. spending, and deregulate the airlines and the banks in later years. We know how that worked out. We are paying for it still.
And that thing about removing Carter's solar panels from the White House......