Aengus Anderson: You're listening to the conversation. I'm Aengus Anderson.
Micah Saul: I'm Micah Saul.
Neil Prendergast: And I'm Neil Prendergast. And if you're just tuning into the series you may want to check out an earlier episode, where we lay out the whole premise of The Conversation.
Saul: Yeah, these are our final episodes. They were all recorded in 2013, and we've just been horrifically lazy about getting them packaged up for you. But, they are now ready and here they are.
Anderson: Today an interview with Charles Hugh Smith, an alternative economics blogger from the Bay Area.
Prendergast: The way we got to him, actually, is that he was recommended by a listener, so it was really nice to have that back and forth with our audience.
Anderson: He's a really interesting thinker. He's self-taught. He's got a background in philosophy, but he's worked in a whole gamut of different areas. But he's been doing economics blogging because it is his passion. CNBC listed him as one of their top alt economics bloggers. So it was really nice of him to carve out a little time and sit down for a conversation. And speaking as the one who interviewed him, this was one of the most conversational conversations I've had. It never felt like a single answer was boilerplate. And that is always refreshing. So, without further ado, here's Charles Hugh Smith.
Charles Hugh Smith: We’re in an era of overlapping crises, and I think that’s what makes it sort of unique. We’re aware of the financial aspect, which is sort of exponential increase in debt. We’re also aware that energy, the cost is going up because we’re reaching to deeper and more expensive reserves of energy, at least fossil fuels.
So that’s another if not crisis then um… Well, actually it is a crisis, because the world we’ve constructed is based on cheap fossil fuels. And so anything that changes that creates a chronic crisis. And I think consumerism as a way of life and as a guiding philosophy for the financial sector and the economy as a whole, I think that has sort of run out of air, you know. That we’ve reached this sort of marginal return on consumption as the guiding philosophy, not just for economic growth but for meaning in our lives. Like we identify who we are with the signifiers that we’re able to purchase and consume.
And then we can also look at say, just resources in general. Not just energy but soil, which is being depleted. Fresh water which is under pressure. And certain of the minerals. And so that’s the general context of my work, is these four overlapping crises.
Aengus Anderson: If the current systems logic continues, what does that look like?
Smith: We can separate the financial from the material.
Smith: So the financial, there will be a crisis within I’d say ten years. Maybe you can stretch it out to you know, twelve years. But somewhere relatively soon, this whole thing of exponential debt being built on an economy that’s basically flatlined in the real world, that’s going to need to be reset. And the only way that it can be reset is all that debt’s liquidated. It’s either destroyed by crisis or it’s forgiven, or it’s defaulted on. And so that’s guaranteed. That just mathematics, and so that’s why guys like Chris Martenson who comes from a scientific background, they look at the math of debt at the government and private sector levels and they go, “This is…there’s no way this is sustainable.” And so that’s one thing.
But that doesn’t necessarily mean we all have to be like starving in the streets, because the material economy is still like, how much food is grown, how much energy’s extracted, and how is it distributed? That I think will partly depend on energy. And a lot of people are now convinced that there’s going to be tons of fossil fuels forever because of the fracking and new technologies extracting more oil out of old wells and all that kind of thing. I look at that and go that’s all fine and good, and maybe even if you said it was infinite, if the cost is five times more than it is now, then that doesn’t work for the economy we have, which requires cheap energy.
Anderson: I was talking to John Fullerton, are you familiar with him, of The Capital Institute?
Smith: Yes. A little bit.
Anderson: Okay. We were talking about the sort of terrible fork in the road that he feels we’re at. He said basically let’s not even worry about energy limits. Let’s say you’ve got all the energy you want. But to burn it you still have to deal with the climatic repercussions of that. So essentially if you want to keep the climate in an even remotely tolerable zone for doing anything else in the world, farming, or living, you basically have a lot of energy that maybe exists in the ground but you just can’t burn.
And then he was saying so, we can either go down the road where we say in advance, “Let’s not burn that,” and then you write off the value of all of that. Which collapses the value of all these energy companies on the stock market and causes a systemic problem that radiates out from that—with panic and with poor distribution based on just…panic.
So that’s what you need to do to save the environment. And he said of course you could not save the environment. Let’s say you just burn all that stuff. And then you have a true environmental problem, with food distribution issues that could lead to some sort of panic that collapses the stock market then precipitates a… And so he saw it as sort of this no‐win scenario, but one of those ways really hurts the physical world that we live in, not only for us but for other features as well. What do you think of that scenario? Are we in one of these…kinda lose‐lose whatever we do, with the current market?
Smith: The biologist E.O. Wilson, he wrote a book… I forget the exact title but his thinking is similar. In life on planet Earth, a lot of people see the same kind of cone you’re describing, where the number of species that are being driven to extinction, and the disruptions of these ecosystems is just reaching a critical phase based on burning huge quantities of coal, and of strip mining the ocean so there’s you know…totally disrupting those ecologies, and that you can’t go back and fix that stuff. You know, we can’t bring species back. We can’t bring the ocean ecology back after we’ve eliminated all the whole food chain. So I think there is a point where you know, you can’t go back and fix that stuff with just more money. That’s kind of the intellectual paradigm we have, is, “Well, all you need is more money.” If you’re burning too much coal then you spend money and put a scrubber on that chimney stack or whatever. And so the idea that no amount of money can fix the problems, that’s part of the…kind of the end of capitalism thinking that I’m pursuing, you know. That the whole model is broken.
Then I take your question as sort of like well, it’s an organizational one. Is there some other way that we could organize life such that we could get by as a species on 10% of the energy we now spend? And I think the answer’s well clearly, yes we could. So then it’s like, how do we organize that rationally?
Anderson: And do you buy his description where we have that fork in the road with two options that lose, but one that takes out the environment? Or, is there a way to ignore that fork in the road entirely? Is there a third way that gets you to this minimal energy scenario without say, an economic collapse that leads to panic? You know, because it seems like a big theme of this, is that everything is so interconnected that it doesn’t matter what’s materially out there, right. There’s the psychological aspect of if the market collapses then distribution breaks down. And that that kind of snowballs, in a way.
Smith: Yeah. I agree with the domino sequence there. And I consider it a positive if the financial situation collapses. In other words, if all of our financial wealth vanishes, what impact does that actually have? And if we follow that through it leads to some interesting questions. Because most of us don’t control enough wealth to really make a difference. And so what we’re really talking about is the loss of all financial wealth really only affects the one tenth of 1% who own like 80% of the assets. And so if they were wiped out, how bad would that be for the rest of us? Well, it might be good.
Anderson: Mm hm. But would it lead to a distribution problem? A panic that would affect everyone else? So, maybe they would lose a lot of wealth but in the process their companies would stop functioning. You know, we have a very distributed food system, for example, so if there was a financial panic and the top lost the wealth and their companies fell into disarray, would Walmart then be shipping produce to all of these towns that aren’t ready to grow anything, and where the local population doesn’t have the knowledge to grow things?
So that’s where I wonder, in the short term do you face a real crisis, even if it is in the long term a positive thing? Because I’ve had several people in the series—I’m thinking of Jan Lundberg down in Santa Cruz, talking about you know, crisis could be catharsis, you know, and lead to a better state. But I always wonder well what does that crisis look like, and how many people die just because of our own inefficiencies and our own panic mechanism, our own herd mentality?
Smith: Yeah. And that’s um…that’s a question that’s really hard to answer because there’s so many variables. My sense is there’s a lot of people, and this is the positive part, who are trying to set up parallel systems. Of course we’re still dependent on these large infrastructures. You know, the Internet and the power grid and all that. But to whatever degree we can I think we need to create a parallel system not only of values but of ways of using the energy and the infrastructure, that if we can distance ourselves from these cartels, the more the better. So if they survive, they’re not going to impact us so much. And if they crumble, or devolve, then we’ve separated ourselves out.
And so that’s the whole idea of the relocalizing economy, that you can say, “Well you know, the farmers market can’t replace Walmart. But can it replace the fresh fruits and vegetables that Walmart doesn’t have, or that it only has a selection, or that Walmart flew in those grapes 6,000 miles from Chile? Can it replace some part of that?” And so the more that we can replace the better, that’s how I would kind of phrase it.
Some communities are going to do better than others, because they’ve built a little bit of resilience. That would be hopeful in the sense that there’s a model that other people can quickly follow, and because of the Internet we now have a way to spread that kind of knowledge extremely quickly.
You go, “Well wait a minute. You’re talking about like the real world. Can gardening spread that fast? Can Zipcar spread that fast?” And I’m saying I think in terms of social innovation yes it can. It can spread as fast as technology, because it’s enabled by technology. And so I’m a little more hopeful that parallel systems can arise as these centralized systems decay or devolve.
So I have one foot in that camp, that recognizes the power of the local economy and the real world. And then I also have a foot in the camp of gee, this 3D printer is going to wipe out a bunch of cartels because we don’t need these 6,000-mile supply chains to China anymore because you can buy like a desktop 3D printer for three grand or something. And if you put that in a community workshop where a bunch of people can rent it for like ten bucks an hour, suddenly you have like a nexus of potential innovation, without a 6,000-mile supply chain controlled by a centralized corporation controlled by a central state.
Anderson: Kind of the big thrust in terms of what you’d want to see happening now would be local, parallel, resilient, small‐scale systems.
Smith: Yeah. And why would that be something we want to do? Well, two reasons. One is it’s more fun and it feels better. With the caveat that we can actually support that this is a healthier environment with data. Just like there’s endless reams of data to support the Mediterranean diet as like the key to longevity, and the community that goes with that kind of lifestyle is part of that longevity. That’s been studied to death and it’s supported by data.
But then there’s also that the technological or economic argument is the 3D desktop fab technology enables faster better cheaper, at least in certain areas. And so in those areas it’s actually more efficient and cheaper than Walmart.
Anderson: With 7 billion people on the planet, could you have any other kind of model? You know, when I think of societies where people had a much more direct, vested connection to the community, it seems like they were small and primitive, in a way that…well,we don’t know how to be small with 7 billion people, and we don’t want to be primitive, right?
Smith: Yeah, and this is where it’s really interesting to consider Tainter’s view of complexity and maybe tease apart the parts of our lives that are complex? And so, if you say…let’s take the whole Internet. It’s very complex in all of its workings. But in terms of its energy consumption, it’s about 2% of energy use, I think. All the servers, the whole deal. That’s still a considerable amount of electricity. But it’s a tiny percentage of the electricity compared to air travel, transportation, heating and cooling you know millions of buildings. And so we could say, is is sustainable to maintain the Internet complexity? And on just a straight energy level, you’d have to say yes.
And then you say well, what about all the complexity that the Internet generates or enables? And then you go well, if it’s not an energy drain, there’s really no material reason why that’s not sustainable. And so the complexity that seems unsustainable to me is the marginal return kind of thing. And you know, there’s lots of examples of that. Flying in grapes from country 6,000 miles away. Is that really wise? What if we just chose to eat some other fruit or vegetable that was local?
Anderson: This makes me think of when I was talking to David Korten, he was outlining this big economic problem. And I was saying okay, well what do you do about it? And he said, “You reduce waste.” You can have access to all these things that give you qualitative richness, say through the Internet, all that information. And yet you can massively reduce. You can get rid of the car. You know, you don’t have to live in the suburb.
And of course what I always want to know about something like that, and this was a question I was talking about with my co‐host afterwards is, to have that little connection to the Internet, can that exist at all without the giant high‐energy framework elsewhere, you know?
Smith: One of my friends is Jim Kunstler, the author of The Long Emergency, and his view is we’re going to go back to a world made by hand. In other words were going to lose all this technological complexity because of the same dynamic you just described. It requires this gigantic structure. And if you lose the huge industrial structure then you lose the technology.
I’m not so sure, personally, because of the like, digital fab revolution, the so‐called desktop 3D printing and so on. It could be that a lot of the parts to the technology will be able to be designed and manufactured on a very small scale. And then that would open up a lot of doors to keeping all this electronic technology affordable.
Anderson: The hypothetical situation I talk about my co‐hosts will be like, you want to make something like this recording device that we’re using here. It’s a solid state recorder and it’s full of integrated circuits. It’s full of exotic rare earths that come from all over the world. Does digital fabrication allow you to make this in a local way?
Smith: Yeah, I think there’s a bit of sleight of hand there that like the actual ICs—the integrated circuits—they’re made in like these enormous fabs that cost like $2 billion.
Anderson: Right, and there’s no way to really quite fake that.
Smith: No, there isn’t. In an idealized system? then you’d have a fab…like and IC fab like that located next to a big hydroelectric dam, or some sort of energy source that wasn’t like coal‐fired or whatever. Because that fab uses a lot of power, but it generates tens of millions of chips at an incredibly low cost. And so that’s something that you’d say well, look at the enabling power of those little ten‐cent chips globally. If we needed a billion chips, or 10 billion chips, how much would this cost us in terms of energy consumption, and it would again be something like 1% or less.
Anderson: So I think you’ve made a compelling argument that you could probably keep a lot of the goodies in a very efficient system—at least the electronic goodies. Maybe the complex goodies. But maybe not the heavy industrial goodies like the car.
Smith: One of the other themes I constantly write about is social innovation. One of the things that authors like Jim Kunstler focus on is most people look to technology to solve all problems through what he calls magic. In other words we don’t really understand how it’s all going to work, but we’re going to get hydrogen and unlimited supplies from the ocean, and they’re going to like, dig down two miles and get to some solid methane and do some miraculous thing to it.
And of course, the more you know about the actual technologies of energy the more amazed you are that it’s as cheap as it is. Because I mean, drilling a hole like 10,000 feet deep and then fracking it and then extracting this stuff and then taking it to this gigantic refinery, it’s so immense and costly it’s a miracle that we even have any gasoline at less than 100 bucks a gallon.
And so that kind of magic I don’t believe in. But on the other hand desktop 3D, it is a sort of magic. And so I think we have to kind of separate out the magic from the technology that can be localized and could actually be cost effective.
And then social innovation doesn’t require any money at all. For instance, there’s like Zipcar and share rides, that’s one vehicle that’s shared by maybe five people or even ten people. So let’s say that you had one vehicle and you had a much more efficient system than we have with Zipcar. Then [we’ve] basically eliminated 90% of the autos through a social innovation that’s enabled by the Internet.
Anderson: It’s interesting because we’re dealing with this legacy of suburbs here, right—
Anderson: —where all these people live in places where there’s going to be a drag if you want to shift away from that. You’re going to have to rebuild city centers so there are walkable areas.
Smith: Yeah. I mentioned Jim Kunstler because he basically started from that perspective of looking critically at suburbs and then following up on the consequences of that fixed investment. And so he feels that we’re trapped between the sunk cost, it’s called, like we’ve invested so much in this infrastructure of interstate highways and suburbs that we can’t let go of it. And yet it’s costing us more and more energy and time for less and less yield.
Anderson: Mm hm.
Smith: Yeah, and that’s also Joseph Tainter’s analysis, is that the return on all this investment just gets smaller and smaller. And then you reach a threshold where it implodes. Then you start wondering well what are the consequences of that, and one avenue of thought is the suburbs become the new ghettos.
Anderson: Let’s just say, in a hypothetical scenario, we got rid of a lot of the waste. Even if you do that, we’re still faced with a scenario where we have an economic model that really only knows how to grow. Even if the rate of rise is much slower with an efficient economy is it still always going to increase the material footprint anyway?
Smith: Yeah, I think that’s…I think you’ve identified sort of the nub of global capitalism, which is based on there’s always got to be more. More material wealth, more financial wealth that can be distributed to more and more people. And so Jeremy Rifkin wrote a book called The End of Work a few years ago. And the thrust of his thinking was technology is reducing the need for human labor to such a degree that paid work is no longer going to be a system we can count on to distribute the essentials of life. I think we see that more and more as the ability of software automation, robotics, keeps advancing up the food chain from low‐skill labor to higher‐skill labor. And so then we face a crisis perhaps less of material wealth or exploitation of resources, to we just don’t have enough paying work anymore to support this sort of consumption.
And so then we go well what’s beyond paid work? And then you go well, in my mind we have to go back to a community‐based thing where you can have a good life but you have very little exposure to the financial economy. You don’t need debt. You’re not making enough to borrow money but you don’t need to because there’s a new system of exchange that takes a surplus that the economy generates and distributes it to the community, based less on the market value of your labor and more on what you’re contributing to the community locally.
Anderson: But is there enough of a demand for that, at the end of the day? Are there enough jobs or do we just have so many damn people that they can’t all be working at soup kitchens and being funded by their friends’ donations in the community, living a very ascetic lifestyle? Are we just dealing with a giant numbers problem?
Smith: My sense is there’s a ton of undone work, but that there’s only two sources of funding for it in our current system. Either the government borrows the money by selling treasury bonds or local municipal bonds. Or it skims the money from some private sector enterprise, or individual with taxes. Or, the market economy identifies some profit in this thing that will generate enough money that they can pay people to do it.
And so I think of things like well what about a bike lane or a bikeway? Now, we all know that bikes are good, and that they are healthier, and they reduce pollution, and they also are good for the urban economy. You know, like, people on their bikes will stop and go to local businesses that they happen to see because they’re able to do so, they’re on their bike and so on. And so there’s this multiplier effect that’s been shown with having bike lanes and bikeways that are safe.
I don’t want to sound too fanatical about it because there’s a lot of communities where biking doesn’t work because the weather’s extreme or the distances are too great. But I mention bikeways because there’s so many benefits to them, but our system doesn’t provide any way to cost that. The government doesn’t count cars that are not on the road because somebody’s riding a bike. They don’t measure the health improvements from riding a bike. We only measure how much money we’re blowing on people that had a heart attack, not the people that were saved from having a heart attack because they’ve been riding a bike for 10 years.
So there’s no benefit to the government or the market economy to creating a bike lane. It’s like, well who’s going to pay for it? There’s no profit in this. And there’s no political demand strong enough. And so I look at this as a classic model where the community would then look at the value of a bike lane, and they would take resources that had been made available from the surplus generated elsewhere. Maybe it’s by taxes, maybe it’s by donations. And then the community gets to decide how to spend the money, without regard to profit or lobbying.
Anderson: And so do you think that’s something that could be done in say, a more…a lower‐production economy?
Anderson: Yeah, because in this case you’d deploy a bunch of people out to make the bike lane—
Anderson: But, you know, now we of course think well, we’ve got professionals who know how to [pave roads, you’ve got da da da da da da. But if we have on an economy that’s sort of moved beyond a lot of the traditional employment roles that we have, do you have a bunch of people who just kind of volunteer to different causes and can’t really put in a bike lane? To some extent do you need a really specialized, stratified economy to be able to achieve something like paving a road, which seems like a very technical job that maybe couldn’t be done in the sort of local craftsperson way?
Smith: Yeah, I think you’ve raised a very important issue that I often write about too, which is preparing ourselves for like a new mode of work which I call “hybrid work.” Like maybe acquiring skills across a spectrum of things as opposed to the specialization, which we all know that’s kind of the model that we’ve been following for decades, which is the more specialized your skills then the higher value your labor has. And of course, in terms of being a surgeon or a pilot we understand that these are high‐value positions because there’s very few people who qualify. But the number of people that are in that role might be 5 or 10% of the economy, and the other 9% of us are generalized, or our skillset’s not quite that unique or difficult to reach.
So, kind of to go back to the point, I’ll mention the example from the UK, from Britain, where a lot of local governments are finding they don’t have enough money to fund everything they want to, just like here. And so when at least one town in Britain, they’ve come up with a solution where there’s one paid city worker who drives the truck with the asphalt to fill potholes. And then there’s volunteers who then he teaches or leads. And so then the pothole‐filling crew is one paid guy and like five volunteers. And of course you go well, how are the five people paid? And of course in Britain it’s a welfare state so they’re getting some sort of social benefits.
And what I’m kind of proposing as an alternative is the community would get whatever money we now devote to social services rather than the individual, so that people would have a chance to contribute rather than just getting a check in the mail and then sitting down and watching TV and feeling depressed about their lack of meaning in their life. The only way that you could get housing and food and all the stuff that social services provide is you would have to contribute to the community. And I think the key word here I think is reciprocity, and that’s what we’ve lost. We only know about the reciprocity of money. In other words, I provide my labor to you and you pay me. And then I go out and I do some more financial trades. But in terms of like my involvement in the community we’ve lost that reciprocity.
Anderson: I think something that comes to mind for me is always that if you’ve got that say, parallel to a market economy, it seems like you might have people who are playing this bigger financial game always able to sort of…ooze in and coopt and corrupt those local systems.
Smith: Yeah. You’ve brought up a critical question about this iteration of global capitalism we’re in. And if you take say, thinkers like Wallerstein, his idea was the teleology of capitalism is always expanding your asset base, which is what you just spoke to. And so, within that teleology, if there’s some way to monetize or profit from something that’s outside the existing financial system, then those profit centers will attempt to take it over.
But the question that that world systems approach raises is, what if we’re at the end of this iteration of capitalism? Because this iteration of capitalism only works if there’s enough people that can earn enough money from their wage labor to support what I call the financialized economy—like in other words it’s all based on debt, you know. You want to have a house, roof over your head? Big debt. You want to go to college? Oh, here’s another giant amount of debt. You want to have a vehicle? Oh! More debt. So really it’s sort of like, what would we have if debt was eliminated? Well you’d eliminate this iteration of global capitalism.
Anderson: So you think there could be another form of capitalism that wouldn’t be based on perpetual growth?
Smith: Yeah. I think it’s possible or that it would be much more freeform and anarchistic. There might be high growth in one area and like, stable or slow growth or even decaying situations elsewhere but that we’d have a localized and perhaps more fragmented situation. I’m struggling here to describe something that I see, that the Internet allows for all these connections at a higher level. We can be more like a beehive. In other words, where the bees have a system for communicating and organizing their labor which appears chaotic and random but is actually highly efficient. And it’s…this thing within systems analysis, it’s called self‐organizing systems, where each individual unit (in this case for example a bee), does not have a tremendous amount of intelligence. It has a tiny brain, it has very few ways of feeding back information and communicating with other fees, But nonetheless, it creates an immensely complex system from really small pieces. And so I think a lot of people see the potential in that as being the basis for a new global capitalism.
Anderson: It seems like there’s a real question of human nature here which I find very interesting. You know, with the be analogy, are we bees? Can we self‐organize in that way or are we a hierarchical animal that naturally self‐organizes in ways that are very…pyramid-like. Do we seek the simplicity of the hierarchy, rather than the chaos of the emergent or self‐organizing system?
Smith: Yeah, that’s a fascinating question and I think like a lot of things in human nature, I guess you can say yes to both? If we look at our primate cousins, we can say that chimpanzees are extremely hierarchical, and brutally so in enforcing the hierarchy. And yet we also have the orangutans and other primate cousins who are individual, who are isolated. Typically they don’t form groups that much. And so you say well gosh, we seem to have both of those characteristics. Is it creating a balance between those?
And you go well, what’s the balance in a centralized system? And what I see is the federal government is an excellent example of a system with increasingly diminishing returns on its centralization. Like it sucks up more and more of the resources, and it provides less and less, really. In its initial growth phase, say in the 20th century, centralization as a whole paid all these dividends, you know. That the larger the company or the government got, then the more efficient it could [be]come. It’s like, they call it the efficiencies of scale, you know, and the idea that that’s an endless process is perhaps just flat‐out wrong. And that actually maybe we’ve reached a point where we’ve topped out on the efficiencies and now it’s actually costing us the more we centralize.
Democracy’s not becoming more democratic as a result, it’s actually we’re getting a less democratic nation as a result. And the economy is becoming more fragile from this centralization into the Federal Reserve and the executive branch. So we’re getting actually a negative yield on more centralization, so then it would be natural to say well then we need to try the new model beyond this. The next teleology will be decentralization because it’s simply way more efficient.
Anderson: Part of the premise of this project is looking at different historical moments where it seems like a social system has ceased working and there are a lot of people in the culture talking about, “Well what do we do next?” and all these crazy ideas are on the table. But of course what I wonder is, does that lead the change, proactively? Or does that happen after the change is already underway? Are we, as Joseph Tainter said, only responsive to the price mechanism?
Smith: Yeah. I think you’ve identified really the key question of the era. Like say if we go back to the printed word, the Gutenberg press and the sudden explosion of technology which we consider sort of primitive like oh my gosh, you make paper and you print it… But that explosion of knowledge created immense changes because an average person could now have access to a scale of knowledge that was only attainable to a handful of scholars a few decades before. Maybe what we’re really asking is, can we take the kind of technological change that we’re used to…transforming the world literally in a decade, can we extrapolate that to social innovations? Or are those unattainable, or are those in some other scale that we can’t really apply the technology model?
And I’m a little more hopeful, I guess, that the technology model is the social innovation model. Because the technology revolution of the Internet has enabled the spread of all these ideas that can be applied. They’re practical.
Anderson: Though with something like technology, you know, you could’ve given me a new computer in the mid‐90s with an Internet connection and I would’ve gone, “Oh, well this is exciting. It opens up all these doors, but it doesn’t demand sacrifice,” right. I mean sacrifice in terms of learning it, a little time sacrificed.
But it seems like this would be like you’re proposing well, here’s a system that…that may be hurtling towards destruction but doesn’t seem that way, to most people who are looking at it. They’re just not reading those sources, they’re not looking at the same things that you’re looking at or that other people are looking at. And so what you’d be asking of them almost is like, “Make this big sacrifice so this thing doesn’t drive off a cliff, even though you think it’s not driving off a cliff.” So it seems like there’s something different between adapting to a new technology and adapting preemptively to a new social model.
Smith: Yeah. I think you’re right, and I think you’re raising a point that goes back to human nature, which at least from my point of view and my own personal experiences none of us change until we have to. As you mentioned that Tainter mentioned, people find an amazing ability to innovate and to adapt when the price of something like, goes up ten‐fold. They suddenly find some way around that. And so then we’re really asking, is that process going to be so disruptive that we’re going to lose the system.
Smith: I tend to look at the material culture and say if it’s extremely fragile, that culture, that society, that economy could be in real big trouble. I would think the next ten years are are really going to be extremely interesting. There’s gonna be resets of systems, and whether it’s going to be messy or not, it’s totally up in the air.
Anderson: I’m thinking of my conversation with the philosopher Lawrence Torcello, and I said, “What’s the crisis of the present?” He said, “It’s stupidity.” And you know, so when we think about stupidity and having to like deal with these resets…and how do we do that?, do we have the maturity to do that?, there’s a really interesting question there in terms of like how do we even perceive reality? Because education plays such a role in like what data we choose to take in. The complexity of systems that we can see.
Smith: Well when we talk about stupidity, my favorite example of that as a sort of a joke about it is The Onion had a parody where it said only sixteen people in the US qualify to drive their cars. And if you were entirely strict about your…
Smith: That would be true!
Smith: That, why do we allow 200 million people this freedom to kill other people?
Anderson: Then when we’re talking about you know, you hit this crisis moment and we’re allowing them to vote…
Smith: Yeah, exactly.
Anderson: And I think Torcello’s thrust was like, boy we sure need to work on education first so we extend the term that people are thinking in. And actually I think that was the only bit of optimism in my conversation with Joseph Tainter. And he doesn’t think it’ll make any difference but he thinks you have to try with education first, to extend people’s timeframes so they’re at least cognizant of the crises that they’re creating and dealing with.
Smith: And then we come into the biological limits. Is that just an intellectual concept or can we start changing our behavior for that? And then that’s when the “price is everything” guys tend to come in and they tend to win that argument because people talk about different things about their value system but they actually only respond generally to price.
But it also raises this notion of…that Douglas Rushkoff wrote in his latest book, it’s called Present Shock.
Anderson: Mm hm.
Smith: And he’s referring to the 1970 book Future Shock, which was a big deal way before you were born. And that what the idea behind Future Shock was, the world is changing so rapidly that it’s exceeded our biological ability to process this rapid change and make sense of it and adapt to it. And so then we basically enter a stage of being overwhelmed and incapable of processing everything. And so Rushkoff, and probably many other people, have concluded we’ve reached that point now.
Smith: That the Internet has speeded up so much the input that we’re receiving that we literally have lost the ability to track a narrative. And that our sense of time has now been compressed. Everything happens in the present.
Anderson: Mm hm.
Smith: That’s really destructive, obviously, to the thing we’re talking about, which is we need a longer‐term point of view here.
Anderson: Right, and what’s interesting you know, when I talked to Rushkoff and I was trying to ask him like, “Where are you going with this? What kind of future do you want?” he was so into the present shock thing that he said like, “I’m not even concerned about that. I’m concerned about what we can do right now,” in a way that really resembles stuff that we’ve been talking about, you know. Not as organized, but he was just saying you know, have dinner with your neighbor. Pull out of the big system as much as you can in a way that makes me think now as you’re talking about resilience like ah, there’s a resonance there, you know. Rushkoff was saying, can you knit something at home? Okay, well that’s not everything but start there. Very pragmatic, and maybe not…it might seem remarkably unambitious to a lot of people. But I think he feels that we’re so stuck in this present shock that asking for any more than that is just asking too much.
Smith: This raises another issue which I think about a lot because I’m 59 and so yes, I’m a Baby Boomer and so yes, I’m to blame for all these problems. Certainly my generation has a lot to answer for; I will be the first to say that. Having lived through, as a child, the 60s and the early 70s, I think that that era is interesting. There was kind of a counter‐revolution or a reformation of the whole consumerist mentality that we now call the counterculture. And it’s often derided or marginalized now because the Baby Boom Generation quickly dropped that and bought back into the consumerist mentality with total vigor.
But I think that it shows that you can have a social revolution that has an economic and a religious aspect. I mean like, in other words Christianity changed in the 60s as well, with the Jesus freak movement and a lot of growth of marginal churches and exploration of Eastern thinking and trying to integrate that into Christianity. And so the possibility of broad spectrum change, just the last fifty years, proves it is possible. And we could look at 1968 in terms of like Paris and Czechoslovakia, and—
Smith: It’s not just a US phenomenon is what I’m saying. Or in a negative example the Cultural Revolution in China. You can have this broad spectrum change that touches on all these different things. And again it’s not a centralized idea or a centralized authority creates it.
Anderson: If we were to call that The Conversation, which is something that we do periodically in here, that certainly seems like the last one we had, you know. And where did that come from?
Smith: I mean, some people say, and I think you could make the case, that it was all about the discovery of new supergiant oil fields in the North Sea and Alaska and West Africa. And that everything that had a momentum for changing the kind of consumerist version of capitalism teleology vanished in a flood of cheap oil. If we are no longer finding these kind of gigantic new sources of cheap energy, maybe the ground will become fertile again for a social revolution, or everything’s on the table again.
Anderson: That’s a really interesting way of putting it because you know, something I’ve been thinking about as we’ve been talking is kind of economic determinism. How much of us is just a reactive animal dealing with scarcity and supply. You know.
Anderson: And all of this philosophical stuff is just…it’s just the wrapping paper we put on it to give ourselves a sense of dignity, you know?
Smith: [laughing] Yes.
Anderson: Maybe that description can bridge this a little better, where you can say well okay so yes, we’re reactive to all of these economic forces. But, when they’re scarce, then there’s a place for this conversation and the social stuff and individual agency and leadership and all of those things to really play a role in deciding how you deal with it. Maybe if there’s unlimited wealth, then maybe we do act in really predictable and selfish and shallow ways. But maybe when there’s limited wealth, then you get a little more variety.
Smith: I hadn’t really thought about it in the way you just described but I think you’ve nailed a key dynamic of our era, is that when there’s immense surplus the decisionmaking can be really loose because there’s so much wealth we can afford that sloppy decisionmaking. And so what you’re saying is it becomes we only have to start thinking clearly in scarcity. And I think that’s a very powerful dynamic.
So I think we’re going to experience that time that we’re talking about, when scarcity occurs, in the next decade, where decisionmaking will have to really sharpen up. I kinda go back to the Pareto Principle that the 4%, the vital few, influence the 64 and then the 80%. And so—
Anderson: But that’s got to be after our crisis.
Smith: Well actually I think it’s actually got to be before, because what you’re doing, and all the people that you talk to— And I don’t try to put myself in some sort of like…that I’ve got the answers. But what we’re doing is we’re talking about things, and some of the people you have talked to I consider part of the 4% who are laying out all these alternatives and different ways of thinking and approaching things, and that those will catch on like fire. When the time is right, and when people are looking for alternatives they’ll already be there. If we didn’t talk about it, and if you didn’t do your work, and the rest of us didn’t do our work, then we really would be in a tight spot because we wouldn’t have any alternatives already laid out.
Anderson: So as we look towards this different paradigm, are you optimistic that the things that you hope to see will happen?
Smith: I’m optimistic because of the vast explosion of knowledge and sharing of knowledge and models because of the Internet. And that puts one of my feet in the “technology is going to save us” magic camp, but I don’t really think of myself as being in that camp for the simple reason is I see it as an extension of the printing press revolution. In other words all you’re really doing is enabling the average person to access far more knowledge and skills than they could have otherwise.
Anderson: It seems like ultimately your faith is in knowledge, and the freedom to use it.
Smith: I think that summarizes my viewpoint very well. Better than I could myself.
Anderson: So there we have an interview that is really…non-dogmatic, very pragmatic. One of the things that I really liked about this is it felt like we got to follow trains of thought for a while. There've been a lot of interviews where people say, "Here's an example of a magic technology." And I go, "Okay," maybe I ask one or two follow-up questions, maybe I don't have time for it.
But in this case, Charles said, "Okay, fabricators." And I said, "Well, alright. But do they make this really complicated form of electronics equipment?" which is something that I always wonder, right? You can't say "fabricator is a panacea" and then just let it…go.
And he said, "Well. Okay. Here's some ways in which that could still be produced, and here are some other things that couldn't be produced by that. And oh by the way, here's a way it could be scaled," and maybe it felt like we got a little bit lost in detail? But part of me didn't edit that because I wanted to show that we went down those roads.
Prendergast: It actually really kind of inspired me, and I like that he connected his ideas to a lot of works that actually I'm kind of interested in myself. End of work, James Howard Kunstler's book, Present Shock also, Rushkoff. Really interesting stuff. And kind of what I wanted to see was more of those particularities, actually. A little bit maybe beyond the economics, and—
Anderson: Wait, you wanted to get lost in the weeds more?
Prendergast: Yeah, I did, actually. But I mean I think that just says that I was on board with his big picture. And what I kind of wanted was some of the more policy stuff. Talking about the bike lanes, the community gardens, the farmers markets kind of thing. Those things have kinda taken off around the country right now. But I think there's just so much more that small communities need to do to kind of create those parallel systems. But I think a lot of people are wondering well, what do you do after you create that community garden plot? What do you do after you get that bike lane in? What else can a small community do?
Anderson: So it's almost like the question you're asking is, are the current parallel systems remotely big enough to handle these challenges, or do we need like a toolkit for small towns to make much more complicated parallel systems.
Prendergast: Yeah, that's kinda what I'm interested in. I'd like to know what that would be. What would that new Whole Earth Catalog look like?
Anderson: We talked for three hours…and I coulda gone down that road. I think with Charles you could probably go back and say, "Hey man, we had a bunch of thoughts about this. Do you want to riff on these ideas more?" and I'm sure he would say yes.
Saul: I was also really sort of fascinated by these parallel communities. I had a little bit of a…problem?…with it? You know, there's the farmers markets and bike lanes, which makes sense—they exist in our communities now. Then there was sort of the next step? where he's talking about those in conjunction with this sort of post-work thing and you start getting to these reciprocity-based economies. Which…also sound kind of idyllic and utopic in their way.
But he has them existing…parallel, right. And in some ways feeding off of the surplus of the larger growth-based economies that we currently have. And I guess my question is how do you protect those small economies from the growth-based economy? I mean, if you view the growth-based economy as this sort of…monster devouring everything (which I think a lot of people we've talked to do; some don't, obviously), how do you preserve this little more-idyllic, utopic community in the face of that?
Anderson: I'm pulling this from a lot of conversation that was edited out of what we're posting here. But my guess would be that he would feel well, you know these parallel systems, they just need to exist as almost reminders of an idea. Reminders that you can do it in this other way. Maybe it doesn't need to be a full-fledged economy. Maybe it isn't ever going to successfully compete with the larger growth-based economy. But you just need to have those farmers markets there so when the growth-based economy crashes face-first into a wall, which he does expect, you have models of development.
There've been other thinkers in this project who've talked about similar things. Chuck Collins mentioning that really what you need to do is you need to have ideas in place. And that ideas, when they're needed they can spread really fast. So it's just what you need to do is you need to have the ideas more than have like, a fully functioning parallel economy.
Prendergast: It actually kinda reminds me of some of the work that people in local farming movement conduct. Think of the seed-saving type of farmer gardener. They want to make sure that seed continues into the future. But for that to happen, you have to have somebody actually using that seed. You can't just put that seed in a seed bank. Somebody actually has to use it.
Saul: I like that. You need to actually use it to preserve it. And my big take away from this conversation was right there at the end. He was talking about what knowledge and conversation or good for, and it's…the conversation is useful because it lays the groundwork for the things we'll need when we're all fucked.
Anderson: Which is interesting, but it did leave me thinking that like, this is a collapse scenario which is pretty rosy. And that's rare in this project.
This is The Conversation and that was Charles Hugh Smith, recorded on June 10th, 2013 in Berkeley, California.
This interview at the Conversation web site, with project notes, comments, and taxonomic organization specific to The Conversation.