Nicole Foss is a finance-savvy energy analyst who has added a new concern to Peak Oil and Peak Finance. Have you thought about Peak Trust?
As she explains in a fascinating podcast conversation with James Howard Kunstler here, in an economic expansion phase such as that of the last 70-80 years, public trust moves outward and upward to higher levels of political organization, nationally and internationally, granting these greater legitimacy.
But in a contraction phase (such as presently grips us), trust recedes far more quickly than in expansion. Fewer and fewer political leaders appear trustworthy, and lower and lower levels of political organization inspire any confidence.
Energy, Foss points out, is the primary driver of expansion and socio-economic complexity. Finance is the driver of contraction, partly because the timeframes involved in finance–which is now almost completely virtual–are very short.
Over the last thirty years of credit expansion, we’ve reached the point where credit is some 90% of the money supply–i.e., most of it is excess claims to underlying real wealth. If finance is the operating system of our economy, what happens when the operating system fails? No matter how much energy and cheap labor you may have, you still have a depression: nothing will work until you find a way to reboot the operating system.
“It’s not that we will be running out of energy soon but we will be running out of the dollars to buy it and the ability to use it,” Foss comments. Kunstler seconds her point about the phony nature of our new bullishness on energy: our energy sources, whatever their size, cannot sustain the level of socio-economic complexity now needed to produce them. Thus they are not real energy sources.
Technology, despite our endemic technophilia, will be no help. “Technology without energy is just funny-shaped sculpture,” Foss remarks. “People no longer realize that energy is the master resource. It’s the capacity to do work.”
Amidst this collapsing trust horizon, national institutions will not, of course, simply disappear. They will try to maintain control insofar as they are still perceived as acting in the public good. As trust recedes, these insitutions will turn even more to using surveillance and coercion. The White House occupant during such a period will inevitably become a polarizing figure. (Kunstler suggests we are in a time parallel to the 1850s, in fact.)
In order to scale the levels of trust back upward, we’ll need to rebuild from a foundational level, she concludes. But getting there will be anything but a smooth landing, on this reading.