Monday, June 13, 2011

Gold and the Means of Production

I want to shift gears away from current events for a little back and back to thinking about the future.  Where we all are in life right now is, with some exceptions, probably our greatest potential in terms of what we can do with our personal futures, and also true of the future of society as a whole.  The surpluses of wealth are steadily being eaten up, easily accessible resources are basically gone, the population is well above what the pre-industrial carrying capacity of the world is, and so on.  In other words, we're not at the top of the mountain any longer, as we've slipped down it a bit, but we've caught ourselves at least for a little while and have time to think about it before the next shoe drops.

Reactions to this, of course, are mixed.  Some people choose to basically deny the reality of the situation and continue living as they always have, by spending small fortunes on trivial things and not worrying about their future.  Others take a more long-term view and invest in gold or other things which have traditionally had intrinsic value to them.  Still others prepare by buying things which they think they'll need to survive in a post-collapse world (guns and ammo, preserved food, medical supplies, etc). 

Obviously, spending like there will never be a collapse is probably not a wise decision.  However, I think there are some assumptions in the other two strategies which need to be questioned.  While gold and silver have historically been valuable, until recent years, they have not had any real utility for industrial purposes.  Sure, people could make jewelry from them, but there was always a lingering expectation that said jewelry could be turned back into a means of exchange at some point (supposedly, sailors wore gold earrings for this reason -- something that could not easily be lost if they were washed overboard or shipwrecked).  However, if you're starving and have a bag of gold, but nowhere to spend it for food, then it's worthless.  On the other hand, supplies can be used up or lose their functionality over a period of time.  Ammunition has a shelf life of somewhere between 20 to 40 years, producing ammunition for modern firearms will be difficult in the future, medicines also expire, the food will be eaten sooner or later, etc.

What is lacking here is any sense of having a means of building wealth post-collapse.  A lot of the time, I see people writing about the subject of post-crash life who assume that we're all be living as simple farmers or we'll be rapidly rebuilding as soon as the last of the lights go out.  Both cases seem to be an extreme which isn't practical -- if we just suffered a collapse (in other words, the system that sustain our society have completely failed), then what is going to be left to rebuild with?  Likewise, the assumption that specialist occupations won't quickly re-emerge in a purely agricultural society is also questionable. 

So, I'm still puzzled that people don't put more time/thought into post-collapse professions and businesses and preparing to do something besides simply try to get by.  Consider a person who has some home brewing or wine making skills.  While people often do this as a hobby, and may envision making a little wine after a collapse for trade, why do they not think of scaling it up to be a larger enterprise, maybe employing several people?  The knowledge is already there, but the idea may occur to them too late and they may not have the equipment to do much beyond small batches of production.  However, buying the equipment to make more wine would not be expensive at the current time -- a garage or storage barn full of carboys, airlocks, corks and discarded bottles would be enough to sustain a relatively large-scale operation for some time, taking fruit in trade and trading wine in turn.  Other people that have other hobbies or skills may think about expanding them to be larger-scale operations.  Printing, papermaking, candlemaking, distilling, smithing, weaving, etc, all come to mind.

Ultimately, having some means of production may allow a community to be built around the industry, much like most villages in the middle ages had at least one "cottage indsutry" to produce wealth for storage, improvements or trade.  Likewise for monasteries that relied on production of everything from cheese to wood products to sustain themselves.  People might say "Well, why can't we just use what's out there now for this?"  The issue is that modern production is very process-oriented and relies on decentralized production of materials and processing on a scale too large to be practical for most people.  What do you do with a brewing plant when the electricity doesn't come on any longer?

While I realize that the subject of wealth building is probably a strange one to tackle, when discussing economic collapse, and may be distasteful to some, I think it would be a good idea to define it in broader terms, too.  Adam Smith postulated that when one person can benefit from the fruits of their labors, it's likely that all will benefit as well.  Consider a person who builds a mill in a village that didn't have one.  Yes, they might charge a nominal fee for processing the grain into flour, but people will be able to more effectively use their grain harvest at that point.  Or, another person might build a brewery to let people turn grain into alcohol for long-term storage.  Over time, this will tend to build stronger communities with deeper resources which are more able to weather various problems as they arise.

Lastly, I would point out that one part of the philosophy of the Leibowitz Society is the creation and maintenance of strong communities to serve as centers of information storage and dissemination.  This means that the idea of creating centers of production to help sustain that community makes perfect sense, as well as how it would benefit the individual who maintained that means of production.


  1. Had an early start this morning on the west coast, so i got my CF fix in before there were too many responses. Decided to use the link, so here i am at the Leibowitz Society page. - good essay. I have been onto cottage industry for years - everybody making something for deep background support.

    I have been speaking truth to power. I was blogging on Blogger, but i got a better deal - come visit Existence - . I give pictures, descriptions and account of this new game - based on a simultaneous civilization while we wait for the bell to ring. I would be pleased to keep up a trade route with you - for information and potentially off the net. After all, i'm a zoom kid. (if you like what you see, turn off the tv and do it!).

    Since i cannot embed with this responder - here is the url for Thyme on time - this weekends essay. I consider writing a way of creating small pieces of silver in the account - if you like what you read, mebbe you'll come back. Looking forward to opening more depth-filled conversations. Dr. Lenny Thyme

  2. Blogger eats comments again - come to

  3. or here :

  4. Why this fixation on total collapse?

    Despite our problems, it seems far most likely (at least to me) that the system will degrade in fits and starts over a period of time.

    Do you really think the U.S. Federal government is going to relinquish power? Regardless of declining revenue & resources they'll hold on tightly. In fact, ever tighter as things worsen. We see them laying the ground work in this press to turn the country into a total Police state and ever greater warmongering abroad. Their course of action is clear.

    Collapse most likely is an outlier event, and yet Americans with their inherent gun obsession and residual nuclear war/commie invasion mindset are fixated with SHTF.

    Your desire to build reliance and sustainability is laudable, however our economic & resource issues might be addressable if we shifted away from using debt as money and it's requisite need for unending growth.

  5. I would recommend looking back over some of the previous postings -- the Leibowitz Society does not specify if we will see total collapse, or no collapse, or anything in between. In part, "collapse" can also very readily mean a collapse of the structures of real learning and culture, and their replacement by the lesser virtues of reactive and maintenance-based philosophy and thinking. A society can experience a dark age even if the "lights" never go out (although they often go hand in hand).

    Regardless of whether or not the government wants to maintain control over the country isn't necessarily relevant in this context. If we take an event like the Black Death, or some other equally awful calamity, it's probably safe to say that little of the old authority will exist. For what it's worth, Rome tried desperately to maintain itself as a political entity, but just imploded in the end for a variety of reasons, some of which seem less drastic than what we're facing today. At any rate, the Leibowitz Society is not a politically-oriented organization and doesn't take any stand on politics one way or the other, instead preferring to concentrate on preserving knowledge for after a crash, if and when it does happen.

    There is some irony here in your response -- on one hand, there's the assumption that control exercised by the state will be absolute. On the other hand, there's the assumption that we can actually do anything about where we seem to be headed as a culture. My feeling/thought on the subject has always been that we are both victims and perpetrators of our own demise. People want security and comfort, but do not think out how to pay for that security and comfort. Politicians simply give people what they want and leave it to their successors to clean up the mess, which everyone is going to be wrapped up in at some point.

    I've also commented some on the "survivalist" mindset here from time to time as being counter-productive. People who are hunkered down in their bunkers, awaiting Armageddon, aren't really doing themselves a favor. The world will go on around them. On the other hand, armed self-defense is still a legitimate in a number of countries, so I do mention it here, even if the "classic" survival scenario has little to recommend it.

  6. Doctor Lenny,

    Thanks for posting the links. I've been interested in Quantum Physics for some time, but applying it to social situations is an interesting vehicle of thought for me. At times, I've contemplated applying complexity theory to ideas about collapse, but haven't felt it was justifiable, in light of other issues seeming more pressing at times. I may reconsider that after reading your post.

    Really, the idea of "six degrees" of separation isn't much more than a social version of quantum entanglement. We tend to put too much distance between ourselves and other people sometimes, and forget that we still live in much the same conditions and environments as others do. For example, I have friends who are friends with Dennis Kucinich on one hand, and friends who are friends with Rob Portman on the other. We tend not to think in those terms, but they still do exist.


  7. One thermodynamic fact that isn't widely appreciated, but is in fact the main difference between renewable and "traditional" non-renewable fuels of the industrial age is that oil, coal, uranium and natural gas have negative returns. By this I mean, for example, if you shovel 100 tons of coal into a power plant, it delivers about one-third or 33 tons (equivalent) of useable electricity. Of course, you then lose more of that delivering through the grid, but the point is non-renewable returns are negative -- you lose, in the case cited, about 67 tons of the original energy.

    Photovoltaic panels, on the other hand, produce about five times more energy over their warrantied lifetime than is required to make them. This positive return -- five fold -- has increased during the past decade, from about a factor of four, according to Jerry Ventre, co-author of Photovoltaic Systems Engineering.

    Despite the ominous possibilities discussed in this blog and in The Long Emergency, it is still possible that a crash program to install widely distributed (best at the individual residence and business location level) of solar and wind technologies could greatly cushion the inevitable transition away from the oil orgy.

  8. Ron,

    You make a very good point about solar and energy. We face two problems of thought when it comes to alternative energy -- people want transportation (and economics) to cater to the consumer's wants as much as possible (meaning, the personal passenger car is still the common denominator) and the other is that people think traditionally when it comes to how goods and energy move.

    I think there are two things which would break us out of the need for fossil fuels -- the first is solar (and solar satellites), and the other is fusion power. Both are being invested in and may yield production-level solutions in the next decade or so. The problem is that we are also dealing with massive economic problems which may cripple the ability to deploy those systems or make use of them at all.

    On the other hand, one point I've tried to stress in the Leibowitz Society is that we can still be optimistic about the long-term future, even if things seem to be falling off a cliff at the moment. Also, a stable economy doesn't negate the need for the role of the Society, as we could still face collapse from other causes (natural disaster, war, plague, etc).

    In the long term, I share Steven Hawking's thinking that we need to expand into space on a permanent basis, then to the stars. I also tend to share Marc Widdowson's view that human society is destined to fail and renew itself cyclically. So, things might leak bleak, but we, as a species, can be amazing in our accomplishments even as we are staggering in our failures.


  9. Hello there,
    I have found this blog very interesting and with very serious arguments. By the way, I'm writing from Europe and so I might have a different perspective on how things are rolling on. My point of view is that all we are experiencing is the end of so called "turbo-capitalism" based on the unexpected scenario (or may be very well known probability by some elite) of what was inevitable after the abandoning the Bretton Woods system by USA back in 1971. Nixon's shock has given the lead over the world to the USA for the past 40 years, greatly contributing on the self-collapse of the Soviet Union. FIAT money - the US dollar - made all this possible, but it's obvious that it wouldn't work on the long run. You can win anything with the printing machine running but it will only function until there is a willing of the rest of the world in trusting the green paper. When that ends - and is ending - people might as well use the dollar for other purposes (I would suggest wall paper). The chinese still hold a huge amount of credits in US dollars, that's the last barrier to the collapse backlash. The collapse of the matrix - as it is sometimes named - won't be the same around the world. My opinion is that it will begin in Greece - a place that I enjoyed many times, the same place where democracy started in the first place. Tomorrow might be the day.

  10. It's interesting to hear from European readers. In America, the sense of Ameri-centrism tends to drown out much of what we hear and think about other parts of the world, parts which are also having difficulty and uncertainty as constant companions.

    I would absolutely agree with your assertions about the end of capitalism, itself ending around 700 or so years of European (and perhaps world) banking that began with the Templars. It's funny. We've gone in a century from being so tightly dependent on the gold standard that it was retarding commercial growth, to abandoning it completely and finding out that it's impossible to accurately value everything from fuel to labor because no one is speaking on common ground.

    China is such a big question mark at the moment. They've been griping about monetary policy for several years now, but are eventually going to have to face either cutting the dollar loose or going down with the American ship. My feeling is that they'll treat the dollar like they did their great treasure fleets -- decide that there's no reason to be overly involved with outside matters and focus on trying to remain stable as everything else fails.

    Interesting point about Greece, too. Greece's heritage is something which is all-too-often forgotten by people who pretend that history stops somewhere north of the Alps, and it's not all that far from Sarajevo, which of course was the site of the trigger for the calamities of the 20th century. There always seems to be something about that part of the world (besides good food)...


  11. "...and finding out that it's impossible to accurately value everything..."

    Thank you for this astute observation, it is so true.

    What's interesting, for me, is that I've become pretty good at organic gardening, producing excess beyond what we need. Take tomatoes, for example, we like to can enough sauce to last a year -- about 104 jars, if we eat it twice a week. I'm still canning this Spring's crop and I'm at 150+ jars. So now, I'm trading it with people who free range chickens and harvest the eggs.

    So what's a fair swap? Well, free range eggs in this part of North Florida sell for $2 a dozen. Tomato sauce -- factory produced -- is about the same, maybe cheaper depending on how many rat turds are contained therein.

    So we simply swap a jar for a dozen eggs, and everyone seems happy. But maybe I should be asking for two dozen eggs...and the cycle of greed begins anew.

  12. Ron,

    It's an interesting example you lay out. I would offer that if a person thinks a jar of sauce is worth two dozen eggs, they will trade. If not, they'll find someone else who will sell their sauce more cheaply.

    "Greed" itself is a loaded word and I think probably requires some thought. In a real free market, "greed" can't exactly exist, because if you demand too much for your items, you're simply not going to find a buyer (like the person who, on Ebay, asks full list price for used DVDs, for example). Greed seems more applicable to occasions where people use political influence or other means to bypass market interactions and "cheat."

    On the other hand, these really aren't abstract questions -- Rome had price controls (non-market pricing) to try to manage the economy and medieval guilds enforced the same sort of thing in an attempt to protect the interests of the guild members. Is it fairer to limit the ability of producers to adjust prices for their goods than it is to let consumers try to satisfy their basic needs the best they can? Or do we see consumers as also being producers in the market, but likely using their skills and labor as their commodity instead of hard goods? And is there room for humanitarian considerations? (if so, who determines what is "humane?")


  13. Good Afternoon,
    as I said yesterday, Papandreou will be speaking to the Greek nation tonight. Thousands of persons - yes the people - are encircling the Parliament. What will happen next? They will try a grand coalition? Who will be such a fool to embark himself onto a sinking ship? I wonder if Papandreou will have the courage to face the truth and instead of stitching up the impossible just declare the end. Default. Creditors and debtors will have to meet half a way. What may follow will be certain austerity but the Greeks - with such ancestors as the Spartans - will surely survive and give birth to the real democracy, the one ethically just and free from surfdom to foreign corporations, the Persian Serse metafhor.
    History repeats itself, always. This is not the end, it's a NEW BEGINNING.

  14. Markus,

    History does seem to be cyclical much of the time. Maybe the names and places change, but...

    It does seem that Papandreou is trying to buy time with something of a shell game, much like what happened in Egypt earlier this year. It doesn't look like the Greeks are necessarily buying it, however.

    I wonder when -- not if -- the Greek government falls, what course the people will pursue after that?


  15. There are many options open, I guess the CIA might be very well informed... lets see:
    1. Papandreou falls and a military coup d'etate backed by NATO stands in to enforce the diktat of the IMF and BCE.
    2. Papandreou calls for a national assembly to enforce the exit from the euro and declares a default.
    3. A revolution takes place with the establishment of a new national assembly and declare default.
    4. Things get totally out of control on all levels of society, including the military and... the Russians on request of the Greek Orthodox church come in to restore civil order.

    Remember Pristina, consider the crisis of NATO (a serious budget crisis), take into account the domino effect of the Greek default and what Obama said about the "strategic importance" of the Greek affair becomes very well understandable.
    We are living on borrowed time.