Reasons for the Crash of 2008

Everybody has their own view of why the crash happened.

Many economic experts say that “renewed economic growth” and “capitalism with better controls” is the solution to restore things back to ‘normal’. Other people  say that uncontrolled and fundamentally unsustainable growth got us into this mess in the first place.

My views sit in the latter camp – here’s why.

At the end of the day, like many things, it comes down to simple maths and physics. Ultimately any economic system has to be connected to the physical reality of the planet and has to take planetary limits into account.

Specifically, the current economic and social model is based on everlasting, unlimited growth, which just can’t happen on a finite planet.

When the world’ s population and the footprint of our economic activity were smaller, you could reasonably assume that the world essentially placed no restrictions on economic activity. (Note however that localized constraints have always applied and resource depletion has usually been the reason that previous human civilizations have collapsed. The only difference is earlier civilizations affected less of the planet).

Today the limitations of the planet and resource depletion are visible almost everywhere e.g. forests, soil, water, oil, fisheries, etc etc.

The Bottom Line:

6.5 Billion people living the way we do,  can’t survive in the long term on this planet with its obvious resource limits, many of which we have now hit.

Sooner or later, really big environmental and societal changes are almost certain to happen, given the current trajectory of consumption and resource depletion, combined with very slow progress on environmental preservation.

Personally, I think the changes are likely to happen sooner rather than later and 2009 is likely to be a year of upheaval that will make 2008 look like easy street. Peak oil is one factor that may bring massive changes within a few years or less.

The reasons include:

• as above- an economic system that is disconnected from physical reality of the planet and does not take the planetary limits into account. Specifically, the current economic and social model is based on everlasting, unlimited growth, which just can’t happen on a finite planet.

• limits on energy availability especially “peak oil” (industrial civilization runs on energy and the era of cheap, easy energy is drawing to a close, even though oil is under $US 50 per barrel at the time of writing).

• limits on other resources that industrial civilization depends upon e.g. metals, fertiliser.

• destruction of the planet’s natural resource base (soil, forests, water, fisheries, species diversity etc etc)

• increasing competition for basic resources such as food and water

• societal and political unrest and widespread societal collapse as people begin to discern that the prevailing systems are not viable in a resource constrained world

Remember: The purpose of this site is to help you wake up. If enough people wake up and make changes to their behavior quickly enough, we can reach a tipping point that can change the path of history and take you and us to a positive future.