Endgame: USA

The thought of collapse to most people is a frightening prospect and for good reason. At the very least, the collapse of the US economy would likely result in the greatest destruction of wealth ever seen in human history due to the tightly coupled nature of the global economy. As Barnaby Joyce rightly points out, “A default by the US means complete economic collapse around the world and the question we have got to ask ourselves is where are we in that?”

Collapse needs to be placed in context. Buzz Holling of the Resilience Alliance has developed the concept of panarchy, which describes how ecological systems progress through adaptive cycles of growth, collapse, regeneration, and further growth. This can also be applied to social and economic systems. The evidence suggests that the US has reached, or is approaching, the peak of its growth cycle. If this is the case, at some point a collapse must follow which is the precursor to regeneration. Canadian political scientist, Thomas Homer-Dixon has coined the term catagenesis to describe this process of renewal through breakdown. Catagenesis comes from the ancient Greek words for down (cata), and birth (genesis).

So if we were to accept that the collapse of the USA was possible, even probable, what would be an appropriate policy response? How do we make the most of the opportunity for catagensis? The first step would be recognising that to adapt in a functional manner would require a high level of adaptive capacity within our society. This would enable us to re-configure our society without a significant decline in the critical functions required to maintain a stable society and reduce the risk of “synchronous failure,” the technical term for a Mad Max-type scenario. So how could we increase the adaptive capacity/resilience of Australian society? Some suggestions might be:

• Decouple from the global economy. As demonstrated by the GFC, financial shocks in one nation can become widespread in a highly coupled globalised world.
• Reduce debt levels, both private and government as quickly as possible. This will minimise the impact of the credit crunch that would follow a collapse of the US and provide more options for adaption.
• Forget about Emission Trading Schemes. The collapse of the US, and thus of China’s exports, would probably be the most effective climate change mitigation strategy available. For a long term opportunity for catagenesis however, conservation and renewable energy are imperative.
• Reduce oil dependency. The collapse of the US, by far the world’s largest oil consumer, would result in the collapse of the oil price and as a result investment in the oil industry. This would almost certainly mean that peak oil is a historical, as opposed to a future, event.

These suggestions are the antithesis of current policy direction, which brings me to the point of this article. Current discourse suggests that “growth” is the only possible future scenario and our entire focus is on pursuing this goal. If growth is inherently limited, as panarchy and a long term view of human history suggest, then the possibility of “collapse” must become part of our discourse. Collapse should provide the opportunity for renewal, while avoiding synchronous failure, but this will only occur if we recognise the predicament we have placed ourselves in.