Virtually no one realizes that the economy is a self-organized networked system. There are many interconnections within the system. The real situation is that as prices rise, supply tends to rise as well, because new sources of production become available at the higher price. At the same time, demand tends to fall for a variety of reasons:
- Lower affordability
- Lower productivity growth
- Falling relative wages of non-elite workers
The potential mismatch between amount of supply and demand is exacerbated by the oversized role that debt plays in determining the level of commodity prices. Because the oil problem is one of diminishing returns, adding debt becomes less and less profitable over time. There is a potential for a sharp decrease in debt from a combination of defaults and planned debt reductions, leading to very much lower oil prices, and severe problems for oil producers. Financial institutions tend to be badly affected as well. If a person looks at only past history, the situation looks secure, but it really is not.
Our academic system of inquiry, with its peer reviewed literature system, has let us down.
Our peer reviewed academic system is not telling this story. Part of the problem is that this is a difficult story. It has taken me most of the last ten years to figure it out.
Part of the problem with our academic system seems to be excessive reliance on past analyses. Once one direction has been set, it is hard to change. Another part of the problem is that the focus of each researcher tends to be quite narrow. The result can be that it is hard to “see the forest for the trees.”
Furthermore, politicians and academic publishers tend to “push” results in the direction of a desired outcome. Grant money goes to researchers who follow the government-preferred fields of inquiry; publishers prefer books that are not too alarming to students.
I am coming at this issue from “out in left field.” I don’t have a Ph.D., although I am a Fellow of the Casualty Actuarial Society, which many would consider similar. I also have an M. S. in Mathematics. I do not work in a university setting. I do not have a strong background in subjects a person might expect, such as geology, economic theory, or physics. I do have a fair amount of practical experience with financial modeling from my actuarial background, however.
My approach is very different from that of most researchers. I come to the problem from the point of view of how a finite world might be expected to operate. I write most of my articles on the Internet, where I get the benefit of comments from readers. Many of these commenters point me in the direction of articles or books I should read, or raise additional issues I should consider.
Over the years, I have become acquainted with many researchers in related fields. These people have generally reached out to me–invited me to speak at their conferences, or corresponded with me about issues they considered important. As a result of this collaboration, I have been able to put together a more complete story than others.
I have stayed away from publishers and funding sources that might try to influence what I say. I have not been taking donations, and do not run ads on my website. The story is one that needs to be told, but it easily gets distorted if the person telling the story is influenced by what will generate the largest donations, or the most grant money.
My experience says that our education system does not support research necessary for our survival on a big scale. World science and research is not motivated by our survival but by ‘business’ or ‘entertainment’. Most people’s behavior is not determined by reason but by genetic impulses, tendencies and propensities, and they don’t know this. Until we will not rise our heads above over our primate heritage, we will be doomed to repeated extinctions.
We need completely new education which contains the most important issues for human beings: to survive and to be, as they say, ‘happy’. I.V.