If nothing else, the housing market crash and the ensuing credit meltdown and debt deflation signifies the extent to which Americans had come to believe that you can get something for nothing. Believing money really is some sort of cosmic force all on it's own, obeying the metaphysical laws specific to it that had been harnessed by a bunch of people in suits living in Manhattan might have been the foundational delusion. This was widely believed. Rather, it was narrowly believed and widely believed in as so much depended on the veracity of this new dimension of money. Long ago, back in the 1980's under the Reagan Administration, it was decided that the nation's power and prestige, it's ability to fight and win the Cold War, and the expansion of the American economy would be entrusted to Wall Street. Guided by the beacon of enlightened self-interest, Wall Street would take the nation and the world to new heights of unimaginable wealth for the people of the world as economic growth would over time solve any problem that came along. Morning in America. Everything is going to be outstanding. Who has time to be miserable when you are so busily getting rich, after all? And if you just so happen to be miserable you have only yourself to blame.
Optimism turns delusional when it tries to maintain a consensus reality in the face of new conditions deleterious to that reality. Americans have been feasting on a buffet of optimism since the end of the Cold War. Certain of the superiority of our system, moral or otherwise, the nation set about aggressively exporting the American model to the rest of the world, much of which had just been freed from the dreary, dull authoritarian socialists. The lesson taken from the collapse of the Soviet Union was essentially that free societies will prevail over the non-free. More specifically, and more importantly, the free market will prevail over the centrally controlled markets. Translated into politics, it meant the free market knows best and the government knows nothing. Until recently, it was well nigh impossible to pitch an argument against this victorious ideology that could get a hearing anywhere. Now, it would seem, the fate of the American economy would largely depend on whether the American economy is the best (only?) development model.
It behooves us to wonder whether the American model is even possible anymore. For a variety of reasons, the American model faces a lot of questions about it's legitimacy as we notice the freest of the free markets require enormous and unprecedented amounts of government money just to appear solvent. This money has to be borrowed, of course, so that investment banks can cover bets they borrowed money to make. Not only that, these investment banks have sold this debt to unsuspecting investors and then bet against this debt from ever performing. This debt market, called the derivatives market, is also called a dark, or opaque, market for a simple reason; nobody really knows what anybody else is doing in this market. It seems self-evident that if a bank accumulates debt, counts it as an asset, and then issues credit based on the value of that debt that eventually there would be problems. The question Americans, whose future depends on the answer should ask, is: Why has the American system required so much debt?
Lots of people complain about the debt. Everybody knows that at some point debt is going to be a problem. What most people don't understand is the magnitude of the debt that has been taken on. What we do know is the $10-odd trillion the government owes. We know the financial obligations of the U.S. government in entitlement payments over the next fifty years is $65 trillion. We know corporate debt is about the same within a shorter time span. We know household debt is somewhere around thirty trillion. Lots and lots of debt. But what about the derivatives market? The market that underlies the credit market, what made the heyday of cheap, easy credit possible over the years is the derivatives market. The latest estimate for the total "value" of this market is $1 quadrillion dollars. That is $1,000 trillion dollars worldwide in debt derivatives that are contituted by a smorgasbord of innovative investment vehicles that believe with all it's heart and soul that one day the American and global economies will grow sufficiently to make those debts good investments. To borrow Chris Martenson phraseology: It assumes the world will be $1 quadrillion dollars bigger than it is today. The global economy is roughly $55 trillion and shrinking as of this writing. What if the assumption that the world will be 200x bigger than it is now isn't right?
Back to our question, then, of why the system needs so much debt. The debt load was not built over night and so finding the reasons behind it seems, well, reasonable. First, though, we will name the economic process that lead to the debt accumulation; financialization, which is the technical term for big economic fun. Also known as the last stage of empire. The financial sector of the U.S. economy grew from around 13% of Gross Domestic Product in 1980 to around 26% in 2008. How that breaks down on a yearly basis I don't know, but the question I have, and I don't know if anyone can truly answer it, is what would our economy look like had we not gone through the financialization process. Would our vaunted growth rates, the very growth rates we beat our European friends over the head with, have been nearly what they were had we not built up this financial sector to such a degree? It seems the answer is probably no. What does the sum of the American economy look like when you subtract the debt? That still leaves the maddening question of why all the debt was necessary?
The answer will have to wait until the next post.
Saturday, October 31, 2009
Sunday, October 25, 2009
Capitalism's Limited Capacity
For those who may believe in capitalism as a sort of vessel through which freedom is exercised, the notion that there may be a natural constraint to continued growth represents a particular challenge to that belief. That capitalism must grow in order to continue as a functioning system seems almost a moot point, but it may be worthwhile to revisit this feature of a system that has thrived in the western countries for the better part of two centuries. It is quite clear as we survey these past two centuries that capitalism has coincided with great advances in all aspects of society, if not been a direct agent in these advances. It has fed the idea of progress, the actuality of progress, and finally, the myth of progress as a cultural foundation, so that now it is simply axiomatic that the future will be bigger, better, and faster in ways we can only now imagine. Capitalism is indeed a profoundly powerful tool.
The success of capitalism has certainly given people a sense that the world is our oyster. And the oyster seems limitless in it's dimensions. The assumption is that whenever we run out of something, the signal to the market will dictate that more will be discovered somewhere else in the world. For the most part this has been the case. We have always found new sources of trees, metals, land, and what have you up to the present. But what if the assumption of limitless resources is not correct? What if we can't find new cheap replacements for what we have relied on to supply our needs? This is where the assumption of capitalism runs into the understanding science has of the natural world.
When pressed, most people I believe would accept intuitively the fact that the world is a finite space. Still, the space we inhabit seems vast as we experience it. As tiny individuals living for a brief time on the surface of a planet, it is easy to believe that humans couldn't hope to exhaust the natural wealth we find here. But the habitable Earth is really just a very narrow range on the surface that might be best illustrated as the mossy cover of a large boulder. But even this illustration doesn't tell the whole story. If the moss is the productive part of the land area, then it would cover perhaps ten percent of the surface of the boulder. You might wonder about the oceans. Where are the oceans? You're forgetting about those. Actually, in terms of food, the oceans provide less than five percent of human food calories. All the rest is derived from the working of the land. Of that, most of the worlds food comes from less than a third of the total land area. We are working with much smaller spaces than we might have thought.
What capitalism has enabled us to do, among other things, is to dramatically increase the rate we find, extract, and use the natural wealth of the Earth. As the capitalist industrial economies have grown, the amount of materials used each year has likewise grown almost without interruption. This is true of both renewable resources such as fresh water and arable soil and non-renewables such as oil and copper. In the case of renewables, we are using them faster than the rate at which they are naturally replenished. We might ask ourselves how a system which has been so good at procuring materials for human use in increasing amounts will function when those materials will begin to decline as they inevitably become scarce. Can a system which must grow function on a planet which cannot grow indefinitely? This is the most fundamental question we can ask about the nature of our economic activities.
One of the most dangerous myths of capitalism is that the market, using the price signal, will solve problems of resource depletion. What serves as a myth has manifested as a cultural delusion. The trust in the market has become something resembling a bad religion. The evidence of a depleted Earth unable to support the human race as it lives now, and in such numbers, for very much longer is mounting. Are we going to claim that the entitlement to accrue wealth without limit trumps the habitability of the planet? In the next post I will talk about overshooting the planet's capacity to support our present civilization and the role of oil in all of that.
The success of capitalism has certainly given people a sense that the world is our oyster. And the oyster seems limitless in it's dimensions. The assumption is that whenever we run out of something, the signal to the market will dictate that more will be discovered somewhere else in the world. For the most part this has been the case. We have always found new sources of trees, metals, land, and what have you up to the present. But what if the assumption of limitless resources is not correct? What if we can't find new cheap replacements for what we have relied on to supply our needs? This is where the assumption of capitalism runs into the understanding science has of the natural world.
When pressed, most people I believe would accept intuitively the fact that the world is a finite space. Still, the space we inhabit seems vast as we experience it. As tiny individuals living for a brief time on the surface of a planet, it is easy to believe that humans couldn't hope to exhaust the natural wealth we find here. But the habitable Earth is really just a very narrow range on the surface that might be best illustrated as the mossy cover of a large boulder. But even this illustration doesn't tell the whole story. If the moss is the productive part of the land area, then it would cover perhaps ten percent of the surface of the boulder. You might wonder about the oceans. Where are the oceans? You're forgetting about those. Actually, in terms of food, the oceans provide less than five percent of human food calories. All the rest is derived from the working of the land. Of that, most of the worlds food comes from less than a third of the total land area. We are working with much smaller spaces than we might have thought.
What capitalism has enabled us to do, among other things, is to dramatically increase the rate we find, extract, and use the natural wealth of the Earth. As the capitalist industrial economies have grown, the amount of materials used each year has likewise grown almost without interruption. This is true of both renewable resources such as fresh water and arable soil and non-renewables such as oil and copper. In the case of renewables, we are using them faster than the rate at which they are naturally replenished. We might ask ourselves how a system which has been so good at procuring materials for human use in increasing amounts will function when those materials will begin to decline as they inevitably become scarce. Can a system which must grow function on a planet which cannot grow indefinitely? This is the most fundamental question we can ask about the nature of our economic activities.
One of the most dangerous myths of capitalism is that the market, using the price signal, will solve problems of resource depletion. What serves as a myth has manifested as a cultural delusion. The trust in the market has become something resembling a bad religion. The evidence of a depleted Earth unable to support the human race as it lives now, and in such numbers, for very much longer is mounting. Are we going to claim that the entitlement to accrue wealth without limit trumps the habitability of the planet? In the next post I will talk about overshooting the planet's capacity to support our present civilization and the role of oil in all of that.
Sunday, October 18, 2009
Copenhagen and Reality.
In December, the leaders of the world will congregate in Copenhagen, Denmark to fashion a new climate change treaty. Like any multi-lateral treaty, the participants will negotiate to secure their own benefit while attempting to get others to sacrifice and still make themselves look good. I don't mean to sound cynical when I say that. It is simply the way of geo-politics. There will be many in attendance who believe in the importance of reducing and ultimately eliminating carbon dioxide emissions through human economic activity and doing it quickly. Many nations citizens overwhelmingly and rightly see the current warming trend as both caused by humans and as a real threat to planetary well being. Being a citizen of the United States, there are two aspects that are starkly out of tune with the spirit of international agreement generally and in the reality of human caused climate change specifically.
It is a pity when public discourse in the U.S. centers around the question of the reality of climate change and it's cause and not on a more pertinent one; whether it is too late to stop it. Things being as they are, Americans will continue to muddle through the "debate", with "skeptics" on one side and people who know what they are talking about on the other. It should be quite a spectacle, contentious and stupid, as the right wing, funded by the entrenched interests, and propelled by their passion for ignorance for it's own sake, will poison the well of constructive and critical discourse. I think we can expect a racheting up of the rhetoric as we saw during the fight over health care legislation. They will alternately dismiss the climate change problem as imaginary, fraudulent, conspiratorial, and nothing we need to worry about. They will use arguments that have already been debunked, like the variable solar radiation hypothesis, or the cyclical climate change as a natural function we can do nothing about anyway argument. Lots of money, hundreds of millions, will be spent, have been spent, to sway public opinion to see climate change as a hoax or a sideshow. Because anybody who bothers his or her pretty little head about climate change is "hysterical", a "dupe", or is part of a socialist conspiracy to destroy capitalism and the American economy. This last should sound familiar to anyone who pays attention.
In the meantime, as we have been wasting our time thusly, the world has and will continue to get warmer due to carbon dioxide emissions released into the atmosphere. It is expected by climate scientists that even if we stop all CO2 emissions today that the carbon released up to yesterday will raise the temperative another half degree centigrade. To put that into perspective, the temperature rise above the post-glacial norm is .8 degrees C. That is about 1.5 degrees F. The consensus view is that we must absolutely keep global temperatures from rising two degrees centigrade, just under 4 degrees F because it is believed that it is a tipping point after which warming will rise beyond our ability to control it. They fear that a 2 degree rise will initiate a positive feedback loop which will unleash carbon stored in the form of methane that is trapped in tundra and the oceans, through the burning of forests, and the further heating of the artic regions after the ice has melted and sunlight is absorbed in open water.
The alarm of scientists over the rate of change of climate zones should cause commensurate alarm in the population. For various reasons it doesn't. Perhaps the American public has "climate" fatigue. That says maybe, but given my general sense that American leadership isn't quite as alarmed either, and is not presenting to the American public the reality of climate change and the threat it poses, I think Copenhagen might underwhelm. There is reason to hope that something dramatic will happen in Copenhagen in targeting a low carbon emissions treaty with the targets coming sooner rather than later. But I'm not holding my breath. This may mean the next climate summit will be an emergency summit for reasons that will likely be evident over the next several years.
It begins with what happens when the temperature rises only .8 degrees. What we've seen is ice melting at a rate faster than scientists ever thought it would. We have lost 20% of the arctic winter ice and the Arctic Ocean will likely be ice free in summer by 2015. What happens then is anybody's guess, but is certain to happen is the blue ocean water would absorb heat energy from the sun rather than reflect the sunlight back into space. This would cause the Greenland ice sheet to melt at an even faster rate, adding water to the oceans and raise sea levels. Climate patterns would change in unpredictable ways. This would certainly impact agriculture negatively and maybe disasterously. This is the form the feedback loop will take.
Glaciers are receding all over the world. Glaciers feed many of the major rivers around the world, most notably in China and India. The Ganges, Indus, Yellow, Yangtze and others have their source in the Himalayan glaciers. These glaciers are receding and the amount of water that flows from them during the spring thaw is lessening. Eventually they will not flow at all. Hundreds of millions of people depend on those rivers for their water.
It is a pity when public discourse in the U.S. centers around the question of the reality of climate change and it's cause and not on a more pertinent one; whether it is too late to stop it. Things being as they are, Americans will continue to muddle through the "debate", with "skeptics" on one side and people who know what they are talking about on the other. It should be quite a spectacle, contentious and stupid, as the right wing, funded by the entrenched interests, and propelled by their passion for ignorance for it's own sake, will poison the well of constructive and critical discourse. I think we can expect a racheting up of the rhetoric as we saw during the fight over health care legislation. They will alternately dismiss the climate change problem as imaginary, fraudulent, conspiratorial, and nothing we need to worry about. They will use arguments that have already been debunked, like the variable solar radiation hypothesis, or the cyclical climate change as a natural function we can do nothing about anyway argument. Lots of money, hundreds of millions, will be spent, have been spent, to sway public opinion to see climate change as a hoax or a sideshow. Because anybody who bothers his or her pretty little head about climate change is "hysterical", a "dupe", or is part of a socialist conspiracy to destroy capitalism and the American economy. This last should sound familiar to anyone who pays attention.
In the meantime, as we have been wasting our time thusly, the world has and will continue to get warmer due to carbon dioxide emissions released into the atmosphere. It is expected by climate scientists that even if we stop all CO2 emissions today that the carbon released up to yesterday will raise the temperative another half degree centigrade. To put that into perspective, the temperature rise above the post-glacial norm is .8 degrees C. That is about 1.5 degrees F. The consensus view is that we must absolutely keep global temperatures from rising two degrees centigrade, just under 4 degrees F because it is believed that it is a tipping point after which warming will rise beyond our ability to control it. They fear that a 2 degree rise will initiate a positive feedback loop which will unleash carbon stored in the form of methane that is trapped in tundra and the oceans, through the burning of forests, and the further heating of the artic regions after the ice has melted and sunlight is absorbed in open water.
The alarm of scientists over the rate of change of climate zones should cause commensurate alarm in the population. For various reasons it doesn't. Perhaps the American public has "climate" fatigue. That says maybe, but given my general sense that American leadership isn't quite as alarmed either, and is not presenting to the American public the reality of climate change and the threat it poses, I think Copenhagen might underwhelm. There is reason to hope that something dramatic will happen in Copenhagen in targeting a low carbon emissions treaty with the targets coming sooner rather than later. But I'm not holding my breath. This may mean the next climate summit will be an emergency summit for reasons that will likely be evident over the next several years.
It begins with what happens when the temperature rises only .8 degrees. What we've seen is ice melting at a rate faster than scientists ever thought it would. We have lost 20% of the arctic winter ice and the Arctic Ocean will likely be ice free in summer by 2015. What happens then is anybody's guess, but is certain to happen is the blue ocean water would absorb heat energy from the sun rather than reflect the sunlight back into space. This would cause the Greenland ice sheet to melt at an even faster rate, adding water to the oceans and raise sea levels. Climate patterns would change in unpredictable ways. This would certainly impact agriculture negatively and maybe disasterously. This is the form the feedback loop will take.
Glaciers are receding all over the world. Glaciers feed many of the major rivers around the world, most notably in China and India. The Ganges, Indus, Yellow, Yangtze and others have their source in the Himalayan glaciers. These glaciers are receding and the amount of water that flows from them during the spring thaw is lessening. Eventually they will not flow at all. Hundreds of millions of people depend on those rivers for their water.
Wednesday, October 7, 2009
Net Energy and Societal Complexity
Nothing is as emblematic of human self-congratulation than when a leader of government or of business waxes retrospective about human ingenuity and innovation in the realm of technology. We have come so far and just imagine how much further we can go with the next innovation, and the one after that. For them, the past and the future are linked in a seamless upward and outward expansion of human understanding, awareness, and habitation. We have come so far in so little time; from horse and buggy to space travel, from toiling in potato fields to instantaneous global capital transfers. Certainly, it can be easy to get caught up in the dream of our capacity to understand the workings of nature, alter it to fit our needs, and to defeat it's unpleasant and undesirable aspects.
It is interesting how so little of the credit for humanity's recent surge in production, distribution, and disposal of goods and services goes to the fuel which gave the impetus for all these wonders, all of which were designed for use with particular energy sources. The sources may vary, but a transfer of sources to a different technology is not such an easy feat. Currently, there is a rush for the next automobile that seeks to achieve two things: It must run on something other than gasoline, and be able to replace 980 million cars on the roads now at an affordable price. This is not simple to do. It raises a seemingly minor but fundamental question: Was industrialization the result of human ingenuity or was it because the energy source (coal) was so good, so condensed, that already existent human ingenuity would eventually come up with a use for it? This is not a chicken-and-egg question. The first coal-powered machine was used to get more coal.
What followed the invention of the coal-powered water pump was the greatest expansion of economic activity and wealth accrual in human history. The usable, exploitable Earth grew exponentially and the complexity of industrial societies grew right along with it. Humans would eventually gain access to energy and mineral wealth deep in the Earth, build ever larger machines to extract and transport it, and create increasingly complex systems of trade and governance to manage all the transfers. From this, some would become very wealthy and live comparatively easy lives.
During the past 200 years, as the process of industrialization got underway, probably the greatest single aspect that changed for most people was the means by which they earn a living. The occupations most prevalent in Europe and America changed dramatically as many disappeared and were replaced by many other, more specialized, occupations. In 1800 America, for example, there were farmers, tanners, and spinners. Life was mostly lived in rural areas and the average person didn't travel more than a few miles from where they kept house. People migrated back then, and it took weeks to get from one part of the country to another. Most got their food from within a hundred miles of where they lived. Most of the population was illiterate or had a low level of literacy. It was, as we've come to see it now, a very simple and very slow way to live.
In 2009 we live fast-paced, complex lives. It may seem cliche to put it that way, but it is the physical truth. It is useful to see it in terms of a system that is growing, and as it grows, it uses more and more stuff to input in order to sustain itself and feed more growth. The feedstock of this system is energy. Concentrated, low-cost energy that is plentiful and that is what we found in fossil fuels. Before, in the world of farm animals and foot paths, of hay bales and wood stoves, we obtained our energy primarily from food. Food powered the muscles to do the work and at the end of the day, we had very little energy left over to do other things. With the advent of fossil fuels and the machines that run on them, we have much more energy to do the work. This is the net energy. We have found in fossil fuels extra energy to run society on. This extra energy enables us to leave the farm, to take up jobs like like lawyer, teacher, technician, machinist, middle manager, dog counselor and event planner. It enables us to add layers to society, to create new positions that augment productive activities but don't really produce any new energy themselves.
The most visible example of this is government. All federal, state, and municipal governments in the United States employ more people now than lived in America at the time of it's founding. These are not elected officials there to better represent their constituents, either. It is a behemoth bureaucracy that has grown to administer the functions of society. It would be a mistake to think the growth in the complexity of government is anything but a symptom of increasing complexity everywhere else in society. All systems are more complex than they ever have been. Corporations, technology, universities, trade, food, medicine, money, and anything you can think of to administer these things use more energy to support the functioning of them than ever before.
The entire field of economics uses only two laws; the Law of Supply and Demand and the Law of Diminishing Returns. It is the second law that makes itself known in any discussion of complex organizations. The basic idea is this: As an organization grows it becomes more complex. As it becomes more complex it requires more energy. Each increment of complexity will see initial gains in, say, efficiency, but each increment means there is another part, another layer which is permanently a part of it's structure. Therefore, this new, more complex organization will use more energy resources in order to maintain itself. Inevitably, another problem arises which will be solved with another layer of complexity, but with each new adaptation, the benefit from that adaptation is less than the one before. This is called the marginal return on investment. The margin is the gain and each gain diminishes as the complexity increases, ergo, diminishing return. Eventually, the return requires more energy than you gain from complexity and that constitutes the beginning of the end for that organization. You can see this in the need for companies to grow each year. It isn't simply a matter of getting more money for shareholders each year, but a company must do so in order to survive. In fact, this can be generalized to the economy as a whole, especially capitalist economies, for reasons too complicated to go into here.
The reason industrial societies have managed to continue against this law of economics is that there has always been more energy to spend on that complexity. One last point to ponder in all of this is the fate of societies generally. It might be useful to think of why empires collapse. Countless theories have been proposed as to why this happens, why no empire has withstood the test of centuries and millennia and have ultimately fallen apart. It is for this reason, this problem of maintaining the grand structure of it's administration that has caused them to finally fall, whether it be from invasion by another, like Rome, or a dissipation from within, like the Maya. The capacity for an empire to withstand shocks as it's surplus energy gets used up in the maintenance of it's own structure is reduced until it can no longer support societal integrity, and then it's curtains for that empire on the stage of history.
It is interesting how so little of the credit for humanity's recent surge in production, distribution, and disposal of goods and services goes to the fuel which gave the impetus for all these wonders, all of which were designed for use with particular energy sources. The sources may vary, but a transfer of sources to a different technology is not such an easy feat. Currently, there is a rush for the next automobile that seeks to achieve two things: It must run on something other than gasoline, and be able to replace 980 million cars on the roads now at an affordable price. This is not simple to do. It raises a seemingly minor but fundamental question: Was industrialization the result of human ingenuity or was it because the energy source (coal) was so good, so condensed, that already existent human ingenuity would eventually come up with a use for it? This is not a chicken-and-egg question. The first coal-powered machine was used to get more coal.
What followed the invention of the coal-powered water pump was the greatest expansion of economic activity and wealth accrual in human history. The usable, exploitable Earth grew exponentially and the complexity of industrial societies grew right along with it. Humans would eventually gain access to energy and mineral wealth deep in the Earth, build ever larger machines to extract and transport it, and create increasingly complex systems of trade and governance to manage all the transfers. From this, some would become very wealthy and live comparatively easy lives.
During the past 200 years, as the process of industrialization got underway, probably the greatest single aspect that changed for most people was the means by which they earn a living. The occupations most prevalent in Europe and America changed dramatically as many disappeared and were replaced by many other, more specialized, occupations. In 1800 America, for example, there were farmers, tanners, and spinners. Life was mostly lived in rural areas and the average person didn't travel more than a few miles from where they kept house. People migrated back then, and it took weeks to get from one part of the country to another. Most got their food from within a hundred miles of where they lived. Most of the population was illiterate or had a low level of literacy. It was, as we've come to see it now, a very simple and very slow way to live.
In 2009 we live fast-paced, complex lives. It may seem cliche to put it that way, but it is the physical truth. It is useful to see it in terms of a system that is growing, and as it grows, it uses more and more stuff to input in order to sustain itself and feed more growth. The feedstock of this system is energy. Concentrated, low-cost energy that is plentiful and that is what we found in fossil fuels. Before, in the world of farm animals and foot paths, of hay bales and wood stoves, we obtained our energy primarily from food. Food powered the muscles to do the work and at the end of the day, we had very little energy left over to do other things. With the advent of fossil fuels and the machines that run on them, we have much more energy to do the work. This is the net energy. We have found in fossil fuels extra energy to run society on. This extra energy enables us to leave the farm, to take up jobs like like lawyer, teacher, technician, machinist, middle manager, dog counselor and event planner. It enables us to add layers to society, to create new positions that augment productive activities but don't really produce any new energy themselves.
The most visible example of this is government. All federal, state, and municipal governments in the United States employ more people now than lived in America at the time of it's founding. These are not elected officials there to better represent their constituents, either. It is a behemoth bureaucracy that has grown to administer the functions of society. It would be a mistake to think the growth in the complexity of government is anything but a symptom of increasing complexity everywhere else in society. All systems are more complex than they ever have been. Corporations, technology, universities, trade, food, medicine, money, and anything you can think of to administer these things use more energy to support the functioning of them than ever before.
The entire field of economics uses only two laws; the Law of Supply and Demand and the Law of Diminishing Returns. It is the second law that makes itself known in any discussion of complex organizations. The basic idea is this: As an organization grows it becomes more complex. As it becomes more complex it requires more energy. Each increment of complexity will see initial gains in, say, efficiency, but each increment means there is another part, another layer which is permanently a part of it's structure. Therefore, this new, more complex organization will use more energy resources in order to maintain itself. Inevitably, another problem arises which will be solved with another layer of complexity, but with each new adaptation, the benefit from that adaptation is less than the one before. This is called the marginal return on investment. The margin is the gain and each gain diminishes as the complexity increases, ergo, diminishing return. Eventually, the return requires more energy than you gain from complexity and that constitutes the beginning of the end for that organization. You can see this in the need for companies to grow each year. It isn't simply a matter of getting more money for shareholders each year, but a company must do so in order to survive. In fact, this can be generalized to the economy as a whole, especially capitalist economies, for reasons too complicated to go into here.
The reason industrial societies have managed to continue against this law of economics is that there has always been more energy to spend on that complexity. One last point to ponder in all of this is the fate of societies generally. It might be useful to think of why empires collapse. Countless theories have been proposed as to why this happens, why no empire has withstood the test of centuries and millennia and have ultimately fallen apart. It is for this reason, this problem of maintaining the grand structure of it's administration that has caused them to finally fall, whether it be from invasion by another, like Rome, or a dissipation from within, like the Maya. The capacity for an empire to withstand shocks as it's surplus energy gets used up in the maintenance of it's own structure is reduced until it can no longer support societal integrity, and then it's curtains for that empire on the stage of history.
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