Hydrocarbons And Funny Money
By Peter Goodchild
21 December, 2007
Countercurrents.orgEconomic trends can always be seen either in terms of materials or in terms of money. One can say that the future will be one of diminishing fossil fuels, and hence diminishing gasoline, plastic, paint, asphalt, fertilizer, and electricity. Or one can say that it will be a period of stagflation: rising prices and falling wages — since rising oil prices "drag up" all other prices. Eventually faith in the dollar will collapse, and money will be replaced by barter. (No, I don’t meant "the barter system"; barter is the opposite of "system.") From "economic hardship" of a financial kind we will pass to "economic hardship" of a physical kind: hard manual labor and a scarcity of material goods. Then, of course, economic trends will be describable only in terms of materials, not money.
Stagflation is what happened in the 1970s, when OPEC quadrupled the oil prices. Eroded faith in the dollar will resemble eroded faith in the ruble, which happened with the Soviet collapse in the early 1990s: money was replaced by homemade vodka.
There are parallels between the Great Depression of the 1930s and the Oil Shock of the future, but there are also important differences. The Great Depression was caused by over-speculation in the stock market, which led to the 1929 panic. The rapid sellout of stocks caused the collapse of many businesses. These businesses then laid off many workers. The workers then had insufficient income to buy whatever was available, even though prices were low. The Great Depression, in other words, had an amazingly "artificial" cause, although the ensuing suffering was by no means artificial.
The oil shock will be quite different. Its cause will not be artificial; in fact, its cause will have little to do with money. Although many people will lose their jobs, there will at first be no overall reduction in the prices of goods.
Will life be better or worse in a world without money? That’s hard to say. In my own rural community, there seem to be advantages to the rather casual and offhand bartering that goes on. If one person leaves a gift on a neighbor’s porch, and a few days later the neighbor leaves some other item on the first person’s porch as a gesture of appreciation, it is not even clear if such behavior could be considered barter
All that is clear is that sales tax has not been paid, and that a "crime" has therefore been committed. The money economy requires that a large portion of one’s income be paid out in various forms of legalized extortion: taxes, insurance, and banker’s fees, all of which are justified in our minds solely by the fact that they have been imposed for centuries.
Taxes alone consume a vast portion of one’s income, especially if one considers that there are, in a sense, taxes on taxes: I am taxed on what I buy, but the price for that object has been raised to cover the income tax, gasoline tax, and so on, that were paid in the process of making and delivering that object. Only a small piece of paper is required to make a list of all the benefits one receives from these various forms of extortion.
On the other hand, in a more primitive economy, one in which money played a small part, the manufacture and sale of goods and services would require more labor and time. A hundred acres tended by horse and plow would require far more effort than the same land tended by petroleum-powered machinery, and the price would reflect that difference. Whether the price for those crops was paid in dollars or in goods, it would still be high.
And now it’s time for the weather report. For the next days, expect plenty of FOG. Food, Oil, and Gold. They’ll all be expensive. Everything else will cheap. After that, who knows? We might even be in for the kind of weather that the human race once considered normal.
Peter Goodchild is the author of "Survival Skills of the North American Indians," published by Chicago Review Press. He can be reached at [email protected].
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