Seneca cliffs of the third kind: how technological progress can generate a faster collapse

19 12 2014

Another guest post by

The image above (from Wikipedia) shows the collapse of the North Atlantic cod stocks. The fishery disaster of the early 1990s was the result of a combination of greed, incompetence, and government support for both. Unfortunately, it is just one of the many examples of how human beings tend to worsen the problems they try to solve. The philosopher Lucius Anneus Seneca had understood this problem already some 2000 years ago, when he said, “It would be some consolation for the feebleness of our selves and our works if all things should perish as slowly as they come into being; but as it is, increases are of sluggish growth, but the way to ruin is rapid.”

The collapse of the North Atlantic cod fishery industry gives us a good example of the abrupt collapse in the production of resources – even resources which are theoretically renewable. The shape of the production curve landings shows some similarity with the “Seneca curve“, a general term that I proposed to apply to all cases in which we observe a rapid decline of the production of a non renewable, or slowly renewable, resource. Here is the typical shape of the Seneca Curve:

The similarity with the cod landings curve is only approximate, but clearly, in both cases we have a very rapid decline after a slow growth that, for the cod fishery, had lasted for more than a century. What caused this behavior?

The Seneca curve is a special case of the “Hubbert Curve” which describes the exploitation of a non renewable (or slowly renewable) resource in a free market environment. The Hubbert curve is “bell shaped” and symmetric (and it is the origin of the well known concept of “peak oil). The Seneca curve is similar, but it is skewed forward. In general, the forward skewness can be explained in terms of the attempt of producers to keep producing at all costs a disappearing resource.

There are several mechanisms which can affect the curve. In my first note on this subject, I noted how the Seneca behavior could be generated by growing pollution and, later on, how it could be the result of the application of more capital resources to production as a consequence of increasing market prices. However, in the case of the cod fishery, neither factor seems to be fundamental. Pollution in the form of climate change may have played a role, but it doesn’t explain the upward spike of the 1960s in fish landings. Also, we have no evidence of cod prices increasing sharply during this phase of the production cycle. Instead, there is clear evidence that the spike and the subsequent collapse was generated by technological improvements.

The effect of new and better fishing technologies is clearly described by Hamilton et al. (2003)

Fishing changed as new technology for catching cod and shrimp developed, and boats became larger. A handful of fishermen shifted to trawling or “dragger” gear. The federal government played a decisive role introducing new technology and providing financial resources to fishermen who were willing to take the risk of investing in new gear and larger boats.

Fishermen in open boats and some long-liners continued to fish cod, lobster and seal inshore. Meanwhile draggers  and other long-liners moved onto the open ocean, pursuing cod and shrimp nearly year round. At the height of the boom, dragger captains made $350,000–600,000 a year from cod alone. … The federal government helped finance boat improvements, providing grants covering 30–40% of their cost.
By the late 1980s, some fishermen recognized signs of decline. Open boats and long-liners could rarely reach their quotas. To find the remaining cod, fishermen traveled farther north, deployed more gear and intensified their efforts. A few began shifting to alternative species such as crab. Cheating fisheries regulation—by selling unreported catches at night, lining nets with small mesh and dumping bycatch at sea—was said to be commonplace. Large illegal catches on top of too-high legal quotas drew down the resource. Some say they saw trouble coming, but felt powerless to halt it.

So, we don’t really need complicated models (but see below) to understand how human greed and incompetence – and help from the government – generated the cod disaster. Cods were killed faster than they could reproduce and the result was their destruction. Note also that in the case of whaling in the 19th century, the collapse of the fishery was not so abrupt as it was for cods, most likely because, in the 19th century, fishing technology could not “progress” could not be so radical as it was in the 20th century.

The Seneca collapse of the Atlantic cod fishery is just one of the many cases in which humans “push the levers in the wrong directions“, directly generating the problem they try to avoid. If there is some hope that, someday, the cod fishery may recover, the situation is even clearer with fully non-renewable resources, such as oil and most minerals. Also here, technological progress is touted as the way to solve the depletion problems. Nobody seems to worry about the fact that the faster you extract it, the faster you deplete it: that’s the whole concept of the Seneca curve.

So take care: there is a Seneca cliff ahead also for oil!




6 responses

19 12 2014

The problem with these models is that they are only modelling something idealistic – that demand grows exponentially, and that supply (unfound resources) diminshes exponentially. In reality neither condition applies like that.

Demand doesn’t grow exponentially because economies go through boom and bust cycles. Supply doesn’t diminish smoothly because key technological improvements (like fracking tight rocks) don’t get applied smoothly, and the extra resource that becomes available doesn’t diminish smoothly.

Compounding these effects, the auction system that sets the price and matches supply to demand, has a lag time built into it. The sudden switch from boom to bust in 2008 took 6 months to filter through from peak to trough, and another six months to get back to a relatively stable price.

In December 2014 we are seeing a price war due to falling demand, which must ultimately resolve itself by some producers cutting production, but everyone is loath to do that and will try to “last it out” until someone else goes bust and relieves the pressure.

Hubbert thought oil would give way to nuclear as an energy resource. Today some think it will be wind and solar, not nuclear, but all are wrong. The energy required to build electric cars and trucks, on top of the energy needed to build the new wind/solar infrastructure and the transmission grid upgrades, mean we will reach an energy barrier which can’t be overcome.

At that point either there will not be enough oil to keep the electricity running, or there will not be enough electricity to keep the oil pumping. And then industrial civilisation will collapse in a heap because the phones and the internet have stopped working, and no one will know what has happened because the phones and the internet is down.

20 12 2014

Is it possible to give an estimate of when that will happen?

20 12 2014

No, it’s going to be even harder than predicting the Hubbert Peak or the Seneca Peak. The most unpredictable factor is the timing of financial contagion – once it is triggered, it can spread worldwide in a week. Conditions for the triggering have been right for some time, so anytime from now on is possible.

I should add another factor – that our leaders could change course from “growth at all costs” to some kind of planned power-down, which would postpone the inevitable for a few more years. But more likely would be a final military grab for someone else’s resources.

None of these plans will work in the long run, and would be extremely unpopular, so could only be implemented by dictatorial government with a massive media propaganda campaign, strong police control over its people, and censorship/suppression of dissent.

27 12 2014

What is your opinion of John Michael Greer’s scenario of collapse?

27 12 2014

It’s hard to collect all of Greer’s ideas together and then criticise them in one go. I certainly go along with much of his voluminous writings, but I think things will suddenly go wildly of out of control more quickly than he does, for the following reason (that I can’t find in his writings).

Every new development of efficiency (like email over snail mail, EFTPOS over cash) causes the old system to be discarded, decreasing resilience (like the ability to keep functioning during electricity cuts.) It is this lack of resilience that will catch us out, causing what Korowicz calls a cascading collapse of interdependent systems.

I envisage a scenario something like this:
Lack of world demand for energy has caused the oil producers to fight for market share. The current oil price war puts the US shale drillers under financial pressure, which puts the banks and hedge fund managers (who have been financing their operations) under more pressure. Eventually one of them fails, triggering credit default swaps (CDS) for which the counter party (who has to pay up) to fail, triggering more CDSs. This causes more shale drillers to fail, and more banks to fail, and international trade (lubricated by Letters of Credit and loans) to grind to a halt.

Lack of oil imports brings petrol/diesel shortages, and makes it hard to keep up supplies of coal and gas to power stations and maintenance of the electricity grid. Erratic operation of the grid leads to erratic availability of the internet, and electronic banking. This is compounded by the bank branches’ reliance on electricity for security cameras, security locks and timers. Back up generators start to fail from lack of petrol. The sight of banks with closed doors causes a run on the banks for cash.

Retailers are increasingly unable to contact wholesalers for more supplies, or to pay for them, and increasingly unable to process EFTPOS sales and to physically bank their cash. “Just in time delivery”, which enables companies to work with smaller stockpiles tying up “idle capital”, suddenly comes back to bite us as stocks run out, causing delays that break more chains of supply.

Workers find it increasingly difficult to find fuel to get them to work, and to the shops to buy food. The disruptions to the smooth workings of bureaucrats cause huge backlogs of paperwork, and delays in getting a decent overview of what is really going on.

The water supply system becomes more erratic, and industrial processes that require large volumes of water are forced to close or only work intermittently. This is compounded by the erratic electricity, petrol supply, payments flow, worker unavailability.

Enough examples, I think you can see that all this compouding of problems, self-reinforcing feedback loops if you like, would quickly cascade out of control and result in no electricity, no internet, no phones, no petrol, no food, no banking and, most importantly, no way to organise the recovery.

I don’t see anything on this in Greer’s writings, but I do in Korowicz’s writings
at . “… collapse happens when a system crosses a tipping point and is driven by negative feedbacks into a new and structurally and qualitatively different state, one with a different arrangement between parts and a fall in complexity. “

19 12 2014

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