Deep thoughts on civilisation from Jeremy "Hari Seldon" Grantham If you submit to theoretical physicist Geoffrey West's urban development theories, then you've probably aware of the idea that humanity is set to face a critical crunch point soon enough (if not already). And by crunch point, we mean - either humanity throws everything it's got at speeding up technology to ensure its resource consumption-to-population footprint becomes manageable, or we wither away. The Roman Empire, by the way, is perhaps the best example of a civilisation which failed to make the next great technologically leap to the carbon age and did actually wither. As West observed in a collective note with Luis Bettencourt, Jose Lobo, Dirk Helbing and Christian Kuhnert there's also the issue that every great cyclical leap - in terms of technological advances - is having to occur more quickly for balance (and humanity) to be maintained (our emphasis): The tension between economies of scale and wealth creation, summarized in Table 2, represents a phenomenon where innovation occurs on time scales that are now shorter than individual life spans and are predicted to become even shorter as populations increase and become more connected, in contrast to biology where the innovation time scales of natural selection greatly exceed individual life spans. Our analysis suggests uniquely human social dynamics that transcend biology and redefine metaphors of urban ""metabolism."" Open-ended wealth and knowledge creation require the pace of life to increase with organization size and for individuals and institutions to adapt at a continually accelerating rate to avoid stagnation or potential crises. These conclusions very likely generalize to other social organizations, such as corporations and businesses, potentially explaining why continuous growth necessitates an accelerating treadmill of dynamical cycles of innovation. Well, this is the sort of stuff deep thinker Jeremy Grantham of GMO seems to be contemplating at the moment as well. In fact, Grantham is out with one of his deepest notes yet, entitled "The race of our lives." The key points are: 1) We are facing a critical inflection point not just a financial crisis, and if we don't make the leap, it could be bye bye human civilisation. 2) We need to do everything we can to ensure the technological leap, which is needed to sustain us, happens. And this can happen if we get our act together. 3) There are vested interests who are mindful to defend the status quo, rather than progress forward. And many people prefer to burry their heads in the sand. 4) The race is going to be very close. FYI - on point 3, it's worth noting that Robert Gordon's now famous "technology is slowing down not advancing" observation could be the result of vested interests unwittingly suppressing and sabotaging progress to keep the old capital system in place. Grantham, however, is relatively optimistic we can make it. For one thing, he takes some solace in the fact that at least population trends are for us rather than against us. He cites the work of William Ophul who, in a very Hari Seldon way, is warning that most civilisations self-destruct, and our current civilisation is well on the path to destruction as well. In fact, in Ophul's opinion, there's hardly anything we can do to stop it. The only good news is that after the New Dark Ages end, we may emerge with a smaller population and more humble approach to resource consumption. Grantham's view - thank god - is that this is far too bleak an assessment. Yet he also understands the great leap forward will be social order toppling and thus there are interests out there who actually prefer the emergence of a new dark age: The investment business has taught me - increasingly as the years have passed - that people, especially investors (and, I believe, Americans), prefer good news and wishful thinking to bad news; and that there are always vested interests to offer facile, optimistic alternatives to the bad news. The good news is obviously an easier sell. Good news in investing in particular is better for business; good news on resource limitation is better for the suppliers of resources; and good news on climate change - that it basically does not exist and is even a hoax - is better for energy companies, among the biggest and most proﬁtable of all companies. Historians have pointed out the bias against the need for change: there are always clear beneﬁciaries of the current state of affairs but the beneﬁts of a changed world in contrast will look vague and uncertain to the likely beneﬁciaries. That is always the case. What is less common, although not unique in history, is what we have today: the near complete control of government by the powerful beneﬁciaries of the current system. The second point is that although I ﬁnd Ophuls's argument well-reasoned and although I must acknowledge the strong possibility of a very negative outcome, I feel it is too pessimistic (which, sadly, is a rare occurrence for me on this topic). Yes, we are taking extreme risks with resource depletion and with the environment, especially concerning climate damage and ocean acidiﬁcation. Yet I believe the case for the near certainty of our running off the cliff misses the existence of two extraordinarily lucky (and, one could argue, undeserved) gifts that were not available to any prior stressed civilization. They may arrive like the U.S. Cavalry, just in time to turn us away from the cliff edge. But at best, as Wellington is famously paraphrased as saying about the Battle of Waterloo, it will be a "damn closely run thing."3 It will be the race of our lives. As referenced above, the first of his "two gifts" is declining fertility, on which point he presents the following three charts (click to enlarge): This remarkable decline in fertility is our last best hope, both from our civilization's point of view as well as for the well-being of all of the life on our planet. Exhibit 5 summarizes the past data and projects the more optimistic end of the U.N. data for future global population. The world's population is shown peaking around 2050 at just over 8 billion and then declining to near 6 billion by 2100. The second remarkable gift we have is the infinite potential of the human brain which can bring us the technology we need to turn resource scarcity to resource abundance in the years. Though, he adds, this is a branch of "cornucopian" optimism which he usually deplores, since it also brings us all the bad things. But... he notes: Yet now, ﬁnally, there is an example of a great technological leap that for the first time is accompanied by less energy use - the technologies of solar, wind power, and other alternatives as well as electric grid efﬁciencies and improved energy storage. For once, all of the innovations, corporate start-ups, and risk taking - the best part of the capitalist system - work to decrease our use of depleting hydrocarbons and therefore to increase our chance of stabilizing our civilization before the cliff edge is reached. Exhibit 6 shows in orange the truly remarkable decline in the cost of electricity from photovoltaic cells. The only thing to compare it to is the Moore's Law decline in the price of semiconductors. That would indeed be a happy comparison, for perceived physical limits to semiconductor progress have been overcome time and time again. If the physical limits on photovoltaic efﬁciency, and hence its price, are similarly maneuvered in future decades, then the price of photovoltaic energy would guarantee us cheap and plentiful energy forever. Comparing photovoltaic progress to Moore's Law is a good idea, for there are definitely many similar production processes in play with PV manufacturing as there are with chip production: And he adds the marginal costs of creating renewables run in our favour as well, because once produced there is less need to spend dollars on digging and replacing fossil fuels. As we have noted previously it's almost like we needed the 2008 commodity spike to ensure that the switch into renewable investment did happen. And in that sense 2008 possibly wasn't a financial crisis, but a reset of the economy towards a new sustainable path - a path that doesn't necessarily look all that good for vested interests. You can read the full note here. Related links: Is the end of the oil era nigh? - FT Alphaville Scarcity amid plenty, oil edition - FT Alphaville The oil-bound - FT Alphaville It's not a liquidity crisis, it's an energy crisis stupid - FT Alphaville