Efficiency => consolidation + specialization => loss of resilience

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HMichaelPower's picture
HMichaelPower
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Efficiency => consolidation + specialization => loss of resilience

Chris

The Crash course is excellent. Thanks very much for creating it.

I am no economist. Nevertheless, I would like to suggest that you could usefully add another E and one more module to the Crash Course. The fourth E is for Efficiency.

Corporations, governments (and sometimes states) use "efficiency" to justify their expansion. And, the easiest way to expand is to take over a rival. Effiiciency then drives consolidation and specialization. Any redundancy is cut because it seems surplus to requirements.

This works well when the environment is predictable. But, the unintended and unforseen effect of efficiency is loss of resilience, so, when a crisis occurs, the effects are likely to be be severe, and can be out of proportion to the disturbance. For example, a minor incident on a rail line severely disrupts train travel if there are no alternative routes. In the UK, consolidation, specialization, and removal of redundancy have led to the closure of many duplicate routes, so we have a rail system where a small local incident can easily have national effects.

In recent times, efficiency-led consolidation has occured on a global scale; we have therefore lost, on a global scale, resilience to minor economic crises. To return to a globally robust economic system, we need to re-introduce redundancy at local and national levels, even if this seems less efficient.

 

caroline_culbert's picture
caroline_culbert
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Re: Efficiency => consolidation + specialization => loss of ...

I agree.

S Schauermann's picture
S Schauermann
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Re: Efficiency => consolidation + specialization => loss of ...

Great post, this applies on a personal level as well as institutional. Many people with highly specialized careers and skill sets have lost the diversity that is necessary for post peak energy survival. In the Crash Course, Chris speaks of loss of diversity that makes up modern society. Are modern peoples lives really that diverse? Was a pre-petrochemical farmer who raised most of their food a highly specialized person? Probably not. Were they resilient? Probably. Ask anyone who has experimented with self-sufficiency if there was ever a dull moment.

It would be interesting to see a demographic breakdown of 1930's America compared to today when asking the question of whether the current depresssion will be worse than the "Great Depression". I would think people were more prepared for hard times, as there was a stronger sense of community, more people lived on self-sufficient farms, and survival skills were an everyday part of life. Just my two cents.

Michael's picture
Michael
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Re: Efficiency => consolidation + specialization => loss of ...

I agree.  I would really like to see Chris explore this topic, if he has the time.

For those who are interested, Bernard Lietaer discusses efficiency vs. resilience in a white paper concerning banking crises at http://www.lietaer.com/images/White_Paper_on_Systemic_Bank_Crises_Decemb....

In this paper, Lietaer explores the viability of complex systems in general, then applies it to money systems in particular.  It's a great read!

tomaquet's picture
tomaquet
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Joined: Oct 7 2008
Posts: 16
Re: Efficiency => consolidation + specialization => loss of ...

I’ve only just seen this thread so sorry to comment so late.

Resilience theory is certainly a key idea to grasp, although surprisingly difficult to implement. Whereas efficiency has a set of simple equations that can be applied to determine it, resilience is much more elusive. The free online peer-reviewed journal “Ecology and Society” has more info re this.

http://www.ecologyandsociety.org/

Another problem in focusing on efficiency as a way to use less resources is Jevons Paradox (a particular case of the rebound effect). This posits that an increase in efficiency in which a resource is used tends to increase (rather than decrease, as intuitively expected) the rate of consumption of that resource.

http://en.wikipedia.org/wiki/Jevons_paradox

A better policy objective (instead of efficiency) would be frugality in which a certain amount of the resource can be used (cap and trade) determined by environmental and social limits. This would thus lead to improved efficiency as a side-effect whereas the danger of focusing on improved efficiency could actually result in greater resource use.

p.s. I agree Michael, Lietaer’s paper is great.

deggleton's picture
deggleton
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Posts: 250
Re: Efficiency => consolidation + specialization => loss of ...

I concur that this topic is a very important one, worthy of the full Martenson treatment.  Efficiency is driving real life out of this world.

An experiment is a good way to do something that's not normal, while continuing what is normal.  Let's do an experiment in which we remove concerns for efficiency from meeting fundamental human needs.  With respect to that, getting it done will have priority.  Efficiency will continue to regulate production and delivery of what people merely want.  This will free people everywhere to feed, educate and take care of each other in ways that are appropriate where they are.  They'll have an unprecedented chance to sort out needs and wants, and find out what they really care to be.

Kalense's picture
Kalense
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Re: Efficiency => consolidation + specialization => loss of ...

Well, yes and no.  Every business wants to cut costs and most would like to maximise profits.  So every business seeks efficiency - in consuming the energy, resources and labour needed to make, deliver, market and sell their product.  Efficiency may reduce redundancy in the system, but it also reduces the need for labour, which means it puts people out of jobs.  To survive without forcing people out of their job, the business must provide new jobs, which means it must grow.  And it must grow at least as fast as it achieves savings from increased efficiency.  This, it seems to me, is the basic conundrum that faces any attempt at a non-growth economy that depends on employment.

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