Thank you for this sober look at the realities underlying the headlines. I lack the knowledge to usefully critique the evidence but the process that you describe feels as solid as a rock.
Your description of surviving a shock but with depleted reserves almost writes the self-congratulatory speeches that will certainly follow the next shock as they interpret survival as a validation of their paradigm.
‘Pivoting’ to a new model of husbandry will, as Mike Chitty points out, be anything but the smooth transition this mot de jour suggests but it represents our best hope of longer term survival.
Thank you for sharing this, Ernesto. I found myself agreeing with much of what you wrote, especially that our biggest challenges emerge through the relationships between systems rather than any one issue alone. The "ratchet" metaphor really stayed with me.
I subscribed to your Substack sometime back after reading much of what you have written about regeneration. My gratitude to you for so succinctly helping me to see some of the major issues involved in what we are facing today.
My wife and I lived in 'Santa Fe, NM for nearly 14 years before coming to a small town in the Northern Rivers area of NSW, Australia to help our daughter and son in law with their new child. They have an organic farm that uses regenerative agricultural principles including green manure...no nitrogen purchases needed.
As I read your latest article, "Winter is Here" I wonder how can I communicate some of these perceptions to a small town with a curious mix of environmentalists, conservative farmers, dairy and cattle, miles of pasture, rivers, logging mills, aboriginal peoples and anglo settlers that goes far back to the first migrations from England.
In reading your article this is what I summarized, with the last 2 points being the most critical summary of all that went before.
1. Everything is connected through relationships.
2. Every system, be it environment, resources, climate, economy, product availability, industrial, political, or even collective belief systems can be affected by changes or failures in any other system.
3. System changes compound as the number of systems changing or failing increase or intensify. This process results in external shocks whose effects compound leading to increasingly difficult and longer recovery times. This is called the “ratchet effect”.
4. Accelerating systems failure and negative effects on essential products and energy are hidden from view because we are buffering these effects by drawing down stored inventories (reserves) meant to be used for the future. Resilience is increasingly diminished.
5. Diesel is the life blood of the global society, not crude oil.
6. Overall, refinery of oil into diesel relative to production of crude oil, keeps declining as external shocks to systems keep increasing or compounding. Focusing on oil production as opposed to the production of diesel is blinding us to an impending crisis that may affect transportation, food production, farming, mining, air travel, electricity, alternative energy and almost everything else.
7. During times of system failure, money loses its ability to mobilize production because the physical ability of industrial production has been diminished.
8. It is a myth that our new economy has escaped the limitations of a physical economy.
9. While AI appears on the surface to be weightless it is one of the most physically resource demanding inventions ever created by man in terms of copper, electricity and water.
10. We are now in a vicious circle demanding more of the very things we are making scarce.
11. Confidence in our essential physical systems is eroding because they are becoming unpredictable and therefore insecure.
12. Essential problem behind all of this is that despite all available information, we cannot see the forests for the trees. We are looking at the parts, at abstractions, at the symptoms-debt, inflation, price of oil, etc. as if the abstractions were the reality when what we should be looking at is the whole-systems, relationships, the feedback loops, the interactions.
13. We are now facing a crisis of perception and cognition.
First of all, thank you for taking the time to read the essay so carefully, and even more for distilling it into its underlying principles. That is a wonderful exercise, and I think you’ve captured the essence remarkably well. It also tells me the article communicated what I hoped it would.
Let me offer a few comments, point by point.
1. Everything is connected through relationships.
Absolutely. If readers were to remember only one idea, this would be enough.
2. Every system can be affected by changes in another.
Yes. I would only replace the word failures with disturbances or changes, because living systems often reorganize rather than simply fail.
3. The ratchet effect.
Very close. The ratchet is not the external shocks themselves, but what they leave behind. Each disturbance consumes some resilience, so the next one arrives in a system with fewer buffers.
4. Drawing down future resilience.
Exactly. One of the central ideas is that we are preserving today’s normality by consuming reserves that were meant to increase tomorrow’s resilience.
5. Diesel.
I might phrase it slightly differently: diesel has become the working fluid of the physical economy. It is the medium through which energy becomes food, transportation, mining, construction, and logistics.
6. Refining versus crude.
I would only refine the wording here. The issue is not that refining is steadily declining, but that refining capacity has become the bottleneck. We may still have crude oil, yet lack the ability to transform it into the diesel the physical economy requires.
7. Money and production.
Yes. Financial capital cannot mobilize production if the physical capacity itself has become constrained.
8. The physical economy.
Exactly. The digital economy has not escaped the laws of the physical world.
9. Artificial Intelligence.
Correct. AI turns out to be far more materially intensive than many of us initially imagined.
10. A reinforcing spiral.
I would replace vicious circle with reinforcing spiral or ratchet, because one of the arguments I make is precisely that the system does not return to where it began.
11. Operational volatility.
Yes. This is the emergence of uncertainty in the functioning of essential physical systems.
12. The crisis of perception.
Very well put. We continue looking at sectors, variables and abstractions, when what matters increasingly are the relationships between them.
13. A crisis of cognition.
Exactly. More specifically, I would say it is a crisis of perception rooted in a paradigm that was extraordinarily successful under yesterday’s conditions, but is increasingly inadequate for today’s.
If I were to add two final principles, they would be these:
14. The economy has been spending resilience without accounting for it.
Inventories, healthy soils, trust, biodiversity, strategic reserves, and hope are all forms of accumulated resilience. Much of what we have called economic progress has been achieved by drawing down these invisible reserves.
15. The strategic challenge of our time is no longer maximizing efficiency, but rebuilding resilience.
The transition ahead is not simply from one technology to another. It is from optimization to stewardship, from extraction to regeneration, and from consuming reserves to replenishing them.
Thank you again for such a thoughtful reading. Responses like yours are enormously encouraging because they show that the conversation is moving beyond individual facts toward a different way of seeing. That, more than agreement with any particular conclusion, is what I hoped these essays might contribute.
This is illustrative of my advocacy that Substack writers not just broadcast but engage. In this leaderless world, it's a way for we-the-people to get agency!
What you write is so seminal. In an earlier era, you could have been a guru -- maybe you were. But here you are, I presume in the fringes given your comment sections are as underwhelming as mine are.
Would that suggest that you and I and a few others get engaged as a potential Island of Coherence, that's being bandied about as a theoretical idea, to get us redirected?
Thank you for this sober look at the realities underlying the headlines. I lack the knowledge to usefully critique the evidence but the process that you describe feels as solid as a rock.
Your description of surviving a shock but with depleted reserves almost writes the self-congratulatory speeches that will certainly follow the next shock as they interpret survival as a validation of their paradigm.
‘Pivoting’ to a new model of husbandry will, as Mike Chitty points out, be anything but the smooth transition this mot de jour suggests but it represents our best hope of longer term survival.
Thank you for sharing this, Ernesto. I found myself agreeing with much of what you wrote, especially that our biggest challenges emerge through the relationships between systems rather than any one issue alone. The "ratchet" metaphor really stayed with me.
Dear Ernesto,
I subscribed to your Substack sometime back after reading much of what you have written about regeneration. My gratitude to you for so succinctly helping me to see some of the major issues involved in what we are facing today.
My wife and I lived in 'Santa Fe, NM for nearly 14 years before coming to a small town in the Northern Rivers area of NSW, Australia to help our daughter and son in law with their new child. They have an organic farm that uses regenerative agricultural principles including green manure...no nitrogen purchases needed.
As I read your latest article, "Winter is Here" I wonder how can I communicate some of these perceptions to a small town with a curious mix of environmentalists, conservative farmers, dairy and cattle, miles of pasture, rivers, logging mills, aboriginal peoples and anglo settlers that goes far back to the first migrations from England.
In reading your article this is what I summarized, with the last 2 points being the most critical summary of all that went before.
1. Everything is connected through relationships.
2. Every system, be it environment, resources, climate, economy, product availability, industrial, political, or even collective belief systems can be affected by changes or failures in any other system.
3. System changes compound as the number of systems changing or failing increase or intensify. This process results in external shocks whose effects compound leading to increasingly difficult and longer recovery times. This is called the “ratchet effect”.
4. Accelerating systems failure and negative effects on essential products and energy are hidden from view because we are buffering these effects by drawing down stored inventories (reserves) meant to be used for the future. Resilience is increasingly diminished.
5. Diesel is the life blood of the global society, not crude oil.
6. Overall, refinery of oil into diesel relative to production of crude oil, keeps declining as external shocks to systems keep increasing or compounding. Focusing on oil production as opposed to the production of diesel is blinding us to an impending crisis that may affect transportation, food production, farming, mining, air travel, electricity, alternative energy and almost everything else.
7. During times of system failure, money loses its ability to mobilize production because the physical ability of industrial production has been diminished.
8. It is a myth that our new economy has escaped the limitations of a physical economy.
9. While AI appears on the surface to be weightless it is one of the most physically resource demanding inventions ever created by man in terms of copper, electricity and water.
10. We are now in a vicious circle demanding more of the very things we are making scarce.
11. Confidence in our essential physical systems is eroding because they are becoming unpredictable and therefore insecure.
12. Essential problem behind all of this is that despite all available information, we cannot see the forests for the trees. We are looking at the parts, at abstractions, at the symptoms-debt, inflation, price of oil, etc. as if the abstractions were the reality when what we should be looking at is the whole-systems, relationships, the feedback loops, the interactions.
13. We are now facing a crisis of perception and cognition.
I hope I got that right.
Thank you
Richard Welker
Dear Richard,
First of all, thank you for taking the time to read the essay so carefully, and even more for distilling it into its underlying principles. That is a wonderful exercise, and I think you’ve captured the essence remarkably well. It also tells me the article communicated what I hoped it would.
Let me offer a few comments, point by point.
1. Everything is connected through relationships.
Absolutely. If readers were to remember only one idea, this would be enough.
2. Every system can be affected by changes in another.
Yes. I would only replace the word failures with disturbances or changes, because living systems often reorganize rather than simply fail.
3. The ratchet effect.
Very close. The ratchet is not the external shocks themselves, but what they leave behind. Each disturbance consumes some resilience, so the next one arrives in a system with fewer buffers.
4. Drawing down future resilience.
Exactly. One of the central ideas is that we are preserving today’s normality by consuming reserves that were meant to increase tomorrow’s resilience.
5. Diesel.
I might phrase it slightly differently: diesel has become the working fluid of the physical economy. It is the medium through which energy becomes food, transportation, mining, construction, and logistics.
6. Refining versus crude.
I would only refine the wording here. The issue is not that refining is steadily declining, but that refining capacity has become the bottleneck. We may still have crude oil, yet lack the ability to transform it into the diesel the physical economy requires.
7. Money and production.
Yes. Financial capital cannot mobilize production if the physical capacity itself has become constrained.
8. The physical economy.
Exactly. The digital economy has not escaped the laws of the physical world.
9. Artificial Intelligence.
Correct. AI turns out to be far more materially intensive than many of us initially imagined.
10. A reinforcing spiral.
I would replace vicious circle with reinforcing spiral or ratchet, because one of the arguments I make is precisely that the system does not return to where it began.
11. Operational volatility.
Yes. This is the emergence of uncertainty in the functioning of essential physical systems.
12. The crisis of perception.
Very well put. We continue looking at sectors, variables and abstractions, when what matters increasingly are the relationships between them.
13. A crisis of cognition.
Exactly. More specifically, I would say it is a crisis of perception rooted in a paradigm that was extraordinarily successful under yesterday’s conditions, but is increasingly inadequate for today’s.
If I were to add two final principles, they would be these:
14. The economy has been spending resilience without accounting for it.
Inventories, healthy soils, trust, biodiversity, strategic reserves, and hope are all forms of accumulated resilience. Much of what we have called economic progress has been achieved by drawing down these invisible reserves.
15. The strategic challenge of our time is no longer maximizing efficiency, but rebuilding resilience.
The transition ahead is not simply from one technology to another. It is from optimization to stewardship, from extraction to regeneration, and from consuming reserves to replenishing them.
Thank you again for such a thoughtful reading. Responses like yours are enormously encouraging because they show that the conversation is moving beyond individual facts toward a different way of seeing. That, more than agreement with any particular conclusion, is what I hoped these essays might contribute.
Warm regards
This is illustrative of my advocacy that Substack writers not just broadcast but engage. In this leaderless world, it's a way for we-the-people to get agency!
What you write is so seminal. In an earlier era, you could have been a guru -- maybe you were. But here you are, I presume in the fringes given your comment sections are as underwhelming as mine are.
Would that suggest that you and I and a few others get engaged as a potential Island of Coherence, that's being bandied about as a theoretical idea, to get us redirected?