This article, “The Failure of Networked Systems”, on The Oil Drum explains matters very well.
It is sort of an engineer’s twist on the tradeoff between risk and return. Go read it.
It applies both to the immediate financial mess and the even bigger picture reservoirs-and-flows views of the earth system.
What I have to add is this:
The current financial disaster is based on people deluding themselves that they had eliminated risk, when in fact they had coupled risk. The consequence is that small failures were avoided at the expense of big failures.
The whole setup of modern human activity makes a comparable error. There is no such thing as unlimited growth. All growing systems reach limits. The most casual understanding of exponential growth (h/t HR) makes this clear.
Either fuel supply or carbon waste are likely candidates to be the limit we hit first, but there are others. It doesn’t matter. The “growth forever” idea is really “growth until it stops”. If we base everything we do and everything we think on an assumption of growth, we start to build things in to protect the growth.
Much of government of the past century has been about protecting the growth. Sooner or later it is doomed to fail.
Has this just happened? Has the system reached old-fashioned bubble-popping so emphatically and so hard upon its physical limits that we will be unable to right it? Maybe, but probably not.
The problem is that righting it is not what we need to do. What we need to do is relax.
What we will inevitably try to to is rebuild the tightly coupled growth-dependent system that has spectacular failures built into its whole M.O. Realistically, some of this is unavoidable at this stage, but it’s an ill-timed distraction. What we ought to do, instead, is reduce growth dependency and increase redundancy and resilience.
We need to convert to a world where less wealth gets created, and less wealth gets destroyed.
This is the relaxation scenario; it is easier on everybody, but it will take some creativity. In a perceived crisis, can we find the creativity to say, “no, we don’t particularly want things to get back to normal”?
Resilience, not growth, is the goal of our time. We need to build a world where time to think and time to enjoy and time to care is valued more, where time to achieve and money to spend is valued less. Say you don’t want no diamond rings and I’ll be satisfied. Tell me that you want the kind of things that money just can’t buy.
Trying to find sustainability in conventional economics at a time of stress is a category error if ever there was one. This mistake has its precedents and they are not encouraging.