Reinventing Collapse: The Soviet Example and American Prospects | Date: 15 April 2011, 13:46
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As an MIT engineer (BSME MIT, 1978) and Author of When Technology Fails, I have read over a hundred books over the past two years, but Dimitri Orlov's "Reinventing Collapse" is the one that haunts me. Like many Americans, I felt quite smug when the Soviet Union collapsed. At the time, it appeared to be proof that the western world's way of running its businesses and governments was indeed superior to communism, and that the "free market" would soon deliver oppressed peoples all over the world from the clutches of the remaining totalitarian regimes.
Orlov's analysis, gained through personally experiencing the Soviet collapse, shows us that this collapse was more a factor of economic problems caused by a crash in oil revenues than by the Regan/Breshnev arms race that was credited by so many westerners for fomenting this collapse. When the oil-glut of the 1980's caused the price of oil to fall radically, the Soviet income from their inefficient state run petroleum industries crashed (it basically cost them about as much to pump and refine their oil as the export price per barrel), and the result was a cash flow crunch that could not sustain the rest of their state-run economy.
Now that oil prices have shot past the $100 a barrel mark, the tables have turned. Russia has surpassed Saudi Arabia as the world's number one oil producer, and the same oil exports that caused the Soviet regime's cash flow problem when prices were extremely low, is now making the new Russian economy cash-rich. America is seeing the devaluation of our dollar, brought on primarily due to a negative cash flow of billions of dollars a day for petroleum product imports and military ventures to protect our access to the supply of oil in foreign countries (Iraq, etc.), contributing to a large portion of our skyrocketing national debt, bringing the threat of economic collapse ever closer to our shores. Orlov points out a few of the differences between the former Soviet situation and the current US situation that makes our predicament even scarier.
When the Soviet Union collapsed, many of its state run systems continued to function. For example, most Soviets lived in public housing, fueled by public utilities, and they got around using public transportation. When their economic system went down, even though few people had much or any usable cash, their homes were still heated and not boarded up, the lights stayed on, and they could still get around using buses and trains. Here in America, the free market and privatization makes ours a very different story. When we stop paying our bills, the lights go out and the banks take our homes. If you don't have money for gas, or happen to live where trains and buses don't go where you need to go, your only recourse is to walk or hitch hike. When cash stops flowing, paychecks halt immediately and services screech to a halt (remember Enron and MCI?). When the Soviet Union collapsed, their country still had vast untapped resources to help rebuild after the collapse. America, on the other hand, has already used up most of our steel, natural gas, oil, timber, and so on. What untapped resources do we have to draw upon to pull ourselves out of this predicament? If the American dollar plunges, how will we continue to buy the resources and products from other countries that we no longer make ourselves?
So, if you are worried about the future and what you may do to prepare your friends, family, and country for what may lie ahead, I suggest you pick up a copy of "Reinventing Collapse", and learn from Orlov's experience. He gives us a clear vision of what to expect, including which strategies worked best for individuals, and what items proved most valuable to stock up for barter use when cash has no value because the economy crashed. What you learn from the past can help you to navigate a course through the future. Highly recommended!
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