The Effects of Oil Scarcity in Post-Fordist Society

As my understanding of Fordism and post-Fordism has developed, I've begun to notice a trend - life in America shifted drastically as our economy made the shift from a production- to service-based economy. With this shift came myriad side effects - labor became devalued, unions declined, inequality soared out of control, and the demographics of poverty shifted. Federal social spending declined and with it, poverty and inequality rose commensurately. Post-1979, those with the least wealth see the least growth, while families of higher socioeconomic status grow in prosperity. Beginning in the late 80s to 90s, the CEO to worker pay ratio has skyrocketed. The Gini ratio has climbed while the index of social health has steadily declined. The old cliché holds true - the rich truly do get richer while the poor stay poor.

But what makes the years circa 1979 the lynchpin to all these simultaneous paradigm shifts that led to the new and growing form of American social and economic inequality? Why does the basic shift from a production to a service-based economy co-occur with the shift from incarceration to mass incarceration? With the ghettoization of industrial cities, and white flight to the suburbs? It is one thing to recognize the co-occurrence of all these changes, but quite another (maybe impossible?) to isolate one root cause.

At the risk of sounding overly reductionist, I think the root of the issue is simple. Quite simply, everything is subject to the laws of physics - even the economy. And one of the basic tenets of physics is the First Law of Thermodynamics: Energy can neither be created nor destroyed, it can only change forms. Money is (ideally) a representation of work that has been done - work made possible by the expenditure of energy. In industrial America, during the Fordist era, our primary source of GDP came from physical work being done and physical goods being produced and exported/consumed. Producers were consumers. We were relatively self-sufficient.

The industrial growth and prosperity that characterized Fordism, however, corresponded with an oil glut. Just after WWII, the U.S. economy was stronger than ever. Not insignificantly, the U.S. was also domestically producing the vast majority of its own oil - the undeniable source of the energy the U.S. uses to do the work that enables its economic growth. By the late 50's, however, oil demand had already begun to outstrip domestic production capabilities, and we began importing more foreign oil. This trend only worsened from there, and by the 1970s, we were importing more than a third of our oil, making us vulnerable to the vicissitudes of geopolitics.

The oil crisis of the 1970s, precipitated largely by our decision to back Israel in the growing unrest in the Middle East, drove home our growing vulnerability and reliance on foreign resources. The shortage caused inflation and unemployment to skyrocket, while the economy stagnated in the face of resource scarcity. Nixon called upon the American people to reduce energy expenses in all areas of life, and Americans, recognizing the role of overconsumption in the oil crisis, began to buy more fuel efficient, foreign automobiles (a trend that has ultimately led, in large part, to the Big Three's current crisis). Auto manufacture was not the only industry to suffer, and many companies began outsourcing their labor to foreign countries to save money, causing the decline in prosperity in formerly booming industrial cities in the north. This led to white flight and the ghettoization of American cities like Chicago and Detroit.

As production decreased, the U.S. economy evolved into a more service-based one that capitalized on the increasing industrial success of Asian and European countries to procure its tangible goods. The actual production that remains has been condensed and streamlined in the form of a few enormous and streamlined corporations. Also, unsurprisingly (when one considers the essential, thermodynamic truth that nothing can come from nothing) American debt began to explode, and people began to spend money they didn't have. The total credit in the U.S. has risen from $500 billion in 1980 to over $2 trillion in 2004 - a scary figure when credit is considered critically as the widening chasm between our nation's actual capacity for work and production and the cost of continued economic growth. The stock market is fuelled by essentially hypothetical money, and the national debt is nearing $10 trillion. The recent banking crisis is an early manifestation of the simple fact that an economy cannot continue to run on fictional money and promises indefinitely. It needs fuel.

At the center of all these changes and problems lies one simple truth - the world is running out of fossil fuel energy. Shell researcher Marion King Hubbert recognized this fact as early as the 1950s when he predicted a global oil production peak in the 1970s, and would have been correct were it not for the marked cutback in demand precipitated by the oil crisis. Contemporary critics of the oil economy such as Howard Kunstler, author of

The Long Emergency, have become more vocal in recent years, though they are met with fierce opposition. Because people do not want to accept that the comforts and even the highest institutions of mankind are subject to the laws of physics, and that what goes up must come down. It is for this reason that Carter was so severely lashed for his "Malaise speech" in which he suggested to the American people after the 1979 oil shipment cuts that they share the responsibility of energy conservation, while offering no easy solutions. No politician since has been so candid about the future of the world's energy resources - they can't afford to.

Because people don't want to believe that the American dream might run on crude oil, or that the marginalized will become further disenfranchised as our economy struggles to get by and continue to grow as energy becomes increasingly scarce and more costly. We like to think that our laws and institutions and policies, infused with the best and brightest of human thought, operate separately from nature and natural laws.

This is not to say that inequality is an inevitable and natural consequence of scarcity, but it is to recognize that trends in socioeconomic inequality that have long existed in America have begun and will continue to become more pronounced and evident as energy needed to do work dwindles. As Dick Cheney once said, "The American way of life is not negotiable." People will cling to the accustomed forms of wealth and privilege - already increasingly condensed and hoarded - as tenaciously as they can, even as the energy needed to procure them disappears and they become increasingly impractical. And I fear that as the melee intensifies, the poor and marginalized will be elbowed ever further from the prize.

I recognize that these views are incredibly fatalistic, and perhaps overlook essential human traits such as tenacity, ingenuity and compassion. As the election of our new president amply demonstrates, progressive social change is entirely possible. It is my hope that as the social and economic situation in the United States worsens in the coming years, we will react against it and turn the tide against the trends that have led to our current predicament. Only time will tell.

Sources: "Changes in the American Economy - The Energy Crisis, Deindustrialization, and the Service Economy"

http://74.125.95.132/search?q=cache:ZAhiwtbd340J:amhist.ist.unomaha.edu/module_files/Changes%2520in%2520the%2520American%2520Economy.ppt+industry+manufacturing+oil+crisis+1970s&hl=en&ct=clnk&cd=1&gl=us&client=firefox-a

James Howard Kunstler -

The Long Emergency