We are in for another global oil supply crunch from 2018 onwards that many experts say will trigger another severe economic recession if not depression. A fragile global economy, with a massive debt overhang, cannot handle too high oil prices. A large portion of most countries budgets, and individuals budgets as well, are spent on fossil fuel energy. That's why rapid price increases (over $60 per barrel) crushes demand and flips the economy over into a recession. In turn, leading to the bankruptcy of non-profitable unconventional energy ventures like tar sands and fracking. Thus further reducing supply over the long term.

Since the early 1970s global energy costs have steadily increased. Even if oil prices have oscillated with recurring spikes and drops, as the economy tries to adjust, the overall trend is a steady increase. This is due to the fact that extraction has become increasingly difficult and costly, yielding ever lower return on investment. The problem of course is that we built our economies based on cheap energy that yielded relatively high net energy to society. But that is a thing of the past and now we are struggling to afford our current lifestyles. Thats basically why we started this massive global debt bubble, pulling forward future consumption with cheap credit. But costs will eventually have to be paid.

We have now reached a point when all the energy and resources available to society are required just to maintain our existing level of complexity. A phenomenon puzzling many commentators, calling it secular stagnation. All these factors have made the global economy so fragile that even small perturbations from climate change, wars or falling credit could tip the system over into a deflationary spiral. With economic inequalities already increasing, increasing social instability, this is a recipe for disaster. 

No economy will be able to recover unless it transitions to non-fossil fuel energy sources and writes down its debts. And even then net energy will likely be much lower, meaning that society still has to lower its overall consumption of energy and resources. Implying a voluntary measure to reduce organizational complexity in society. Something few previous civilisations managed, perhaps the British did when they dismantled their empire. 

Global food prices have increased steadily since 2005, about the time of global peak oil, now at 1970s highs or above. Further exacerbating the problem is booming populations, freshwater scarcity and climate change. 

Today’s population levels depend on fossil fuels and industrial agriculture. Especially vulnerable to rising food prices are people with low purchasing power and without subsistence farming to fall back on. We know that food price increases that reach 200 on the FAO index have led to riots and unrest.

Many countries in the Middle East are especially vulnerable due to convergence of several different crises. State revenue losses from falling oil exports, due to depleting resources and higher domestic consumption, with a need to cut food and fuel subsidies usually make people very upset. Especially when, as is the case in the region, people have no way of making a living coupled with overexploited water reservoirs and eroded soils. As if that wasn't enough, scorching heat and significant risk of recurrent droughts makes the entire region utterly unsustainable. Without energy they have nothing. The chances for further conflict and wars in the region are high. Massive, continuing, migration flows towards Europe is to be expected. 

The infamous ‘Doomsday Clock’ is again at two and a half minutes to midnight  -  the closest since 1953

Economic growth as people know it, in terms of GDP, has stagnated and started to turn negative. Most reactions to the absence of growth have consisted in trying to get it back again as fast as possible, whatever the cost, further degrading the biosphere at an accelerated rate. We have seen low interest rates, debt expansion, bank bailouts, government stimulus, land-grabs, tax havens, fiscal austerity, and stock buybacks etc. Most of these things did nothing to increase the wellbeing of ordinary people but greatly profited the richest in society. The massive debt overhang from such policies have now become a burden on the real economy. All it did was to divert people's attention from the inconvenient truth that there will be less material goods and energy flows in the future, not more.

This massive wastefulness of resources comes at a time when we could have used those means to invest in benefitting projects like affordable housing, a basic income, low carbon infrastructure, ecologically sound agriculture, adaptation to climate change etc. Instead we have chosen to let the oceans contain more plastic than fish and species go extinct a thousand times faster than any time in the last 65 million years. The central bank and governments desperate policies after the 2008 financial crisis is the biggest failure in our time. When the next crisis hits, which could be very soon, there will be neither fiscal nor monetary room for manoeuvre.

In his latest paper Tim Jackson show how declining growth in the real economy caused by resource limitations has led to increasing economic inequality. A factor that greatly increases the instability of a society. The rising inequality that has haunted advanced economies over the last decade is a direct consequence of policy decisions trying to promote growth in a dying capitalistic society that cannot be supported by underlying fundamentals. All it has done is to redistribute wealth from the bottom to the top. The growth fetish has hindered ecological investments, reinforced inequality and exacerbated financial instability. The social and ecological prosperity that once was is being undone by this allegiance to growth at all costs. 

As shown in the HANDY-model (2014), overexploitation of both nature and labour leads to a fast total collapse of society. Economic stratification is a symptom often found in many past collapsed societies and is an outcome of elite overconsumption in a society overshooting its ecological carrying capacity. Such a collapse often lead to inequality-induced famine, due to widespread poverty, that causes the loss of workers rather than a collapse of the ecological base itself. Elites consumption keeps growing until the society collapses.

This is a very ugly possibility. And it shows just how important issues of ecological degradation and inequality are for social stability. The fact that we see widespread resource/economic inequality indicate that we, some societies more than other but talking globally, are far gone in the process towards collapse.

However, in another paper by Jackson, there are post-growth scenarios that dont necessarily lead to increasing inequality. Jackson claims that it depends on three structural features of the economy: elasticity of substitution between labour and capital, the dynamics of the capital-to output ratio, and the behaviour of the savings rate. Under conditions more favourable to wage labour (than capital) measures like a tax on capital and a universal basic income can decrease inequality even as growth decline. However, these measures are insufficient to reduce inequality when institutions aggressively favour capital over labour.  

Marx once said that "religion... is the opiate of the masses", meaning that it reduced people's immediate suffering and provided them with pleasant illusions which gave them the strength to carry on. Nowadays, such plesasant illusions are not only provided by religion but also by the entertainment industry, media and medical science in form of legal narcotics.

A growing population and dwindling natural resources, with rapidly rising extraction costs, implies increasing poverty. And this is also what we are noticing among the general populace, a shrinking economic pie has meant smaller pieces for everyone but the super rich who can bet on government stimulated markets. According to McKinsey (2016), real incomes of some 65-70% of households in 25 advanced economies have been flat or falling between 2005-2014. Crushing the long held belief that "the next generation will be better off than their parents".

As people have started to realise that they are having a tougher time to get by economically, or simply less able to buy lots of stuff, trust in governments and social cohesion has fallen. And that is also why we see the phenomena of populist, extremist, politicians gaining more traction as ordinary people become increasingly dissatisfied with status quo.

The divide between the younger and older generation is also growing as younger people are experiencing a harder time finding good paying jobs, saddled with student debt, while expected to provide for a growing share of pensioners. This at the same time as savers, e.g. pensioners, are suffering from negative interest rates and rising living costs.

Earth Overshoot Day is tomorrow, marking the fact that humanity has used up a year's worth of natural resources in only seven months. This have been made possible only by our discovering of stored fossil hydrocarbons which have provided us with cheap and abundant energy. Up until now. As we have plundered the planet for its resources we have hit limits to what Earth's ecosystems can provide without degrading or collapsing. Transgressing those limits means that we now have less resources available every year. 

It's time to wake up to the fact that the world is changing and old beliefs have to be revised. Having children while wasting the Earth's resources is hypocritical if we now claim to be a species with some skill at foresight. 

Humans need clean drinking water, food and energy to survive. These things used to be public goods but we decided, somewhere along the road, to make them private goods. This means that an individual have to make, or inherit, money so she/he can purchase these basic necessities. Those who don’t have money get “weeded out”. This is the human created system that has replaced natural selection. Nowadays it doesn't matter if you are clever, healthy, kind or cooperative as long as you have money. 

Actually money is the wrong term, what a person needs is capital. There are many types of capital but we humans have decided that financial capital is the most important, compared to e.g. social or ecological capital. Again this is because with financial capital we can get other types of capital that we need for our survival and wellbeing. So we accumulate financial capital, as much as we can get, at the cost of degrading other capital bases. We degrade and destroy ecosystems that generate a stable climate, clean water, food and fuel so that over time these resources start to deplete and the cost rises. 

The cost keep rising but the world doesn't pay attention since it’s the most vulnerable that are hit first. It is not until poverty results in death or degradation results in extinction that we start wondering “what is going on?”. We sympathize but feel safe as long as it's happening somewhere else or we have a pile of financial capital to turn to. But what happens if lots of people start deciding that it’s easier to just “move” when rivers dry up, trust breaks down or conflict over remaining resources break out? Syria being a case in point.

Or what happens if the economy takes a beating, perhaps even a sudden crash, that wipes out all your financial capital and/or source of income, what will you do? In some places people can rely on the government, receiving benefits to cover minimum expenses. But what if the crash is so bad that everyone needs benefits at the same time? A healthy government could perhaps manage it. But what if all the government gets in trouble and yours can’t fund the entitlement programs anymore? Now you don’t have a job so you can’t earn money to buy basic goods and the government can’t help you out, you will have to rely on friends and family (community). If that doesn't work perhaps you will move. Greece comes to mind.

The end conclusion is that a growing number of people will have to move as a form of adaptation to rapidly changing socioeconomic or ecological conditions. This, in turn, will create hostility between the “haves” and the “have nots” since there is a limited amount of resources left. The majority are among those who have little since the overall resource pie is shrinking but the minority have more power within the current system since resources are becoming more expensive. This situation will grow worse over time until the majority have had enough. And the a major clash is unavoidable. 

At this point, perhaps, the system that we humans created can be replaced. But some of the social and ecological damage can never be reversed. Whatever happens, we have to be prepared for some very turbulent times.

According to 2014 Global Wealth Report, by Credit Suisse, world wealth has reached a record $263 trillion but is now even more concentrated at the top. The richest 1 percent of the worlds 7.3 billion people have accumulated even more wealth, now owning more than 48% of global wealth. The authors of the report warns that growing inequality may spark a recession, as high disparity leads to economic friction.

Few household characteristics vary across individuals as much as income and wealth. This has been the case throughout much of human history, with wealth ownership often equating with land holdings, and wealth more often acquired via inheritance or conquest. But a combination of factors caused wealth inequality to trend downwards in high income countries during much of the 20th century, suggesting a new era. However, that downward trend has now stalled, and started going into reverse.

Since the 1980s wealth distribution have developed differently in a number of countries. In some countries, especially the US and the UK, inequality has risen sharply. This increase has taken place from a level that was already high in relation to others before it started. In countries like Sweden and Finland, increases have also been substantial but here from internationally low levels that are much higher but remain among the lowest (Roine and Waldenström, 2014).

According to Credit Suisse 2014 report, a person that owns $3,650 (including equity of their home) is today considered to be among the wealthiest half of global citizens. A person owning more than $77,000 is considered to belong to the top 10% and a person owning $798,000 to belong to the top 1%. 

“Taken together, the bottom half of the global population own less than 1% of total wealth. In sharp contrast, the richest decile hold 87% of the world’s wealth, and the top percentile alone account for 48.2% of global assets” (Credit Suisse, 2014 pp.99). 

The richest nations, with over $100,000 wealth per adult, are found in North America, Western Europe and among the rich Asia-Pacific and Middle Eastern countries. They are headed by Switzerland ($587,000), Australia (431,000), Norway ($359,000), United States ($348,000), Sweden ($333,000), France ($317,000) and the United Kingdom ($293,000). See map below.

From 2013 to 2014 global wealth grew 8.3%, $20.1 trillion, and is the largest increase since 2007. Total global wealth has risen every year since 2008 and is now 20% above its pre-crisis peak. Leading the wealth increase is the United States, home to 34.7% of global wealth. Most of the world's ultra high net worth individuals can be found in the United States, followed by China, Germany and the United Kingdom (see chart below).

Own elaboration, data from Credit Suisse - Global Wealth Report 2014

However, Credit Suisse analysts also showed that overall wealth in the US has grown at a faster pace than incomes, warning that it is a trend that could point to recession. Stating that "For more than a century, the wealth income ratio has typically fallen in a narrow interval between 4 and 5. However, the ratiobriefly rose above 6 in 1999 during the dotcom bubble and broke that barrier again during 2005-2007. It dropped sharply into the "normal band" following the financial crisis, but the decline has since been reversed, and the ratio is now at a recent record high level of 6.5, matched previously only during the Great Depression. This is a worrying signal given that abnormally high wealth income ratio have always signalled recession in the past"