The Great 21st Century Hedge
What's at stake in the next 25 years?
Imagine if an earthquake hit and the main explosion of energy was silent. You felt the after-shock radiate out from the epicenter but the initial blast was under the surface. Unnoticed. Hidden. You'd be forgiven if you assumed that the aftershock was the earthquake itself. You didn't feel the original rumble and when the aftershock hit it was devastating.
Rifkin argues that the 2008 collapse of world financial markets was an example of this phenomenon and it was based on our imagined right to cheap oil and movement by automobile
In July of 2008 the world market priced oil at a record $147 per barrel; almost 7 times the price of seven years prior. Unfortunately for us all, our productivity throughout the Second Industrial Revolution has been directly linked to the price of oil. I.e, when the price of oil rises so too, does the cost of goods & services. [source]
"We grow our food in petrochemical fertilizers and pesticides. Most of our construction materials-cement, plastics, and so on- are made of fossil fuels, as are most of our pharmaceutical products...Our transport, power, heat and light are all reliant on fossil fuels as well. We have built an entire civilization on the exhumed carbon deposits of the Carboniferous Period." - Jeremy Rifkin
When the ability to cost-effectively purchase goods and services across the world declined in response to peak oil prices, the global economy virtually shut down. That was July of 2008 and it was, Rifkin argues, the earthquake that was the eulogy of the fossil fuel era. The eventual total collapse of world financial markets was the resulting after-shock.
What this tells us is that there is always a price to non-action. Sure, oil prices rose, good and services were more expensive and we had to tighten our belts for a while; fine. But because we were an economy completely beholden to fossil fuels we accepted the reality and missed the earthquake. It took an extreme after-shock for us to realize we had been blinded by progress.
"I am suggesting that we are currently in the endgame of the Second Industrial Revolution and the oil era upon which it is based. This is a hard reality to accept because it would force the human family to quickly transition to a wholly new energy regime and a new industrial model, or risk the collapse of civilization." - Jeremy Rifkin (2008)
We need to consider the rapid rate of change and the risk of missing the point here. If we don't get on this train it will leave Decentral Station and the gap will only widen between the nations who choose to take on this new, greater world and those who do not. If new-communications and new-mobility are truly decentralized, then nations of the world will be free to compete for top talent everywhere. Estonia could be the legal and financial home of the world's top internet migrants (who may never even set foot on Estonia). Even more counterintuitive, consider a region with historic geographic advantages; a large port, physical proximity to important neighbor markets, natural resources. You can logically come to the conclusion that these nations will be either much less competitive in the Third Industrial Revolution or much more so. If they choose to not adapt then they will enter an economy where their geographic advantage is null & void with no logical avenue to pivot. If they get ahead of the curve they double-down on the advantage in the new economy.
Fortunately for us, risk is always attached with an opposing opportunity.
If the risk, as Rifkin tells us, is the collapse of productivity in its current form then the opportunity is a revolutionary model of work. If the risk is another 100 years of always playing catch-up, then the opportunity is a once-in-a-lifetime shot at being on the vanguard of real socio-economic change. If the risk is continuing down a path of energy consumption with an expiry date, then the opportunity is an era of exponential abundance and sustainability. If the risk is irreversible damage to the environment via runaway climate change, then the opportunity is to acknowledge the woes of the Second Industrial Revolution and make way for the Third. If the risk is another 200 years of top-down, raise-your-hand central power, then the opportunity is a system of open, neutral and local innovation.
The Third Industrial Revolution will be the Great 21st Century Hedge toward a sustainable, abundant future.