Sunday, August 28, 2011

The Seneca Effect: why decline is faster than growth


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Originally published on "Cassandra's Legacy" on Aug 28 2011





"It would be some consolation for the feebleness of our selves and our works if all things should perish as slowly as they come into being; but as it is, increases are of sluggish growth, but the way to ruin is rapid." Lucius Anneaus Seneca, Letters to Lucilius, n. 91







Don't you stumble, sometimes, into something that seems to make a lot of sense, but you can't say exactly why? For a long time, I had in mind the idea that when things start going bad, they tend to go bad fast. We might call this tendency the "Seneca effect" or the "Seneca cliff," from Lucius Annaeus Seneca who wrote that "increases are of sluggish growth, but the way to ruin is rapid."

Could it be that the Seneca cliff is what we are facing, right now? If that is the case, then we are in trouble. With oil production peaking or set to peak soon, it is hard to think that we are going to see a gentle downward slope of the economy. Rather, we may see a decline so fast that we can only call it "collapse." The symptoms are all there, but how to prove that it is what is really in store for us? It is not enough to quote a Roman philosopher who lived two thousand years ago. We need to understand what factors might lead us to fall much faster than we have been growing so far. For that, we need to make a model and see how the various elements of the economic system may interact with each other to generate collapse.

I have been working on this idea for quite a while and now I think I can make such a model. This is what the rest of this post will be about. We'll see that a Seneca cliff may indeed be part of our future if we keep acting as we have been acting so far (and as we probably will). But let's go into the details. 


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