Wages of workers are down. The reason for this is increased entropy, which our current system is very bad at handling. Gail Tverberg says: “There are a few winners, and lots of losers, in the current system.” This mean that we cannot handle the problem of squeezed workers within the current system, as this is the outcome of the system trying to save itself.

Tverberg’s depiction of changes to workers share of output of economy, if costs keep rising for other portions of the economy. (Chart is only intended to illustrate the problem; it is not based on a study of the relative amounts involved.)

A description of each element:

• Pollution control. Pollution sinks are already full. Continuing to use non-renewable resources (including burning fossil fuels) adds increased pollution. Workarounds have costs, and these take an increasing share of the output of the economy.
• Energy used in energy production. When we started extracting energy products, the cheapest, easiest-to-extract energy products were chosen first. The energy products that are left are higher-cost to extract, and thus require a larger share of the goods the economy produces for extraction.
• Water, metals, and soil workarounds. These suffer from deteriorating quantity and quality, leading to the need for workarounds such as desalination plants, deeper mines, and more irrigated land. All of these take an increasingly large share of the output of the economy.
• Interest and dividends. Capital goods tend to be purchased through debt or sales of stock. Either way, interest payments and dividends must be made, leaving less for workers.
• Increasing hierarchy. Companies need to be larger in size to purchase and manage all of the capital goods needed to work around shortages. High pay for supervisors reduces funds available to pay lower-ranking employees.
• Government funding and pensions. Government programs grow in size in good times, but are hard to cut back in hard times. Pensions, both government and private, are a particular problem because the number of elderly people tends to grow.

We should note that the current system is based on competition and large scale production. There should be obvious now that with these rising problems of all sorts, what can solve them is the opposite of what created them, and that is cooperation and distribution of production. This can best be achieved using the RID-model (Representative Ingroup Democracy) of Terje Bongard. It’s a model of an economical democracy organized in self organizing production cells with an ideal size for cooperation, linked together in a larger network structure.

But we are in a hurry now, as we are standing on the edge on the Stagflation Period of the Secular Cycle!

Shape of typical Secular Cycle, based on work of Peter Turchin and Sergey Nefedov in Secular Cycles. Chart by Gail Tverberg.

Unfortunately the Research Council of Norway debunked Bongard’s initiative back in 2014, and the tipping point might be reached meanwhile. Still, Bongard is now translating his book “The biological Human Being – individuals and societies in light of evolution” into English all by himself, as he couldn’t find an international publisher. This in spite of that it has sold more than 2500 copies in Norway.

I hope the p2p-community will embrace this book, as it might help us from entering another intercycle, which will have unforeseen consequences with the global reach of our problems.

The illustrations are from Gail Tverberg’s post “Why we have a wage inequality problem“.