Apocalypse (Part 3)

On The Rise and Fall of Economic Systems

This short mini-essay is the third in a five part series focusing on the imminent collapse of our banking system. That system comes to us from the Renaissance, so the suggestion is that we are in for a transition of that magnitude. There are some interesting historical symmetries to buttress the point, along with a heaping helping of optimism.

Our doomed economic system is not the first to be predicated on infinite growth. And as such, it won’t be the first to collapse in dramatic fashion either. This system divides people into employers and employees to get work done. We’ll recognize our modern system in the history books when we read about people working in these roles. The Roman Empire, by contrast, was a slave society. The lion's share of their work was done with masters and slaves. That empire ascended to lofty heights through constant military expansion, a model every bit as unsustainable as our own. And it eventually crashed back to Earth in spectacular fashion, as our model must too.

After the fall of Rome, Europe settled into the Middle Ages. Slaves were vanishingly rare. Most work was accomplished by people acting as lords and serfs. The economy was notoriously stagnant, but the non-reliance on economic growth allowed it to endure for a thousand years. But, like all systems, it reached the end of its life cycle. The Black Death is traditionally the event that brought down Medieval society. The pandemic wiped out a third of Europe’s peasants, leaving too few of them alive to work the fields owned by the lord's…they finally had the nobility over a barrel! Peasants stopped swearing oaths of fealty to feudal lords and instead began freely selling their labor to the highest bidder. The Medieval system of lords and serfs collapsed because of a pandemic, to be replaced by our modern system of employers and employees.

And now the white horseman of the plague has come calling once again. The COVID-19 drama is still playing out, but it's already clear that it's having a massive economic impact. Among other things, that fundamental relationship between employer and employee is evolving in new and exciting ways. As our system comes up against growth limits and the chaos becomes unmistakable, we should remember that our system could never have had its magical 600-year run without prior apocalypses. That is the historical context that will anchor our sanity during the difficult times ahead.   

Stay tuned for tomorrow’s sequel, where we will explore how it was that banking came to be at the core of our economic system.