Too big to fail.
It’s a phrase that has become so ubiquitous that even the Federal Reserve has a definition on one of its web sites. From the Fed’s standpoint, an organization is “too big to fail” when it is “so important to markets and their positions [are] so intertwined with those of other [institutions] that their failure would be unacceptably disruptive, financially and economically.” But the complexity and interrelatedness of institutions aren’t limited to the financial sphere. There’s plenty of backbone systems whose failure could border on or would be downright calamitous.
John Casti examines the issue and 11 potential human-caused scenarios in X-Events: The Collapse of Everything but he’s not just a 2012 apocalypse fear-monger. To the contrary, Casti is a senior research scholar at the International Institute for Applied Systems Analysis in Austria, where he works on the development of early-warning methods for extreme events in human society, and one of a number of scholars in the field of what is called “complexity science.”
At its most basic, a core theory appears to be that as society becomes increasingly complex, there is a point where all its resources are consumed just maintaining the current level. The next big problem is, in a way, the straw that breaks the camel’s back and there is a “complexity overload.” Some part of a complex system rapidly collapses and the adverse effects of this “X-event” forces the society to a much lower level from which it must/can rebuild. Granted, there are events that are beyond human control — asteroids, tsunamis, hurricanes and the like. But here’s plenty of potential human-caused events to make anyone ill at ease.
Among the 11 specific X-events Casti explores, some are probably less likely to occur, such as scientific experiments creating exotic particles that can destroy all or part of the earth or the creation of intelligent robots who eventually overthrow the human race. Most, though, seem wholly realistic, such as a a long-term and widespread failure of the Internet, nuclear war or terrorism, the drying up of world oil supplies, failure of the power grid or economic collapse. Perhaps even more alarming is the interrelatedness of these complex systems. As Casti points out, a failure of the power grid may well lead to the failure of the Internet. The failure of either could lead to economic collapse in a global economy in which commerce and finance depend on electronic transactions and information exchange.
Even a commonsense view of modern life indicates X-Events isn’t far-fetched speculation. Consider the electrical grid in the United States alone. Despite being one of the most advanced industrial nations, there have been several instances over the years where large chunks were taken down by human error and led to cascading effects. Think the internet can’t fail? Set aside the electrical grid and think of the seemingly inveterate trojans, worms and other malware in the system. Throw in government control in some nations, denial of service attacks and the like and, as Casti notes, “there are many ways to bring down the system, or at at least huge segments of it. The most amazing fact of all is that it hasn’t happened more frequently.” Throw in computerized trading and finance, let alone the concept of peak oil, and there’s plenty out there to worry about
But Casti contends it’s not all doom and gloom. To the contrary, the real message of X-Events is that if we are aware of the potential for human-caused X-events, they are avoidable or we can greatly reduce their potential damage. Casti warns, though, that doing so is “a painful, difficult, and time-consuming process.” One of our foremost problems, he says, is recognizing the risks and when they may be escalating.
We’ve been coddled and protected to the extent that we actually expect our governments and other public institutions to solve all problems and address our hopes and needs without cost or risk to ourselves. In short, we’ve fallen into the misguided belief that everyone can be above average, that it’s everyone’s birthright to live a happy, risk-free life, and that any misfortune or bad judgment or just plain bad luck should be laid at someone else’s doorstep. So the first step on the road to reality is to drop these visions of Utopia.
If there’s a sense of foreboding created by X-Events it isn’t just the potential events and consequences. In actuality, knowing of them is easy. The real difficulty arises in whether we have the political and social fortitude necessary to address them before an X-Event forces us to do so in dire circumstances.
Oil is the commodity of all commodities. Without it, nothing works in modern society as it’s currently structured.
John Casti, X-Events: The Collapse of Everything
