"The "Impossible" But Inevitable Solution: Decentralization

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

What lies beyond the current failing, unsustainable versions of Capitalism and Socialism? Decentralization.

Correspondent John D. recently sent in a link to an interview with energy expert and author Jeremy Leggett. The title, "Make no mistake, this is an energy civil war" is a bit sensationalist, but the gist of his point is that centralized control of energy (and the capital that controls the energy and distribution networks) are colliding with new models of decentralized, locally autonomous control and ownership of energy generation and distribution.

Given the immense power of the banking/energy/political Elites that directly benefit from centralization of energy, capital and political power, I term this decentralization solution "impossible." Yet because it is driven by the diminishing returns of the centralized model and the emergence of the Web as an unstoppable force distributing decentralization and new models, the transition from ossified, failing centralized models to adaptive, faster-better-cheaper decentralized models is also inevitable.

This is the context of Leggett's view that there is an 'energy civil war' between the powers defending centralization and those promoting community ownership and control of energy:

You’ve just published a book called The Energy of Nations. Could you just tell people in a nutshell what they might expect to find in there?

I worry that the energy industry is in the process of repeating systemically the mistakes of the financial sector, and on multiple fronts.

It’s not all bleak because I think the neuroscientists also tell us that we have this great yearning as human beings for community and all the rest of it, and individualistic or selfish, perhaps what people on the right of the political spectrum constantly try and persuade us that we are. That all points towards the possibility of a road to renaissance and that’s why I titled the book The Energy of Nations: Risk Blindness and the Road to Renaissance. I talk about the importance of things like the Transition movement as the building blocks for this road to renaissance.

What can we learn from Germany, do you think in terms of practicality and in terms of ambition?

I think that it’s altogether very encouraging indeed. We can learn that it’s possible to renewably power a modern economy like Germany 100% with renewables, and do it much quicker than people anticipate. We can also see that the ownership structures can change radically, so that people power comes into the mainstream. As you know, more than half the renewable assets in Germany are owned by people, by people and communities.

That’s not just the small energy co-ops that are being set up by the multiple hundreds, but whole cities are talking about taking their own power into their own hands, even Berlin, with a membership movement to take control of the way that energy is created in cities. Germany is vital in the whole narrative going forward.

You talk about a localisation mega-trend and peer-to-peer lending and community-led initiatives like Transition and others, need to sit alongside the bigger things as well in terms of investment etc. How do you see those two things sitting alongside each other?

I think inevitably what’s going to happen whether people like it or not, is that communities, towns, individual houses are going to get themselves off that grid and the march of technology is going to help them. People and communities are going to become increasingly self-sufficient. When you do that, where’s the role for the national electricity grid, at a certain point? Where’s the role for a giant company like National Grid?

I think it’s an exciting vision, because you get all sorts of spin-off benefits from a transition of that kind. I don’t have a blueprint template of how we get from A to B, the globalised national, international infrastructure world to the localised world. I think that’s a work in progress that we’re all going to have to be active players."

You say at one point in The Energy of Nations, “I’m now convinced that capitalism as we know it is torpedoing our prosperity, killing our economies, threatening our children with an unliveable world. It needs to be re-engineered root and branch.” Does capitalism still have a place? What would re-engineered capitalism look like, and what does that mean for economic growth?

It depends on your definition of capitalism. Economic growth as it’s currently measured? I think its days are over. That used to be that the mantras of the people classified as the lunatic fringe, but not any more. You can read this kind of thinking in the commentary in the Financial Times. In a world with a global economy on route to six degrees, how can such a system be viewed as sane any more, much less survivable?

The more of us who start using this language, this new type of capitalism – others won’t call it capitalism at all of course – a new type of capitalism. Certainly my point in the book is that modern capitalism, the form of capitalism that’s evolved in the last few decades is basically suicidally dysfunctional and we have to turn our backs on it and introduce an alternative set of systems. That’s what I think we have the opportunity to do in building the road to renaissance."

The interview also raised the same question I have discussed in the Musings and blog: What lies beyond the current failing, unsustainable versions of Capitalism and Socialism? I think the basic answer is coming into focus: since the current iterations of Capitalism and Socialism are both systems of increasing centralization (and thus of systemic fragility), the future belongs to the Web-enabled, localized but globally networked models of decentralized capital, currencies, ownership, production and distribution.

As I have noted before: Central planning perfects the power of threats to bypass the system's defenses.