Dmitry Orlov, The coming collapse

Dmitry Orlov, a Russian immigrant, moved to the Boston area just prior to the collapse of the Soviet Union.

In 2011, Dmitry wrote the book, ‘Reinventing Collapse: The Soviet Experience and American Prospects’, detailing his experiences in the Soviet Union and the parallels to the US experience.

I have highlighted a few notes from his lecture series and book.

Orlov's analysis, gained through personally experiencing the Soviet collapse, shows us that this collapse was more a factor of economic problems caused by a crash in oil revenues than by the Regan/Brezhnev arms race that was credited by so many westerners for fomenting this collapse. When the oil-glut of the 1980's caused the price of oil to fall radically, the Soviet income from their inefficient state run petroleum industries crashed (it basically cost them about as much to pump and refine their oil as the export price per barrel), and the result was a cash flow crunch that could not sustain the rest of their state-run economy.

The US faces the same conditions that the Soviet Union had faced prior to their collapse.

·        Out of control government spending

·        Rising unemployment

·        Devaluation of the currency

·        Reduction of goods produced

·        Reduction in demand for domestically produced goods

·        Civil unrest  

·        A society that demands more and more handouts from government

·        Imbalance in Import/export

·        Unsustainable debt

·        Fabric of human decency unraveling

·        Polarization between groups of people (finding the scapegoat for the troubles)

·        Corrupt political system, incapable of reform

·        Delusions of grandeur which prevents a realistic discussion of facts

By the end of the Soviet Union the delusion of grandeur kind of wore thin. Everybody knew that the problems weren’t just cosmetic. It wasn’t just a rough patch. You know, it wasn’t something that, “Oh, we’ll just get over by trying the same thing a little bit harder.”

People realized that what they had been trying for the past 70 years basically didn’t work.

But in the United States, people are, most people are very far from realizing that what they’ve been doing basically doesn’t work and will probably be devastating. So there isn’t really that realization at all.

A national collapse has multiple aspects to it. In 2007 we had witnessed a burst in the housing bubble and it affected the stock markets, but politically, socially and culturally the effect was not major. In the coming collapse all phases of life will be dramatically affected; financial, commercial, political, social and cultural; as happened in the USSR.

In the Soviet Union, there was an instantaneous ‘snap’ and everyone knew that the party was over. The most compelling example of lots of minds suddenly going "snap" is, to my mind,  happened with Boris Yeltsin standing atop a tank, and being asked the question: "But what will become of the Soviet Union?" And his answer, pronounced with maximum gravitas was: "Henceforth I shall only refer to it as the FORMER Soviet Union." And that was that. After that, whoever still believed in the Soviet Union appeared as not just foolish, but actually crazy. For a while, there were a lot of crazy old people parading around with portraits of Lenin and Stalin. Their minds were too old to go "snap".

A list of comparisons and contrasts between the US and USSR are shown below to show the conditions in society.

Family and civic life

In the Soviet Union two and three generations of a family lived in government supplied housing free of rent. The family unit relied on itself for survival. Money only had a token value even before the collapse. The standard of value or barter was vodka. The families were close-knit, not terribly happy, but each member had to meet their expectation to fulfill the needs of the family.  The family has a plot of land on which they grew enough for themselves and enough to barter.  The family also lived near public transportation and had access nearby businesses or other family members. 

After the collapse, not much had really changed in the civic life and family life in the Soviet Union; just the rations became smaller.

The US consists of isolated individuals. Example, a family in Pennsylvania has 2 children; these children go to college and then one gets a job in Florida and the other gets a job in Texas. The family, then, communicates by skype. The family and its members are solely reliant on their jobs for income; ie food, shelter, transportation, etc.

After the collapse the US family will be isolated from each other and helpless; but with a sense of entitlement. It has nothing to barter with and incapable for supplying its own needs. Further, the housing will be repossessed, producing a flood of refugees. The result is that people will be isolated in a sea of strangers, with nothing. Families do not grow their own food and without oil and money food can’t get from the growers to the consumers.

There’s this iron triangle of House-Car-Job, and the entire landscape is structured so you have to have all three or your life falls apart. People have to be creative in escaping from that constraint.

Energy

The US and Soviet Union are vastly different in their approach to energy.

In the Soviet Union there was a surplus of oil with the government being funded by exports to Europe and Asia. The government controlled the creation and distribution of the oil exports and could centrally plan it for maximum returns.

During the collapse, the government instituted price controls and mandated a significant amount of supply for the businesses and citizens; ensuring survivability. Rationing and shortages were common, but it was dealt with.

The US imports 65% of its oil and doesn’t tap the reserves. The companies that drill for the oil and distribute the oil always sell to the highest bidder. 

During the collapse, the US companies and citizens will not be able to bid for the oil because they will not be able to compete with China, Japan or Europe for the oil. As a result, only pockets of the US will have access to energy.

Education

The Soviet education system was generally quite excellent. It produced an overwhelmingly literate population and many great specialists. The education was free at all levels, but higher education sometimes paid a stipend, and often provided room and board. The educational system held together quite well after the economy collapsed because it was small, efficient and self-sustaining. Universities sold their ideas and labor to private businesses. They also maintained farms and livestock, tended by the students.  The problem was that the graduates had no jobs to look forward to upon graduation. Many of them lost their way.

The higher education system in the United States is good at many things – government and industrial research, team sports, vocational training… Primary and secondary education fails to achieve in 12 years what Soviet schools generally achieved in 8. But the institutions are not sustainable or economically feasible.  The massive scale and expense of maintaining these institutions is likely to prove too much for the post-collapse environment. (Actually, the education system was not sustainable even in a good economy; it was just that the debt was covered over by a big credit card.) Illiteracy is already a problem in the United States, and we should expect it to get a lot worse.

This, of course, is all the more reason to remove one's children from state and state-supported education. Alternatives such as homeschooling and distributed/community-supported schooling can all continue in a collapse situation.

Marketplace

The US does not have an actual free market, but what it does have (a foul hybrid of state-controlled/state-influenced markets and free markets) has indeed failed during times of severe shortage. This lends further weight to the benefit of creating, supporting, and engaging in voluntary exchange and cooperation outside of state/corporate control.

This is not to say that there will not still be shortages, but relying upon the state and its corporate bedfellows to manage them is not a viable option.

It’s important to understand that the Soviet Union achieved collapse-preparedness inadvertently, and not because of the success of some crash program. Economic collapse has a way of turning economic negatives into positives. The last thing we want is a perfectly functioning, growing, prosperous economy that suddenly collapses one day, and leaves everybody in the lurch. All storms are advertised beforehand with the darkening clouds. No storm ever struck on a clear day without a moments warning. 

It is not necessary for us to embrace the tenets of command economy and central planning to match the Soviet lackluster performance in this area. We have our own methods, that are working almost as well. I call them “boondoggles.” They are solutions to problems that cause more problems than they solve.

Just look around you, and you will see boondoggles sprouting up everywhere, in every field of endeavor: we have military boondoggles like Iraq and Afghanistan, financial boondoggles like the doomed retirement system, medicare and welfare, medical boondoggles like Obamacare, legal boondoggles like the intellectual property system. The combined weight of all these boondoggles is slowly but surely pushing us all down. If it pushes us down far enough, then economic collapse, when it arrives, will be like falling out of a ground floor window. We just have to help this process along, or at least not interfere with it. So if somebody comes to you and says “I want to make a boondoggle that runs on hydrogen” – by all means encourage him! It’s not as good as a boondoggle that burns money directly, but it’s a step in the right direction.

Advice from personal experience

Certain types of mainstream economic behavior are not prudent on a personal level, and are also counterproductive to bridging the Collapse Gap. Any behavior that might result in continued economic growth and prosperity is counterproductive: the higher you jump, the harder you land. It is traumatic to go from having a big retirement fund to having no retirement fund because of a market crash. It is also traumatic to go from a high income to little or no income. If, on top of that, you have kept yourself incredibly busy, and suddenly have nothing to do, then you will really be in rough shape.

Economic collapse is about the worst possible time for someone to suffer a nervous breakdown, yet this is what often happens. The people who are most at risk psychologically are successful middle-aged men. When their career is suddenly over, their savings are gone, and their property worthless, much of their sense of self-worth is gone as well. They tend to drink themselves to death and commit suicide in disproportionate numbers. Since they tend to be the most experienced and capable people, this is a staggering loss to society.

If the economy, and your place within it, is really important to you, you will be really hurt when it goes away. You can cultivate an attitude of studied indifference, but it has to be more than just a conceit. You have to develop the lifestyle and the habits and the physical stamina to back it up. It takes a lot of creativity and effort to put together a fulfilling existence on the margins of society. After the collapse, these margins may turn out to be some of the best places to live.

Dmitry Orlov responded to the label of ‘cynic’ and ‘fear-monger’ by a member of the audience at the Heartland Institute in Chicago.

Some say, “The Soviets had little chance to make democratic institutions work.” That’s not entirely true. Perestroika and Glasnost were all about democracy, and in my opinion it had the same chance of success as the hopelessly gerrymandered system that passes for democracy in the US, (although much less than any proper, modern democracy, in which the Obama regime would have been put out of power quite a while ago, after a simple parliamentary vote of no confidence and early elections). The problem is that, in a collapse scenario, democracy is the least effective system of government one can possibly think of (think Weimar, or the Russian Interim Government) – a topic I cover in Post-Soviet Lessons.

Lastly, I don’t think calling me a cynic or fear-monger is exactly accurate: I’ve been in the US a long time, watching the system become progressively more dysfunctional with each passing political season. It seems to me that it is not necessarily cynical to be able to spot a solid trend, but that it could be simply observant.

In spite of all this, I believe that in every age and circumstance, people can sometimes find not just a means and a reason to survive, but enlightenment, fulfillment, and freedom. If we can find them even after the economy collapses, then why not start looking for them now?  

Some other advice that Orlov provided in the post presentation questions is that all 401k savings should be liquidated. Use the money to pay down debt, buy land and buy gold. “There is nothing good in store for your 401k. It will either dwindle down to nothing as the market collapses, hyper-inflation will render it valueless or it will be confiscated by the government as seen in Argentina, Spain, Portugal and England in the 1960’s.

http://transitionvoice.com/2011/08/no-shirt-no-shoes-no-problem-interview-dmitry-orlov/

http://fora.tv/2009/02/13/Dmitry_Orlov_Social_Collapse_Best_Practices

http://www.resilience.org/stories/2008-11-11/five-stages-collapse