It was roughly two years ago, October 15, 2009, when I got a call from a desperate lady, panicking, as she asked for my help.

Being a futurist, I don’t get many calls from people who urgently need my help. Futurists are rarely first responders.

As she described the situation, telling how a young boy’s life was at stake, and the situation was far too complicated for normal emergency rescue crews, she somehow thought of the DaVinci Institute.

“You work with some of the brightest minds in the world and this situation is going to require a very ingenious solution.” Her voice was dripping with trepidation and fear.

Moments after receiving her call, I turned on the television because the problem she described was quickly unfolding across the nation, gaining national attention, as a six-year old boy named Falcon had somehow gotten trapped inside a small weather balloon that was flying over the Midwest. Yes, this was the legendary balloon-boy incident, gripping the nation in panic and fear until the entire hoax started unraveling.

At the DaVinci Institute, we often tackle complex problems to find solutions. But in today’s world, one of the biggest problems threatening society today is complexity itself. Here’s why.

Collapsing Civilizations

In 1988, Joseph Tainter wrote a disturbing book titled The Collapse of Complex Societies. Tainter’s work enabled him to take a close look at some of the most sophisticated societies throughout history to gain a better understanding about what led to their fall – the Roman Empire, the Anasazi In Chaco Canyon, the Mayan Civilization, ancient Mesopotamia and several more.

Every one of these groups had rich traditions, complex social structures, and advanced technology. But despite their cleverness, they all collapsed.

These once great civilizations, all separated by time and distance, created systems for living and working that were not flexible enough to survive the demands of change.

With architectural details still offering only sketchy insight at best, the rapid declines were invariably triggered by a single incident that caused the entire house of cards to crumble.

For people living in each of these cultures, it became impossible for any one person to understand the interrelationships and intricate workings of the whole. While the triggering event may be considered a classic blunder by today’s standards, it would have been impossible to predict at the time.

Re-Inventing Classic Blunders

Industries today operate, in many respects, like these ancient cultures, but heavily influenced by external forces.

In September last year, Blockbuster Video filed for bankruptcy protection amidst a rapidly declining video store rental market. At their peak, this well-know brand boasted over 4,400 stores around the world.

Over the coming years, every one of these stores will be closed, replacing people with machines as they try to re-engineer their business model around a faceless vending operation, and eventually they too will disappear.

Video rental businesses are going the way of the Yellow Pages, travel agencies, and, in earlier days, blacksmiths, telegraph operators, and livery stables.

The difference today is a well-connected world that enables us to learn about the signals of change before the bulk of the change actually occurs.

Unlike the slow moving cultures of the past, where every change took a generation or two for people to adapt to, business opportunities today can be capitalized on in a matter of days. These businesses are being created around fragile structures that can cause entire industries to grow and collapse in what would seem like fleeting moments in any history book.

50% Unemployment

One topic receiving considerable attention today is unemployment. The trappings of modern employment have a relatively short history with an entire body of regulations building up around the employer-employee relationship to help define an equitable working arrangement.

At the same time that employment law is being defined to the nth degree, technology is being developed to disrupt the human need for traditional workers.

Automation comes in many different shapes and sizes, sometimes hardware, sometimes software, that causes the need for human labor to drop precipitously.

Since business has an obligation to hire and employ the fewest number of people it can get by with, most are quick to jump on any labor-saving automation they can reasonably implement.

Many of these automations eliminate as many as 10,000 people at a time. Just as email has eliminated the need for mail delivery, electric cars will eliminate the need for car mechanics.

These types of automations are being introduced into society with ever-greater frequency. Much like a giant elephant stomping across the employment landscape, huge numbers of jobs are being eliminated every time a foot hits the ground.

A research group we have at the DaVinci Institute has been looking closely at the future employment issue and whether we are destined to reach something as devastating as 50% unemployment.

One conclusion we reached is that every industry will indeed go through a period of 50% unemployment, eventually.

In the 1700s over 97% of the people in the U.S. were involved in agriculture in one way or another. Today that number is 1.4%, yet we produce far more food. Agriculture is an industry that has gone through several iterations of 50% unemployment.

Similarly, in 1970 the U.S. steel industry employed 531,000 workers who produced 91 million tons of steel. By 2006, the industry dropped to only 159,000 workers, yet they produced over 106 million tons of steel. Again, this is an industry that has gone through multiple iterations of 50% unemployment.

Neither of these industries has collapsed, but they look radically different than they did a few decades earlier.

The Engines of Job Creation

In a recent column I asked the question – “Is there such a thing as a “forever” job, a position that will endure forever through time?” Will we always need policemen, firemen, teachers, farmers, doctors, and nurses, or is it possible that those professions will also go away?

One astute reader commented that we will always have a need for “fathers” and “mothers.”

Excluding these two non-paid professions, if we start with the premise that there is no such thing as a forever job, that all jobs will eventually be replaced, we can logically conclude new jobs will be needed to take the old one’s place.

Going one step further, if we assume the pace of life is constantly speeding up, we must also consider the possibility that jobs will disappear far faster in the future than they do today. Certainly there are no guarantees we will stay on this torrid pace of change, but for the time being we will need to quickly make adjustments along with all other aspects of society.

For this reason, the next obvious question is whether or not we can create new jobs as fast as the old ones go away? And if not, will we suffer the same fate as the Romans, Mayans, and the Anasazi.

In a closely linked, interdependent world, every change will cause ripple effects that reach into people’s lives, even those working in industries seemingly unrelated to what originally happened.

Change does not happen because everyone gets together first and decides a change is going to happen. When the stock market started collapsing in 2006 and 2007, it wasn’t because there was some grand conspiracy to cause entire industries to fall apart. Everyone loses when that happens.

Final Thoughts

Tainter concluded that when society’s elite members add one layer of bureaucracy too many that it becomes the proverbial straw that broke the camel’s back.

Complex societies collapse because they are too inflexible to respond. From our vantage point, this can seem rather mystifying. Why didn’t they just re-tool and make things simpler? The answer Tainter gives is a simple one: When societies fail to respond with orderly downsizing, it isn’t because they don’t want to, it’s because they can’t.

Even when moderate adjustments can be made, they tend to be resisted, because any simplification is too disruptive for the elite among us. Collapse becomes the last remaining option on the path to simplification.

By Futurist Thomas Frey

Author of “Communicating with the Future” – the book that changes everything


17 Responses to “Why Industries Collapse”

Comments List

  1. <a href='http://Market-Engineering.com' rel='external nofollow' class='url'>Gary Lundquist</a>

    Tom, The logical step is to downsize Humanity. For every job lost, we have one fewer children. It won't take long. You've just nailed it. If no Human has a job, then why have Humans? Perhaps just enough for the zoo. Gary
    • admin

      Gary, If no humans existed, no one would care. Great companies are never created because they create great balance. Rather, great companies are formed around a great imbalance - something they do better than anyone else. Similarly, a world that achieves perfect harmony with nature is one without purpose for existing. Tom
  2. Nancy Garrett

    In my working lifetime, I've enjoyed being a part of the changes evidenced in such diverse objects as punched cards, PC boards, and the operations involved with the typed word and the harvesting of sugar cane. Awesome. I still hang on to reading from paper and I avoid texting. And I don't use a microwave. So, guess I qualify as an oldie as opposed to any sort of futurist. However, some years ago I came across John Keegan's "The Mask of Command" which chronicled how military leaders through the ages dealt with changes. I believe it was Asimov who wrote the story where our planets were governed by various large industries (IBM, etc.). Between these two concepts I suspect we are back to the wonder of the human and his tremendous ability to not only come up with a match but still be able to strike it.
  3. BJ

    It seems that we have one thing that prior collapsing civilizations lacked - communications. Surely there were many, like those writing here that saw the disaster coming. The difference was that those in the middle who saw the problem but lacked power to initiate changes themselves couldn't find each other in the past. Now the Internet allows those of us who see the problems to collaborate with each other to address them independently of the dying bureaucracy. While it's true you can't opt out alone, survivalists not withstanding, larger groups of people can elect together to do it differently. For example, the local food movement and transitions towns are doing things differently in a non-confrontational way.
    • admin

      BJ, Yes, you are correct about us having a communication system that alerts us to every possible shift in market conditions so industries can quickly respond. At the same time, that same communication system is allowing us to build fragile companies and fragile industries that do not have the long-term durability of ages past. As a result, we will be seeing companies and industries appear and disappear in record time. Tom
  4. <a href='http://Market-Engineering.com' rel='external nofollow' class='url'>Gary Lundquist</a>

    Tom, I wrote all of this two decades ago. I think I gave you my "Way of Change." Premises: Change will never, ever be as slow... as it is today. The only way to manage change is with change. The cycle is an ever accelerating curve. >> Humanity can't handle the curve today, and the problem will only get worse. >> If there are no productive jobs for humans, then we need to reduce human population. Indeed, we need that just to save our ecosystems. I've suggested that 3 billion is a good goal. Your curves suggest that when we reach 3 B, we will need to work toward 1.5 B. Best, Gary
  5. Eduardo Josè

    Good day ...I feel that we don`t need to work all humans to have food, clothes, home, and the more basics things to live a decorate living. With just few of us, we can create the better for all the rest. Now, GOD, is True, Wealthy and Kindness, so we just need first follow his steps, and our climate living will be much better. with all respect.. Ed.
  6. Dennis Garlington

    Blockbuster’s bankruptcy liquidation proved the end of video rental stores and the predicted success of delivered video rentals. Once the darling of Wall Street, it died because its owners grew lazy and its managers were blind to alternatives. …all the more reason for business schools to teach futuring. You are right to poke about on the issue of job creation. I don’t see any reason why the equations that define capitalism must include labor. Truly dexterous robots are coming. And it won’t be that long until Watson becomes Mycroft. What then of economics? Gene Roddenberry believed we are on the verge of moving from the realm of necessity to the realm of surplus and freedom. And Henry Ford once complained, “Why did you bring me people? I only wanted hands.” Perhaps one requires the other. But who can doubt that our future will require more than “moderate adjustments”?
  7. <a href='http://www.tmg-strategy-facilitation.com.au' rel='external nofollow' class='url'>Peter Boyce</a>

    Many, many jobs in existence today that would have been unimaginable when 97% of Americans were involved in rural production, for example. As productivity, automation and elimination do ther "creative destruction" thing, we invent new ways to occupy our time and concommitantly, employ the innovators, adapters, commercializers and users of that which we invent. I don't have any concern about humans running out of ways to continue this process and I doubt we are anywhere near the peak of our capacity to create, innovate and explore. For as long as we want it to be so, there will be plenty of jobs to be done.
  8. <a href='http://www.shantijuniors.com/' rel='external nofollow' class='url'>Play School Activities</a>

    The difference was that those in the middle who saw the problem but lacked power to initiate changes themselves couldn’t find each other in the past.
  9. McHugh Thomas P

    In reference to the sentence; "Just as email has eliminated the need for mail delivery, electric cars will eliminate the need for car mechanics." Electric cars will create the need for electric car mechanics.
  10. <a href='http://waynegillan.com.au' rel='external nofollow' class='url'>Wayne Gillan The Profit Booster</a>

    Great info. Downsizing humans? Im not sure that is going to happen.
  11. Roger Loving

    Thomas Frey ends with: "Even when moderate adjustments can be made, they tend to be resisted, because any simplification is too disruptive for the elite among us. Collapse becomes the last remaining option on the path to simplification." Near as I can tell by observation, our society doesn't seem to have a problem when Tainter and Frey's "elite among us" enjoy a special lifestyle earned as the reward for accomplishments. We all seem to think that's fair. But does society benefit when an elite lifestyle is passed along as inherited wealth based on relationships rather than accomplishments? There's a pretty obvious problem looming there; it's a problem that society society makes for itself when it creates an unproductive elite. One solution to that problem which was much discussed a few decades back was to increase inheritance taxes. Wait a minute!! ....Increase Taxes!?! But hold on, there are some rather large benefits to increasing inheritance taxes, and no very clear losers. For beginners, it solves the common societal problem of an under-productive elite. That's huge. And such taxes could be much higher than today without penalizing anyone. After all, it is an "inheritance tax" we are talking about here. Nothing prevents a successful person from distributing his assets to favorites during his lifetime. As a result, pure inheritance taxes could be set far higher than today; the benefits of rates as high as 100% have been discussed. Again, because these are inheritance rather than gift taxes, even these high rates would still allow the elite to satisfy their very human impulse to give their advantages to their own children....but only while alive. And it's possible that some people would prefer to give back more broadly to a whole society rather than to a narrower group of individuals. Let's hope so, because for them it becomes automatic and inescapable. Does such a program stand a chance? Probably not. After all, it would have to be voted into being by the very elite whose power it restricts. For that matter, I'm not even sure that such a tax - or any tax that puts society above individuals - is a good thing. Personally I'm still working that one through. But if - as seemingly hypothesized by the authors - that sudden collapses are caused by the burden of an unproductive bureaucratic elite, such a tax would work to prevent that from happening. It would remove one problem from an afflicted society. Seems worth thinking about.... Roger Loving (from conversations with Dwight Shellman)
    • FuturistSpeaker

      Murali, Webmaster will be around for a while, but its a good idea to think in terms of apps, and mobile ones at that. The next big move will be to wearable and imbedded technologies. Thomas Frey

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