Houses of Cards
How resilient are globalized societies?
Fortitude Ranch would look a lot like a summer camp, if it weren’t for all the guns. It is a five-compound chain of doomsday accommodations. And you can buy a franchise license for 40 thousand dollars. Think bomb shelter mixed with rustic country getaway, but only run like a McDonalds.
Accommodations at Fortitude Ranch locations run from basic and shared to private and comfortable. It all depends on how much you are willing to spend. Members can spend up to two weeks per year at the camps, but most of the year they sit awaiting the apocalypse. Beneath the rustic cabins there are layers of concrete and steel, which protects a bunk stocked with ready-to-eat meals, canned food, water, and an armory. Should life remain habitable on the surface, there are chickens, sheep, and rabbits to supply meat and eggs.
This all strikes me, to be frank, as a bit much. Yet nothing seems more characteristic of today’s culture than the gnawing worry that the world is a house of cards waiting to collapse, even while it provides an unprecedented level of abundance. For buyers of doomsday camp timeshares (or the billionaires building their own private bunkers), the disarray shown during the pandemic exposed the instability of the world economic system. The chronic dysfunctions that have reemerged after each subsequent world event (e.g., the wars in Ukraine and Gaza) appear to show that the seeming resilience of a globalized market is really a façade. After it falls, the deluge.
It’s worth considering how robust the great economic efficiencies of globalized world system actually are. They have come with a set of complex conditions that has undermined the world’s response to not just the coronavirus but to global disruptions of all kinds. When Russia invaded Ukraine and when the Evergreen temporarily blocked the Suez Canal, supply chains were thrown in disarray. Shipments get delayed weeks, if not months. Costs increased dramatically, and firms found that they don’t have what they need to make their products. China’s planned attack on Taiwan, which produces 93 percent of the world’s advanced semiconductors, could set the global economy back by 20 years. One electronics consultant stated, “It would make Covid seem like a walk in the park.”
The question may no longer be if we will soon be hit by another global disruption to that system but when. Coming to understand these conditions, and their inherent risks, we are faced with the possibility that globalized society is a disaster waiting to happen.
The Costs of Efficiency
In order to understand the way globalization works today, we must go back to the early days of the industrial revolution. We must grasp the costs and risks of efficiency. Before he invented the modern steam engine, James Watt worked at the University of Glasgow, where he was responsible for repairing a model of the Newcomen engine. It was the steam engine that was used to drain water from the coal, tin, and copper mines of the era. But these workhorses gobbled up immense amounts of wood and coal.
Watt immediately recognized the inefficiencies and limitations of Newcomen’s invention and set about trying to build something more efficient. The Newcomen engine used a boiler to fill a cylinder with steam. Once full, cold water was shot in, causing the steam to condense and the pressure to drop rapidly. The resulting imbalance of pressure on the piston drives the piston down. Newcomen engines used so much fuel, because they were constantly reheating the cylinder, only to lose that heat when the cold jet of vacuum-producing water was injected. And they only produced power on the downstroke. Watt’s central insight was to design an engine where the condenser and cylinder were separate.
It took Watt two decades to develop an engine that did work on both the up and downstrokes of its cycle. But the gain in efficiency change came with costs. The previous Newcomen engines were robust enough that some stayed in service for as long as a century. In contrast, Watt’s redesign proved finicky, requiring constant attention from a bevy of human engineers.
The case of Newcomen and Watt illustrates a general tradeoff in technological progress: Improvements of efficiency often demand an equivalent increase in complexity. While there is nothing wrong with that in theory, in practice increased complexity usually results in greater unpredictability.
Coping with these unforeseen challenges has historically moved knowledge and innovation forward, which is exactly what happened with Watt’s steam engine. The oak logs that served as rocker beams for Newcomen engines could not handle the back-and-forth forces of the later Watt engines, so metal substitutes had to be developed. Watt’s devices were far more sensitive to leaks, so early engineers explored new seal materials and alloys, especially as boiler pressures increased. Most of all, manufacturers and operators had to recognize the engine’s sensitivities, learning to be more careful and vigilant with their machining and maintenance practices.
Although probably no one disputed whether or not these tradeoffs were worthwhile at the time, it is still important to recognize that they existed. Watt’s engines economized fuel, but they required vast networks of knowledge, manufacturing, and infrastructure to function. While the Newcomen engine could have for all intents and purposes been constructed and operated with materials readily at hand and local know-how, the Watt engine was more a sociotechnical system than a tool. Without a supportive network of organizations and other technologies, it would cease to be a useful technology. Put another way, and as we saw with COVID and other global disruptions, when one part of this complex system breaks, the entire system of interdependency is called into question. Sometimes disastrously.
The Challenge of Complexity
As complexity and interdependence compounds, the potential for catastrophe grows apace. This was demonstrated in 1979, when routine maintenance resulted in a bewildering series of events that almost led to a nuclear disaster. Night shift operators at the Three Mile Island nuclear reactor worked to clean the filters that kept the steam generator free of impurities. Unfortunately, they didn’t know about a stuck-open check valve, which allowed water to leak into an air line, which led feedwater pumps to shut off, which caused the turbine to trip, which cut off the reactor’s coolant flow.
In anticipation of just such a crisis, when a loss of cooling causes the core temperature to rise, the plant’s engineers had included emergency backup pumps in their designs. But unfortunately maintenance workers had unintentionally left valves closed in the backup system that should have remained open. From there the process went over a technological waterfall—a relief valve failed to close, leaking precious coolant, but faulty lights in the control room misled operators about what had happened, and then other small failures and consequences began to build.
As the plant began behaving in ways that made no sense to the operators, they started to doubt whether the vast array of dials and gauges in front of their eyes were telling them the truth. Records of control room conversation found operators exasperated and confused. These were “failure modes” they “never encountered before,” and they felt like they were “flying blind.” It was days before they felt like they had the reactor in complete control. Although there is some disagreement about the extent and consequences of released radiation, complete disaster was fortuitously averted.
Although official accounts blamed the operators for the near meltdown, a more charitable view is that the accident was a trap laid for them in the design of the technology itself—those dizzying arrays of piping, control systems, wiring, pumps, and motors, all interacting with one another in unanticipated ways. As sociologist Charles Perrow outlines in his analysis of the accident, nuclear plants have two characteristics that render them difficult or even impossible to perfectly manage: They are complex and tightly coupled.
The combination of these features, according to Perrow, meant that large-scale accidents like Three Mile Island were not entirely exceptional but were rather a “normal” occurrence. With enough time, disaster was inevitable. The unpredictability of complex technologies, when combined with designs that allowed small errors to snowball into larger crises, was simply too much for ordinary humans to master.
Nuclear skeptics, like Perrow, believe that the light-water reactor design cannot be reformed. The Fukushima disaster only seemed to reinforce this view. Apart from the more obvious oversights such as failing to design for large tsunami events, post-accident reviews uncovered inadequate pipe supports and emergency pressure relief valves that became only more difficult to open as reactor vessel pressure increased. For skeptics, such problems are not mere blunders but further evidence that nuclear energy is a dangerous progress trap.
The nearly averted disaster at Three Mile Island exposed a cost of efficiency that had previously escaped unnoticed. While the breakdown of a Watt steam engine left its owner in difficult economic situation, the consequences were not dire. Achieving efficiencies at ever larger scales only seems to multiply the challenges and to introduce a whole new cost: the potential for catastrophe.
The Globalization Machine
As the pandemic wore on, it became clear that controlling a modern global epidemic, and it’s impacts a globalize economic system, was more like managing a runaway nuclear meltdown than responding to routine natural disasters. Germany’s industry has never recovered from being cut off from Russian gas after the invasion of Ukraine (combined with their decision to shutter their nuclear plants). Future pandemics, wars, and other disruptions threaten like a rising tsunami tide to incapacitate the global interconnected systems of trade, travel, and healthcare.
As with Watt’s engine, the ultimate fragility of the global system is an inherent aspect of its efficiency. That efficiency is partly the result of the life’s work of Taiichi Ohno, a Toyota engineer born in 1912, who had the central insight to reframe any slack in the process of producing cars—including inventory—as waste. By developing supply chains within which inputs can be ordered, manufactured, and delivered “just in time”, production lead times could be dramatically lessened and output per employee significantly expanded. A testament to the fruits of this approach, labor productivity among Toyota assembly workers and suppliers grew an average of 8% per year throughout the 1970s as the company fully embraced lean production.
Already-developed nations looked on with envy. One of the central challenges faced by already industrialized countries is that growth eventually slows down. Once an economy has been saturated with machines, the returns on investment diminish and new economic growth depends largely on ongoing innovation, which is far from guaranteed. Toyota’s lean approach offered a seemingly more straightforward pathway out of stagnation, albeit one that required operating on ever thinner margins.
Although globalized trade has waxed and waned throughout the centuries, the development of just in time manufacturing marks the start date for the contemporary paradigm of globalization. It flags the beginning of more intricate sociotechnical systems of manufacture, transport, and sale. This paradigm is defined not just be the existence of globalized trade but also by highly interdependent global supply chains based on “just in time” deliveries. This has even been extended into the consumer side, where “dropshippers” purchase and resell (sometimes fake or counterfeit) Chinese goods that they never actually handle themselves.
And so we arrive at the recognition that globalization is a kind of sociotechnical system—not too different from a steam engine. True, we tend to see technology and society as distinct spheres of reality, but, like globalization, Watt’s engines only worked through the integration of the technical and social components. Piston rings couldn’t adequately seal the cylinder without human organizations designed to develop better materials, ensure manufacturing tolerances, and enforce adherence to proper maintenance schedules and procedures.
But globalization is a sociotechnical system at an almost baffling scale, and it has been self-organized rather than consciously designed. Its technical parts—ships, factories, and computer networks—are seamlessly interconnected with compatible social systems—consumer markets, business strategies, financial arrangements, and trade regulations—in order to keep a vast machine of material production running.
COVID, and other global disruptions, exposed the weaknesses in these supply chains, which, are even more complex and tightly coupled than Three Mile Island. As Ian Welsh noted in 2010, “Our society, as a whole, has no surge capacity protection, no ability to take shocks. We have no excess beds, no excess equipment, no excess ability to produce vaccines or medicines.”
When Covid-19 first broke out in China, it temporarily cut off the United States and other nations from their main supplier of sanitary and surgical masks. No sooner was Italy locked down amidst the first serious outbreak outside of China than the world realized that the special swabs used for nasal testing came only from a small town in Maine and Lombardy, Italy. Meanwhile European automakers worried about maintaining production when part of the supply of necessary electronics for their vehicles were locked away in Italian factories. These disruptions again exposed the paradox of efficiency: The more productive the system was in good times, the more precarious it would be when things went bad.
Combating these disruptions would be like keeping a giant overworked steam engine running in the middle of a parts shortage after it just sprung a dozen leaks.
The virus’s movement was aided by not only by the increasing frequent and rapid movement of goods but also of people. International tourist arrivals increased from 25 million in 1950 to 1.4 billion in 2018, a 56 fold increase at the same time that the world population merely tripled. All this travel provides new opportunities for emergence of novel diseases to rapidly develop from local outbreaks to full-scale pandemics, creating pathways of viral spread to even remote rural villages. More tightly coupling the world’s population centers only diminished the already depleted slack available within systems for detecting and mounting a response to highly virulent diseases.
Large-scale epidemics obviously precede modern globalization and have complex roots, but just as accidents in early industrial factories were far different than those taking place the nuclear reactors and sprawling petrochemical plants, outbreaks like Covid-19 now challenge us in new ways. While our understanding of virulent diseases as well as our public hygiene infrastructures have advanced considerably since the time of historic epidemics, contemporary pandemic challenges are much more ominous in terms of the potential scale of the consequences, the pace of viral spread, and the complexity of global-scale coordination.
Consider, for example, the example of livestock production increasingly dominated by “concentrated animal feeding operations” of thousands of animals. Ever higher levels of scale and specialization promise meat for global citizens increasingly able to afford it, but researchers have found that nearly all conversions of avian flu strains into highly pathological states have been detected in commercial poultry systems and primarily in countries seeing an intensification of production, making such factory farms ideal for breeding novel, fast-spreading pathogens.
Even without the threat of a raging pandemic, the global supply chain is frequently in disarray. The head of a German logistics company refers to the 2024 market as “COVID junior.” “In a lot of ways we’re right back to where we were during the pandemic,” she adds. “It’s all happening again.” Especially when ships have to avoid key routes, like the Red Sea, ports gets jammed. Delays cascade through the tightly coupled system, resulting in massive cost increases, sometimes doubling or more. Surges overwhelm longshoreman, truckers, and railworkers, many of whom have threatened to walk of the job unless they are paid equitably for their now-harried working conditions.
Modern globalization eliminates slack in critical supplies of goods and services, removing friction in normal times, but it also removes the inventories that might serve as “brakes” during disruptions. The normalization of global travel increases the potential pace of spread of new diseases, while the industrialization of meat production and other virogenic activities raise the likelihood of novel emergent viruses. “Chokepoints” in global supply chains are increasingly vulnerable to accidents or intentional attack. Ships have already been significantly delayed and rerouted because of the Houthis in Yemen, exposing the possibility of major disruption should Iran close the Strait of Hormuz or a conflict with China close the Malacca Strait. Combating these disruptions would be like keeping a giant overworked steam engine running in the middle of a parts shortage after it just sprung a dozen leaks.
Normal Collapses?
If Charles Perrow were alive today to comment, he would likely seriously consider the prospect that, despite our scientific and technological advancements, large-scale pandemics and other major crises will remain a normal feature of a lean and international-travel-friendly globalized system. Cascading supply chain disruptions and shortages may turn out to be an inevitability.
Those who are pessimistic about our ability to manage complex and tightly coupled sociotechnical systems will agree that the only reason it has taken this long is that humanity has simply gotten lucky. Previous viruses like SARS and MERS lacked the right features for rapid spread, never gaining sufficient momentum to deeply disrupt healthcare and economic systems. Globalization has only recently achieved the level of complexity and tight coupling it was destined to reach.
Our current globalization paradigm, in this view, is a precariously complex specialization, one that we may be better off replacing than reforming. Critical needs and production of all kinds should be onshored, and perhaps even stockpiled, even if greater efficiencies could be realized elsewhere.
Doomsday preppers and members of Fortitude Ranch are themselves essentially onshoring their needs, but in a very extreme way. Stockpiling food and medicine, learning survival skills, reading up on how to garden, hunt, and fish, and preparing homestead, they hope to reduce the necessary size of their local economy to handful of people. The task is incredibly expensive, requiring that they replicate much of what the global market provides them, but on a tiny scale. Should economic disaster not strike, it will also have been incredibly wasteful.
Complexity can’t bite us back, if we don’t have it in the first place. But that would mean forgoing many of the benefits of globalization. Despite all the critiques of global trade, people do enjoy a greater variety of far cheaper goods as a result. Poverty has been lessened in some countries as a result of it, albeit sometimes at the cost of worsening inequality or currency crises. Finally, there are potential climate benefits to globalization, insofar as people are able to direct their purchases of furniture, beef, and other products to the nations that can produce them more sustainably.
But are we really left with a “take it or leave it” decision? In the next installment, I’ll look at the potential for better managing the complexity of the global market society, and the political tradeoffs that doing so brings.
 | A guest post by
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Another place where the global economy could have a single point of failure: Spruce Pine, North Carolina, which produces about 70% of the world’s highest-purity quartz, a key input in chip manufacturing. It’s only accessible by a narrow, landslide prone road, which means if something happened to it like, say, a hurricane, much of the semiconductor industry would falter and the pivot to smaller quartz mines in Quebec, Australia, the Arabian Shield, and Russia would be painfully slow.