Iceland is like a human experiment. Leave 300.000 people on an island and see what happens. In many ways, Iceland is a strange place, and what happens in Iceland on a small scale can reflect far bigger forces in this world. Marketing experts sometimes use Iceland to test-run products or marketing campaigns – of course without letting us know. If they are successful in Iceland, they take the campaign into the wider world. The same applies to ideas, literature, movies and music. Although there aren’t many of us we have somehow managed to create a pattern which isn’t monotonous – on the contrary, in fact; lots of opposites in proportion with the opposites found in larger societies. Here you can see clearly, how large ideas have a direct impact on people’s daily lives.

Throughout the centuries, Iceland has for the most part had little to do with the big events of world history. But you can nonetheless see a miniature image of world events. In Hofdi, a white timber house in Reykjavik, Reagan and Gorbachev met in 1986 – and this house marks the beginning of the end of the Cold War, the dissolution of the Soviet Union and the fall of communism. That meeting would eventually lead to the closure of an US military base in Iceland where a thousand people lost their jobs. Next door you can find the headquarters of Kaupthing Bank, a black building with shaded glass – where supercapitalism collapsed in Iceland following the collapse of Lehman Brothers – just before the entire global financial system went the same way. According to credit rating agency Moody’s, Kaupthing’s bankruptcy was the third biggest in the world since the year 1920 – amounting to just over 20 billion dollars. The bankruptcy of Glitnir Bank was the fifth biggest. Landsbanki wasn’t far behind. These amounts are all bigger than Enron - but nothing next to the biggest bankruptcy of all, the collapse of Lehman Brothers, which holds the record at just over 120 billion dollars. But for a nation of 300.000, these are astronomical amounts.

On a small island just off where Hofdi stands, there is a gigantic ray of light pointed skywards: the Imagine Peace Tower, which Yoko Ono had built in memory of John Lennon. From there you have a clear view into the fjord Hvalfjordur, with its gigantic aluminium smelter built by American company Century Aluminium. It uses up more electricity than a city of one million people. Not far from Hofdi stands a small steel hut; a tiny wisp of steam emerging from a chimney attached to the building: the only visible sign of the geothermal energy pumped out of the ground to heat up the city, the steel hut a mere fraction of one of the biggest geothermal energy programs in the world, which on a yearly basis saves thousands of tonnes in carbon fuels. It is thought that around 600 million people worldwide could make use of a similar technology as Reykjavik uses to heat its houses. To pump hot water from the ground where the earth crust is hot and thin - thereby solving around 10% of the world’s energy crisis.

Global problems do not really exist - only a collection of millions of local problems and challenges people are faced with in their daily lives. Ideologies, values, business, environment, peace, war - everything tangled up in an interconnected web of interest. By understanding how we react to local problems you can sometimes gain a slightly better understanding of how the world works. By looking at places like Iceland - you can sometimes see the web very clearly. In my book Dreamland I attempt to look at our own society and try to apply that understanding to the wider world. We can see how solutions become problems and vice versa.

The Chinese have a curse which goes like this: May you live in interesting times. In Iceland we are certainly living through some interesting times. At the moment, Iceland is going through enormous problems – local problems which are an offshoot of a larger world recession. We can see the endless dance between utopia and dystopia, the transition from ideology - to executing the ideas, to the fall and collapse of these same ideas. In the Soviet Union the total corruption and collapse of communism took almost 60 years - in Iceland supercapitalism killed itself in less than 7 years.

At the beginning of the 20th century, Icelandic people were one of the poorest nations in Europe, but immediately after World War II a fast-moving process of modernization began. Around 1980, conditions of life were on a par with the most advanced in western societies. A complete modern society with hospitals, schools, swimming pools, theatres and discotheques. The highest life expectancy, the infant mortality rate one of the lowest in the world. Almost 80% of all energy used in the country was local, pure, renewable and CO2 free – long before the wider debate on global warming began. We did not have to be very rich to build up this infrastructure of clean energy - on the contrary - we really did it because we were rather poor and could not afford to be totally dependent on imported coal and oil. Many places in the world could have done the same - but the ruling technology was coal, gas and oil dominated - often applied by default to areas that could have used geothermal energy. Icelanders had embraced modern life and kept its language, equality was rife, there was little class division, scientists were trying to manage the fisheries and create a sustainable industry with a quota system. The majority of Iceland consisted of unspoiled nature, and the nation had voted into office the world’s first democratically elected female leader. Everything seemed to be going in the right direction when the shit hit the fan.

In the five years between 2003 and 2008, the Icelandic banks had gone from serving a small local market to operating as large international corporations. They grew tenfold and had become 12 times the Icelandic gross national product, and they had their sights set even higher. When the global financial recession hit the world, Iceland became one of the worst casualties of the global financial crisis.

Economists speak of the invisible hand of the free market, correcting the market when an imbalance has arisen. In Iceland the imbalance had become such that you could say an invisible guillotine was formed. Practically all the power which had been attained by a few select individuals disappeared in a single week. The entire business elite was suddenly nowhere to be seen and a power structure with a grip on the media, business, even the arts, disappeared in a single week. A decades-long process of the privatization of state businesses and industries was almost fully reversed – without the revolution being ideological or bloody. A revolution without revolutionaries and such a void is an incredibly interesting position – frightening – full of uncertainties – very interesting times.

Dreamland – A self-help manual for a frightened nation was published in Iceland in early 2006. The Icelandic stock market had then risen from 1000 points in 2001 to 9000 points in October 2006. Some might express surprise at the book’s title – when Iceland was on its way to becoming an international economic marvel, how could the nation have been frightened at that point?

As early as 2002, it was clear there would be a downturn in Iceland in the year 2007. When the financial system collapsed in 2008, the IMF issued a statement on the causes of the Icelandic collapse:

Executive Directors observed that the Icelandic economy is at a difficult turning point. The long economic expansion, initiated by aluminum sector investments, sustained by a boom in private consumption, and fueled by ready access to external financing, contributed to a build-up of macroeconomic imbalances and financial vulnerabilities.

The collapse of the Icelandic economy can be traced to the year 2002, when politicians decided to concurrently try out two major social experiments. One of them was a revolutionary five year plan, on an almost soviet-like scale – to double Iceland’s electricity production in order to power an aluminum smelter owned by a large American company – Alcoa. This act alone – doubling the electricity production of a developed nation – is enough to kick off a gold rush. The energy would have sufficed to run a million homes; the scale equaled the energy requirements of Manchester, England. Waterfalls, valleys, terrains and the habitat of geese and reindeer were to be flooded behind the largest dam in Europe, a 190 meter high 700MW power plant. For a nation of 300.000, the investment was colossal – roughly three billion USD. The strength of the Icelandic krona grew greatly so that the entire world was practically on sale but local manufacturing and export industries suffered. Interest rates were increased to keep down inflation, but that had the opposite effect, they became a magnet for capital and speculators from all over the world. According to the government, the smelter and the dam would bring the nation much prosperity during construction – but it was a known fact that when construction ended there would be a downturn.

The three major banks were privatized and deregulated at the same time. The newly ,,free" banks made use of people’s optimism at the beginning of the energy gold rush, pumping the economy full of loans in foreign currencies. 100% car loans, 100% mortgages and 100% loans to people taking over solid, old family companies. A hike in housing prices made many feel as if they’d made tens of thousands of dollars. Icelandic men bought more Range Rover than whole Scandinavia put together. So we were really using ,,clean energy" to keep up a very CO2 intensive lifestyle, largely based on vanity rather than the love for driving the rugged roads of the highlands.

The huge Karahnjukar dam in east Iceland was almost complete. In order to avoid a downturn after the largest construction project in Icelandic history. The government aimed even higher with a new five year plan – to again double the energy production in Iceland from 2010 to 2015, with two new aluminum smelters - making Iceland one of the greatest aluminum smelting sites on earth. By far the largest electricity producer per capita in the world, by far the greatest nation of emitting CO2 in the world. We had created a sort of heroin economy – we’d become addicted to constantly building energy plants and aluminum smelters. During construction, more money flows into the country than after the factories commence production. During construction there are more jobs available than in a working factory.

Suddenly, one natural gem after the other was in immediate danger. Delicate geothermal areas with colors and bubbling water, beautiful waterfalls, endless expanses all over the country – all had been put on the drawing board to serve a handful of multinational companies, like Alcoa and Rio Tinto while also turning them into economic superpowers in Iceland. Almost anything could be sacrificed to maintain Icelanders standard of living as weapons of mass consumption, to keep up an overly strong currency, the flow of capital and work for contractors, and to create jobs in weak rural communities. The risk was a large one – the Icelandic nation only used 20% of the electricity compared with an 80% use by aluminum companies – still, even more sacrifices were to be made and our energy companies to be placed in colossal debt.

Suddenly there was a race to know our nature and discover it - before it was lost. Suddenly we had to gather knowledge about an industry - hardly anybody knew anything about or had been educated to understand. Aluminum production needs twenty times more electricity than steel production. Turning white powder - alumina, shipped in from Jamaica - to aluminum also produces one ton of CO2 for each ton of aluminum.
 
Because of aluminum production, by far the most energy-demanding industry in the world, we were faced with enormous decisions. The highlands and nature of Iceland suddenly became politically charged issues - while without the smelters the areas would be preserved naturally by the remoteness of Iceland. Places only a few people had seen and experienced were making front page news. If this was to continue, the major waterfalls and geothermal areas would become industrial zones in a couple of years. Artists, natural scientists and outdoors enthusiasts fought a tireless battle to introduce the nation to the most important areas – before they would fall prey to destruction. So the irony in Iceland was this: The government saying it was unethical not to dam rivers or harness fragile geothermal wonders for multinational corporations - because then they would build the smelters in China, burning fossil fuel. But the arguments were simplistic - in reality - when you give the industry too cheap power and free land to destroy - the incentive to recycle reduces. In USA - four times more than the total commercial fleet of airplanes - is thrown away in the form of beer and soda cans - every year.

But strangely the environmental battle in Iceland was little about CO2. Even though we are witnessing the melting of glaciers with rapid speed. The Notre Dame has little to do with the environment, the Colosseum has nothing to do with it or Mona Lisa or the Pyramids. The landscape of Iceland - the vast wilderness, the openness, the power and blend of harshness and fragility - has become for many modern Icelanders the heart of inspiration and identity - almost an artistic experience and regarded as a cultural heritage rather than just nature. And according to latest knowledge of biologists glacial rivers and its muddy silt actually have a buffering affect against global warming by binding carbon in the ocean. And they actually help creating the vital life of the sea and spawning of fishes when flowing freely. On the other hand many of the corporations being attracted to Iceland have the reputation of being the most ruthless in the world - regardless of more or less CO2 from their factories. And the bauxite - the raw material for the smelters comes from forested areas in Jamaica, the Amazon - from holy places of aboriginals in Australia where land has been totally destroyed for the sake of aluminum. At this very moment - people are being dislocated from their 5000 year old homelands in India - to make way for bauxite strip mining and alumina production. We are suddenly not an island anymore - we have been connected to huge global conveyor belt - giving us huge responsibility of corporate business ethics. So again - the energy utopia in Iceland – had become a dystopia in the hands of our leaders. The beautiful nature having the potential of becoming a resource curse.

But we learn a lesson. How vulnerable we are as humans. How we need to have a role in life and activity - how we want to harness our knowledge. We want to continue our habits, we want to avoid changes. We want to keep building cars, and apply our habits in the parts of the world that have not gained them. That is called - an opportunity to expand. We want to continue pumping up oil. We know how to dam rivers and want to continue doing so - until we have finished the rivers. We want to dig up the bauxite and melt it and drink from disposable cans while we can. If we stop for some reason - we call it unemployment, crisis. And we can see from our banking collapse, how well educated men will avoid all warning signs and pay people for saying the contrary - keeping us from changing our habits until it is too late.

When we create too many jobs through an immoderate encroachment upon natural resources or debt, we pull the teeth out of other industries and weaken the economy in the long run. We ruin a fabric of local industries and activity that is important in itself - as human activity - and make us vulnerable to change and globalization. Transparency and scientific freedom are vital if a nation is to be able to make informed and democratic decisions. If every individual attempts to maximize his or her own gain but cares nothing for the national or global interest, everyone becomes a loser. If larger nations can learn from these mistakes – then we’ll possibly have done something useful.

Recent research has shown that stock markets stir up the primal urges of man – particularly those of young men. They buy stock – it goes up and a higher level of testosterone can then be measured in their saliva. When short-time gain is wired straight into your paycheck, the effect is the same as in a casino. We should apply this to nature - and make sure testosterone levels never rise - unless the sustainability indexes are going up.

Some interesting statistics have surfaced after the collapse in Iceland. Landfills receive only half the garbage compared to last year. People fix things, use them better and longer. Traffic authorities have reported that in Iceland, car accidents have gone down by 40% during the first five months of this year compared with the same period before the collapse. Serious accidents have gone down by 13%. Traffic has gone down by 5%. Why? People are probably less stressed, they are in less of a hurry – and they show more consideration for others. There is probably less testosterone in the drivers’ blood. Never have more children been born in Iceland than 2009 - a year after the crash - so people are proving physically that they actually believe in the future.

There is growing unemployment - but not a reason to become totally pessimistic. The schools are here and so is the knowledge for teaching. The fish is still in the sea, the energy is still in the ground, the language is still good for telling stories. We are still on crossroads. We need to pay dept. Some people believe the only way would be through more plundering of our resources. Some think the IMF will demand that we sell all natural resources global investors are willing to buy.

The children born 2009 in Iceland will very likely be still alive in the year 2100. We that are born in 1973 are still only brought up to think about 2000 as the most futuristic year we can imagine - our mindset has not been updated. Just the act of imagining a child’s future is science fiction. It is not for the nerds - it has become normal thinking. We managed to create a sustainable heating system in Reykjavik starting 1930 in the world crisis - why should it not be possible now to have totally sustainable transport in Iceland, create a totally sustainable infrastructure of recycling upcycling and more cycling in general, instead of cars.

Iceland’s future has probably not been as uncertain for decades. We are faced with a unique opportunity to rethink everything – if it can be done locally, it might be possible on a global scale, we could export valuable experience and knowledge which could benefit millions. On the other hand, we could become too poor to decline any offers from multinational corporations. Internationally important geothermal areas, waterfalls and the breeding grounds of birds could therefore be in great danger.

Despite that mankind often seems to have almost boundless creative powers, we often don’t make use of them until we’re forced to. Despite the fact that we know that much of our activities are and can be very harmful for the environment - we don't seem to change our habits until we are literally forced to. So now we might be forced to change - and in hindsight this crisis might be seen as one of the most important turning points in Iceland’s history.

This article is also published in the RETHINK exhibition catalogue which can be purchased at one of the four museums or at the Alexandra Institute. For mail order, please contact Lene Mortensen, bGVuZS5oLm1vcnRlbnNlbkBhbGV4YW5kcmEuZGs=.