The Future of Capitalism - Profits and Growth
Posted by Gail the Actuary on April 16, 2010 - 10:50am
This is a guest post by George Mobus, who is an Associate Professor of Computing and Software Systems at the University of Washington Tacoma. His blog is Question Everything. He recently wrote another guest post published on The Oil Drum, Energy Flow, Emergent Complexity, and Collapse.
Growth Feasibility
Growth is only possible when energy flow is increasing.
It is pretty simple really. When energy flow is increasing in each subsequent time period it is possible to increase the amount of work devoted to increasing the asset base of society. Alternatively, if the energy flow is decreasing...
Short of a miracle (let's pray for it!) energy flows are about to decline in a serious way. And as a result growth is an utterly fatuous notion. Unfortunately, the majority of the population, and especially the economists and politicians, don't get it. The economists still firmly believe that if energy costs (oil, coal, etc.) rise as a result of constraints on production then we will simply substitute other sources (wind, solar PV, etc.) and keep going as we have been for the last two hundred years. This is both stupid and foolish. It is a complete failure of intelligence and wisdom.
Over the next several decades we (humans) will have to change our understanding of what is feasible and what we need to be doing to have a future. The future does not include growth of the GDP or profits. Capitalism as it has been practiced in the 20th century and now hanging on in the early 21st century is dead. Or rather, at this juncture in history, it is moribund. It served its purpose to raise mankind's understanding of what is possible in this world. It was a necessary step in the evolution of knowledge but its time has come and gone.
Real Profits
As growth depends on the continual increase in energy flows, more energy available to do useful work, so profits depend on more net energy available per unit of time, the energy that is left over after accounting for the energy needed to acquire energy.
We need to look more closely at the uses of energy in the economy. My energy mentor, Charlie Hall et al, produced a simple but complete model of energy flows in the world economy that does a good job of summarizing the situation [1, 2]. It starts with an investment of energy to obtain more energy. This is the energy used to build and operate energy extraction, capture, conversion, and distribution infrastructure. When all is well, the amount of usable energy returned from this investment is many times larger than the energy invested. Or, there is a net energy profit. That profit is then what is available to the rest of the economy to drive the activities of several major sectors. The first major use of energy profit is to maintain the existing asset base. Assets tend to wear out with use and time. The Second Law of Thermodynamics applies to the structures of material goods that we use. So a substantial fraction of the energy flow is directed at work processes that repair or replace these assets. Many kinds of intangible assets, e.g. intellectual properties, also need on-going maintenance work.
The maintenance of assets is the minimal level of work and requisite energy flow in the economy. So these two uses of energy profit, reinvestment in energy capture to keep the energy flowing, and maintenance of the rest of the asset base or capital, constitute the minimum economic activities needed to maintain a steady-state condition in which energy flows at a constant rate and assets are maintained at a constant level.
Historically, humans have discovered and exploited methods of energy capture that have far exceeded the minimum profit needed to just maintain the social economy. Agriculture, exploitation of wind and hydro power, and later fossil fuels, have all allowed humans to generate huge energy profits from nominal investments. Under these circumstances there has always been considerably more available energy for human purposes than could actually be used. This led to the development of two additional uses of energy profits. The first is growth of the economy itself. This first, and foremost, means growth of the population (human bodies are a material asset in the strict sense of the term). But it also means growth and development of all other kinds of assets, both those needed to directly support the culture and those that extend the culture (new kinds of products, services, and arts). The measure of an economy's size is the population plus the asset base, measured in embodied energy units. Once money was invented as a convenient way to represent work, both potential future and past accomplished, assets, at least, could be monetized and the size of the monetary pool could be used to measure the economy size, or at least be a reasonable surrogate measure.
One way of slicing the excess energy available (above that needed for just maintenance) is between necessary and discretionary asset production. Necessary assets are those deemed needed to maintain a given quality of culture. For example building more homes of comparable size to meet the needs of an increasing population would be in this category. Discretionary energy expenditures would include things like building much larger houses than strictly needed to maintain the cultural milieu. Discretionary spending of energy might satisfy egos and desires, but is not, strictly speaking, needed to maintain a given level of affluence. What it is needed for is the evolution of culture. And arguably, a major part of the human condition is involved in the co-evolution of the species and the culture. So from that standpoint it is pointless to denigrate what might now seem to us as excesses of the past. In a real sense these were necessary to promote the evolution of knowledge and understanding. But, all stories of expansion and development do come to an end eventually.
The Energy Budget
Energy flows through the economy (all sectors) have to be budgeted in order to assure the proper balance of energy inputs to the various subsystems. Figure 1 shows this budget roughly. Of especial importance is the feedback of usable energy to the energy capture and conversion capital for maintenance (top white arrow). This is what keeps the usable energy flow into the whole economy up to demand.
The figure shows energy feedback to maintain the current asset base and the flow of energy directed toward work processes involved with producing new assets, labeled 'growth'. This process takes new material resources from the Ecos and converts them into human usable form. Both non-energy related and energy capture assets (capital) are created and fed into the two subsystems. This represents adding assets to the economy at a higher than ordinary maintenance rate; in other words, growth.
Growth applies to all asset classes and human biomass (population and girth) and, importantly, to the energy capture and conversion capital assets. The latter need to grow in order to increase the usable energy flows into the economy assuming that there is more raw energy than is currently being converted available. The amount of growth of all other non-energy assets is now greatly determined by open markets just as the neoclassical economists claim. There is no value judgments placed on what happens in terms of choices about what gets produced. The market is value-free or amoral in this regard. Whatever the buyers want will get produced and sold. Energy will be directed in the appropriate directions to satisfy these desires without anyone actually controlling the process.
But suppose the supply of raw (gross) energy is not only fixed, but actually starting to decline. Instead of excess raw energy that could be exploited by simply putting more energy capture/conversion capital into play, suppose that the raw energy arrow started to contract in size. In that case it would not be profitable (in terms of usable energy return on the investments in energy capture/conversion) to grow that capital equipment. This is exactly the case for fossil fuels today. We have passed the peak of gross energy production (oil) and are now starting down the decline side of Hubbert's peak. The input energy arrow is starting to shrink. As it does, the usable energy produced and available to the economy for budgeting is getting smaller as well. Note that all of the investments made in the energy capture/conversion process are now starting to provide a smaller return per unit. This is exactly what is meant by a declining energy return on energy invested (EROEI (ERoEI, EROI, and EROeI are all the same concept but different authors insist on slightly different versions of the acronym to maintain their personal sense of internal consistency!)). As the marginal returns start to diminish (the logistic goes through its third inflection point), the investments in both growth of capital and maintenance will start to diminish. After all, profits are starting to decline so who, under our current capitalistic system, would invest in lower profit margins? Of course this can exacerbate the situation with respect to production of usable energy.
Rational Realignment of the Energy Budget, Post-Peak Oil
Figure 2 shows the results of a rational response to a decline in gross and net useable energy flows. Investments in energy capture/conversion capital should diminish as the EROEI declines past a point where an acceptable profit is being made. But at the same time the energy put into growth should be diminished (growth curtailed) so that an adequate flow to maintain current assets can be continued.
Unfortunately, who, besides economists, said the economy and the markets are rational? Or, more to the point, the individual participants in the market decisions are not rational. Nor do they anticipate changes that will have a time lag between the restriction in energy flows and the 'pain' they will eventually experience. The market mechanism for conveying information is price denominated in dollars (or money value). This is problematic for at least two reasons. First monetary values have been effectively decoupled from the underlying real physical value (in work units - energy) by many distortions, mostly due to the invention of debt (in the form of borrowing by speculation on future earnings) and bizarre financial instruments that pose as money. Second the time lag for effective changes in monetary measures of real economic importance are much longer than the actual time scales for changes in energy flows. Thus, at no particular time is there a direct and causal relation between the money supply and the energy supply. But in our modern capitalistic marketplace, decisions are based on monetary valuations. This leads to all kinds of anomalies, like market bubbles that further distort whatever weak relation still exists.
We have been witnessing the results of these distortions in the current financial meltdown. There has been a massive correction with respect to bringing the relation between money and energy back into focus. But the decision makers continue to fail to recognize the actual cause of the problems. They are still believing that the key to economic success (defined as growth of the gross domestic product - GDP - year over year) is to continue to channel energy flow to the growth process. This is based on the fact that our economy is seen now as a consumer-oriented one. It is healthy if we are producing more goods and services and aggregating the monetary transactions (sales) to show that our GDP is growing.
There are many motivations for believing this way. One is that that is the way it worked in the past. When the raw energy was expanding (we were on the up side of Hubbert's curve) this expansionary logic actually worked fine, except, of course, that we were damaging the environment in doing so. Another is a more subtle interaction between economics and politics. There is a huge political pressure to provide the workers with jobs and cheap goods so that they are "happy". In the democratic nations politicians get and hold their jobs by promising the people that they will do everything in their powers to assure the continuance of business as usual (BAU).
And so, in our less than rational market system, we continue to direct energy flows into the growth production function even though it has meant diminishing our investments into new energy capital (e.g. into renewable energy sources because they have much lower EROEI, at least by historical precedents). Or at least we have not rerouted a significant energy investment that way. Instead we continue to try to expand the fossil fuel raw energy inputs, even as the evidence mounts that this is an impossible route to take. We also continue to budget energy flows to the growth processes in the vain hopes that money will prove to be more powerful than energy. This is, of course, the epitome of foolishness, the antithesis of wisdom.
The proper response to the reality of diminishing energy flows from fossil fuels would be to greatly reduce the flow budgeted to growth and redirect it toward investment in alternative energy capture/conversion capital. It would also be rational to start lowering our energy investment in maintaining large parts of the asset base that are non-productive or discretionary. For example, what would be wise is to start converting much of the standing housing stock into multi-family living quarters instead of trying to revive the new house building industry. The maintenance energy feedback into the standing stock would be to make that stock more efficient in using energy. We need to cut the wasteful parts of the asset base like luxuries and unnecessary entertainments. As per my previous post (on Question Everything), I feel strongly that some of that energy has to be dedicated to preserving the valuable artistic treasures of the past as well as support current humanities. No easy decisions there. But if we don't do something along those lines, we have lost our humanity.
That brings us, finally, to the crux of the matter, the decision processes needed to respond rationally to the realities of energy contraction. Capitalism is now based on a single pursuit, profit in monetary measures. And that profit applies equally to the growth processes as it does to the energy capital. Yet under the constraints of the real world, the one dictated by the laws of physics, not only is growth no longer rational, neither is the use of profit potential as a guideline of where to put investments. In other words, the market as the main mechanism for decisions regarding energy budgets is now counterproductive. Indeed profits not involved with either the capture of new usable energy or the increase in efficiency for our machines that use that energy have to go the way of the Dodo bird!
Capitalism driven by the profit motive worked pretty well in a growing energy flow economy. We should not be anxious to demonize it outright just because it also led to problems with cost externalities that damaged the Ecos. After all, we humans were actually starting to become aware of that problem and were starting to seek ways to amend it. The problem with capitalism and profit motive today is quite different however. It only works when energy supplies are growing and technologies are making strides to improve overall efficiencies. Today we now know that the former condition is no longer true. Energy supplies are starting to contract and there is nothing on the horizon in the way of alternative energy sources that can come close to the power production from fossil fuels. We may be able to eek out a stable (steady-state) flow of some exosomatic energies from these sources to provide future society with a basis for living a comfortable life, but they will never be able to support BAU. Not even close.
As far as new technologies improving efficiencies, there will, of course be some of that developing, especially if we direct some energy investment toward that end. But reality must intercede again to point out that efficiency gains in real machines suffers from the same Law of Diminishing Returns as in all other physical systems. Efficiencies have upper bounds, both theoretical and practical for all machine types. It is hard for techno-cornucopians to accept but the fact is that our engineering work for the last hundred years has helped us achieve close to the practical limits for many of our modern machine types already. In other words, we can't look for huge gains in efficiencies in our prime movers (though there might be big gains to be made in our heat trap systems, e.g. buildings, through improved insulation and other such measures). We can and will have to stop wasting energy resources on trivial, non-productive or previously discretionary uses. And there may be substantial savings to be realized there (but note that stopping waste is not the same as improving efficiency since, by definition, wasting a resource is something you don’t have to do and can just stop without any technological advances).
An Uncomfortable Conclusion
The conclusion is not comfortable but is imperative. Capitalism, as it has been practiced in a market and democratic governance system, is going to die. It will die in one of two ways. Either people will start to exercise some rationality and some wisdom and realize that as the energy supplies diminish the capacity to do useful work also diminishes. They will then seek to reorganize our governance structures/institutions in such a way as to rationally respond to the reality. Somehow I have a hard time seeing this kind of response. From outright denial, to outright insistence on exceptionalism and blind faith in market mechanisms, I suspect that most people will be blind-sided by reality.
This leads to the alternate more likely response. People will demand, and politicians will give them, continued support for direction of the energy budget into growth and discretionary asset production as long as they possibly can. For all practical purposes this is exactly what we already see. Think about the state of critical infrastructure in the US. Some of it is falling apart from neglect. Some of it is decaying due to inattention and restriction of energy flows into work to manage it properly. What are the outward signs of this neglect? Aversion to taxes and regulations is an obvious example. The attitudes of libertarians (regardless of political party) is a prime example of psychological resistance to grasping the true nature of what is happening to human economies. Additional examples of the political aversion can be seen in Obama's reliance for economic advice from the very architects of the destruction of financial regulations designed to prevent some of the kinds of bubbles that have arisen in the banking and stock market sectors. I must be frank. I am not hopeful for rationality and wisdom to prevail in the near future.
We (Homo sapiens) may be lucky enough that after the SHTF due to mismanagement of the economic energy budget, there may be a spark of rationality and wisdom available and recognized that we can turn to in our despair. Unfortunately even this possibility is highly problematic. More likely mankind will be subjected to a mean and uncaring dictatorial hand, a person or persons not eusapient, but harsh and vindictive. After all, the stock from which to choose potential candidates for leadership is composed largely of minimally sapient beings to begin with. Evolution help us.
For readers interested in an alternative view to the prevailing beliefs you may want to read my series on Sapient Governance here.
Many thanks to Charlie Hall and his associates for so many good insights into the nature of our predicament. I treasure the time I spent with him at SUNY-ESF.
[1] Hall, Powers, & Schoenberg (2008). "Peak Oil, EROI, Investments and the Economy in an Uncertain Future", in Biofuels, Solar and Wind as Renewable Energy Systems, David Pimentel (ed). Springer, New York.
[2] Hall, Balogh, and Murphy (2009). "What is the Minimum EROI that a Sustainable Society Must Have?", Energies, 2, 25-47; doi:10.3390/en20100025
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As Oscar Wilde said on his deathbed "Either that wallpaper goes, or I do"
It is most likely that we will all go down together, hucksters and rubes chained each to the other.
We live in a one-party state, much like the Roman Senate in the final days of the republic. Back then there were two loud and contentious factions. But in truth, both represented only the oligarchy. Today in the U.S. the two “parties” are owned by Big Money. The Republicans are the high-priced call girls and the Democrats are the street hookers. Corporate media is the pimp. And now that the Five Stooges on the Supreme Court have blessed our beloved corporations with the First Amendment rights of living citizens… Mammon can be our Caesar.
But, enough of that... Your piece is exactly to the point, George Mobus. Without the growth that has been built on several centuries of cheap, ever-growing supplies of energy, capitalism begins to stall. If it continues trying to grow beyond its energy base capitalism becomes malignant.
One minor point: You credit the energy flow charts to your very enlightened teacher, Dr. Charles Hall. But I first saw them in 1973. They were created by Dr. H.T. Odum, (I’m sure Dr. Hall would credit Odum, too.) Even back then, Odum was warning about the constraints of net energy on the alternative fuels that ecologists and economists said would easily and painlessly replace petroleum and the fossil fuels.
They won’t. But we didn’t want to hear it back then; we don’t want to hear it now. As Voltaire (I think) said, “History teaches us that history teaches us nothing.”
Anyhow… as we say down here in Lower Redneckia …durn good work, George Mobus. Keep plugging.
Cap’n Daddy
True enough Cap'n Daddy. Charlie gives credit to HT and I give credit to Charlie. While I was in Syracuse Charlie had me reading lots of both his and HT's papers/books. The ideas are fundamental energy flow through a complex system, living or human-centered.
Thanks.
George
I seem to have a different understanding of "Capitalism" than you do.
Last time I checked "Capitalism" was defined by the Merriam-Webster's Dictionary as:
": an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market." http://www.merriam-webster.com/dictionary/capitalism
So lets see here, that's the:
1. Private ownership of capital and goods.
2. Investment by Private Decision
3. Prices, production and distribution of goods determined by competition in a free market (of individuals).
Which part of that definition do you disagree with? Is it the private ownership of the very computer you are writing on? Is it the personal choice to invest or work as you please? Or is it the free competition of you and I in an open market of ideas, solutions and works?
I will assume you are a rational human being and that you don't hate your own private ownership of items, the right to work or invest as you decide or the open discussion of ideas we are having right now. With this assumption stated let me suggest in my humble opinion you point your dislike at the real culprit, namely: Statism, Monopoly power, and corporatism.
There are more than two species of fish in the ocean.
Capitalism morphs into Corporatism as Communism morphs into State ism.
I have read that most decisions made by executive directors have diddley squat to do with corporate objectives or share holder interests. Suprise!
Distributism or Guilds are better choices because they exist for the benefit of the workers.
Their very structure precludes non participating parasites.
agree.
I think that any political economy( if sufficiently large and dispersed enough) whether it starts as a participatory democracy or a dictatorship drifts toward an oligarchy.
That seems to be what history shows most frequently.
It also makes intuitive sense.
The reason the guilds work best is the smallish and focused nature of the organization.
Once things get too big and complex the masses lose interest and awareness and want to be led.
The dictator losing his authority to and oligarchy is the old it is lonely at the top and everybody is shooting at you so a compromise among the power hungry is the Nash equilibrium.
As the population grows, Guilds leave huge numbers of people out in the cold, unable to get in on the economic action. They aren't really "the answer" any more than corporations are the answer, because they simply are another road to monopoly -- as are State Corporatism, State Socialism, and just plain old tried-and-true monarchy.
I guess we just have to live with the reality that revolutions occur periodically because change can never seem to happen peacefully.
Revolution!
Where do I sign up?!
There is nothing in the definition of "Revolution" that says it can not be peaceful. Granted major social revolutions have historically come about with a large component of violence.
One can always hope that it will not be necessary, however slim that hope may be.
What Merriam-Webster decides to define "Capitalism" has no currency with the denizens of Wall Street.
Thanks, George!
It seems like there are several semi-rational responses that can be made to declining net energy:
1. Attempt to continue to at least produce the current net energy through more emphasis on fossil fuel production. If necessary, simplify society so that it can afford to pay the higher price of fossil fuels (less discretionary spending).
2. Attempt to add wind, solar, geothermal, and perhaps nuclear, hoping that these will provide net energy, and that this net energy will be long lasting.
3. Grab on to a personal store of net energy (hoard of food, solar panels for your house, electric vehicle), so that the rich individual personally can weather at least the first effects of the storm.
4. Put together a plan for society that will use less energy, and use what current net energy is available to set up long-lasting means of production, using resources which are truly renewable using only local materials--for example, water or wind driven grain mills. Use more wind powered boats and animals for transportation.
To me, path 4 makes the most sense, but it is the least likely to be followed.
Instead, we will have different versions of paths 1, 2, and 3 followed. If 2 truly did add huge amounts of net energy, and was truly sustainable, it might sense. Instead, I think path 2, if it uses high-tech solutions, is likely to be close to path 3, but on a little broader basis--an attempt to grab a little more of what we have today, and store it up, so something close to our current lifestyle might last a little longer. If that is the best we can do--store up a bit of the past, and hold on to it for a while longer--maybe that is a reasonable path.
But we should at least understand that is what we are doing. And think about the need for a path 4.
As I've commented before, our off-grid "experiment" has resulted in a hybrid lifestyle incorporating all four of your points, Gail.
"1. Attempt to continue to at least produce the current net energy through more emphasis on fossil fuel production. If necessary, simplify society so that it can afford to pay the higher price of fossil fuels (less discretionary spending)."
Any attempts to continue our previous levels of energy usage quickly fell apart. Any discretionary spending that was available did go into increasing our energy output just to accomplish necessary tasks. Fuel for our BAU generator became a bad/expensive outlay of financial resources. We soon realized the true value of simplification and conservation. Addapt or give up.
"2. Attempt to add wind, solar, geothermal, and perhaps nuclear, hoping that these will provide net energy, and that this net energy will be long lasting."
We made choices that allowed us to add PV capacity, and did increase net energy. Long lasting? 15 years, so far, so good. Very little maintanance or repair capital (although we try to budget for the future).
"3. Grab on to a personal store of net energy (hoard of food, solar panels for your house, electric vehicle), so that the rich individual personally can weather at least the first effects of the storm."
Yes and no. I don't see it as hoarding, just "grabbing" what was there to begin with, reducing our contribution to depletion/consumption. I would like to think that this has a positive effect on society but there's Jevons and the continuing growth meme.
BTW, by US standards, we're not rich.
"4. Put together a plan for society that will use less energy, and use what current net energy is available to set up long-lasting means of production, using resources which are truly renewable using only local materials--for example, water or wind driven grain mills. Use more wind powered boats and animals for transportation."
Lead by example. Our plan wasn't a naive idea to change the world. But we can show others that it is possible to power down and still live in comfort while reducing our level of resource depletion. Some folks are starting to pay attention. Some never will. For most, seeing is believing. I don't hesitate to make fun of other's high (and rising) power bills. They tend to make excuses until I point out that it's about priorities (the big boat or SUV, the annual vacation to Aruba, the huge side-by-side refrigerator, a TV in every room, that expensive bottle of Scotch, trying to live the "lifestyles of the rich and famous".
Once these changes in our social priorities are forced upon society, many will discover that adapting isn't that hard, that the benefits actually outweigh the "sacrifices". The problem is as much in their heads as in what can and can't be done. Folks are truly confused about "what they want and what they need". "Forgive them, for they know not what they do." If we can collectivly prioritize and shift our resource uses to what really matters, we may have a chance.
Big if!
As I see it, our only choice will be between slightly softer self-imposed limits and the hard limits imposed by the planet.
Why do you doubt that path 2 will provide net energy? This seems to be the core belief you have that leads you to expect a far worse outcome post-peak.
Do you really doubt that wind or nuclear have high enough EROEI to survive without fossil fuels to drive their construction?
Right. Shouldn't we lay that one to rest once and for all? The return on energy invested from wind and solar has been discussed here many times, and shown to be plenty. Does TOD have any collective memory at all ???
And there have also been many investigations showing we have plenty of both wind and solar available to us.(USA). ( and I am NOT advocating BAU- that's suicide)
And we know how to knit energy sources all together- HVDC.
And store it- pumped hydro.
And we know what we do to pay for it- quit the frivolous stuff like fancy cars and junk that fills the big box stores and put those resources into getting on to renewables. We redirected our manufacturing in WW ll and we can do it now. My car is 21 years old. Works fine.
The real problem is not energy per se, but the things we do with it- the pollution that it generates. So, power down and consume down.
All this happens if we put the full true cost on what we do, not just a fraction as we do now.
My biggest frustration about TOD is that the doomers do not show why decline to extremely low living standards and massive die-off is inevitable. They just assert it without showing why the substitutes will fail. If we've got substitutes with healthily positive EROEI then why won't we shift to the substitutes?
Sure, the transition stands a good chance of causing a depression. But failure of most of the banks in America during the 1930s did not end industrial civilization.
Redirected manufacturing and WWII: Yes, exactly. It is possible to force a big shift toward capital investment. Lots of people who currently get paid to not work could be forced back into the labor force. What would we do in event of a huge war? We could do the same in response to Peak Oil.
I want to know why the doomers think we can't adjust and eventually start growing again. Low EROEIs? Total collapse of the market? In other words, is the problem with technology or with financial and political flaws?
Some doomers want a collapse because they are so bothered by inequality of incomes. This is like a chance to bring down The Man. Others I'm not sure about.
Except for some technical information on oil and gas production TOD is not the same as a refereed journal. It includes essays. The best of these do provide references to backup, but surprisingly not that many readers bother to dig a little deeper if they have sincere questions. That is why I included references to the primary literature. You would do well to read #1 above (link provided). You then might at least understand why some of so-called doomers hold the views we do. You would also be in a better position to provide counter evidence for your faith in mankind's experience during an expanding energy regime continuing under one of contraction.
Aside from George's comment below suggesting that people like yourself, actually read some of the linked material and perhaps, (my suggestion),god forbid, do some of the math yourself.
Apparently you have either failed to notice or simply do not grasp the significance of that black resource arrow becoming considerably diminished over time. This is one of the biggest problems with neo classical economics based thinking. They fail to understand what is meant by physical limits.
There are, shall we say, "resources" that simply can not be substituted under any circumstance. It is *NOT* just about finding an energy substitute with a reasonably good EROEI. That is just one part of the equation.
We are, (believe it or not) biological organisms, directly tied into the global ecosystem, we need nourishment which depends on basic chemical elements. These elements are to some extent recycled by the ecosystem. However the total available amount of these elements is fixed. Therefore it should be easy to grasp that there is no way that any biological growth can exceed the carrying capacity of the available basic elements necessary for nourishment. This is why we can not hope to continue growing the population. How is it possible that people don't get this?
And that, ladies and gentleman, is my biggest frustration with the facile arguments of the cornucopian crowd. They truly lack a basic understanding of physics, chemistry, biology and ecology.
Sure. We live on a finite sphere. Nothing can grow forever. Simple. And I too am amazed how few people actually get this so, so obvious fact.
But my own big frustration is all this talk about running out of ENERGY ( and believe me, I know the difference between available energy and just energy) when there is so much of it in wind and solar right in our own back yard-sort of.
And so it bugs me to hear people here moan about energy shortages and how much wind and solar cost, when
They spend huge resources of everything on pure crap like fancy clothes, wildly obese automobiles, soda pop and such like poison, stupid piles of fuzzy toys for their kids, and so on and on, including those long streaks of burnt kerosine over my house every day of the year, going nowhere for nothing.
I am not a cornucopian by a very long shot. And I live a life most of my friends would call spartan to an absurd extreme, But that doesn't allow me to say that there is not lots of available energy around that needs not crud up the world. Our problem is not energy- its what kind of it we use and what we do with it.
PS -Thanks, FMaygar, for all your good contributions- and even your not so good ones. Appreciate it.
Well if someone wants to but into the pitiful flow charts in this essay, all the could follow. Over simplification and no sense of scale makes the charts the worst kind of deception. The usable energy flow should not even be visible to the naked eye with such small initial raw energy flow arrows, which means a doubling of the efficiency with which we capture the raw energy and convert it to useable energy would not be visible to the naked eye on these charts either. I'm not even certain the decline in raw energy depicted in the two charts could ever approach the proportions shown while the sun is still a healthy star. That's just the first arrow they get worse from there. Since the raw energy input drop is said to be immanent in the opening paragraphs these ill scaled charts are no small issue. It all kind of reminded me of when I sat in on an Amway distributors presentation while he was trying to sucker 'salespeople' into his pyramid, thosr fantasy charts might even have been scaled better than these.
But some doomers here say fossil fuels exhaustion alone is enough to bring the downfall of civilization. Now you are saying we have to add the exhaustion of assorted minerals to assure the collapse.
I'm not convinced on the minerals argument. Energy is far more important than materials. Lots of materials substitution can be done. I've got this from talking to engineers and physicists and reading reports on nanomaterials. We have lots of concrete and basic metals.
Only potassium or phosphorus seem absolutely necessary (for agriculture) while being without substitutes. But they aren't going to run out in the next few decades when doomers are saying civilization is going to collapse.
Regards "do the math": Condescension is not an argument.
Your "off the grid experiment" will last until the first pickup truck loaded with AK-47 wielding looters comes to visit you after civilization breaks down.
I believe Ghung has posted some pictures of his area. It looks like it's quite rural, it wouldn't be difficult to make roads impassable. I've driven on some of those gravel, mountain roads before and even a small rain storm can make them very dangerous to drive on.
Ghung's experiment would most definitely fair better than urban gardening attempts which a few here have suggested. It's rather difficult to do any looting if your truck is a mile down the road and you're stuck on foot in an unfamiliar area.
That seems to sum up well the choices available. I would add that a combination of several may be the best, for instance adding 2 to 4, adding sustainable energy sources and planning less energy use might be the better way to go.
#1 is not possible... fossil fuels will give out in time, beyond mere diminishing. #3 is only possible for a few, and probably only for those who have most contributed to the problem as they accumulated their great wealth. Perhaps for a while they could sustain; the later impact of that storm would be fatal even to them.
Had mankind appreciated the depth of the impending crisis 20 or so years ago, #2 might have worked to sustain a significant part of our current population. Even that, however, will be difficult as materials deplete in the same way as fossil fuels have. Perhaps with a serious effort at fusion power, mankind might have [and remotely might one day, I suppose] constructed fleets of colonizing ships to the stars, after first having used the materials in our solar system in the process.
Watching the news today, observing the attitudes of investors, politicians, and the people I know and those I meet, I am not sanguine about the possibility that we will have the requisite sagacity to solve these problems, and must instead deal with our predicament. My bet, if I was a gambling man, would be no plan at all, as politicians follow the polls, and capitalists insist that greed is good and will show the way. In the end they will fail, and the collapse will be long and painful, until without plan and without goals, mankind finds itself either at a sustainable level or extinct.
Strange species, homo sapiens. Wonder if they'll be missed.
Craig
What sort of economic system would enable path 4? George says:
It would seem that pure capitalism is incompatible with path 4 -- as long as coal (or whatever) is cheap, someone will burn it. You would probably need: (1) Social control of the size of the economy, through e. g. ownership or regulation of natural resources. (2) Social control of distribution of goods, through e. g. a steep progressive income tax. (3) Some sort of political reform, e. g. campaign finance reform, to prevent the rich from getting power and changing the rules after the fact. But within those parameters, a free market would seem to work fine.
It feels a bit strange being the token perpetual optimist, but I would say that it's premature to rule out path 4. Just because things haven't changed in 60 years doesn't mean that they can't change, in a hurry.
It seems to me that the solution to this is simply a large enough carbon tax, and the political wil to implment it, and keep it, in the face of the inevitable oppostion.
Ghung's excellent example above shows this. Even without a carbon tax, the use of fossil fuels was quickly revealed to be the most expensive option, so it is relegated to a last resort (not abandoned, though), and so other options (conervation, alternative sources) were pursued, obviously successfully.
Now, we can;t expect the wider economy to adopt Ghung's approach, unfortunately, but it can be pushed in that direction. Quite simply, at some point, if the price of carbon/fossil fuels is high enough, industry will seek alternatives, and some industries will do so sooner (e.g. railroads) and some may have no alternative, such as airlines, and will inevitably shrink, though not disappear.
Capitalism can still work with 4, in fact, I think it is the best way to get to 4 - as long as resources/energy are valued sufficiently. If every material -land, minerals, energy, is sufficiently expensive (or limited in supply, which amounts to the same thing), then they will be used in the most efficient manner possible. And if labour is cheap, or at least not taxed the way it is today, then a natural result would be towards communities that consume less land, materials and energy - i.e. denser, smaller, efficient houses, efficient transit, less waste of land (think "green space" and more productive use of land, for growing food. In effect, the goals of the transition town movement.
As a thought exercise, consider the scenario where energy is so expensive, (or unavailable) that it is cheaper to have a person do the work than a machine (which itself has a high embodied energy). Compare Henry Ford's original production line with today - which used more fuel energy?
Capitalism works, we just need it to work to different ends than it is today. To tax energy/materials (and even land) and not labour would be a good way to shift the goalposts.
I agree. Carbon tax is a good idea. And as you note it is compatible with a free market for most day-to-day economic goods. I think you would need political reform too, as otherwise the rich will corrupt the political process (again), and if you had a steep progressive income tax, like in the U. S. under Dwight Eisenhower, that would further dampen the instability of the political system caused by wealth inequality, which is itself exacerbating our resource issues.
There will be cries of protest that this is "socialism," of course, but whether it's actually socialism depends on your definition. I think that relative to where the U. S. / Britain / Canada are today, it will "feel" like socialism because it does require more government intervention that people are used to. It's certainly not outright ownership of the means of production, just regulation (possibly ownership) of natural resources. But depending on your audience, you could make the case either way.
I'm reading The Enemy of Nature by eco-socialist Joel Kovel, and his position seems to me to be pretty close to the kind of position advocated here -- he has some kind words for Herman Daly. As long as we're clear on what is actually going to happen, we can lose the rhetoric (or not, as the occasion demands).
Keith, if you have a high carbon tax, you don't need steep progressive income tax, at least, as long as government spending doesn't go haywire. You do need some income tax, and I would propose a flat 15%, above a certain threshold, with no deductions or exemptions (I know its not that simple, but it is far simpler than the system we have today).
I am not a fan of government operating the means of production, though owning the resources is fine, and many governments do. you just have clear rules as to their use. Generally speaking, I am OK with government intervention, but I think it works best when they set the rules of play, and enforce them, rather than trying to do it all themselves. Whenever there is government money for things, people/companies trying to get it regard it as "free" money and behave differently, and less efficiently, so I prefer to avoid that a much as possible (health care being a notable exception)
Government doesn't have to do everything, but it does have to make clear what it will, and won;t do, what the rules are, and then enforce them,
Agreed overall, just a minor redirect on
The government must own the resources, but rather than setting clear rules on their use, it simply should set the extraction fees at levels where their use can only be justified for very high return applications, and recycling and substituyion with renewables is maximally encouraged. A fairly gradual transition necessary, say over ten to twenty five years.
Len, you still need to have certain rules, by which I mean things like safety and environmental standards. I guess, really, those are the rules of extraction, rather than use. Certainly, the taxes on the resources need to be high enough that they are developed/extracted, and used, in the most efficient manner possible. But high extraction/development costs can lead to cutting of corners, hence the need for the rules, and their enforcement.
I don't think the transition is necessary, not for new stuff anyway. new taxes/royalties on resources can apply to any new developments, and old agreements get updated as they expire. The carbon tax, you just have to announce it, to give certainty, and ramp it up over five years. if industry can cope with oil going from $11 to $147 in a decade, they can cope with a $50/barrel carbon tax, at $10/yr for five years.
if everyone knows what that future is (carbon tax) it is easier to do medium term planning.
The alternative energies, in particular, are in a good place then. They will still need to be taxed, just not carbon taxed.
In principle you are right, you don't need a steep progressive income tax to save the planet. But a flat 15% tax is even less progressive than the U. S. has now (and I'm arguing from a U. S. perspective).
The problem is two-fold. First of all, the rich tend to get richer and the poor tend to get poorer, at least in relative terms. This is precisely what has happened in the U. S. and many third-world countries. The system naturally tilts towards the rich and you need to counter that or the wealth will all slide over to one side. You need a progressive income tax, as under Eisenhower, to do that job.
Second, you need to have buy-in from the poor and middle class for a carbon tax to work. A high carbon tax is going to be an economic burden compared to what we've got now. People will need to make adjustments and sacrifices. If people see that some, the rich, are scarcely affected, while others (like themselves) sink into ever more desperate situations, they are going to be upset, and are going to either riot or say to themselves, "screw it, I can't afford to insulate my house and I want that coal plant for my electricity." You need to have the sense that the burdens are being shared equally, and those with the most ability to handle those burdens should pay proportionately more.
For those who are rich, I would look at social equality as a cheaper form of police and riot insurance. It's much more efficient just not to have gross social inequality in the first place than to hire all those riot police and pay through the nose for insurance.
It already is on one side and has been "sliding" since the late 60s early 70s.
That is the whole idea with the welfare system that started taking shape with Johnson's "Great Society" and has continued ever since.
Bread and circuses are cheaper/safer than police.
Let's face it........ The US was on the path to failure starting in the 1930s and got a reprieve because of the destruction of all the other industrialized nations during WWII.
This time the piper is going to collect and prove that Capitalism(focusing on money instead of humanity) is impossible without rewarding the worst, most heartless, evil people in it's final form.
We have psychopaths running every institution both public and private and I believe that the only solution is forceful removal and extreme punishment for this absolutely outrageous situation.
I still can't believe that we are putting up with these worthless pieces of Sh%t.
I have not yet turned 50 and I will do whatever it takes to right this ridiculous situation but it seems we are not close to the pain point yet.
The first step IMO is to arrest everyone.
Wall Street and DC.
It really frustrates the hell out of me knowing that most people that read here on TOD are probably smarter and more qualified than the A$$holes running our system both public and private.....they are just more evil and have an absence of conscience and social responsibility.
What the hell kind of a system is it that not only rewards but glorifies criminal behavior???
The time is fast approaching that we have to take back the country and it will require a high level of resolve and courage to do what is right.
We have a moral obligation to the future of our children to make a stand now and punish severely the criminals that have ruined this society.
"When plunder becomes a way of life for a group of
men living together in society, they create for
themselves in the course of time a legal system that
authorizes it and a moral code that glorifies it"
Frederic Bastiat - The Law
All right, I appreciate your passion, but I don't think that punishment of individuals is the solution here. It's the "system" that's the problem. There will always be psychopaths. A system that rewards them instead of treating them is the problem.
It may be a good idea, but we are not likely to see it. At least not in the gold old U S of A.
Besides, we don't really need a carbon tax. Physics will take care of it fine. Fossil fueld run down, economy runs down with them, population, with no need for government intervention, falls... maybe from reduced medical care, or from local or even international wars over water and other remaining resources. Mostly, though, from lack of food and know how. In the end, no matter whether anyone listens to us "doomers" at TOD or not, the results will be the same.
In the meantime, there is a buck to be made, and that will keep the attention of the capitalists. And, of course, with a bit of planning, and more than a little luck, perhaps I will see my grandkids grow up.
Craig
I'll bet there were people in 1908 who said that about Marx and his "Communism" rant.
All revenue to be raised by taxing the thing that we, the people, own. Carbon as it comes into the light of day.
So.. No income tax, no death tax, no property tax.
Whats not to like?
Thanks Paul. I, of course, don't expect our society to adopt my specific system. We have many options. My point is about the mindset of the masses, what we value and how we conduct our affairs. Porge said it pretty well downthread:
"This consumer oriented culture needs to be destroyed and replaced with an ethos that centers on self- improvement and personal development."
It won't matter what system we adopt if we don't change the way we think. Saying we need (or don't need) capitalism is like saying we need agriculture. Until we replace greed with need, redefine what "security" means, and assign new meanings to growth and status, reward ourselves in different ways, I have little hope. Capitalism doesn't define who we are. We define capitalism by our actions as individuals. It's just how we play the game. People accumulate money and stuff because they think that's what is important. How they do that seems to mean very little these days. Therefore, my doomer side persists. I fear that humans are hardwired to take, consume, use up, and hoard.
Downthread, Beck implies that this capitalistic/consumption meme is what has driven/allowed humans to achieve great things. To what end, Roderick?
My favorite Edgar quote, from MIB:
"Y'know, I've noticed an infestation here. Everywhere I look, in fact. Nothing but undeveloped, unevolved, barely conscious pond scum, totally convinced of their own superiority as they scurry about their short, pointless lives."
Ghung, I don;t expect society to adopt your system either, but it's a good example of what can be done, with minimal or no sacrifice of comfort/convenience.
Like the old saying " happiness is not having everything want, but being content with what you have". Unfortunately, that is polar opposite to our hardwired nature to consume as much as we can, even if to the detriment of our neighbours, and ultimately, ourselves.
But I have hope, the younger people are rejecting some forms of consumption, notably cars, though they over consume elsewhere - anything to do with consumer electronics. Unfortunately, many of the younger people (and I am only just out of that category) do not have a hard work ethic because they have grown up with their parents providing everything. If you have to work for your spending money as opposed to an allowance, you are very careful about what and how much you spend, and you have less non-productive time in which to spend it, too. If people are busy doing productive work they do not need to "consume" nearly as much entertainment as they do today. And if in doing said work, you are not being taxed, while in consuming entertainment you are, then so much the better - work becomes its own reward, as any gardener or woodworker will tell you.
It is not 'worth the money" to make a table that you can buy from Ikea, but there is no comparison in the satisfaction.
I just hope the young folks realise that not everything can be provided via an iphone, some things require real work, and they are usually the best things.
Happiness is a neurotransmitter cocktail..................It is a feeling.
Capitalism is responsible for the dramatic rise in the standard of living since the end of the Middle Ages.
I don't think you would like living in the Middles Ages. As Hobbes said, "Life is short, brutish, and nasty."
The flowering of the Italian Renaissance was due to a resurgence in trade and the development of banking.
That to me is 'capitalism'.
To me capitalism is simply a market system.
No one can deny the ugly side of capitalism - the locking of workers overnight in Walmart facilities or the Cuyahoga river in Ohio catching on fire ...
Capitalism is like a garden. If you don't tend to it, weeds will take over ...
One weed might be Goldman Sachs, another ...
The flowering of the Italian Renaissance was due to a resurgence in trade and the development of banking.
I'm sure the bankers would love for us all to believe in this version of history, but it simply isn't true. The Italian Renaissance owed more to the rediscovery of "lost" Greek and Roman classics (from the Byzantine Empire and Islamic world) and the Black Plague. The Plague especially was key --it wiped out a third of Europe's population, simultaneously producing a surplus of land and a labour shortage, so that demand for labor (and wages) increased, while the reduced population became much wealthier. If anything, the Renaissance happened *in spite of* parasitic banker-oligrachs.
Agreed. Markets are too useful to be abandoned.
I live now in Budapest - I've seen the result of 45 years of state planning. It's not pretty.
European energy efficiency than US energy efficiency. Why? Because of the gas taxes. Gas prices are easily twice the American average.
A rather large portion of my extended family lives throughout Europe and Hungary, "NOT PRETTY" is an understatement. We are well on the way to a new fascism with the full blessings of organized religion.
http://www.wieninternational.at/en/node/4961
Ironic, isn't it, that they are referring to the greatness of Hungary during the Middle Ages? LOL!
Dear magyar,
how I weep for you, it seems a pity that the rise of Nationalism and in Hungary's case National fascism seems to be the only answer too the monolithic E.U. that is trying to impose on all of us here in Europe a bland European identity. The E.U. will of cause break down in the same way that the Austro-Hugarian empire fell apart after the first world war. Multicultural empires have always needed a powerful dictatorial centre to to maintain themselves in power. Once that disappears they break up very quickly into there component parts, Russia and Yugoslavia are prime examples. The Greek Crisis is perhaps the first crack we are seeing. When Peak oil really hills home and thousands are without work and no hope, Nationalistic and local solutions will take over. That is apart form the massive migration of Muslims into Europe with its alien incompatible culture which will polarise these views. We are seeing the exponential rise of Nationalistic parties here in Holland, Britain, Denmark, Sweden, and Belgium. When Germany overcomes its guilt feelings then the shit hits the fan. Hopefully I will be dead, and wont see the results of the monumental utopian hubris of the E.U. experiment, as it crashes.
The US should have put a big gas pump tax into effect back when we had Cantarell, North Sea and Alaska producing part of the swing.
Jimmy Carter had it right back in the 70s.
We Effed up big time.
Using animals in any volume will result in the watershed becoming contaminated with various fecal matter based diseases.
Animals also require FAR more care/time to get "work" out of them than the motors we are used to.
"According to the General Accounting Office, more plant species have been eliminated or threatened by livestock grazing than any other cause, and cattle grazing harms about 20% of endangered and threatened species. Some $37 million of taxpayer money is used to trap, poison, gas, and gun down almost one million wild animals and birds each year for livestock protection and pest control.
In the United States, every year 10 billion land animals and countless billions of fish raised at fish farms or taken from the wild are killed for food." -- http://www.associatedcontent.com/article/274046/sobering_statistics_abou...
Observation 1: The future population will be largely, by necessity, vegetarian (more efficient to eat lower on the food chain by an order of magnitude (10x). It won't be voluntary... unless, of course, we get a Mad Max scenario and people turn to cannibalism?
Observation 2: The US, around the beginning of the 20th Century, maintained 25 million horses. Far fewer people of course. Horses were critical for food production. It may be possible to eliminate all factory farming, an extremely destructive process, making room for a large number of horses. This would be a long process.
Observation 3: We seem to not have enough time to make a smooth transition. Worst case scenarios always end in sudden population decline. Problem solved, one way or another. National and international leadership is taking us over the cliff, whether we like it or not, we are all on their suicide train.
Not to mention that it would take a long time to ramp up breeding of sufficient numbers of draft animals. I don't have any numbers, but there has to be a relative handful of draft horses left.
Actually, draft animals, especially horses, are making a comeback. After WWII, the number of draft horses in the US fell drastically. For example, the Percheron, a well-known draft horse numbered in the thousands earlier in the 20th century, but fell to 85 registered horses in 1954. That number began recovering in the 1980s and now once again numbers several thousand horses. While I do not have current numbers, I do know that as recently as a decade ago there were over 3000 registered. The Belgian draft horse is even more popular and was experiencing several thousand registrations per year.
While certainly not sufficient for an instantaneous switchover tomorrow, there are thousands of such horses today that could assist in breeding larger numbers of horses for the future. More importantly, if someone wanted to obtain such a draft horse today, it is most certainly possible, thanks to the diligent efforts of those horse lovers who have preserved the various draft horse lineages.
If things really do go all the way to hell in a hand basket,a draft horse would be priceless, but unless one assumes that diesel and gasoline are going to be simply unavailable at any price, we aren't going to go back to horse powered agriculture in a big way any time soon.
Even at twenty dollars a gallon we could run our family farm cheaper on diesel than we could on hay. A tractor has to be fed only on the days you work it, and when you do work it, it doesn't get tired or overheated. A starving man might very well steal or shoot a horse expecting to butcher it, but a tractor is absolutely inedible.
Horses can do incredible things , for a day or two-just like professional athletes.Most of what you will hear about what they can do is honestly described, but it is usually based on a day or two of actual work, with extended rest periods between working days.
Of course over the longer run, it may become necessary to give up tractors and the rest of the petroleum powered machinery commonly used on farms, but I just can't see this happening within the near future,meaning the next decade or two, barring a mad max scenario.
I would agree with your path 4. The question then is, how should we come to that path? I contend that it can be arrived at by carefully planned changes to the market rules which govern capitalism. What alternatives? A "benevolent socialist dictatorship", a command monarchy or oligarchy, feudalism, open slavery? All these will succumb to corruption. Some form of non-capitalist democracy? What would that look like?
All four are happening. The Transition Town movement is at least tackling #4. All those small and simple steps by individuals and communities do add up. Part of the entropic limits appear to manifest as limits to the effectiveness of complex organizations. The result is that the individual, community, local and possibly regional level is the most effective scale to work on.
I am not seeing a simple choice between courses of action 1-4 at a personal level. Instead, what really happens is bouncing around between them like a pinball machine. I think that is just life, taking individual steps and as cultural and economic conditions change, other steps become possible or inevitable.
I drive a lot less than I used to. I went carless for three months last year. It didn't last, but I got a good measure of how I would have to revisit my business model to give up personal car ownership.
Hi Gail.
RE: #4. I've been writing a series of blog posts on exploring the conditions that would make something like this feasible (See: What is a feasible living situation for future humans? and A feasible living situation - continued). In these posts I am asking what sorts of environments would be needed to completely support a self-contained and sustainable village population. I look at land, topography, climate, water, and a number of issues vis a vis energy flows that would need to be considered.
The reason I pursue this is that I find almost every other path to lead either to ultimate failure, or to a pathetic loss of our humanity. Either way, if we end up down those paths, our existence would have been for nothing other than to be the trigger factor in the sixth major extinction event.
George
Hi George,
I wonder how that plays out for the populations of these "villages"?:
NY Metro Area - 19 Million
LA Metro Area - 13 Million
Chicago Metro Area - 10 Million
Mumbai Metro Area - 18 Million
Mexico City Metro Area - 22 million
It seems to me that the most useful question is how to humanely reduce the world population. It seems fashionable to point to declining birth rates as a reason to dismiss this concern. The conventional wisdom is that the world population will peak at 9+ billion sometime after 2050. After that we should take comfort that declining birth rates will stabilize or reduce global population.
Why does anyone take comfort in seeing 2B more humans occupy the planet in a period declining resources and deteriorating biosphere? Why are we so sure that birth rates will continue to decline in a dramatically different world?
Until global population growth is at least recognized as undesirable, I suspect most other plans will be ineffective in mitigating the worst consequences. The USA should follow the lead of China and at least address the issue and attempt some form of policy regarding population growth.
I fully understand the arguments about consumption versus population and the futility of advocating family planning. Fine, let us all stick our collective heads in the sand and "pray" that some god will provide for his special humans. Personally, I would feel a lot better if our elected folks were more interested in talking about sustainable population issues than sending more troops to some foreign land.
The Hardest Moral Dilemma of All
Getting an energy miracle won't solve the problem by itself. Even photosynthetic plants can not transform raw energy into food without adequate supplies of NPK and water. So it would seem to me you need to wish for two more miracles at a minimum.
If and when do you find that genie in the bottle, before you rub it, you had better consider what you wish for with the utmost of care.
I won't mince my words, eliminating the irrational opposition by religious fundamentalists to birth control, family planning, contraception and the consensual and voluntary euthanasia of the terminally ill would be a start. We need to consider a fundamentally new morality
Cheers!
George and Fred,
I thought the "The Hardest Moral Dilemma of All" was very good - I plan to send the link to several friends.
Of course I think Fred is absolutely correct:
I started reading the new book "Dark Green Religion", thinking it might provide some insight on how this new morality might come about - I've stopped reading it as the author spends far too much time mucking about in "spirituality" to hold my interest. Maybe someone else finished the book and could comment?
The quote in George's piece is what I think is heart of the problem:
I can see no hope for any kind of mitigation of coming pain unless governments, religions, and quasi-government organizations like the UN, start talking to Fred about the proper language to use in policy statements.
It starts at the top. Without real leaders that do the right thing nothing will change.
Step 1). Drag all the worthless parasites in DC and Wall Street out of their leather chairs and into the streets and beat then senseless after which they are treated to a drawing and quartering and then are immortalized by having their heads prominently displayed on a pike in a frequented public location.
Gail, when you state path 4 makes the most sense, what you're not saying is that path cannot sustain the present population, so there will be problems, to put it mildly. Path 3 just leads to mobs attacking those who hoard their personal store. Is that plan going to work? It might, if the hoarders have enough guns and ammo, and determination. If the past holds lessons, those hoarding usually end up in ruins. I think of Roman outposts in Britain, or scenes from Conrad's "An Outpost of Progress" or "Heart of Darkness", Marlow's chilling narrative in the introduction.
It's probably too late for path 2, but you read a lot about those, like chanting mantra, makes one feel hopeful, I guess. Path 1 only works for so long.
There are fundamental Laws that have to be obeyed.
We will go Nuclear, IE the Sun.
Perhaps we can make our own little sun here?
I am glad that we have these kinds of posts since it offers us all a chance to argue how best to model the economy as we enter a new era of resource limitations.
If we are interested in how our economies adapt, I definitely that these kinds of issues will need to be addressed. In the context that Steve Ludlum has frequently raised: how do we disentangle labor productivity from energy?
I urge everyone to begin paying attention to the field of study called econophysics. Earlier this year an interesting commentary came out of the American Journal of Physics titled "Econophysics and economics: Sister disciplines?".
That section essentially explains the approach that I use. I have no economic model to push; instead I try to explain the data based on the logic of science: probability theory.
The author states that economists invariably reduce uncertainty to risk, because, after all, economic models exist to support prediction of financial reward and failure (what else?). Econophysics becomes a more uncertainty-oriented discipline than economics, because scientists describe the behaviors operationally using the more rigorous physical explanations such as maximum entropy, etc.
I have been looking at models of labor productivity with a recent post called Business as Entropic Warfare and have stated in so many words that I could care less about the individual agent psychology, and all that matters relates to the statistical ensemble behavior. Which then helps to explain this:
This essentially describes the context in which scientists can understand the future of economics and capitalism. We need to look at the empirical data and reason about it using the same math that a statistical mechanic reasons about the physics of a large ensemble of particles. IMO, blindly creating a model which essentially emulates how conventional/classical economists would approach the problem or that the system dynamicists such as Jay Forrester have done this over the years just won't cut it.
As Prof Schinckus would suggests, we first need to establish the relationship between energy and capitalism from the empirical data we have on hand and then figure out how the system will respond to various kinds of stimulus. In other words, we have to treat this like a laboratory environment and not a rarefied idealized model. Maybe you have this in mind, but I am not sure it is coming across.
Re: "we first need to establish the relationship between energy and capitalism from the empirical data we have on hand and then figure out how the system will respond to various kinds of stimulus..."
Not sure if capitalism is going to be the vehicle of choice if basic human needs are not met. That is, BAU will eventually crash hard, leaving people in lines for food. Capitalism won't feed people at that point. Government, benevolent or not, will find it necessary to step in to avoid social unrest. No?
Isn't it far too late to "stimulate" an apparent corpse? Who does the stimulating? Wouldn't that be government? They're only good at stimulating the military/intelligence/police structures. Not much else is seeing 'stimulus' and the corporate media culture, working with those same agencies, is moribund.
You could be right. I just suggested that the scientific method is all about testing hypotheses and empirically deducing behavior from the data. The best way to do this is via controlled experiments or stimulating the system. Not many other options are available.
Don't get me wrong--I'm all in favor of experiments, the scientific method, and pilot projects to test avenues of change, efficiencies, etc. Not enough of that happening. However, we know so much that could be productive, immediately, if any 'transition' was envisioned by global leaders. That said, China has made remarkable progress, say, on the development of wind, solar. But they are also operating on a perpetual growth model.
The laboratory is Earth.
The experiment is in progress.
The results are coming in post hoc.
What are our baseline data?
How will we know if the system is optimised?
If the Celts were less than happy, they augured the future in the entrails of their leader.
Bit how did they know that he had not optimised the situation?
Perhaps their situation was as good as it got.
You're wrong there. Are you saying that Sweden / Norway / Canada do not employ a capitalist system? Perhaps you simply need a broader view of the world. There are places outside the USA, y'know.
The three countries you mention are hybrid systems with a very strong social component.
I am just as guilty of USA centric thinking and i have always admired the European countries for attempting to put people ahead of money and striving for some semblance of social fairness.
Just what makes those three countries "hybrid"? They are all capitalist countries, just better managed than the US. They have social programs, gov health care etc, but people are still able and encouraged to increase their personal wealth, they just don;t do it to extremes.
Where do you draw the line between capitalism and some other definition.
Sweden in particular is a cradle to grave system with extremely high taxes so what do you call that?
It could be considered Socialist more than capitalist.
I have a personal friend from Sweden and the first thing he told me is that he will never renounce his Swedish citizenship because of the social programs. He also said that the average Swede is much better off than the average American.
Entrepreneurship is minimal and a hand full of people run the whole show.
This is what I was told and I see nothing that refutes it.
They are more secure with less options.
Now America is less secure with less options.
Well, where you draw the line is a good question. No question Sweden is "more socialist", but it has not renounced capitalism (and I'm not saying you said that, either).
I have no reason to doubt your Swedish friends comments. Many Canadians living in the US will say the same
here in Canada, things are not that much different from the US, with the exception of the public health care system. And the real strange part, is that the Cdn and US govts each spend the same $/capita on health care, and we get universal coverage, and the US does not, the private sector spends as much again as Uncle Sam, and still 1/6 of the people do not have coverage.
But, other than health care, it is not that different between Can and US, hence my original comment. And if both govts spend the same on health, but Can has found a way to get much more, for more people, for it;s money, does that make it more socialist than the US?
The nationalising of banks, GM and AIG, subsidising of ethanol and farmers, and all sort of other things done by the US gov can be construed as socialist acts, it's just that no one wants to admit it.
Your final anaylsis is correct though, less secure, and less options.
Where I think Sweden has succeeded, and America could still do so, but has to work at it, is the government still enjoys the confidence, support and pride of the people. They will stand up for their country and government because it looks after them. In the US (and to a lesser extent, Canada) the governments have largely lost the faith and trust of the people, so no one is willing to give up anything for the good of the country. And getting that faith, trust and respect back will not be easy, and it cannot be bought, it must be earned. I think Obama captured enough "hope" but translating that into trust, confidence and eventually pride is proving to be much harder than he thought. Republicans will fare no better.
The politician that can capture trust, while resolving the very real problems of social security etc talked about here, will be famous, I'm just not sure if the problems can be resolved to anyones satisfaction.
Sweden is capitalist. Most productive resources are privately owned.
It is a mistake to call a country 'socialist' simply because they believe in redistributing income through taxes.
What distinguished the Soviet system was state ownership of resources, not high taxes. In fact, taxes played little role in the Soviet Union.
OK
but it is a matter of how you define each system because the outcomes start to blend together in final effect.
But I do see your argument.
Like someone down thread mentioned I am coming at it from the stand point of government control( make that concentrated control) or influence and not necessarily the formal structure as you define them.
A cynical take is that the social programs are to quell any uprising from the masses(bread and circuses)..........but i am definitely very cynical.
All current developed Nations are a hybrid in my view.
I've met tax exile Swedes. I've met Swedes who found their country stifling and do not want to go back. I've met Swedes who live in Santa Barbara and hide the extent of their material success from Swedes back in Sweden because so many Swedes want to force people to be equal in possessions regardless of how hard a subset of people work.
That sounds suspiciously like communism and even past socialism.
To each according to his contribution (socialism)
To each according to his need (communism)
Yes, and thank God the relationship between wealth and "hard work" is so strong here in the good 'ol USA! Yessiree... our bankers and oligarchs are among the hardest "working" people on the planet. Always putting in a full day's work at reckless bets designed to increase their already obscene profits at the expense of everyone else. And when those bets go really bad, they work even harder at threatening and blackmailing the taxpayer in order to get massive bailouts.
Thank Prosperity Gospel Jeesus I don't live in horrible "socialist" Sweden!
The likes of those listed, and France or the UK have systems that are more socialist in nature with higher regulation on private business, and nationalised services for the most part. The US, however, is far closer to a free market than any European state, and it shows. There is no such thing as a purely socialist or free market capitalist country now, but we get a broad spectrum between those two extremes, and it's fair to say that when we're talking about national structure like this, the likes of Sweden or the UK are far less "capitalistic" than the US, even if their economies still work via markets. It's the extent of control the government has in these capitalist societies that dictates whether they'll help people for a price, or turn to welfare.
It all depends on your definition of "better managed". Measured by per capita income they are not better managed. Sweden's international per capita income ranking has fallen many places in the last 50 years.
One can slice and dice country comparisons in many ways. For example, average life expectancy at birth, average life expectancy at age 65, average life expectancy once diagnosed with cancer (and by that measure you are better off in the US than a lot of other industrialized countries), pollution exposures, and many other measures.
Note that a lot of those life expectancy comparisons are not measures of health care systems. Higher drug or alcohol abuse can cause more miscarriages, birth defects, and deaths at various stages. Higher obesity can cause different rates of heart disease and stroke. Higher rates of smoking can also skew the results. You have to do a lot of work to be able to compare. Most internet forum discussions featuring people proclaiming some country as inferior or superior really demonstrate more about the ideological beliefs of the participants than abou anything actually true about the world.
you bring up some interesting points, Pundit.
I haven't had a chance to track it down for verification , but I saw apiece a few days ago that said that if you strip out the carnage due to firearms, automobiles, and our very high rate of obesity, thus making the US statistically comparable to the rest of the OECD, we come out either at or very near the top of the life expectancy charts.
OFM, On my own blog I write a lot about diet studies, aging studies, and medical research. My impression from reading is that banning high fructose corn syrup and trans fats would do more to cut obesity and raise life expectancy than any change in how medical care is delivered. The secret to long life is to not get sick in the first place. That means diet and exercise and pretty cheap preventative measures like vaccines and sanitation. The ideological wars about models for health care delivery pretty much ignore this.
One of the most useful comparisons of various healthcare systems is infant mortality, because it is not significantly influenced by those other issues you mention such as murder rates by guns, etc. CIA Factbook - Infant Mortality statistics country comparisons Of the 224 jurisdictions compared, the USA comes in at 180th (higher is better, eg. lower rates), Cuba at 182, Canada at 190, most EU countries above there, with Sweden second from top at 222nd, surpassed only by Bermuda and Singapore. I figure Canada is doing pretty good to be at that level given the small population spread out across a huge landmass with such a difficult climate.
I am sure that this has everything to do with how much money can be made off the life extending treatment for cancer and nothing else.
WebHubbleTelescope,
I've looked at your writings. I find traditional economic analysis more illuminatings.
In fact, it is a stretch to say you have a model. What are really engaging is a sophisticated form of data mining.
Let me list some of your errors in your posting.
1. Economics assumes lognormal distributions. False. There are plenty of papers, particularly in the finance literature, that assume non-normality, fat tails, and nonsymetrical
2. You're confusing explanation with probability theory. If you claim that x is a random walk with a positive mean drift of alpha, that is not an explanation.
Any explanation would tell why it is a random walk.
3. You are not going to be able establish a 'relationship between energy and capitalism from the empirical data'. You need to have some model in the back of mind. Otherwise you simply be collecting a bunch of near multicollinear correlations.
I would not claim that the econophysics is entirely worthless. There may be value. But haven't made the case.
To say that economic phenomena follows a power law is again simply data mining.
Beck, Your first point reflects the opinion of an economist I quoted from.
1. Lognormal is a form of fat-tail distribution. So this criticism makes little sense.
2. I am explaining the disorder and distribution observed with probability theory. There really is no other way to explain uncertainty or disorder than with probability concepts.
3. I do have a model. It is called common sense logic. This kind of nearly perfect and parsimonious agreement via simple logic is what every economists would die for if they didn't have their heads up their you know where. I am happy to see that you stated that you too observe "near multicollinear correlations." in my fit. Thanks for the praise.
Your intended insult on data mining is kind of humorous. If you don't mine the data what do you do? Does it actively mine you?
Yes, you're correct. Lognormal is fat tailed. But it is not correct to say economics assume normality. It is not necessary, although seductive to its tractability and the Law of Large Numbers. ..
Well, look at this way. Data mining means you have no theory. Correct? Do you agree?
Take a correlation matrix of key macroeconomic variables. You will see lots of highly correlated variables
Obviously your theory will need to accomodate those correlations. But I don't think the correlations will suggest a theory.
If you succeed in documenting some stochastic features that have eluded researches, then it is interesting.
But you need a theory and extremely suspicious of people of throwing thermodynamics around ....
Why? Because thermodynamics doesn't very strict constraints on economic systems. Ok, so energy is neither created nor destroyed. Ok.
Showing me how that translates into a meaningful on an economic system.
You seem to be saying something like what I have said for a good long time. Economics is the unwarrented application of scientific theories, using invalid assumptions to apply mathematical sets in an effort to create a 'scientific framework' for the subject. In other words, economists take a theory from another discipline, and then take mathematical formulae out of context, placing it in the 'new' paradigm they have 'created', to try to 'prove' what they have merely assumed. IMO they do not know what they are talking about, there is no science of economics, and they (and we) are all guessing.
Having said that, thermodynamics seems to have something to say about sustainability. I don't know how that can be applied rigorously to economics. I will have to sleep on it.
Craig
Econophysics is different than economics, I have a link upthread
http://www.theoildrum.com/node/6374#comment-611544
Beck seems to laud classical economics and is reserving judgment on econophysics. He is definitely criticising what I am trying to do, which is OK, since I can learn from any criticism.
Everything I present on my blog and here on TOD has eluded researchers. That is what is fun about documenting my findings on the internet. Eventually someone else will discover the same thing and I get to nod in agreement.
Invoking the laws of thermodynamics is not the same as what I am doing. Read the works of E.T.Jaynes who wrote a definitive text called "Probability Theory: The Logic of Science". Jaynes essentially proposed a different way to look at problems in science. Thermodynamics fits within his framework but doesn't drive it.
"Growth is only possible when energy flow is increasing... Unfortunately, the majority of the population, and especially the economists and politicians, don't get it."
I think "most people" do not even think about it. The possibility that global industrial capitalism's growth is going to end does not enter their minds.
One point of contention. Even with declining global energy, Growth is possible if you can just out-compete the rest of the Village.
I wonder if Our Glorious Leaders plan on just that - let the "others" de-industrialize and "pull out of the competition for resources" that Capitalism naturally fosters.
Fight for every calorie (drop) of energy (through war or financial shenanigans, etc) until there is no one left to fight. And hope we are the last one standing.
Chindia has already won that game.
Could be, I really don't know which team to put my chips on. There are too many unknown and unknowable variables to venture an educated guess (at least for me).
I would not count out the tribes left undisturbed on tiny islands throughout the world. They may inherit the ash pile.
That's a little premature.
Agree. They face the same hard limits as everyone else on Planet Earth.
And they have the most mouths to feed (which might be useful for cannon fodder to protect their 'elites.").
I still think some little "backwater nation" that doesn't draw too much attention to itself might pick up the pieces after the giants shoot themselves and each other in the foot one-too-many times.
Regarding net oil exports, Sam Foucher's most optimistic scenario is that the post-2005 CNOE (Cumulative Net Oil Exports) from the (2005) top five net oil exporters will be about 132 Gb. I estimate that by the end of 2010, the (2005) top five will have shipped about 30% of their post-2005 CNOE. Sam shows the net export decline rate accelerating after 2010, which is only to be expected. The model and multiple case histories show that net export decline rates tend to accelerate with time.
This is perhaps the most insidious characteristic of net export declines--the initial net export decline rates tend to be low, but the flip side of that is that the initial net export depletion rate is quite high. The Indonesia, UK, Egypt (IUKE) case history is a prime example. Their 1996-1999 combined net export decline rate was only about 3%/year, but their combined post-1996 CNOE depletion rate was about 25%/year from 1996-1999. In other words, over the initial decline period, they were depleting their post-1996 CNOE at eight times the rate that the volume of their net exports was falling.
For the (2005) top five, Sam's best case scenario, over the 2005-2013 time frame, is that they are depleting their post-2005 CNOE at about 5.4 times the rate that the volume of their net exports is falling. Of course, then we have the ELM 2.0 (Chindia, et al) factors, i.e., my outlook for the US is that we are going to be forced to make do with a declining share of a falling volume of global net oil exports.
Yes, or else we will have to destroy the local industries so that the exporters stop using so much of their own oil! Down with ELM!!!
Craig
The possibility is interesting, but you don't have an airtight case because you have never addressed technological progress or the impact of higher real energy prices on substitution away from oil to other forms of energy or the likelihood of energy conservation.
It is simply false to claim that you have to consume huge amounts of energy to have a high standard of living. In the past ten years I have lived in New York, Paris, and now Budapest. I have owned no car and taken no taxis during that time. I get around Budapest on a bike and its public transportation (just like in Paris).
Energy intensity of GDP can be sharply decreased. The US is at the high end of energy intensity. Many countries such as Germany are using dramatically less energy and they are outperform the US in terms of exports and fiscal discipline.
http://en.wikipedia.org/wiki/List_of_countries_by_energy_intensity
Your lifestyle with respect to transportation should be applauded, encouraged,and emulated. However, what do you consider a "high standard of living". Around these parts, it appears to include a lot of jet travel by the retired rich. Isn't a high standard of living closely related to consumption? If so, what have you been consuming, how was that produced, and what was its carbon impact.
I agree that carbon impact can obviously be reduced with reduced carbon intensity, but I am not sure we can have what has traditionally considered a "high standard of living". It may be possible,however, to have a fairly good quality of life without a high standard of living.
Well, that's the rub. If you live in Paris, a good standard living is a large beautiful apartment in a beautiful building in a charming neighborhood with open markets and good restaurants and bookstores and cafes. Plenty of leisure. Wine and bread are cheap and good and health care is excellent.
Hop on the TVG (fast train) and you are in London in two hours and fifteen minutes. Much faster than the plane since the airports are outside of Paris and London.
Now, you're right. A good standard living in American is very expensive. But you could change it. Americans may have to ...
Not because of some mythical thermodynamic constraint, but
Note my defnition of high standard living does not include conspicuous consumption designed to impress neighbors ...
No Hummers, no big boats, no wide screen televisions. It's fluff ...
:)
Good answer. There will still be those, however, who argue that we must continue to consume crap to keep people employed. Grow, grow, grow. There are still a lot of people on Wall Street making tens of millions, even billions of dollars. Eliminate the excess and then we can start talking about how we are close to making the descent.
Remarkably, in the 1950s, the top marginal tax rate in the U.S. was 91% and the average person paid a lot higher taxes. And yet people bitch, bitch, bitch about their taxes.
Anyway, I think those beautiful Parisian apartments you refer to will still be around for awhile after peak oil. They are not high rises after all and do not require elevators and did fine prior to the oil age.
Unless of course worsening economic conditions and a break down in global trade leads to full-scale war once again.
So if you can convince people to put little value on big cars, airplane rides, large houses, boat rides, big plasma TVs, and other high uses of energy then you can convince people that they've got just as high a GDP and just as high a living standard. Collapse all demand for cruise ship trips, flights to distant places, cross-country car trips, car commutes from suburbs into cities, and heating of big houses when it is cold outside then magically GDP is no longer so dependent on energy inputs.
We'll need to convince people that things which take very little energy to make ought to have high prices and be very valued. Everyone will have to scorn the very sight of a jumbo jet. Boo. Hiss.
Of course, we'll also have to convince people they do not want fruits and vegetables in the winter and a number of other items. Some of that will be trickier. Got any ideas on that?
Hi Roderick,
Paris: I admire your bravery! I'm generally not timid about biking in traffic - but Paris, no way! I've been there several times and done well on foot and public transport, but biking looked far to dangerous for me to consider.
Thanks for that insightful article.
Apart from Energy - which is of course crucial - I identify two other factors of production in the economy, and these are:
(a) Location - (3D); and
(b) Knowledge - both subjective 'human capital' which dies with us, and objective 'intellectual capital' which consists of data patterns and representations and is typically enclosed and owned as 'intellectual property', and thereby monetised.
More than two thirds of money/credit in existence came into existence from mortgage loans secured on land, and a very large part of that is based purely on the use value of bare Location, with the rest being based upon the use value of the energy and knowledge embedded in Location. As we have discussed here before, I think that while the increase in energy costs prior to 2007 undoubtedly brought forward the bursting of the property bubble, that it would have burst anyway in due course is a mathematical certainty.
Now, I agree with you that the current centralised but connected version of capitalism (Capitalism 2.0) is now definitively over, but I see the next phase - now rapidly emerging for those with eyes to see- as a dis-intermediated, decentralised but connected 'Peer to Peer' economy - Capitalism 3.0. Peter Barnes wrote an excellent book of that name along parallel lines, but suggested a solution based upon 'trust' law - which I see as sub-optimal, and I favour partnership-based protocols instead. The proof of that pudding is in the eating - it's about 'What Works'.
I think that in this emergent - co-operative - phase of capitalism we will collaborate (because in a partnership framework it is in our interest to do so) to create new energy sources and to make better use of the energy we have. The optimal use of developing Knowledge, on the one hand, and the smarter use of Location (eg transport advances, Live/work, virtual working, and the end of suburbia) will enableus to harvest both renewable MegaWatts and much more importantly, Amory Lovins' NegaWatts.
In my view, the enabler for this will be a new partnership-based approach to legal and financial structure which results in bypassing the intermediaries whose profit maximising (as opposed to loss minimising) behaviour is hard wired into the toxic financial capital 'enterprise model' of 'debt and equity which we take for granted.
Within a partnership there is no profit and no loss - but there is sharing of risk and surplus value mutually created.
This presentation on Energy Pools to the Scottish Energy Institute got quite a good reception.
I like that. Partnership is the perfect word to describe the relationship between an enterprises management, employees, and investors. At what point does an employee with 20 years good service to an enterprise who wants to move across the country for eg. health reasons, become considered also an investor? Is the junior "partner" with 6 months service of identical value per unit worked time with that 20 year "partner" in the same job description? How are such questions settled efficiently?
When he buys a share of stock in the enterprise.
While I'm thinking about the many ideas in your post and others, could you clarify what you mean by 'over' in "current centralised...is now...over." Are you saying that at some future date capitalism will not be centralised or that this has occurred already or is occurring, and if you mean one of the latter two, what is your evidence?
From what I can see financial capital and industrial capital are as centralized and concentrated as ever, even though their locus has partially shifted to Chindia from USland.
@toilforoil
When I say 'over' I mean we reached a point of Peak Credit about three years ago, and that Humpty cannot be put back together again.
The evolution of a Peer to Peer economy arguably began in the music industry, and I give the financial industry two to five years before it goes the same way. The reason why I believe it will happen so quickly is that it is in the interests of banks to become credit service providers rather than to remain credit intermediaries, because their capital requirement will be drastically reduced to the level necessary to cover operating costs.
Which is convenient since the next wave of the credit crunch is fast approaching and their window-dressed 'mark to fantasy' balance sheets are in no condition to withstand this wave.
Good points Chris. Up-thread I responded to Gail's comment giving links to a set of articles I have been writing about feasible solutions to her #4 path concept (at least in general terms) that, in fact, depend on the twin notions of place and knowledge. Elsewhere I have written about the nature of systems in which competition is the prevailing organizing principle (e.g. ecosystems and capitalism!) vs. those in which cooperation is the more prevailing mode (e.g. metabolism and autopoeitic systems), and those in which there is some kind of balance between the two that is context (environmental contingencies) dependent. The latter are represented by whole organisms such as ourselves and social animal populations.
I see the next phase of human evolution as moving our sociality from predominantly competition-based toward a higher degree of cooperation-based, though in small community numbers. We know that we have some propensity in that direction because that was the prevailing situation that gave rise to Homo sapiens in the first place.
Very insightful back at ya.
George
Good point, George. There are those who believe that human evolution was enhanced, not by being competitive, but by being cooperative. The see the greed gene as contrary to our nature, and to our survival.
This view is supported by the 'brain science' that seems to indicate that we have a limitation in our ability to recognize others beyond a few hundred at most, and that rather than warring with other clans, we traded.
In this worldview, the development of cheap energy as a substitute for labor began a new path that may succeed only so long as the energy components last. For instance, the fall of Rome is partly from deforestation. The dark ages were preceded by larger fuel problems, and in fact the lack of fuel resources was in some measure responsible for the devastating plagues, as our immunity was diminished.
Of course all is speculative to some extent; the research looks good, and the long term implications are interesting.
Craig
Interesting diascussion, George.
Your premise seems to be that capitalism "is dead", but you offer no alternative. "the market as the main mechanism for decisions" -- "Capitalism, as it has been practiced in a market and democratic governance system, is going to die." So what do you propose will replace it?
I think your analysis is faulty. You confuse "capitalism as a means of economic organization of society", with "capitalism as it is presently operating in the United States".
From the Meriam Webster dictionray.
emphasis added
To replace capitalism, you need to define your alternative. Many have been tried. Some have even demonstrated limited success in small isolated groups with near-zero economic complexity. The Soviets proved that command socialism fails (we pretend to work, they pretend to pay us). There are good reasons why the Chinese government is rapidly implementing a capitalist system. If anyone should know, it would be they. India has rapidly backtracked from their command system. What system should China be moving to?
To condemn capitalism simply because the present unregulated unfettered capitalism as practiced in N America, Europe and Japan is a failure is an error. The failure is of governments to manage and police capitalist markets correctly, not of capitalism as a system. Prior to capitalism working well, it is mandatory for government to establish the rules under which the markets will operate. Flawed rules provide failures, as we see. Capitalism itself is the system I've observed which can provide maximal benefit to everyone under any circumstance of available energy or resources.
I generally agree with your sentiment, yet the economic models for capitalism are completely hosed (see my comments upthread). Since no one has a real scientific understanding of deterministic capitalism in so far as game theoretic issues make this impossible, we still need to know how the system will respond to perturbations. I predict that deep analysis should remain the focus.
Perhaps we shouldn't suggest that capitalism "is dead", but instead pose the question as : what kind of transformations or responses will occur as resource limitations take hold?
The transformation of Capitalism is a bit dry for an Oil Drum article
@lengould
I believe that the next generation of Capitalism will be an open, networked and dis-intermediated 'Peer to Peer' market capitalism where there are no profits, because there are no intermediaries.
In this model transactions will be based upon value, rather than a claim over value issued ex nihilo by a credit intermediary aka bank. The use of an Energy Standard - ie an energy unit of measure - would give rise to energy accounting. Units of currency ('money's worth') will circulate by reference to this value standard on credit terms, within a suitable trust framework backed by mutual guarantees.
Units of currency redeemable in payment for energy use are probably the most generally fungible, and would give rise to an International Energy Clearing Union. Units of currency based upon the use value of location will be geographically acceptable, and indeed John Law suggested land backing for currency over 300 years ago here in Scotland.
Without profit, where is the surplus?
Market systems are not going away. They are responsible for an amazing creation of wealth during the last five decades.
Nor is money going away. Trade without money means barter.
@Roderick Beck
Profit and Loss are outcomes of our current system of absolute property rights, intermediated transactions, and double entry book-keeping. All of these are IMHO obsolescent in a networked economy.
Market systems are not going away. They are responsible for an amazing creation of wealth during the last five decades.
The existing toxic combination of compounding debt and private property - particularly in land - has been responsible for the creation of our present position of an unsustainable accumulation of financial claims over wealth (aka interest-bearing debt). So 90% of the UK and US populations are now in debt to the other 10% who also own virtually all of the unencumbered wealth. In the UK 0.3% of the population now owns 69% of land, which is a considerably less equal distribution of 'wealth' than the average banana republic. I doubt whether the US distribution is any more equal or sustainable.
I agree that market systems are necessary: but in a world of direct instantaneous connections, neither Public intermediaries ie the State, nor Private intermediaries ie Shareholders, are necessary.
Nor is money going away. Trade without money means barter.
You are under a misapprehension as to the nature of money and credit, I think.
Wherever barter systems incorporate credit or 'time to pay' the result IS a monetary system.
The best example is the Swiss WIR (but any proprietary barter system is the same) where tens of thousands of Swiss SME businesses have since 1934 exchanged many billions of Swiss Francs' worth of goods and services on credit terms. No Swiss Francs change hands in settlement of this bilateral P2P trade credit and the Swiss Franc is effectively used only as the abstract pricing reference 'unit of measure' which I refer to as a 'Value Standard'.
The WIR system is a monetary system; a credit clearing system; and an accounting system. There is credit; there is a complementary currency issued by the WIR Bank; there is a Swiss Franc value standard; and there is a framework of trust which provides a discipline in respect of debit balances, this being the requirement upon WIR members to give a lien over business property.
But there is no 'money' as you are thinking of it - ie as a physical object or a credit object/IOU issued by a bank.
A more up to date example, where I have a personal interest through top-level contacts, is in Ecuador.
Ecuador's Central Bank is currently prototyping the 'FactoRepo' system whereby businesses registered for Value Added Tax may discount their invoices directly with the Ecuador Central Bank and thereby obtain credit directly for working capital.
In this model - which is not dissimilar to time-honoured use of bills of exchange - trade credit obligations are essentially used in settlement of other trade credit obligations. The outcome is once again a credit clearing system, but this time with a State intermediary, rather than a 'Not for profit' intermediary like the WIR bank.
In Ecuador, the US dollar is therefore used as a 'Value Standard', which Ecuadoreans prefer since 'dollarisation' stabilised the economy. But the beauty of the FactoRepo model for the Central Bank (and President Correa) is that it could help to wean Ecuador off dependency on the US for 'fiat' dollars, since the dollar requirement is minimised by the 'netting out' of credit obligations.
With seed funding from the Norwegian government I have gone one step further and architected truly 'Peer to Peer' systems for both credit and investment where there is no need for any intermediary at all, and where banks may operate as service providers instead.
The emerging 'Peer to Peer' market economy will operate in a very different way - let's call it 'Not for Loss' - to the existing 'For Intermediary Profit' economy, and will result, I believe, in much fairer and more sustainable outcomes.
Chris,
1. Money is a medium of exchange, a unit of value, and a store of value.
2. Profit is not caused by intermediated transactions or absolute property rights. Profit is really a social surplus - the difference between total benefits and total costs.
3. You engaging in a dangerous of intellectual self-indulgence. The modern market system survived the Great Depression - the Great Recession of 2008 is a pimple compared to the Great Depression.
3. Barter means the direct exchange of goods and services for other goods and services without money being involved. You are obviously interested in facilitating that. Great. So what?
It is therefore a nonmonetary (as well as highly inefficient system).
4. In your Peer-to-Peer economy economic agents will strive to maximize their net benefits .... In other words, their profits ....
I don't expect people to become any less selfish under your peer-to-peer system.
:)
5. Barter is a tiny fraction of world economic output, but it does not help to evade taxes. Now that is very Swiss ...
6. By the way, who is going to provide the capital in your system? Are you going to pay with organic potatos and tofu?
Let's get serious.
Economists like the the agent approach but most econophycisists avoid theorizing about the individual psychology of agents. It typically doesn't do any good because the vast amount of individual behaviors remain unpredictable.
Maximizing their net benefits is just one outcome. Game theory suggests that any number of other possibilities exist. These all get smeared together.
Wait a minute. You're half right. But game theoretic models generally do have payoff functions for their agents.
I agree that there is not a priori compelling reason to assume selfish payoff functions ... But they do seem a good fit at least for the private economy (nonprofits are another story).
By the way, I am not a big fan of much of utility function theory. So I am not going to argue in favour of traditional utility theory.
You can model agents as Brownian motion, etc. but you still need an underlying theory. You can't leave at Brownian motion. We appear to be more complex than atoms ...
I rarely invoke Brownian motion. Way too low a level for econophysics. Invoking any individual agent behavior is suspect as well.
I'll agree that most agents in an economic system are more complex than simply
However, as a first approximation it works fairly well. There is, agreed however, no doubt that there is a broad spectrum of other motivations for actors in real economies, and significant variations across geographic areas. Obviously the motivations of Norwegian or Swedish economic actors have somewhat less of a laser-like focus on personal benefit than, say, those in the USA. Evidence willingness to support decent universal medical care, education, support for the least wealthy percentage of the population, other community activities.
The key seems to be an economy strong enough to support people to a "threshold" level, and isolation from certain toxic media influences.
The key in Scandinavia is genetic homogeneity which causes instincts aimed at protecting one's genes carried by other people to cause people to support social welfare programs for others. Take an evolutionary psychology approach and the Swedish welfare state (as well as greater opposition to it in the US) makes perfect sense.
@ Roderick Beck
1. Money is a medium of exchange, a unit of value, and a store of value.
You will find as many definitions of money as you will economists. And virtually all of them use ideological assumptions and definitions which bear no relationship to the reality.
The WIR, among other systems, demonstrates that a unit of currency - which might be thought of as 'money's worth' or 'store of value' - is distinct from a unit of measure or 'value standard'. How can these two demonstrably distinct concepts both be 'money'?
2. Profit is not caused by intermediated transactions or absolute property rights.
The concepts of profit and loss are integral to double entry book-keeping, and that in turn derived from the growth of trading with non-local counterparties via intermediaries. Money came about in order to bridge the temporal gap between 'split barter' transactions. E C Riegel gives one of the best accounts of this.
the Great Recession of 2008 is a pimple compared to the Great Depression.
You are engaging in wishful thinking. We may, perhaps, have avoided Depression because we have so far avoided the lunatic prescriptions of the Voodoo tendency of economists, but these quack doctors are waiting in the wings to apply leeches to a patient bleeding from internal wounds.
There is another wave about to arrive in the current Credit Crunch. All we have so far is a recovery in financial asset prices. There can be no recovery in the productive economy unless and until wealth imbalances are addressed.
3. Barter means the direct exchange of goods and services for other goods and services without money being involved.
I propose a new generation of currencies based upon land rental values and energy, and I have identified a simple Capital partnership mechanism for a 'debt/equity swap' which when implemented will give rise to such currencies as an outcome.
It is therefore a nonmonetary (as well as highly inefficient system).
Money is a relationship: not an object. In fact such a system has much lower friction costs because it is in everyone's interests to remove them.
4. In your Peer-to-Peer economy economic agents will strive to maximize their net benefits .... In other words, their profits ....
There are no 'agents' in a partnership: all participants are Principals. Moreover, within a partnership framework it is optimal behaviour to be transparent and to co-operate to maximise gross production, because to do so maximises the value of a partnership interest.
5. Barter is a tiny fraction of world economic output, but it does not help to evade taxes.
Barter constitutes the entire world economic output. It's just that most of what is exchanged consists of credit objects with no intrinsic value.
6. By the way, who is going to provide the capital in your system? Are you going to pay with organic potatos and tofu?
What I have described is a credit clearing system, which is necessary for the circulation of goods and services and the creation of productive assets. Such a system requires neither deposits nor interest, although it does require a service charge and provision against defaults.
Investment in productive assets requires a new approach to equity, in order to replace the conflicting - and thoroughly broken - conventional claims of equity and secured debt. Here I advocate direct peer to peer investment using partnership-based entities, rather than inefficient, conflicted and archaic entities based upon trust law or company law.
Chris,
I don't expect to see anytime soon the withering of capitalism in its current form, which I see as a hybrid of monopoly industrial capitalism and monopoly financial capitalism. I use the word monopoly even as I recognize that small financial institutions, like credit unions, and small independent business co-exist with the dominant mainly ogilopolistic forms of industrial and financial organization. In this sense monopoly refers to the general concentration and centralization in industry and finance. The concentration of wealth to which you point is instructive.
But industrial capitalism is immature in 'the developing world', and its process of maturation there can probably carry the next to useless agencies of financialization down the road a ways yet.
Still, capitalism has changed more than once even since it emerged from its mercantilist roots. I understand your 'for Intermediary Profit' expression to derive from the rise of financial capitalism in recent years. What Marx called 'M to M1', instead of his classical M > C > M1 in which capital (M) grew by increasing the value of a real commodity. So, I think you are right to be on the outlook for the new form which capitalism might take.
Roderick may see the Great Recession as a pimple compared to the Great Depression, but it's not yet clear that the Great Recession has run its course. It's not clear for example that efforts to regulate the largely unproductive and dangerous financial speculation that characterizes these times will be successful. It's not clear either that the response to resource degradation will improve or worsen the economic situation.
I think that Marx and Keynes have been proven right, that capitalism is crisis prone. And it's not clear that Krugman and other more conservative economists are right that appropriate regulation and smart fiscal and monetary policy can moderate these crises into near irrelevance. Thus I expect that new solutions will be sought. It's just not clear to me why a "'Peer to Peer' market economy" might provide that solution.
delete that repeat
Profits has nothing to do with intermediaries.
No intermediaries? So shut down Amazon.com? Only buy books directly from authors? Will authors print their own books?
Intermediaries exist for very compelling reasons that will not go away.
Units of currency based on the use value of location? A barrel of oil already has a different price depending on where it is at. We already have a market that does this.
Peer to peer market: That's what eBay does. But big companies end up selling on eBay too.
Legould,
As long as there exists a monetary system and hence money to buy off politicians then any form of "Capitalism" will degrade into Oligarchy.
Who watches the watchmen?
I believe that Energy/resource based model will be the ultimate economic model and money will not exist.
Social status will be determined by what you can contribute and not what you can grab from others.
The younger generation is already getting hip to the fact that they are not going to get a shot in the current system and they understand why.
"Ownership" of the means of production and resources is not going to work in a shrinking resource world.
The only alternative I see from here is either something like this:
http://www.thezeitgeistmovement.com/joomla/index.php?Itemid=50
Or perpetual resource wars and many, many deaths.
"That which is about to fall should be push." (paraphrased) Nietzsche.
That is simply too cynical for words. Enforcing appropriate ethical standards on political and civil service representatives in a democracy is NOT rocket science. Several countries I can think of immediately come very close to very excellent systems. Norway. Finland. Even Canada's conservative government has just yesterday fired a cabinet minister for suspicion of corruption.
"While Harper didn't elaborate on the nature of the RCMP investigation, CTV News has learned that the Mounties will probe allegations that Guergis' husband, former MP Rahim Jaffer, used his wife's office to conduct commercial business.
Additionally, CTV Ottawa Bureau Chief Robert Fife reported late Friday that the RCMP will investigate allegations that Guergis accompanied her husband to business meetings."
http://www.cp24.com/servlet/an/local/CTVNews/20100409/guergis_update_100...
Maybe I am too cynical.
What are we doing wrong here in the US then?
The US is infested with corruption and nothing short of an enema will do.
Price points really don't know how do value resources.
hubbert was a commie. Equal access to resources….pure evil!
Here is a reasonably 'neutral' encapsulation of the term "Capitalism", which I think gives a better picture than your dictionary definition. Please see a very brief description of the prehistory of capitalism, what capitalism means in terms of production and what it means as a way of thinking.
http://www.wsu.edu/~dee/GLOSSARY/CAPITAL.HTM
Thanks for the link. I especially enjoyed the bit about what it meant to be a "consumer".
Me too!
Pretty good except
But when people no longer have social relations with others who make the objects they consume, that means that the only relation they have is with the object itself. So part of capitalism as a way of thinking is that people become "consumers," that is, they define themselves by the objects they purchase rather than the objects they produce.
really doesn't square with reality, almost everyone I have encountered (and that includes virtual encounters like interviews) in the capitalist US defines themselves by the type of work they do overlain on their family situation. Only the economy regards primarily regards people as consumers and economy has no life without all those people who define themselves by their type of work. The boxes the social 'science' academics construct are useful tools but they never, ever really describe what is.
Evidently you've never encountered a teenager.
Well there are a couple of issue with that ?- )
In the world where teenagers are becomning a larger part of the demographic there is not really enough to consume to call anyone, by capitalist western standards anyway, a consumer. In the aging developed world, almost everyone has had or does have a type of work by which they define themselves. The median age in the US is about 36.7 years, in Somalia it is 17.5 years. Mr. Mobus is introduced as an associate professor of computer and software engineering, not as a buyer of bread at Safeway. But I get your point teenagers can seem to group themselves by what they buy, which makes sense as the classification of student is near meaningless to them since, by far, the biggest part of them have been in school near as long as they can remember. Actually on a little more reflection most people classify themselves by what they sell (type of labor) which is the exact opposite of
So part of capitalism as a way of thinking is that people become "consumers," that is, they define themselves by the objects they purchase rather than the objects they produce.
Which all points up the problem in any kind of modeling. All has to organized around a central theme to start with. All becomes defined in terms of that central theme and properties of components regardless how important that do not readily quantify in terms of that central theme are ignored. There is no other way to do it, unless you go to the other extreme like WHT and just compute for everything attempting to achieve maximum entropy, which may well describe the very biggest of pictures over the longest of time frames but does very little to help us understand how local systems organize themselves to minimize entropy (or however that should be said) for shorter time periods. Kind of the same problem that physics has where the rules we use to describe the very small don't help us to make sense of things when describing the very large and vice versa.
lengould,
Actually at the very end of the article I provided a link to exactly that! I call it sapient governance, but it applies to smaller, more distributed communities in a fashion similar to what Chris Cook has described. I outline the role of markets, money (strictly as a token representation for exergy) and hierarchical distributed governance (strategic, tactical, logistical, and operational levels). The caveat seems to be that such an organization could only function in the case where the majority of citizens are sufficiently sapient (capable of developing wisdom) to have superior judgment capabilities. That is why I view it as a potential next stage of human evolution rather than propose it as a solution to the current species' problems.
George
I see a lot of evidence that there will be no next stage of evolution and that we are devolving. I think we are descending into incoherent madness, derangement, violence, and hate. Other than that, I am quite optimistic about the future.
Sapience ain't gonna happen.
The smaller, distributed communities will otherwise be known as hordes populated by the kinds of people you see on that credit card commercial, but without a very good sense of humor.
Get ready not for sapience, but for Sarahpalience.
Frankly, I think this whole discussion is getting way too abstract. Good luck communicating with the masses.
Much smaller scale capitalism would be an improvement and would be closer to the kind of world that Adam Smith envisioned. But that is a wish not a prediction.
Could we just start by breaking up the banks? Or how about the military industrial complex.
The concentrators and the aggregators are winning and they will probably find a way to win under peak oil.
Don't need it. Not trying to communicate with the masses. Most of them are essentially history. Not trying to save the world or anything like that. Just trying to get a perspective that MIGHT be workable in an energy constrained world. Is it too abstract? Read my working papers on sapience before you decide.
I was not referring to you regarding abstraction.
Tstreet,
I am still laughing over this one.
The concentrators and aggregators are losing less slowly. They are trying to outlast the others. They are staving off disaster as long as they can while wealth accrues slowly in their general direction..
I think it is no accident that the concentrators and aggregators often have high educations. And applications to excellent colleges in the US are up 30% or something. If you can`t beat the club....
The concentrators and aggregators use their intelligence to construct power spheres (higher ed., medicine, govt, banking) where their skills are necessary, and have to be bought.
Little by little these power spheres are actually losing their grip--witness GS being sued today. But on the way down, the aggregators and concentrators are finding their power useful because they can funnel funds in their own direction. WHich they are doing, by the way.
If you are an aggregator and a concentrator don`t feel guilty, by the way. I know many nice ones. They are almost all nice---look at Obama! They really do feel sympathy for people. DOn`t you know some personally in your life?
It has ever been this way, but without oil it was a lot less malignant and dangerous. Outsiders could get a living in nature but that is gone now.
In Collapse, the "Gift Economy" is discussed ... a useful and more peaceful, cooperative way perhpas. In a society where cooperation is the imperative, the ultimate punishment is banishment.
Craig
When the society is the entire world, where are violators banished to?
It is certain that the gift economy worked well in some north-west Pacific native american societies, though its implementation had the large advantage of no means to store surplus meat (mostly fish I think) when caught so gifting it to others presumeably in expectation of future reciprocation would be a very productive self-interest thing to do. More difficult to get started in eg. grain-farming groups where surplus is much more easily stored, and stored surplus would be necessary to survive between harvests.
I suspect that acting in self-interest is probably hard-wired into our genetic makeup, making it hugely difficult to overcome. Any rational system must essentially deal with that by setting strict limits by some means on the amount of variance between haves and have-nots is acceptable / tolerated. My opinion is that the 1950's and 1960's had a quite effective balance within North America but terribly out of sorts on the larger geographic scale, whereas today things are totaly whacked even within North America. Perhaps a constitutional ammendment setting a maximum size on the Gini Index? (eg. no developed country has an index anywhere near as high as the USA, most under-developed countries much higher). List of countries by income equality - (Click on column title to sort)
I agree with Len Gould on capitalism and the market economy. Communism isn't going to replace capitalism. Computers aren't going to replace prices. Kibbutzes aren't going to sprout up on the edge of Transition Towns.
I think a lot of supporters of socialist policies are trying to piggyback onto Peak Oil to get another chance to promote policies they'd be for even if the world still had 5 trillion barrels of oil available for extraction.
Of course the environmental movement and even the peak oil movement have been hijacked. Take a look at the U.S. green party's platforms on various things. Many of their platforms would harm the environment but favor them for "social justice."
So funny to see people trying to do things that are impossible for them. In the case of this article its trying to save the modern form of capitalism. So, what is capitalism. Its making capital and use it to produce more goods and services (combinely called products) that couldn't be produced in absence of that capital.
On the most basic sense of capitalism, everything we humans do is capitalistic. Even a hunter-gatherer society used to have some kind of weapons (even if its made up of stone), animals and some other basic tools for cutting and cooking the meat and processing the fruits they hunt and gather. A simple knife is a very precious capital in a forest or grass land, using it you can hunt more meat than you can in absence of it and it may pay back in terms of energy returns 100 times the effort used to make it, and it not needed be a metal knife, a simple knife can be made from pointed stone or wood etc.
Agriculture is capitalistic in its basics. Land is capital and so is farm animals, plough, suckle, quern etc. Industralization is obviously capitalistic.
The problem is not in all of the capitalism, its only in interest-based capitalism. A wide spread and long term implementation of interest-based capitalism cannot happen without a general compound growth in production, that is in economy. People give much thought to growth-based economy but not to why its so much depended on. Its interest-based economic system that is putting everybody in trouble.
So, what is the alternative. The alternative is to switch to a rent-based economy. You have capital and you use it to buy some mean of production. You not want to work on that mean of production and if you do you want to have some other income in return of your labour. That return you want to keep separate from the return you expect to get just by owning the mean of production. This desire of yours is fairly reasonable and should be fulfilled. So what you do is to demand a rent. If you have a farm you take for example 25% of the production of farm. If you have a living place you take some pre-decided quantity of materials (money or goods) in return of somebody else using it.
Rent based economy is the only alternate for growth-based economy if the target is to save the goods of current economic system as much as possible and keep the sum of troubles of humanity at the minimum.
Excellent framing of a hypothetical situation.
How would the statistics of labor productivity and income distribution change under a rent-based scenario?
We are facing a situation of energy decline therefore labor productivity have to decline as less goods and services can be produced by working class when help of automatic machines would no longer be there. At the same time wealth would shrink too as once precious capital would become worthless. How the statistics of income distribution change depends on what choices are made. An investor sticking to current kind of capital would in most cases suffer badly in both income and wealth. A worker who is more flexible in learning new, simple and more manual ways of production can face a less decline in income than a worker who want to stick to the current ways.
From my 2007 ELP essay:
http://graphoilogy.blogspot.com/2007/04/elp-plan-economize-localize-prod...
Could you explain to me why your "rents" are in any way different from "interest charges"?
A rent-based economy is different from a growth-based economy in the essence that it does not require growth. Rent can be part of production regardless of whether the production is increasing or decreasing. Some ratio is set and that is taken. In a contracting economy the contraction is shared both by rich and poor as income and wealth of both decline.
Also the loss is shared by the investor. If the crop go bad, factory production go down due to lack of energy source or house is burned down then the investor loses. Its different from an interest-based economy where the basic claim of lender is still acknowledged.
So essentially it is same as converting debt to equity in present financial terms. Incidentally, In response to the deflating housing bubble this was one of the solutions proposed by Nassim N Taleb (of Black Swan fame).
read here http://www.ritholtz.com/blog/2009/07/fixing-housing/
Debt to equity is the protocol of bankruptcy.
The debt holders get to own the company.
@lengould
Could you explain to me why your "rents" are in any way different from "interest charges"?
Hong Kong is a good illustration, where getting on for 35% of government income historically came from a 'Crown Rental' - not technically a tax - not unconnected to the fact that a large chunk of HK was only leased from the Chinese, so freehold was impracticable.
This meant that the entrepreneurial population did not have BOTH landlords AND government on their backs to the extent of that amount, and the resulting lower tax burden on earned income undoubtedly had a great deal to do with Hong Kong's success.
In a rent-based economy there is no compound interest, although there is a return on capital assets.
Well, my experience is limited to observing that any landlord with a computer can easily figure out a "rent" rate and set of contract terms which will have a very high probability of returning to them exactly the same gain over the life of the contract that compound interest would do. Two observations:
1) The Islamic rule of "no interest allowed on loans" works in fact identically to the western system of interest. The interest is simply rolled up into the initial fees or collection fees. Have the Koran ban initial fees and collection fees and see how fast your economy freezes up.
2) While a farmer who has no means of concealing the land's production from the view of an experienced landlord is a good candidate for "percentage of production" based rents, such a system would be hugely unwieldy for a multi- storey office tower in a city. This is nothing but a call to return to a simpler past based primarily on nostalgia.
Just as workers need an incentive to work, those who save their money need an incentive to re-invest that saving rather than socking it into gold bars and hiding it under their beds. The key is to get the market set up properly so that the three pillars (labour, capital, resources) are valued properly and ethically. IMHO, at present capital is over-rewarded and resources are undervalued, a problem which we need our governments to fix.
Nothing but tuning the same old broken and outdated system.
We need to start from the premise that humans are one species and part of the ecosystem that we are currently raping into oblivion.
Capitalism or competition among humans is blind to the untended consequences and external costs. We have way over stepped or boundaries regarding the planet.
We need to re-orient our culture away from materialism and toward life long personal development.
It really is funny because once I realized that the biggest thrills I ever had where learning or the moment of understanding that is all I wanted to do.
This consumer oriented culture needs to be destroyed and replaced with an ethos that centers on self- improvement and personal development.
Life long personal development is expensive. Education systems are expensive.
The Italian Renaissance would not have occurred without the wealth generated by the East/West trade routes. .
You're engaging in a dangerous romanticism ...
How much are you willing to reduce your income to achieve life long personal development?
Find out how much it costs to learn a foreign language.
Very expensive ...
Books are free at the library........and so is the internet.
You can learn much for free.
The Internet is not free. I work for a TransAtlantic cable system that carries lots of Internet traffic. Our system cost a $1 billion to build.
Libraries are expensive. .
The first that happens in an economic recession is that libraries, museums, orchestras, operas, etc. face deficits.
There is no free lunch.
They are already established and free is a term I misused.
The bang for the buck of all this available information is enormous.
One Billion LOL...........compare that to the bullshit money that flies around Wall Street.
Think of what could have been accomplished with all the wasted money that "capitalism" and the "free market" squander supposedly making efficient use of it. LOL.
One of the main arguments made for free markets and Capitalism is that it finds the most efficient ways to create wealth.
This is total BullSh@T.
There are so many redundancies and so much waste (look at a landfill). That to claim it is efficient is an exercise in Big Lie Propaganda.
We should be making products that last a lifetime and focus on the resource cost of the product over it's lifetime as the metric for efficiency.
At this point the current system is dead and a walking zombie.
Porge,
Your American capitalism is very wasteful. French, Swedish or Danish capitalism is not as wasteful.
Don't confuse American culture with capitalism.
By the way, what's the replacement. Centrally managed systems failed.
All systems fail eventually because of corrupt "leaders".
You got me on the perfect replacement.
A good start would be to link the currency to energy flow rates to at least have a natural metric govern the economy.
And I am not so sure that a coordinated economy wouldn't work at our level of technological ability.
If the leadership can be kept honest then it might just be the only way out of this mess that the free market myth has created.
If American capitalism is so wasteful then why does America manage to have higher per capita GDP? Europe's right up there with Mississippi for per capita GDP.
See my above comments on the BullSh!T metric that is called GDP.
It measures nothing but money turning over and a huge chunk is not only useless but detrimental.
All the transactions on wall street are calculated in the "GDP".
Also all the junk in the landfills is calculated in "GDP".
The only metric that makes sense is something like..... Quality of life(happiness)/energy(or broader resources in general) ratio.
It is not only worthless it is exceedingly misleading.
America lives a Big Lie.
I am so sick and tired of people taking "GDP" seriously.
Garbage in garbage out.
That's what happens when "GDP" is used as the yard stick.
And everything I said above assumes that it is being reported honestly.
What a absolute F@cking Joke.
Furthermore, our technological abilities and automation have taken us well past survival.
What I am saying is that a mindset change is needed away from materialism and toward skill and knowledge development.
Think of how much of a leap it would be if everyone became life long learners and didn't stop after they learned the minimum skills to get a "job".
That to me is the greatest failure of capitalism/chasing money.
And yes I am a romantic but I don't think that means I am wrong.
I like it, and libraries certainly are cheap compared to most else.
To kludge an idea from Plato, I'd say bring on the philosopher-peasants.
Agreed. But capitalism can be tamed. However, it requires political strength and courage.
Don't kid yourself, Obama's success on health care was triumph over the American reactionaries.
The requirement for all to get medical insurance was first proposed by analysts at the Heritage Foundation (right wing) around 1993 or 1994. The first state to put it into place (Massachusetts) had a Republican governor (Romney) promoting it. The irony is that the Democrats embraced a Republican measure and therefore the Republicans opposed it.
Romney preferred allowing people to opt out of medical insurance by posting a bond or some other similar mechanism to prove ability to pay one's own medical expenses. The Democrats in the MA legislature opposed this and he had to accept a plan only partly to his liking.
I favor the ability to do a progressive opt-out by larger deductible policies tied to health savings accounts. The more you have saved the higher deductible you should be allowed to have.
Those proposals were nothing more than attempts (largely successful) to intercept the voter's swing toward a universal insurance system.
All your proposals are completely meaningless to the bottom 1/3 income earners in the USA, who will still be wiped out by any serious medical event in their families as long as you allow competition among multiple medical insurers.
We have to understand the way of thinking of most of people. We have to find a solution that most people are willing to accept. A simple, flexible and readily understandable solution. Concerns about ecology and energy efficiency would not be interested by most people.
We simply have to inform people that current interest-based economic system rely on long term compound growth. Growth is always and always an exception, never a rule. On a finite planet growth is finite and limited too. We have to tell people that why current economic crisis in developed world is different than any other in living memories is because its a paradigm change. The days of growth are over. What follows is a decline. Its not even a plateau because money is energy and 86% of energy comes from fossil fuels that took millions of years to form and due to thermodynamic rules energy once gone is gone forever.
While it may be boring for people to think in ecological and energy efficiency terms it should be easily absorbing for them to understand the energy decline and thermodynamic rule. We on our basic subconscious level know that thing once gone is never coming back.
The public will ask you what is the alternate. You must tell people an alternate or keep quiet. If you don't have a solution but are willing to talk loud about problem you would be ignored at best and attacked at worst. I have a solution. For an investor its to rent out thing, for a worker it is to adapt. For both investor and worker and other non-earning parts of society (women, children and old men) it is to simplify their lives, do more work manually and reduce their dependability of automatic machines. Use more manual machines are more tools.
We have to understand the way of thinking of most of people. We have to find a solution that most people are willing to accept. A simple, flexible and readily understandable solution. Concerns about ecology and energy efficiency would not be interested by most people.
We simply have to inform people that current interest-based economic system rely on long term compound growth. Growth is always and always an exception, never a rule. On a finite planet growth is finite and limited too. We have to tell people that why current economic crisis in developed world is different than any other in living memories is because its a paradigm change. The days of growth are over. What follows is a decline. Its not even a plateau because money is energy and 86% of energy comes from fossil fuels that took millions of years to form and due to thermodynamic rules energy once gone is gone forever.
While it may be boring for people to think in ecological and energy efficiency terms it should be easily absorbing for them to understand the energy decline and thermodynamic rule. We on our basic subconscious level know that thing once gone is never coming back.
The public will ask you what is the alternate. You must tell people an alternate or keep quiet. If you don't have a solution but are willing to talk loud about problem you would be ignored at best and attacked at worst. I have a solution. For an investor its to rent out thing, for a worker it is to adapt. For both investor and worker and other non-earning parts of society (women, children and old men) it is to simplify their lives, do more work manually and reduce their dependability of automatic machines. Use more manual machines are more tools.
Consider the following:
and
It sure seemed that the rate of growth slowed when the energy input decreased, but there was still growth. If the energy that is input -- although smaller -- is used more efficiently to build and move things around, it is possible for growth to still be net positive. There is a ceiling to this, of course, but it's difficult to measure where that is.
Of course.
George's article is an embarrassment.
George has never heard of nuclear power, which provides 80% of France's electricity and has made the France the number one electricity exporter in the world.
There are plenty of substitutes for oil.
Then George has clearly not heard of energy efficiency:
http://en.wikipedia.org/wiki/List_of_countries_by_energy_intensity.
The dramatic variation in energy intensity among developed countries is a clear indication that there are a variety of ways to produce a good or service using dramatically different amounts of energy.
The Germans have developed the PassivHaus - a housing design that eliminates the need for heating during the winter ...
Next winter my apartment will be upgraded to the PassivHaus design and my energy loss will be cut by 50%. So my energy bill will fall $80 a month to $40 a month.
Energy is not in fixed proportions to produce goods and services.
The Germans are to be congratulated in keeping their rate of increase in total energy consumption in the 1999 to 2006 time frame down to about 0.5%/year (see my note down the thread).
And, as per the EIA, total world energy production and consumption grew steadily during this period. There was no substantial market driven need for the Germans to use less energy in total, especially as they show a remarkable ability to use energy productively, measured in terms of their competitiveness in world markets.
http://tonto.eia.doe.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=44&pid=44&...
A rather harsh comment, and somewhat misguided.
Nuclear is one way to replace the energy from dwindling oil supplies, but we need to build one a week for decades to get there. Do you see that happening now? France is predominantly nuclear for electricity generation (the US actually produces twice as much overall), but that accounts for much less than half of its energy needs. Can it handle a rapid decline in FF supplies?
The concept of Energy Intensity ignores the fact that those that are now less intensive have exported their energy intensive manufacturing to other countries.
The relationship between energy and the rest of the economy is complex, and efficiency improvements serve as a buffer that can cushion a decline in energy input -- but it's not a cure. And while there may be many substitutes for oil there are none for time that we don't have.
"A rather harsh comment, and somewhat misguided."
I concur.
I think you are ignoring much that isn't working in the French system.
I'm afraid I don't have the link handy for this snippet but it's easy to find discussions of the situation the French nuclear industry is in:
The Finnish reactor is now even more over budget and behind schedule.
There are 104 reactors in the United States, all of them coming to the end of their lifespan within the next two to three decades. There are about two dozen applications for new nuclear reactors, 17 of which have been approved. Even if all of them are approved and built before 2020, the U.S. will not replace anywhere near the number that will be retired.
It's possible that these new smaller reactors can technologically be ready for mass deployment before we shut down the current crop of reactors but with the financial system assured to fail before then (in my view), I wouldn't bet money on that.
All signals point to Energy Descent to me.
If the added cost for building these nuclear reactors means the electricity costs 12 or 15 or even 18 cents per kwh that does not mean Energy Descent. It just means moderately higher electric power prices.
Really, nuclear power costs more than coal electric or natural gas electric. Okay, fine. But it is still affordable. Suppose each reactor costs as much as $10 billion. We could build 500 reactors to generate almost all electricity in America for $5 trillion. With a US yearly GDP of about $14 trillion we can afford that.
We are going to go thru a period of higher unemployment and lower living standards. But we are still going to live better than people in the 19th century. This transition is going to be a big disruptive bump in the road. But civilization will continue.
Actually, 0 of them have been approved yet. The first new licenses aren't scheduled to be issued until 2011.
1. It's harsh, but true. George needs to make his case. Not ignore the countervailing factors and make glib comments about the end of capitalism.
2. I am not claiming any one source of energy (wind, nuclear, solar, gas, biofuels, coal, etc.) is the magic bullet. But
George writes as though oil has no substitutes and its use cannot be economized. That's rubbish. It is actually a very American centric view.
3. The idea is diversify one's sources of energy to be able to better handle the inevitable rise of oil prices into the $100 to $150 range. Not eliminate one's dependence on oil, but sharply reduce it.
4. Oil prices themselves will induce energy conservation and create huge incentives to find new energy sources.
5. Don't forget that Peak Oil has winners as well as losers. US. Urban areas are winners. Rural areas are losers. Train and maritime transport are winners. Trucks are losers. Anyone producing house insulation is a winner ... Wood houses are losers. Good brick buildings are winners.
Figure out how to be winner. I have an excellent bike and live in a city. I hold oil futures ...
As opposed to glib comments about someone's lack of intelligence (threads below)? The existence of alternatives and possible efficiency improvements don't guarantee anything. Is there a physical law which says this has to end well?
Again, it's the volume problem. There is no substitute in the near term for the amount of liquid fuel needed.
About time to find that next North Sea.
The problem is the need for step 4 to kick in before step 3. Expensive oil makes developing and deploying alternatives more expensive, and recent years have shown that demand for labor and equipment necessary for such changes quickly outgrows supply.
Maybe. Maybe not. In the "Great Leap Forward", Mao ensured that food made it into the city, starving the peasants who grew it. That's what it might take.
If I steal your bike, do I win?
There is plenty of room for contrary discussion and criticism. Just present your ideas and quit trying to beat down the ideas of others with insults and email revelations.
In my view, alternative energy machines are not truly divorced from oil very much. Their manufacture and distribution still requires direct oil usage (mining the ores, transporting the finished goods, all the places oil is used along the chain) as well as complete dependence on an oil-fueled economy for people and businesses to afford them.
I don't recall who it was (Deffeyes?) saying that alternative energy systems are really "fossil fuel extenders."
I think there is a lot of insight from the perspective.
JoulesBurn,
I don't have to pull punches. His article is fear mongering.
If he proclaims Doomsday, then he should back it up by showing why technological progress, substitution, and reduced demand for energy are insufficient. That the ship will go down even under plausible scenarios.
It is a simple courtesy to the reader.
Particularly given the dramatic differences in the energy intensity of different developed countries:
http://en.wikipedia.org/wiki/Energy_intensity
He is making the argument, let him back it up.
My skepticism is quite justified given the article doesn't even acknowledge the past importance of these three key factors. From a guy who bills himself as "an expert in modelling energy systems".
:)
By the way, I never said that these three key factors guarantee a soft landing. What I did write was that they represent key uncertainties.
None one, including yourself, what will really happen when oil production begins its descent on the far side. So one has to be suspicious of Prophets of Doom. Prophets pretend to have greater knowledge. Let them convince us ...
Do you know why the Club of Rome forecasts were so dismally wrong? Because they ignored these three key factors ...
It was a naive extrapolation exercise.
The Club of Rome's abject failure undermined legitimate depletion concerns for a generation.
By the way, your graph of Europe's oil consumption also misses the point. A lot of European oil consumption is discretionary. Paris public transportation system moves millions each day. As oil prices and gas taxes go higher and as the French imposed a CO2 tax and subsidy on cars, the French have substituted away from big cars to smaller cars and motorcyles.
The average American emits 23 tons of CO2 a year. The average Frenchman is six tons.
Sounds like the US has a lot room to maneuver ...
The Peak Oil Doomsday has never demonstated using a numerical analysis that not enough time remains to make the transition nor have they shown there isn't enough fossil fuels left to power the transition to other forms of energy.
Yet the economic models used to address global warming indicates the costs of reducing CO2 emissions is probably 2% to 3% of world GDP. Any reduction in CO2 emissions is probably going to require a big move away from fossil fuels.
Two to three percent is not peanuts, but it is hardly the end of the world...
?
Gee, where have I heard this kind of brilliant logic before? You are skating dangerously close to being labeled a troll.
Limits are real and all natural systems come up against them sooner or later, the club of Rome may have been off with regards time frame and specific circumstance but not in the essential understanding of the physical system. We live on a finite planet with finite resources and we can not continue to grow the human population forever. This is a fact of life. No amount of fancy technological solutions will change that. We must and eventually will live, (assuming we survive) within our means.
Actually, the Club of Rome was really, spectacularly, wrong in most of its predictions. Apologists for them argue that they were merely off by a few decades in their predictions, but my own personal belief is that they just screwed up completely. I've been checking the correlation between their predictions and reality for several decades, and they missed by a country mile.
There are some basic flaws in their methodology, which I'm not prepared to go into in detail here, but the main ones are that they grossly underestimated the size of the planet's resources - the Earth is much bigger than they seemed to think, and that they underestimated human ingenuity. There are a lot of smart people in the world, and most of them don't belong to the Club of Rome.
The whole systems dynamics modeling curse. The equations and formulas they used produced a solution that looked like what would eventually occur but since nothing was really calibrated or derived from first principles, the output resulted in something that was way off.
What I try to do is start from first principles and thus come up with a fundamental solutions, where each parameter actually means something.
That completely misses the point! Even if the earth has orders of magnitude greater amounts of resources and humans are incredibly more ingenious than we give them credit for we are still living on a finite planet with finite resources and sooner or later we encounter natural limits beyond which it is impossible to grow. That is the point that every one who argues that the Club of Rome is wrong fails to grasp. Are you going to argue that those limits are not real? Perhaps you believe that our incredible ingenuity will allow us to develop technology that will allow us to drill deep into the earth's self replenishing core of abiotic oil?! What's it going to be, Cold Fusion? That will allow us to do what? Transform arsenic into phosphorus so we can continue with industrial agriculture. Maybe you think we can genetically modify humans to digest silcon?
It isn't about the methodology or the predictions, you are right that they were way off the mark, it's about the concept of limits. How hard is it to understand that?
Now there's an idea.
We can all eat at the beach.
The main issues with the Club of Rome estimates are that they were off by an order of magnitude or more on the size of the Earth's resources, and that human beings are vastly more adaptable than they assumed.
Given enough time (e.g. 100 years), people will develop something like Cold Fusion. Maybe not exactly like Cold Fusion, but something you can't imagine given your current information. They won't genetically modify humans to digest silicon, but they might genetically modify plants to grow on salt water in the desert.
There's a big difference between 10 years and 100 years. My grandfather lived for 99 years. During his lifetime, they invented the electric light bulb, the telephone, the automobile, the airplane, the internal combustion engine, the oil refinery, the atomic bomb, and before he died they landed a man on the moon. He first came from Europe on a coal-burning steam ship, built the railroads, homesteaded the land, and before he died flew back to visit his birthplace on a jet plane. When he was born, his home country, Norway, was one of the poorest countries in Europe. When he died, it was one of the richest.
My father is 94 now. He's been through quite a few things, but his biggest concern was that oil would become obsolete before we could use it all up. Well, so far he's been lucky. We have managed to use up about half the world's oil during his lifetime and his father's.
However, about halfway through his lifetime he did invest in the first commercial oil sands mine, and we've barely scratched the surface on oil sands development. It's going to take my lifetime and probably several generations of my nieces and nephews descendants before we use that up. People who think we are going to use up the world's resources in a short period of time have no sense of history.
The article author's first sentence, "Growth is only possible when energy flow is increasing." is obviously wrong, and his arguments went downhill from there. Growth isn't about resources - it's about improving production by means of competition, trade, science, education and technology.
You are trying to cover up this monumental error on his part by talking about some abstract "limits" which we sooner or later will hit. Sure - the day everybody on this earth have fulfilled their intellectual and physical potential and can't or won't work more or smarter, and we know everything there is to know about science so we find it impossible to improve nanotech, to do better genetic engineering, to build more powerful computers, to create better software, to entertain ourselves better, to improve any production, trade or logistics pattern, yes, on that day growth will stop. But would that be a problem? No, on the contrary - it would be utopia, and we'd still need capitalism to maintain it.
Have you read it?
I read the Club of Rome report when in first came out. Since I was involved in computer modeling, a relatively new field at the time, I thought it should have been called, "Limits to Computer Modelling" instead of "Limits to Growth".
All computer models, including mine, break down at some point. The only really interesting questions are: "At what point does the breakdown occur?" and "What is the mode of the breakdown?"
An economic model that purports to predict the future 100 years or more into the future is certain to depart from reality long before its time period elapses. It turns into the old computer "garbage in, garbage out" phenomenon.
Which page or paragraph do you think it broke down on?
Exactly what predictions are you referring to RMG?
What came out of the CoR was the work that resulted in the Limits to Growth. Clearly you've never heard Dennis Meadows being asked about LTG and predictions, he gets pretty fraught about it, and with reason. As he states, LTG didn't make predictions, if you want some to do that go to a fortune teller, what they did do was produce several scenarios.
They updated the results in an imaginative new book called LTG the 30 year update, didn't really hide from critics like yourself very well.
So exactly where have they made their big mistakes in methodology RMG, you seem to have a head and opinions about you the size of a planet?
Have you even read LTG or listened Dennis Meadows?
Can you give one reference as to where their 'big predictions' went wrong?
http://en.wikipedia.org/wiki/The_Limits_to_Growth
http://www.youtube.com/watch?v=pvh-oWWhDIA
http://peakenergy.blogspot.com/2009/01/dennis-meadows-wins-japan-prize.html
Exactly when is someone going to give you the Japan Prize RMG? You should've been a Proctologist, it seems to be the part of the body you specialise in.
Thank you sunnata,
I had never had the opportunity to actually hear Dr.Meadows speak, that was a great talk.
Glossing over the ad-hominem attacks for the time being, I would just like to say that the Club of Rome did make predications.
At this point in time they are claiming they didn't make predictions, but they are just claiming that because all of their predictions were wrong. They are trying to get around that little anomaly by claiming they weren't wrong because they didn't exist.
What I am claiming is that they did make predictions, and none of them have come to pass. I'm not going to give them more time for them to become true, I'm just going to say that they didn't know what they were talking about.
It's like listening to fortune tellers. They try to confuse the issues by obfuscation. Usually they are wrong, but they always claim you didn't understand what they were saying.
RMG
You've done it again, more opinion, no references. Did you bother listening to Dennis Meadows?
Which 'predictions' are you referring to?
Ecologically speaking we have an abundance of primary energy, the sun, the question is how does our civilization convert it.
Have you read any of William Catton writings on Overshoot. Here's a good one to start with -
http://www.greatchange.org/ov-catton,denial.html
Or try this one
http://www.guardian.co.uk/environment/blog/2010/mar/29/james-lovelock
Wasn't it you who said the CoR had no brains. Paul Erlich (Population Bomb) had a bet with Simons about resources and Erlich was definitely proved wrong on that one.
As for the tar sands, that has varying qualities to it, exactly what grade they'll be mining in even a decade time is really open to question.
Oh, by the way, regarding Africa, the four horsemen of the apocalypse is already visiting a number of countries, bet they can't wait for cold fusion to arrive FFC
http://www.worldpress.org/Africa/719.cfm
My intention was just to give you my opinion of the Club of Rome report, on a take-it-or-leave-it basis. I don't have the time or patience to explain the limitations of computer models.
The predictions I am referring to are the ones involving exponential curves (which I think is all of them). When you see what looks like an exponential curve continuing on indefinitely, it is never really an exponential curve. It is something different (typically a sigmoid curve).
Why would you think that? The real question is, "Is solar energy the answer to our problems?" and I would say the real answer is, "Probably not." This is the sort of thinking that led Jimmy Carter to put solar panels up on the roof of the White House, and Ronald Reagan to take them down again. It's basically a distraction.
No, that's just another ad-hominem attack by you. It's an example of the Straw Man logical fallacy . What I said was that there are a lot of smart people in the world, and most of them do not belong to the Club of Rome. It is literally true, and also a reference to the tendency of the Club of Rome people to think that they are the only smart people in the world. Most people are smarter than yeast and will make non-yeast-like decisions if given the facts. That in itself is enough to wreck their models.
No it's not. They'll still be producing it 100 years from now. It is a resource that is bigger than England.
The oil sands are a case in point. When the Club of Rome report came out, unfortunately the Canadian government took it seriously and acted on it. This ultimately cost the Canadian taxpayer billions of dollars. What happened was that Canadian oil production went in exactly the opposite direction that the Canadian government predicted from the Club of Rome Report. Canadian oil production bottomed out around 1973 and has continued to rise ever since. World oil production also continued to rise. The Canadian government of the day bet the National Income on falling oil production (they essentially shorted the market), and they lost big time. They won't do that again.
They missed two important points (among others): 1) The Canadian oil sands contain as much non-conventional oil as the rest of the world has conventional oil and, 2) Canadians are really smart about inventing ways to produce non-conventional oil.
And there's a third point that a lot of people miss 3) We don't really need oil anyway. I came to that conclusion after working in the oil industry for 35 years. I'll just let you mull on that one for a while.
So when will the tar sands replace Saudi production? And why, up thread, did you appeal to some nebulous technofantasy by bringing up what your father or grandfather would've seen in their life time, then extrapolate that progress to our future? That's patently absurd to say the least, and makes me question whether you really did any modelling of the sort. You even mentioned cold fusion, admittedly you qualified it by saying something like an equivalent may be made instead, but that you even mentioned such a sham of modern physics is telling. I simply see unquantified criticism of the CoR and some appeal to
magicktechnology. I was rather hoping you would substantiate your criticisms, alas, no.Anyone can handwave away the problems of the future or say that models weren't accurate, therefore, everything is fine. I've seen it time and again with climate change and in my own field of biotechnology. Unfortunately, not everything pans out as it should. Even if you deal with energy, you've not even begun to address the other resource constraints, and believe me, the world is certainly capable of shifting through them quite amply, your appeal to incredulity notwithstanding.
This also all assumes the economy even survives to be of use. Right now, it's not achieving much other than treading water before the next wave of financial chaos hits it.
It won't. Canada will probably be one of the last places on Earth to produce oil, which is great for Canada but somewhat less great for Saudi Arabia or the United States. You will have to get used to paying much higher prices for gasoline, which will be difficult from you perspective but not from mine, because the money you pay to fill up your car will help pay for my retirement. And thank you very much for continuing to support me in my declining years.
However, note point 3) above: We don't really need oil anyway. So if you can't afford it, feel free to do without.
It's not a technofantasy, it's history. During my grandfather's 99 years, they invented the telephone, the light bulb, the automobile, the airplane, and they flew to the moon. He immigrated to North America on a coal-burning steamship and returned to visit on a jet plane. How hard is this to understand? If you live for 99 years, the changes you see will be mind-boggling. A technofantasy would be the flying car, which they failed to invent during his lifetime, much to his disappointment.
Personally, I can remember steam trains. I clearly recall my parents driving to the train station to deliver the milk cans from the family farm to market, the steam locomotive (it was quite awesome to a kid) chugging into the station, and old Amos driving up with his horses and wagon to pick up the goods to deliver around town.
I went to a one-room country school with no running water, boys and girls outhouses behind it, and a coal furnace in the basement. However, I also remember the seismic crews coming past our one-room country school, followed by the drilling rigs, and then the pipeline crews. At that point in time, Canada imported 90% of its oil from the United States. At this point in time, it exports more oil to the US than it consumes itself. So, the changes in my lifetime have already been enormous, and I'm not nearly as old as my grandfather lived to be.
But to get back closer to the topic at hand, my grandfather brought in the crop with a crew of 20 and a steam-powered threshing machine. My nephew is doing the same thing with a computer-controlled combine with GPS navigation. However, my grandfather grew wheat for the British market, and my nephew is growing peas for the market in India. The Indians are not going to starve because they can afford to buy peas from Canada now. How can they afford it? Well, as it happens, I am checking out prices for a hip replacement, and it looks like India has the best prices. Of course, I could get a hip replacement for free in Canada, two years from now. but I could also pay $7000 and get one next month in India. And then I would be back to skiing in the fall. The quality of the surgery would be about the same because the doctors in India were trained in Canada.
That's your problem, not mine. Canada missed out on all this financial chaos stuff, and I wasn't dumb enough to invest in US securities.
By the way, the Chinese and Indians are buying up the Canadian oil sands, just in case you weren't paying attention. Most Americans aren't.
Roderick Beck -
you say that a lot of European oil consumption is discretionary. Well I guess all oil consumption everywhere is really discretionary. It depends what your frame of reference is concerning the underlying economic and social setup. For instance, many of friends are typical middle class families with husband and wife and two or more young children. We were talking the other day and, although they are all green-educated and sympathetic, they all said that there is no way they could continue doing what they do at the moment with out a car. We discussed it at some length and here is what they feared would happen if they gave up the car. Shopping, taking kids to school, dropping pre-school kids off at nursery and then traveling to employment all totally reliant on the family car. Not only does car ownership allow people to travel further, it also allows families to compress regular activities into less time, thus meaning that the mother of the family could also hold down a part-time job. All of my friends rely on the second income. It is not just nice additional money; it is totally part of the family budget. If the car went then the second income would not be possible. Once the mother had walked the older kids to school - sometimes different schools - and then pushed the baby in the pram to the nursery there would be no time to then walk on to work or the train station. The car allows them to do all this before 9am. The same is true in reverse. And then there is the 'emergency' scenario where one of the kids needs to go to the doctor etc: with a car this is a simple process. Using public transport or walking it would conceivably take half a day.
But you are correct in one sense. We could regress to a society where only one person in the home works for income and where the car is a luxury and not a necessity but this would change everything. The point people are making is that Business As Usual is not possible without cheap oil, not that life is not possible.
EDIT: and if we change back to only having one income earner in the family how can the housing prices stay so high? If the money isn't there to pay the additional mortgage then prices will fall, especially as interest rates are currently rock-bottom. So what happens to the banks whose phantom capitalization is based in a large part on house prices? That is the problem with our system as it stands. Everything is linked.
I don't want to make an explicitly sexist point, but the feminist movement might well have inadvertently set us up for a massive fall. There is no 'spare capacity' in middle class families. Very little savings and both parents working flat out. Back when (usually) the wife stayed home there was much more flexibility in the household budget and more stability.
30 years ago moms did not drive their kids everywhere like they do today. I am amazed at friends of mine do for their kids. I used to take a bus to school. I used to go to play with other kids by myself without a parent to supervise me. Some of this car use by parents amounts to overreaction to pretty rare child kidnappers they've seen on TV. Some of it is due to parents incorrectly believing their kids will develop more rapidly if the kids go to many different types of special lessons and trainings. Parents could get by on much less driving. In fact, they will.
Overbooked middle class families: Yes, it is amazing how moms have been willing to make themselves and their husbands incredibly busy.
Is that it?
One wiki reference and opinions to support how a complex system handles a decline in crude oil.
Lets start with this one from David Goodstein
http://www.its.caltech.edu/~dg/Essay2.pdf on rates of conversion.
How about this one from one of the leads in US Strategic Command
http://www.guardian.co.uk/business/2010/apr/11/peak-oil-production-supply
let you look up the main report, but I wouldn't bother especially if you don't like doomer stories.
Or this one from the IEA
http://www.worldenergyoutlook.org/docs/weo2009/fact_sheets_WEO_2009.pdf
Or this by their Chief Economist
http://www.independent.co.uk/news/science/warning-oil-supplies-are-runni...
Precisely because we use oil in such inefficient ways we have enormous potential to increase energy efficiency. We could switch to 50+ mpg hybrids, electric cars, and motorcycles for example.
I expect Peak Oil to cause an economic depression because shifting to new capital equipment and more efficient end-use goods takes time. But I do not see why industrial civilization has to end. We have lots of ways to shift away from oil. We are just shifting too slowly to allow us to avoid a big decline in living standards during the transition.
I don't think you can back up that the claim that energy intensity has been sharply diminished by exporting energy intensive manufacturing to other countries. Sounds like an urban legend.
Germany is my counterexample. Until 2009 Germany was the world's largest exporter. It's exporting manufactured goods.
Germany GDP = 25% is manufacturing.
US GDP = 12.2% is manufacturing.
Yet German energy intensity is 163.9 versus 221.7 for the United States:
http://en.wikipedia.org/wiki/List_of_countries_by_energy_intensity
What distinguished the Germans from the US? Lots of factors. I don't pretend to have a complete understanding. However, they share the very high gasoline taxes and the heavy reliance on rail to move people and merchandise common to many European countries.
The US uses rail more effectively than Europe for moving goods according to some accounts I've read. Europe uses rail more for passengers. But for freight? You have evidence for this?
Due to long term costs of maintenance of nuclear wastes which expand well into tens of thousands of years its a total no-no idea.
Sorry, that red herring will no longer hunt. China has just begun fueling the first of its Candu6 reactors at Quinshan with spent fuel from its LWR's, so successfully that they're seriously discussing installing additional units. IF spent fuel is a problem (which it presently isn't), the means to use it to generate additional energy are readily at hand.
Maybe GDP expressed in $ can always keep on growing. But how much stuff of real value (e.g. barrels of oil, BTUs, loaves of bread, ...) can these dollars buy?
E.g what does a GDP graph look like if we convert it into some unit of value that is a more of stable reference point than dollars. How much stuff did a 1950's dollar buy? How much stuff does a 2010 dollar buy. I don't think those 2 are even close.
Picoday
GDP is a worthless metric even if it is being reported honestly.
A huge chunk of it is nothing more than money changing accounts in servers in cyberspace........what a joke.
The only real way to measure economic improvement is on a........ quality of life/energy unit....ratio.
In other words use the least energy to get the most quality of life for the most people.
We will end up taking this approach sooner or later.
That is for sure, Porge! Just for example, GDP increases when the fire department fails to arrive in time and my house burns down and the Insurance Company rebuilds it. If the fire dept. puts out the fire in 2 minutes, GDP does not increase.
GDP tends to be a measure of waste. Military spending increases GDP, meditation does not. Wars generate insane amounts of GDP, as bombs are manufactured and dropped, airplanes are built and shot down, buildings are bombed and people are injured (creates great medical product).
The better for people, the worse for GDP and capitalism.
Capitalism, you see, views capital as important. Humanism views, well, humans, as important. Socialism tends to view society as worthy.
What's in your wallet?
Craig
(On paper, a couple of days ago, I was "wealthy")
;-)
"In other words use the least energy to get the most quality of life for the most people."
If we didnt use this approach on the upslope why would it be used on the way down?
Good point.... but there is a difference in a shrinking pie environment that will definitely cause the disenfranchised to react.
On the way up everyone thought that since the pie is growing they would get their share so they ignored the growing inequality.
So something will happen whether it is cooperation or chaos remains to be seen.
Real GDP figures are easy to get. You can pull the series off the Federal Reserve web site.
You will see an annualized real GDP growth of roughly 2.5% over the last 30 years.
That's a big deal. Given compounding a 2.5% annual growth rate translates to 28% cumulative growth in real GDP every ten years.
However, you may want to look at one of the quality of life indices since leisure, safety, the esthetics of one's sourrounding, ,etc. All matter.
I don't view Peak Oil as being just a bad thing. It will bring benefits as well. It means people will have to abandon this suburban sprawl that has made America infamous. People have to go back to living in real communities. They might even get to know their neighbors. The one hour commute to work and back will become history.
There will be less international trade and unskilled labor will have strong bargaining power (cheap international transport means blue collar Americans compete against blue collar Chinese - not an even fight).
Cheap oil promoted an American culture that I frankly despise. Ugly housing developments, driving ten minutes just to get a grocery store, your children spend their time at malls. New Jersey is an excellent example.
Ugh, ugh, ugh!
I agree with you.
I knew if I kept the banter up we would find some accord.
We will still have ugly housing developments, the ones that already exist and the ones that will be built. The houses will just be smaller.
I don't understand how peak oil will enhance our esthetics. We will have less money and, therefore, our developments will probably be even tackier.
Preservation of existing housing, in the right place, however, will probably increase. Less tear downs.
There is a halting movement to build smaller, better built, and more esthetically pleasing homes as exemplified by Ross Chapin. These are much more expensive per square feet albeit much smaller. But I don't see this sweeping the country.
Price per square foot is still king, esthetics be damned.
Possibly but you are making alot of assumptions.
First of all, international transport by ship will be relatively cheap even in a post-peak world, and Chinese workers will still be able to work for practically nothing. The differential between Chinese and American workers is gargantuan, and its unclear if even the downslope of Hubbert's curve corrects that. I more envision a scenario in which Americans are forced back onto the land as agricultural serfs, and some distant cities/civilizations are like the Constantinople of the dark ages.
Moreover, 2008 and beyond has given us direct experience with what happens when American rednecks have to pay too much for gas. They don't decide to give up their McMansions and trailers, ditch their pickups/SUVs, and buy bikes and move into apartments in the city. What happens is they spend less on everything else (except for guns and ammo) and the economy crashes. You can't necessarily blame them as we have few other options in this country. The real estate developers, city planners, and oil/gas industry have locked us in.
In short, we're f-cked.
You need to do more international travelling.
The average Chinese family is now middle class, at least by developing world standards. That means that at least 1/3 of their income is disposable income - i.e. they have a lot of money they could use for things other than food, clothing, and shelter. It doesn't cost much to live in China because their expectations are low - they still think like peasants. They are putting a huge amount of money into savings - something like 25% of their incomes.
You need to ask how this compares to the average US family. What percentage of Americans have more than 1/3 of their income available after basics are paid for? What percentage of their income do they put into savings?
It is true that the difference between Chinese workers and American workers is gargantuan, but it has little to do with wages. The fact is that the average Chinese worker is seeing his situation in life rapidly getting better, and the average American worker is seeing the opposite.
Labor entropy dispersion.
Porge gets it. :)
Hell, I read enough of your stuff.
Sometimes I think you might be shoe horning the entropic dispersion model into questionable areas(like trading) but overall I am coming to see it as a very powerful analytic tool. That is, the more familiar it gets.
If you have noticed, I love using natural process as a guide to model our synthetic man made systems and this fits the bill.
Moving into cities is not the only option. People will buy Nissan Leafs. Others will telecommute. Some will choose jobs closer to their suburb. Some companies will move to office buildings in suburbs.
People who can afford a $50k SUV can afford a $30k EV with 100 mile range. There's already a company converting Chevy Envoy SUVs into EVs for $50k. 150 mile range. No reason to give up the suburbs for those who can afford expensive cars.
These are cooked up numbers. Inflation reported by govts is always less than reality and vice versa for gdp.
I've got to get one of them printing presses.
They are all the rage in London and New York.
George,
For someone who claims to be an expert in modelling energy systems , as you said in an email to me (which is why I suppose you are in the computer science department ...), your analysis is not very convincing.
If you want convince anyone outside of the Doomsday blog crowd, then you need to show or demonstrate society cannot reduce its consumption of energy and maintain significant economic growth.
Unfortunately for you, the dramatic increase in the real price of oil in the 70s did result in remarkable reductions in the energy intensity of GDP...
Energy is an input, but it is not used in fixed proportions with other inputs into the production process. The proportions depends on the price of energy vis-a-vis capital and labor and the state of the arts (technology).
Socrates said that wisdom consisted in knowing what one did know not ...
You clearly do not know, but think you do ...
The truth is that no one knows how well industrial society will stand up to a sustained decline in oil productions. But because you ignore the key uncertainties such as technology progress, improvements in energy efficiency, and the substitutability of different kinds of energy, you clearly flunk the Socratic definition of a wise man ...
To reduce energy intensity a good start would be to base the currency on an a priori energy flow rate and then determine what the economy can do.
Fiat currency like free markets have no basis in the realities of the natural world and it's limits.
We have over shot in a big way and need to admit it and re-align ourselves with the sustainable capacity of the planet.
I do agree with you that we haven't even tried to improve our energy intensity here in the USA and I blame that on total lack of leadership by the puppets of the oligarchs.
You are also correct that no one really knows how things will play out but we do know the direction that needs to be taken and we don't seem to be heeding.
Regarding Germany, they have of course reduced their oil consumption (and the US is wildly inefficient in comparison), but since hitting a recent low in 1999, German total energy consumption, at least through 2006, showed a small, but measurable increase of about 0.5%/year.
Total Primary German Energy Consumption Through 2006 (EIA):
German 7 year slow rise in energy consumption may be due to larger portion of consumed goods imported from less developed countries, therefore in effect simply exporting the energy consumption, not keeping it stable. Besides german population is in decline. Above all this its still a rise in energy consumption, not a decline. There is no wide spread acceptance of coming energy decline. Recession and decline in gdp are considered temporary situations with growth hoping to restore soon. This is exactly the opposite of what should be. Growth must always be considered a temporary and extra ordinary situation and maturity and stability a more realistic and common situation.
So you know for a fact that technological progress, improvements in energy efficiency, and the substitutability of different kinds of energy will forever continue with no need to ever pay the thermodynamic piper?
Let us not forget Socrates' last words...
So far what we do know is that our civilization continues to go into ever deeper resource debt borrowed from future generations, we must at least suspect that at some point that debt comes due...
Raise your flagon of hemlock and drink it down!
FMagyar,
What I said is that this silly article doesn't consider improvements in energy efficiency, and the substitutability of different kinds of energy.
Any intelligent analysis can't simply ignore those three key factors.
This article by a computer science professor does completely ignore those three items. It makes no attempt to factor them in ...
It is self-indulgent pessimism.
If you want convince someone that the world is going to end as we know it, then make the case. The article doesn't make the case, it assumes the case.
By the way, I don't think you really no anything about thermodynamics. Thermodynamics does not claim that there is a binding resource constraint on humanity.
Whether this a binding resource constraint is an empirical matter. Not a thermodynamic issue.
Beck, We are all trying here. I have criticized Mobus before, primarily on the assumptions that go into systems dynamics modeling, but there is something to be said for understanding our world as it stands now. The whole substitutability argument is essentially what has prevented mainstream economists from even considering resource limitations. You seem to perpetuate that view.
Classic Steve Martin bit about Socrates last moments. Martin plays Socrates and I seem to recall Carl Reiner or Martin Short as Plato.
I gather from your statement that you are of the school that believes humanity is not part of the ecosystem and is therefore not subject to basic natural laws.
BTW welcome to TOD I see you have been here for a total of ten weeks. I would suggest you familiarize yourself with the rather vast archives of information on this site and become a little more familiar with the staff, the guest posters and regulars before you critique their work.
I'm not yet convinced that you know as much as you seem to think you know but perhaps you will surprise me and I'll eat my words...
Cheers!
Well said, FMagyar, and gentle considering the churlish behavior being exhibited.
Roddy Beck, m’boy:
If there is anything that is embarrassing on this site it is your smug condescension.
We all agree that efficiency can do much to mitigate the decline of petroleum and other fuels. But you seem uninterested in the very real problems of fuel substitution and declining net energy, which most of the people on this site have taken the pains to understand. This is fueled specifically by the 2nd Law of Thermodynamics and is a useful tool for determining the efficiency and viability of alternative proposals ...the very graphs in the Mobus article, which you dismissed.
Instead you hide behind one-line economic clichés and blithely chum up technological innovators in white lab coats who will save the day. “Go back to sleep, little proles. Dr. Science gonna make it all right.” The great science of Economics says so, you seem to say, and therefore it is true and those who don’t agree are dimwits.
Socrates would skewer you like an overstuffed sausage.
It is great that you can give up your car and bike around Budapest. In the early ‘80s I lived comfortably without a car in Washington, D.C. But try as I might, I couldn’t do it in Florida’s sprawled-out, bike-hostile capital city in the late-‘70s. You don’t like the spread-out infrastructure of the American Suburb-Utopia outside of a big city where one works. Most of us agree. But that very sprawl does not afford the luxury of freedom-from-cars to most Americans …who are not inclined to want it anyway. We Americans have a lot of problems that have been brought on by a glut of cheap petroleum. And by the time we finally face up to the absolute necessity to cut way back on our gas hogs in this country, the cheap energy to support massive infrastructure transitions will be rapidly declining ...quite likely before this decade is finished, as Westtexas has just pointed out.
EVs? Bring ‘em on! A hundred nukes to power them? Where are they? I was trying to sell efficiency and lifestyle modification over three decades ago. Americans didn’t want to hear it then. They’re barely listening now and most will wait and see …just in case they should give up something before they absolutely have to.
Germany has been building an energy efficient infrastructure in a tight country for half a century. The U.S. is still trying to expand an inefficient infrastructure across a 3,000 mile continent. We have been “prodigal sons.” What should be embarrassing to us is that the transition is likely to be painful for our posterity.
Cap’n Daddy
Actually, if anything is embarrassing on this site, it's how much misinformation is going around.
Those "technological innovators in white lab coats" are the people who got us here and the people who will decide where we go next.
By fuel substitution, you must mean using electricity instead of liquid fuel? With exception of personal automobiles and aviation, this can already be done. In fact it's been making a lot of sense lately. Motors were around before the ICE.
Declining net energy? This is another one going around here lately. I understand the concept, but please show me evidence we are now seeing declining net energy? We have renewable sources of energy with an EROEI much greater than the 10:1 that American oil is getting us right now. Yet American oil seems to be selling. I call it inertia and politics, not declining net energy.
Do you actually know what the 2nd law of thermodynamics is? I disregarded Mobus' article as soon as I read that the "raw energy" of our planet is at risk of decline. This is just pure misinformation.
There are many places in the world you can still live car-free and bicycle-friendly. Germany is one of them. Consider moving? North America is a wasteland. Europe is much nicer, especially if you're a cyclist. Take your pick of city.
A bit of a curious claim since the whole point of peak oil is that it represents a decline of "raw energy".
Perhaps you could supply a bit more in the way of substance to your assertion that this is "misinformation".
Peak Oil represents a decline of raw energy?
No, it represents a decline in the supply of energy we can get from oil.
Although, actually, the total net energy we are getting from oil has been in decline for at least a few years I suspect. I am referring to (total energy recoverable from all the barrels of oil that are sold today) - (the energy it took to make them). I'm ignoring the various conversion processes of oil to useful work.
But if you want to talk about raw energy, you're going to have to make an argument for the trade winds slowing down (google high altitude wind power), for a sun that has spent its fuel 2 billion years too early, and for rivers that are slowing down.
There's a reason all the major oil companies have recently purchased wind turbines to power their offshore oil platforms. They know it's coming, you know it's coming, and I know it's coming. That is, the end of cheap oil. This does not mean the end of "raw energy".
If you believe it does, it puts you in the same boat of every shortsighted person that believes the end of oil will mark the end of modern society. I believe it will mark the end of society as we know it, but it will not mark the end of continued growth and it will not mark the end of high tech.
EngineeringPhysicist:
As you yourself admitted in your post much of this is a question of politics. I would add finance into the mix. So our big system, based upon the platform of cheap, readily available fossil fuel energy, is interconnected - and you can't change a thing about it.
One of the major points is that we've really run out of time. There's just no turning back now - we are locked into major decline. Renewables and alternative fuels were never going to power the whole world in an industrial fashion - they, at best, were going to mitigate the decline and people would still have to make major lifestyle adjustments. All of this may have been possible if we started say 30 years ago.
But instead we built exurbs and strip malls and McMansions - and, for what? Does any of this represent gains in quality of life, improvements in technology or progress? Granted we have the tech boom and internet but that would have happened even without the ugly and unneeded growth in our suburban infrastructure, not to mention massive ongoing immigration.
And America is a behemoth. Sure there's going to be some decoupling but if America goes down it takes the world with it, as the events of 2008 demonstrated.
Moreover there's not a single place on Earth which has an alternative for oil for transport/trade. Not a single one. Europe does better but still most of the people drive everywhere - not to mention that how do all of these materials and goods circulate throughout the globe - by air, ship and truck - powered by oil! How can trains or sails possibly replace this?
I don't think you are seeing the big picture. Like most cornucopians you are blinded by hubris and the belief that progress is neverending, rather than the reality, not to mention the truth of history, that extinctions, wars, famines, and diseases routinely brought down whole civilizations and ways of life.
Do any of the substitutes for oil have favorable EROEIs?
If the answer to the first question is "Yes" then why won't we develop these other energy sources?
I fully expect an economic depression due to Peak Oil because of the lag time and cost of developing substitutes. But I do not see why we won't come out on the other side with a growing economy once again. I think we are heading into something akin to the 1930s. But the 1950s and 1960s came after that. Hopefully we'll avoid a global war this time.
You are addressing Amerika! in this article. I don't care for Amerika! because Amerika! has gone and fucked itself. It has no chance unless it's totally rebuilt. Although some places like NYC have it right.
Renewables and alternatives will power the world but it's not going to be anytime soon. I agree we will see a major recession because of PO but I don't think it's going to mark the end of an advanced, hi-tech society. I think we'll come out on top, with better values, and with a healthier way of life. It's going to be an interesting ride and some smart people are going to become billionaires while a lot of people lose everything. It will be much like WW2, where a lot of things changed.
Progress is of course neverending. All of history is nothing but progress. Time is progress.
Europe has the best hopes for survival. Contrary to what you said, they don't drive. They have amazing public transportation. Amazing rail system. And it is already, or can be, electrified.
I won't pretend to speak for George but I highly doubt he, or anyone else for that matter, is suggesting that the earth is about to receive less energy from the sun, anytime soon.
However the raw energy input into the system, at least as I interpret it, is diminishing because we use mostly concentrated solar energy in the form of fossil fuel. (I think most people on this site accept Peak Oil)
I myself work with PV and have some hope that they guys in white lab coats still have a few tricks up their sleeves to help smooth out our transition to renewables but it's very difficult to see that happening if much more of that diminishing raw energy input is not diverted away from a blatantly consumerist society to the processes and systems that we need to develop those sources.
So we are faced with less energy input at the same time we need greater energy input to build new systems that allow us to capture and utilize raw energy. Unfortunately we continue squander energy in wasteful processes that few people want to give up. So even if we understand thermodynamics and can come up with technological solutions we still have to deal with inertia of the current human component which is either ignorant of the problem or in denial of it.
Let's just say that I'm hedging my bets that this is going to turn out well under our current political and economic system.
Cheers!
No, but he is assuming a peak in oil means a peak in raw energy. I don't work in semiconductors on the PV side, only the ASIC side.
I think he has the same problem that most people have when discussing this topic. That is, he has not looked at the processes that vertical companies of alternative tech have established.
I firmly believe if we set a slowly rising tax on gasoline and a price floor on electricity of $0.40/kWh that the PV technology we have today, right NOW, is sufficient. We could collect the difference in the form of a tax.
I am in full acceptance of Peak Oil. I don't think there is much of a difference whether it happens now or in a few years. Either way, we need to provide the proper forces to get people to change the status quo. I'm talking about the general acceptance of wind, cutting off parts of the sky we can fly over so that we can put up high altitude wind power that catches the trade winds, and covering literally everything in photovoltaic cells. Subsidizing them all we need to. And taxing the hell out of fossil fuels. Our economy could grow on just this for a long time. This is why I firmly believe our inability to adapt thus far has been purely political. The squandering of energy, as you put it, must come to an end. People must see energy availability, e.g. a gallon of fuel sitting on a shelf, a power mains outlet, as a truly precious thing.
Beck seems to be a bit of a contrarian just because he can.
So on one hand he blasts Mobus for not dealing with uncertainties, yet my analysis upthread is essentially reasoning under uncertainty and he blasts me for that.
WebHubbleTelescope,
I am fully buy the Peak Oil thesis.
But you're conflating two different notions of uncertainty.
Mobus excludes from his analysis the three key variables that could undermine it. He is a shadow boxer ... He is guaranteed to win his fight because he leaves key uncertainties in terms of economic variables.
On the other hand, the way I read your papers you are just looking for stochastic structures (random walk, power laws, etc.) in the data.
You need to come up with a theory to explain the stochastic structure as well.
Let me give you an example of an interesting analysis. The efficient market hypothesis implies that security prices under certain conditions are random walks. Right or wrong, the random walk implication does from from the assumptions.
You are like the guy who notices that security prices appear to be random walks, but you don't have a theory to explain.
Maybe there is a deep theory buried in your paper, but I don't see it.
OK here is the deep logic.
1. Labor productivity goes as the square because of compound growth mechanisms, either from drawing from competitors or drawing from debt (I propose that a linear term exists as well at low productivity).
2. The rate of this growth is uncertain so we apply MaxEnt to gauge a mean rate of growth. This is called entropic dispersion.
3. A ceiling exists on the growth and various other ceilings exist across the board that are less than this ceiling.
In the individual case 1,2,3 essentially follow a kind of "learning curve" profile that shows acceleration and then hits a ceiling. Taking this over lots of individual cases, we come up with a probability distribution, which is what we gather from the data.
Here is the Monte Carlo algorithm. Whether you simulate or analyse the situation, the agreement with the data is PERFECT.
Just because one does not believe that growth can or should continue does not mean one is a doomer. If you mean, by economic growth, the continuation of increase in throughput we call GDP, then I think you are pursuing a metric that does not reflect true levels of well being or quality of life.
A doomer, however, might believe that we will not have the wisdom to quit our pursuit in economic growth, thus leading to a somewhat sudden wrenching down of the economy and our well being.
Do we really need more growth? And if so, at what point will we be satisfied that we have enough growth? Further, do you recognize that there is a limit to growth?
Yes, there are a whole host of uncertainties. But why push our luck. Let us err on the side of caution by beginning to build a society that uses a lot less energy, more than is simply indicated by decreasing intensity. The planet does not care about intensity; it cares about the absolute numbers generated which cannot be reduced by incresed efficiency alone.
Anyway, I think it is a bit harsh to go around telling people they are not wise. I think it would be better to just stick to the analysis without getting personal about it.
It is evident that a prioriced and planified economy is needed for the future (and present). Scarcity implies planification and priorization. In capitalism a minority monopolizes the means of production generating explotation, exclusion and global ineficiency for the worker class. When the rate of energy entering the system increased, there was more to spread though a minority concentrated wealth, but now it is not sustainable because if that minority is still concentrated wealth at the expense of working class take it away from quadruplicate.
Let me show you which is the more eficient country of the planet and the best model for the future for all the countries.
IDH and Footprint, that is the key.
I like this graph. It shows that diminishing returns apply to wealth versus happiness graph too. Note that the curve is the diminishing from the start. The first dollar a pennyless get worth more than any other dollar he get after it.
South Asia especially Pakistan and India are at the optimum point on this curve, the most efficient happiness return at consumption. Global hectares are less than 2 per capita and this ofcourse includes the wealth of rich. The media point is around 1 acre.
Cuba is quite an amazing place. Interestingly, they had an oil shock of their own when the USSR collapsed. They recovered within a couple years, establishing a local food system and becoming a completely sustainable society.
But this graph must be flawed. I know Canadians are some of the worst in the world, with a 12kW society, majority car ownership with inefficiency matching the US, and a colder climate. They should be far right of everyone else.
Well, there's actually several differences which can affect "footprint" favourable to Canada. Lower average income = average smaller autos, though driven further (we're really spread out). Lower average income = smaller average homes. Colder climate = better insulation standards and much less use of A/C. Much tougher typical zoning regulations = higher density cities. Population more urbanized. Much higher proportion of electricity is hydro and nuclear. Higher energy taxes. Govt's doing better job of promoting conservation. Somewhat more rational use of appliances, eg. I can't recall ever seeing a Canadian home with a garbage disposal unit installed, though no doubt some exist (my daughter lives in a million+ home, has none. They sort and compost food waste even though they don't consider themselves particularly environmentally friendly. Every municipality I know of provides collection of paper, metal and glass, organic yard wastes, other garbage separately).
The chart shown originated at Global Footprint Network
View How Ecological Footprint is calculated, base data
From what I can see there, your complaint appears valid. The entire dataset is computed from a nation's rate of use per capita of land under 6 catagories, as follows.
Cropland Footprint, Grazing Footprint, Forest Footprint, Fishing Ground Footprint, Carbon Footprint, Built-up Land
Canada - 0.54, ---- 0.26, ------------ 1.05, ------------ 0.23, ------------------- 3.60, ----------------- 0.08
USA ---- 1.12, ---- 0.06, ------------ 1.17, ------------ 0.16, ------------------- 6.41, ----------------- 0.09
If I understand their methodology correctly, then I think the figures provided may be essentially meaningless, though I haven't read the entire website yet.
Some good points. Thanks for the data.
Eng.Phys,
I don't know if we (Canada) are "some of the worst in the world", and neither are we a 12kW society - where did you get that number from?
A good source of per capita comparisons is nationmaster.com, that has good presentations of IEA data, and from there, this is the per capita breakdown
Energy/US/Can
Oil (barrel/day/capita) 0.694 / 0.672
Electricity (kWh/yr/capita) 12,900 / 16,300
Coal (tons/yr/capita) 3.58 / /2.00
Total (bbl oil equiv/yr/cap) 8.35 /8.16
So, Canada is line ball with the US on energy, no real surprise there. But the ecological footprint, is smaller. We use less coal, less water per capita, eat less food and consume less materials than the US.
55% of electricity generated is hydro.
The total installed capacity is 126GW, for 33.3milion people is 3.8kW/person on average (unless your 12kW is per house?)
Canada is more urbanised than the US (just), and we generally live in smaller houses, fly less and drive smaller vehicles and own less iphones (but more guns!), and play sports that use readily available materials (i.e. ice!)
so on the basis of all these measures, I think that graph's assessment, that we have a large footprint, but not the largest, is about right. And, since Canada is the second largest country in the world, we have plenty of land to spread our footprint over - it;s not all bad!
I saw someone once derive the 12 kW figure as an average, converting oil usage, the energy entailed in the goods we buy from Asia, the fertilizer used in our food production, etc.. into Watts. Yeah we consume same oil but more electricity by a wide margin. I think the kicker is provinces like Ontario, BC, and Quebec have always been pushing so strongly for hydro or nuclear that this offsets our higher electricity consumption. Though what I do know for fact is that we use the most electricity per capita not just in North America but the whole world. But I guess the hydro warrants it, with some of the cheapest power in the world also. I met some guys from OPG and asked them what their target electricity price is. They said "free would be best". I think Ontario, Quebec, and BC could be 100% renewable because of hydro resources. Isn't Quebec already nearly 100% hydro and an exporter to the States?, and BC has decided this year they are going to get there too. There's actually tons more untapped hydro resources in Canada, and I've seen essays that suggest we could power all the of United States using untapped hydro, acting as a Saudi Arabia of electricity.
That is true. Looking at Canadian energy consumption is misleading because most of Canada's electricity production is renewable hydroelectric. Canadians generally live in smaller houses and drive smaller cars than Americans. A major cause of high energy consumption is the energy industry itself, because it uses a lot of energy producing energy for export to the United States. Canada exports vast amounts of energy to the US.
Ontario is a problem from the standpoint of electricity production because it has developed most of its hydro potential, and its nuclear reactor strategy has been a failure (as have all of its other electricity strategies).
However, other Canadian provinces have undeveloped hydro potential - B.C., Quebec, and Manitoba have huge potential sites that haven't been developed. Even oil-rich Alberta has a couple of major hydro sites that would have been developed if it didn't have so much natural gas and coal that is cheaper. The real problem is that Canada has managed to locate its industrial centers far away from its energy resources.
I'm all for planification and priorization. As long as I'm the one in charge of doing the planning and prioritizing. ;)
Just because economic growth ceases to be does not mean capitalism has to die. It means things have to change, but capitalism at the most basic definition just means that an individual gets to choose what products to make (i.e. you choose your job/profession) and that same individual can also choose what products to buy and the overall market sets the price. I don't see why this has to end in a steady-state economy. Capitalism does not equal debt, worker exploitation, pollution, or any of those things. Those are market inefficiencies and they can be fixed or at least mitigated. Trying to fix market inefficiencies via central government policy is usually a good thing, as long as government is efficient in its approach (easier said than done). Trying to BE the market via a central planning authority is quite another and doomed to failure (but not before causing widespread misery). A politician is just as susceptible to exploitation of the individual as is a powerful CEO.
This graph is an example of why I keep coming back to the Oil Drum.
There are diamonds in the dross.
I am 100% convinced that IF we make it through the Bottleneck of converging constraints we, Humanity, are totally capable of working it out, re-engineering society, coming to grips with reality and getting on with things.
Reading this thread I am 100% convinced that we will not ever face the realities of the bottleneck and therefore will probably not make it through.
Other than that it was another great hypothetical thought experiment aka, Jircle cerk.
It probably has been a bit of a circle jerk but then I guess that is pretty much where we are as a society. We cannot even agree on some basic facts about the current state of the planet and where it is going given our current trajectory. Pretty hard to solve a problem if one cannot agree that there is a problem or what the problem is.
But doncha know? If we would just lower taxes even more and get Obama out of our hair, everything would be better and we could go back to living in the 1950s.
Yes EEnigma said that this was a big circle jerk.
I remember posting a front-page story on TOD on complexity a couple of months ago with EEnigma criticizing my post, saying "We will control nothing about our destiny until we change the way money works." In retrospect, I guess I baited him and everyone else by suggesting that we can't control what we don't understand.
http://www.theoildrum.com/node/6255#comment-594307
Since then, I actually took his advice to heart and went on a bit of a binge looking at economic matters. Mobus also is also looking at this, but from another angle. Of course these are all thought experiments, but we are discussing the topic of how money works. Aren't we?
The moral of the story is that no one is ever completely satisfied.
So you think that shifting the endless round robin discussion from one issue to another should satisfy?
This shows how most people are satisfied that they they are "doing all the can" simply by discussing the issue ad nauseam.
Which supports my conclusion that we will never actually do what needs to be done.
It's not shifting the discussion from one issue to the next. In fact, these issues are all interlocked.
It is great finding out how labor productivity relates to oil. Thanks for providing the motivation.
From FF back to the sun is an amazing energy transition.
Humans started making the transition from the sun to FF starting back in 1100 (when coal started to be used as fuel in England). By the 1570s finally London (only London) was more reliant on coal for cooking fuel and heating fuel than wood (the sun). Then other English cities followed. Then all of England. Then came the Inductrial Rev. Finally a few countries were using more FF than sun. Then many. But many were still running on sun. The US had oil and coal so it quickly transitioned, compared to other countries. But the transition was still rough.
Now finally China and India are trying to get off sun (I mean rickshaws, oxen, chickens, etc.) all these things look like "poverty". They too want to make the transition to FF like everyone else. Even if you have wind turbines, there is a lot of FF in them too, as we know.
When we all have to transition back again from FF to the sun, it may take another MILLENIUM! (1100 is almost 1000 years ago--the time it took to "get here") It stands to reason that when you are talking about billions of people changing their basic energy regime you will have a major shake-up.
Some are not aware, perhaps most. Some, a few, are. All will be aware sooner or later---but that might be decades away, centuries, and we will be talking about the next generation.
If you have in mind a basic bell curve, that works. MOst people will become aware at the peak of the curve. They will become aware when they can`t drive their cars around anymore...
They`ll start to think about collecting grass along the roadside to feed a rabbit so they an eat the rabbit later. Actually, that person has now made an energy transition, and most unwillingly!! Nevertheless, it has been accomplished!
Here`s to everyone`s energy transition being as painless and smooth as possible!
Actually it began with the first hunter gatherer camp fire.
At some point, world leaders WILL conclude that, globally and generally speaking, forward growth is impossible. Would anybody here like to call the day the announcement is made?
My bid's Boxing Day, 2015, following a few flat years of the DOW at 15,000.
Regards, Matt B
Yeah, I know what you're going to say! :). Cheers.
Hmm I stopped reading after I saw the picture showing "raw energy supply shrinks or declines".
We have more "raw energy" on this planet than you can begin to imagine. And we have higher EROI while collecting it than we do oil. I'm all for reform of the way we live right now, but come on, be a little pragmatic. We're supposed to agree this is a liquid fuels crisis, not an energy crisis.
I take it as levels of abstractions:
Money <= Productivity <= Energy <= Liquid Fuels
We still need to make the quantitative links, but the abstractions are definitely of some use.
Don't give up so easily, we need the help of EngineeringPhysicists.
But the abstraction is flawed to begin with. I believe the good stuff that we really need (ammonia synthesis, mining, machining, semiconductor fabrication) can be electrified. Everything else is a toy and for show. We are seeing an exponential decline (e^-at) of the human resources we need at work to sustain our needs. Everyone else is making stuff we don't need. I believe this is the real reason for unemployment. This is why money is flawed. Everyone is pointing to energy being the root cause and I hope you of all people can see there are other factors at work here.
Show me evidence that we can't make it work without liquid fuels. Put it this way. If we had a new North America but it had absolutely no crude or condensates on it, but we took the intellectual property we have already developed using FFs with us, and we still get the natural gas and coal along with Canada's uranium, do you seriously believe we couldn't get back to where we are now (as if we'd want to?) The discussion is about oil and only oil as far as I'm concerned.
Who said I'm giving up? I'm devoting my life to this issue. When I finish my current work contract I'm going to start with biomimicry. Why go searching for IP from scratch when it's all in front of us already? We seem to be good at using systems in a black box manner. That is, if we have only some or no clue how it works, we still excite it enough and deduce the transfer function, if you'll excuse the analogy (though it's not an analogy at all). And if it's what we're looking for, it's good enough. This is how we are inventing modern medicine. Mining the data to see the system response and identifying the compounds that might work. The good stuff nowadays isn't coming from the ground up, it's coming top down...hmm like from the sky (hint/hint). We shouldn't need to produce photovoltaics in a factory. There is already a natural way to breed the polysilicon, just like photosynthesis, but it is yet to be uncovered. The search requires heuristics or it won't be found. We're even endowed with the quartz and trade winds. It's as if our universe is in a petri dish and the controllers are trying to see how long it takes before we make some use of what we're given.
Why use abstractions to model our clearly fucked system when we already have concrete models of better systems? That is, why attempt to explain the link between liquid fuels and money when we know the future actually lies in the link between our ability to capture the sun's radiation and happiness? It seems like a waste of time. Let's just get started already.
If anything, I'm more interested in modeling the inertia of our present system, and seeing what sort of excitations we need. I think a good analogy for where we are now is an unstable equilibrium. Like a ball at the top of a hill. It's velocity is zero and it's not going anywhere, but it's so close to being tipped. Eventually we will end up at a more favourable place. Some sort of underdamped system that has wiggle room. Like the wind doesn't blow but that's okay because we stored enough energy in a capacitor somewhere. But we'll need a shitload of annealing to get there. The question is whether the acceleration we experience en route hurts. The further we get now, the greater the damping coefficient. The model doesn't need to be any more complicated than that.
Looks to be a wild ride for you. Good luck.
EP,
Interesting ideas. But most of them are based on misguided ideologies.
The reason we have unemployment is due to mechanization and automation.
Consider for example, the lowly traffic light (you know; green means go, red means stop and amber means go faster and honk your horn obnoxiously as you plow through the traffic intersection).
If it wasn't for this marvelous little contraption, we would need a traffic cop at every busy intersection. Millions of jobs right there.
Consider the automated telephone system. If it weren't for automated dialing, we would need millions of telephone switchboard operators.
We can go on and on. I'm sure some Ag business TODder out there will chime in and say, hey, you forgot to mention the modern farm combine! Yes. If we didn't have mechanized farming, then millions of people would have to be employed in manual farming.
I'm not suggesting we go back to the good old days (they weren't all that good). However please think and learn before you spout.
Liquid fossil fuels (particularly oil) are critical because nothing else provides the energy storage density and transport-ability as does oil. Your electric capacitor is not going to do the trick with its pico-Farad storage prowess. ;-)
BIIIIINGOOOOO!!!
So we all should be working 15 hours a week have comfortable lives and spend our free time on personal development and improvement that doesn't waste resources.
What is so hard about understanding this???
We are living in a Society that has collectively gone insane!
I already automated my job at work and do just this. I spend my time learning and cycling. I think it's hard to get people into academia and low-energy hobbies before they have a foundation to go on. For example, it's tough to start learning a musical instrument, and where's the incentive? But once you're good at it, you just want to keep practicing... Thank god for video games though. They are low-energy and keep people busy.
And Low IQ as well.
"The reason we have unemployment is due to mechanization and automation."
I'm pretty confident that's the exact point that I was trying to make. The next few lines of your response give good examples. I 100% agree. The point is that it is not energy peak that caused our present unemployment. It's the mere fact that we don't need people to do things. But then they don't have money, and so nobody will give them anything (e.g. food). That's why our organization is a little funny. Money doesn't make too much sense unless society agrees that we will give every unemployed person a $1000 cheque every month. I'm sure the people with jobs who love what they do won't care too much if they understood the issue we now face (I would happily accept the tax). And the people who choose that they enjoy life more not working can go enjoy themselves in things that they do enjoy. This is the model I hope we see in the future, if the idea of money persists, which I think it will.
As for your arrogant remark about capacitors... Why are you showing a picture of an obsolete design? Modern capacitors are sheets rolled dozens, thousands, or millions of times over. Utilities use caps in the range of MegaFarads and beyond. They don't make sense for lightweight energy storage, e.g. what we need for transportation. This is because we have been unable to economically produce a dielectric that can withstand a large enough electric field before breakdown (where it becomes conductive, short-circuiting the plates). How large does it need to be? Well, we decide on the max weight of the capacitor. We want to get as much surface area as we can, and we want to make the distance as small as we can. To achieve the same voltage, for a shorter distance, since voltage is the integral of electric field times each infinitesimal distance, we need a stronger electric field. Most materials break down too early, i.e. we need to get more Volts/Meter or Nowtons/Coulomb, depending on how you prefer to look at E field. However, we know which materials can do the trick. We know how to manufacture them. And we are getting better at it very quickly. I am currently inventing a bicycle that has enough capacitance to store your kinetic energy when going at 30km/h so that you can get back up to speed without having to pedal, great for city cycling. Eventually, when we get a better grasp of nanotech, we will be able to overcome the manufacturing challenges of our ideal dielectrics, and we will produce the ultracapacitors needed for EVs. They will be built using materials that are in abundance on this planet.
Where are utilities using MegaFarad capacitors? I have not hear of this. We use some huge capacitor banks at Bonneville Power, but they are in the Microfarad range (rated for 500kV, often as not).
I have a professional interest. I suspect you are mistaken, but thought I would ask and maybe be suprised.
EP,
For a while there, I thought you were just an engineering student. But now I see up thread that you are in the ASIC business. (BTW, are you located in the Si Valley area?)
As for Hi-K dielectrics, yes I'm well aware of them.
The problem is that ASIC mentality does not scale into high power requirements. It's one thing to lay down a thin film of Hi-K dielectric on a small IC chip. It's a whole other world when you contemplate going the A123 way.
BTW, how are those A123 guys coming along with their plans for BaTiO3 capacitors?
A lower EROEI results in a lower ENERGY profit margin, but not necessarily in a lower profit margin for investors. There are a variety of other factors driving profit margin of the companies. First off, not all companies are E&P companies, so for example those providing EOR services would actually see revenue growth and improved profit margins assuming there are not enough service providers relative to demand for their services. Even with an E&P company, profit margins can still go up if the price of the underlying commodity increases by more than the EROI decreases. For example, oil supply can peak and then decline, making the commodity more valuable, but the EROI can still go down from say 20 to 1 to 10 to 1. Say oil goes from $100 to $120 and reserves are 1 million barrels (simple numbers to get point across). Then $100M*(19/20) = $95M while $120M*(9/10) = $108M. Note how even though commodity price has only gone up 20% while EROI has been halved, the value of the company still goes up. As has been mentioned before in other posts, money is not a perfect proxy for energy. There are a lot of other factors in play.
In a decreasing EROI environment, the energy space is the best place to invest because it is the best able to maintain profit margins. Discretionary items don't have pricing power in such an environment and they get massacred as a result.
Capitalism can continue to be our best option if we adjust some parameters and eliminate some distortions:
1) We must live within our means. Investment must be funded from savings (no fractional reserves) and governments must balance their budgets.
2) We must link energy prices to their actual scarcity and cost. Current price floor is set by production cost and does not include subsidies like military and atmosphere. We need a price floor linked to realistic reserves without subsidies. A good method for this that might also help address climate change is a carbon tax set high enough to force oil demand down faster than supply depletion.
Yes I understand that 1) and 2) will cause a crash. But at least we will crash to reality rather than crashing to oblivion.
An essay with two flow charts. No data to show just how big any of those arrows should be. No explanation for why the profit did not get hijacked to maintain the raw energy flow, I mean oil is only about twice as energy dense as coal, and there is a heck of a lot of accessible coal--not that I want to see things go that way. I'm just not buying it. Looks like the flip side of something Limbaugh would show, and serves the same purpose, get the faithful talking. Still thanks for taking the time to dish something out there.
I assume you must have missed the pointers to the primary literature that provides the backup. This was an essay, not a journal article.
The only inputs to your little charts are raw energy. So since solar is by far the biggest chunk of our raw energy input, and since fossil fuel is essentially banked solar, and we are using fossil fuel at what appears to be an increasing clip no doubt we will be dealing with a smaller energy input at some point. But since the efficiency with which we use the current solar input is certainly not maximized and since there are still enormous amounts of fossil fuel (read coal) left your initial statement is a belief and no more true than the beliefs cornucopians spout.
Here it is again if you need a refresher
You also have to include the part of the cosmic dust cloud that formed the earth and moon and the power of gravity as part of the raw input, in order to take nuclear, tidal and geothermal into account. The sun and the earth are finite, the raw energy mix will eventually disappear, but that is not the time frame you are referring to.
You could of course be right, Jevons certainly thought he was right, but he had no clue as to just how important the control of electrical current was to become and what that control could do for our potential fuel mix. For anyone that is feeling a little depressed about the near future, I'd say read all of Jevons 'The Coal Question'. We humans love to play soothsayer, but it is always with mixed results. Of course if there is soon a sudden drop in the availability of oil the raw energy will decline dramatically in the short run. But just how sudden and how much of a drop there will be in oil (and readily substituted replacements) availability has been the big subject of debate on this site for a long time.
Even if we had infinite supplies of petroleum theres another factor which will end capitalism as we know it - the end of world population growth. Population growth is exponential, and at this point theres no further possibility of sustained exponential growth. The era of world population growth is over, and with it the end of exponentially increasing consumption.
Unfortunately very few people seem to realize its time for zero population growth. And even more unfortunately it looks like peak oil is going to do the job of permanently stabilizing the world's population for us. After reducing it a lot first. I am very nervous at this point.
Fortunately, most of the world's population is way ahead of you on this one. The fertility rates in almost all developed countries are below the replacement rate, and the developing countries are following suit. The big factor is China, who's fertility rate is below the replacement rate as the result of its draconian one-child policy. India isn't there yet, being a democracy, but it is getting close.
The main exceptions are in Africa and the Middle East, so I would look to see a lot of collateral damage there in the next few decades as the Four Horsemen of the Apocalypse eliminate the surplus people.
Look for Peak People around 2050 in the current trend line. After that, it's all downhill.
I did see one discouraging thing on China as Shanghai no longer has the one child limit. City officials are encouraged women to have a second child as more than 20% of Shanghai's residents are over sixty. Policies can change on a dime. China's population is expected to grow until 2030 even with the one child policy in place (the actual fertility rate now stands at 1.7 children per woman with about 2.1 the rate needed for stable replacement). China probably has no intention of shrinking its population, but rather maintaining it a some future higher level or even to continue growing it at some very low rate.
With the fertility rate now below the replacement rate, I think China is probably losing interest in enforcing their "one child" policy. They probably don't want the population to shrink all that much, because it will raise the issue of who will pay for the pensions to their elderly people, and they will soon be paying pensions to the elderly.
They're joining the developed world.
I'm thinking they don't want their population to shrink at all, as a matter of fact I can't find any developed country that wants their population to shrink, they all want some modicum or growth, ponzi scheme retirement programs make that a big issue in all the developed world. That is why I wonder about any predictions of population actually completely levelling off gently of its own accord. It is a sticky issue. I'm not saying population won't level off, but rather don't expect the levelling process to be gentle or conducive to trans oceanic oil shipment, which of course means you will, at least for a while, have to sell your tar sand oil to the local markets you can pipe it to, making it a commodity much more akin to natural gas than it is now. Just a thought.
To pick up on the last comment by ChrisInns, where does a potential decline in world population fit in? Again, I want to mention that we have available now voluntary, inexpensive, and effective birth control. We are already seeing the effects in Europe. And, guess what - Europe's unemployment rate has been falling as the bumper crop of baby boomers begins to leave the system. Imagine if Europe had had an increasing population in the past 50 years, say 100 million more on the continent?
Yes, there will be this hopefully one-time crunch as retirees crowd the system, but with a combination of several more years of work, full employment on the part of the younger population, fewer dependent children (who also cost the system lots of money, particularly in Europe), and some modest cuts in benefits and lifestyle, I have hopes that Europe will get through this immediate problem of benefits and begin to enjoy the premiums of a declining population (less strain on resources, improving the natural environment, fewer people to crowd the cities) - and that the rest of the world will begin to follow.
Imagine if more people began to choose one child or none - that would result in a much better balance for the planet, and contribute to a better life for most people. And it's a voluntary, cheap, and instantly available remedy, though it will take time for its full effects to be felt!
Unfortunately the world's population is still continuing to increase exponentially. Predications that it will stabilize within a few decades are just optimistic estimates. Even Europe is continuing to increase, just at a slower rate than average. Even China's extreme unpleasant policies weren't enough.
The world's business leaders and politicians all cry out for perpetual population growth, just maybe "managed" a bit. In Australia we recently had a debate on population growth, this article published in the leading national newspaper is representative of the view of most of our politicians and business leaders, including our prime minister.
People are dumb, really dumb. The human race bears all the signs of a species in the final catastrophic stage of an exponential growth cycle.
No, the population growth is not exponential. It would be if the population growth rate kept constant year-over-year, but as you can see, it is trending downward:
Chinas policies WERE enough, as were Europes non-policies, in taking the number of children per woman down below two, but population growth may continue for decades as the population pyramid becomes a population rectangle and as longevity increases. That the world population will stabilize is NOT some form of optimistic dream or a political goal - it's an educated demographic best-guess. And as demographers see the long-term trends and as they know the number of future mothers at least 20 years in advance, the best-guess is a good guess.
Why Socialism?
by Albert Einstein
This essay was originally published in the first issue of Monthly Review (May 1949).
Is it advisable for one who is not an expert on economic and social issues to express views on the subject of socialism? I believe for a number of reasons that it is.
Let us first consider the question from the point of view of scientific knowledge. It might appear that there are no essential methodological differences between astronomy and economics: scientists in both fields attempt to discover laws of general acceptability for a circumscribed group of phenomena in order to make the interconnection of these phenomena as clearly understandable as possible. But in reality such methodological differences do exist. The discovery of general laws in the field of economics is made difficult by the circumstance that observed economic phenomena are often affected by many factors which are very hard to evaluate separately. In addition, the experience which has accumulated since the beginning of the so-called civilized period of human history has—as is well known—been largely influenced and limited by causes which are by no means exclusively economic in nature. For example, most of the major states of history owed their existence to conquest. The conquering peoples established themselves, legally and economically, as the privileged class of the conquered country. They seized for themselves a monopoly of the land ownership and appointed a priesthood from among their own ranks. The priests, in control of education, made the class division of society into a permanent institution and created a system of values by which the people were thenceforth, to a large extent unconsciously, guided in their social behavior.
But historic tradition is, so to speak, of yesterday; nowhere have we really overcome what Thorstein Veblen called "the predatory phase" of human development. The observable economic facts belong to that phase and even such laws as we can derive from them are not applicable to other phases. Since the real purpose of socialism is precisely to overcome and advance beyond the predatory phase of human development, economic science in its present state can throw little light on the socialist society of the future.
Second, socialism is directed towards a social-ethical end. Science, however, cannot create ends and, even less, instill them in human beings; science, at most, can supply the means by which to attain certain ends. But the ends themselves are conceived by personalities with lofty ethical ideals and—if these ends are not stillborn, but vital and vigorous—are adopted and carried forward by those many human beings who, half unconsciously, determine the slow evolution of society.
For these reasons, we should be on our guard not to overestimate science and scientific methods when it is a question of human problems; and we should not assume that experts are the only ones who have a right to express themselves on questions affecting the organization of society.
Innumerable voices have been asserting for some time now that human society is passing through a crisis, that its stability has been gravely shattered. It is characteristic of such a situation that individuals feel indifferent or even hostile toward the group, small or large, to which they belong. In order to illustrate my meaning, let me record here a personal experience. I recently discussed with an intelligent and well-disposed man the threat of another war, which in my opinion would seriously endanger the existence of mankind, and I remarked that only a supra-national organization would offer protection from that danger. Thereupon my visitor, very calmly and coolly, said to me: "Why are you so deeply opposed to the disappearance of the human race?"
I am sure that as little as a century ago no one would have so lightly made a statement of this kind. It is the statement of a man who has striven in vain to attain an equilibrium within himself and has more or less lost hope of succeeding. It is the expression of a painful solitude and isolation from which so many people are suffering in these days. What is the cause? Is there a way out?
It is easy to raise such questions, but difficult to answer them with any degree of assurance. I must try, however, as best I can, although I am very conscious of the fact that our feelings and strivings are often contradictory and obscure and that they cannot be expressed in easy and simple formulas.
Man is, at one and the same time, a solitary being and a social being. As a solitary being, he attempts to protect his own existence and that of those who are closest to him, to satisfy his personal desires, and to develop his innate abilities. As a social being, he seeks to gain the recognition and affection of his fellow human beings, to share in their pleasures, to comfort them in their sorrows, and to improve their conditions of life. Only the existence of these varied, frequently conflicting, strivings accounts for the special character of a man, and their specific combination determines the extent to which an individual can achieve an inner equilibrium and can contribute to the well-being of society. It is quite possible that the relative strength of these two drives is, in the main, fixed by inheritance. But the personality that finally emerges is largely formed by the environment in which a man happens to find himself during his development, by the structure of the society in which he grows up, by the tradition of that society, and by its appraisal of particular types of behavior. The abstract concept "society" means to the individual human being the sum total of his direct and indirect relations to his contemporaries and to all the people of earlier generations. The individual is able to think, feel, strive, and work by himself; but he depends so much upon society—in his physical, intellectual, and emotional existence—that it is impossible to think of him, or to understand him, outside the framework of society. It is "society" which provides man with food, clothing, a home, the tools of work, language, the forms of thought, and most of the content of thought; his life is made possible through the labor and the accomplishments of the many millions past and present who are all hidden behind the small word “society.”
It is evident, therefore, that the dependence of the individual upon society is a fact of nature which cannot be abolished—just as in the case of ants and bees. However, while the whole life process of ants and bees is fixed down to the smallest detail by rigid, hereditary instincts, the social pattern and interrelationships of human beings are very variable and susceptible to change. Memory, the capacity to make new combinations, the gift of oral communication have made possible developments among human being which are not dictated by biological necessities. Such developments manifest themselves in traditions, institutions, and organizations; in literature; in scientific and engineering accomplishments; in works of art. This explains how it happens that, in a certain sense, man can influence his life through his own conduct, and that in this process conscious thinking and wanting can play a part.
Man acquires at birth, through heredity, a biological constitution which we must consider fixed and unalterable, including the natural urges which are characteristic of the human species. In addition, during his lifetime, he acquires a cultural constitution which he adopts from society through communication and through many other types of influences. It is this cultural constitution which, with the passage of time, is subject to change and which determines to a very large extent the relationship between the individual and society. Modern anthropology has taught us, through comparative investigation of so-called primitive cultures, that the social behavior of human beings may differ greatly, depending upon prevailing cultural patterns and the types of organization which predominate in society. It is on this that those who are striving to improve the lot of man may ground their hopes: human beings are not condemned, because of their biological constitution, to annihilate each other or to be at the mercy of a cruel, self-inflicted fate.
If we ask ourselves how the structure of society and the cultural attitude of man should be changed in order to make human life as satisfying as possible, we should constantly be conscious of the fact that there are certain conditions which we are unable to modify. As mentioned before, the biological nature of man is, for all practical purposes, not subject to change. Furthermore, technological and demographic developments of the last few centuries have created conditions which are here to stay. In relatively densely settled populations with the goods which are indispensable to their continued existence, an extreme division of labor and a highly-centralized productive apparatus are absolutely necessary. The time—which, looking back, seems so idyllic—is gone forever when individuals or relatively small groups could be completely self-sufficient. It is only a slight exaggeration to say that mankind constitutes even now a planetary community of production and consumption.
I have now reached the point where I may indicate briefly what to me constitutes the essence of the crisis of our time. It concerns the relationship of the individual to society. The individual has become more conscious than ever of his dependence upon society. But he does not experience this dependence as a positive asset, as an organic tie, as a protective force, but rather as a threat to his natural rights, or even to his economic existence. Moreover, his position in society is such that the egotistical drives of his make-up are constantly being accentuated, while his social drives, which are by nature weaker, progressively deteriorate. All human beings, whatever their position in society, are suffering from this process of deterioration. Unknowingly prisoners of their own egotism, they feel insecure, lonely, and deprived of the naive, simple, and unsophisticated enjoyment of life. Man can find meaning in life, short and perilous as it is, only through devoting himself to society.
The economic anarchy of capitalist society as it exists today is, in my opinion, the real source of the evil. We see before us a huge community of producers the members of which are unceasingly striving to deprive each other of the fruits of their collective labor—not by force, but on the whole in faithful compliance with legally established rules. In this respect, it is important to realize that the means of production—that is to say, the entire productive capacity that is needed for producing consumer goods as well as additional capital goods—may legally be, and for the most part are, the private property of individuals.
For the sake of simplicity, in the discussion that follows I shall call “workers” all those who do not share in the ownership of the means of production—although this does not quite correspond to the customary use of the term. The owner of the means of production is in a position to purchase the labor power of the worker. By using the means of production, the worker produces new goods which become the property of the capitalist. The essential point about this process is the relation between what the worker produces and what he is paid, both measured in terms of real value. Insofar as the labor contract is “free,” what the worker receives is determined not by the real value of the goods he produces, but by his minimum needs and by the capitalists' requirements for labor power in relation to the number of workers competing for jobs. It is important to understand that even in theory the payment of the worker is not determined by the value of his product.
Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.
The situation prevailing in an economy based on the private ownership of capital is thus characterized by two main principles: first, means of production (capital) are privately owned and the owners dispose of them as they see fit; second, the labor contract is free. Of course, there is no such thing as a pure capitalist society in this sense. In particular, it should be noted that the workers, through long and bitter political struggles, have succeeded in securing a somewhat improved form of the “free labor contract” for certain categories of workers. But taken as a whole, the present day economy does not differ much from “pure” capitalism.
Production is carried on for profit, not for use. There is no provision that all those able and willing to work will always be in a position to find employment; an “army of unemployed” almost always exists. The worker is constantly in fear of losing his job. Since unemployed and poorly paid workers do not provide a profitable market, the production of consumers' goods is restricted, and great hardship is the consequence. Technological progress frequently results in more unemployment rather than in an easing of the burden of work for all. The profit motive, in conjunction with competition among capitalists, is responsible for an instability in the accumulation and utilization of capital which leads to increasingly severe depressions. Unlimited competition leads to a huge waste of labor, and to that crippling of the social consciousness of individuals which I mentioned before.
This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career.
I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child. The education of the individual, in addition to promoting his own innate abilities, would attempt to develop in him a sense of responsibility for his fellow men in place of the glorification of power and success in our present society.
Nevertheless, it is necessary to remember that a planned economy is not yet socialism. A planned economy as such may be accompanied by the complete enslavement of the individual. The achievement of socialism requires the solution of some extremely difficult socio-political problems: how is it possible, in view of the far-reaching centralization of political and economic power, to prevent bureaucracy from becoming all-powerful and overweening? How can the rights of the individual be protected and therewith a democratic counterweight to the power of bureaucracy be assured?
Clarity about the aims and problems of socialism is of greatest significance in our age of transition. Since, under present circumstances, free and unhindered discussion of these problems has come under a powerful taboo, I consider the foundation of this magazine to be an important public service.
But the ends themselves are conceived by personalities with lofty ethical ideals
A bit of a rub when the rubber meets the rode with that 'lofty' part. As for your acquaintance who wondered why you were so opposed to the disappearance of the human race, he really doesn't sound too much different than Volataire's character Martin, who is fully bored with existence, so it is hardly a new attitude. Struggle and overcoming or at least finding a workable balance with obstacles is a lot of the very best that life is about... The dynamic between cooperation and competition is fluid and will remain so, I hope. And in the end as, after all his ups and downs, Candide said to the 'lofty' Pangloss 'We must cultivate our gardens.' So get out there and move a couple rocks ?- )
Yes - capitalism as we currently know it depends on 2 things:
1. Continuous exponential growth in production.
2. Continuous exponential growth in consumption.
Neither will be possible shortly.
That's nice, but I do not see anything from Charlie Hall as being creative or actually coming up with ideas that relate to change.
He is a Price System advocate or presenter, in his thinking and that is all he is, and does not relate at all to any kind of social activism or blowing the whistle on the current operating system (neo-classical Keynes nonsense system).
You mention Hubbert a lot in the article.
Why not actually see what Hubbert says about the ONLY viable alternative system that is worth talking about? Yeah the technate design and energy economics instead of the current Price System.
I guess you know what that is, but sites like this, go round in circles and are really not of much good unless they can give actual alternative information http://docs.google.com/View?docID=0AUfLP5xuRGeqZGZ4N3JmcjJfMTEzNG5waGRt&... Man-Hours And Distribution, M. King Hubbert.
Growth is only possible when energy flow is increasing.
SIMPLY WRONG !
Your analysis that "prime movers are at their peak efficiency" completely overlooks the MASSIVE gains by changing prime movers, and reducing movement.
Imagine an economy where energy efficiency increases dramatically. Where several percent of GDP was diverted to both long lived energy efficient and energy producing assets.
Examples:
- Shift 80% of trucking to an expanded and improved electrified rail system. Trade 20 BTUs of diesel for 1 BTU of electricity
- Vastly expand bicycle facilities in, say, Washington DC and get 25% to 30% of commuters to use bikes, 50% to use Metro or new streetcars, several % to walk.
- Abandon Exurbs and outer suburbs and expand TOD near new Urban Rail. Cut VMT by more than half, reduced energy to maintain the infrastructure,
- Reduce retail space back to 1950 levels/capita. i.e. 1/10th of today
- Build new homes to German standards (R-50 walls, etc.) and retrofit
- Solar or tankless has water heaters in new & old homes
- Go to much more energy efficient cars (Prius & Yaris replaces Hummer)
and so forth.
Growth within such an economy should be quite possible even with declining energy for a century or so.
Alan
All of us are permitted our dreams.
I'd certainly agree with the reducing movement part, but the "...MASSIVE gains by changing prime movers..." begs some questions (and note I did not say they were AT their peak efficiency). One question begged is exactly how this conversion of standing capital is to be accomplished and over what time frame? Another obvious question is what new prime mover technology do you see as candidate for building the new capital?
Every item in your list is one of "If only we did thus and so everything would be right with the world!" You might be right. The problem is with the IF clause. Until you show clearly how all of these are to be accomplished (and I mean feasibility demonstrated) this remains the claim of a dreamer.
BTW: I read your paper and found no compelling proof (as you had claimed) that the solution to a very circumscribed problem could be actualized. The 'IF' analyses are necessary to demonstrate technical feasibility but they are not sufficient to claim realizability. And in any case, even the IF part has to bring cold hard facts to bear.
By growth I assume you mean in GDP. If so then you should do a little thinking about what that actually means. For many people the past growth of the economy has hardly produced the promised better life. Since the whole notion of growth of GDP has become our mantra for a "healthy" economy the economy has gotten more divorced from physical reality. The whole concept of value of money has gotten distorted. It used to roughly be equivalent to how much real work (production of useful assets) could be done. Now? The reality today is that GDP is a virtually meaningless number. At best its y-o-y change points to growth or decline in overall economic activity (like recording repairs in your New Orleans as adding to that number). But it doesn't tell you anything about the health of households other than to infer that there is at least one breadwinner in that household due to increase in jobs. For the last twenty years the phony debt-based "money" from the financial sector's manipulations have been pumping up GDP. Bankers and Wall Streeters have been paying themselves handsomely because they were contributing to the growth of the GDP, all the while the middle class purchasing power was in decline.
Consider carefully what it is about the notion of growth that you think is worthwhile.
Finally, you must be making some assumptions about how rapidly energy input (net energy into the economy) will decline to believe that efficiency gains and stopping the wasteful habits (of Americans anyway) will be adequate to offset that decline. If your evidence is just looking at the downside curve of Hubbert's peak then be aware that that curve was mere speculation based on downside positive and negative feedback loops simply working in reverse. There are now a number of criticisms of that assumption (some have shown up here on TOD). At this stage of analysis it is by no means clear that the downside will resemble the upside (logistic). There has been some work suggesting that regional and field-level data on actually declining fields look like they take longer, have a different set of rate constants. But still other work suggests quite the opposite for global-scale oil decline. Factor in the problems Gail has pointed out with investment capital not being sufficient to keep extraction rate from new finds able to compensate for declining fields and we may find much more rapid decline rates (the very capital that you would want to turn to producing all the new machinery). Finally look at the Cantrell field as an example (model) of what might happen at the global scale.
But the biggest problem with these assumptions is that they don't take into account that net energy (gasoline, diesel, electricity, etc.) is not the same as gross energy (oil, coal, fissile materials, etc.) Just looking at declines in gross tells you nothing about declines in net until you have really hard EROI numbers to use as factors. And while we are getting better analyses these days, we are still very far from concrete, reliable numbers for all of the energy production infrastructure. Even at this, if you take a look at Charlie Hall's Balloon Chart you should be able to see that even with scientifically conservative estimates of, especially, alternative energy sources, that the declines in fossil fuel gross energy inputs would require "MASSIVE" investments and still probably wouldn't scale to meet the supposed demand.
Dreams are nice and sometimes comforting. But until you can produce more than claims from dreams...
My dream is based on a model that Charlie Hall helped develop with the Millennium Institute.
The "new" prime movers are electrified rail (urban & inter-city), bicycles and walkable neighborhoods combined with less moving.
We modeled "Maximum Commercial Effort) (ACORE plans for renewables) with VERY positive results.
PS: I would like to see growth in areas that do not use much resources. Music, software, art (including the art of cooking :-), literature and more.
more later
How long ago did you talk to Charlie about the future?
Hi George,
I just wanted to say I hope you keep on posting more essays, by the look of the some of the posts, some people don't seem to get the significance of humans being detritivores, Homo Colossus as Catton would say.
Reading around this subject has taken me a long time! If I am a doomer its simply because of some of the so called fixes by the non-doomers!
Ah well.
ATM, I am battling a virus.
I came on board to model my ideas after Dr. Hall had modified the model with his concepts and data on EROEI.
I am interested in his contributions to analysis, I am less interested in his conclusions, because they incorporate a too small set of what is possible (which I define by historical examples; if we did it before with less resources, we can do it again).
Too weak and too many other pressing projects for what energy I do have to engage in a proper debate ATM.
Best Hopes for Later,
Alan
This is socialist myths. Of course life has become better and of course the middle class purchasing power has increased. A lot, too. GDP/capita is a good measure and GDP per capita growth a smart goal.
Bravo for an exceptionally fine presentation articulating some of the points originally set forth by H.T.Odum in his 1973 Ambio article (Odum, H.T. 1973. Energy, ecology and economics. Royal Swedish Academy of Science. AMBIO 2(6):220-227). That article was a masterpiece setting forth energy systems fundamentals to which the masters of our world economic system remain totally oblivious.
One small correction - your diagrams violate the Second Law of Thermodynamics. There is no energy departing your system diagrams as waste/unusable entropic energy. Check out Odum's diagrams. At each point of interaction waste heat flows out to a heat sink at the bottom of the diagram. This waste heat forever departs to that great heat sink in the sky (or elsewhere), never to be useful again. It's the portion of the inflowing energy that doesn't get to pass on to the next user in the energetic food chain.
Thanks for the comment. I may have forgotten to mention the heat output and that I intentionally left it out so as not to clutter up the figures. Those figures come from a series which starts out with diagrams that do include the heat flows and sinks. I cover this pretty thoroughly in my articles about biophysical economics in Question Everything.
You are right about Odum. I feel incredibly privileged to have gotten a chance to work with one of his top Ph.D. students (Charlie Hall). With a little luck, I might get a paper or two co-authored with Charlie. That will make my Odum number = 2 (c.f. Erdős number!)
Probably a pointless endeavor and mostly a status goal for misguided reasons then.
Unless someone provides alternative ideas that are real (viable) it is pointless to go over this ground over and over like this thread does.
This is old information that has been known for decades. People like Charlie and yourself apparently, also, are just rehashing it.
Maybe its about University funding and other Price System goals then. Pity. Funding etc.
I suppose the big corporate fascists support lots of these university programs and departments, right?
The present system does not need people trying to patch or reform or make sense of it.
Doing so is antithetical to providing the public with real information about viable alternative ideas http://www.youtube.com/user/TBonePickensetc
John you are consistently hypercritical of Charlie (and now me) and never really provide much explanation other than to claim something like the above. I get that you like the Technocracy program but I wonder if you really grasp how hard it is to communicate with the economists and politicians who actually dominate the conversations with such a program. They have no idea what exergy or emergy is. The best way to try to get to the point that H.T. Odum and others talked about many years ago is to do more science to demonstrate the relationship between money and energy. That is all Charlie and the rest of us in biophysical econ are trying to do, I believe. We're not trying to reinvent any wheels, just make it obvious to those who want to transport something that a wheel will work for their purposes.
I would really like to hear something constructive rather than what, frankly, sounds like some kind of bitterness showing through. But do what you think you have to.
end quote, George.
Not really.
That information has been known since then, and was known before then also.
Alternatives to the present system are well known.
Feeding around the fringes of Keynes with energy economics... thermoeconomics/constrained by 'debt token' thinking, for more years does not really accomplish anything now and as to politicians and corporations getting actual viable information .. that is not going to happen, unless an incentive or educational program with actual information is used.
Not just game playing fake economic (money) to energy ideas in long trains of nonsense that ignore the reality of the situation we are in http://gsa.confex.com/gsa/2003AM/finalprogram/abstract_61689.htm More on Hubbert.
If you were a garbage man would you ignore toxic waste in your garbage cans?? or tell someone, or do something? Are you a technician only,? or do you care a little about the fate of the human race?
If so, non market economics using energy accounting, is the future... if there is a future.
Wouldn't it be better to stand up for that instead of being a cog in a University machine that spins around with old information.
People like Hubbert were creative and had something to say about the future and our place as humans in it.
They had alternative ideas based on science.
They proposed an alternative social system https://docs.google.com/Doc?id=dfx7rfr2_357gsgx2ptk
A Statement Of The Social Objectives Of Technocracy
Hubbert was probably the preeminent geo-scientist of the 20th. century. Physics has not changed much since then ... has it?
Trying to reform the political Price System is not going to work.
If people like you realized that then you would get involved and have a real stake in making a viable change and not just arranging the deck chairs
http://docs.google.com/Doc?docid=dfx7rfr2_55dh6wv9&hl=en Technate Design... and idea for now.
The American Political Price System http://docs.google.com/Doc?docid=dfx7rfr2_109m3xbv3&hl=en Corporate fascism and special interest groups run it and have for some time.
Its not a good thing to support. It is a good thing to blow the whistle on, and maybe even let people know that there is a viable alternative.
Mostly unregulated economic activity is capitalism. It's the default natural state unless it is regulated away. Therefore it can not die. I would venture that economic activity tends to resemble capitalism even when it is regulated away in places such as Soviet Russia, North Korea, and during Feudal Times. Even if it is not money, SOMETHING is always being exchanged.
It would abuse the word capitalism to use it so broadly, but 'economic activity' might encompass what I mean. It will continue. Saying capitalism will die is sort of like saying that anarchy is going to fall apart. Hierarchy is naturally formed from anarchy, and it is only the hierarchy that can fall apart.
Opportunity costs exist even in a shrinking economy. Some things make sense to do. Capital moves to where it can get the best returns, even if those returns are negative.
Imagine Planet Simple where there is one world currency (Simplebucks) and no banks, or lending. There is only one fossil fuel there, oil, and being a limited resource, it's production has just peaked. There are only 1 million Simplebucks in existance, and this is and has always been, and will always be kept constant since the citizens of planet simple would consider printing more or less to be plain silly.
For years, since the industrial revolution, on Planet Simple, there has been endless deflation, but only the good kind. One well known example is the recent trend of dramatic price drops in computer processing. Some people choose to delay purchasing of this year's latest computer, so they can hold on to their Simplebucks for another year so they can buy next year's sure to be superior model of computer taking advantage of the deflationary trend.
Because of the deflationary trend driven by industrialization, technological improvements, and of course cheap oil, keeping one's money under the matress has always earned one a positive real rate of return. However, investing in the companies that have grown the economy has been even more profitable. This has been so true that hardly anyone kept their money in their matress over the years. Generally picking a random portfolio of any 10 respected companies has been an almost riskless way to grow wealth.
However oil prices have been rising of late. It turns out that some of the more marginal uses of oil that were once profitable, are no longer profitable. Sometimes other less energy intensive products are substituted, sometimes production is ramped down and prices increase to meet the demand that was not destroyed.
Although makers of items that can no longer be supplied cheaply are now less attractive investments and so often fail because of lack of capital, that capital does not go under the mattress because as prices rise, the real rate of return goes down. The capital is shifted towards sectors that can still offer a positive rate of return. In fact, as oil intensive activities become more and more expensive, people substitute other activities less effected by the price of oil.
It is still very possible to earn a positive return by investing in equities in these new and growing sectors. Of course prices for almost everything are rising while wages are fairly constant or even falling.
Fast forward some years, and society is taking a Dickensian turn. Downward mobility rules. Capital still flows and grows but is owned by fewer and fewer people. High technology and standards of living are still available. Western civilization continues on, but only for the wealthy. Lack of oil puts a damper on the hopes of the less developed parts of the world, and the developed world starts moving the other way. Huge disparities in wealth are ubiquitous worldwide, and the population of poor who are unable to replace themselves is continually replenished by the children of the wealthy.
It has been noted that this is the opposite of what was occuring prior to the peak of oil on Planet Simple. At that time it was the rich who were not reproducing while the children of the poor replaced them. Above the median income upward mobility has always of logical necessity been more about luck than hard work. Though hard work has always been almost an absolute necessity, it is only luck that can not be copied by the reasonable and so it is only by luck that upward mobility past the point where there are fewer opportunities than those who would fill them is possible. The reasonable have enjoyed the conceit that reason is rare and especially blessed. Of course humans are by and large reasonable, so that premise is false.
How the buying power of a Simplebuck has fallen from it's highs. Now only a few have enough of them to buy the things that were once enjoyed by the masses. Really this is more efficient the wealthy being so few in number consume far less than the poor.
But what is the purpose of life on Earth but to convert the usable energy from the sun into unusable energy by increasing the total entropy? If this is possible without as many humans, then isn't that more efficient?
Desperate people are willing to give up their freedom. Desperate people are willing to risk their lives. Desperate people have no principles. Desperate people are assholes.
Desperate people feeling their own doom on Planet Simple tend to ally themselves with powerful interests that might 'take care of them'. Powerful interests know that they can remain thusly powerful by taking care of those allied with them at the expense of those not allied with them, thus it is better to ally with powerful interests if not powerful yourself. Hierarchies of allegiance form. Those at the bottom of the heirarchy seek the opportunity to divide the haves from the have nots along different lines. Competing interests tap this well of support.
Things happen. There are winners and losers, none of it is fair, or reasonable or just. Any blessed roads to success are emulated out of existence so that there is nothing you can do to secure yourself from your fate in the long run. Try to avoid the obvious pitfalls, and especially try to enjoy the ride. Que Sera Sera.
And looking at the world as if you were a naturalist is fun, but it doesn't remove you from nature. There is no 'should' in this perspective, but there is ALWAYS self interest.
Nonsense, there is nothing natural about it. Capitalism is a social system which is dominated by capital, a social relation between people and the means of production, in which the means of production are treated as equivalents of money, and used to produce commodities for market exchange with the goal being a larger sum of money or its equivalent than at the beginning of the process.
The means of subsistence production (especially primary production per the physiocrats' definition: agriculture) were taken away from people en masse (enclosed) not too long ago see "enclosures" in england circa 1300-1700. People suddenly did not have the same type of access to the land that they'd always had. Someone else owned it in a totally different way than the feudal way. The merchant class -- those who produce nothing, but simply rearrange and sell what nature produces -- rose to prominence, and began to enclose more than just agricultural land, but also overtook manufacturing methods, materials and people, too. As people lost their ability to sustain themselves directly, they began to have to do so indirectly through the sale of themselves to the new system. That's the social relation part, people (society) had to literally sell themselves into the system in the form of wage labor which took on market pricing mechanisms. Prior to that, people worked for a certain amount and paid dues to the feudal lords, but it wasn't a market in the modern sense of price making and taking. Capital (and thus capitalism) is the social relation which necessitates and involves the selling of oneself to the market at market value as just another commodity. You cannot live within the system as we know it, without selling your self (labor) for a wage, which you then use to buy the things to subsist upon. It is a socially acceptable coercion . Essentially, a middle-man was created and this middle-man began to siphon off greater and greater commissions and expanded with the increase in ownership capability bought through the new social relationship. This is now the ruling class see wall street and their minions politicians
Whether those few middle-men be a cabal of government officials (Russia), or private tycoons (in a Randian world), or a mix thereof (like in the U.S.), the social relation of labor (people) as a commodity and expressed through capital is the same.
Interestingly, Marx though he critiqued capitalism, also considered it to be a necessary thing, and even a good thing provided we eventually move beyond it. He viewed it as a stepping stone -- which was necessary to develop a "mastery of nature" (part of why he is considered by many to have been lacking in incorporating an environmental aspect) through technology -- to his ideal society : the commune oft vilified by those who look at Russian history as its main example. He thought that capitalist nations would have to rise to prominence, then fail according to the inherent flaws in their models (per his critique), before communism -- a new social relation -- could really take hold
arraya
I would agree with CodeMonkey76 in that capitalism is the essential default of human kind post civilization. Evidence of primitive money is ubiquitous in the early cultures that we have archaeological evidence for. Sea shell money has been found on every continent save Antarctica.
Feudalism was simply the dominance of the strong over the weak. The impoverished slaves living fairly desperate lives worked the land to provide for the lord. They were denied any opportunity to attain capital. The lords were very much involved in the accumulation of capital though.
As soon as humanity invented agriculture specialization exploded. You had people producing and selling goods for a profit. That mechanism has grown ever more complicated as our economies have evolved, but there is very little difference in essence between what we do now and what we have done since the dawn of civilization. The main difference in the developed world today is that a person at least has a very significant influence on what their lot in life will be.
My argument was not PRO feudalism. It was describing the origins of capitalism, which was that it arouse out of feudalism. Which was a state implemented social relation. See "enclosures" people where coerced by force into wage slavery. Much like stalinist russia except over a much longer period of time. The vast majority of human history people did not need to sell themselves in a market like a commodity to survive. It's just a bunch of voodoo around monetary price points and private property. Pay "market price" for food or die
If not money, then influence, loyalty, favors can be exchanged. Instead of accounts, reputations can be used. Instead of becoming a CEO, you can become a powerful crony. Instead of rich, you can get privileged position. You invest what you have ( even if it is not money ) to get more, even if you can't own capital. You can still have more power over the means of production ( and especially the outputs ) than others.
Feudalism sucked. I don't see it not sucking, or sucking less than much of anything. Decent farmland has always been 'enclosed' since the agricultural revolution. And commons have always been subject to the tragedy thereof. Under a wage system, you front the work, and are paid for it. If you don't get paid, you can just stop work. Under feudalism, you accept the donation of food for a season in exchange for becoming a serf. Thereafter the lord of the manor taxes you as they see fit. Much surplus above subsistence will be taken away, and importantly, if you don't like it you can't leave. It's a form of debt bondage. When faced with starvation, people tend to accept these sorts of terms. People give up their freedom in order to continue existence under the protection of a more powerful interest.
If one can not defend one's habitat one will be displaced. Consider what happened to the 'savages' of the world. Consider what humans do to wild animals and plants. They are displaced. Domestic animals have come under the protection of humans who have displaced wild animals. People once considered 'savages' were killed or assimilated.
Not that displacement didn't happen since forever. Life always displace life and has since life began. 'Savages' always did it to each other. It has never had anything to do with right or justice or worthiness. It just is. Environments change and so different things are favored at different times. It has as much moral implications as the weather. Am I better than a shark? On land yes, in the water, not so much.
The problem with a Randian worldview is that Rand seems to think that successful people are better than others. Although 'better' begs the question 'better for what?' continuing on that line it's evident that this is completely false because society is ALWAYS shaped like a pyramid at the top and must always be. There will never be an inverse pyramid Star Trek TNG society where everyone is unimaginably wealthy except for a few criminals. Success is copied. Upward social mobility past median is by luck. Want to move up past that? Do things that give you the chance to. Don't do it FOR the chance to though because any chance you have is likely to be less than what would be required to justify the effort. Play the lotto because it's fun, not as an investment.
Very successful people are like other people but with luck. A few may have been particularly smart but most have been a little stupider than most, and convinced themselves and maybe some others that they were smart and insightful and done the equivalent of buying a lotto ticket, that is taken an action with a less than 1 expected payoff but potential high returns. For every smug success story there are more than one ( many ) failures. The failures and the successes are the same people. On average an entrepreneur fails many times before hitting the jackpot. Most never do, and those that do are probably risking someone else's money. Expected payoff less than 1 + action taken = stupid.
Then there are the most of us at or about the median who are neither stupid enough to be a great success or stupid enough to be a great failure.
However if you must be rich to survive, then get rich or die tryin.
What caused the rise for individual freedom and human rights? Pestilence and new frontiers raising the value of human capital.
True enough. But looking at the world through a naturalistic lens just might shed some light on the phenomena and provide some clues to help us anticipate what might be coming down the pike. While I personally believe that we are headed for a crash (for all the reasons I post on this site and my own blog) I don't believe that it need represent the extinction of humanity, except possibly by sympatric speciation(!). That is it needn't so long as some of us take steps to adapt and survive.
No crystal balls used here, just disturbing trends noted.
This was a well written essay, but I am still a long way from being convinced that we are in the midst of any sort of fundamental reshaping of our economic system. It seems fairly obvious that we will be able to keep up with growth while still exploiting primarily fossil fuels for at least the next 4-5 decades. I agree that renewables like solar and wind are highly unlikely to replace a majority of fossil energy generation for the foreseeable future. They are lousy for both base load and peak load applications. Until we can efficiently store large amounts of power for practical durations they will be of limited utility. Nuclear fission is capable of delivering energy to humanity at a reasonable price for centuries after that. We are absolutely going to adjust to a world of higher energy prices in the near to mid term, but I fail to see any reason why energy will not be produceable at far below the 1 to 1 ratio of energy required to extract vs. energy extracted.
I would also not look to democratic leadership to direct energy flows away from prosperity. Even if a regime were so inclined, they would be quickly shown the door. And if leadership became non-democratic and tried to artificially limit the growth of prosperity based solely on faith in a scarcity that may or may not come to pass, there will be no small amount of blood. People, as a general rule, do not take kindly to others forcing their beliefs on them.
Another problem with these models of inevitable collapse is that they rely on there being very little technological development. From Malthus to Ehrlich predictions of dire consequences related to finite resources have been shown to be lacking because they discount too deeply human dynamism. Sure commercial solar pannels work at about 20% efficiency today, but what if that is tripled? What if we can efficiently produce biofuels from cellulose? There are no shortage of potential advances that may well provide cost efficient energy for many centuries to come.
And I cringe when I hear capitalism needs to be replaced. In reality capitalism is just a word for what humans naturally do; for what we have always done. It has been the emergence of effective democratic institutions combined with the industrial and information ages that has created both the stability and opportunity necessary for the explosion of prosperity that we have seen.
From a moral perspective I do not see how you can reverse that and deny said opportunity to the developing world unless it was absolutely, beyond a shadow of a doubt necessary. Sure enough, economic growth will be strongly coupled with increased energy production for the foreseeable future, but I still think you are betting against history if you think that scarcity will trump development. Furthermore, it is the pursuit and attainment of prosperity that is levelling and in many cases decreasing populations. Straying from that model now could well exacerbate any future problems associated with a large human population.
Well, what do we do when it collapses? Somebody should have a plan B, No?
My point is that capitalism is just what people do. When you have the means to produce beyond your basic survival you will naturally seek to trade what you can produce in surplus for something else that is valuable to you. Our current economies could collapse, but whatever emerges will almost certainly still be capitalism. I have not once in my life heard anything else that could possibly substitue for it.
You would have to dictate to people exactly what they have to do to stop capitalism from emerging (and even then you have black markets). Essentially you cannot have a democratically elected government without capitalism. Society without capitalism has been tried before and it plainly does not work for all sorts of reasons.
Capitalism is just what people do... That is an absurdity right out of a libertarian comic book. So, people since the beginning of time have sold themselves in a market system to survive.
Markets have existed since at least the dawn of civilization and probably far earlier. And yes you have always had to provide something of value to provide for yourself or live off the kindness and surplus of others (well the welfare state has removed the kindness requirement anyway).
If you are lamenting the death of an idyllic freedom to live off the land, you might want to consider some of the less than idyllic elements of that reality. You were either open to attack from another group, or you paid for your security, such as it was, from someone somehow. People have always been a "slave" to something or someone. The fact is that at no other time in history have people generally had as much freedom from want and danger than they have today in the developed world. Nor have they had anywhere near the freedom to choose what to do with their time on Earth.
Money History and Energy Accounting
http://www.archive.org/details/MoneyHistoryAndEnergyAccounting
The Mystery of Money http://web.archive.org/web/20010514114733/www.technocracyinc.org/pamphle...
spriddler,
You miss a huge point..........technological unemployment even if you are correct about energy and human dynamism.
We don't need people doing work anymore and in capitalism that means they don't get to participate in the economy.
The same was said about agricultural unemployment more than a century ago: "We don't need people doing work anymore." But that was/is nonsense, of course. We always just produce more of something else instead.
A: Markets do not equal capitalism. Capitalism is a social system that arose out of feudalism with capital as the social relation. .
B: Up until a few hundred years ago the vast majority of humanity did not depend on a "market system" to survive. Wage-less relationship existed in Europe prior to the Enclosures. People farmed communal land (with feudalism existing at some points in time) cooperatively. All the while trade did of course occur, and there were even common exchange references (money), but the institution of wages and disposession was not a part of that trade. It was only through acts of governmental force that a disposession of means of production (enclosing/privatizing previously common-access land) occurred, thereby forcing people to relate in terms of wages as they were kicked off the land. Much as Native Americans were assimilated by force into colonial economies as their land (access to means of production / subsistence) was taken from them, this occurred in Europe. And it is this relationship which is the distinguishing essence of the system we now have.
C: Capitalism absolutely cannot consider anything external to the pricing mechanism, and will therefore destroy us, as everything that we depend upon as living creatures embedded within a web of life cannot be defined and controlled by something that cannot exceed its scope (the market as a subsystem of the biosphere cannot informationally exceed the biosphere, and thus must remain internal to it, leaving externalities which the market cannot consider in its pricing mechanism... duh!). Until that point is addressed, all of this is bankrupt from the start.
D: Biospheric interactions are inherently cooperative in nature, not supremely competitive... this is how a life manages to endure without snuffing everyone else out. Everything finds its unique niche in a functioning ecosystem, and the niches in their entirety are unique to the organisms that occupy them. And nature doesn't have concentrated ownership of the means of production... EVERYTHING is the means of production for everything else, equally distributed. Output = input. No waste to speak of, contrary to our system.
The human social construct of private ownership of the means of production that is our current economic system, a man-made institution fully dependent on social support... (without the social organization of military, police, and courts [you don't think these just magically appear, do you? And you don't think they've been with us for our entire history as a species, do you?] to keep the land under private ownership and control, it would fall apart immediately) is not mirrored in the natural world.
E: Do I really have to go into how ridiculous the invisible hand is...
Nice neo-marxist lecture.
A: Markets with industrialisation and property rights give rise to capitalism. Capitalism is what we end up with when we spontaneously organize a tech society.
B: Quite - we had to specialize to take advantage of tech and to become wealthier. So we did - hence urbanization and wages.
C: You assume that ownership cannot extend over the whole biosphere? The seas can't be owned, so overfishing is inevitable? Perhaps, but then we just tax the externalities - it's still capitalism, you know. If we throw out capitalism, we'll simply be sorry, b/c capitalism is very practical production-wise and b/c it requires a fair amount of repression to keep capitalism away. Your "web of life" notwithstanding.
D: You are dreaming. "Biospheric interactions" ARE opportunistic and supremely competitive. We have seen time and time again what happens if you introduce foreign species in eco systems - they often out-competes everything else. That we, given enough time, get a sort of balance is obviously NOT due to cooperation, and we get that kind of balance under the evolutionary pressure from competition in capitalist systems too. And yes, military, police and courts more or less magically appear, and they've been with us in all civilisations since the dawn of time.
E: No, you don't. What you've written is enough of an epic fail already.
I think your crystal ball might be giving you false readings. I have a nice new shinny clear one I'd be willing to part with for a reasonable sum.
The known reserves of oil in liquid, shale, and tar plus coal reserves seem more than adequate for a few decades use. At around $80 a barrel shale, tar, and a lot of deep sea oil are reportedly viable options.
Thanks for a thoughtful and NOT strident comment. Your four to five decades seems overly optimistic given the continuing refinement in our understanding of peak oil and its impact on society (including the fact that oil is a kinpin energy source -- you need diesel to extract coal). It also doesn't take into account the lead that the peak in NET ENERGY has relative to oil (GROSS ENERGY). If the peak has indeed arrived it means that the net energy peak arrived some decades ago, meaning there is less available energy for the general economy (excluding the energy sector itself since EROI takes that into account). Some of us contend that the economic decline that we have seen is in response to that historical proposition. We'll have a better handle on this if we see after, say, twenty years that we have been in a bumpy decline a la John Michale Greer's Long Descent, or in the worst case fall off the economic cliff as some here suspect.
Our history has always been against the background of increasing energy flows and with improving technologies for extraction and use. So the lessons of history can only be judged useful for making predictions in a similar environment in the future. Right now the evidence points to the future being one of energy decline, not increase, and limits on the improvements of technology. Therefore the lessons of the past may not hold water in that future. A completely, and possibly unsymmetrical set of rules are more likely to apply in that future. We need to expand our thinking by imagining what those rules might be and how we can adapt to them with the least pain.
Hi George,
I cannot disagree with any part of your argument with certainty. I therefore agree that we need to be thinking of many contingencies that would occur should we not be able to provide a surplus of energy at some future date. We would almost certainly see massive political instability in such a world. It is only prudent to have plans in case of that eventuality. I was taking issue with the author's call for drastic changes now as I think they are neither possible nor prudent. Introducing austerity measures would guarantee severe political unrest (violence, murder, mayhem) throughout the developing world, not to mention some unrest likely including a degree of violence in the rich world. That is why I think it extraordinarily foolhardy to take such measures now unless we know beyond a shadow of a doubt that such action is absolutely necessary to prevent a much larger collapse in the future.
I do take a more optimistic view on our energy future. Between entirely feasible advancements in renewals, biofuels, and the power contained in the atom, I do not see where we are terribly likely to hit a wall. The earlier fossils run out the more painful (stagnating) the interim will be. However, the energy is out there, and we know how to get at it. We just need to learn more efficient ways. For instance, if we could even approach the efficiency of the natural process of photosynthesis we would be a great deal of the way there. And nuclear fission may not be a permanent solution, but with a 10-20 year lead time we can provide for everything but transportation at a reasonable price with today's technology.
I think that the disappearance of cheap energy is contributing to and will continue to contribute to significant hiccups, but I do not see the evidence that any prolonged decline will occur. The developing world has already largely recovered from the recession and is generally expecting growth rates in excess of 6% this year, and we should not be too far behind (expected 2% growth in the EU and 3% in the USA). Reckless governance seems to be the far bigger threat to our prosperity.
I don't want to sound snide, but honestly it is statements like this from those who don't get deep into the physics of energy that shows why none of the other optimistic visions can be taken seriously. Photosynthesis is one of the least efficient forms of solar transformation (into carbohydrates as store houses of energy for metabolism). PS runs between 3 and 6%, with the mean lying toward the lower end over thus far measured species of plants and algae. The efficiency of these plants to then produce fats and proteins is much less still (total dry biomass from plant synthesis). But then they grow at paces and in environments to which they evolved fitness. This is why biofuels are doomed as a major replacement for fossil fuels. Photosynthesis simply can't do the job. Also, if you look into the so-called projects to genetically engineer algae to boost their efficiency we are still talking about not much more than 5 - 6% and a little more energy going into fat production (oils). Still no where near what is needed according to current and future projected demand (under any scenario).
Your optimism is still fueled, as far as I can see, by the techo-cornucopian belief in endless scientific/engineering progress. During the industrial revolution there was significant progress in engineering heat engines and their efficiencies and capacities have grown since, but with declining marginal returns. Then during the twentieth century we saw the improvements in control systems associated with these heat engines. These did eke out some more efficiency gains, but at the cost of complexity and questionable EROI to boot. There too we have seen declining marginal returns on engineering. Perhaps we will see some substantial gains if and when some kind of smart grid is implemented (that actually works as promised) but that will involve a re-engineering of the current outdated grid as well as computer-based advanced controls. Even so, we shouldn't expect great miracles. The bigger gain will probably come from making the hook up of intermittent sources (wind and solar) more acceptable to performance.
If your projections are based upon what you read in the media (even places like Scientific American have been publishing bogus or questionable analysis) then you really should consider digging deeper in the technical literature to see the problems more clearly. It isn't until you start understanding the details of hurdles to realizing the grand schemes (both technical and economic) that you will be stuck with beliefs such as you've expressed above.
I'm just saying...