#208. A path of reason, part one

THE CONSTRAINED EQUATION

Most of us, for one reason or another, want to know “what comes next”. There are many wrong ways of going about this. We can, for instance, take our expectations for the future ‘on trust’ from others, or we can simply assume (meaning hope) that the future will be what we want it to be.

The only effective way of forming rational expectations, though, is to follow a ‘path of reason’ from “what we know” (about the present) to “what we want to know” (about the future).

The original plan here was to try to encompass this within a single discussion. Practicality, though, suggests that we tackle this in two or three stages.

This first instalment starts with “what we know”.

This turns out to be rather a lot.

We know, for example, that the economy is an energy system. This knowledge identifies an equation which expresses the conversion of energy into material prosperity.

We know, further, that this is a constrained equation. The constraints on our conversion of energy into prosperity are set (a) by the physical characteristics of energy resources, and (b) by the limits of environmental tolerance.

This knowledge enables us to clear the ground by dismissing the fallacy of the infinite. Infinite growth isn’t feasible on a finite planet and within a finite ecosphere.

Far too much of our thinking, and far too many of our economic and broader systems, are based on this ‘infinity fallacy’. We assume, for instance, that economic growth can continue in perpetuity, and that a sustainable financial system can be built on this false assumption. We assume that businesses can offer perpetual expansion to their shareholders, and that governments can promise never-ending “growth” to their electorates.

We’ve reached a point at which the reality of constraint is discrediting the fallacy of the infinite. Environmental constraint is demonstrating itself to us with shocking force. Resource constraint has pushed us into a self-deluding falsification of economic “growth”.

Effective planning for the future requires recognition of the realities of constraint.       

At the end of certainty

As well as casting a long shadow over society and the economy, the coronavirus pandemic has created a remarkably extreme ‘dialogue of the deaf’ between competing certainties.

On the one hand, the authorities present vaccines as a ‘magic bullet’, whose efficacy and safety are questioned only by the anti-social and the deranged.

On the other, critics insist, with equal certainty, that the whole ‘covid and vaccine show’ is some kind of nefarious plot by malign agents of ‘the elites’.

Those of us who don’t have specialist knowledge of life sciences cannot determine where reality resides within this shouting-match. Even the experts may not, as yet, have all the requisite information.

But the extremes of the debate about the coronavirus are echoed in similarly extreme views on the economy, finance and government. On the economy, opinions range all the way from ‘assured growth in perpetuity’ to ‘imminent collapse’.       

We are entitled to be sceptical, in an impartial way, about certainties.

Excessive certainty, after all, is close kin to extremism, which has seldom served us well. Entrusting everything to the state worked out very badly in the Soviet Union. Handing everything over to ‘the market’ – or, in reality, to unfettered “animal spirits” – is turning out to have been an even bigger mistake.

It’s a reasonable presupposition that ‘all isn’t well’ in the economy, in finance, in government and in the broader categories of trust and social cohesion. 

To enquire further than this, it’s necessary to proceed by logical steps from what we know (about the present) to what we want to know (about the immediate and longer-term future).

From what we know

For those who like their conclusions up front, “what we know” can be summarized as follows.

First, the economy is an energy system, whose historic dynamic – fossil fuels – is winding down.

Second, we face severe environmental and ecological threats. These are linked to a significant extent to energy use, which means that our economic and environmental “best interests” are not opposed to each other but, rather, are connected dimensions of a shared predicament rooted in energy.

Third, the world is becoming more confrontational. Wars and revolutions, of course, are recurrent features of history, but a notable feature of modern times is internal antagonism, based in (and further contributing to) suspicions of the motives of others.

Our fourth problem is a widespread lack of understanding of these issues. This might be simple ignorance of the realities around energy, the economy and the environment. It might, alternatively, be some form of denial, in which groups of any size (ranging from ‘elites’ or governments to the public generally) don’t wish to understand, or choose not to accept, the reality of our economic and environmental predicament.

The energy dynamic

In reasoning from “what we know” to “what we want to know”, the place to start is with the economy as an energy system.

As regular visitors to this site will appreciate, the evidence for this interpretation is overwhelming. Apart from anything else, nothing of any economic utility at all can be produced without the use of energy. Interruption to the continuity of energy supply would, and over a pretty short period, result in economic collapse. 

Historical evidence affirms both this linkage and its causal direction. The exponential take-off in population numbers (and in their economic means of support) from the late 1700s paralleled a similarly exponential increase in the use of energy, the vast bulk of which, hitherto, has been sourced from fossil fuels.

Fig. 1

These exponential take-offs occurred from the 1770s, when ‘what changed’ was the development of the first efficient heat-engines, which enabled us to put coal, oil and natural gas to economic use. So the causal linkage is clear enough – access to fossil fuel energy drove population and economic expansion, not the other way around.

A second, parallel and important observation is that, whenever energy is accessed for our use, some of that energy is always consumed in the access process. This is the principle of ECoE (the Energy Cost of Energy).

We know this to be a factual observation because, at the most basic level, we know that we cannot drill an oil well, lay a gas pipeline, manufacture a solar panel or a wind turbine, or install an electricity distribution grid without using energy. Just as energy has to be used to create energy-accessing assets, further energy has to be consumed in their maintenance, and in their eventual replacement. ECoE, then, comprises both initial investment and subsequent upkeep.

These observations form an equation which, in principle, is comparatively simple.

Economic output is a function of the use of energy. The economic value derived from energy use is a function of the surplus energy which remains after the ECoE proportion has been deducted. The resulting material prosperity is a function of the number of people between whom this surplus energy value is shared.

To understand economic prosperity, therefore, we need to know about trends in (a) total energy supply, (b) the ECoE deduction and the residual surplus energy, and (c) population numbers.

In passing, any economic interpretation or model which excludes any of these three components is founded on a fallacy which renders it worthless.             

The realization of constraint

Recent times have seen the emergence of two constraints to continued reliance on fossil fuel energy.

The first of these constraints is the environment. We know that emissions from the burning of fossil fuels threaten to raise atmospheric temperatures, and we also know that “global warming” and “climate change” are short-hand for a much broader set of challenges. Pollution alone would be harmful, even if it wasn’t associated with temperature change. Ecological degradation is a consequence, not just of the use of oil, gas and coal, but of the economic growth made possible by fossil fuels.

We can accept, then, that fossil fuel consumption and broader economic expansion have moved us to a point of environmental and ecological constraint.

The second, less-recognized constraint is that the ECoEs of fossil fuels are rising relentlessly. This alone would, in due course, degrade and then destroy an economy wholly reliant on oil, gas and coal.

This means that the environment isn’t the only constraint on the use of fossil fuels. Anyone minded to oppose transition away from fossil fuels needs to be aware that, even if we were so unwise as to ignore environmental issues, rising fossil fuel ECoEs would, in any case, ultimately destroy the economy.

Put another way, those campaigning for greater environmental responsibility and a reduction in fossil fuel use have a “second string to their bow” in the form of ECoE.

The factors which drive ECoEs are – with one exception – reasonably well understood, and can be depicted as an ECoE parabola (see fig. 2).

In the initial stages of energy resource use, ECoEs are driven downwards by economies of scale and geographic reach. Once these drivers are exhausted, ECoEs are pushed back upwards by depletion, a natural consequence of using low-cost resources first, and leaving costlier alternatives for later.

Fig. 2

The limits of technology and the reality of the finite

The exception to general understanding of ECoE is the role of technology. In the energy sphere, positive technological progress involves improvements in the efficiency with which energy is accessed and put to use. This progress accelerated the downwards trend in ECoEs and, latterly, has acted to mitigate the rise in energy costs.

But there are two other things that we need to know about technology.

First, its scope is constrained by the laws of physics. Technology has, for instance, lowered the cost of extracting tight oil and gas in the United States, but it hasn’t transformed American shale reserves into the equivalent of the conventional resources of Saudi Arabia.

That this has been impossible illustrates that technology operates within the confines of the characteristics of the resource itself. We cannot, by ignoring these physical constraints, extrapolate past technological trends indefinitely into the future.

Second, most technology doesn’t help us to use energy more efficiently but, rather, finds more ways to put energy to use. This isn’t ‘bad’ in itself, but it can contribute to a mindset which both (a) exaggerates the potential of technology as a ‘fix’, and (b) disguises the important dimension of energy efficiency within the loose category of ‘technology for the sake of technology’.          

This consideration of constraints reminds us of another point which is too often forgotten. Economic growth, properly understood, is a matter of using the Earth’s resources to deliver material economic prosperity. These resources are not infinite.

We can debate the extent of the natural resources that were in place originally, and which remain today. These resources include energy, minerals and environmental tolerance.

What we can’t do with any credibility, though, is to claim that these resources aren’t, ultimately, finite. Any philosophy which ignores this reality, and which claims that economic growth can continue in perpetuity on a finite planet, is based on a fallacy of infinity.

The constrained equation

As we’ve seen, then, there’s an equation which relates energy use to the delivery of material prosperity. We’ve also seen that this is a constrained equation, whose limits are set (a) by resource characteristics (availability and ECoE-cost), and (b) by environmental and ecological boundaries.

Unfortunately, we’ve managed to disguise from ourselves the meaning, and even the existence, of this “constrained equation”. We’ve developed an economic philosophy which presupposes that “growth” can continue in perpetuity. We’ve allowed this infinity fallacy to influence our thinking about the world around us, and we’ve embedded this same fallacy into systems.

It’s important to be aware of the extent to which our economy and society are shaped by the “infinity fallacy”. Our financial system is entirely predicated on growth in perpetuity. Businesses, too, are conducted on the basis of a never-ending pursuit of expansion. Governments are assumed – by themselves and by the public – to have a mandate to deliver, in perpetuity, the ‘benefits of growth’.

Politicians and the public may, and do, argue about how growth should be used, and how it should be distributed between people and groups.

But nowhere – in finance, business, government or amongst the general public – is there any kind of preparation for an alternative to an assumed context of perpetual growth. If you ask a financier, a business leader or a politician about his or her plans if “growth” ceases – let alone if it goes into reverse – you’ll be met by a blank stare of incomprehension.

Everything that government, business and finance endeavours to achieve is informed by the assumption of growth. In response to environmental risk, proposals are almost always expressed in terms such as ‘green growth’, ‘responsible growth’, ‘sustainable growth’ and ‘equitable growth’.   

To use a hackneyed term, there’s no “plan B” for an ex-growth economy, let alone for an economy whose prior growth has gone into reverse.

The fallacy of the infinite economy

Proceeding step by step, we’ve learned a great deal that conventional thinking fails (or refuses) to encompass.

To recap, the energy economy provides us with a prosperity equation that is constrained both by resource characteristics and by the limits of environmental tolerance. It is further constrained by the ultimately finite character of the Earth, both as a ‘resource set’ and as an ecosphere.

At no point, in reaching these conclusions, have we needed to consider money.

Money itself is a human artefact. As such, the creation of money isn’t bounded by the physical finality that limits material economic activity. But the only value of money is as a proxy for material goods and services whose supply is subject to these limits.

We can study the operation of money, and this study yields certain worthwhile insights. But the findings which orthodox economics is pleased to call “laws” are, in fact, simply behavioural observations about money. They are not remotely analogous to the laws of physics. Economics, as conventionally understood, may or may not be “gloomy”, but it certainly isn’t a “science”.

The central fallacy of orthodox economics is that it portrays the economy as a monetary system, when the reality, of course, is that it’s an energy dynamic.

The misconception here is huge. Observation and logic inform us that economic prosperity is the product of a physical dynamic that is subject to constraint. Conventional economics seeks to persuade us, instead, that the economy is an immaterial system shaped by the use of the unlimited human artefact of money.

As well as being a misconception, this is also a conceit. If it were true that economic activity was wholly a product of the use of money, then we, as the creators of money, would be in full control of what might grandiloquently be called our ‘economic destiny’.

Our actual position is a more modest one, in that our degree of control is strictly circumscribed by physical factors that we can’t control.      

The human artefact of money is claimed to have three qualities. However, it’s an extremely poor ‘store of value’, and how well it functions as a ‘unit of account’ really depends on what it is that we’re trying to quantify.

The fundamental role of money is as a ‘medium of exchange’. Exchange, of course, is a process that depends upon there being something that people are able and willing to exchange. This is why no amount of money, in any form, would be of the slightest use to somebody lost in a desert, or cast adrift in a lifeboat.

Money, then, is validated by exchange, and the “something” for which it can be exchanged is the material value provided by the energy economy.       

What this in turn means is that money has no intrinsic worth, but commands value only as a ‘claim’ on the output of the energy economy.

To be clear about this, our control over the supply of money and credit enables us to create financial ‘claims’ that exceed the current or future delivery capability of the economy itself. When we do this, we create excess claims.

When we assign the concept of ‘value’ to the aggregate of claims, we create a situation in which the excess component of this supposed ‘value’ must be destroyed. This value destruction can take the form of repudiation (otherwise called hard default), or of the inflationary erosion of the value of money itself (soft default).

It has to be one, or both, of the above because, by definition, excess claims cannot be honoured, which means that supposed ‘value’ attached to these excess claims must be eliminated.      

Of two economies

Given the relationship that exists between the constrained equation of the energy economy and the seemingly unconstrained scope for creating monetary claims, it’s helpful to think in terms of ‘two economies’ – the ‘real’ economy of goods and services, and the proxy or ‘financial’ economy of money and credit.

An understanding of the interface between the energy and the financial economies is critical to effective interpretation of the economy that we see around us.

This interface isn’t addressed by orthodox economic interpretation, because conventional economics is based on the false assumption that money is the economy. The objective of the SEEDS economic model is to understand the economy as an energy system, but to present conclusions in the financial idiom in which, by convention, economic issues are debated.

SEEDS analysis indicates that, in the advanced economies of the West, growth in energy-based economic output slowed during the 1990s, and went into reverse in the first decade of the twenty-first century. Modelling of the constrained equation indicates that prosperity per capita turned down in Japan from 1997, in America from 2000, and in Britain from 2004.

These inflexion-points correlate with the rise of trend ECoEs into a range between 3.5% and 5.0%. By virtue of their lesser complexity and their correspondingly lower system maintenance requirements, the equivalent climacterics for EM (emerging market countries) occur at higher levels of ECoE, levels which SEEDS places between 8% and 10%.

The downturn in prosperity which impacted the West between 1997 and 2007, then, isn’t something from which EM countries are immune. Rather, their inflexion-points happen in the same way, but at a later stage on the ECoE curve. 

The relationship between ECoEs and prosperity per capita – in America, China and globally – is illustrated in fig. 3.

In the United States, prosperity per person turned down after 2000, when trend ECoE was 4.5%. The equivalent climacteric in China is projected to occur in 2026, when China’s ECoE is likely to be just below 10%.

For the world as a whole, prosperity has been on a long plateau, reflecting the interaction between Western countries (where people have been getting poorer over a lengthy period) and EM economies (where prosperity has continued to improve).

Perhaps the single most important economic event of our times is the ending of this plateau and the onset of de-growth on a global basis.   

Fig. 3

Exercises in denial

Recognition of this energy-constrained reality was, and remains, denied to those who believe in the infinity fallacy born of the mistaken assumption that the economy is a wholly monetary system. When deceleration – then labelled “secular stagnation” – started to be noted during the 1990s, the natural (though wholly mistaken) assumption was that there must exist a financial ‘fix’ for this unwelcome trend.

Briefly, the history of the intervening period is that the authorities tried, first, to restore growth by pouring abundant credit into the system, a process known here as credit adventurism. The fallacy here was the assumption that the creation of demand must, by some immaterial process, be met by increased supply, an assumption which is invalid in any situation governed by material constraints.

When, as was always inevitable, this gambit took the credit (banking) system to the brink of collapse, a resort was made to monetary adventurism. This process threatens to do to money what credit adventurism so nearly did to the banking system.

The policy of pricing money at sub-zero real levels has had a string of consequential effects. One of these has been an escalation in debt, and another has been rapid growth in the shadow banking system, known more formally as the ‘non-bank financial intermediation’ sector.

Over the past twenty years, we’ve been using credit and monetary policy to ‘buy’ economic “growth” at an adverse rate of exchange. Each dollar of “growth” reported since 2000 has been accompanied by more than $3 of net new debt, and by getting on for $4 of broader financial liabilities. Even these metrics exclude the emergence of huge “gaps” that have emerged in the adequacy of pension provision.

Using SEEDS, we can quantify the deterioration in prosperity, identify the correlation between rising ECoEs and the inflexion-points in underlying economic activity, and map the relationships between liabilities and the maintenance of a simulacrum of “growth”.

But the central issue here is the widening gap between (a) the real economy (of energy, value and prosperity), and (b) the proxy financial economy and its excess claims against non-existent future economic value.

Conclusions

Any article with the professed aim of preferring reasoned interpretation over received certainties must leave readers to determine how sure we can be about the conclusions that are reached here.

This said, there is very substantial evidence – logical and observational – for the proposition that the economy is a physical dynamic, driven by an energy equation that we can identify, and limited by the constraints both of resource characteristics and of environmental tolerance.

We can observe, too, that there is a general ignorance around this proposition, and an insistence, instead, on perpetual growth, driven by the immaterial processes of money within a context of assumed infinity.

If our interpretation is correct, then there exists a serious disconnect between the economy as it is and the economy as it is mistakenly assumed to be. A misunderstanding as fundamental as this goes quite far enough to explain the insistence on assumed certainties in the context of the emergence of a very different reality.    

 

162 thoughts on “#208. A path of reason, part one

  1. Since We Obviously Need Some Gap Filler to Admire or Ridicule:
    “If you’re waiting for a moment where you’re like ‘this is it,’ I’m telling you, it never comes. Nobody comes on TV and says ‘things are officially bad.’ There’s no launch party for decay. It’s just a pileup of outrages and atrocities in between friendships and weddings and perhaps an unusual amount of alcohol. Perhaps you’re waiting for some moment when the adrenaline kicks in and you’re fighting the virus or fascism all the time, but it’s not like that… Collapse is just a series of ordinary days in between extraordinary bullshit, most of it happening to someone else. That’s all it is.”

    Don Stewart

    • I think Walter Benjamin is always appropriate in such moments, Don.

      For example …

      “A Klee painting named ‘Angelus Novus’ shows an angel looking as though he is about to move away from something he is fixedly contemplating. His eyes are staring, his mouth is open, his wings are spread. This is how one pictures the angel of history. His face is turned toward the past. Where we perceive a chain of events, he sees one single catastrophe which keeps piling wreckage and hurls it in front of his feet. The angel would like to stay, awaken the dead, and make whole what has been smashed. But a storm is blowing in from Paradise; it has got caught in his wings with such a violence that the angel can no longer close them. The storm irresistibly propels him into the future to which his back is turned, while the pile of debris before him grows skyward. This storm is what we call progress”.

      More of his prophetic musings are here
      https://www.sfu.ca/~andrewf/CONCEPT2.html

  2. Apologies if this was previously posted. I see no mention of how any of this pie in the shy outlook will be fuelled.
    “This quarterly briefing builds on the
    latest policy research as well as
    consultations and surveys with leading
    chief economists from both the public
    and private sectors, organized by the
    World Economic Forum’s Centre for
    the New Economy and Society.
    It aims to summarize the emerging
    contours of the current economic
    environment and identify priorities for
    further action by policy-makers and
    business leaders in response to the
    global economic crisis triggered by
    the COVID-19 pandemic.”

    The consensus among the World Economic
    Forum’s Chief Economists Community is
    tending towards an expected average global
    growth rate in the range of 5.5% to 6% in
    2021 (or possibly higher) and a recovery of
    global GDP to pre-COVID levels within the
    first half of 2022.

    Click to access WEF_Chief_Economists_Outlook_June_2021.pdf

  3. anyone interested in a regional view of what’s happening in Afghanistan might find the blog of M. K. BHADRAKUMAR a retired Indian career diplomat a fascinating angle on what’s going on,

    https://www.indianpunchline.com/

    I picked up on him a while back when his columns were being reprinted in The Asia Times,

    I’ve no idea how accurate or truthful it is but it certainly paints a different picture to the Western media at the moment and no doubt the truth is somewhere in between,
    he’s quite prolific and has already generated four reflections on events in Afghanistan and appears to know of all of the people involved and seems to be following events in detail.

    • @Matt
      20 years ago the US justified its overthrow of the Afghan government using ‘the search for Bin Laden’ as the excuse. The Taliban government at that time asked for evidence that Bin Laden had been involved in the World Trade Center attack. The US refused to provide any such evidence, and simply demanded that the Taliban do exactly what the US wanted them to do. The Taliban refused and lost that war.

      The US repeatedly engages in such behavior. In Cuba, some Embassy people either got sick or succumbed to mass hysteria. The US jumped to the conclusion that Cuba was poisoning them with some sort of sound waves. (An independent analysis said it was something like seasonal crickets.). The US nevertheless slapped sanctions on Cuba (the US largely controls global flows of money, and can thus do pretty much what it wants to do with small fry and even large fry like China).

      One might argue that while global warming and resource depletion and pandemics are systemic threats to the world, the biggest of them all may be the dependence of the US on forcing other people to do its will. If the US had to pay its own way, suddenly, it would be a pretty horrible picture for the US.

      Don Stewart

    • Matt

      Another good source of information is “B” at Moon of Alabama
      https://www.moonofalabama.org/

      The latest article, on the delusional British wanting to remain in Afghanistan, (mainly military types, such as Johnny Mercer, I should add) has a gem of an article linked in it – I will post it here:
      https://annebonnypirate.org/2021/08/17/afghanistan-the-end-of-the-occupation/

      Some of the barflies there also post up good information: There was another very interesting essay that was actually picked up from Naked Capitalism from a blogger who has gone under the radar a bit: https://tinkzorg.wordpress.com/2021/08/16/farewell-to-bourgeois-kings/

      What is left unsaid here but is fairly self evident is that the US and Western Powers no longer have the resources to maintain its presence there.

  4. A Lesson From Sheeky Science
    This young woman puts together some excellent illustrated stories which keep us up to date on a wide variety of scientific topics:

    I would like to use her dozen minutes or so of discussion about the cul-de-sac longevity research finds itself in, and suggest some lessons for macro-economics, which obviously faces similarly significant challenges. She begins with diagrams which identify all the things that CAN go wrong and lead to aging. If we were making up such diagrams for the economy, we would include items such as financialization and debt, resource depletion, neoliberalism, obsolete regulatory systems, the Maximum Power Principle, and so forth. But the recent paper she is reviewing argues that the items identified for aging are not real theories as described by Thomas Kuhn…because they don’t get down to bedrock reasons. Similarly, it is my contention that 99 percent of the discussion about our macroeconomic crisis never gets down to the bedrock reason.

    At 9:50….”This is problematic for several reasons. First, the hallmarks of aging incorrectly gives an impression of an understanding of aging that does not exist; in fact it masks what is actually a crisis affecting traditional biogerontological paradigms relating to the mechanistic understand of aging, particularly the primacy of damage. Second, a true paradigm provides a framework of understanding that guides research into understanding the subject that it addresses. In terms of understanding the causes of aging (in the same way that Hanashan and Weinberg seek to understand the causes of cancer) the hallmarks of aging scheme has relatively little to offer, except as a review of different aspects of the aging field (and as such, it is excellent). This is because it is not a paradigm in the proper sense, rather the hallmarks of aging, as a pseudo-paradigm, risks acting as a conceptual obstacle to the development a genuine paradigm with explanatory power.”

    I know just enough about aging to be dangerous. So here goes. The reason that life expectancy in the first world has increased, but health span has not increased, is because fossil fuels enabled a big reduction in child mortality due to infection, but actually made the diseases of longevity worse by enabling very poor habits which underly the macro-economy. My poor habit provides a living for you, but society as a whole is not better off.

    In terms of aging, I believe that Valter Longo and his Fasting Mimicking Diet give us a way forward in terms of nutrition. Humans evolved to cycle between growth and rest and repair. When we have exercised our muscles, we need to stop and rest. Every night we need to fall into a deep sleep so we can repair and we need lighter sleep so we can consolidate learning. And, periodically, we need to experience a shortage of protein and calories so that the body is challenged to digest some of its own less than healthy cells and make and use new stem cells to regenerate. Fossil fuels permit us to transgress on all those measures…but of course fossil fuels don’t require us to transgress, unless the society and economy require it. E.g., night shifts and the powers of science to make junk food irresistible. Sheeky did a recent interview with Longo, and she gives a very good explanation. Longo is not the expert we need in terms of social and mental rejuvenation…I suggest Lisa Feldman Barrett as a good entry point for that realm.

    Now to the Macro-Economic realm. The basic issue is laid out in this brief Q and A:
    https://mahb.stanford.edu/blog/the-systems-of-life-a-mahb-dialogue-with-fritjof-capra-systems-scientist-and-author-of-the-tao-of-physics/

    “In The Systems View of Life, you advocate for moving from quantitative to qualitative growth. How would that transform the way we live?”

    The same question is posed by Nate Hagens. What we really want is activation of certain neurotransmitter and hormones. Atomic bombs and fossil fuels are grossly excessive ways to move neurotransmitters and hormones, and cause enormous collateral damage. It’s like saying that fast food is the solution to global hunger.

    And so, I think that Capra has nicely framed the Big Question. Capra has done his share, but we need a generally understood and accepted Kuhnian Paradigm and a determination to enact it, in the face of short term pain (e.g., things like debt default and shrinking populations).

    Don Stewart

    • @Steve Gwynne
      Just a couple of scattered observations. First, Orson Welles explored three human foibles in three of his movies: the shallowness of ‘things’ in Citizen Kane; the shallowness of wealth in The Magnificent Ambersons; and the shallowness of rarity in F is for Fake (about copies of great art and the anger when one has been duped by a beautiful reproduction). Exploring shallowness turned out not to be the royal road to riches in Hollywood. Second, John Huston has been characterized, in terms of his many movies, as interested in ‘a group of men coping with an important challenge’ and ‘the men’s relationships to the women in their lives’. Huston began working at the MGM studio in Hollywood…which was better known for glossy musicals where everyone ended up happy. The Studio head was Louis B. Mayer, a staunch Republican. But Huston’s movie The Asphalt Jungle, about a group of career criminals attempting a heroic heist, was approved by the second in command at MGM, Dore Schary, a liberal Democrat who had been brought in to diversify MGM’s movies and to cater to the post WWII popularity of more realistic movies such as the Italian Neo-Realists. Louis Mayer appreciated the fact that Asphalt Jungle was a critical and financial success, but said “I would never go to see this movie”. So we can see that the question of looking carefully at the real world versus retreating into fantasy has been around for a long time.

      My own experience working on a small farm during the GFC of 2007 and 2008 and the years immediately after, where a small group of people were thrown together in circumstances mostly not of their own choosing and with very real physical and mental challenges, showed me very directly that coping with reality has its own rewards. But we have the historical evidence that the world quickly grows tired of too many Bicycle Thieves movies and stories of how excess leads to its own boredom and how criminals navigating a heist are very much like the corporate dysfunction portrayed in How to Succeed in Business.

      Education has taught me that a surplus of money (which equates to command over materials) generates its own set of novel problems. And to think in Systems.

      Don Stewart

  5. @Steve Gwynne
    Little more on delusion. The “fire” stories out of California now routinely say that “the situation is made worse by climate change”. So we have many competing narratives:
    *If the Liberals in California would just approve more clear cuts we wouldn’t have these fires (ignoring the fact that it is the Federal Government which controls the bulk of the land)
    *The problem would go away if California politicians would just clean the forest floor of flammables (ignoring the fact that the forests are mostly Federal, and Congress has shown little interest in funding large numbers of people and machines to clean forest floors)
    *The problem would go away if we just switch to renewables and thus avoid climate disaster (ignoring the fact that the equipment used to fight the fires is almost entirely dependent on fossil fuels and heavy machinery…tanker airplanes dumping water and flame retardants???)

    A look at reality tells us that the Western forests burned regularly, and the Longleaf Pine forests in the Southeast were ‘fire dependent’. They needed to burn periodically. The Native Americans, who had no fossil fuels, had learned to both live with the fires and also use fire as a management tool. BUT….they didn’t build expensive houses in dense forests. Fires periodically sweep through Hadza camps in Tanzania, and burn the grass shacks they live in. It doesn’t cause them any grief, they just spend a few hours building another grass shack.

    I wouldn’t want to run for office on the platform of ‘restoring natural fires and living in grass shacks…or even living in camper vans’. (Camper vans could presumably be driven out of harm’s way, approximating a Hadza grass shack). I suspect that no matter what I do, or the politicians do, or what people want to happen, Nature Will Bat Last. We are not living in a movie.

    Don Stewart

  6. Good Read on Nuclear
    https://resourceinsights.blogspot.com/2021/08/whatever-happened-to-chinas.html
    Don Stewart
    PS. I participated in a couple of bona-fide technological revolutions, including information encoded on carrier signals and differentiation of the carrier signals by different ‘colors’. These revolutions decreased the cost of transmitting information over distance to virtually zero. But there were more false-starts than I care to remember. And also foot dragging: I remember in college in the late 1950s when serious electrical engineers thought that analog computers were the wave of the future. The future is very hard to predict.

    • On slightly different level, why are convicted criminals in good physical condition not involved in organic gardening to produce some of their food and perhaps surplus for needy people? It costs taxpayers/governments a lot to house, feed, provide medical and educational services. Inmates who spend all day in recreational activities aren’t learning responsibility nor useful skills. I realize that some study or do creative things, but a modest work day of say 6 hours would still allow for that.

    • I’m all in favour of convicted criminals working, so long as the conditions are satisfactory and they are paid decently, perhaps with the money being put aside and given to them on release. This would give them both experience of work and some money to help them start new lives once released. I was semi-joking about handing meat cleavers to criminals.

    • To be fair, if I remember correctly, in the UK recently (and yes, you may have to pinch yourself to check this can be real) the actual prime minister of an alleged 1st world country suggested using prisoners in chain gangs like in the US, so maybe big business think they’re just singing off the same hymn sheet. Also, during the last lost decade of austerity, they were trying to get people on benefits to work for free in a scheme some of the biggest businesses happily signed up for, (the then euphemism for it was ‘work experience’) as a condition of their payments. So it’s merely a continuation of various tried and tested cruelties they know the public will keep voting them in to just get done.

    • if using prison labour in this way requires legislation they could call it the Sweeney Todd act?

    • Hi Steven,
      I agree entirely, I’d much rather see prisoners running extensive market gardens within the prison grounds, getting out in the open air, doing something productive and rewarding and supplying the prison with a healthy and varied diet,
      the thought of rehabilitating prisoners into organic market gardeners, horticulturalists etc. sounds very wholesome,
      they could even run tree nurseries and then send out working groups on planting projects,
      many prisoners come from an urban environment and it would be a great way to help them reconnect with the natural world and gain some self esteem doing something good and worthwhile.

    • There’s a prison cluster on the Isle of Sheppey (Thames estuary) . It’s a series of prisons of differing security categories from high security to open. There was a very extensive market garden/farming set up run on organic grounds I believe which many of the inmates were expected to work on. The produce was destined both for the prison itself and the wider community. I know some of the livestock went off to markets in either Kent or Essex. I used to visit once a year in my role as an examinations moderator to standardize assessment of academic qualifications taken within the prison with those taken in the outside world. I was always very curious about the farm, it’s 10 years since I last visited but i assume it still happens.

  7. Dr Tim,
    We have just returned from a short break on the Isle of Wight, and I was struck by the evident ‘whiff of poverty’ in the main towns. This report https://www.aberdeenstandard.com/docs?editionId=c8d6f9b5-1c8b-4b97-9bb4-c3099938f737 is clearly right in that ‘amusement arcades’ and betting shops were everywhere, it seemed. The ‘punters’ were ill-dressed, broadly obese, and some I watched leaving such premises had a haunted, desperate, look in their eyes. I don’t want to be a snob about this, but I really worry about future society, as the current one is deteriorating fast.

    One of these premises, ironically, was situated in what appeared to be an ex-Bank branch!

    • The last time I was in England – which was quite a while before covid – I noticed how run-down things were in two large-ish towns in the Midlands. in some ways it had almost a dust-bowl feel. One of those towns had always been prosperous, and the other no worse than middling. The UK economy looks increasingly hollowed-out, keeping going on credit and monetization. The JAMs – the ‘just about managings’ referenced by Mrs May – seem to keep increasing in numbers.

  8. You are quite right, Dr Tim. The thing that struck me the most was the sad state of many individuals in what were once thriving Victorian towns. We were visiting our son who has a summer job on the Isle of Wight and took the opportunity to visit Osborne House, the former summer residence of Queen Victoria; the contrast of the (faded) opulence of the royal residence and the small seaside towns today was very striking. Looking at old photographs of the main commercial streets of Ryde, for instance, one could see banks, butchers, fishmongers, bakers, hardware stores, etc. Whilst it is true that a few of these remain, most premises are hopeless shops trying to sell things people do not need for money they do not have – useless tat, in other words. If one remembers to look up when visiting small towns, one can gauge the age of property and see the rotting window frames, buddleia sprouting from the crumbling masonry, loose roof tiles and general physical decay.

    As you have said before, a crisis is unfolding in society before our very eyes, and the pace of decline is accelerating. It’s all very well for the increasingly ‘hollowed-out’ middle classes to sneer at this, but they (we?) are not so very far behind them, now that everything has been ‘financialized’, from the roof over our heads to the food we eat. I speak to far too many people at present who have a very rude awakening coming down the line when they think about turning their ‘defined contribution’ pension fund into an income (whichever way they decide to do this), suddenly finding that the needlessly large car PCP is no longer affordable, that local taxes never go down, and, of course, that the cost of energy will spiral ever-upwards.

    It’s utterly shocking.

    • Indeed.

      This touches on what I’m thinking through at the moment. With this article we have, I hope, the foundations in place – the energy economy, the ‘constrained equation’, the fallacy of the money economy, the limits to technology, etc – and the aim now is to put this together in such a way that it tells us what happens next.

      I’m getting a general sense of things falling apart, a sense reinforced by what’s happening with ludicrous stimulus, and of course by the chaotic events in Afghanstan and so on.

  9. Mark’s description from the Isle of Wight mirrors the situation in small-town Lancashire. Some places are faring better than others, but locally one detects a huge gulf between the governors and the governed. The former remain in thrall to the fallacy of infinite growth and a better tomorrow – they genuinely believe in unicorns and rainbows; while many of the latter convey an image of being genuinely beaten and weary with an air that they are really struggling and increasingly facing severe hardship. This, I think, is the emerging process of collapse, which is now being revealed on many levels and is slowly yet assuredly gathering momentum.

    • I’m in the South East, it’s supposedly the wealthiest part of the country and the High Streets are charity shops, barbers and fast food joints,
      the only jobs advertised are for cleaners and care assistants,

      as the roads become potholed the wealthy buy Range Rovers, they need an all terrain vehicle for the neglected roads,

      it’s a Potemkin village, it’s quite depressing really,
      only the middleclass are keeping calm and carrying on, they are the only ones who still have the discretionary spending power to do so,
      but the middleclass is shrinking,

  10. This Strikes Me As A Good Review of Lessons for the US and the UK from Afghanistan
    https://thenextwavefutures.wordpress.com/2021/08/22/lessons-from-afghanistan-sigar-brexit/

    I can’t speak intelligently about Britain. But I will give my summary of the dominant themes in the US. We assume that that Marine in the photograph is interacting with those lounging villagers in some helpful way…but a few minutes of reflection would convince us that the interaction is going to have long term repercussions. In contrast, the interaction between Doctors Without Borders and the Afghans is almost universally positive. The US claims it spends a lot on rehabilitating very poor countries, but it almost always involves the gift of giving them a debit card on some US corporation. From the perspective of the US government, it is an attempt to stimulate exports to deal with our chronic trade deficit. In Afghanistan, a minute fraction of the trillions spent actually benefitted any ordinary Afghan citizen.

    In contrast, I have heard people from Doctors Without Borders talking about working in Taliban controlled villages where their efforts were welcomed…usually after initial suspicion. Whether the US ought to even be involved in ‘nation building’ is an open question, but doing it with heavily armed soldiers is not the right way to go about it.

    A further question is the astronomical cost of maintaining the American forces. A former Secretary of Defense asked (as I remember the details of the remark): “Why does it cost me a thousand dollars per plastic bottle of water for our troops?” That suggests that showing the Afghans a style of life costing hundreds of thousands of dollars per involved American is not likely to do much good in terms of showing them how to build a sustainable country. I am reminded of Dr. Paul Farmer, a Duke educated doctor, who worked in very poor countries on the most essential needs. In Haiti, he determined to start with pouring concrete floors to replace the dirt. He got a lot of bang for his buck. If done right, it builds local businesses while also greatly improving health and thus the potential productivity of the people.

    If the US and the UK foresee a partnership to stop China, then I predict long term failure. I just don’t see any evidence that either country’s elites have any real grasp of the issues, much less understand ECoE. Dmitry Orlov has characterized China (and increasingly Russia) as having a State Capitalism model. Dmitry thinks that State Capitalism is currently the system to beat. If he is right, then the religious faith in NeoLiberalism in the UK and Biden’s recent assertion that ‘capitalism in the US is alive and well’ (supported by a 6 trillion dollar fiscal deficit and money creation???) need re-examination. I don’t perceive either country as being very well prepared for such re-examination.

    Don Stewart

    • I’ve not rewatched it for a while but Adam Curtis’s film Bitterlake showed a British presence in Afghanistan that the mainstream media will not recognise,

      https://thoughtmaybe.com/bitter-lake/

      it’s so ironic that the US accidentally bombed and killed the puppet leader they were hoping to install during the original invasion in 2002,

      the film is 5 years old, 5 years spent further ignoring elelphants in the room and hoping they’d simply disappear like magic.

      today the BBC News website has pictures of our brave soldiers holding children and babies and tries to present the SAS trained northern alliance as a ‘resistance movement’ when it’s clearly the UK establishment still meddling in the internal affairs of Afghanistan,
      we are in the midst of an information operation in the media, our leopard refuses to change it’s spots.

    • Don and all,

      Taleb on Afghanistan:

      https://www.newsweek.com/afghanistan-war-largely-wealth-transfer-military-contractors-says-black-swan-author-1621772?fbclid=IwAR1iKfAtmbBvjNTQUNeHo-VQPYOqqvZHIOGFB42HDXCwjE-HWlPSAvPqCJU

      Afghanistan War ‘Largely a Wealth Transfer’ to Military Contractors, Says ‘Black Swan’ Author
      By
      The Black Swan author Nassim Nicholas Taleb on Saturday weighed in on the situation in Afghanistan, describing it as “largely a wealth transfer from U.S. taxpayers to military contractors.”

      The comment adds to those from other observers who have zeroed in on the role of military contractors. Saqib Qureshi, a visiting fellow at the London School of Economics, wrote a recent Newsweek op-ed entitled “Taliban Didn’t Win in Afghanistan, the Defense Contractors Did.”

      On Twitter, many responded to Taleb’s post by noting that Wikileaks founder Julian Assange said years ago the goal in Afghanistan “is to have an endless war not a successful war,” in order to “wash money out of the tax bases of the United States…into the hands of the transnational security elite.”

      Taleb responded in a tweet, “I am not claiming conspiracy, just facts.”

      (continues)

    • is it a coincidence that we’ve had two decades of forever wars to wash money out of the State and recycle it back into the hands of the MIC,

      and then we’ve had over a decade of forever economic crisis to wash QE & stimulus out of the State and into the hands of the financial sector?

      just a thought experiment.

    • Given that the rationale for the Afghanistan war was suspect, and the Iraq war was more than suspect, along with vast expenditures despite no progress, the most sensible explanation was military industrial complex enrichment. Just as Eisenhower warned. As the latin saying goes: Cui bono? Simple incompetence didn’t seem a sufficient explanation for such gargantuan fiascos.

    • I draw a distinction between these two wars. The invasion of Iraq never made a scrap of sense, and your explanation fits. I’ve sometimes wondered, also, whether Iraq’s plan to trade oil in currencies other than dollars threatened the ‘petro-prop’ so important to the dollar’s ‘exorbitant privilege’.

      Afghanistan, though, was rather different. The country had become a base for terrorist organizations which, on 11th September, proved their ability to launch devastating attacks on Western targets. The question now is whether that threat will return following a thoroughly bungled exit. A case for remaining involved could be made by comparing this risk with the low force levels used in Afghanistan, where no US or allied soldier had been killed in eighteen months.

    • This first article has been about getting our foundations in place – the economy as an energy system, the equation that determines prosperity, environmental and ECoE constraints on that equation, and so on. Obviously, this has to be put in place first.

      Setting out what this is going to mean is a very ambitious undertaking, particularly as I want to use SEEDS to put numbers on as much of it as possible.

  11. From Tom Murphy @ Do the Math it’s free to down load the pdf.

    Salvaging a decent future requires keen awareness, quantitative assessment, deliberate preventive action, and—above all—recognition that prevailing assumptions about human identity and destiny have been cruelly misshapen by the profoundly unsustainable trajectory of the last 150 years. The goal is to shake off unfounded and unexamined expectations, while elucidating the relevant physics and encouraging greater facility in quantitative reasoning.

    After addressing limits to growth, population dynamics, uncooperative space environments, and the current fossil underpinnings of modern civilization, various sources of alternative energy are considered in detail— assessing how they stack up against each other, and which show the greatest potential. Following this is an exploration of systemic human impediments to effective and timely responses, capped by guidelines for individual adaptations resulting in reduced energy and material demands on the planet’s groaning capacity. Appendices provide refreshers on math and chemistry, as well as supplementary material of potential interest relating to cosmology, electric transportation, and an evolutionary perspective on humanity’s place in nature.
    https://open.umn.edu/opentextbooks/textbooks/980

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