Here is the downloadable PDF report which summarises the principles and application of Surplus Energy Economics.

It is based on the article #175. The Surplus Energy Economy – An Introduction, first published on 19th June 2020.


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Here is the PDF version of the report Coronavirus: The Economics of De-Growth

This based on #169: At the zenith of complexity, to which some additional information has been added.


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Here is the PDF version of the scoping report Coronavirus: The Scope of Financial Risk

This based on #168: Polly and the Sandwich-man, to which some additional information has been added.


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Welcome to the resources section of Surplus Energy Economics.

Here, further to a request, is SEEDS data for selected European economies:


Here’s the SEEDS dataset on the EM-14 emerging market economies group, accompanying article #159.

EM 14 December 7th 2019

Here are the charts, from the new version of SEEDS, showing per capita prosperity by region. The critical one is the EM group – and what it does to the World picture.

P11 01

Energy and population:

Energy & populationjpg_Page1





SEEDS environment report July 2019

Supplement #151- The Great brick Wall of China

Surplus Energy Economics – Interpreting the post-growth economy

Guide to SEEDS output







Recent Posts

#220. The human factor


Over an extended period, but with growing intensity in recent times, there has been a discussion, here and elsewhere, about whether we can prevent economic contraction from turning into collapse.

This is part of a broader debate in which every point of view seems to begin with the letter C. The orthodox or consensus line is Continuity, meaning that the economy will continue to expand in the future as it has in the past, and is claimed still to be doing in the present. The main contrarian theme is the inevitability of Collapse. Those of us who believe even in the existence of a third possibility – Contraction – are in a tiny minority. 

Of these three points of view, the only one that we can dismiss is continuity. The economic “growth” that we’re told can be extended indefinitely into the future isn’t even happening in the present. 

Most – roughly two-thirds – of the reported “growth” of the past twenty years has been cosmetic. The preferred metric of gross domestic product (GDP) measures activity, not prosperity. If we inject liquidity into the system, and count the use of that liquidity as ‘activity’, we can persuade ourselves that the world economy has been growing at rates of between 3% and 3.5%.

The classic illustrative example is of a government paying one large group of workers to dig holes in the ground, and another group to fill them in again. This adds no value, of course, but it does increase activity, and therefore boosts GDP.

In this example, the obvious question is that of how the government pays for all this zero-value ‘activity’. The simple answer is to use borrowed money. Conveniently, GDP, as a measure of activity, calculates flow without reference to stock. This sleight-of-hand has persuaded many that their national economies have now recovered in full from the coronavirus downturn, a claim that is only valid if changes in the stock of government (and broader) liabilities are left out of the equation.

Statistically, world GDP increased by 94%, or $64 trillion, between 2000 and 2020. This “growth”, though, was accompanied by an increase of $216tn (190%) in total debt, meaning that more than $3.35 was borrowed to deliver each $1 of “growth”. On the basis of broader liabilities (including those of the shadow banking system), this ratio rises to an estimated $7.25 of new commitments for each dollar of “growth”.

If we further included the emergence of enormous deficiencies (“gaps”) in the adequacy of pension provision, this number would rise to somewhere close to $10.     

The artificial inflation of GDP does more than persuade us that the economy is growing at a satisfactory rate. It also affects the denominator used in numerous calculations and ratios. On this basis, it can be contended, for example, that debt and other liabilities are ‘not excessive’, and that government expenditures remain at a ‘modest and sustainable’ percentage of the economy.

This pattern of behaviour merits the term “Ponzi”, with the proviso that there may not have been any conscious and deliberate intent in the creation of this situation.

In objective terms, we can conclude that two factors have informed decision-making through a period that began with ‘credit adventurism’ before, in the aftermath of the GFC (global financial crisis), adding ‘monetary adventurism’ into the mix.

The first factor has been a determination to support the status quo, and the second has been the misplaced faith placed in an orthodox school of economics which dismisses resource constraints as part of a money-only interpretation of the economy which promises infinite growth on a finite planet.

Decision-makers may have drawn comfort from the relentless rise in the prices of assets such as equities and property. The snag here is that the aggregate valuations of these and other asset classes are purely notional, meaning that they cannot be monetized.

We can, for instance, multiply the average price of a house by the number of properties to arrive at an impressive-sounding ‘value’ for a nation’s housing stock. This ignores the inconvenient reality that the only potential buyers of this stock are the same people to whom it already belongs.  On this basis, we can calculate that aggregate assets are ‘worth’ a sum comfortably in excess of aggregate liabilities. Any such calculation may be reassuring, but the reality is that it is meaningless.

As regular readers will know, the alternative interpretation favoured here is that we need to draw a conceptual distinction between a ‘financial’ economy of money and credit and a ‘real’ economy of goods and services. The connection between these ‘two economies’ is that money, having no intrinsic worth, commands value only as a ‘claim’ on the goods and services produced by the real economy.

With this distinction established, we can further observe that the ‘real’ economy is an energy system, because nothing that has any economic utility at all can be supplied without the use of energy. Put another way, economic prosperity is determined by an equation involving the supply, value and cost of energy.

Over a long period of time, the conversion ratio of energy into economic value has been largely static. The quantitative supply of energy is a function of the value and cost of energy, as applied to the physical availability of the energy resource. 

These considerations identify cost as the critical part of the energy equation which determines prosperity. We know that, whenever energy is accessed for our use, some of that energy is always consumed in the access process. This ‘consumed in access’ component is known here as the Energy Cost of Energy, or ECoE.

If ECoEs rise, the surplus (ex-ECoE) energy which determines prosperity contracts. Rising ECoEs also exert an adverse effect on the value-versus-cost equation which determines the quantity of energy supplied.   

Critically, trend ECoEs have been rising relentlessly, primarily reflecting the effects of depletion on an economy which still derives more than four-fifths of its primary energy from oil, natural gas and coal.

Decision-makers still fail to recognize the constraint imposed by a rise in the ECoE costs, and a deterioration in the surplus value, of fossil fuels. They have, though, reached a belated recognition of a second constraint, imposed by the limits of environmental tolerance.

The proposed solution is a “transition” to renewable energy sources (REs) such as wind and solar power. These REs may pass the test of being better for the environment than fossil fuels, but they are unlikely ever to pass the second, critical test of delivering ECoEs that are as low as, or lower than, those of oil, gas and coal.

The slogan used almost universally in this context is “sustainable growth”. Within this term, the word “sustainable” – meaning environmentally tolerable – might indeed be delivered. After all, we had this kind of “sustainable” economy before the first effective heat-engine was completed in 1776.

But the word “growth” is simply an assumption, based on that same ‘money-only’ theory of economics which, by dismissing resource constraints, also dismisses the entire concept of ECoE. 

Those of us who understand the energy basis of prosperity, and who also recognize the critical duality of the financial and the real economies, can arrive at the reality behind an economy in which prosperity per person has ceased growing, and has started to contract.

For us, involuntary “de-growth” is a situation, defined as ‘a set of circumstances allowing of more than one possible outcome’. On this basis, and for so long as the alternative of ‘contraction’ exists, we cannot state that ‘collapse’ is inevitable, though it is eminently possible.

Having ruled out continuity, the difference between orderly contraction and disorderly collapse devolves into a question of management, a question which necessarily involves government and politics.

Our understanding of the situation, applied here using the SEEDS economic model, enables us to project various trends into the future, trends which are either unknown to, or ignored by, decision-makers in government, business and finance.

We know, for instance, that a simulacrum of “growth” cannot be maintained for much longer in the face of a trend towards the restoration of equilibrium between the real economy of energy and the financial economy of money and credit.  We know that this process will involve rapid (and probably disorderly) contraction in the financial system, which will need to shrink by at least 35-40%, and perhaps more, to reach stable alignment with the material economy.  

We further know that the real cost of energy-intensive essentials – including food, water, domestic energy, necessary travel and the building and maintenance of housing and infrastructure – will continue to rise, even as top-line prosperity erodes.

We also know that the scope, both for discretionary consumption and for capital investment in new and replacement productive capacity, will be compressed by the narrowing of the margin between prosperity and the cost of essentials.

We can further set out the taxonomy of de-growth which describes how businesses will seek to adapt to falling consumer prosperity, rising costs, worsening supply vulnerability and deteriorating financial conditions.

But what we cannot know is how society will adapt to a future which involves reduced prosperity, worsening hardship and insecurity, severe financial disruption and a loss of faith in the continuity of growth.

We can anticipate, of course, that economic considerations will rise steadily up the agenda of popular priorities, and that a leadership cadre, unaware of the inevitability of deteriorating prosperity and financial dislocation, will make every effort to maintain the status quo.   

Until we have answers to these questions, we cannot know whether the future will be one of orderly contraction (which is theoretically feasible) or of disorderly collapse (which is frighteningly plausible).               

  1. #219. The unravelling begins 284 Replies
  2. #218. The real state of the economy 112 Replies
  3. #217. No ‘soft landing’ 86 Replies
  4. #216. It’s now 117 Replies
  5. #215. The price of equilibrium 117 Replies
  6. #214. Needed – a new model tin-opener 543 Replies
  7. #213. A moment of truth 326 Replies
  8. #212. Are we nearly there yet? 123 Replies
  9. #211. The case for contingency planning 163 Replies