[FoRK] Does economics violate the laws of physics?

Ken Ganshirt @ Yahoo ken_ganshirt at yahoo.ca
Thu Oct 29 09:55:08 PDT 2009

--- On Thu, 10/29/09, Jeff Bone <jbone at place.org> wrote:
> My apologies if this was buried somewhere in the peak coal
> discussion, I'm a bit behind.
>   http://www.scientificamerican.com/article.cfm?id=does-economics-violate-th&print=true
> Despite the rather sensationalist title, the article
> indirectly gets to a point I've eluded to around here for
> some time:  namely that increased productivity and
> technology leads to increased carrying capacity, and
> inversely that carrying capacity is *deeply* dependent not
> just on a maintained but growing productivity and
> technology. ...

It's encouraging that they "get" that energy is different and they recognize that other nonrenewable resources might have a similar attribute (potential for depletion to zero, or so low as to be no longer useful). 

But I'm still not sure they get the real problem with any form of current economics: 

   It's Population, Stupid! It's all about Carrying Capacity.

Any study of economics that ignores the fact that Planet Earth is a closed system -- a spaceship, if you will -- with the only input being sunlight is bound to fail us in the end. If it refuses to take the holistic view and ignores the fundamentals of Population and Carrying Capacity, it's useless at best and misleading at worst.

Improving technology or "productivity" simply allows us to consume, and deplete, stuff faster. And in the interim gives us a false feeling that we can somehow overcome Carrying Capacity with technology.

When you combine economies that measure success by how fast we can consume stuff with economics theories that ignore or deny that there are ultimate limits to consumption, it's a recipe for the sorts of disaster scenarios that are being floated by those who do have a holistic view of things.

While I'm encouraged that these folks have decided to differentiate energy as an economic input and treat it differently, one bit of evidence about how limited their thinking continues to be is their comment that conservation is useless because "a gallon of gasoline not burned by an American will be burned by someone else anyway". 

That suggests to me they are oblivious to carrying capacity as an absolute limit. I'm not sure if they have chosen to ignore it or deny it. The article is not clear in this regard. 

If you accept that the planet has an absolute limit to its carrying capacity, conservation is the ONLY thing that works. Conservation through each of us using less as well as, ultimately, through fewer of us using it.

While it's inclusion is a big improvement over neoclassical economics, in the end, Energy Return On Investment (EROI) is simply a direct measure of how deep down the depletion curve we can push ourselves and an indirect measure of how rapidly we are pushing towards the limits of the carrying capacity of the planet.

In my view.

Jeff, I've frequently heard arguments like yours that "... increased productivity and technology leads to increased carrying capacity". I've never been able to suss it myself and I've not seen an explanation that made sense to me in the larger context of planetary carrying capacity.

I would be interested in a lucid, plain language explanation from someone who believes otherwise: that technology can somehow overcome what I believe is the absolute limit of planetary carrying capacity rather than simply helping us reach that limit ever faster. Is there some simple principle involved here that I'm overlooking?

I would also be interested if, and how, it can do so without reducing both population and consumption.


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