Peter had a thoroughly baffled look on his face, “Econowha?”
“Econo-thermodynamics,” repeated Elder Ishmael, “one of the greatest lies foisted upon the collective psyche of the modern world is that an economy can violate the laws of thermodynamics. Are you familiar with those laws, Peter?”
“Uh, I guess I vaguely remember them from high school science.”
“Well, it is the second law that we are mainly concerned with, commonly referred to as the law of entropy, and it basically states that whenever energy is used to do work, some is lost to heat and friction.” Peter did not seem to be following him, so Elder Ishmael clarified, “it might be easiest to view the economy in terms of trophic level, am I correct in assuming you are unfamiliar with that concept as well? I’ll take that blank stare as a yes. Well, in it’s simplest form, you have the primary producer level, these are the living things that get their energy directly from the sun, mostly the plants, and a few in other kingdoms of life. It is important to note here that all the energy on this planet comes first from the sun or the radioactivity of the earth’s core, that is to say that though some energy is recycled from within the system, without the constant input from the sun and earth, this planet would be a frozen rock devoid of life.
“So, these primary producers use photosynthesis to get energy to live and grow and so they make up the greatest chunk of biomass. At the next trophic level are the primary consumers, the living things that feed on the primary producers. Because of the law of entropy, they cannot convert all the energy contained within their food into energy they can use. Consequently, they make up less biomass. At the next level are the secondary consumers; the carnivores and omnivores and they, too, have less energy available to them than the level below them and again make up less biomass as a consequence. Of course the real world things are more complicated; many things feed at multiple levels, chains of consumption can be much longer, etc. but the general rule applies that the further from the the source you get, the less energy is available. You with me so far?” Peter nodded.
“OK then, let’s apply that to the economy. As it turns out, money is a lot like energy. So for example you have a block of wood it is valued at a certain price, but if you carve it into something, and you aren’t crap at carving, it will be worth more because you have added some of your energy to it.”
“Alright, I am beginning to see where you are going with this,” asserted Peter, “so, like when you get really high up to, say, a CEO, they get the most money because their work is supported by the energy of all kinds of people below them, which they add their energy to, right?”
“Very good,” confirmed Elder Ishmael, “now let’s do a little thought exercise to really tie together economy and thermodynamics.”
“The farmers?” Answered Peter.
“Correct!” exclaimed Elder Ishmael, “and because our village needs firewood, shelters, and transportation, there is a logging camp in the forest, too. We will see now how all the rest of the energy, in the village is completely derived from and dependent on what the primary producers produce.
“Now, then, the farm can only convert so much energy into food and clothing material each year and the forest can only convert so much energy into wood. The farmers are dependent on the loggers for housing and firewood and the loggers need food and clothing because chopping naked on an empty stomach is not fun for very long. Also, some wood needs to go to tools, some food to draft animals, not all trees are suitable to fell, some food gets eaten by wild animals, you see what I’m saying. So already some of that maximum level of energy captured by field and forest has been lost to the wider economy.
“Because farming and logging are relatively low skilled jobs, many can be employed for relatively little money. Now let’s look at the next trophic level. Someone is needed to carry raw goods to the market and to refineries to make finished goods, so another company builds and uses horse-drawn wagons. Again some energy is lost to feeding the animals and constructing and maintaining the wagons and some wood and food gets lost through damage during shipment, so again less of that primary production energy is available. Consequently, less workers are able to be employed.
“Now as I said, the next trophic level is the market, where raw and refined goods are sold and the refineries, where the raw material is made into ‘added value’ products. Again some energy is lost to damage, to building and maintaining the facilities, to paying employees, and so forth.
“We come now to the really specialized trophic levels. This village surely needs an accountant. Someone could be a born numbers man, really good with keeping track of every mind-numbing detail of an operation, but if those other lower systems are not in place to support him, he’s S.O.L., because plants have little need for accountants and you can’t eat spreadsheets. Likewise, there could be 50 villagers that are equally qualified to be an accountant, but the energy from the lower levels can only support so many positions. And while other specialized professions may also need the services of a trained accountant and therefore support a few more positions, there is a diminishing return because those other professions, too, ultimately derive their energy from the lower levels. All the energy available to an upper level must therefore be less than or equal to the energy generated by the lower levels. The reason for this is at some point, every accountant, banker, CEO, everyone must eat, dress, transport themselves, and have warmth and shelter, as well as rely on all the other services and patronage of the lower levels. Although, as it concentrates into fewer and fewer hands, more is available per individual.
“We could keep going level by level, but I guess you get what I am driving at, right?”
“Um. . . yeah, I think so. So the higher you go, the more support from lower levels you need and the more money, or ‘energy’ is lost as it moves from level to level, though with fewer people per level, each one gets more energy” Peter paused a moment to think, “but I still don’t get a couple of things. First off, in your model, wouldn’t most people be farmers and loggers and other sorts of primary producers, ’cause I don’t know if you’ve heard, but mining, farming, timber, even factory jobs are all going away, especially in this country. And second of all, the energy from all the cornfields, forests and mines couldn’t possibly be enough to build highways, cars, computers, skyscrapers, it’s just too little for, you know, modern civilization.”
Peter expected Elder Ishmael to be stumped or get mad that Peter pointed out such gaping holes in his theories, but instead his face beamed, “you have, in one fell swoop, my boy, arrived at what makes the myth of economics’ invincibility to the law of entropy possible. You are quite right; farmers, loggers, miners, and the like would have to work for eons to produce the energy necessary to build and run this modern civilization. And in a sense that is exactly what happened.”
The look of bewilderment had returned to Peter’s face. A twinkle appeared in Elder Ishmael’s eye as he spoke again, “fossil energy! It quite literally represents the toil and moil of countless life forms, built up, drop by drop and bubble by bubble over millions of years. And that, way more than the noblest of laws, the most eloquent speeches, even the barrels of guns, has made every modern advancement in our civilization possible. Our roads are literally paved with it, the steel for our skyscrapers forged with it, our entire distribution system, from people to goods, runs on it. It is directly what has led to the decline of those jobs you mentioned; farm hands, miners, factory workers all replaced by automation and outsourcing which, in turn, are impossible without cheap, abundant fossil fuel. Every single stage of development, every technological advancement, every breakthrough in medicine, everything since the Industrial Revolution has been possible because of fossil fuel and the rate of advancement correlates perfectly with the rate of use.
“And because we have continued to find enough new sources to sustain that advancement, up until recently, economic growth has marched right along with it, to the point where no one alive today has had it better off than the generations that have come afterward. THIS is what has lead to the divorcing of economy from physics, to the idea that economic growth can be infinite in a finite physical world.
“You may be wondering, ‘what’s the problem with all this? Maybe fossil fuels have proven that economy can exist outside of physical constraints.’ But you would be wrong, dead wrong. Because lurking in the shadows of this industrial fueled Renaissance is a massive problem, one that has been there all along but will soon be dragged, kicking and screaming, into the light of the world’s collective consciousness.
“Before we get to what that problem is, though, let’s look at some of the real world consequences of believing economics is immune to the realities of the physical world. First, this thinking has lead to a financial sector that is ‘forever blowing bubbles,’ the tech bubble, the housing bubble, the gold bubble, today’s public infrastructure and natural gas bubbles, and I promise that last one will be as stinky as its name implies when it bursts.” He smiled a bit and continued. “So why do these bubbles keep bursting? Second, we have a monetary system which quite literally loans money into existence, a practice known as fractional reserve banking. Do you believe something can be created from nothing? Third, there are virtually no municipalities in this country who do not finance public infrastructure projects with debt that can only be serviced with increased tax base from future developments, as well as subsidies from higher up levels of government, yet few projects ever end up paying for themselves in any way. Could this be why today the capital needed just to maintain the infrastructure we have is so phenomenally high and why more and more municipalities are going bankrupt?
“Let’s get back to that massive problem with this magical thinking about economics and thermodynamics. The problem is fossil fuels are being consumed far faster than they are being created.
“It’s as if civilization is a teenager that has been recently given access to a massive trust fund that older generations have been building for many years. So, instead of budgeting according to the job he has, he decides to just dip into the fund and rent a huge house on the beach, lease an expensive sports car, buy fancy clothes and electronics, and just throw huge cocaine parties every weekend. This might seem like living the dream, until his fund is about to run dry, leaving only what comes from his fast food job to cover what are now astronomical monthly bills.
“This is an imperfect analogy because it is, in fact, much worse for civilization. We don’t even have to get to the point where we are about to run out of all that banked energy, we just have to get to the point where we can’t find enough new sources to keep up with future demands, generally calculated as the point that half of a fossil fuel have been extracted. That point is known as the peak and from that point on less will be available, driving the price up and up, a point most people with good information now believe it has come and gone already for oil. If you look at the increasingly exotic and energy intensive ways that are being touted as the next big energy sources, tar sands, deep water oil and gas rigs, horizontal oil and gas fracking wells, you too start to see the writing on the wall.
“When the whole system will come tumbling down is anyone’s guess, since humans are very cunning at goosing the system in ever more elaborate ways to squeeze just a bit more life out of it. However, in the end entropy wins and the infinite growth myth dries up faster than a fracking well.”
Elder Ishmael put his hand on Peter’s shoulder and imparted to him, “now you see why Solaris has organized its economy to more closely reflect nature’s trophic levels. That’s why 90% of our land is devoted to primary production and why so many people make things for a living; so whenever that great transition comes, we’ll not only be ready, we will have at least a decade of experience under our belts of how to live well in whatever comes afterward.”
That’s all for now, I welcome your comments.
Until next time, dream on!