How is the economy like a saucepan of water?

I thought of a simple example that conveys the physical reality of our economic situation as we go through the peak of oil production and start heading down the slope toward decreasing energy supplies.

To start we have to realize that everything in this world has a physical basis. Everything. If you are a Cartesian dualist and insist the mind is not a result of the brain's activity you need read no further — you wouldn't be able to believe this example. But as I said, everything, from all the stuff we have, all the work we do, all the thoughts we ever think, has a physical basis. So here is a simple physical experiment you can do at home. Bring a saucepan of water to a boil. Start the heat slowly at first, just warm the water until you see the roiling as hot water rises to the top and colder water falls to the bottom. This roiling is activity driven by the heat flow from the source underneath the pan to the air above the water where the heat is dissipated.

Now turn up the heat a bit. You will see an increase in the roiling activity and you will see tiny bubbles forming on the pan bottom. Some of these will break free and start to rise. At the right temperature range many of these will be reabsorbed into the water before making it to the surface.

After a while start increasing the heat even more (those with a gas range will be able to do this more gradually than those with an electric range with discrete temperature settings). Keep running it up to max and watch the increase in roiling and bubbling until finally, in a very short time, the water is boiling furiously and steam is rising.

Now, gradually at first, reverse the process. Start reducing the temperature and watch the activity. At first the water will continue to boil for a while because of stored heat in the water and the pan. But soon it will start to reduce and eventually, of course, it will cease boiling and with the heat off entirely it will cease roiling. What just happened and why is it like the economy?

This isn't just an analogy. All real systems (meaning physical) respond to the flow of energy in exactly this fashion. Complex systems, like the biosphere, don't boil, of course. They convert sunlight into complex molecules that are able to do interesting work - like life. They roil with activity, both mechanical and chemical, and evolve to higher levels of organization, which includes human society. And humans discover that some of that ancient biological activity got trapped in the ground meaning that they can recover all that sequestered energy for current roiling activity. They can make more food for themselves; they are able to confiscate larger portions of the current solar energy flow to their own devices. Their numbers increase way beyond the real-time capacity of the planet to support. The system is bubbling like crazy.

And then the effort needed to get the formerly sequestered energy out of the ground starts to grow so that the net energy gain is reduced. This is effectively turning down the energy flow. You know what happened in the boiling water example. Reduce the energy flow and you reduce the supportable activity. It really is that simple, at least in principle.

And that really is what is happening to our society, to civilization, to the economy. But our system is many orders of magnitude more complex than the water in a saucepan. Hence seeing the play out of this phenomenon is not easy to do. The effects are complex and take a long time (relative to a human life span) to propagate through the system. But it really is the same phenomenon.

In the economy, in the US right now, the biggest sign of how this is playing out is in the debt crisis that threatens to shake the consumptive lifestyles of Americans to the roots. A large and growing number of economists recognize this coming recession as fundamentally different from earlier ones. We've overspent and did it largely on debt we (that is too many of us) had no real way to pay back. If it is true that we have passed the peak of oil production (already the case in the continental US) world-wide, then the same phenomenon will start to topple the world economy as well. China may carry on in it's growth for a while, especially if it relies on its coal reserves. But that will come to an end too. And, besides, with America in the tank, who will China sell its goods to?

Boil some water and watch it. Then think about energy flow through the economy. Ask yourself, what stuff do I have that didn't rely on energy to get made? What services do I rely on that don't require any energy or human labor (food is energy!)? Dumb questions, right? But too many serious people, economists and politicians, but (wo)man-in-the-street types as well, act as if what we do and what we consume is essentially energy-free. That is, they do until the dollar cost of gasoline or heating oil goes above a pain threshold.

Then think about history. The big run up in wealth production, including food from the Green Revolution, came about after the oil and coal industries were in high gear. After WWII energy production grew exponentially. And so did the growth in wealth that most of my generation and my kids' take for granted.

Very many of these serious people are now scratching their heads wondering what the hell is going on. They should do the experiment. As the energy flow turns down, the boiling will stop. Then the roiling will stop.

Comments

[Trinifar]

Also worth noting that wars have become extraordinarily more destructive since the coal and oil eras began.

I wonder if there is another aspect to this. Can we find a ray of hope in the roiling intellectual activity that's stimulated by increased literacy, communication, and better science? It is possible to find an intelligent and compassionate way to turn down the heat and discover a way to live well at a lower energy state?

[George responds: I think your last point is crucial. I do believe evolution includes the cultural/intellectual co-evolution that has produced our modern world with cleverness as a primary enabler (like a catalyst). In my prior posts regarding wisdom, it occurs to me that out of this turmoil that will result from powering down at the same time we are adapting to climate change, those wise enough to be able to use the knowledge gained by Homo sapiens will do well. They will survive and lead us to what I suspect will be a new species of humanity. I plan on posting on this topic in the not-too-distant future.]