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« Just in case the world doesn't come to an end too quickly... | Main | Past the Point of No Return »

February 06, 2011


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Teeeeeny little point, but I love it that Mr Academic Economist has a little "problem" with subject-verb agreement..... But I guess academics don't have to pay attention to grammar. So I reckon that he is both logically deficient - as in presenting an erroneous argument - but grammatically deficient as well. Leaving economics to the "experts" is what got us into the shit bin that we are in.


Other than Steve Keen and biophysical economists, I've never seen any even know what a differential equation is. In fact it's so bad that Steve Keen starts his talks off by showing his model and then saying, "Don't worry, these are called differential equations and I just put them up to scare the economists in the room."

One time I thought Krugman had an equation that had dt in it but it turned out that d and t were actually just variables and that it was a coincidence.

Neoclassical economics is basically just massive curve fitting to "derive" Laws and then tortured explanations about why we observe the data we do. We are told that they are on par with scientific Laws, except scientific laws don't stop working every few decades.

On the other hand systems theorists can explain the economy through first principles and accurately describe what is seen both in "normal" times and "crises." The latter of which are literally mathematically impossible in neoclassical economics which is why everything that doesn't operate according to the model is deemed to be exogenous.

Using neoclassical logic, I propose Mikkel's Law which simply states "Mikkel is always right at probability of 80%." We know that this is a Law worthy of being called as such because a)I can provide data that on past performance that when fit shows a r^2 of 0.8 and b) it is simple, so therefore it must be true. I will personally guarantee that this Law is Reality and any time that it appears that it fails it's actually because of unexpected exogenous causes that I can't be expected to know about because they are unpredictable. Any time that an exogenous event happens it may create a string of times I'm wrong that appear to violate the normality assumption, but these will all be accounted eventually so there is no point in questioning it. We should obviously follow Mikkel's Law and allow me to set all policy, then when I die or become enfeebled we will let market forces find a replacement Mikkel or perhaps transition to George. It is important that we do not interfere with this process though, because Mikkel's Law says we shouldn't.

BTW there are three GREAT charts here that show how markets interact with resources, manufacturing and marketing. Charles' work is far superior to my ranting above perhaps because he isn't trying to use the mind numbingly obtuse logic of neoclassical economics.


Gail has a great post on how ignoring the physical realities of how systems are integrated can create very sudden cascades of failure. Her point focuses on electricity generation but the same concept of local over-optimization damaging network resilience is exactly how to describe the financial collapse and the current explosion in food prices.

These examples also show that ironically the fact that energy currently makes up a small percentage of current costs means that we are more susceptible to widespread economic cascades due to energy prices rising permanently than if we currently had a large percentage of cost go to energy already.


I think this article is spot on. How about another way of looking at the same problem? Show us something that Oil/Energy "doesn't" play a role in (that we consume). Energy is at the core level of everything we as humans do. The second law of thermodynamics comes to mind here. We've already hit peak oil, what happens from here on out is pretty simple even for the non intellect to grasp - as things become more scarce the price goes up.

Phil Henshaw

I continue to attempt to communicate with you, but I'm beginning to wonder why. You go on and on at such great length, year after year, completely ignoring superseding findings that would **give your own thesis** a far more valid basis and much wider implications. It seems you don't expect it, so you refuse to consider it. What should I do with scientists like you, behaving just like TS Kuhn described as "what scientists never do us adopt a new paradigm".

The embodied energy of business operations is physically 500% larger(nominally)than even the most careful efforts to trace energy uses to business will show. The untraceable energy uses that businesses employ don't leave receipts. It's a very cool finding. Why don't you even mention that a scale change in energy use assessment may be needed.

The fact is that the standard method you use to "show how costs at each stage of production build up with energy inputs" should be multiplied by 500%, as a first step, to show the importance of doing the systems analysis correctly using whole system methods. The self-managing production services that businesses employ don't leave receipts for their energy uses, that's why they've been untraceable.

You keep claiming to correct everyone else while yourself still only counting traceable energy uses, and the "whole technology" method that ignores that technology can't work without operators. As whole systems businesses are matched pairings of "controlling and controlled parts", "animate and inanimate", "operators and machines", and **BOTH** have embodied energy costs. I wrote a long paper on the subject, about to be released in Sustainability, and have mentioned it to you several times.

It doesn't help science for every individual scientist to live in their own personal ivory towers of self-reinforcement. How do we go about changing that?


Phil, can you plainly state the implications of your statement that George disagrees with?

For me the whole embodied energy fact makes me very cynical. It is easy to show that the flow based energy that our systems require will be nearly impossible to meet going forward and I also believe that it is possible to construct new systems that reduce the flow based energy needs to manageable levels.

However, even assuming that's correct then the amount of embodied energy needed to produce those new systems is mind boggling.

George Mobus


Oops. That is my mistake, not his/hers! I didn't copy the text properly. It should have been "factorS" rather than "factor". My bad! The person I am alluding to is actually quite intelligent and well educated. So no aspersions based on improper grammar can be attributed!!!!

Think content.
Now now, Mikkel. Charity. It takes time and an ability to question everything to shift one's perspective! Give them time. After all, Kahneman was able to get out of the mold and won a prize in honor of Alfred Nobel as a consequence!


Mr. Cranstone,

That is a worthy challenge. Anyone would be hard pressed to show something that wasn't touched by oil. And certainly it would be physically impossible to show some human activity not dependent on energy!

OK Phil, I am chagrined.

To be blunt, I have read some of your work at synapse9 and I must be dense. I just don't understand a lot of it. I can't be expected to cite references that I do not grasp.

Also, please note that this is not a scientific journal but a blog. I write here to express my own views which may or may not be based on prior scientific research.

If you have a position to proclaim based on your own research, please feel free to express it here as you see fit. But do not chastise me because I don't liberally cite your work. I've provided readers with a link to your blog and they are free to examine your arguments as much as they want.

If I understood your points of view and they, in fact, bolstered my arguments here, I would cite you as much as I do any one on this site.

So please don't chastise me for not incorporating your research into my own visions. I do not edit or moderate anyone's views here and you are welcome to state your case as you desire.



George, I do not hold any malice towards any individual neoclassical economists. OK that's not true, there are a few that I do because they did things like actively hold up Pinochet and Franco as the Ideal; and then there is the whole Wall Street complex where they gave academic cover (and then received millions of dollars) to a system that encouraged wide scale fraud that continues to this day. So I hold something against those particular individuals but not in general.

That said we are suffering through an immense economic crisis that completely invalidates everything that they hold dear. Not only are they not chastened but they refuse to listen to their colleagues such as Stiglitz and Keen that have warned of the problems of neoclassical economics for decades. Not to mention people like Bill Black and Elizabeth Warren. I'm highlighting these people because they are relatively orthodox compared to bioeconomists and with the exception of Keen have top notch pedigrees.

It's not just that they are wrong; I am wrong far too often to hold that against anyone. It is that they have more influence than any other intellectual group (save lawyers) and have Bad Thinking: the logic is so absurd and anti-empirical that to maintain their tortured rationalizations in the face of immense suffering caused by their proclamations is repulsive. Especially when the great minds above are being marginalized in influence.

I am a big fan of Kuhn's framework for paradigm shifts. The way I look at it there is -- uh, shall we say "ample" -- evidence that the neoclassical paradigm is flawed and should be replaced by one of the competing ones. Per Kuhn's observation (and paraphrasing Planck, "Science advances one funeral at a time") I don't really hold out much hope of convincing its adherents. Instead I view it as a battle in the middle and towards the young. In that aim scathing bluntness about the core axioms of the field can be an asset and defenders of it are free to challenge the exact details if they feel the generalizations are unfair.

So I try to hold charity towards all, but this is really a struggle. Neoclassical inspired policies that have pushed for global monoculture, segmentation and consumerism are the proximate cause for many of our ills (although I obviously think the theory itself is just a symptom of deeper human proclivities) and it's hard to me to bite my tongue when they blather self serving idiocies in the face of mass suffering. I pray that if I'm ever unfortunate enough that anyone listens to me I retain the humility needed to accept responsibility for my miscalculations and seek wisdom in those that had compelling disagreements.

George Mobus

Well put Mikkel.


supply chain

I'm a supply chain professional and I always find it difficult to control supply chain cost.

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