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« Past the Point of No Return | Main | Limits to Complexity »

March 07, 2011

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Phil Henshaw

Well, saying "the only thing that could possibly break this cycle..." is assuming your various assumptions. I think we may indeed see fuel prices double and hold a couple more times, to $16/gallon or higher perhaps, having already doubled a couple times I think from the effective $1/gal we designed our economy around. But what are the other assumptions that might change?

Do you think we might finally have a serious discussion about why our economy is only stable if it is consuming depleting resources as growing rates?? Do you think it would become possible to discuss how that is directly connected to the similar need to generate $'s at ever growing rates?

These are physical system questions that even the physical system economists seem loath to try discussing, very oddly. It seems to strike much too close to home or something. So, I ask us all, why are we so averse to that discussion, that is so very central to the survival of our culture and society?? Is it just because it seems like it might hide embarrassing complicity, or that we'd find things that would make us change, have no solution anyway, or unleash culture wars that would get out of control?

Personally, I've looked at the problem inside and out from many directions, checking out all those and lots of other possible hazards. It seems that the one risk that fits is discovering our "good will mistake". Our culture has been misunderstanding the natural processes of the economy and people in every sector have been showing good will in trying to fix things they basically didn't understand.

It would of course involve change to deal with that, but might be exciting too. Would the hazard of discovering a way to understand the problem, as our solution, be really so threatening?

Peter Cranstone

Spot on. The area under the curve is the "pay no attention to the man behind the curtain". Oil is the issue. The second law of thermodynamics is clearly at play and overcoming entropy is not for the weak or feeble.

We sure do live in interesting times.

Robin Datta

Excellent as usual, but regrettable in the futility of the wish that it was somehow mistaken somewhere.

The Powers That Be are either willfully misleading (amounting to malevolence) or woefully ignorant (amounting to incompetence) and in either case unfit for their role.

Nigel Goddard

Do you mean exergy or "available-work" rather than energy? In which case making production of goods and services more efficient can help to mitigate the reduced availability of net primary energy, although there are limits.

Oz

The decrease-over-time of ERoEI certainly seems a likely candidate to explain much about economic bubbles, trends and the current ongoing and accelerating decline, but I think it's a mistake to assert it explains everything. As is often the case, things are more complex.

For example, take a glance at what's happened to the value (in purchasing power) of US$1 since 1913, when the (privately owned) Federal Reserve took over the monetary system (throw in FDR and Nixon's abandonment of the gold standard), and you have another primary contributor. Oil is, after all, measured in the USD - a fiat currency created via debt and manipulated for upwards of 100 years such that is has lost over 95% of its value. Surely, this decline in monetary value has played a role in conjunction with the decline in ERoEI.

In a sense, the Fed policy of the last century may have served as an aggravating factor to your thesis (i.e. it's even worse than you describe). It has effectively hollowed out the 'real' economy (which is why the government now fraudulently measures economic output via GDP - a non-credible, thumb-on-the-scale measure of *consumption* rather than production), rendering it exquisitely vulnerable to a decline in ERoEI coupled with the demand for ever more energy. The surge in debt, it seems, masks a multitude of sins - not just net energy declines, but purchasing power declines as well.

Incidentally, the Keynesians and Monetarists both miss this monetary piece. The Austrian school (and I wish more biophysical economists were familiar with the work of von Mises and Rothbard) gets it. The Austrians also are the only school which vociferously agrees with you that "real growth is in the production of real wealth, per se."

What this means is that, even absent declining net energy, we were already in big trouble, economically speaking, because both monetary and fiscal polices over many decades - and accelerating over the past three - have done serious damage to real economic growth and the prospects for it.

However, even the Austrian school fails to "recognize the role of energy in work processes and as the currency of economics" - and so do not grasp the import of declining net energy, which the biophysical school does.

Maybe you guys should get together. :)

So I see this as essentially a double whammy. An economic system which must grow or die is now experiencing not only declining net energy (and thus an impassable obstacle to sustainable growth), but also the poisonous fruits of decades of monetary mismanagement and manipulation (which has sapped the economic resiliency and vitality which would have been so useful in days to come as we tumble along Hubbert's downslope).

It seems to me that if you combine the economy/ERoEI thesis as you have outlined it here, the Austrian school understanding of the impact on an economy (Main St, not Wall St) of a privately controlled, debt-based fiat currency, and J Tainter's views on declining marginal returns as a society grows ever more complex (itself closely related to energy), well, that's easily a PhD dissertation, though not one that would ever get presented at Jackson Hole.

George Mobus

Phil,

Do you think we might finally have a serious discussion about why our economy is only stable if it is consuming depleting resources as growing rates??

Not sure who the "we" includes. I believe this is the conversation that "we" biophysical economists have been having unless I misinterpret your meaning here (I have yet to go deeper into the e-mail you sent which might have cleared this up).

When I said that the only thing that could break the cycle was a new energy source with a high EROI I meant that it was the only thing simply because "we" humans are incapable of doing what is actually necessary, let alone have any conversations. By that I refer to the average human with average sapience. It takes a lot more wisdom than the average person has to even recognize the problems let alone think about solving them. That is why I am also interested in sapience.

-----------------------------
Peter & Robin. Thanks for the notes. So noted.

-----------------------------
Nigel,

I have written before about the meaning of exergy and its relation to the economy. Yes, the net energy flow into the economy is exergy in the technical sense. But since most readers may not have a good understanding of the term, I tend to stick with net energy to do useful work (more words, but probably better understood).

------------------------------
Oz,

Thanks for the reminders of just how complex the economic system is. There is quite a lot unsaid behind my claims. I tend to look at the human manipulations as unconscious (mindless) attempts to compensate for what is happening in the energy realm! So all of those manipulations (good and bad, but mostly bad) on the monetary/fiscal sides have been responses to a grander scale of declining net energy flow per unit of energy extracted. This has actually been going on for a very long time. It was the case with coal before oil started taking on the heavy lifting. Indeed, had it not been for diesel fuel, coal would be many times more expensive today. Now it is oil's turn and the decline in net energy per unit of raw energy has been noticeable since just after WWII.

In my view the problems with the gold standard to which Nixon responded, were caused by the accumulated mismatch between money's nominal value and the declining real wealth value that it should have represented. And that latter is based on the amount of useful work that could be done, or in other words, net energy.

So in sum, and I know this short explanation is not going to really do the job, I think there is good reason to believe that the kinds of decisions and manipulations of the economy (esp. debt reliance) have been reactions to the underlying situation with respect to net energy. Those reactions were conditioned by our general belief that growth in wealth should go on forever and was the normative model of economics. Ergo, people have been trying to keep that illusion going by any means possible. It was somewhat possible as long as there was increasing production of oil even as the net per unit declined. We were losing on each unit but making it up in the volume! But now that peak production has set in, even that means for perpetuating the illusion is gone.

PS. Joe Tainter is going to be at the next BPE meeting in April (15/16).

Regards

George

Robin Datta

Something complementary to sapience?
TED Talks
David Brooks: The social animal
http://www.ted.com/talks/david_brooks_the_social_animal.html

George Mobus

Robin,

Every once in a while David comes up smelling a lot better than other times! I caught his article in the NYT this weekend. Will take a look after finals week is dead and gone.

George

Ken Arent

I see a potential flaw in the notion that fossil fuels will not be replaceable by renewable energy sources, because the latter represents millions of years of stored solar energy. The amount of solar energy that was captured and converted into fossil fuel sources was a minuscule fraction of the total solar energy input into the biosphere over that period of time. It is at least theoretically possible that we could have all of our energy needs met by solar power. The technological barrier of actually capturing and storing that energy may or may not be surmountable.
It seems at least possible that we could chain together renewable sources of energy to mitigate some of their deficiencies. For example wind or geothermal power could be used to operate biofuel plants using cyanobacteria (more promising than algae). Such operations could be scaled up readily. Not requiring fertile soil they could but point in desert regions mitigating their environmental impact. If combined with technology that improved energy efficiency, couldn’t society work around the declining EROI?

George Mobus

Ken,

The amount of solar energy that was captured and converted into fossil fuel sources was a minuscule fraction of the total solar energy input into the biosphere over that period of time.

I'm not seeing how this is a flaw int argument.

It is at least theoretically possible that we could have all of our energy needs met by solar power.

Well we could in the sense that we reduce our energy requirements to just those that can be met by real-time flow. But if you are thinking that we can power our current level of BAU (and especially if you allow the development of the rest of the underdeveloped world to our standard) then I have to reiterate that that is a pipe dream.

The rest of your comment is really a restatement of the conventional "green" wisdom (leaving out only the part about high paying green jobs!). They make these claims but provide no substantial evidence. Whereas modelers and biophysical economists like myself keep showing that by thermodynamic considerations (ultimate controlling laws!) that this is not feasible. Statements like:

Such operations could be scaled up readily.
cannot be substantiated. They are wishful thinking at best.

Finally,

If combined with technology that improved energy efficiency, couldn’t society work around the declining EROI?

It turns out that technology that improves the efficiency of one process is often bought at a greater net energy cost than what is saved locally. For example to make solar PV more efficient requires scarce rare earth dopants that require considerably more energy to extract and refine than they produce in greater conversion efficiency. We need to get this simple fact through our skulls: There is no free lunch!

George

Ken Arent

I agree that PV will never be scalable, because of the limitations of rare earth elements. However, cyanobacteria do not have these requirements. Using wind farms to generate the input power for cyanobacteria based biofuels is what I’m saying is scalable. Not necessarily rapidly scalable. I am not denying that a population bottleneck is a high probability as well. In fact losing much of the population from the third world regions of the southern hemisphere (due to climate change, and resource exhaustion) will probably be required for a the world to come to grips with the enormity of the challenges we face. That being stated, only tragedies of this scale will provide a common enemy for humanity to rally against.

I’m also a fan of Tainter’s work (if one can celebrate such darkness), but his analysis is incomplete on many fronts. I recommend Peter Turchin’s work on cliodynamics (a demographic-structural theory), in particular his book “Secular Cycles.” The problem with Tainter (Turchin only hints at this) is that he sees a ceiling on complexity. Societies crumble at vastly different scales of overall complexity. This is related to their ability to maintain an adequate energy and resource subsidy, but I don’t think that is the whole of the answer. Tainter rejected the notion that societies collapsed based on environmental catastrophe, and I agree with his reason. He argued that some societies withstood similar insults from the environment and still remained intact. I would argue that societies have also faced energy and resource shortfalls and maintained their integrity (of course not without suffering) while they found supplementary sources and technologies.

I argue that all complex systems break down (be they civilizations, biological organisms, or whatever else) for the same reason: a loss of the weak links that maintain their small-world network architecture.

I’ll have more to add later, but I must say that I love the work you’re doing here.

George Mobus

Ken,

I talked with Joe Tainter about your thoughts. He is familiar with Turchin's work and I guess they are mutually not impressed! Joe does not think his work implies a limit or ceiling to complexity. The limit is determined by the limits of net energy flow (which is why Joe speaks at the Biophysical Econ meeting!)

WRT: societies that maintained their integrity in spite of reductions in net energy flow, I would like to have some examples. Joe talks about the forced simplification that the Byzantine Empire underwent to avoid complete collapse. But by his description it would be hard to assert that they had maintained, say, their cultural integrity. They became a shadow of their former selves, so to speak, but reverted to localized economies that were able to survive after Byzantium rule over outlying regions collapsed.

The point about loss of weak links is interesting. In my network flow analysis of complex systems there are issues with competition between flow paths as energy declines. I suppose one could argue that some flow links lose energy as a result of this competition and that they are, de facto, weak.

Look forward to future comments you have.

George

Ken Arent


Turchin and Tainter are mutually antagonistic for certain. I think this is to the detriment of finding a coherent theory however. Sometimes big boys, with big theories can behave like big petulant children. Tainter’s critique of Turchin can be found here in a review that appeared in Nature called Plotting the downfall of society (Turchin has it posted on his site, but I can’t access it right now). In the review Tainter also rejects the work of CS Holling, from your recommendation of Hommer-Dixon I think you are a bit more sympathetic to Holling.

My point in considering a synthesis between Turchin, Tainter, Holling, and network theory, is that I think it demonstrates that the problem solving capacity of a civilization doesn’t decrease linearly with increasing complexity. My argument is that as complexity increases and resources become scarce the network transitions from a small-world (moderately sized hubs with adequate weak link stabilization) to a star network (fewer larger hubs with an increase reliance on strong links, and increased cascading synchronization), when this phase change happens problem solving capacity decreases rapidly and catastrophically. See the book Weak Links: The Universal Key to the Stability of Networks and Complex Systems by Peter Csermely for elaboration. I think that this rapid decrease in problem solving capacity prevents a society from finding a supplementary energy subsidy (in historic societies) or adjusting to existence with reduced net energy (in modern society).

On the modern green energy debate offshore wind (possibly integrated with wave power) provides pretty good EROEI. For the problems of storing, transporting, and intermittence of the power generated using the wind as input to cyanobacteria based biofuel generation could increase the energy quality. I know building the infrastructure makes it challenging, but thorium could be a bridge fuel. With reasonable quality uranium theoildrum.com puts nuclear between 10-20 for EROEI. The thorium fuel cycle would eliminate much of the energy for mining (we already have so much mined, and we get even more from mining rare earth’s), for fuel fabrication (if a LFTR is used), and waste disposal. It seems plausible that thorium could double uranium’s EROEI.

George Mobus

Ken,

You might be interested in this. I am trying to launch a research project to investigate the flow of energy on the generation of complexity in a classical cellular automata lattice. I've also considered doing something similar in a more general network framework. Grid models with energy (e.g. climate models) have been around for a while, but I have never seen any attempt to link complexity evolution with energy flow.

Now, what funding agency might be interested!

George
PS. Thanks for the lead to Csermely

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