How Energy Shapes the Economy

In the beginning, the Master Economist created the Economy.  He created businesses large and small, consumers, governments with their regulation, and financial institutions of all types. And the Master Economist declared that the economy should grow. And it did grow, but only for a while. Then it stalled. Then He declared that stimulus of various types should fix it, and it did, for a while. Then He declared that if humans would just wait for a while, it would fix itself, but it wouldn’t.

We all know that the foregoing isn’t the real story about the economy, but what is the real story?

I think if we dig deeper, we discover that energy plays an all-powerful role, just as it does in the natural world in general.

Population: How Inadequate Energy Acts as a Limiting Factor 

Human population is of course an important part of the economy. If population keeps growing, it helps the economy grow, because more consumers mean more demand.  Can human population keep growing?

Figure 1. World Population Growth, based on summary data provided by US Census. Population growth became much more rapid after fossil fuels began adding to food supply, in the 1800s. Coal enabled much greater use of metal and glass, allowing changes which permitted horses to do more work on farms, and innovations such as electric light bulbs.

The answer seems to be no. Here we find that researchers have found an extremely important role for energy. The relationship they have found relates to any species, not just to homo sapiens.

Ecologists often talk about the existence of a natural cycle between predators and prey. The predators eat the prey that is available, but in time, the predators drop in number, as less food becomes available. When the population of predators drops, the prey is able to expand its population. In fact, Lotka and Volterra created a model that has been used to model a number of predator-prey relationships, including the wolf and moose population on Isle Royal National Park (Lotka) (Volterra) (Jost).

Figure 2. Lotka-Volterra Predator-Prey Model
Source: Wikipedia

Humans are now the dominant predator species on earth. Our numbers have grown from a relative handful in our earliest days to over 7 billion in 2012. Other species have had to contract in relationship to the advances man has made.

The United Nations is now forecasting a world population of over 9 billion in 2050, and over 10 billion in 2100 (United Nations).  If this happens, the populations of other species will need to be pushed down to offset the growth in the human species. Eventually, this situation will reach a limit, since we need to eat other species, both plants and animals.

The situation is more complicated than Figure 2 suggests, because there are many species involved, and there are many other changes taking place—temperature of the sun is gradually changing, the earth’s orbit around the sun varies, etc. Also, external energy, including fossil fuels and nuclear, is adding to total energy available to man. But the point remains: we cannot expect population growth to continue indefinitely.

The situation in Figure 2 is described as a  predator-prey situation, but if we analyze the situation, it is really an energy situation as well, because prey is an energy source to the predator. Howard T. Odum has written extensively on this subject. Let me explain his view.

The Role of Energy in the Population of Species

Energy plays a major role in the balance between predators and prey. Natural systems, such as groups of plants and animals, arrange themselves to get the best possible use of energy resources available. All of us know that if there is a bare spot on our lawn, and enough sunlight and water, it is not long before some kinds of plants come along to fill the gap. Sunlight allows photosynthesis to take place, producing food for plants. If more sunlight is available, more plants will grow.

This tends to work with animals as well. Let’s take the example of wolves that are predators of moose (mentioned above as being modeled using Lotka-Volterra equations). From the point of view of a wolf, a moose is a form of stored energy, since eating it provides calories that provide energy to the wolf. If at some point more moose become available to eat, then more offspring of wolves will be able to survive to adulthood, under survival of the fittest, so the wolf population will increase. As a result, the wolves get as much use as possible of the energy available to them.

Howard Odum, in A Prosperous Way Down, credits Lotka with discovering the fundamental energy law that underlies ecological systems, which Odum calls the Maximum Power Concept and rephrases as follows:

In the self-organization process, systems develop those parts, processes, and relationships that capture the most energy and use it with the best efficiency possible without reducing power.[1]

This means that ecosystems (and in fact, other self-organizing systems, such as economies), will gradually adapt to get the best use possible of the energy available to them. Ecosystems are “self-organizing” in that with the abundance of offspring of animals, and the abundance of seeds of plants, there are always offspring available to move into available niches with excess energy. There are other ways of making use of  available energy—for example, selection of the fittest can lead to people with the right skin color being adapted to best using the intensity of the suns rays in their part of the globe.

Energy Use by Humans

Energy plays an important role for each of us as humans, just as it does for other species in ecosystems. The most obvious use for energy is in the food that we eat. Some of the energy we use is embedded energy—that is energy from the past that has been used to make something that we use today. The stored energy can be human energy, as in the energy it would take to shear wool from a sheep, make it into yarn, and knit a sweater from it. Stored energy can also be from other sources. For example, it takes a great deal of energy to extract and refine metals. It also takes a great deal of energy to make today’s concrete.

One type of stored energy comes in the form of education (Odum). Education is available because the student’s labor is not needed in the workforce to create the food and other goods that he consumes while being educated.  Education requires that teachers attend school themselves for many years, meaning that teachers must somehow be supported by the energy of the rest of society both during their own education and while they are teaching students.

Education also involves the concentration of knowledge in the form of books and on the Internet. All of this requires energy. Books require energy to support the people taking time to write the books, to physically make the books, and to transport them to the location where they are read. The Internet requires electrical energy.  Even thinking requires energy. The human brain uses a disproportionate share of man’s energy, up to 20% of the energy used by humans (Swaminathan). The people with the highest education tend to receive higher salaries than others, indicating that this form of embedded energy is highly valued by society.

The Role of Energy in Numbers and Types of Businesses and Governments

Businesses, governments, and consumers form another self-organizing system, not unlike ecological systems (Odum).  This system has gradually arisen over many years, and adapts itself as conditions change. The financial system is the part of the self-organizing system that keeps track of the energy costs of the system (as well as other costs), and pushes the whole system toward the lowest cost approach to creating goods and services. Businesses tend to succeed or fail in ways that make the most productive use of energy resources, according to the rules set out by the system.

Let’s consider a small-scale example of a potential addition to this self-organized system. An entrepreneur decides to plant a field of turnips. In this case, part of the energy for the business comes from the sun, and part of the energy comes from the labor of the entrepreneur. The calories the entrepreneur eats provide energy for his labor. The entrepreneur’s education represents another form of stored energy, affecting his success. If the entrepreneur buys fertilizer, it is an energy input as well, since energy was required to make and transport the fertilizer to the location where it is used.

Part of the energy used by the entrepreneur may come from mechanical equipment that was made in the past using heat energy, and part from fuels that power that equipment. If purchased energy is scarce, and because of this, high-priced, the entrepreneur will have to charge a higher price for turnips he sells in order to cover his costs. The entrepreneur has a much greater chance of success in selling his turnips to customers if energy is low-priced rather than high-priced because many more customers will be able to afford turnips at $1.00 pound than at $4.00 pound. So it is the price of goods, which is tied to energy costs, that helps determine both which goods are sold and which businesses will succeed. High energy cost tend to lead to business failures.

Governments, too, use energy, and fit in with the same self-organizing system as businesses. The type of government requiring the least amount of energy is one run by a single person, perhaps a king or dictator. In order to support the king, the economy needs to have enough spare energy (in the form of food) available so that the king or dictator doesn’t himself need to work to grow food. It is also helpful if there is excess energy generated by society to provide clothing, a home, heat for the home, and the many other things that the king or dictator expects to own.

More complicated governments require more energy. A government of elected officials requires not only the excess energy from society to feed and clothe the elected officials, it also requires the energy to build the buildings where polling takes place, and the energy for officials to travel to the location of the government offices. The offices themselves also require energy, both for their construction and their maintenance. If energy supply is constricted, the price of energy is likely to be higher, and thus the cost of government will be higher. Taxes will need to be raised. If there is a sufficient energy surplus elsewhere to afford these higher taxes, these higher taxes may be acceptable to taxpayers. If not, some government officials may need to be laid off, to balance the (energy) budget.

What Happens When Energy is Deficient?

Something has to “give,” when there is not enough energy.

A deficiency in solar energy would likely cause the world to get colder. Crops would fail, prices would rise, and the problem of low solar energy would affect both the natural world, and the economy consisting of businesses, governments, consumers, and financial institutions. The last time this was a major issue was during the Little Ice Age. The biggest impact seems to have been during the 1600s. I show in The Long-Term Tie Between Energy Supply, Population, and the Economy that this seems to have been the case.

What happens when energy supply such as wood, coal, oil or natural gas is constrained?

Unfortunately, we are getting a chance to find out. There is considerable evidence that oil, our largest and most flexible source of energy, is now encountering supply issues.  Oil price in 2012 is more than three times the price it was ten years ago, in inflation-adjusted prices.

Figure 3. Historical inflation adjusted oil price per barrel, (Brent equivalent in 2011$), based on amounts shown in BP’s 2012 Statistical Review of World Energy.

It is during the time that prices have been high (indicating short supply) that the world has been suffering from recession. This is precisely the impact one would expect, if energy is closely tied to the economy. Adequate supply would be reflected in low price. When it is not, the economy of countries, especially of oil importers, tends to go into recession. We will discuss this more in future posts.

Figure 3 shows that there was a previous time, in the 1970s and early 1980s, when oil prices were very high in inflation adjusted terms. This was the time shortly after the United States discovered that its own oil supply was decreasing rapidly (Figure 4).

Figure 4. US crude oil production based on data of the US Energy Information Administration.

After United States oil production began decreasing in 1970, a huge amount of effort was put into finding more oil supplies, increasing efficiency, and converting oil use to other types of energy use. There was considerable success in these areas. The second “bump” in Figure 4 reflects the addition of oil from Alaska, something that is now in decline also. Oil uses that could be easily switched to another fuel were switched away. For example, where oil had been used to create electricity, new generation using nuclear or coal was built. In the case of oil for home heating, the switch was often made to natural gas. Cars became smaller and more energy-efficient during this period.

It might be noted that the period of high oil prices in the mid 1970s and early 1980s was also a time of recession. Economist James Hamilton has shown that 10 out of 11 US recessions since World War II were associated with oil price spikes (Hamilton, 2011). He has also shown that there appears be a direct connection between the price run-up of 2007-08, cutbacks in consumer consumption and spending on purchases of domestic automobiles, and the economic slowdown of 2007 – 2008 (Hamilton, 2009).

The run-up in oil prices in the past few years seems to be related to a combination of (a) world oil supply that is not growing very rapidly, and (b) increasing demand from developing economies, such as China and India, and (c) higher production costs for oil, because much of the inexpensive to extract oil has already been extracted.

There is a great deal more that could be said about these issues, but I will save this information for later. I will make a couple of observations, however:

1. The United States has not been very successful in increasing its oil production, in spite of improved technology. The right hand side of the graph in Figure 4 is higher than what it would have been because of opening areas to drilling in the Gulf of Mexico, new technology, and enhanced oil recovery methods. But current production still lies far below the 1970 peak of oil production.

2. The government has not been forthright in telling us about this problem. Science textbooks don’t generally discuss this issue, nor do history books. Some things are embarrassing. This seems to be one of them.

Footnote:

[1] Power is the rate at which energy is used.  For example, a 100 watt light bulb uses more energy per unit of time than a 50 watt bulb, so has more power. Any organism has a rate at which it uses energy. For example, we may eat 2200 calories a day. This quote is just saying that the rate at which organisms use energy is considered in this self-organization process.

References:

Lotka, A.J., Elements of Physical Biology, Williams and Wilkins, (1925)

Volterra, V., Variations and fluctuations of the number of individuals in animal species living together in Animal Ecology, Chapman, R.N. (ed), McGraw–Hill, (1931)

Jost, C., Devulder, G., Vucetich, J.A., Peterson, R., and Arditi, R., “The wolves of Isle Royale display scale-invariant satiation and density dependent predation on moose”, J. Anim. Ecol., 74(5), 809-816 (2005)

United Nations, Department of Economic and Social Affairs, World Population Prospects the 2010 Revision. Total Population – Both Sexes. http://esa.un.org/wpp/Excel-Data/population.htm

Odum, H. T. and Odum E. C., A Prosperous Way Down: Principles and Policies, University Press of Colorado, (2001)

Barnosky, A. D. et al., Approaching a State Shift in the Earth’s Biosphere, Nature, 486, 52-58 (07 June 2012)

Swaminathan, N. Why Does the Brain Need So Much Power? Scientific American, April 29, 2008. http://www.scientificamerican.com/article.cfm?id=why-does-the-brain-need-s

Hamilton, J. D. Historical oil shocks. NBER working paper No. 16790.  Feb 2011. Available from http://www.nber.org/papers/w16790.pdf

Hamilton J. H. Causes and consequences of the oil shock of 2007-08. Brookings Papers on Economic Activity:215e61. Spring 2009. Accessible at https://muse.jhu.edu/journals/brookings_papers_on_economic_activity/toc/eca.2009.1.html

68 thoughts on “How Energy Shapes the Economy

  1. Gail,
    This was a very informative and well-written piece. I am especially intrigued by the relationship between the economy and our financial markets as complex self-organizing systems that increasingly represent natural biological systems, most specifically the human brain. My own thesis is that this trend of techno-social organization towards neural-like networks will lead to the wide-scale emergence of an automated centralized architecture akin to our own autonomic nervous system. Ironically, as this relates to energy and the economy/markets, the Department of Energy has created a Center for Innovative Technology to research the use of supercomputing in regulating the markets. Why the Department of Energy and not the Department of Defense? Anyone who just read your piece would understand that answer clearly.

    • The question is whether complexity can be taken to higher and higher level without itself creating a need for more and more energy to support it.

      I would argue that the historical record argues strongly for a collapse back to more simple forms, rather than adding more complexity. Governments are an obvious example. With more energy, it was possible to create the Eurozone. As energy, and in particular oil, gets more expensive, it looks likely to collapse to a simpler form (individual countries), just as the Soviet Union did. I think government collapses, and problems with finance, are likely to prevent maintenance of systems that were created when oil was cheap.

      • Technically and in practice, complexity cannot be taken to higher and higher levels without the input of more and more exergy (energy harnessed for useful work). That is clear from the laws of thermodynamics. So clearly, there is a limit to complexity of the human economy on earth.

        Positing collapse back to simpler forms (much simpler forms) as the only alternative is too negative on account of the energy issue alone. There is also the possibility of maintaining an approximately current level of complexity or some lower but still civilizational level of complexity. With renewables, there is clearly some reneweable throughput rate of exergy use possible. This rate with attendant energy efficiency looks likely to me to be able to maintain a modern electric and electronic civilization.

        However, I agree that adding back in all the other problems we face (over-population, climate change, soil depletion, species extinctions, ocean acidification, metals exhaustion, fresh water exhaustion etc. etc.) then the problem looks far more difficult. The one possibility would be transition to a ubiquitous resources economy where ubiquitous resources including sunlight are extensively utilised. Metals use in construction would be largely replaced by carbon fibre and glass fibre reinforced polymers (e.g. expoxy) use and perhaps a move back to plantation wood.

  2. This will be a rambling response to what Gail has said over the last months about the decline in available energy and the way energy shapes our fates and the way we live.

    Let’s start with Darwin:
    The notion is that a gene for helping behavior can thrive even if it’s disadvantageous for the individual — so long as it gives the individual’s group an advantage over other groups. Darwin provided a nice example of this, imagining two tribes in conflict and noting that “if . . . the one tribe included a great number of courageous, sympathetic and faithful members, who were always ready to warn each other of danger, to aid and defend each other, this tribe would succeed better and conquer the other.”

    If you read The Forest Unseen by the biologist David George Haskell, you will be entertained by a rumination on alarm calls. Why does an animal give out an alarm call which alerts other animals to the threat, at the expense of more clearly exposing the animal’s own position? The answer is that no one really knows. But very clearly the simple-minded notion of ‘every man for himself’ is simply wrong. Even plants warn each other by making alarm chemicals which are carried by air currents to other plants and also through the fungal network underground.

    You will also be enlightened by Haskell’s analysis of the growth patterns as revealed by the study of twigs in a forest. Among other things, you will learn that red sensing molecules turn on growth, while infrared sensing molecules turn growth off. Red comes from the unobstructed sky, and means that an opening in the canopy exists (perhaps because a giant tree fell) and there is plenty of sunlight. If the light reaching the twig is mostly infrared, it means that the red wavelengths are being absorbed by leaves overhead and there is not enough sunlight to support growth. A new opening in the canopy ignites a furious competition for sunlight that a very small minority will survive to enjoy. So go and do likewise and look for Mother Nature’s energy gradients.

    So what we have is a complicated play of forces between competition and co-operation. But always the behavior is bounded and shaped by available energy.

    The best single example of a lower energy, resource conserving, cooperative way of life that I know is this tour of the learning center at The Farm in Tennessee conducted by Albert Bates:
    http://www.thefarm.org/lifestyle/albertbates/akb.html

    What you will see in the video is consistent with a lower energy future which provides a good life today. It is not a ‘doomer’ scenario where everything suddenly collapses and the world becomes ‘every man for himself’. For example, metal roofs are used to collect water, and plastic pipes are used to drain shower water into a wetland which cleans the water and captures the phosphates and other nutrients. In addition, anyone traveling to The Farm today almost certainly drives there in a car. But you will see quite satisfactory housing built for a few thousand dollars–which means no mortgage and less exposure to Peak Finance. (Note Albert’s comments about one of the small, frame houses being very similar to the house that Thomas Jefferson and his wife lived in while Jefferson was building Monticello.) While this is a training facility, if you actually lived here you would be secure in terms of water and food and shelter and you would be living in a supportive social environment. If you were cut off from the outside world by the sudden disappearance of transport fuels, you would survive and possibly thrive (absent roving bands of gangsters–life will still be risky). You will note that a considerable amount of the resilience built into this center is enabled by the cooperation of a group of people in terms of the initial construction, the maintenance of the garden, the willingness to adopt an energy and resource conserving lifestyle, and the creation of low energy socializing events.

    You will note the use of the sun to heat water for the showers and also for generating electricity. I don’t know if they use batteries to store the electricity. I do know that Albert has made the comment in a meeting that ‘the sun just came up, you have solar energy available now’. When The Farm was first established, they used a lot of short wave radio to stay in touch with people around the world. Now they use the internet. Could they go back to short wave? I think so. Short wave is a much simpler technology than the internet. Anyone can come up with scenarios which start with a world in total chaos in which even short wave radios cannot be built–but there isn’t much point in thinking about those scenarios because then we would likely have been one of the many doomed saplings competing for the limited canopy light.

    Note the reuse of industrial cast-offs such as the large TV antennas and the plastic bottle windows in the hand-made houses.

    Albert feels pretty strongly that Intentional Communities (of which The Farm is one) are a good way to live a satisfying life today with a much lower energy budget and relative freedom from the world of Finance. My own conclusion is that making my suburban house and grounds more productive and therefore more resilient is the best choice for me. Peter Bane chose this strategy also:
    http://www.youtube.com/watch?v=ySydk4R77po

    And here is a recent interview with Peter:
    http://www.indianalivinggreen.com/permaculture-potentate-an-interview-with-peter-bane/

    A quote: We are on the leading edge of the mother of all depressions. We can view this either as a crisis or as an opportunity. My book is a positive response to the environmental crisis, which is also an economic crisis. The storm is on us, but we can take the resources we have and begin bolstering the real foundations of an enduring economy: the household, and its relationship to its neighbors and the community around it.

    The good news is that we will substitute social capital for financial capital. We have hard work and difficulties facing us, but also the opportunity to be near friends and family and to solve problems creatively in ways that will help the places we love, our homes and communities. End quotation.

    In short, if you prefer optimism to pessimism, there are people in the world who are able to look reality in the face and get on with what needs to be done. Just look around and get started. If some magic bullet in the form of infinite and cheap solar energy storage, or infinite and cheap nuclear power, or Daniel Yergen’s cornucopia of oil supply, ever materialize, you won’t have wasted anything. You will have built up satisfying skills and built social capital which will pay off in many ways. Let other people argue about the magic bullets.

    Don Stewart

    • I suppose people will get to see how these work in practice. Communities in the past had reasonable support networks–places they could go to trade with others for clothing or spare parts, for example. If these start to disappear, it will be much more difficult, I would expect.

  3. Pingback: Excellent work Gail » Why Aren't You Outraged?

  4. ”In the long term, we are all dead.” – John Maynard Keynes…. In the long-term, human civilization will need to be powered by sustainable renewable energy supplies. While it\’s possible that eventually some form of fusion, or truly safe and affordable fission might be developed, there\’s no credible evidence that either of these is likely to have a major positive impact on energy supplies in the US, China, India or the EU (granted that France generates most of its electrical energy from nuclear fission).

    So if we rule those out as credible (safe, affordable, scalable, sustainable) energy supplies for large numbers of people in the next 3 – 5 decades, and we rule out miracles (e.g., workable \”clean\” coal, help from space aliens), that leaves solar based supplies (direct thermal, photovoltaics, wind, ocean thermal gradient, ocean tides, biomass) plus geothermal to partially make up for declining (and dangerous to keep consuming) fossil fuels, especially oil.

    If the United States were to engage on something extraordinarily challenging, like building 10 thousand square miles of wind and solar power generation systems, plus develop new means of storage along with a new electrical grid, there might be reason to hope that as oil affordability declines, some reasonable measure of modern society might be sustainable… if we don\’t equate happiness with near unlimited consumption. But, to state the obvious, the US has no intention under current political and economic conditions of undertaking any such monumental effort. Government is the problem, peak oil is a myth, and global warm is a hoax are pretty difficult to surmount. But even if the politics could be \”solved\”, building solar and wind generation on 10K square miles, distributing it on existing and new grids, storing it so energy is available when the sun isn\’t providing it… That would be a many decade effort, made all the more challenging by progressing global climate change and the need to divert a pretty fair amount of declining fossil energy supplies to develop new post-carbon sustainable one [See The Energy Trap discussions of Tom Murphy].

    So the quandary boils down to: How can we move from a politically corrupt, highly polarized, science denying, plutocracy, addicted to dangerous fossil fuel supplies, to a sustainable \”solar society\”? And how can we do so fast enough to not destroy the earth\’s climate? And how can we simultaneously get China, India, Brazil, the EU and Russia to take similar steps as fast as possible? It\’s theoretically possible, but politically, virtually impossible. We are apparently heading towards Michael T. Klare\’s \”race for what\’s left\” world, a world of famine, pandemics, shortages of water, food, arable land, usable energy, but no shortage of wars.

    • I am less optimistic about renewables than you are because they are so much tied to fossil fuels. Solar thermal is the only one I see as having much hope, and that is only as long as there are metals that we can recycle to make fossil fuel containers to hold water for heating (or do something similar).

      The way I see the world economy as a self-organized whole suggests that it will be very difficult for renewables to be more than a tiny add-on to a system dominated by fossil fuels. Fossil fuels play such a huge role today. All of today’s equipment uses fossil fuels to operate. We do not have the capital or energy supplies to replace it all, even if we knew how to and wanted to.

      One of the big issues I am concerned about is how we will be able to maintain today’s complex society. I have a hard time seeing how we will be able to continue to make complex goods such as computers, if there is a major loss in international trade, or if the international financial system “breaks”, because of the need to use inputs from suppliers from many parts of the world.

  5. Well, there was a lot of Energy about the Economy at the Convention tonight !

    1. President Clinton said, President Obama has cut your future gasoline bill in half by doubling the fuel mileage requirement.

    2. There was another main theme about a women’s right to control her own reproductive system.

    What I didn’t hear was peak oil, over population, resource constraints, climate change, collapse or resource wars. Is it the politics of denial or survival ?

    • Obama senior adviser David Plouffe promised the president would give voters “a very clear sense of where he thinks the country needs to go economically, the path we need to take.”

  6. I have just become aware of this video Albert Bates made at the Local Future symposium last year in Grand Rapids, MI.

    I think it is valuable because Albert has been associated with The Farm almost since its inception. He gives a very realistic history, detailing the initial strategies, the successes and failures, and how the strategies have evolved. What you will see is not ‘how to survive in a world in chaos’, but instead ‘how to live sustainably in a world which is living unsustainably’. At 12 minutes into the video, you will see a picture of Albert’s home. It is superinsulated with shredded dollar bills. Obviously, there aren’t enough shredded dollar bills to superinsulate everyone’s home. You can think of it as an example of someone who understands the basic mechanics of superinsulation and then looks around for a material to accomplish it and finds something that is appropriate. You will see many more examples like the shredded dollar bills.

    There is a discussion of building soil in the thin, poor, Cumberland Plateau. Albert’s claim is that it takes 10 years to turn very poor soil into rich garden soil. The group that originally settled The Farm knew nothing about farming. With lots of labor, within 3 years they were food self-sufficient. Some of the best soil on the farm is the field that received the ‘diaper rinse’ residue from the laundry.

    At 22 minutes in the video, you will see Albert show the transition from a 19th Century farming model to the current Permaculture model. From drudgery to enjoyable family work.

    The Farm began as a commune, and has transformed into a Co-Op. The commune was functioning on a dollar per person per day–because everything was outside the cash economy. They were living pretty well–they just didn’t have any money. With the Co-Op system, the model changes to a system of linked businesses. There are numerous examples of businesses which they have started. Some have thrived, other have not.

    The second video describes the ‘Foreign Policy’ of The Farm. Albert believes that a community is held together not only by their own common concerns, but also by the ways they reach out to others as a community. You will find much fascinating food for thought here.

    I would love to see a discussion between Gail and Albert about the future. The Farm began with self-sufficiency. It has transitioned into a dependency on supply chains involving mostly companies who are striving to live ethically in a finite world. I imagine Gail will forecast doom for the supply chains. It would be interesting to hear Albert’s response.

    Another fertile area of discussion between Gail and Albert might be the learning curve. It took a few years for a group of novices to become self-sufficient and there was a lot of hard work. They have become much smarter (e.g., the move from row crops to Permaculture) and their building methods are much improved. But it IS a learning curve, and I imagine Gail won’t give society very much time to fumble around. She might also think that their dependence on supply chains for staples such as soy beans is a weakness.

    The best way to locate these videos:
    Go to
    http://www.youtube.com/user/newculture/videos
    In the search box, enter Albert Bates. A half dozen videos will pop up. Look for VAL2011–Life At the Farm. Click on the longer video first (which is on the right side of your screen) The second half of the talk is just to the left of it.

    Don Stewart

  7. quote from above: part of the energy for the business comes from the sun, and part of the energy comes from the labor of the entrepreneur. The calories the entrepreneur eats provide energy for his labor.
    No, ALL of the energy comes from the sun, because the entrepreneur gets his energy that way too, whether through food intake, or the tools needed to do the work

    • Dear Medieval Future
      I would usually say that ‘the energy of the entrepreneur comes from the sun via the food the entrepreneur eats’. But I have learned to suspect that absolute statements such as ‘ALL energy comes from the sun’ hide more than they reveal.

      I will now reveal my small knowledge and vast ignorance of physics. Energy was liberated by the Big Bang. Whether it existed before the Big Bang and just changed into a different form is something a cosmologist might have an opinion about–but I don’t. Some of the energy that was liberated by the Big Bang now resides in the sun, but not all of it. Some of it resided in long dead stars which exploded and sent elemental chemicals out into the universe and some of those chemicals form our bodies. Those chemicals are, I believe, embedded energy because they have a structure.

      Some of the energy liberated by the Big Bang is now known as Gravity. So, the sun lifts water vapor high up on a hillside where it falls as rain. Evolution has seen fit to put trees and a myriad of supporting plants and animals and microbes up on that ridge, so that the water percolates into the ground and flows slowly down hill under the influence of gravity. If I am farming in the valley below, and I understand the rudiments of Permaculture, then I can manage that flow of water to my advantage. Is the water the embedded energy of the Sun, the Big Bang, or some mysterious thing called Human Knowledge and Effort? As a practical matter, it makes little difference. Science is about relationships. And if I have some understanding of the relationships, then I am more likely to thrive.

      We could likewise take a look at nuclear power plants. The plant was constructed using energy pretty directly derived from the sun (including the food the humans ate), but the elemental atomic forces which are being harnessed were liberated in the Big Bang (with some help from Gravity to keep the whole thing tethered to the Earth). I believe that the uranium ore was created essentially by Gravity–which built the Earth and propels its geological energy.

      In short, it makes more sense to me to be clear about the relationships involved, and not worry too much about absolute statements.

      I am sure lots of people reading this will find grievous errors in my explanation. But I stand by my basic observation of paying attention to relationships and less statements of absolutes.

      Don Stewart

    • Sure as hell hope we don’t have a medieval future, at least not without bringing things like Coca-Cola, aspirin and morphine along with us.

      The sun spews forth electromagnetic energy some of which penetrates the earth’s atmosphere, gives form to the atmosphere, flows through the cogs of life, animates the fluids and gases and then flows outward again in a less energetic form. All life forms, being dissipative structures, must acquire energy, and their forms, by necessity, must evolve to capture their share of that energy. Every thought and movement of a heterotrophic organism is a continuation of the flow of sunlight coming into the atmosphere and passing back out again in a degraded form as heat.

      Interesting research by a couple of climatologists suggests the wet-bulb temperature, especially near the equator will become intolerable for human life. The flow of heat from the human body is curtailed. The convection and radiation to the surrounding air will no longer adequately remove heat from the 98.6F human body.

      http://www.democraticunderground.com/112710966

      Too bad they’re receiving death threats. However, the human animated representatives of that flow of solar energy are programmed to seek the release of dopamine in their brains. Very few have brains that relish intellectual development. Instead, simple pleasurable stimuli and thoughts are on their menu and reality can be dispatched like the make-believe villain on a T.V. wrestler smack-down.

    • Indirectly, you are right, mostly. I suppose if the entrepreneur were using nuclear energy, it wouldn’t be coming from the sun, it would be coming from the use of radiation. If it came from hydroelectric, gravity would play a role in the availability of the energy. Not quite all energy comes from the sun.

          • As just one more example of the ability of forces which are not solar to do critical work. Clay particles are electrically charged. Which means that they can attract certain nutrients and retain them in the soil rather than let the rain leach them into the sea. And good garden soil will be coated by a thin film of water (which I understand is mostly a result of surface tension). In that thin film of water exist a whole zoo of tiny creatures. With both the electric charge on clay and the surface tension retaining water, the stage is set for the cornucopia of life and death in the plant root zone and the making available of essential nutrients to the plant.

            Clay is not a solar product to my knowledge. I think it is made by geological forces which are a function of gravity compacting the earth from space fragments. Electrical charge is not a solar product. Surface tension is not a solar product. Good soil structure is dependent on solar energy because the small creatures who create the soil are dependent on solar energy. It takes all of it to make anything work.

            I doubt that humans could exist on this planet if any one of the non-solar forces were missing: clay with its electrical charge, surface tension and water, and the principle of natural selection which creates the zoo of small critters.

            A decent low-fossil fuel plan will make maximum use of all of the resources.

            Don Stewart

            • Dave Montgomery talks about the sub-soil in general being made from the weathering of bedrock. Different kind of rock give different types of soil.

              Trees seem not to mind clay.

      • Dear Gail and Down To The Last Cookie
        This may sound like quibbling, but as we have less fossil fuel and nuclear energy available to us, we need to get more precise in our thinking about where the energy is coming from.

        The sun causes water to evaporate out of the leaves in the tree. What force replaces the water with water from the ground? It is surface tension–which I don’t think has anything to do with the sun. So enormous weights of water are being lifted against gravity by surface tension. Neither gravity nor surface tension are in our minds when we glibly say that ‘the sun is almost entirely responsible for our energy’.

        Let’s look at dissipating too much energy. A hurricane or severe thunderstorm is violently shaking a tree. The leaves of the tree have distinctive patterns of movement which dissipate some of the energy and make the tree less likely to topple over. The trunks of many trees are also flexible and bend and dissipate excess energy. These dissipative maneuvers are mechanical–they are not driven by the sun. One of the problems with wind turbines is that we tend to make them out of inflexible materials which have trouble shedding excess energy.

        Now let’s suppose we are designing a Permaculture habitat friendly to humans. We will want to make full use of solar energy, water surface tension, gravity, and the dissipative effects of shelter belts of trees. I submit that those tools don’t fit very easily under the title ‘solar energy’.

        Don Stewart

  8. Dear Medieval Future and James
    I sat down to read a little more of The Forest Unseen and ran across what is perhaps a good illustration of my point. The author, concluding his year of observation in the old growth forest, states that ‘Death is the soil’s main supplier of food’.

    Let’s unpack that statement a little. A plant devotes around 20 percent of the energy that it makes by photosynthesis to the production of sugars (carbohydrates) which it sends to the roots and then out into the soil. The ‘purpose’ is to attract microbes who feed on the sugar. The microbes then attract those who prey on the sugar seeking microbes. Who attract yet more predators. Until there is an enormous amount of biological activity around the roots. We can call it Life, or we can call it Death. In any event, the death of an individual makes available to the plant the minerals that were part of the prey’s body. A plant dropped into sterile soil would not be able to absorb the minerals as well and would not thrive.

    Does the plant ‘know’ that it needs to divert 20 percent of its production into attracting microbes? Well…its embedded in the genes. Some writers call what is written in the genes an ‘enormous source of energy’. The author of The Forest Unseen might say that ‘Death is an enormous source of energy’. Both statements give us a vivid impression of what is happening.

    How did plants ‘learn’ to set aside some sugar for the microbes? Through natural selection, obviously. Why are humans so much dumber than plants (in that we refuse to set aside anything in our pursuit of dopamine)? Perhaps it is because humans alone have been able (in the last few years) to pursue dopamine without adequate molding by natural selection. (During the very early ages of life on earth, the bacteria were also able to pursue ‘gratification’ seemingly without limit, and then it all crashed.)

    So perhaps the story on humans is that:
    * we have in common with other living things the pursuit of chemical rewards
    * we have not been subjected to severe pruning by natural selection for a long time
    * we have a highly developed intellect, which has not succeeded in changing our behavior decisively
    * we will meet the same fate as the early bacteria

    In short, it is more important to use vivid language which conveys to the listener the linkages than it is to debate the nouns we want to apply to something. Nature abhors nouns.

    Don Stewart

  9. Figure 4 is pretty misleading, as it is almost a lock that the US will produce well in excess of 6 million bbl per day of oil for 2012. Probably 6.2 or even higher. Look at the monthly data for 2012.

    It’s also a bit misleading in that the US has changed it’s oil consumption quite a bit from the 70s. A lot of oil-for-natural gas switching has occurred in the 40 years intervening years, and personal cars are quite a bit more fuel efficient.

    North America will almost surely be “energy independent” in 10 years. It will still import oil, but less than it does today, and this will be balanced against higher exports of coal and other energy goods (refined products, liquified natural gas, etc).

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