What Would it Take to Get to a Steady State Economy?

Humans live in equilibrium with other species in a finite world. In such a world, there is never really a Steady State. Instead, there is a constant ebb and flow.  For a while, one species may be dominant in an area, and then another. If populations are closely matched in “ability,” then the ups and downs aren’t too severe. If a predator depends on a particular type of prey for its dinner, it can’t eat all of the prey, or it will go hungry.

When the populations of various species are graphed, they rise and fall.  We usually think of a close match, such as depicted in this graph:

Figure 1. Volterra_Lotka equations used to illustrate situation where population of predators and prey do not vary over too wide a range.Source: Wikipedia.

In fact, the variability of the many species over time tends to be greater than this, as illustrated by the following model that started with 80 baboons and 40 cheetahs:

Figure 2. Lotka-Volterra equations used to illustrate situation that begins with 80 baboons and 40 cheetahs. Source: Wikipedia

If species evolve together, a natural balance tends to remain in place. If a species suddenly finds a new, better source of nourishment (really, energy supply, since food supplies energy), its population may increase greatly. For example, yeast may metabolize the sugar in grape juice, converting it to alcohol. The yeast population temporarily rises and then declines, as the food source disappears and alcohol pollution poisons the yeast. Or bacteria may multiply rapidly inside the human body under certain circumstances (including  adequate nutrients and a compromised immune system).

An example is sometimes given of reindeer introduced to St. Matthews Island near Alaska, where there was considerable lichen on the rock. The reindeer ate the lichen at a speed faster than the lichen could reproduce. Soon the lichen was gone, and the reindeer population crashed.

Figure 3. Assumed population of St. Matthew Reindeer herd, with actual counts given. Based on research of David R. Klein of University of Alaska.

The reindeer example is similar to a very severe predator-prey curve. The reindeer ate a renewable resource faster than it could reproduce. There were a few other food sources a reindeer could eat, so a few reindeer remained, but there was a very sharp drop in the number of reindeer.

The population of humans has ramped up greatly in recent times:

Figure 4. World population based on data from “Atlas of World History,” McEvedy and Jones, Penguin Reference Books, 1978 and Wikipedia-World Population.

The most recent growth coincides with the addition of fossil fuels to the energy supplies used by humans, starting about 1800. If we look back, we see though that human population has been ramping up for a very long period. Humans discovered how to control fire over 1,000,000 years ago. Since 75,000 BCE, there has been fairly consistent population growth, if we look at the data on a log/log graph.

Figure 5. Log/log graph of human population growth, with energy sources giving rise to this growth.

The initial growth of human population occurred with the discovery of how to burn biomass, and how to use it for such purposes as cooking, keeping warm, honing stone tools to a sharper edge, and scaring predator animals away. All of these uses allowed ancestors of modern man to spread over a wider area of the globe, while at the same time wiping out many species of animals, as humans spread to new areas. Biologist and paleontologist Niles Eldridge says that Phase One of the Sixth Mass Extinction began when the first modern humans began to disperse to different parts of the world about 100,000 years ago. Phase Two began about 10,000 years ago when humans turned to agriculture. Even at these early stages, energy use by humans allowed human population to grow at the expense of the population of predator species.

There was a lull in human world population growth between 1 CE and 800 CE (Figure 5). In this period, there were many local collapses, so growth in one area tended to offset collapse in another area. When these collapses happened, they generally looked financial in nature, according to the research of Peter Turchin and Surgey Nefedov in Secular Cycles. Populations had found a new resource that allowed them to have more food supply–for example, they cleared land of trees so that it could be farmed or learned to use irrigation.

But over time, population grew and caught up with available resources. At the same time, the resources started degrading. The soil started eroding, or became less fertile, and or salt built up from irrigation. Wages of the common worker dropped, and it was hard for them to get adequate nourishment. Epidemics became common. The general shape of these collapses was approximately as follows:

Figure 6. Shape of typical Secular Cycle, based on work of Peter Turkin and Sergey Nefedov.

So even in the Year 1 CE to Year 800 CE period, there was not a Steady State. Instead, there was a combination of overshoot and collapse type waves of the types seen with other species in different parts of the globe, which together averaged out to relatively flat world population growth.

Angus Maddison analyzed GDP growth in the 1 CE to 1000CE period. He concluded that the per capita GDP was slightly lower at the end of the period (453) than at the beginning of the period (476). He doesn’t give amounts at the Year 800. But assuming that the change was fairly representative, the period 1CE to 800CE or 1 CE to 1000CE was close to a Steady State economy (with lots of collapses), considering the lack of both population growth and GDP growth per capita.

In more recent times, humans were able to add more energy sources (including peat moss, windmills, and water mills). They also developed better ocean-going ships that allowed them to make colonies, and spread agriculture further, and demand that these colonies extract resources to support the home country. Also, with a more globalized world, agriculture could be improved through a wider choice of domesticated plants and animals, by introducing species from other parts of the world.

Since 1800, the growth in fossil fuels has helped ramp up both population and standards of living.

Figure 7. Per capita world energy consumption, calculated by dividing world energy consumption (based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects together with BP Statistical Data for 1965 and subsequent) by population estimates, based on Angus Maddison data.

What Are Humans’ Options for Living in a Steady State Economy?

I am not sure there are many good choices:

1. If we went back to the period before the ancestors of humans discovered fire, about 100,000 to 200,000 of us could live in the warm areas of the world, eating raw food, and living much as chimpanzees and baboons do today, based on populations of those primates today. The population of humans under such a scenario would fluctuate upward and downward, perhaps as in Figure 1.

Because of the availability of cooked foods for many years, the bodies of humans have adapted to the improvement in diet. It is not clear that our teeth and internal organs could handle a purely raw-food diet, unless we happened to live in a part of the world where a soft diet (berries, fish and worms) was available. The areas where humans could live would also need to be warm, so our lack of fur would not be a problem. To meet these criteria, the population might need to be even lower than 100,000 to 200,000.

2. Having no humans at all is by definition a Steady State. I am doubtful that most people would consider this an acceptable Steady State, however.

3. If we did not have globalization and stopped adding energy supplies, we might continue to have local collapses, as in the 1CE to 800CE or 1000CE period. In this way, we could approximate a Steady State. Of course, now with globalization, a problem in one part of the world quickly spreads to other parts of the world.

4. If we want 7 billion people to be able to continue to live, we will need some basic level of energy supplies for these 7 billion people. If we assume that as a minimum, people today will need at least the 1820 level of energy consumption (based on Figure 7), we will need total energy consumption of at least 22 gigajoules per capita. This would amount to about 7% of the current energy consumption of the United States. It would not be enough to perform what we now consider basic functions such as maintaining roads, electrical systems, water systems, and sewer systems, so would be a major step down for US residents.

At the 1820 level of energy consumption, we would still need to continue a portion of fossil fuel consumption, since there are now so many of us that biofuels would no longer suffice (Figure 7–read across at 1820 level). Also, renewables, including today’s modern hydroelectric and solar panels are made and transported with fossil fuels, so in order to have what we now consider renewables, we would need to continue to have some fossil fuel use. Also, electricity from wind and solar PV needs to be backed up with natural gas electricity generation.

In addition to needing energy to maintain a population of 7 billion people, we would also need a way to

(a) keep population down, and

(b) keep people from using available energy supplies (beyond the 22 gigajoules per capita allotted), to improve their lifestyles.

The way we often hear proposed for keeping population down is more education of women together with availability of birth control measures. Unfortunately, this approach is energy dependent. Unless considerable external energy is available, women will have to work in the fields to produce food.  This will give them little time for education or the jobs that education would provide.

There are some cultures that have been able to keep population down by less energy-dependent means. For example, China uses strict governmental controls. Cultural and religious practices may also be used, such as delayed marriage and long breastfeeding. In some cases, abortion or infanticide may be used.

Keeping people from using available energy supplies to improve their lifestyles is even trickier. Some central authority can dictate that the US will use only 7% of the energy the population used in the past, meaning that everyone has to give up nearly everything. But enforcing this will be a real trick, unless energy supplies really are constrained.

There seems to be a common belief that cutting down on personal transportation fuel would have a big impact on total energy consumption. In the US, gasoline amounts to about 44% of US oil consumption. If we eliminated all gasoline consumption (even that by police, ambulances, and sales people), it would only reduce US energy consumption  (all types, not just oil) by 16%. On a worldwide basis, much less oil is used for personal transportation, so eliminating all oil for personal transportation would likely reduce world energy consumption by something like 10% to 12%.

Is There a Reason for Aiming for a Steady State Economy?

At this point, we seem to be headed for collapse, because the number of humans is so far out of line with the population of other species. There are many other limits we are reaching as well, including the cost of oil extraction, the availability of fresh water, and the amount of pollution (including CO2 pollution). Also, governments are in increasingly poor financial condition, because when there are not enough resources to go around, governments tend to “come up short”. They can’t collect enough taxes relative to the benefits they pay out and all of the government programs they administer.

The only way a Steady State would make sense would be if there were some level of Steady State that humans could fall back to, instead of collapse. Unfortunately, it is hard to see a good place to fall back to. The only period during which human population was relatively constant was the period 1 CE to 800 CE, when frequent collapses kept population down. It is difficult to see any point at which humans have not increased population, or increased resource use, if resources were available, except when frequent civilization collapses overwhelmed the system.

If our civilization does collapse to a lower level, but not all the way back to zero, it seems likely that humans will again repeat the pattern they have experienced, over and over. They will again increase population and resource use, if resources are available. This pattern seems to be an instinct for all species, which is why it is virtually impossible to eliminate. Humans will then again collapse back to a more sustainable level.

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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441 Responses to What Would it Take to Get to a Steady State Economy?

1. Christopher Johnson says:

Revenge of the Rich

A noteworthy article in Bloomberg / Businessweek this fine 23rd Day of May: “The Powerful People Arguing for U.S.-China Free Trade” . Thank you Henry KIssinger and friends.

Who really profited from ‘free trade’ over the last few decades? The poor and middle classes in the rich world certainly didn’t: they lost their jobs in manufacturing, administrative services and just about everything else other than banking, accounting, schoolteaching and governing. So that’s what we’re left with… The poor abroad (say, China), got a tad richer but have only started to earn a livelier salary just in time to have worked themselves out of a job, since they’re not migrating to cheaper locales.

Ah, but the rich at home and abroad did quite well: investing in new factories, financing trade, earning royalties and executive fees. So of course Henry the K and his buddies want more trade with China. And they will promise that the impeccably honest Chinese businessmen will live up to their obligations and commitments 100 and 10 percent of the time. Yes sir, this is a good deal!

• xabier says:

Christopher

Yes, exactly: it destroyed everything except the essentially parasitic sectors of society, destroying the productive. An excellent deal for some, as you rightly point out.

2. Age of Limits Conference Coverage Notice

The Doomstead Diner will be reporting Daily from The Age of Limits Conference with Podcast Interviews, Video and Pics from the Conference provided by one of the Diners going to the Conference. I will have an Intro Article up tonight on the Diner detailing our coverage plans.

Gail, you might want to drop this information into a new thread here on OFW, since this is buried pretty far down the comment list in this one.

• Scott says:

Yes, interesting stuff there on The Doomstead Diner – I saw a couple of good articles there, especially this one by James Howard Kunstler, I wonder if Gail has met him they seem to agree on many subjects. His writings and stories are interesting.

• I know JHK reasonably well–have met him several times at conferences. We correspond from time to time.

• Scott says:

Hello Gail, I had a feeling you knew JHK, He has a way of making peak oil almost entertaining and frightening at the same time with those wonderful stories of his. I have followed him for a long time and I tend to agree with you both. You present things in a more technical way and he kind has own style in story telling to get his message out. I like to look at this both ways.

3. Vazzellin says:

Hi Gail,
FYI
Oil Export Slump Slashes Russia’s Q1 Foreign Trade Surplus

• Christopher Johnson says:

That’s very interesting, Vazzellin. In an earlier article, Gail provided minimum petroleum sales prices that various countries required to break even while meeting the country’s budgetary requirements. I believe Russia’s was in the range of \$140 /BBL, one of the highest.

• Scott says:

Chris,
On Russia Oil Exports, I wonder if that is because decline in production due to depletion or the slump in Europe?

• Christopher Johnson says:

Hi Scott:

I’ve read in various places, such as The Economist (which can be recommended for weekly consumption), and certainly here in Gail’s articles, that some countries use their oil revenues to support all the government programs, salaries, etc. Gail’s article earlier this year, “How Oil Exporters Reach Financial Collapse” weaves together all the problems very coherently. A few years ago nobody would have believed it; not they do. And it’s not merely a matter of running out of oil, its the continuing squeeze on production and higher costs.

Rather than try to collect income and other taxes from people and organizations that resist and have developed effective ways of avoiding / evading taxes, they just use the national oil company as their piggy bank. The only trouble is that when oil prices are low, they piggy bank is less full. Not only Russia, but also the Persian Gulf states do this.

The biggest impact of the US oil production increases (via fracking and other means) is the effect it has on lowering global oil prices by a few dollars per barrel. Suddenly somebody’s government is broke; it can be Russia, Saudi, Venezuela, Indonesia or several others. Russia is now in pain.

• Scott says:

Thanks Chris, That was a good explanation of the financial aspects of oil in countries like Russia and Saudi. I still wonder about the depletion of those larger fields in Saudi that pumping since the late 1950’s, I think we read they are now 60 percent depleted. Sounds like these countries have built themselves a bad business model that is not sustainable in the long run. Sure they had many good years with their riches in oil but it appears this will not end well for them. I know many of these place like Saudi even subsidize the price of fuel and foods using these revenues too. People got used to paying a certain price that was really like half of what it should cost they will get upset when they have to pay full price or if like in Saudi if the government payments stop.

Aside for the financial aspects – I also believe that eventually, due to depletion, these major field they have relied on will decline and so everything along with it and could bring about unrest in many of these places. Looks like their best times are behind them in the past now.

• Christopher Johnson says:

Most informed observers would probably agree with you. Notwithstanding, there are plenty of people who believe that we will never run out of oil, but might have to drill a little bit deeper. The Atlantic monthly had a very good article about this last month that you can read online. Also, the interesting thing about ‘Peak Oil’ is that so far all the estimates have proved wrong: drillers just keep discovering more and more oil. It’s kind of Malthusian — we never run out of food, we just keep adding more fertilizer and depleting the soil so that nutritional value drops to near zip.

The very interesting thing that Gail has brought into focus is the complex interaction between various segments of the economy. I don’t know that anybody else has really tried to do this. It’s an undertaking worthy of numerous volumes.

Mind you, I’m not convinced that we have entered the state of collapse. At the same time, due to the continuing severe economic tightening, we would do well to prepare for a difficult future.

Cheers, Chris

• Scott says:

Hello Chris, Yes, I agree, I do not see collapse just yet, well not here anyway in the US. Although it would not take much to trigger it financially if rates suddenly rise significantly or some other black swan event like war or a financial event.

The people in Spain are having a very tough time is sounds from Xabier’s comments. It could spread our way after it goes through Europe. The Arab world does look very unstable to me and surrounding countries.

But in the USA for now things look semi stable here. I think the key word is “looks stable” although they may not really be stable. If we do not have any trouble this could muddle along for years just like it is. In recent years I have noticed that things are not always what they appear to be when it comes to reports on mainstream media about the economy and state of things.

I do agree the best years are behind us for eating clean foods and cheap energy and clean water and all of those important things. The future will surely be harder.

Best Regards,
Scott

• Christopher Johnson says:

Cheers, Chris

• Scott says:

Thanks Chris, I know I have brought up some difficult and bold subjects for discussion. Tonight, I was looking at a movie made from the old book which I have not yet read – Atlas Shrugged: Part I – It seems to portray some of the events we have been discussing and wanted to put this out there to group to look at, I looked at the trailer tonight but have read the book seen the movie yet, but I think I may check this out if anyone has any comments on this we can discuss.
http://en.wikipedia.org/wiki/Atlas_Shrugged:_Part_I

• Scott says:

Chris, This even looks more interesting than part one-
Atlas Shrugged Part II Trailer

• Thanks!

I am wondering if the problem with Russian Oil Exports is that oil available for export is down at the same time that prices are flat. This might happen if oil used internally is rising at the same time that oil production is barely increasing. I notice this article says, “Russia posted 0.3 percent increase in oil extraction, 0.8% drop in gas production in Jan-April.

Russia is increasingly finding itself with only high-cost oil resources to extract. At the same time, its finances are stretched, making it hard to make huge investments in unconventional oil (Polar, shale oil, bitumen, etc.) I should probably look into this more.

4. Don Stewart says:

To Gail and Others
The consensus seems to be that Edo Japan has nothing to say to us. It’s a waste of time to even look at it.

http://www.newyorker.com/talk/2013/05/20/130520ta_talk_kolbert

Graham Hill has founded and later sold two companies for a total of 20 million dollars. For his personal dwelling in New York City, he has liberally stolen ideas from Edo. You might call it ‘Edo for the 21st century’.

Asby Brown’s book describes a complete society which was sustainable. Graham Hill is not creating a sustainable New York City, but he is dramatically reducing his own footprint.

Don Stewart

• Christopher Johnson says:

Don,
I apologize that my reception of the ‘Edo model’ was less than forthcoming. It does have some features that are not just admirable in the general sense, but probably very useful in a ‘post collapse’ scenario. Most of us, for good or ill, will have a great deal of difficulty accepting iron laws dictated by a strongman such as Hideyoshi. Nor could Americans easily accept the social strictures that dominated feudal-era Japan.
Having said all that, might it be possible to include the ‘harmony with nature’ mentality into the training and social direction that could be developed at the grass roots level.
Or was that your intention from the outset?

• Don Stewart says:

Dear Christopher
I begin with the new book by Douglas Hofstadter and Emmanuel Sander, Surfaces ancd Essences: Analogy As the Fuel and Fire of Thinking.

Computers make analogies badly or not at all. Humans make analogies easily and rapidly. That is why human thought is valuable and ‘computer thought’ is worthless.

So…if we are to ‘think’ about a sustainable society, then we need something to anchor us. Something we can visualize and then make analogies to our own situation. So far as I am aware, the best description of a relatively recent society which solved the sustainability puzzle while also being innovative and with an increasing standard of living and population was Edo Japan as described by Azby Brown.

You seem intent on characterizing it as a very top down model. I see it as a village model. I think Brown describes a village model. If we broadly agree that a single individual cannot survive and be ‘sustainable’, then something like a village model seems to be required. To be sure, there is a ‘top down’ aspect: the village doesn’t have the option of cutting down all the trees or polluting the water which flows downhill to a neighboring village. These requirements are endorced ‘top down’. There are also other restrictions such as limited choice of vocation…but nobody said we have to copy everything. First, you have to read Brown’s book to understand what he is describing. Many people are simply unwilling to read it, and so cannot benefit from any analogies which might suggest themselves.

If you examine the New York City apartment and the farmhouses and merchant and artisan houses of Edo, you will find many similarities. The Edo people were forced (by the Island they had defined for themselves) to be sustainable and evolutionary selection honed their daily practices and the design of their dwellings. The Manhattan apartment sets out to reduce the ecological footprint, and many of the same practices and designs are chosen as were used in Edo. Edo evolved through necessity…the Manhattan apartment largely through choice. We can learn from both.

I encourage you to think using analogies…Don Stewart

• Scott says:

Hello Don, I like the village model, it is the most pleasant and works well and feels like home, Local and done near by and with family and neighbors you know. But it will not work for most of the world that has 8 billion people unfortunately where most do not even know their neighbors. I guess that means that someday after many of us are gone the villages will re-emerge and horses and animals again in the streets.

• Don Stewart says:

Dear Scott
So…let’s all stop just repeating the slogan that ‘it won’t work for 7 or 9 or 12 billion people’ or ‘it won’t work in New York City’ and get serious for a change. The Brown book makes the case that the village model can support a pretty large and prosperous population with the only fuel being surplus firewood and the only food what can be grown in a mostly mountainous land. The Manhattan apartment makes the case that living with a small footprint can be fun. Granted…most people won’t understand either point.

Probably most people will simply perish because they aren’t able to think seriously. That’s Nature’s Way. But if you and I aspire to survive and thrive, then there is food for thought in both stories. Any actions we take are likely to spring from analogies we make from these and similar stories. To survive, we need both good analogies adapted to our own conditions, plus action to turn those analogies into reality, and also the luck of the draw.

Don Stewart