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Building Upon the Trophic Theory of Money: Preliminary Results from Canada

Published by Anonymous (not verified) on Thu, 25/06/2020 - 12:18am in

By James Magnus-Johnston

The human economy doesn’t just mimic the economy of nature; it is part of it. It is woven directly into the ecological system of producers and consumers. Due to the technological prowess of Homo sapiens, though, the human presence dominates, threatening other species and the life support system of the planet. Human dominance over non-human life leads us to acknowledge some uncomfortable truths, particularly for proponents of “green growth.”

The first pertains to the loss of biodiversity. As the human economy grows, biodiversity must be sacrificed. The economy grows from the “bottom up,” starting with the agricultural and extractive activity that displaces non-human species. This is the essence of what Brian Czech calls the “trophic theory of money.”

 



In this anchored clip, Brian Czech defines the trophic theory of money in a 2018 presentation to the Royal Society of New South Wales.

 

The trophic theory of money changes the way we think about pathways toward a greener, sustainable society. For example, it makes us think twice about strategies for “green growth,” including the following two:

  1. Using sectors like tech and tourism to shift away from farming and extraction (“dematerialization”).
  2. Investing in a renewable energy strategy that shifts the economy away from fossil fuels.

While both strategies have merit, it’s important to consider the systemic material implications of each strategy: How does each relate to the agro/extractive base of the economy and biodiversity loss? What are their rebound effects?

An alternative warrant for a greener society would be to use the trophic theory of money as an overarching design constraint. Instead of attempting to “dematerialize” GDP, we can instead work toward social wellbeing at an appropriately scaled, non-growing GDP. We can, in other words, opt for a steady state economy at some relatively optimal level. Before we can expect widespread acceptance of this option, however, we’ll probably need wider-spread knowledge of trophic principles.

What is the “Trophic Structure” of the Economy?

It takes producers and production to support consumers and consumption. In any ecosystem, from local to planetary, primary consumers (like voles and rabbits) require producers (like grasses and forbs), while secondary consumers (like shrews and weasels) require primary consumers (like voles and rabbits). For an ecosystem to be sufficiently developed to host tertiary consumers (like bobcats and eagles), there must be plenty of production, primary consumption, and secondary consumption “below.”

Trophic theory of money

The trophic structure of the economy consists of producers, manufacturing sectors, and services. The corresponding trophic theory of money is that “money originates via the agricultural surplus that frees the hands for the division of labor unto manufacturing and service sectors.” In other words, the real economy is reflected by flows of real (inflation-adjusted) money.

These “trophic levels”—producers, primary consumers, secondary consumers, etc.—comprise the “trophic structure” of nature. “Trophic” simply refers to the flow of energy and material, or the “low-entropy flow” described by Herman Daly. Each time biomass (plant material or animal flesh) is consumed for the growth or maintenance of the consumer, waste is co-produced and energy is lost as heat. The certainty of waste follows from the second law of thermodynamics (that is, the entropy law).

In the human economy, manufacturing sectors build upon the agricultural and extractive base. Service sectors are not as readily assigned to particular levels in the trophic structure. Some service sectors—tourism for example—are best modeled as high trophic levels. Tourism doesn’t literally “serve” other sectors, but rather comprises a high level of consumption allowed for by surplus production starting at the trophic base. Other service sectors, though, are more appropriately modeled as interwoven throughout all trophic levels. For example, the transportation sector serves virtually all other sectors ranging from agricultural and extractive all the way through the manufacturing sectors and up to tourism and entertainment sectors.

Why is this trophic structure consequential? Because the clearly “material” sectors (agriculture, extraction, and manufacturing) are inseparable from the “immaterial” sectors (i.e., services such as insurance and finance). In fact, the material and immaterial sectors are mutually dependent, and ultimately the primary dependence is upon the agricultural and extractive sectors. Manufacturing and services would not exist without the agricultural and extractive base; more manufacturing and services require more agricultural and extractive surplus.

The money-material correlation might be less evident in national economies where services predominate, but that doesn’t mean the trophic dynamics don’t exist. For example, a Swiss investor might be earning revenue from resource extraction in Mali. What appears as “immaterial” financial sector revenue in Swiss accounting still has a large material footprint in Mali.

As resources are exchanged up the trophic pyramid, value is created and revenue is produced. In this way, value (represented by real money) becomes a unit of pressure on the environment. Every time a trophic conversion happens, it produces waste (material waste and waste heat) as well as a stream of revenue. The trophic theory of money suggests that the generation and flow of real money—namely the flow of expenditure contributing to GDP—is concurrently, concomitantly a measure of economic output and environmental impact (including especially biodiversity loss).

As Czech has pointed out, inflation, technological progress, and international trade can warp the tight linkage between GDP and environmental impact. But, as we hope to demonstrate with further research results, these phenomena do not affect the underlying trophic structure of the economy, nor do they refute the trophic theory of money.

Initial Research: Money-Material Correlation in Canada

Almost fifteen years ago, without the benefit of numerous intervening studies, Herman Daly wrote, “ecological economics sees coupling [between income and environmental degradation] as by no means fixed, but not nearly as flexible as neoclassicals believe it to be—in other words, the ‘dematerialization’ of GNP and the ‘information economy’ will not save growth economics.”[i] I tested the idea in 2010 by comparing materials use with income (GDP) in the Canadian economy over a quarter-century. I found that the coupling of aggregate materials and aggregate inflation-adjusted income in Canada is indeed pretty tight. I called this coupling the “money-material correlation.”

        Money-Material Correlation in Canada, 1980-2006

Income flow

In the first phase of the study—the phase producing the figure above—I considered materials use (material flow or MFA); later I also considered the ecological footprint. I wanted a metric that would concretize the idea of material growth (that is, resource use), and MFA fit the bill. I also wanted to understand the general environmental impact of GDP growth, and looked to the ecological footprint for a general understanding. In both the MFA and ecological footprint studies, as one might expect, the correlation with GDP was tight.

My study was, in fact, a test of the trophic theory of money. The results were promising. That said, further testing is probably required before we can establish GDP as a widely accepted indicator of environmental impact.

Future Testing

The trophic theory of money would seem to set design constraints for the pursuit of a greener society, whether as a shift toward tech/tourism, or toward “green” energy. Pursuant to the trophic theory, the economy cannot be “dematerialized” by substituting agro-extractive activities with services like tourism or tech. While the notion of dematerialization has largely been debunked in ecological economics, it remains a popular idea in neoclassical economics and political circles. Further evidence corroborating the trophic theory of money could be the nail in the coffin for dematerialization and “green growth.”

The second argument to consider through the lens of trophic theory is whether or not energy sources are substitutable. The answer will have implications for where we should invest our time and money in the effort to build a better world. The trophic model helps us to recognize that the raw materials required for all energy systems need fossil energy: first to extract; and then to produce and maintain. Fossil energy, as explored in depth by Vaclav Smil and others, is not always substitutable. Fundamentally, whether referring to hydro, nuclear, solar, or wind, each of these energy sources requires oil and other raw materials to build and maintain, in addition to the metabolic and transportation needs of the human beings who design and maintain the systems.

Whether referring to economic sector substitution or energy substitution, the general design principle in operation here is similar: We must consider the metabolic needs of the system and the full spectrum of land and energy inputs. By evaluating the economy as a complete system, we can determine the raw inputs and fossil energy requirements of services or renewables in the trophic structure. More importantly, as resources “climb” up the trophic levels and material conversions take place, the resulting revenue streams are likely to signal biodiversity loss (and other aspects of environmental impact) as much as income gain.

To test the trophic theory of money, then, I intend to reproduce the money-material correlation in other jurisdictions with diverse economies and widespread agro-extractive activities, including China, the USA, and Russia. If there proves to be a strong link between GDP and various indicators of environmental impact under such differing models of political economy, it would be wise for us to include the trophic theory of money as a central feature of ecological macroeconomics, as well as economic policy for the 21st century.

[i] Daly, H. 2007. Ecological Economics and Sustainable Development. Edward Elgar Publishing, Cheltenham, U.K. See page 88.

James Magnus-Johnston headshotJames Magnus-Johnston is a PhD researcher at McGill University in the Leadership for the Ecozoic program.

The post Building Upon the Trophic Theory of Money: Preliminary Results from Canada appeared first on Center for the Advancement of the Steady State Economy.


Terrestrial and Solar Resources in a Steady State Economy

Published by Anonymous (not verified) on Fri, 12/06/2020 - 1:42am in

By Herman Daly

Let us consider a different slant on the current discussion about the necessity versus sufficiency of renewable energy for a steady state economy at the present physical scale.

Pursuant to the pioneering economics of Nicholas Georgescu-Roegen (G-R), we recognize two sources of the low-entropy flow that sustains our lives: the solar and the terrestrial. They differ in their pattern of scarcity. The solar energy source is practically infinite in its stock dimension, but finite and dispersed (yet abundant) in its flow rate of arrival to earth. The terrestrial source of low-entropy matter-energy consists of concentrated deposits of minerals in the earth’s crust, including fossil fuels which are ancient solar energy accumulated over billions of years.

 


“Low entropy” means highly concentrated, in the case of energy, and highly ordered in the case of materials. Low-entropy resources such as timber, steel, and refined oils are more valuable and useful than high-entropy resources such as sawdust, rusted metals, and crude oil. (Highest entropy is pollution or, more philosophically, physical chaos.) (Image: CC BY 3.0, Credit: Ibrahim Dincer and Yunus A. Cengel)

 

Terrestrial low entropy is limited in its stock dimension, but can be used up at a flow rate of our own choosing. We cannot mine the sun to use tomorrow’s solar energy today, we must wait for it to arrive tomorrow. We can, however, mine and use up today the accumulated solar energy of Paleolithic summers, and have chosen to use it rapidly, at least during the past two centuries. We have thereby become more dependent on the scarcer terrestrial source, rather than the abundant solar source, than we were in pre-industrial times. We prefer the terrestrial source because it is already here and already concentrated—and we are impatient to use it to grow. We, especially economists, think that thanks to growth the future will be richer than the present, and, therefore, the (growth-inflicted) costs of depletion and pollution will be easier to bear.

Solar energy is abundant and renewed every day. To capture its flow requires extended space covered by a “net” made out of highly structured materials. These structures wear out over time and need maintenance, as well as replacement, and of course require initial construction. These needs must be largely met out of our diminishing terrestrial stock of low-entropy matter-energy. Current sunlight and terrestrial material collectors are complementary factors. The one in short supply is therefore limiting. The limiting factor is terrestrial low-entropy, concentrated materials in the earth’s crust, including fossil fuels. To see how useless abundant solar energy would be without material structures capable of capturing it, one need only look at the barren moon, or Mars, etc.

Prudential Use of the Limiting Factor

The economic question then is, how best to use the limiting factor? We should focus our attention on how to allocate our scarce dowry of terrestrial low entropy. We have two general alternatives. We can consume it directly in building cruise ships, jetliners, rockets, and Cadillacs—or we can invest it in structures that tap into our more abundant solar source of low entropy. We collect solar energy in two basic ways. The first way is indirectly through the photosynthesis of plants in agriculture, forestry, ranching, hunting, fishing, etc. Other species concentrate, to our benefit, the solar energy captured in the process of photosynthesis. And we exploit their population growth, either by taking only a renewable yield or by extinguishing the entire population for our one-time greedy bonanza. The other way is by investing in direct solar collection by modern technologies such as photovoltaics (PV) and concentrating solar-thermal power (CSP).

Cadillac

Producing a Cadillac comes at the cost of future human lives. (Image: CC BY-SA 3.0 DE, Credit: M 93)

Our human lives require the conversion of incoming solar energy by photosynthesizing plants and thenceforth other species at lower trophic levels into food and fiber above their own maintenance requirements. Given sufficient bounty from these other species, we can then invest resources beyond our own mere maintenance. Investing terrestrial low entropy in a plow, for example, increases our ability to tap incoming sunlight for vital purposes. Investing in a Cadillac, on the other hand, is not a vital purpose but rather a luxury expenditure of our limiting factor. This led G-R to a rather dramatic conclusion: The upshot is clear. Every time we produce a Cadillac, we irrevocably destroy an amount of low entropy that could otherwise be used for producing a plow or a spade. In other words, every time we produce a Cadillac, we do it at the cost of decreasing the number of human lives in the future.”[i]

It seems that in spending our limiting factor we face a tradeoff. Spending it on present luxury has the opportunity cost of fewer lives in the future (fewer plows, less sunlight captured, less food, fewer people). Saving it for future plows has the opportunity cost of less luxury in the present. This basic tradeoff exists regardless of how efficient the solar collectors may be.

No Wealth But Life

John Ruskin

“There is no wealth but life. Life, including all its powers of love, of joy, and of admiration. That country is the richest which nourishes the greatest number of noble and happy human beings.” –John Ruskin
(Image: CC0 1.0, Credit: William Downey)

G-R’s argument was anticipated by Henry David Thoreau’s oft-quoted insight that “the cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.” Or as John Ruskin put it more succinctly, “There is no wealth but life.” Life requires current sunlight, and the most vital use of accumulated Paleozoic sunlight is to build or preserve material structures capable of increasing our ability to capture current sunlight.

The realization that the cost of present luxury is foregone future lives is dramatic and sobering. However, life with zero luxury at a mere basic subsistence may not offer much enjoyment, and reasonable people are certainly not willing to live that way. Yet extravagant luxury and gross inequality become less tolerable when the same reasonable people recognize the opportunity cost in terms of “good life” foregone. So, we are forced to ponder a big question posed by G-R: “Is it not true that mankind’s problem is to economize S (a stock) for as large an amount of life as possible, which implies to minimize sj (a flow) for some ‘good life’?”[ii]

Or, to put it more simply, should we not strive to maximize cumulative lives ever to be lived over time by depleting terrestrial low-entropy stocks at a rate that is low but sufficient for a “good life”? There is no point in maximizing years lived in misery, so the qualification “for a good life” is important.

I have always thought that G-R should have put that question in bold in the text rather than hiding it in a footnote. True enough, eventually the terrestrial stocks will be gone, even as the sun continues to shine. Mankind will revert to what G-R called “a berry-picking economy” until the sun burns out—if not driven to extinction sooner by some other event, as seems increasingly likely.[iii] But in the meantime, striving for a steady state with a rate of resource use sufficient for a good (not luxurious) life, and sustainable for a long (not infinite) future, seems to me a worthy goal. It’s a goal of maximizing the cumulative life satisfaction possible under finite and depleting terrestrial resource constraints.

Key Questions for Citizens and Policy Makers

G-R’s big question raises a number of others that get more pressing by the year as GDP pushes upward to the unsustainable brink:

  • How much resource use per capita is sufficient for a good life?
  • How do we ensure that everyone gets that amount?
  • How large a population can a viable technology support at that standard of consumption without excessively sacrificing carrying capacity and future life?
  • How much of the scarce terrestrial stock of low entropy can be economically invested in further tapping the abundant solar flow? In other words, do proposed direct solar technologies have an EROI greater than one?
  • Is indirect or direct collection of solar energy a more economic investment at the present margin (i.e., more reforestation and conservation of ecosystems, or more PV and CSP)?

These questions have not been central to modern growthist economics—indeed, not even peripheral! That is why steady-state economics puts them front and center, even into proposed legislation such as the Full and Sustainable Employment Act (pursuant to which the cabinet-level Commission on Economic Sustainability would grapple with such questions). In a steady state economy, technology is encouraged to increase the quality of life but not the quantity we know as GDP, the growth of which entails more population, consumption, and throughput of low-entropy resources.

The debate about net energy yields of direct solar capture is important, although difficult to resolve by calculation because of hard-to-define boundary conditions. Does the energy cost of a solar collector include the energy expended in mining the materials? Out of today’s mines or tomorrow’s depleted mines? In transporting the materials? Do we count the energy used to produce the products consumed by the miners? By the miners’ families? By the engineers who never set foot in the mine but design the process? By the teachers who trained the engineers and the miners? By the bankers and lawyers who finance the mine’s operation? Etc.

Yet the problem is resolvable by experiment, if not by calculation. Moreover, the experiment is also a very reasonable economic policy: Raise the price of the limiting factor by a stiff carbon severance tax (or preferably a strict cap-auction-trade system on carbon extraction) and redistribute the revenue progressively. Then, if a technology uses a greater integrated sum of fossil fuels (terrestrial low entropy) than it replaces or saves, it will be more expensive and selected against. If on the other hand it saves or replaces more than it uses it will be less expensive and selected for.

More efficient technologies for using terrestrial resources—including for the purpose of capturing the solar flow—increase the range of feasible answers to the tradeoffs identified by G-R’s analysis, but his fundamental questions are economic and ethical, and remain central regardless of technical efficiency. In policy, sequence matters: “limits first” induces “efficiency second.” Putting efficiency first makes limits less pressing and encourages continuing temporarily along the stupidly happy growth path to depletion, pollution, and collapse.

[i] Georgescu-Roegen, N. 1976. Energy and Economic Myths: Institutional and Analytical Economic Essays. Pergamon, New York. See page 59.

[ii] Georgescu-Roegen, N. 1975. Energy and economic myths. Southern Economic Journal 41:(3), 347-381. See in particular page 368.

[iii] Georgescu-Roegen, N. 2011. “Energy and economic myths.” From Bioeconomics to Degrowth: Georgescu-Roegen’s ‘New Economics’ in Eight Essays, Edited by M. Bonaiuti. Routledge, New York.

Herman DalyHerman Daly is CASSE Chief Economist, Professor Emeritus (University of Maryland), and past World Bank senior economist.

The post Terrestrial and Solar Resources in a Steady State Economy appeared first on Center for the Advancement of the Steady State Economy.


Crossroads for Planet of the Humans

By William Rees

 

[Editor’s Note: The Steady State Herald first published a review of Planet of the Humans on May 1. The following review adds valuable information to the dialog.]

“It stands to reason…”

Who hasn’t heard this expression in everyday conversation? Humans tend to think of themselves as rational beings, and many people sincerely believe they are being reasonable all the time.

However, human reason invariably operates in a straitjacket. Even the most elevated of human thought is constrained by life experience and the unquantifiable set of beliefs and values, as well as facts and assumptions, that every individual acquires by growing up in a particular cultural environment. Life experience determines a person’s perception of reality. Unsurprisingly, people are most comfortable when the universe unfolds in harmony with their culturally preset notion of how things ought to be.

Of course, in complex societies there are many potential versions of “truth” on any particular subject. “Reality”—or rather, our socially-constructed perception of reality—comes in many guises.

Herein lies potential chaos. It starts when a line of thought taken for granted by a group of people who share the same cultural narrative is disputed by another group who observe a different set of beliefs, values, and assumptions.

Renewable energy

Politicians, corporations, and big environmental NGOs claim that renewable energy can support the economy. Really? At what level and at what cost? (Image: CC0, Credit: Kenueone)

Consider the dilemma of modernity. Propelled by fossil fuels, our increasingly global techno-industrial (mainly capitalist) society has generated unprecedented material prosperity for hundreds of millions of people. This extraordinary progress leads us to believe an endless energy bounty will support the ten billion humans expected on the planet by mid- to late century. The catch is that this same success is already well on the way to depleting and polluting the seas, denuding the continents of forests, displacing the world’s wildlife, and triggering climate change.

This is not a problem according to the cultural mainstream. Radiating self-confidence and buoyed by unquestioned past material success, the political and corporate leadership seem confident that human ingenuity (our greatest resource) will prevail. They argue that we have already found economically viable renewable substitutes for fossil fuels such as biomass, wind turbines, and solar photo-voltaic arrays. These alternatives should enable economic growth to continue indefinitely, bringing the affluence needed to “fix” the ecosphere. The big environmental NGOs have climbed on board for pushing the techno-fix narrative, and most citizens are only too happy to go along for the business-as-usual ride.

Not everyone is jumping on the pro-growth bandwagon, however. A surge of scientists and citizens has written a competing narrative. This renegade group reasons that wind and solar technologies are quantitatively insufficient to power modern society, contribute to ecological destruction, and are heavily subsidized by fossil fuels and not really renewable. To them, the only reasonable “solution” to the ongoing climate and eco-catastrophe, difficult as it may be to achieve, is adapting to much lower levels of energy and material consumption, sharing existing income/wealth, and learning to live within the biophysical means of nature.

Michael Moore

Michael Moore and Jeff Gibbs challenge the notion of “green growth.” (Image: CC BY-SA 2.0, Nicolas Genin)

This new movement has been growing steadily and waiting to catch fire politically. While there has been a deepening discussion about the impacts of the economy on the environment, there has also been a significant lack of media coverage about it. That was, however, until a few weeks ago, when one documentary ignited the argument against economic growth: Planet of the Humans.

The Gibbs/Moore production has ignited a conflagration of competing worldviews unparalleled by any debate about alternative energy sources in the history of the environmental movement. As a human ecologist, I’ll admit up front that I am in the renegade camp, but I am not blinded to certain weaknesses in Gibbs’ take on our dilemma. This film contains many pros and cons when framing the conversation of environmental protection. Let’s explore what Planet provided.

The Underbelly of Environmental Organizations

Planet of the Humans does a great service in eroding faith in renewable energy, particularly the travesty of broad-scale biomass energy. It achieved less than it could in undermining wind and solar power. This is a shame since the loudest screams of “foul” come from wind/solar advocates, and there are plenty of recent analyses and data which the film could have drawn on to cut them off. It’s an ironic weakness, because the films critics are most adamant about how “dated” the wind/solar information is. Yes, it’s dated, but on both sides of the argument about whether wind/solar is capable of replacing fossil fuels at the current size of economy.

The film also succeeds in skewering several environmental organizations and popular heroes in the process. Though it’s difficult to watch the hypocrisy of environmental champions unveiled, investigating into these advocacy groups is important and necessary. For instance, Gibbs reveals the large and mainstream environmental organizations are highly dependent on the corporate sector for their financing, either directly or indirectly. This certainly compromises what they can say about the (corporate) values of society and helps to explain why so many environmental NGOs support capital-intensive (i.e., profit-oriented) approaches to energy supply and climate change—e.g., electric cars, solar photovoltaics, wind turbines, carbon capture and storage, etc. These organizations make us think they are saving the planet by introducing “green” tech; yet they are supporting—and enjoying the support of—the corporate giants that contribute to destroying the earth. Even the Green New Deal is a false-promise approach that suggests all we have to do is invest in techno-fixes to continue on our growth-bound path.

A Better Refute Against Renewables Replacing Fossil Fuels

As noted above, up-to-date data are important, and accurate data even more so. Planet of the Humans relies excessively on old research and off-the-cuff comments from interviewees. Gibbs/Moore could have better supported their case by referencing current issues with “green” technology, including extended net energy analysis from mine-shaft through operation, as well as the decommissioning of commercial wind turbine and solar installations.

Solar panels in Germany

Germany: Powered by renewables? (Image: CC BY-SA 3.0, Andrew Glaser)

However, Gibbs does bring a critical question to light: Are renewables effectively displacing fossil fuels?

Let’s look first at the case of Germany, a leader in green energy investment. According to Clean Energy Wire, while wind and solar make a significant contribution to German electricity production (21 percent and 8 percent respectively) these two sources supply a mere 5 percent of German primary energy consumption (3.5 percent and 1.5 percent, respectively). Biomass—largely green trees as Gibbs pointed out—supplies a full 7.6 percent. Meanwhile, fossil fuels still account for about 78 percent of primary consumption, and carbon emissions have been more or less plateaued for a decade. (Yes, carbon emissions did drop in Germany in 2019, by about 6 percent, but 2019 also marked a sharp slump in German GDP growth, especially in the industrial sector). All this despite hundreds of billions invested in wind and solar energy. Furthermore, keep in mind that wind and solar require full backup power, either domestic or imported. (Note this well: It is a common error to conflate electricity generated with total energy demand/consumption. The former is typically only about 20 percent of the latter.)

Then there’s the global picture to consider. According to BP Statistical Review of World Energy 2019, in 2018, fossil fuels supplied 11,743.6 Mtoe (million tonnes of oil equivalent) or 85 percent of the world’s primary energy, while non-hydro renewables (mostly commercial biomass, wind, and solar) contributed only 561.3 Mtoe (4 percent).

Are renewables catching up? While the contribution of non-hydro renewables to global primary consumption has expanded by 437 Mtoe since 2008 (16 percent per year), consumption of fossil fuels increased by about 1,750 Mtoe (about 1.5 percent/yr) in the same period. This marginal increase is over three times the total supplied by non-hydro renewables in 2018. This same year, consumption of non-hydro renewables increased by 71.1 Mtoe (14.5 percent), but fossil fuels were up by 276.3 Mtoe (2.4 percent).

Bottom line? Starting from a much larger base, the pre-pandemic annual absolute growth in fossil fuel production/consumption continues to outpace that of renewables, especially non-hydro-renewables, by a wide margin, despite the higher relative growth rate of renewables. Nothing suggests this will change while economic growth remains the goal, especially since new technology requires economic growth based on current levels of technology.

Bountiful Energy Could Do More Harm Than Good

Gibbs underplays (and the subsequent criticism I have seen entirely misses) a critical point: Even if renewables were “the answer”—i.e., even if our techno-industrial, capitalist growth succeeds in contriving any cheap, plentiful substitute for fossil fuels—it would be catastrophic. Without a sea change in expansionist values and our anthropocentric approach to the natural world, humans will simply use the energy bounty to complete their dismemberment of Earth. (Planet’s horrific sequences of stranded orangutans—their habitats destroyed for palm oil and sugar cane for “green energy”—is perhaps the most illustrative example of this potential destruction.)

In short, it’s really beside the point whether “100 percent renewable energy” is possible because any techno-fix would be disastrous given the prevailing cultural narrative and macroeconomic goals.

The Bottom Line

Planet of the Humans is far from inaccurate in undermining today’s overconfidence in renewables and mainstream environmental NGOs but is arguably a bit unfair to some individuals. Gibbs engages people on both sides of a complicated issue, selectively goring some. Wherever one stands on the issue of sustainable energy, though, Planet of the Humans is proving to be a deeply moving and motivating production.

And now there is a complicating—but possibly complementary—factor. The COVID-19 pandemic provides an unscheduled opportunity to rethink our energy and economic futures. The real planet of humans is at a crossroads: Pre-pandemic trends will not simply resume as if nothing had happened.

Homo sapiens is an allegedly rational species. Virtually everyone agrees that we must avoid an ecosystem collapse and reverse global warming. We also recognize that if civilization is to persist, we must have energy sources. So, what is the solution that balances these two issues?

CASSE’s push for the steady state economy is certainly one of the most rational answers to that question. It really ”stands to reason” that we need an economy that fits on the planet, using a reasonable amount of energy from renewable sources and with processes that don’t destroy our ecosystems. Reducing energy use to that reasonable amount surely entails real (not just political) degrowth. “Degrowth toward a steady state economy” summarizes the solution quite well.

William Rees is a human ecologist, ecological economist, Professor Emeritus, and former Director of the University of British Columbia’s School of Community and Regional Planning, best known for ecological footprint analysis.

The post Crossroads for <em>Planet of the Humans</em> appeared first on Center for the Advancement of the Steady State Economy.


Book Review: The Green New Deal and Beyond: Ending the Climate Emergency While We Still Can by Stan Cox

Published by Anonymous (not verified) on Sat, 16/05/2020 - 3:46am in

By Gerry Greaves
Stan Cox Book

The Green New Deal and Beyond: Ending the Climate Emergency While We Still Can
By Stan Cox
City Lights Books
$16.95

Achieving sustainable societies globally is likely to be a defining challenge of the 21st century. There is a growing realization that we must act to mitigate the climate crisis. There is also a growing understanding that social and economic injustice must be solved simultaneously. There are many ideas of how to achieve this, but none seems to have caught widespread attention as much as the Green New Deal. This resolution of the U.S. House of Representatives is not an action plan. It is more like a high-level set of guiding principles.

In his new book, The Green New Deal and Beyond, Stan Cox makes the case that even though the Green New Deal Resolution is broad, it doesn’t cover all environmental and economic issues. First, even though there is a focus on eliminating greenhouse gas emissions and developing renewable energy, there are no explicit means to eliminate fossil fuels. This is a serious shortcoming. A more serious shortcoming is that the Green New Deal encourages economic growth. Economic growth makes it far more difficult to eliminate greenhouse gas emissions and exacerbates a host of other environmental issues. A small but rapidly growing group of people think that economic growth must be halted or even reversed to achieve sustainable societies. This is not to say this is an end to progress. Instead progress will be measured by the ability of people to live healthier, happier, and more fulfilling lives.

The first half of the book provides a good overview of the economic and social justice progress made over the last 100 years or so. From the 1920s through the 1970s, great progress was made with the original New Deal, Social Security, workers’ rights, welfare, and the civil rights movement. However, starting in the 1980s progress slowed and then eroded. Today economic inequality is similar to what it was in the 1920s. The civil rights wins of the 1960s have proven to not be as successful as they seemed.

The second half of the book focuses on policies beyond the Green New Deal, such as eliminating fossil fuels. Dr. Cox proposes a system he calls “cap and ration” whereby greenhouse gas emissions are capped by issuing or auctioning permits. Over time the cap would be lowered to zero. The cap would be aggressive, forcing a reduction in total energy brought to market, increasing prices and resulting in the need for price controls. To manage a fair distribution of the reduced energy inputs, a rationing system would be required down to the individual household level. He describes a “Victory Plan” to administer this as follows:

Modeled in part on the civilian mobilization for World War II, the Victory Plan would be carried out by a broad array of agencies, including a Climate Mobilization Board, which would administer caps on fossil fuels and materials and oversee production goals. The Mobilization Board would be an analog of the War Production Board of the 1940s. Another agency from that era, the Office of Price Administration, would be revived under its original name to oversee price controls and rationing.

Overall, The Green New Deal and Beyond is well written and accessible. It includes almost 300 endnotes but unfortunately no index. The assessment of our environmental and economic challenges is spot on; so is his vision of a sustainable society as a steady state economy that uses less energy and other natural resources. On the other hand, his proposal for the transition from our consumerist society to a sustainable one is heavy-handed, overly complex, and too reliant on central planning. The only time large-scale central planning has worked well is for short-term civilian mobilizations for war. In his 2014 blog article, “Cold War Leftovers,” Herman Daly very succinctly addresses the issue of what should be planned and what should be left to the market. He wrote:

Steady-state economics deals with three problems: sustainable scale, just distribution, and efficient allocation. It takes the first two issues, scale, and distribution, away from the market. It calls for quantitative ecological limits on the throughput of resources so that the market can no longer determine the physical scale of the economy relative to the biosphere. It also advocates social limits to the range of income inequality, so that the market can no longer generate large inequalities of wealth. Subject to these two prior macro-level aggregate constraints, it then relies on the market to efficiently allocate resources.

Daly’s guidance seems wiser by the day, especially when we consider his further admonition to distinguish rival and excludable goods from those which are not, when identifying which goods are fit for market allocation.

fossil fuel

Dr. Cox’s Victory Plan would entail caps on fossil fuels and ration energy use down to the individual household level. (Image: CC BY-SA 3.0, Credit: Sebastian Schlüter)

So, where does this leave us? We have an ecological imperative to address climate change and a moral imperative to address economic inequality. Executing a transition to a sustainable society is, of course, an extremely difficult challenge. If done well, this can be a real human advancement; however, if botched, it can become an epic catastrophe.

While this transition is partly an engineering problem, it also involves climatology, politics, policy debates, ideological differences, economics, and power struggles. How do we find a path to sustainable societies, then? It may be helpful to look at how difficult problems have been addressed in the past. Often various ideas are proposed. They are criticized, tested, modified, debated, combined, and sometimes abandoned. The best ones survive. We need diverse ideas to come into the light of day where they can be debated and advanced, or abandoned. Time is short. We have only about a decade to get this right. Dr. Cox has offered some bold ideas. It’s up to the rest of us to read them and join the conversation.

Gerry GreavesGerry Greaves is a retired engineer and the CASSE Chapter Director for Upstate South Carolina.

The post Book Review: <em>The Green New Deal and Beyond: Ending the Climate Emergency While We Still Can</em> by Stan Cox appeared first on Center for the Advancement of the Steady State Economy.


Mineral wealth, Clive Palmer, and the corruption of Australian politics – The Conversation

Published by Anonymous (not verified) on Fri, 17/05/2019 - 10:43am in

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Warwick Smith, University of Melbourne

Clive Palmer is reportedly spending A$70 million of his own money on his party’s campaign.

How is it possible for one individual to command so much wealth and where did it come from? The sad and strange reality is that Australian governments gave him most of it by letting him dig up and sell natural resources that, by rights, belong to us not him.

We’ve a history of handing vast wealth to resource and mining magnates and companies and then watching them use that wealth to undermine our democracy in order to continue to get access to that wealth. Palmer is small fry compared to Gina Rinehart and Andrew Forrest or the corporate power of BHP, Rio Tinto and others.

So, what do state and federal governments charge for our mineral wealth? You would hope that they use state-of-the-art methods to get the best possible prices.
You’d be wrong, of course.

We barely charge for resources

The federal government relies primarily on company tax and then on extra tax from employment and consumer spending and other things that are boosted as an indirect result of mining.

But many of the big mining and resource companies use the holes in our tax system to avoid paying company tax. In addition, mining is being increasingly automated, with self-driving trucks and trains becoming the norm, and ever-larger machinery meaning that fewer workers are needed for each tonne extracted and refined. These days billions can be spent with relatively few jobs created.

State and territory governments collect royalties from land-based mining companies, which are charged per unit of product. It means that when the prices of our mineral resources go up during a commodity boom the royalties do not rise with them – the mining companies benefit, but not the people who own the resources.

How much we collect in taxes is just the beginning of the story.

We also spend vast amounts of taxpayer cash on building the infrastructure needed for resource extraction; things such as roads, railways and ports. We also often end up footing the bill to clean up after mines close and the big companies sell depleted mines and their clean-up obligations to shell companies that then file for bankruptcy.

We could (and should) seek more

We could fix the system to get a fairer price.

We already have a more effective tax system for offshore oil and gas. It is, in effect, what the Rudd government tried to do in 2010 when it proposed a mining super profits tax. Foolishly, the tax was announced more than a year before it was to come into effect, giving the mining interests plenty of time to campaign against it.

They spent more than A$22 million just on advertising. Rudd abandoned the original proposal and was removed from office.

The Gillard government consulted the miners and adopted a watered-down version – the Mineral Resource Rent Tax – that was so toothless it collected almost nothing. Even though it was worthless, the mining industry still saw it as enough of a threat to pressure Tony Abbott to kill it off when he took government, which he did with Clive Palmer’s vote in parliament.

But miners have muscle

A more radical idea would be to put out tenders for the extraction and refinement of natural resources and then have the government or an independent authority owned by the government allocate them. Such a “single desk” would have considerable market power – it could demand good payments.

The truth is that all of this has been public knowledge for a long time and the solutions are well known. The problem is politics, not knowledge. The mining industry is so powerful that our leaders rarely attempt to take it on.

Given that Palmer set the record for most absent politician in two out of the three years he was in the parliament last time, why is he so keen to go back? There’s no evidence that he’s a conviction politician, trying to make the country better based on some strongly held principles; quite the opposite given how regularly he has changed his positions.



Read more:
Now for the $55 million question: what does Clive Palmer actually want?

Could it be that what he really wants is political power in order to defend and increase the extent to which him and his mates rake in the cash at our expense?

In 2016 the government used it’s position as a creditor to seek the appointment of a special liquidator to look at the collapse of Palmer’s Queensland Nickel company and the actions of Palmer’s actions personally. The government’s Michaelia Cash said at that time it would use every power as it’s disposal to hold company officers to account.

On Thursday at the National Press Club Prime Minister Scott Morrison was asked how he intended to manage the conflict between pursuing Palmer in the courts and courting his vote in the Senate.

He replied that he would be able to.

We will continue to pursue that measure through the courts with full vigor – we are very confident in our ability to pursue that as we absolutely should

It is obvious that we need political donation reform to keep the influence of money out of politics but we need to go one step further and reform how we, the Australian people, sell our mineral resource wealth so that we don’t create mining giants like Palmer in the first place. He is just the tip of the iceberg.The Conversation

Warwick Smith, Research economist, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.