Energy and Complex Systems

In the last post I made a partial case for visible, measurable signs of diminishing returns on economic activity as an effect of rising energy costs.  The rising cost of energy is an effect of rising costs of getting that energy, which reduces the return on investments and reduces the overall affordable energy available to the system.  I used the example of oil because it is the most important source of energy and what happens with oil reverberates throughout the entire system.  The greatest and most fundamental expression of the impact of rising oil costs is seen in the debt load of the global economy.

I pay attention to, and try to understand, what happens in the economy because it is through the economy that we will experience this loss of available energy.  Energy very closely resembles God;  it is inside, outside, and moves through everything, without it nothing can be done, it has bafflingly mysterious properties, and it follows it's own laws and imposes them on others.  The amount and the quality of it's blessing determines to a large extent how rich our lives can be.  The land of milk and honey is a land rich in available energy and societal prosperity is determined by how much energy can be harvested and how wisely it is used.  It is both useful and enlightening to view the economy as an energy system within and dependent on a larger energy system.

You could call this a natural view of the economy.  Energy represents the furthest reducible form the study of systems can take, whether it's a natural system or a human system.  The laws of energy determine the parameters and the form of a system. If you apply this to the history of economic systems all sorts of insights are revealed.  For example, the industrial revolution is commonly characterized as a technological revolution, as a leap in human understanding of the laws of nature which enabled humans to use machines to further economic prosperity.  This is more or less accurate.  There is no question that human ingenuity accomplished this part of it.  But it is still only part of the story.  An economist would say that advances in Enlightenment Age economic thinkers like Adam Smith and David Ricardo spurred the march of progress.  Still accurate, but insufficient.  Call it a second order factor.   For a fuller, more complete explanation, from a systems perspective the Industrial Revolution was primarily an energy revolution.

Modern Economics was born out of the same societal milieu as was the Industrial Revolution.  At the time of Adam Smith's "Wealth of Nations" the nascent industrial revolution had just begun.  Smith described what would become the mainstay of industrial processes like the division of labor and the efficiencies that were gained from it, but the machine element preceded it slightly and sprang from the energy revolution. 

The idea of the machine had been around a long time before the industrial revolution.  Leonardo da Vinci created designs for machines.  The Romans had what you could call "industrial" scale pottery factories, but these early machines and techniques relied on some combination of wind, water, human, and animal power, and heat energy came mostly from wood and peat.  What characterizes the industrial revolution, and the reason I think it is (mis?)characterized as a "revolution" and not as an "evolution", is the energy density of coal compared to that of wind, water, peat, or wood and the other sources that came before.  It was only through the introduction of coal energy to do work by way of machines did the real industrial revolution as we've come to understand it take off.  The reason is simple:  The energy density of coal provided a sufficient surplus of energy to enable a long and bountiful quest for efficiencies that in turn translated into capital.  Capital is surplus money.  Capitalism then can be understood as having spawned from a surplus of available energy beginning in the late 18th century. 

It's important to trace the beginning of the modern era to that of energy surplus.  The modern era is defined by the abundance of material well being and the power at our disposal.  We marvel (and shudder) at the lives led by our ancestors who farmed, labored, and traveled in ways we have little patience for today.  It was a difficult life compared to ours because the amount of work done was accomplished by less energy dense means.  A human does one/tenth the labor of a horse.  A horse does a hundredth of the amount of work of a small tractor.  Because of this tractor, fewer humans are needed to produce food and they can merrily leave the farm and go to the city, where there is a job as a factory worker, or as a novelist chronicling the crappy lives of factory workers, or, ultimately, as a Deputy Assistant Regional Manager for Personal Finance Products waiting for them.  This is the point at which societal complexity enters the room.

The number and array of job titles is a good measure of the complexity of a human system.  Complexity is seen in the number of different roles people can have, and in the number of institutional components and strata the system supports.  A hunter/gatherer society is simple because you can count all the occupations in the name.  Hunting and gathering lifestyles do not afford much, if any, surplus, and surplus is undesirable because there is nothing to do with it beyond gaining weight or enticing a mate.  In today's world, the U.S government serves as an excellent and much talked about example of a complex human system.  An orders of magnitude larger system is the global economy.  This is the single largest system ever constructed in human history.  The evolution of this system is indeed an evolution, but it's evolution has been fed by an increase in the amount of energy available to it on average about two percent every year for two centuries now.  The two percent increase in annual energy input into the system accounts for the increase in it's complexity.  For reasons I've already mentioned, it now suffers from diminishing returns and faces a reduced flow of energy into it.

Viewing the Industrial Revolution as an energy revolution adds a necessary perspective.  It allows a deeper appreciation for the ways nature bounds us and our choices.  This is not a squishy-headed assertion.  Mother Nature isn't always a sweet, nurturing caregiver.  She can just as easily put us over her knee and give us a good whoopin'.  What's more, she wouldn't even feel guilty about it.

Further information on this subject, and a source of some of my information and thinking about it is found in the video below.  Nate Hagens is a wonderfully broad thinker and endeavors to make a single omni-inclusive one hour powerpoint presentation some day.  He fails here and goes 1:10:00 roughly.  The questions at the end go twenty more minutes but it's not necessary to listen.

For a general systems perspective a good podcast interview with David Korowicz from Feasta (pr. fasta) works well.  Korowicz is a physicist and studies human systems.  In this he talks about how systems can collapse and uses various real-world crises to illustrate.  He is interviewed by Tom O'Brien from From Alpha to Omega.

http://fromalpha2omega.podomatic.com/entry/2012-04-17T16_29_23-07_00