Elusive Alternatives.

At the end of the last post I said the ongoing economic crisis is really an energy crisis masquerading as an economic one.  By talking about empire as a manifestation of the Maximum Power Principle I merely wanted to connect fundamental bio-physical realities to grand scale human behavior.  From this point it's possible to generalize about all sorts of other grand scale human projects based on this underlying logic.  If humanity is going to address the global crises of energy, environment, and economy in a decent and civilized manner, this is a good place to start, because it all comes down to taming our appetites for consumption, status, and expansion.  Our appetites start at this level.

The most important feature to remember about the American led global system of exchange and power (political) relations is that it must grow, materially and nominally as represented by GDP numbers, and enters a crisis phase when the growth slows or stops.  The global economy is in a crisis now because it has essentially stopped growing and has even started to shrink.  Economists, policy makers, politicians, and other creatures of the market are flummoxed about it.  No one has publicly aired the view that maybe the jig is up on economic growth.  The different economies around the world have tried various strategies to revive the patient, but none are successful and only make the problem worse. 

There is a fundamental reason for this.  Economists see their discipline as distinct and independent of other fields of study.  This might be because they see it simply as a field of study as opposed to a representation of a distinct reality.  A physical scientist, on the other hand, who looks into the place of the economy in a broader spectrum would see it as a system nested within larger systems.  So the economy is nested within society which is in turn nested within the biosphere.  A smaller system cannot grow to be bigger than the system which encompasses on.  The space all life occupies is a thin layer of favorable conditions on the surface of the planet which operates according to it's own laws.  This fact is not accounted for in the discipline of economics even though it is the biggest system relevant to human economic life.

The effect of this is that economics cannot explain in it's own terms what is causing the economic crisis.  Having said that, it can still describe what is happening.  So it's very useful to understand what is happening in the economy as it is a manifestation of the underlying energy crisis.  Because the Earth can cough up only so much fossil fuel, the cost of that fuel goes up.  Eventually it will be infinitely expensive.  The trick is to find alternatives to replace fossil fuels.  The problem is that the signal sent by the market seems to be that there is no replacement that will keep this system going. 

This is evident in the failure of alternatives like solar and wind to find a lift-off point of investment.  The only way it ever gets done, like in Germany, is through very large government subsidies.  Even so, the market still does not give the signal that a revolution in energy sources is at hand.  Why that is the case is a long story, but the alternative energy market, with the historically enormous incentives of cheap credit and high oil prices, doesn't gain traction without subsidies.  The way I read this is that the future will be smaller, less energetic, and more expensive.  Not a recipe for economic growth. 

This is the essence of the energy crisis impact on the economy.  We are forced to change fuels but our means to do it (the market system) doesn't want to go there.  The market will not pick these alternative sources because they cannot replace fossil fuels.  We, as a human society, will have to adapt to the limitations of these other fuels.  And that means accepting a reduced capacity to do the work fossil fuels do for us.  The only question is by how much.


Now for some headlines. 

Further disincentives for alternative energy.

Which will whipsaw energy prices at some point.

The only ones who can afford electric cars.

Running out of capital.