Friday, November 9, 2007

Innovation v. Entropy

Energy consumption and economic growth are very highly correlated. This may be common sense, but you will be surprised how many people (professionals included) take energy for granted, dealing with it as just another input factor. The chart below starts in 1980, but the correlation goes back centuries.

Data: IMF, BP

Humanity exploded in numbers and achievement after the Steam Age. Was it because we suddenly became smarter? Of course not - all that happened was coal. A bit later the rate accelerated further because of crude oil. Dense energy subsidies freed us from the drudgery of localized subsistence farming and improved hygeine. Free time and longer lifespans allowed humanity to innovate at a record pace: means and need came together in a virtuous cycle. Boom. That's all; the rest is commentary.

The corollary: We need to find more oil and gas plus the ability to neutralize the greenhouse gas emissions. If we don't, we need to come up with other dense forms of energy. If we don't, we will necessarily slow down our activity (i.e. economy) to the rate at which we can transform dilute solar energy into useful work. The limits of this process are bound by the Second Law of Thermodynamics, a law that is so universal and basic in nature that it even defines the arrow of time. Without dense energy, we can't innovate our way out of entropy.

They should teach Thermodynamics to all economists. Actually, they should make Thermodynamics mandatory for all college degrees. Too bad Adam Smith died a century before Clausius and Carnot discovered entropy. He was a brilliant man and would have sharply constrained the Invisible Hand in his writings.


  1. Teaching Bioenergetics to undergrads is difficult enough - Thermo to economists!! Wow. I know you are serious, I share your opinion, and it should be done. I perform the obverse; Econ to biochemists. It's the only time I get real attention, and the questions the students ask me are both intelligent and informative. Makes one wonder.

    Brian Woods

  2. Re: reducing CO2 emissions

    I am currently working on a project to do just that. Long term, I think that you are right that we need to convert to renewable, clean and natural electric generation. However, in a capitalist system, someone (or group of someones) will need to calculate that they will make a reasonable profit from its activity.

    The alternative is that more taxes would have to be levied to build these systems to maximize efficient use of these new technologies. One negative consequence of our increasing public debt is that lessens the capacity of our country to make such expenditures when needed. The barrier to entry becomes too high for private entities to take full advantage of such opportunities.

  3. There is a book, called, "More Heat than Light" which does look at the history of economics in relation to physics, especially thermodynamics. I can't remember very much about it, but I think that it implied that there was an intellectual link between the development of thermodynamics and the development of economics, but the author felt that the economists hadn't done a very good job.


  4. YES, YES, YES.

    As the human body needs to eat to sustain locally low entropy, as the ecosystem need's the sun's rays to do the same, so we need to burn oil to sustain our civilisation. I'm glad someone else has noticed this. A proper theory would revolutionise economics. I have the physics but not the understanding of econ (yet) to make a contribution here.

    Mind you, classical thermodynamics is an equilibrium system study (much like econ). Non-equilibrium thermo is more recent (Prigogine etc) and is still less well understood.

  5. our increasing public debt is that lessens the capacity of our country to make such expenditures

    Why does it have to be 'our' country? The Japanese or the Chinese should take it on.

  6. There is a great book from
    Nicholas Georgescu-Roegen titled
    "The Entropy Law and the Economic Process". He was very much ahead of his time and in death, remains an unrecognized genius of economics.

  7. The time for nuclear power has arrived this time for good.

    Take a look at France, they derive 70-80% of their electricity from it.
    No way around it at this stage imo.

  8. As Amory Lovins has so adepted pointed out many years ago . . . as it regards the kind of energy used and its (in)efficiency, the key is end use.

    If energy, whether fossil fuel based or some form of alternative ('soft') energy (or some combination of both), the end use is still the overriding concern. If the aim in use of soft energy (as opposed to hard: fossil fuels,etc.) is to maintain existing 'standards of living' with accompanying urban sprawl, current transportation systems, a glut of useless things based on the cultural creation of false needs, etc., then the end result will be essentially the same: entropy.

  9. I do not agree. I think your understanding of laws of thermodynamics is limited to non-living world, and you do not take the living world into account.

    Consider a small village in some Asian country with 200 people. They perform agriculture, grow animals, eat, sleep and live happily. You see - the system is sustainable without ANY external energy input other than sunlight. Living ecosystems can create order out of disorder with solely the energy input from the sun. If you ignore that property of the living world, laws of thermodynamics will continue to confuse you. Human brain is part of the living system, and property of creating order out of disorder has already been taken care of.

    If external sources of energy are added to the ecosystem, it can grow faster than it has been. That is what we have seen over last 200 years during the industrial revolution. If that external source of energy suddenly goes away, the additional growth in the ecosystem may collapse. However, that external source of energy is NOT a precondition for growth. The eco, or rather human subsystem, can grow by innovation. There is no conflict with any laws of thermodynamics.

  10. Free time and longer lifespans allowed humanity to innovate at a record pace: means and need came together in a virtuous cycle.

    I see your problem. Your world of 'humanity' is limited to Europe and USA, and civilization probably started after Columbus met King Fardinand, or James Watt finished his cooking :). There was an advanced civilization in India, China and Persia for a while.

  11. Love the site. Ditto the previous comments on the economist Nicholas Georgescu-Rogen. I read this book back in the 1980's and it opened my eyes to the large and looming disconnect between physical & energy systems and man-made economies. The best way I can explain this disconnect is to say that evenetually we will find that when ignited, a 1$ dollar bill will give off the exact same btu's of energy as igniting a $500 dollar bill.

  12. Ummm....

    Looks to me that GDP growth leads energy consumption and they seem to have diverged over the last couple of years.

    I would think if GDP were energy constrained we'd see consumption lead GDP, not the other way around.

  13. Society is not a machine; application of mechanistic and in this case a-historic
    notions becomes no more than an excuse
    for another technological 'fix', which was after all just what Kyodo was about.

    Since correlation is not causation, it is trivial to say that economic growth and energy consumption are highly correlated without being able to explain why such correlation exists, an explanation which can't be provided without taking account of the rise of capitalism and its defining social relation of production and reproduction. Otherwise we are left in the fantasy land of 'technology will save us' from our own creation, from those relations that we have so fully internalized as to be perfectly unconscious of hence unable to effectively change.

    Neoclassical economics with its abject dependence on axioms of methodological individualism, instrumentalism and equilibriation was/is demonstrably a failure though it has performed superbly as status quo justifying ideology, especially when 'status quo' is understood to be an historically delimited system based not on production for use, not on production for need, but on a contradiction driven system of profit maximization and accumulation both of which depend upon exploitation of man and nature.

    More specifically, 'the steam age' did not cause industrial capitalism but was caused by it, caused by its inherently expansive drive to produce more with less, to compete not for competition's sake but the appropriation of profit, itself rising from the transformation of labor into a commodity, labor power, the exploitation of which is the source of unpaid labor, surplus value...everything else is merely distribution and redistribution or, if you like, simple looting.

    The entire 20th century stands as testament to how patently absurd it is to believe that a social metabolic system such as this can/will consciously repair its humanity and nature degrading self. Solutions will only be adopted and generalized to the extent they provide sufficient, i.e. avg/above avg, rate of profit so tend to negate themselves as solutions...or to the extent such now taken for granted social relations are overthrown. (Both chaos and complexity theory are interesting but deny or severly minimize human agency).

  14. The economists notion that we can innovate our way around the end of abundant, cheap found energy is about to be tested. Considering that their optimistic views arose within the context of civilization with abundant energy, I think their conclusions will prove terribly wrong.

    FYI, my educational background is BS in Mechanical Engineering, and BA in Economics.

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