Paper Notes | Economics for the future – Beyond the superorganism

by @NJHagens

Holistic take on economics, energy, ecosystems, finance, society and much more. I.e.:

"Realize that everything connects to everything else."
― Leonardo da Vinci.

2/60 Abstract:

"At global scales, the emergent result of this combination is a mindless, energy hungry, CO2 emitting Superorganism. Under this dynamic we are now behaviorally 'growth constrained' and will use any means possible to avoid facing this reality."
3/60 And now following more or less the entire paper which I obviously recommend reading "cover to cover".

TL;DR, here are the 4 most important charts. I do not agree with everything and spoiler alert from the paper's conclusion: we need to completely restructure our societies.
4/60 1. Overview

"If the global economy continues to grow at about 3.0% per year, we will consume as much energy and materials in the next ~30 years as we did cumulatively in the past 10,000."
5/60 "In 2019, we are beyond a piecemeal listing of what's wrong. A coherent description of the global economy requires a systems view: describing the parts, the processes, how the parts and processes interact, and what these interactions imply about future possibilities."
6/60 2. Introduction

"Global warming" and the subsequent rise of human civilization 11,000 years ago.
7/60 The discovery of fossil fuels in the 19th century, the great acceleration in the 20th century and reaching limits in the 21th century.
8/60 3. Human behavior

"Our brains and behaviors are products of what worked in our past. We don't consciously go through life maximizing biological fitness, but instead act as 'adaptation executors' seeking to replicate the daily emotional states of our successful ancestors."
9/60 3.3. Cognitive biases

"We didn't evolve to have a veridical view of our world (Mark et al., 2010). We think in words and images disconnected from physical reality. This imagined reality commonly seems more real than science, logic and common sense."
10/60 3.5. Cooperation and group behavior

"We are primed to cooperate with our in-group whether that is a small business, large corporation, or even a nation-state - to obtain monetary (or in earlier times, physical) surplus. 𝘔𝘦 𝘰𝘷𝘦𝘳 𝘜𝘴, 𝘜𝘴 𝘰𝘷𝘦𝘳 𝘛𝘩𝘦𝘮."
11/60 3.6.1. Cultural evolution

"What took place in the early 1500s was truly exceptional Two cultural experiments, running in isolation for millennia, at last came face to face. Amazingly, after all that time, each could recognize the other's institutions."
12/60 3.6.2. Ultrasociality and the Superorganism

"As humans, we are phenotypically primates, but behaviorally we're more akin to the social insects."

"Superorganism: a collection of agents which can act in concert to produce phenomena governed by the collective."
13/60 3.7. Human behavior – summary

""𝘞𝘩𝘰 𝘸𝘦 𝘢𝘳𝘦" as a species is highly relevant to issues of ecological overshoot, sustainability and our related cultural responses."
14/60 4. Energy

Orthodox economic theory, institutions and citizenry are energy blind. "This disconnect has massive implications for our future."
15/60 4.1. Energy in nature

"𝘌𝘯𝘦𝘳𝘨𝘺 𝘪𝘴 𝘢𝘯𝘥 𝘢𝘭𝘸𝘢𝘺𝘴 𝘸𝘪𝘭𝘭 𝘣𝘦 𝘵𝘩𝘦 𝘤𝘶𝘳𝘳𝘦𝘯𝘤𝘺 𝘰𝘧 𝘭𝘪𝘧𝘦."
16/60 4.3. Energy benefits

"Major transitions in human societies over history were linked to the benefits from different energy types and availability."

"Simple arithmetic reveals it takes over 11 years of human labor to do the same work potential in a barrel of oil."
17/60 "Although modern industrial output is energy inefficient it is extremely cost efficient because fossil energy is much cheaper than human energy."

"Modern Americans - via their energy subsidy - now have the physical metabolism of 30+ ton primates."
18/60 4.4. Energy scale

"Our economy is powered by 110 billion barrels of oil equivalents of fossil hydrocarbons a year."

"At 4.5 years per barrel, this equates to the labor equivalent of more than 500 billion human workers (compared to ~4 billion actual human workers)."
19/60 4.5. Energy substitutability

"For instance, there are hundreds of medium and high heat industrial processes using fossil fuels that have no current (or even under development) alternative using low- carbon technology."

I disagree here, c.f. links at the end.
20/60 4.6. Energy primacy

"Energy is so fundamental, that its availability sets the physical limits to our social scale."

"Averaged annually over decades, the correlation between energy and GDP remained a tightly linked 99.4%."
21/60 "Heterodox theories linking productivity to energy were cast aside in favor of other less limiting descriptions of human economic prosperity."
22/60 "Mainstream economics attribute all economic productivity to labor and capital, and therefore assumes the economic importance of energy equals its cost share."

"Rather than being an insignificant factor in productivity 𝘦𝘯𝘦𝘳𝘨𝘺 𝘪𝘴 𝘵𝘩𝘦 𝘮𝘢𝘫𝘰𝘳 𝘧𝘢𝘤𝘵𝘰𝘳."
23/60 4.7. Energy and technology

Two general types of technology:

"Type 1 technology finds ways to use energy more efficiently or invents new energy sources. Type 2 technology consists of devices that replace manual human labor or new ways for humans to use energy."
24/60 4.8. Energy Depletion

"We are drawing down this carbon battery 10-million times faster than it was charged. Estimates of remaining oil and natural gas vary widely, but the cheap high quality oil, at scale, has largely been found and exploited."
25/60 "One is left with the false impression that technology has triumphed depletion making oil abundant and therefore not a risk to future growth. However, reality is more accurately depicted in the right panel: non-shale oil sources are shown to be in permanent decline."
26/60 "The International Energy Agency asserts that with no new drilling, world oil production would be cut in half by 2025 and to only 15% of today's output by 2040."
27/60 "Energy's cost share of our economy, after five centuries of decline, reached a low in 1999 and has been increasing since."
28/60 4.9. Energetic remoteness

"Our natural subsidy of concentrated ores is declining along with the natural subsidy of fossil hydrocarbons. We don't face 'the end' of oil, copper and water, but we do face increasing effort and cost to extract these resources."
29/60 "The total energy used to process copper ore and overburden is shown in red. Lower quality ore grades require increased energy (and water), leading to less copper expected to be available in the coming decade at the same time demand for copper is increasing."
30/60 "We use around two calories of fossil fuel to grow one food calorie in our modern agricultural system - but we use 8-12 additional fossil calories to process, package, deliver, store and cook modern food."
31/60 4.10 Energy and money

"Society runs on energy and materials, but most people think it runs on money."

"𝘔𝘰𝘯𝘦𝘺 𝘪𝘴 𝘢 𝘤𝘭𝘢𝘪𝘮 𝘰𝘯 𝘦𝘯𝘦𝘳𝘨𝘺 𝘺𝘦𝘵 𝘪𝘵𝘴 𝘤𝘳𝘦𝘢𝘵𝘪𝘰𝘯 𝘪𝘴 𝘯𝘰𝘵 𝘵𝘦𝘵𝘩𝘦𝘳𝘦𝘥 𝘵𝘰 𝘦𝘯𝘦𝘳𝘨𝘺 𝘢𝘷𝘢𝘪𝘭𝘢𝘣𝘪𝘭𝘪𝘵𝘺 𝘰𝘳 𝘤𝘰𝘴𝘵."
32/60 4.11. Energy and debt

"Since money is a claim on energy, then debt is a claim on future energy."
33/60 Debt pulls resource consumption forward in time.
34/60 4.12. Energy and well-being

"Despite the pervasive belief that more money and energy makes us happier, evidence suggests this is mostly not true. After basic needs are met, additional energy use yields a slower growth of the HDI."
35/60 4.13. "Externalities'" and energy

"Society may remain energy blind, but we are rapidly becoming aware of the negative consequences of the global human enterprise. Negative impacts for humans include: [long list]."
36/60 4.14.1 Energy – summary

"We've papered over already visible declines in energy growth rates and resource quality by using credit in breathtaking volumes. Modern economic theory ignores or minimizes most of these points, as do our institutions, policies and plans."
37/60 4.14.2 Energy – summary

(same screenshot as above.)

"In the future, the scale, quality, and cost of energy will dictate what sort of human systems are possible. We remain energy blind."
38/60 5. Synthesis

"The green line represents sustainable flow levels available to humanity. The red line represents the one-time pulse of non-renewable natural resource inputs to human economies. The black line represents financial markers of the underlying primary capital."
39/60 "Between B and C we hit an energy crisis in the 1970s, which we 'solved' by debt, globalization and outsourcing to the cheapest areas of production. These changes allowed economic growth to continue until it hit a wall with conventional finance in 2008."
40/60 5.2. The Superorganism: blind, hungry and in charge

"Today, most modern humans - as individuals - follow something like the following 3 simple rules:"

"Economic growth can only experience 'absolute decoupling' if we increase GDP while decreasing primary energy consumption. Relative decoupling occurs when total primary energy grows but at a smaller rate than GDP."

No relative nor absolute decoupling so far.
42/60 "Currently, no one is driving this societal bus, neither billionaires, politicians, nor a secret cabal. We are all caught up in the global growth imperative, which is immune from self-criticism."
43/60 6.2. Climate change - the metabolism of the superorganism

"Because of the direct linkage of human economies to 'fire' and fire to carbon, climate change and ocean acidification are - and will likely remain - directly linked to the metabolism of human economies."
44/60 6.4. Renewables

"Carbon emissions and economic activity can be "decoupled" if we increase non-fossil energy production faster than energy consumption growth (essentially: faster than economic growth). But that's not happening globally."
45/60 "If we remain at 17 TW, whether carbon intensive or carbon neutral, we’ll still need ~1 kg of minerals and materials for every $2 of global GDP."
46/60 6.5.1. Credit and financialization

"Although we currently witness emotional signals that injustice, wealth inequality, and climate change, are real and urgent issues, there appears to be little awareness of constraints concerning energy and finance."

"𝘛𝘩𝘦 𝘦𝘯𝘦𝘳𝘨𝘺/𝘤𝘳𝘦𝘥𝘪𝘵/𝘨𝘳𝘰𝘸𝘵𝘩 𝘥𝘺𝘯𝘢𝘮𝘪𝘤 𝘪𝘴 𝘵𝘩𝘦 𝘭𝘦𝘢𝘴𝘵 𝘶𝘯𝘥𝘦𝘳𝘴𝘵𝘰𝘰𝘥 𝘣𝘶𝘵 𝘮𝘰𝘴𝘵 𝘪𝘮𝘱𝘵. 𝘱𝘩𝘦𝘯𝘰𝘮𝘦𝘯𝘰𝘯 𝘥𝘳𝘪𝘷𝘪𝘯𝘨 𝘵𝘩𝘦 𝘤𝘶𝘳𝘳𝘦𝘯𝘵 𝘨𝘭𝘰𝘣𝘢𝘭 𝘦𝘤𝘰𝘯𝘰𝘮𝘪𝘤 𝘢𝘯𝘥 𝘦𝘤𝘰𝘭𝘰𝘨𝘪𝘤𝘢𝘭 𝘴𝘪𝘵𝘶𝘢𝘵𝘪𝘰𝘯.
48/60 "China created about $55 trillion in credit to maintain their current consumption. When growth stops – which is inevitable – there are trillions of dollars of unsupportable loans in China alone – versus $800 billion in the Global Financial Crisis in 2008/9."
49/60 "We increasingly hear about the risks that climate change has on insurance and financial futures. What the CFTC commissioner didn't say is that finance poses a financial risk to the stability of the system."
50/60 "Recall that debt is a lien on energy. If we are ever to honor our current debts, the amount of energy required will be immense. If the energy is not available, at cheap prices, those debts will never be repaid."
51/60 7. The great simplification

Kicking the can down the road and reaching for the stars.
52/60 "Under this analysis, a reduction of GDP in advanced economies is now likely: 1) when we can no longer access consumption via adding credit, and 2) with a shift towards lower quality and more costly energy and resources."
53/60 8. Social traps

"Both denial and nihilism help the mind remove dissonance and thus emotionally absolve a person from working to make (uncomfortable) changes that might improve our chances."
54/60 9. Discussion 9.1. What next? Predictions for the superorganism

"We can't precisely predict the future, but we can increasingly be confident of what won't happen:"
55/60 "To avoid paying the societal debt bill we've amassed over past decades, we tend to keep kicking the can forward. With the backdrop of the Superorganism we might make some predictions:"
56/60 9.2. Cultural evolution and the superorganism
Growth imperative accentuated by:

a) Creating currency not tethered to physical resources
b) not creating the 'interest' due when money is created
c) increasingly using methods of finance to solve problems created by finance.
57/60 "Understanding that humans in large numbers predictably self-organize by following simple energy scaling tropisms gives us a chance to visualize and prepare for what is likely to happen."
58/60 "There is a recent trend in environmental media asserting climate change is the primary systemic risk faced by civilization. One of the points of this paper is to suggest that climate change is one symptom of a much larger dysfunction."
59/60 10. Conclusion

"It is likely that, in the not-too-distant future, the size, complexity, and 'burn rate' of our civilization will be much reduced by forces other than human volition. This paper suggests that we will not plan for this outcome – but we could react to it."
60/60 "Can we use science to guide us from mildly clever to moderately wise? What sort of economics will help us ask, research and inform these questions?"
See also his recent webinar for a short version of it:
Why I'm a little more optimistic than the paper, the potential of this:
And this:

(see also subsequent tweet in that thread.)
You can follow @gordonschuecker.
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