Posts Tagged ‘economy

09
Feb
16

Exergy and Economy

(This post is a reaction to “The Physics of Energy and the Economy” on “Our Finite World” by Gail Tverberg)

Dissipative systems use exergy, which might be just a nitpicking, but I think not: to use those words make the process of dissipation more palpable.

I see the economy as a net of pathways, consisting of production units (from big companies down to single crafts(wo)men), which works most effectively in a semi-stable environment, i.e. no big fast changes. Then, the units can develop routine and skill in their respective task and the net does not suffer high transaction losses. Parameters change all the time: some production units become more effective than others, the amount of work to get raw materials changes, sometimes to lower, sometimes to higher levels, demand structure changes, the terms of exchange (aka prices) change and so on. To a certain extent, the net can rearrange, its elements can learn new skills, so that the overall efficiency does not plunge.

I support here the Marxian notion, that the relative value of anything on the market is in the long run defined by the amount of human work put into it.

So, to be more precise in definition, a collapse of the economy can be seen as the net beeing ripped apart, which leaves some chains of production more or less intact, while others, neighbouring to the rip, “die from starvation”, so to say. The overall production falls to the level of what is delivered by the relatively intact part.

Now enter two characters on the stage: productivity gains by investment, which is investment of work of course, reflected by a money stream, and information loss about the environment, aka negentropy loss, or entropy increase. They are somehow distant relatives of one another.

Productivity gains by investment decrease more and more, reflecting the fact, that human needs stay – more or less – the same, while the production process is approaching the most effective way to fulfill those needs.

OTOH, negentropy loss places a growing strain on the production system. Lower and lower concentration levels of raw materials can be compensated for by higher and higher exergy use for their concentration. A bigger and bigger part of our yearly exergy budgets is directed to raw material extraction, while the exergy stream is itself beeing limited by external factors, most prominently global warming, and secondly the growing scarcety of high concentration exergy itself.

Can the economy deal with this strain? My answer is: yes, if, and only if, the changes, which are undoubtedly profound, don’t come at too fast a pace, and if the economy is made deliberately more resilient.

What is a resilient economy? One with a little bit less specialization and more general skills, one with sounder financing to prevent one mesh of the net cracking to initiate a rip across the system.

Advertisements



September 2017
M T W T F S S
« May    
 123
45678910
11121314151617
18192021222324
252627282930  

Blog Stats

  • 865 hits