New School of Thought for Economic and Energy Models

As the discussions over energy use and consumption world wide wages on, there is one thing we can all agree on. The amount of "conventional" energy, fossil fuel is limited and will one day run out.

The impact on economic systems world wide will be enormous. Countries hit hardest will no doubt be those most dependent on the use of fossil fuels to derive a majority of their energy  needs.

Common sense tells us that the world at large needs to find alternative methods to create energy. With the alternative energies alternative economic models need be developed as well.

Rational Nation USA, rather than editorializing on the right approach, is merely providing a source of information for its readership to consider. The following excerpts are taken from an Article in The New York Times entitled, New School of Thought Brings Energy to the 'Dismal Science', written by Nathaniel Gronewald.

SYRACUSE, N.Y. -- The financial crisis and subsequent global recession have led to much soul-searching among economists, the vast majority of whom never saw it coming. But were their assumptions and models wrong only because of minor errors or because today's dominant economic thinking violates the laws of physics?


A small but growing group of academics believe the latter is true, and they are out to prove it. These thinkers say that the neoclassical mantra of constant economic growth is ignoring the world's diminishing supply of energy at humanity's peril, failing to take account of the principle of net energy return on investment. They hope that a set of theories they call "biophysical economics" will improve upon neoclassical theory, or even replace it altogether.

"Real economics is the study of how people transform nature to meet their needs," said Charles Hall, professor of systems ecology at SUNY-ESF and organizer of both gatherings in Syracuse. "Neoclassical economics is inconsistent with the laws of thermodynamics."

Central to their argument is an understanding that the survival of all living creatures is limited by the concept of energy return on investment (EROI): that any living thing or living societies can survive only so long as they are capable of getting more net energy from any activity than they expend during the performance of that activity

These are but a few short excerpts from the article. The piece in its entirety is quite informative and certainly worth reading in full. Follow the link to  New School of Thought Brings Energy to 'Dismal Science.'  


Via: Memeorandum
Via: New York Times

Comments

  1. i may be dimwitted this morning, but i don't understand how what they are saying is any different from the economics of old. energy, of any form, is still a commodity. and it is subject to the concept of supply and demand just like any other commodity.

    depletion of a commodity has always been a factor in any commodity and man has always lived up to the challenge of replacing that commodity with another or finding a way to reuse it.

    in other words, man has always lived with scarsity of needs. innovation has always been man's greatest resource.

    ReplyDelete
  2. Agreed.

    The point I think is more for those making big bucks on the current arrangement that resist change to new technology that ultimately eliminates the need for fossil fuels rather than peruse new technology with open arms.

    ReplyDelete
  3. if that be so, RN, it is a socialitic argument, not an argument of an advocate of free enterprise. it has always been the socialists that have decried the amount of money an "individual" makes, not the advocate of free enterprise. don't fall for it, my friend.

    a business is a business and the bottom line is profit. profit is the driver of a business not the product. any business will opt for change of product if the bottom line is affected. business has no reason to resist change or technology. besides, competition assures this too. a business either accepts change or fails in the process of resisting it.

    history is written and rewritten based upon change and man, of all animals, have been the most adaptable to the changes made. and this includes the history of business.

    ReplyDelete
  4. Really. Either I poorly wrote my response or the premise on which you based yours need be checked. I shall check mine again.

    I have written much on capitalism, self reliance, liberty, freedom of speech and expression,radicalism on behalf of "true minority's" (check todays post) to be confused with or aligned with socialism.

    My blood is red, but it is not politically red.

    ReplyDelete

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