That is exactly the point where i see the mistake of the current economic theory.

Thinking about a quality - which is a more or less virtual "feeling" of humans - can never be measured since it is not a inherent characteristic of the "economy".

But there are limits of growth - real limits. And therefor they must be measurable.

The question is "how".

The answer until today is ... well, no answer.

You say "there is no quantitative measurement for some key determinants."

I would say: That is wrong. There is just exactly one key characterisctics which is contained in every single part of each economy - even in all kind of thinkable economy, even in economies without money, without currency.

And with this single characteristic the picture is much more simple as it seems. And it is not simplified - but simple in its characteristic itself.

The only problem is that is puts many of todays "mems" of the economic theory into the "wrong" box.

The first "wrong" is: Money is good to measure something.

The second "wrong" is: Money can be a container for value.

Both is wrong in real term measurent, it is only true in the currency universe itself - but there is no ruler made out of "currency" for measuring economies.

Well. Long telling ... which you will probably not believe so fast.

One question to your reply: What determinant can not be measured?

Limits are probably hard to set because the boundary conditions tend to shift, an example:

Suppose we have enough Zinc to last us for another 30 years, in a cradle to grave economy, based on current knowledge and currently used technology for mining andproduction and integration into products and services.

A change in mining technolgy might lead to more mining of Zinc and add 10 years at the same time because of the anticipated shortage people will seek out alternatives and that might impact demand in such a way that we can still use Zinc for the next 100 years. Still at a certain point in time we run out of it, if we do not learn from nature and make our economies and production systems cyclical.

However approaches such as ecological footprinting do give an indication how much we can use. It is an integrated consumption measure or throughput measure for biologically produced stuff. Toxicity of stuff and minerals/metals are not part of this equation.

A lot can be improved we need a 3-fold measure for Value and Risk: economic=profit, social=inclusion , ecological=bio-diversity and footprinting could fulfill this role for the ecological dimension that supports and 'embraces': society and economy.

Well, that is an answer which i often hear.

All "limits" of a resource are argued out by "new technology", "seeking for alternatives" ... and so on. It is, that is your answer, a microeconomic effect which opens (always) a way out of this - we could take iron, silver, gold or whatever - the argument will stay the same.

But - and it is a big but - there is one limit which is not possible to pass by, which is the absolute limit of each given economy.

At first i want to reply that there is absolutely no limit of any kind of matter, of ore, (zinc, or whatever). With enough energy we can recycle all kind of matter. We can even create different kind of matter, in small amounts, by nuclear power.

The only thing which is by its nature not able to recycle is the energy itself. There is no way of "recycle" energy. It is a given way of each source of energy: The way to hell, I mean, to heat, to high entrophy, coming from low entrophy.

What I want to show is that the economy can easily be described as a given amount of energy used for produce something which is wanted of someone inside that economy.

That energy came in former times only from hard human work and today it comes 1000-times of all human power from external energy sources.

It is a very simple fact that without the constant flow of energy through our very well desdined econoies - all kind of economy will stop immediately by a second.

There is no such thing as a free lunch - in any given economy there is a very much work to be done.

Try to run your car by muscle power. Try to run your TVset by muscle power. Try to run a car industry by muscle power.

All parts of the economy does not get any kind of free lunch. All parts must be produced.

And that is true for all kind of economy - even before someone invented money or a word of "value".

The value is always just a part of "the total value of that economy" there is no value more than "1" in a total economy. It is simply not possible. And the very same economy is also expressed by the total amount of productively used energy in the total size of "1".

Well. I know this is very hard stuff coming from a designer. But the economic theory has to be based on a measurable unit before someone want to talk about limits of real world stuff. The word "value" is not better than the word "beauty". It is a feeling of some humans for something.

At the end, Karl Marx was half way right with his theory about who do the work in any given economy. The workers do the work.

But he did not get the right unit. It was not the time of working. It is the total amount of energy invested for producing something. A worker can invest 70 Watt more or less continuously. Replace the worker by a machine and you can invest much more energy to produce something.

So, at the end, it is the number of Joules invested which determines the size of the energy.

And as long "Joule" is nothing of an understandable word for economists, lets recalulate it as "energy slaves".

Add energy slaves to produce whatever you want and sell it - you have growth....

Conversion of all activities to global hectares to does point the limits you are referring too just as an energy-view. BUt it is true that we use quite a lot of energy slaves to sustain our ways of living. As long as you try to frame an economy as a fixed entity with a fixed or dynamic but bounded value there are not many economist who will take up this kind of reasoning.

Hi Jaco,

I think I can use the virtual energy slaves as the least common denominator for all parts of a given economy.

Energy is necessary for each part of each economy, there is no way out of "some work has to be done" (by humans brainwork, musclepower or by machines).

But what you mean by your second sentence: "frame an economy as a fixed entity with a fixed or dynamic but bounded value"

Can there be another perspective? The total "value" of all products is bound by logical reasoning to the "size" of that economy.

Today we sum up all price labels of all traded goods, etc. ... so we read that value from the price labels - and it is bounded to the economy ... or where is my flaw in understanding your point?

Thanks,

Olaf

Hello Olaf,

The value in an economy is currently assesed by how Busy it is, the throughput expressed in GDP indicates if an economy is healthy (growing) or in decline (contracting). Stating that an economy is a particular size, removes the dynamic element of growth and contraction. Furrthermore, what economist do not see or cannot see that economies grow and develop ususally in alternating phases. The mantra for politicians and economist is growth but we need to develop a less harmfull more live-enhancing/fertile productionsystems in industry and agriculture.

So I guess my point is in nautural ife things grow and die as well just as in economies it is what you allow to die or live on that dtermines the quality of (economic) life not the psize, thourghput or place/resources at your disposal.

Thanks for the interaction

Jaco

Hello Jaco,

thanks for that explanation. I have to think about that for a while - I think I do not follow this perspective really, I think I do not understand this at the moment.

I think the problem or the difference lays in the "value" understanding.

My perspective comes from a start point at the physical existence, a given pile of some kind of matter in a given economy which is one part of all goods and products.

No matter what kind of matter this is - it is "a part" of the total production of one year. Lets asume that the total economy containes only two of these "things". Both are made of the same amount of matter, same amount of input ... so we can say that both represent exactly half of that economy.

Now lets look at the "value": Maybe both parts are equal by all kind of measurable pysical units - but there is a virtual characteristic which is not measurable. Lets call this characteristic for the moment "beautiness".

And now lets assume that one part is more beauty than the other.

And now lets think about the value while this two parts came to a market in this given economy - what "value" would each part get - indicated by a resulting price level as it is traded?

My idea is that the price level - the value - can be different from the "true" value measured by the amount of matter, etc.

But my idea is that the total value of that traded two things in total is - and has to - always exatly sums up also to the number of "one" - since all single parts can only be added up to the total value of "1".

So - you say that the total value is assessed at the moment by one characteristic of that economy, "how busy" it is.

I have a problem (coming from my point of view) to understand this. What kind of physical action is representing "business" of an economy?

In my point of view an economy "with more people running around and doing something" is clearly more busy - and this can be seen as more used energy for transport (or doing something else).

So, just having a "more running around" rises not only the value but also the true characteristics of that economy.

And you say that todays common understanding is that a growing economy is "healthy". That of course is the common understanding of a lot of press guys and so on.

But one remark to your last sentence: If you do also say that

citation: "nautural ife things grow and die as well just as in economies it is what you allow to die or live on that determines the quality of (economic) life not the pure size, throughput or place/resources at your disposal."

Isn't it worth the discussion what "healthy" really is in an economy? It can be different - very different - if you compare the economy over time by a short time range and a long time range.

But what exactly is meant when you say "healthy" - i suppose it is mostly used in the meaning of short term healthiness ... I suppoes most people forget about the long run perspective.

Think about the american indios - they did long discussions about everything - asking the question: "Is it good for us also in the seventh (!) generation from now on?"

That is a more longer perspective ... and with that perspective - we probably would never had startet using oil as an energy ressource and would have started using renewable just from the beginning ...

The whole idea is totally misleading, every day we get a free lunch of energy, gifted by the sun. So there is not a fixed amount of energy on our small planet, and without this energy gift we are unable to survive. However, as a far as I know the sun will exist for the next 3 billion years or so and then it will burst. Then we will not have anymore any value problem.

Well. The total idea is not misleading i would say. And I will give you an argument for this.

Your argument is: Because we get a huge amount of energy each day there is no fixed amount of energy and therefore the idea is wrong.

Well. Nature will not get a problem. That is right. The nature will survive with this energy input.

We as mankind will probably also survive for a while as we are a part of the nature.

BUT: Our wealth, our huge economy, our lifestyle is not at all able to survive with the total amount of sunshine only.

We in germany use 19% of renewable energy for electricity. But globally we more or less run 80% to 90% of all energy consumption out of stock - at a huge pace.

Now give your argument again: Because there is so much sunshine we will not have a problem for the next 3 billion years.

Well - if you get along with a car running by solar power directly ... I would say I am wrong. As you come along with industries worldwide able to run by windpower only ... we are fine and we do not have a problem.

But - conversion of the total energy system worldwide needs quite some invest - in energy terms spoken (and therefore also in money terms).

This can not be done in a day and not in a year and not in a decade.

So, we better start today.

And for the eocnomic theory: I would prefer to have an economic theory able to express some real world problems. I would prefer to have an economic theory able to express what I just say in the theory itself.

Today the price of coal is the price of today. But there is no price modelling available for the most precious energy source in the world.

There is no price modelling or oil.

It is by principle to possible to model a commoditiy which in fact is what builds the real economy by its own heart without having a unit to measure the true external input.

A physicist would name someone trying to describe such a system: An Inventor of a perpetual motion machine.

Not putting all necessary input into the calculation means sneaking the use of some kind of virtual energy sources.

That is exactly what todays modern economic theories are doing.

"Making Money" and put that as a part of the GDP into the calculation ... is inventing a perpetual motion machine.

It is sneaking.

So, I do think I am right. But thank you very much for your reply - I hope my idea gets a bit clearer now.

Olaf

That is funny now. You argue that you are right, despite the fact that your arguments have changed now. You are going to accept, that there is a free lunch of energy (sun energy), but then you change the argument to something like, at the moment we are not living in a sustainable world and that economists ignore that. That is wrong, no economist ever stated that we have a guarantee for any standard of living. Do you know how oil originate? From plants, plants can only grow with the help of photosynthesis and for that sunlight is necessary. The same holds for all other fossil fuels, as the name is saying and plants which can be combusted. So that is not a perpetual mobile, we receive something for free and exogenously. To make it once again obvious that nothing has an absolute value, please note the following. If I would be Robison Crusoe living alone on an island in the South Pacific; what is then the value of an oil stock I would find? The value would be zero, because I would have no use for it and it has no utility for me, and there is no one else who is willing to buy it (maybe by offering his labor time or what however). The same story could be applied to humans in the stone age, because of missing knowledge and technology they could not use it; probably oil did not had any value for them.

Well - my argument is that today economic theory is not able to put all necessary input into the calculation.

Saying we get something for free - and everything is fine is of course possible ... but not sufficient in my point of view.

My argument is that you should first set up an economic theory to name all necessary input by an exactly defined unit - then you can say, ok, because of the costfree input of constant external energy out the huge stockpile of fossil fuels (= huge stockpile of stored solar energy) we have our economy running with a lot of free lunch.

I would better reconfigure the econmic theory to put ALL necessary input into the calculation.

Of course we can continue with using up the stockpile of stored fossil solar fuels - but only when you can measure it you can name it inside of the economic theory.

Today ... well there is a footnote at the end of the theoretical framework for explaining our economy.

It says "eehm, and we also need a huge stockpile of stored energy which we never pay for" (since we pay not for the energy - just for the work to empty the stock).

At first: I do not see even this footnote.

Second: I would be happier if there is a better economic theory where ALL necessary input is on the list first - and gets a price afterwards.

And your last argument:

For me I define technology and innovations as this: Technology is necessary for any kind of enlarging of any given economy above its simple limit of the bodywork of its inhabitants.

Technology is necessary to make external energy available for some kind of economic doing - whatever kind of doing that is.

Your Robinson has not the Technology for using the energy of the oil - therefore it is not possible for him to use the contained energy for some kind of productive work in his economy. Same has also occured during 10.000 years of history in many countrys. The egypts, the romans, the old chinese, the mayas, the sumerer, the greeks ... all had not the technology at hand to make some kind of productive use of the energy contained in fossil fuels.

Of course they did burn coal - they made iron out of ore - and mostly they used coal for heating the house.

But only the invention of the double working steam engine of James Watt after the invention of the steam engine of Newcomen was the first time in human history of converting external stored fossil energy into some kind of mechanical work for productive use.

(See Ian Morris "Why the west rules - for now" page 43)

That was the invention of a new technology to put external energy into useful work - enlarging the total energy useful used for productive work inside of that given economy, enlarging therefore the production of goods, therefor the amount of things produced - therefore enlarging the GDP.

But the real "unnamed" slave producing this kind of plus-input into the GDP is the energy stored in the coal.

The problem until today with the economic theory: This unpaid energy input has not been valued until today.

Limit of growth usually refers to limits of GDP growth. GDP threshold has been initially set at 16000 USD in calculation of Human development index.

The discussion of Meadows about the Limit of Growth is more on physical, earth bound limits, I would say ...

Or I would raise the next question:

"What is the real world physical "part" of the USD-Expression of such an USD Limit?"

In my point of view setting a limit of growth in a monetary unit ... is not quite filled with inner logic. Money is ... nothing else than something to be exchanged for some real world products.

And money can be printed or virtually printed in ... well not limited amounts. How could money be limited? It is something to be exchanged - and it can vary also from one monetary system to another, or you can have many monetary systems in the same time ... so, where can a limit come from in monetary units?

The limitation of the discussion of the LImits of Growth are dealing with the physical limitation on the other side of the exchange process. If you have money, but nothing to be exchanged for this money.

That is a real limitation ... limitations can be short time (crisis, war, whatever ... ) ... or it can be absolute (if we wait some thousand more years) as long the earth is not there forever ...

and it can be intermediate ... see Peak Oil discussion, Peak everything, and so on.

An empty planet ... is not much better with a lot of money.