[p2p-research] Scientific American: Does Economics Violate the Laws of Physics?

[Michel Bauwens]

Interesting exchange here,

Ryan says, Peak Oil is bull, because Amory Lovins has studied the issue;
Stan said a few weeks ago, Amory Lovings is bull.

If Amory is bull, then Peak Oil isn't,

If Amory is not bull, then he is right about nuclear energy too, that he has
studied even more

My take: the difficulties in transitioning towards renewable energies are
real and have been well studied, also based on the historical record of
technological progress and energy conversion, so descent will likely go
faster than re-ascent, leading to a series of crises in the transition
period. We cannot have a simple magical belief that the market and
technology will solve this in an easy way. And Amory Lovins, while right in
my opinion about nuclear energy, is over optimistic on the capacity of
capitalism to solve this fundamental problem.

And indeed, neoclassical economics violates the laws of physics, because it
assumes infinite growth in a context of unlimited resources, or, that the
market will magically solve them, and both are fundamentally mistaken.

So I must agree with the Scientific American and the author here, and I'm
sure Hazel Henderson, who has deeply studied the limitations of neoclassical
economics, would agree, though I think Hazel is quite optimistic about the
potential of ethical green business, see her engagement with the Climate
Prosperity Alliance

(quote from Hazel: "

*“Marking the 20th Anniversary of SRI in the Rockies offers more than an
opportunity to review the hard-won progress of investors to prove that
socially responsible investing is viable and now clearly out-performs
traditional mainstream investing. Since the credit crises of 2008-2009, we
can now assert with confidence that investing for long-term sustainability
and taking ESG factors as material to asset valuation could have actually
helped avert these crises. We investors are now winning the paradigm battle
and cite the evidence to show that the Efficient Market Hypothesis (EMH) is
bunk and by the same token show that the Modern Portfolio Theory (MPT), the
Capital Asset Pricing Model (CAPM) and, yes, even the sacred tenets of the
“rational investor” and the Black-Scholes Merton Options Pricing Model will
soon be part of history.")*

**

*Michel
*

Michel

On Thu, Oct 29, 2009 at 3:48 AM, Paul D. Fernhout <
pdfernhout at kurtz-fernhout.com> wrote:

> Ryan Lanham wrote:
>
>> http://www.scientificamerican.com/article.cfm?id=does-economics-violate-th
>>
>
> Too bad I did not know in advance. It was only a couple hours from where I
> live. It might have been interesting to go. Although I'd probably end up
> arguing about abundance being more likely if we innovate in a Buck Fuller or
> Jacque Fresco or other way, including move into space in the long term. :-)
>
> But yes, we need a better economics that reflects cybernetic principles,
> and that includes some connection with real current resource limits, not
> some mythical thing called "capital" which while including land and
> machinery, also includes fiat dollars of which an infinite number can easily
> be printed or magicked up in the computer.
>
> I totally agree with this from there: "For instance, if a squirrel burns
> energy eating nuts, those nuts had better give the squirrel more energy back
> then it expended, or the squirrel will inevitably die. It is a rule that
> lies at the core of studying animal and plant behavior, and human society
> should be looked at no differently, as even technologically complex
> societies are still governed by EROI."
>
> The same thing can be said for tool wear, for energy going into making
> solar panels, and so on.
>
> However, I would dispute the peak oil issue, as per my "Peak Whale Oil"
> post a while back, which would cause endless arguments, no doubt, same as
> here. :-) They are ignoring the *exponential* growth of alternative energy,
> which is why Peek Oil will be a non issue, same as Y2K was a non-issue, even
> if it in theory might have ended or greatly harmed industrial civilization
> (like with exploding nuclear plants, or accidental weapons launches or the
> collapse of the power grid and so on) had people not spent years working to
> fix all those bugs before the year 2000. But, people did spend those years
> and all that money, because all people are not totally stupid all the time.
> :-) So, one can expect the same for energy alternatives, although it might
> be rougher.
>
> But what is said in that article is:
> ""
> And no amount of technology can fix the problem. Hagens points out that oil
> extraction has evolved by leaps and bounds since the early 1900s, and yet
> companies must expend much more energy to get less and less oil than they
> did back then.
>  "It isn't that there's no technology," Hall said. "The question is,
> technology is in a race with depletion, and that's a whole different
> concept. And we think that we can show empirically that depletion is
> winning, because the energy return on investment keeps dropping for gas and
> oil."
>  The most pessimistic of the biophysical economics camp sees the oil-fueled
> world economy grinding to a halt soon, possibly within 10 years. They are
> all working to get the message out, but not all of them believe their peers
> in other professions will listen.
> """
>
> And that's probably why it was a good thing I did not go. :-)
>
> So given that, the attitude Hall outlines there, like Catton's, is IHMO
> dysfunction, harmful, and unreasonable given the facts if people really
> studied the subject of renewable energy, like Amory Lovins' and Hunter
> Lovins' work in Brittle Power.
>  http://en.wikipedia.org/wiki/Brittle_Power
> "Brittle Power: Energy Strategy for National Security is a 1982 book by
> Amory B. Lovins and L. Hunter Lovins, prepared originally as a Pentagon
> study, and re-released in 2001 following the September 11 attacks. The book
> argues that domestic energy infrastructure is very vulnerable to disruption,
> by accident or malice, often even more so than imported oil. According to
> the authors, a resilient energy system is feasible, costs less, works
> better, is favoured in the market, but is rejected by U.S. policy. the
> preface to the 2001 edition, Lovins explains that these themes are still
> very current."
>
> --Paul Fernhout
> http://www.pdfernhout.net/
>
>
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