26th
Scientists (especially Ecologists) Behaving Badly…
At the end of college, I became a member of an organization called Sigma Xi, “The Scientific Research Society”. Since that moment also pretty much marked the end of my career in (natural) science, my “membership” is perhaps a bit misleading. Nevertheless, I get one very cool perk: 5 days a week, I receive an email digest of summaries of top science stories across a broad range of fields. It’s a good way for a layman to keep up with major stuff in the world of science, and they’re interesting enough that I click through to 1-2 detailed articles (out of a total of 6-10 in the digest) each day.
This morning, the following headline topped one of the summaries: Does Economics Violate the Laws of Physics? A must-read article for me - since those were my grad and undergrad fields, respectively - and a nicely provocative title, too.
But wait: don’t click on the link. If you already did, I apologize. It was awful - perhaps the worst thing I’ve ever read in Scientific American. (SciAm, I expect better - a lot better.)
The basic thesis: there’s a “small but growing group of academics”, which the article groups under the name “biophysical economics”, suggesting 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”.
Um… what?
Caveats out of the way first: I’m not an economist any longer - I’ve been in industry for about a decade; and in grad school, I was a microeconomist. That said: I’ve never heard of a “neoclassical mantra of constant economic growth”. The “world’s diminishing energy supply” needs some support. And what’s this “principle of net energy return on investment”, and what does it have to do with economics?
In plain English, the idea seems to be that 1) prosperity (of an animal, human, society, etc.) depends on its ability to harvest energy; 2) traditional energy sources are requiring more energy to unlock; and 3) therefore, civilization is (imminently) doomed.
There’s some truth to statement 1, but it’s a limited, incomplete lens and, as a general economic statement, highly inadequate. Harvesting energy is one component of a prosperous society - but ability to use that energy (and many other things) to create goods and services valued by people is the point of direct relevance. So, for example, if we can figure out out to use less energy to create the same good or service - or use less energy to create something else that’s a viable substitute - our energy capacity becomes less constraining.
Statement 2 is empirical, and I won’t argue it, though it’s far from obvious that it’s an inevitable trend.
The conclusion is just crazy. Two obvious alternatives that don’t require “the… world economy grinding to a halt… possibly within 10 years” include 1) developing alternative sources of energy and 2) continuing to tap existing sources at lower efficiency but larger scale - both things that, in fact, seem to be happening as we speak.
I’ll list several other amusing/absurd statements from the article:
- “Last week, about 50 scholars in economics, ecology, engineering and other fields met at the State University of New York’s College of Environmental Science and Forestry…”. Wait a minute - that doesn’t sound like a natural location for an economics conference! In fact, the people quoted in the article are described as a “professor of systems ecology”, “a chemist”, and “chairman of Utah State University’s Department of Environment and Society”. Note the absence of economists. The article does note that “many biophysical economic thinkers are trained in ecology and evolutionary biology… not all proponents of the new energy-centric academic study have been formally trained in economics”. This is clear.
- “Real economics is the study of how people transform nature to meet their needs” - a quote from one of the ecologists. Again: … what? Apparently things like markets and services aren’t part of real economics. A later quote reads, “Why should economics be a social science, because it’s about stuff?” No, economics is not just about “stuff”.
- “Neoclassical economics is inconsistent with the laws of thermodynamics.” Same ecologist. Now I’m suspicious of his knowledge of thermodynamics, since he’s already demonstrated his ignorance of economics.
- “Soddy (an early 20th-century chemist) also criticized traditional monetary policy theories for seemingly ignoring the fact that “real wealth” is derived from using energy to transform physical objects, and that these physical objects are inescapably subject to the laws of entropy”. Again, economics isn’t all about “stuff”/physical objects. Transforming physical inputs into physical goods is one kind of activity that can create economic value. Here’s what creates more economic value: selling that good to someone who places a value on that good higher than the cost it takes to produce it. Second, even ignoring non-stuff-based economic value creation, the fact that a physical good deteriorates over time doesn’t necessarily have any impact on its value. If I buy and read a book, the fact that the book will rot over the next several decades doesn’t decrease the value I received from it. The food I eat is subject to a significant increase in entropy immediately - but that doesn’t decrease its value in the slightest; on the contrary, that’s part of its inherent value to me.
- There’s a big chunk of the article devoted to peak oil, which seems to be a key piece of the nascent canon of biophysical economics. I have separate opinions about peak oil (namely, that it’s either tautological or highly unlikely, depending on how you define it), but their central tenet is that the energy ROI of oil has decreased over time. The quote: “If you go from using a 20-to-1 energy return fuel down to a 3-to-1 fuel, economic collapse is guaranteed.” First, there’s no reason why monotonic decrease in energy return is inevitable. Second, a 3-1 ratio - heck, even a 1.01-1 ratio! - would be absolutely fine as long as you can apply that ratio to a large enough energy source. Say, for instance, that we can put giant solar cells into space that collect bajillions of petawatts of power - but they lose 99% of the energy they collect before they can transmit it back to Earth. That would be… absolutely fine.
- “No amount of technology can fix the problem”. Wow - that’s a big statement. Couple it with this - “energy use is doubling every 37 years or so, while energy productivity takes about 56 years to double” - and it’s finally clear what this argument is: it’s modern-day Malthusianism, without Malthus’ excuse of living before the last two centuries of technological progress.
My conclusion: ecologists, stay out of economics - or at least don’t pretend to be an authority in the field by describing yourself as an economist, biophysical or otherwise - until you understand the subject a little (no, a lot) better. Scientific American: don’t give crap like this credence. (For a former economist, reading this was probably emotionally similar to what a biologist would feel if she read an article supporting creationism vs. evolution in SciAm.) For everyone else: human ingenuity, and the economic incentives that promote it, have created innumerable miracles throughout history, and with increasing pace in recent centuries, decades, and years. Be careful before selling it short.
