Natural organization, giving things s.c.a.l.e

John Fullerton posted “Hell hath no limits” on how Wendell Berry’s poetry  clearly speaks of the great error of economics, also discussed by Herman Daly, in overlooking the issue of “scale” as having natural effects far different than numbers do.   My comment was:

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The different effects of scale in the natural world is indeed one of the more important but oddly overlooked realities.   The subject could be powerful in helping communicate what we need to, if people give it some study.  It’s very good that you picked that out!

It’s not just the quite curious omission of the subject from economics.   It’s also a quite curious omission from physics.   Physics represents nature as only composed of “number” on limitless scales, with no grain or scale of any kind except as assigned or reassigned at will.   Even natural units of measure derived from physical quantities lose all the constraints of natural scale in how they’re used.

It’s only physical things and processes, and the relationships between them, that have inherent scale as a part of their nature. Having not generally considered the concept of scale as a subject when describing nature, we shouldn’t underestimate the enormous effect on shaping modern science and our present image of the natural world. Continue reading Natural organization, giving things s.c.a.l.e

Transition to New Blog Site

Posts on this site preceding this one were transferred from my oldest blog, I called “Alongshot“, from its blogspot.com site.   My main archive of blog posts is still at my original “Reading Nature’s Signals” blog, perhaps to be transferred at some point, and quite worth site searching for key words like this one for mentions of Keynes.

The move is really from one directory to another, on Synapse9.com, needed to upgrad the format to WordPress 3.1.3.  The old blog site just got to be a problem.

My original systems physics research is still at The physics of happening, and scattered around Synapse9.com, along with my collections of images, reference libraries, introductions and writing .

My subjects and writing style, of course, will remain just as “primitive” (whether you saw that as a liability or benefit I leave to you) so the software upgrade won’t really change anything but the look and feel.   ;-)

Old Blog Site changeing

I’ll be switching from posting at “synapse9.com/blog” to “synapse9.com/signals” where I’ve installed a more functional blog. Nothing much fancy happening, but upgrading the tools of my original blog to WordPress 3.1.3.

You’ll still find this collection of posts covering the past 6 years of comment and research notes on the new science for a natural world here, until I figure out how to transfer them. Please do come there and subscribe to the RSS feed to keep following my new work and explorations of the subject.

My research archive, The physics of happening, is still at my domain along with my collections of images, reference libraries, introductions and writing www.synapse9.com.

The old blog site just got to be a problem, unable to archive the posts except by printing them to PDF’s (!), unable to separate the spam from comments, no text formatting options, etc. …It was kind of primitive.

My subjects and writing style, of course, will remain just as “primitive” as before…(whether you saw that as a liability or benefit I leave to you), so the software upgrade won’t really change anything but the look and feel of the pages. ;-)

 

Defining netGDP for steering a planet

What’s the cost of increasing investment when you’re already over-invested…??

Many organic and environmental systems display talents for taking care of themselves we could use, using internal steering to avoid approaching hazards and be responsive to change. In studying how they do it one comes across some wonderful new lines f practical of environmental systems research.

fyi – originally posted to World Ecology Research, a related recent post here is Where I’ve gotten so far

Natural systems display remarkable feats of self-control, but studying them fail to connect with the current scientific paradigm for representing everything as controlled by external forces, described by equations. The internal steering mechanisms within natural systems, organisms and economies, etc, are continually reorganizing in much too fluid ways to be described by any kind of equation, or rules for collections of automatic agents either.

The continued interest of the sciences remains only entirely about control theory, unfortunately.The lack of interest within science hasn’t stopped people from productively exploring the territory, only prevented communicating with our wider intellectual culture.

If you look at recent scientific history there were a number of scientists who made great contributions to understanding natural systems, whose work on other questions was accepted while their insights into considering complex systems more like organisms was discarded. It’s not hidden from view at all, for example, that nature arranges environmental systems is as cells of organization.

Those cells of organization also clearly emerge from their own environments, by a self-animated complex process of growth. One needs only ask whether that organization is delivered from the outside or generated within, to observe that complex systems seem to grow by exploiting their environments not being controlled by them. Their organization develops internally.

So, my view that our intellectual culture now finds itself a simply huge stack of “overdue homework”. Just how extremely overdue that homework is may make it seem like nearly starting over, with the whole project of learning about the earth.

For the past several centuries we have been making ever greater strides by multiplying our control of everything on earth, only now to find the process itself going out of control … Considered as a whole system, our profits from controlling nature were constantly allocated by the capital markets to multiply our control of nature, taking it too far to now to gracefully recover from.

What we need are the secrets of nature, how her growth systems come to a climax of vitality rather than of exhaustion. Oddly the first person to notice the elementally simple investment allocation strategy for doing that was J.M. Keynes.

He actually wrote the whole concluding chapter of his theory of economic growth on the subject of its limits. It’s still the correct basic template for how our economic system could exhibit self-control in managing its own growth.

Tragically to the readers of The General Theory the idea appears to have seemed completely alien, and that is why it was entirely ignored as people used the rest of Keynes’ work to build a profoundly unsustainable growth system. As an ecosystem, the strategic use of your profits to multiply your process needs to stop sometime, just to preserve the profitability of the system, whether measured in net-energy terms or a proxy measure of value like money.

When the scale of a system is stabilized while it is still profitable, those profits then become available for the self-management task of steering the system that growth built.

In 2011, of course, there is no discussion of whether Keynes’s strategy for saving the growth system from itself would be needed now, or ever, and how much it would be worth to the world economy to survive as both a cultural institution and a physical system. In 2011, 80 years later, it clearly still seems to be such a “shocking new idea” that people perennially just turn their attention to other popular subjects to avoid it.

Of course, those more popular subjects are not relevant, in the case the system is not steered to survive physically as well.

Keynes discussion in Chapter 16 of The General Theory, was on the natural limits of money. He presented it as a choice for people accumulating savings in a profitable economy until either they a) choose to stop accumulating savings and use the profits for something else of value or b) have to stop accumulating savings in an economy that generates no profits.

Saving financial earnings for more investment as a rule would only stop when aggregate investment earning become zero. Keynes thought it would be fairly easy to have increasing investment become increasingly unprofitable, as of course, we now see with riveting clarity in our present conflict ridden environment, saying:

If I am right in supposing it to be comparatively easy to make capital-goods so abundant that the marginal efficiency of capital is zero, this may be the most sensible way of gradually getting rid of many of the objectionable features of capitalism. Ch 16, iv, pp3

The easy mistake is to confuse his “marginal efficiency of capital” (a measure of the system as a whole) with being a measure of market rates of return. The total of individual rates of return can be zero when the gains of some are canceled out by the losses of others, and measures only reflecting current rates and not enduring rates are misleading as well.

By not even looking for when increasing investment would become decreasingly beneficial, economists appear to have never seriously tried to devise a way to measure whether new investment was making the economy more or less profitable in the long run. There was no need, with perpetual growing profit assumed instead.

That then becomes the direct cause for economic policy ignoring the crossing point, where erupting financial liabilities went unmeasured and the net life-cycle return on increasing investment went below zero. Because we had not been asking we didn’t learn how to measure, the profitability of the system as a whole.

So Keynes’ strategy is simply and purely to keep the economic system profitable, to avoid effects of compound growth becoming unprofitable. I’ve done some of the key work on the physics of environmental systems that will enable that work, on how to make whole system measures.

That’s a study called Systems Energy Assessment (SEA)which shows from a whole environmental systems point of view how to combine “in-house” energy uses with “out-sourced” ones. The statistical finding is that (nominally) 80% of the total energy uses purchased as an operating cost of business are going uncounted. That will help to more accurately measure the real costs of business decisions both today and for the future.

The basic equation of whole system profitability, used to signal the approach of over-investment, can start as simply defining GDP as a “net” quantity, of positive and negative values. The negative GDP values would reflect the foreseeable emerging liabilities of unsustainable development in the past, for example.

That might also be thought of as a negative discount rate, as costs not only for mitigation, but for also having to prematurely rebuild the infrastructure of the economy if over expansion has made it unprofitable.

netGDP = GDP + negGDP

as an environmental measure depreciation due to over-investment in the earth.

One clearly needs to start by carefully choosing only firmly answerable parts of the question to ask, rather than just guessing at totals. You’d want to combine hard measures of clear financial costs with proxy measures to watch carefully, in attempting to make netGDP a true measure of the long term health of the system and the wisdom of its investment choices.

What happens in natural systems is that during initial growth netGDP > GDP as growth fosters growth. After the turning point (where “getting bigger” = “getting too big”) then netGDP< GDP.

One of the proxy measures that would seem most helpful, then, is to locate that turning point when the net benefit of expansion and the net liability of emerging conflicts could be seen clearly approaching. That’s the point when the natural role of finance is to switch from “growing the system” to “steering the system”, a whole new plan for the use of wealth.

The main cost everyone can understand is climate change. Our hidden financial liability for fossil fuel development is needing to basically redevelop the whole world economy.

As a round number we need to get rid of 80-90% of our carbon fuel use, in 30 years. All our development is still carbon intensive, though. There are greatly added liabilities, then, for still becoming further dependent on increasing fossil fuel use, as all the world’s growth strategies are relying on.

One need not have a theory to clearly see how difficult it is to reduce the carbon intensity of GDP. It’s had a remarkably slow and steady historical rate of decline, at about 1.3% per year.

So, the only apparent technically feasible way to do it is to lower GDP. Using Keynes’ template, that would done by creditors spending their savings to facilitate that without causing cascading failures in the interests of long term profitability, despite a current loss.

So yes, it’s a big problem, and people are emotionally inclined to do anything but just buckle down and ask the right questions. Somebody needs to, though, so that anyone can have a believable road map for making their decisions in the future.

We just don’t have any believable road map in public discussion now. We definitely don’t want to shrink carbon pollution by reducing living space and everything else, by 80%, for everyone to essentially share our homes and live with households with 5 times as many people.

That IS the math though. Could we find some sort of equivalent and make the transition profitably? Not in annual terms, but certainly, if we’re asking true netGDP with a view to the future.

As a culture we allowed the assumption that continued growth would always produce current multiplying profits, and we constantly discredited the people from Malthus to the present who pointed out the obvious grand error in that. To now “find yourself in the real world” we need to “study like hell” rather than keep playing games, and the way to make a profit today.

 

 

Three Wider Scientific and Economic Implications

The new scientific method presented in Systems Energy Assessment (SEA) allows economic systems to be studied by physical science methods,

so that our accounting method can match nature’s.

The first major practical finding is that the total energy demands of businesses have been undercounted, with the standard LCA method commonly fining only ~80%.   It does not count the outsourced energy uses for the scattered services businesses hire to operate, or their environmental impacts.

  1. Realistic Life Cycle Financial Accounting & business balance sheets
  2. Discovering how much of nature’s systems are hidden from view
  3. Study of complex systems as both natural objects and abstract concepts

These three main wider scientific implications of the method are found on the SEA resource page with other notes and resources. Each of which would take more explaining, but might also be helpful for suggest the intriguing challenges for learning how to apply science to the task of making the earth work for us, and us to work for the earth at the same time.

Continue reading Three Wider Scientific and Economic Implications

What GDP & the Dow measure

Originally “Where I’ve gotten so far”, A somewhat better summary of my work that Rex Weyler found helpful started from a discussion titled “Are Stock Markets Ponzi Schemes or Real Wealth?”. Rex wrote back: “This and the SEA presentation on your site are helpful. Thanks.”

To me and I think to most economists “the stock market” is not seen as directing the economy, just in the news.

In reality it’s a game of mutual pick-pocket
played by the rich, that helps banks measure the credit worthiness of businesses

I added a line for US GDP to the nice graph of US Quads of energy use & Dow Jones prices done by Charlie Hall (1).   It’s remarkable.

It seems to expose a bit of a “fraud” in what people have been told of the role of the stock market. Clearly both GDP and energy use have generally followed smoothly progressive curves.  Clearly the Dow doesn’t track or lead either.

There’s a lot more to why US energy use stopped growing and GDP kept growing, but the DOW really seems to be just sailing off on its own.  It reflects no aspect of either of the consistent indicators of economic wealth.
(1)Dow Jones, US energy & GDP

Continue reading What GDP & the Dow measure

Seminar on my work at June 2011 Foo Camp

Aleks Jakulin is a systems scientist, entrepreneur and professor at Columbia University, a very interesting guy, who was invited to present at the June 2011 Foo Camp meeting information space hackers and scientists. The invitation is to present the work of someone else, a nice twist, and Aleks chose to present my work, also incorporating some of my years of discussing our approaches to general systems theory with our mutual friend Stan Salthe.

We chose the working title:
System archetypes & anarchitypes… because my interest has always being in the natural processes that are “model breaking”, like the enduring eventfulness of change and how events are reliably individualistic. Below are some of the notes and images he’ll be working from as he builds a conversation on the subject.

Once you have a reliable image for something, an impression, a belief, an equation or rule, how can you keep clear in your thinking that it’s something of your own invention? Failing to do so seems to be central to the “curse of knowledge” that people can only look into the past, and our rules for things often leave us horribly unprepared for the future. Continue reading Seminar on my work at June 2011 Foo Camp