re: Mr. Soddy’s Ecological Economy NY Times Op-Ed, Sun 4/12, mentioned by Tom in a LinkedIn “Global Foresight” conversation.
Thanks for mentioning the Times Op-Ed, It’s just great some mention of Soddy and the “physical world problem” finally appeared in the Times. As I find so often, I agree with his analysis of the problem, about 110%, but that I find is as far as it goes!
You might be interested to know that J.M. Keynes and Kenneth Boulding also came to very similar end conclusions. Each used their own language for it, but each at least would agree firmly that 1) economies are physical systems, and 2) at natural limits something would need to be done about excess savings of financial capital.
The positive feedback of savings multiplying savings is limitless, as long as the economy generates profits.
I had independently come to that view studying what limits befall growth systems generally, how they alter their own environments, in the late 70’s. I began formalizing a general physics of natural systems with that as a starting point in 1985. It centers around what I still think is a definitive theorem for what’s needed to avert a natural collapse of our economic environment.
The versions of the solutions offered by Soddy, Keynes & Boulding each focus on different hidden aspects of the same problem. My work focused on one more of the hidden culprits. The others either didn’t quite see the one I found, or thought it could only be mentioned at a later stage politically.
redesigning the economic system to be compatible with the physical world and its natural limits.
I tend to think it needs to be mentioned up front, or “fixing the system” will be unrealistic, and won’t go anywhere. The central hidden problem I noticed is that the whole idea of having low risk bets, where investments are all assured to yield a positive % return, is:
- a) necessary to have free markets work at all, but also
- b) completely incompatible with allowing people to keep adding their winnings to their bets over and over.
If you have guaranteed bets and get to keep adding your winnings to them, it will blow up and collapse any kind of physical system,
sort of like the housing bubble did but also applying to the whole system.
The curious thing is that attempting to guarantee continual compound returns like that is the one thing most everyone agrees money is for… It is also something that nature will most certainly end either by waking us up or shutting us down.
I’ve gone into it quite deeply, well at least for what anyone can do solo. The curious hidden nature of it includes a world of other fascinating issues, like surrounding how nature invents new things to give life to, for example.
The evidence doesn’t “explain it” exactly, but all things that get born do first begin with that same seductive compound multiplication process, but then switch to another stage. First there’s the rocket, but if all you do is go straight up you never get into orbit, or something like that.
That means what we’re being forced to do and what nature does to bring new life into existence are closely related. That’s to make a transition between immature growth and mature vitality like any organism does.
How any organism does it is following the “map” of development in their genomes. An economy doesn’t have that kind of guidance built in. So to use natural examples as a “map” for how to do it, we’d look to the range of examples that might offer hints.
One place to start looking at what I’ve done on both subjects is through my approach to how correct the financial misinformation driving the global economic decline in “Physics… pointing to a clear way out “. Basically it’s “simple”.
The energy source for building up a system gets switched to building out the system, to let it mature.